Remedial Law Cases

Remedial Law Cases
Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 178911 September 17, 2014
EDUARDO D. MONSANTO, DECOROSO D. MONSANTO, SR., and REV. FR. PASCUAL D. MONSANTO,
JR.,Petitioners,
vs.
LEONCIO LIM and LORENZO DE GUZMAN, Respondents.
DECISION
DEL CASTILLO, J.:
"Filing the appropriate initiatory pleading and the payment of the prescribed docket fees vest a trial court with jurisdiction
over the subject matter."1
Assailed in this Petition for Review on Certiorari2 are the March 12, 2007 Decision3 of the Court of Appeals (CA) which
denied the Petition for Certiorari in CA-G.R. CEB-SP No. 01343 and its July 6, 2007 Resolution 4 denying the herein
petitioners' Motion for Reconsideration.5
Factual Antecedents
In a letter6 dated February 18, 2004, Flordelis B. Menzon, Regional Director of the Home Development Mutual Fund (Pag-
IBIG), requested the intervention of Executive Judge Sinforiano A. Monsanto (Executive Judge Monsanto) of the Regional
Trial Court (RTC) of Catbalogan, Samar on the alleged anomalous auction sale conducted by Sheriff IVLorenzo De
Guzman (De Guzman). According to Pag-IBIG, De Guzman previously acceded to its request to move the date of the
auction sale to January 20, 2004; however, to its surprise, the sale proceeded as originally scheduled on January 15,
2004. Pag-IBIG also claimed that the winning bid of Leoncio Lim (Leoncio) in the amount of P500,000.00 was grossly
disadvantageous to the government considering that the outstanding loan obligations of the mortgagor, Eduardo
Monsanto (Eduardo), was more than the bid amount. Pag-IBIG thus manifested that
It is for this reason that we are making this protest. Sheriff de Guzman failed to comply with our request for deferment
despitehis [acquiescence]. We are requesting for your intervention to nullify the results of the auction sale conducted last
January 15, 2004. This will give our office a chance to be able to participate and recoup our investment.
We trust that you will give thismatter preferential attention. 7
Executive Judge Monsantorefrained from acting on the letter considering that Eduardo is his relative; instead he re-
assigned the same to Judge Sibanah E. Usman (Judge Usman)8 of Branch 28.
In an Order9 dated May 3, 2004 and captioned "In the Matter of the Extrajudicial Foreclosure of Mortgage Filed by the
Home Development Mutual Fund (Pag-IBIG Fund)," Judge Usman declared that on even date, RTC-Branch 28 conducted
a hearing; that Atty. Cesar Lee argued on behalf of Pag-IBIG; and that Pascual Monsanto (Pascual) appeared on behalf of
Eduardo. However, Judge Usman noted that no formal petition orcomplaint was actually filed which presents a judicial
issue; moreover, the acts complained of partake of administrative matter. Consequently, Judge Usman referred the matter
to the Office of the Court Administrator (OCA) for further action.
Subsequently, Pascual filed with the OCA, copy furnished the RTCCatbalogan, Samar, Branches 27 and 28, a Motion to
Lift Writ of Execution and Notice to Vacate10 dated March 13, 2004. Pascual alleged thaton March 5, 2005, De Guzman,
Sheriff of Branch 27, issueda Notice to Vacate; that the same is being enforced with grave threats and harassment;
thatthe protest of Pag-IBIG remains pending with and unresolved by OCA; thatthe trial court did not transmit the records
of the case tothe OCA; that the winning bid of P500,000.00 submitted by Leoncio is disadvantangeous to the government;
that Eduardos loan with PagIBIG is being proposed for restructuring; and that the writ of execution and notice to vacate
would gravely prejudice their rights. Pascual thus prayed that:
A. An order be issued lifting the Writ of Execution and the Notice to Vacate;
B. An order be issued enjoining or restraining the subject Sheriff from enforcing the said Notice to vacate; and
C. Court officials or personnel above mentioned be made to explain respecting the handling of the above
captioned case as cited above, and if found negligent be so sanctioned in accordance with the law. 11
Acting on the aforesaid Motion to Lift Writ of Execution and Notice to Vacate, the OCA, in a letter 12 dated May 9, 2005
directed Judge Usman to
(1) conduct an investigation on the missing records of Home Development Mutual Fund (Pag-IBIG) vs. Eduardo
Monsanto and to report thereon within THIRTY (30) days from notice; and (2) take action on (a) Items A and B of the
Motion to Lift Writ ofExecution and Notice to Vacate and (b) the letter of Home Development Mutual Fund dated 18
February 2004, a copy of which is annexed to the Motion to Lift Writ of Execution and Notice to Vacate, herewith
attached.13 Pursuant to the above directive, Judge Usman notified Pag-IBIG, Eduardo, and Leoncio of a hearing
scheduled on June 14, 2005.14 This time, the case was captioned as "Home Development Mutual Fund (Pag-IBIG Fund),
mortgagee, v. Eduardo Monsanto, mortgagor."
In a Manifestation15 dated June 7, 2005 and filed before Branch 28, PagIBIG informed the trial court that the loan of
Eduardo had been restructured and that Eduardo had commenced paying monthly amortizations; that as a result of the
restructuring, Pag-IBIG is withdrawing its Petition for Extra-judicial Foreclosure; and that it is no longer interested in
pursuing an administrative action against De Guzman.
Leoncio opposed Pag-IBIGs manifestation.16
Meanwhile, the record shows that on April 11, 2005, Leoncio filed with Branch 27 a Manifestation with Ex-Parte Motion for
Issuance of Writ of Possession17 claiming that the reglementary period had elapsed without Eduardo redeeming the
subject property; as such, he is already entitled to the issuance of a writ of possession.
On July 15, 2005, Decoroso D. Monsanto and Pascual moved to intervene in the case. 18 Both claimed that they are co-
owners and actual possessors of the subject property.
Ruling of the Regional Trial Court Branch 28
In an Order19 dated July 1, 2005, the RTC-Branch 28, Catbalogan, Samar resolved two pending motions, i.e., (1) the
motion for issuance of writ of possession filed by Leoncio with Branch 27; and (2) the motion to lift writ of execution and
notice to vacate filed by Pascual with the OCA butcopy furnished the RTC Catbalogan, Samar, Branches 27 and 28 20 viz:
After careful and judicious scrutiny of the records of thiscase, this Court is highly convinced that the public auction sale
conducted by Mr. De Guzman and Atty. Ma. Luz Lampasa-Pabilona, Clerk of Court whereby Mr. Leoncio Lim emerged as
the highest bidder and purchaser of the subject property in good faith, and also given a Certificate of Sale issued by the
Sheriff and the same was registered with the Registry of Deeds on March 5, 2004 are in order. The impugned Sheriff De
Guzman had accordingly performed his functions. Accordingly, there is no showing that hehas abuse[d] his authority
during the conduct of the public auction. Such being the case, this Court is further convinced that the motion filed by
Leoncio Lim through counsel Atty. Labid being meritorious should be given due course. On the other hand, the motion to
lift writ of execution and notice to vacatefiled by Rev. Fr. Pascual D. Monsanto, Jr. being devoid of merit should be denied.
Atty. Cesar E. Lee filed a manifestation dated June 7, 2005, praying that an order be issued directing Lorenzo deGuzman,
Sheriff to make the necessary notice to all concern[ed] of the fact that the mortgagee has restructured his loan with the
mortgagor, and in effect, redeemed his obligation subject matter of this foreclosure proceeding.
Mr. De Guzman explained that even assuming that there was restructuring of the [mortgage] loan it is very clear that it
was done after the lapse of the one (1) year redemption period and also there was no notice given to the Office of the
Clerk of Court. Moreover,if there was actual payment the Office of the Clerk of Court was never x x x informed by Mr.
Monsanto. WHEREFORE, premises considered, this Court finds that the instant motion to lift writ of execution and notice
to vacate the [premises] is devoid of merit, hence denied; likewise the manifestation of Atty. Cesar Lee dated June 7, 2005
being devoid of merit is also denied. The motion for issuance of writ of possession filed by Leoncio Lim through counsel
Atty. Labid being meritorious is hereby ordered GRANTED, hence let a writ of possession be issued immediately in favor
of Mr. Leoncio Lim purchaser in good faith.
Let a copy of this order be furnished the Hon. Presbitero J. Velasco, Jr., Court Administrator for his information and
guidance.
SO ORDERED.21
Eduardo, Pascual,and Pag-IBIG filed motions for reconsideration; however, the same were denied by the trial court in its
August 30, 2005 Order.22
Ruling of the Court of Appeals
Petitioners thus filed a Petition for Certiorari23 with the CA, which was docketed as CA-G.R. CEB SP No. 01343. They
claimed that the RTC committed grave abuse of discretion indenying their Motion to Lift Writ of Execution and Notice to
Vacate and in granting Lims Ex ParteMotion for Issuance of Writ of Possession through its July 1, 2005 Order, arguing
that Lims motion was not made under oath; that there are third parties in possession of the subject property; that they
were not notified of the confirmation of the sale; that the mere filing of the Certificate of Sale withthe Register of Deeds
without presenting the owners duplicate copy is not tantamount to registration; that since the Certificate of Sale was not
registered, then the period to redeem did not begin to run; that De Guzmans March 7, 2005 Notice to Vacate was illegal,
since at the time, no writ of possession was yet issued; that De Guzmans actions in enforcing the writ of possession on
July 8 and 15, 2005 while their motion for reconsideration was pending is inhuman and violated their constitutional
rights; and that out of justice and equity, they should be allowed to redeem the property. Petitioners prayed for the reversal
of the RTCs July 1, 2005 and August 30, 2005 Orders and for the CA to restore the status quo ante.
On March 12, 2007, the CA issued the assailed Decision finding no grave abuse of discretion on the part of the RTC and
affirming its July 1, 2005 and August 30, 2005 Orders, viz:
ACCORDINGLY, in line with the foregoing disquisitions, the petition is hereby DENIED. The assailed Orders dated 1 July
2005 and 30 August 2005 are AFFIRMED IN TOTO.
SO ORDERED.24
Petitioners filed their Motion for Reconsideration, which the CA denied in its assailed July 6, 2007 Resolution.
Hence, the present Petition.
Issues
Petitioners raise the following grounds for the Petition:
1. THE HONORABLE COURT OF APPEALS 20TH DIVISION, CEBU CITY ERRED IN RULING THAT NO
GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE HONORABLE REGIONAL TRIAL COURT
BRANCH 27, EIGHTH JUDICIAL REGION, CATBALOGAN, SAMAR IN ITS ISSUANCE OF THE WRIT OF
POSSESSION AND ITS ISSUANCE DOES NOT NEED A MOTION FOR THE CONFIRMATION OF SALE
WHICH REQUIRES A HEARING;
2. THE HONORABLE COURT OF APPEALS 20TH DIVISION, CEBU CITY ERRED IN FINDING THAT THE
CERTIFICATE OF SALE WAS REGISTERED OR THAT THE MEREFILING WITH THE REGISTER OF DEEDS
OF THE SAME IS TANTAMOUNT TO ITS REGISTRATION, THUS THE REDEMPTION PERIOD HAD STARTED
TO RUN, ON THE COURTS CONJECTURE THAT P.D. 1529 IMPLIEDLY REPEALED ACT NO. 3135,
PARTICULARLY SECTION 6, THEREOF;
3. THE HONORABLE COURT OF APPEALS 20TH DIVISION, CEBU CITY ERRED IN AFFIRMING THE COURT
A QUOS FINDINGS THAT ALL THE PETITIONERS WERE DULY NOTIFIED BUT FAILED TO APPEAR DURING
THE HEARING ON THE MOTION FOR THE ISSUANCE OF THE WRIT OFPOSSESSION. IT ERRED IN
ALLUDING THAT IN THE COURSE OF THE PROCEEDINGS OF THIS INSTANT CASE, PETITIONERS WERE
NOT DENIED DUE PROCESS OF LAW; AND
4. THE HONORABLE COURT OF APPEALS 20TH DIVISION, CEBU CITY ERRED IN RULING THAT
PETITIONERS DECOROSO AND FR. PASCUAL, JR. DO NOT HOLDTHE FORECLOSED PROPERTY
ADVERSELY TO THAT OF THE PETITIONER-MORTGAGOR, FOR BEING MERE ASSIGNEES, THEYDERIVED
THEIR POSSESSORY RIGHTS FROM PETITIONER-MORTGAGOR.25
Petitioners Arguments
Praying that the assailed CA Decision and Resolution be set aside, petitioners reiterate intheir Petition and Reply 26the
points they raised in their CA Petition. Thus, they argue that the ex partemotion for the issuance of a writ of possession
should be under oath, and requires prior notice and hearing; that the mere filing of the sheriffs certificate of sale with the
Register of Deeds is not equivalent to registration as required in order for the one-year redemption period to commence;
that Presidential Decree No. 1529 did not repeal Act No. 3135; that the occupants of the subject property hold rights
adverse to the mortgagor Eduardo; and that the extrajudicial foreclosure proceedings was attended by numerous
irregularities.
Respondent Lims Arguments
On the other hand, Leoncio in his Comment27 insists in essence that the mere filing of the sheriffs Certificate of Sale with
the Samar Register of Deeds on March 5, 2004 was equivalent to the registration thereof; that the Samar Registrar of
Deeds assured him that merereceipt of the Certificate of Sale is tantamount to registration; that he relied upon this
representation and assurance in good faith; and that petitioners remedy is to file a separate case for recovery of
ownership and possession.
Our Ruling
The Petition is dismissed.
"Filing the appropriate initiatory pleading and the payment of the prescribed docket fees vest a trial court with jurisdiction
over the subject matter."28 Section 5, Rule 1 of the Rules of Court specifically providesthat "[a] civil action is commenced
by the filing of the original complaint in court." Moreover, "[e]very ordinary civil action must bebased on a cause of
action."29
No proper initiatory pleading was filed before the trial court.
In this case, records show that no formal complaint or petition was filed in court. The case was supposedly "commenced"
through a letter of Pag-IBIG asking the intervention of Executive Judge Monsanto on the alleged anomalous foreclosure
sale conducted by De Guzman. However, saidletter could not in any way be considered as a pleading. Section 1, Rule 6
of the Rules of Court defines pleadings as "written statements of the respective claims and defenses of the parties
submitted to the court for appropriate judgment." To stress, Pag-IBIGs letter could not be considered as a formal
complaint or petition. First, the parties to the case were not identified pursuant to Section 1, 30 Rule 3 and Section 1,31 Rule
7. Second, the so-called claim or cause of action was not properly mentioned or specified. Third, the letter miserably failed
to comply with the requirements of Rule 7, Rules of Court. The letter bore no caption; it was not even assigned a docket
number; the parties were not properly identified;the allegations were not properly set forth; no particular relief issought; in
fact, only the intervention of Executive Judge Monsanto is requested; it was notsigned by a counsel; and most of all, there
is no verification orcertification against forum-shopping.
We have also noted that in its July1, 2005 Order, Judge Usman of Branch 28 resolved the following incidents: (1) the
motion for issuance of writ of possession filed by Leoncio; and (2) the motion to lift writ of execution and notice to vacate.
However, the said Manifestation with Ex Parte Motion for Issuance of Writ of Possession was not even filed before
Branch28; in fact, it was submitted for consideration of Branch 27. Moreover, the Motion to Lift Writ of Execution and
Notice to Vacatewas filed by Pascual before the OCA; the RTC Branches 27 and 28 of Catbalogan, Samar, were only
furnished copies thereof.
In addition, it is quite unfortunate that Judge Usman proceeded to take cognizance of the case notwithstanding his prior
observation as stated in the May 3, 2004 Order that no formal petition or complaint was actually filed and which presents
a judicial issue.In fact, Judge Usman even opined that the acts complained of partake of administrative matter and thus
referred the same to the OCA for further action. The May 9, 2005 letter of OCA directing Judge Usman to take action on
the Motion to Lift Writ of Execution and Notice to Vacatecould not be interpreted as vesting Judge Usman with the
authority and jurisdiction to take cognizance of the matter. Nothing to that effect could be inferred from the tenor of the
May 9, 2005 letter ofOCA. Jurisdiction is vested by law. When OCA directed Judge Usman to take action on the Motion to
Lift Writ of Execution and Notice to Vacate, it did not deprive the latter ofhis discretion to dismiss the matter/case for lack
of jurisdiction, if the matter/case so warrants.
In fine, there being no proper initiatory pleading filed, then the RTC Branch 28 did not acquire jurisdiction over the
matter/case.
No payment of docket fees.
We have also noted that no docket feeswere paid before the trial court. Section 1, Rule 141 of the Rules of Court
mandates that "[u]pon the filing of the pleading or other application which initiates an action or proceeding, the fees
prescribed therefor shall be paid in full." "It is hornbook law that courts acquire jurisdiction over a case only upon payment
of the prescribed docket fee."32
In Far East Bank and Trust Company v. Shemberg Marketing Corporation, 33 we ruled thus: A court acquires jurisdiction
over a case only upon the payment of the prescribed fees. The importance of filing fees cannot be gainsaid for these are
intended to take care of court expenses inthe handling of cases in terms of costs of supplies, use of equipment, salaries
and fringe benefits of personnel, and others, computed as to man-hours used in the handling of each case. Hence, the
non-payment or insufficient payment of docket fees can entail tremendous losses to government in general and to the
judiciary in particular.
In fine, since no docket or filing feeswere paid, then the RTC Branch 28 did not acquire jurisdiction over the
matter/case.1wphi1 It therefore erred in taking cognizance of the same. Consequently, all the proceedings undertaken by
the trial court are null and void,and without force and effect. In, particular, the July 1, 2005 and August 30, 2005 Orders of
the RTC are null and void.
It is settled jurisprudence that "[a]ny decision rendered without jurisdiction is a total nullity and may be struck down at any
time, even on appeal before this Court."34 Prescinding from the foregoing, we hold that the RTC-Branch 28 did not acquire
jurisdiction over the instant matter/case there being no formal initiatory pleading filed as well asnon-payment of docket
fees. Consequently, all proceedings had before the RTC Branch 28 were null and void for lack of jurisdiction.
WHEREFORE, the Petition is DENIED. The assailedMarch 12, 2007 Decision and July 6, 2007 Resolution of the Court of
Appeals in CA-G.R. CEBSP No. 01343 are ANNULLED and SET ASIDE. The July 1, 2005 and August 30, 2005 Orders of
the Regional Trial Court of Catbalogan, Samar, Branch 28 are DECLARED NULL and VOID. All proceedings, processes
and writs emanating therefrom are likewise NULLIFIED and VOIDEDfor lack of jurisdiction.
SO ORDERED.

Supreme Court
Manila
SECOND DIVISION
PAGLAUM MANAGEMENT & G.R. No. 179018
DEVELOPMENT CORP. and HEALTH
MARKETING TECHNOLOGIES, INC., Present:
Petitioners,
CARPIO, J., Chairperson,
BRION,
PEREZ,
- versus - SERENO, and
REYES, JJ.
UNION BANK OF THE PHILIPPINES,

NOTARY PUBLIC JOHN DOE, and
REGISTER OF DEEDS of Cebu City and
Cebu Province
Respondents.
J. KING & SONS CO., INC.

Intervenor. Promulgated:
June 18, 2012
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
SERENO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision
dated 31 May 2007[1] and Resolution dated 24 July 2007[2]issued by the Court of Appeals (CA).
Petitioner Paglaum Management and Development Corporation (PAGLAUM) is the registered owner of three
parcels of land located in the Province of Cebu [3] and covered by Transfer Certificate of Title (TCT) Nos. 112488, [4] 112489,
[5]
and T-68516.[6] These lots are co-owned by Benjamin B. Dy, the president of petitioner Health Marketing Technologies,
Inc. (HealthTech), and his mother and siblings.[7]
On 3 February 1994, respondent Union Bank of the Philippines (Union Bank) extended HealthTech a credit line in
the amount of 10,000,000.[8] To secure this obligation, PAGLAUM executed three Real Estate Mortgages on behalf of
HealthTech and in favor of Union Bank.[9] It must be noted that the Real Estate Mortgage, on the provision regarding the
venue of all suits and actions arising out of or in connection therewith, originally stipulates:
Section 9. Venue. The venue of all suits and actions arising out of or in connection with this
Mortgage shall be in Makati, Metro Manila or in the place where any of the Mortgaged Properties is
located, at the absolute option of the Mortgagee, the parties hereto waiving any other venue.
[10]
(Emphasis supplied.)
However, under the two Real Estate Mortgages dated 11 February 1994, the following version appears:
Mortgage shall be in Cebu City Metro Manila or in the place where any of the Mortgaged Properties is
located, at the absolute option of the Mortgagee, the xxxxxxxxxxxxx any other venue.[11] (Emphasis
supplied.)
Meanwhile, the same provision in the Real Estate Mortgage dated 22 April 1998 contains the following:
Mortgage shall be in _________ or in the place where any of the Mortgaged Properties is located, at the
absolute option of the Mortgagee, the parties hereto waiving any other venue. [12]
HealthTech and Union Bank agreed to subsequent renewals and increases in the credit line, [13] with the total
amount of debt reaching 36,500,000. [14] Unfortunately, according to HealthTech, the 1997 Asian financial crisis adversely
affected its business and caused it difficulty in meeting its obligations with Union Bank. [15] Thus, on 11 December 1998,
both parties entered into a Restructuring Agreement, [16] which states that any action or proceeding arising out of or in
connection therewith shall be commenced in Makati City, with both partieswaiving any other venue.[17]
Despite the Restructuring Agreement, HealthTech failed to pay its obligation, prompting Union Bank to send a
demand letter dated 9 October 2000, stating that the latter would be constrained to institute foreclosure proceedings,
unless HealthTech settled its account in full.[18]
Since HealthTech defaulted on its payment, Union Bank extra-judicially foreclosed the mortgaged properties.
[19]
The bank, as the sole bidder in the auction sale, was then issued a Certificate of Sale dated 24 May 2001.
[20]
Thereafter, it filed a Petition for Consolidation of Title. [21]
Consequently, HealthTech filed a Complaint for Annulment of Sale and Titles with Damages and Application for
Temporary Restraining Order and Writ of Injunction dated 23 October 2001, praying for: (a) the issuance of a temporary
restraining order, and later a writ of preliminary injunction, directing Union Bank to refrain from exercising acts of
ownership over the foreclosed properties; (b) the annulment of the extra-judicial foreclosure of real properties; (c) the
cancellation of the registration of the Certificates of Sale and the resulting titles issued; (d) the reinstatement of
PAGLAUMs ownership over the subject properties; and (e) the payment of damages. [22] The case was docketed as Civil
Case No. 01-1567 and raffled to the Regional Trial Court, National Capital Judicial Region, Makati City, Branch 134 (RTC
Br. 134), which issued in favor of PAGLAUM and HealthTech a Writ of Preliminary Injunction restraining Union Bank from
proceeding with the auction sale of the three mortgaged properties. [23]
On 23 November 2001, Union Bank filed a Motion to Dismiss on the following grounds: (a) lack of jurisdiction over
the issuance of the injunctive relief; (b) improper venue; and (c) lack of authority of the person who signed the Complaint.
[24]
RTC Br. 134 granted this Motion in its Order dated 11 March 2003, resulting in the dismissal of the case, as well as the
dissolution of the Writ of Preliminary Injunction.[25] It likewise denied the subsequent Motion for Reconsideration filed by
PAGLAUM and HealthTech.[26]
PAGLAUM and HealthTech elevated the case to the CA, which affirmed the Order dated 11 March 2003 [27] and
denied the Motion for Reconsideration.[28]
In the instant Petition, PAGLAUM and HealthTech argue that: (a) the Restructuring Agreement governs the choice
of venue between the parties, and (b) the agreement on the choice of venue must be interpreted with the convenience of
the parties in mind and the view that any obscurity therein was caused by Union Bank. [29]
On the other hand, Union Bank contends that: (a) the Restructuring Agreement is applicable only to the contract of
loan, and not to the Real Estate Mortgage, and (b) the mortgage contracts explicitly state that the choice of venue
exclusively belongs to it.[30]
Meanwhile, intervenor J. King & Sons Company, Inc. adopts the position of Union Bank and reiterates the position
that Cebu City is the proper venue.[31]
The sole issue to be resolved is whether Makati City is the proper venue to assail the foreclosure of the subject
real estate mortgage. This Court rules in the affirmative.
Civil Case No. 01-1567, being an action for Annulment of Sale and Titles resulting from the extrajudicial
foreclosure by Union Bank of the mortgaged real properties, is classified as a real action. In Fortune Motors v. Court of
Appeals,[32] this Court held that a case seeking to annul a foreclosure of a real estate mortgage is a real action, viz:
An action to annul a real estate mortgage foreclosure sale is no different from an action to annul a
private sale of real property. (Muoz v. Llamas, 87 Phil. 737, 1950).
While it is true that petitioner does not directly seek the recovery of title or possession of the
property in question, his action for annulment of sale and his claim for damages are closely intertwined
with the issue of ownership of the building which, under the law, is considered immovable property, the
recovery of which is petitioners primary objective. The prevalent doctrine is that an action for the
annulment or rescission of a sale of real property does not operate to efface the fundamental and prime
objective and nature of the case, which is to recover said real property. It is a real action. [33]
Being a real action, the filing and trial of the Civil Case No. 01-1567 should be governed by the following relevant
provisions of the Rules of Court (the Rules):
Rule 4
VENUE OF ACTIONS
Section 1. Venue of real actions. Actions affecting title to or possession of real property, or interest
therein, shall be commenced and tried in the proper court which has jurisdiction over the area
wherein the real property involved, or a portion thereof, is situated.
Forcible entry and detainer actions shall be commenced and tried in the municipal trial court of
the municipality or city wherein the real property involved, or a portion thereof, is situated.
Sec. 3. When Rule not applicable. This Rule shall not apply
(a) In those cases where a specific rule or law provides otherwise; or
(b) Where the parties have validly agreed in writing before the filing of the action
on the exclusive venue thereof. (Emphasis supplied.)
In Sps. Lantin v. Lantion,[34] this Court explained that a venue stipulation must contain words that show exclusivity
or restrictiveness, as follows:
At the outset, we must make clear that under Section 4 (b) of Rule 4 of the 1997 Rules of Civil
Procedure, the general rules on venue of actions shall not apply where the parties, before the filing of the
action, have validly agreed in writing on an exclusive venue. The mere stipulation on the venue of an
action, however, is not enough to preclude parties from bringing a case in other venues. The parties
must be able to show that such stipulation is exclusive. In the absence of qualifying or restrictive
words, the stipulation should be deemed as merely an agreement on an additional forum, not as
limiting venue to the specified place.
xxxxxxxxx
Clearly, the words exclusively and waiving for this purpose any other venue are restrictive
and used advisedly to meet the requirements.[35] (Emphasis supplied.)
According to the Rules, real actions shall be commenced and tried in the court that has jurisdiction over the area
where the property is situated. In this case, all the mortgaged properties are located in the Province of Cebu. Thus,
following the general rule, PAGLAUM and HealthTech should have filed their case in Cebu, and not in Makati.
However, the Rules provide an exception, in that real actions can be commenced and tried in a court other than
where the property is situated in instances where the parties have previously and validly agreed in writing on the
exclusive venue thereof. In the case at bar, the parties claim that such an agreement exists. The only dispute is whether
the venue that should be followed is that contained in the Real Estate Mortgages, as contended by Union Bank, or that in
the Restructuring Agreement, as posited by PAGLAUM and HealthTech. This Court rules that the venue stipulation in
the Restructuring Agreement should be controlling.
The Real Estate Mortgages were executed by PAGLAUM in favor of Union Bank to secure the credit line
extended by the latter to HealthTech. All three mortgage contracts contain a dragnet clause, which secures succeeding
obligations, including renewals, extensions, amendments or novations thereof, incurred by HealthTech from Union Bank,
to wit:
Section 1. Secured Obligations. The obligations secured by this Mortgage (the Secured
Obligations) are the following:
a) All the obligations of the Borrower and/or the Mortgagor under: (i) the Notes, the
Agreement, and this Mortgage; (ii) any and all instruments or documents issued upon the renewal,
extension, amendment or novation of the Notes, the Agreement and this Mortgage, irrespective of
whether such obligations as renewed, extended, amended or novated are in the nature of new, separate
or additional obligations; and (iii) any and all instruments or documents issued pursuant to the Notes, the
Agreement and this Mortgage;
b) All other obligations of the Borrower and/or the Mortgagor in favor of the Mortgagee,
whether presently owing or hereinafter incurred and whether or not arising from or connected with the
Agreement, the Notes and/or this Mortgage; and
c) Any and all expenses which may be incurred in collecting any and all of the above
and in enforcing any and all rights, powers and remedies of the Mortgagee under this Mortgage. [36]
On the other hand, the Restructuring Agreement was entered into by HealthTech and Union Bank to modify the
entire loan obligation. Section 7 thereof provides:
Security. The principal, interests, penalties and other charges for which the BORROWER may be
bound to the BANK under the terms of this Restructuring Agreement, including the renewal, extension,
amendment or novation of this Restructuring Agreement, irrespective of whether the obligations arising
out of or in connection with this Restructuring Agreement, as renewed, extended, amended or novated,
are in the nature of new, separate or additional obligations, and all other instruments or documents
covering the Indebtedness or otherwise made pursuant to this Restructuring Agreement (the Secured
Obligations), shall continue to be secured by the following security arrangements (the Collaterals):
a. Real Estate Mortgage dated February 11, 1994 executed by Paglaum

Management and Development Corporation over a 474 square meter property covered by TCT No.
112489;
b. Real Estate Mortgage dated February 11, 1994 executed by Paglaum

Management and Development Corporation over a 2,796 square meter property covered by TCT No. T-
68516;
c. Real Estate Mortgage dated April 22, 1998 executed by Paglaum Management
and Development Corporation over a 3,711 square meter property covered by TCT No. 112488;
d. Continuing Surety Agreement of Benjamin B. Dy;
Without need of any further act and deed, the existing Collaterals, shall remain in full force and
effect and continue to secure the payment and performance of the obligations of the BORROWER arising
from the Notes and this Restructuring Agreement.[37] (Emphasis supplied.)
Meanwhile, Section 20 of the Restructuring Agreement as regards the venue of actions state:
20. Venue Venue of any action or proceeding arising out of or connected with this Restructuring
Agreement, the Note, the Collateral and any and all related documents shall be in Makati City,
[HealthTech] and [Union Bank] hereby waiving any other venue.[38] (Emphasis supplied.)
These quoted provisions of the Real Estate Mortgages and the later Restructuring Agreement clearly reveal the
intention of the parties to implement a restrictive venue stipulation, which applies not only to the principal obligation, but
also to the mortgages. The phrase waiving any other venue plainly shows that the choice of Makati City as the venue for
actions arising out of or in connection with the Restructuring Agreement and the Collateral, with the Real Estate
Mortgages being explicitly defined as such, is exclusive.
Even if this Court were to consider the venue stipulations under the Real Estate Mortgages, it must be
underscored that those provisions did not contain words showing exclusivity or restrictiveness. In fact, in the Real Estate
Mortgages dated 11 February 1994, the phrase parties hereto waiving from the entire phrase the parties hereto waiving
any other venue was stricken from the final executed contract. Following the ruling in Sps. Lantin as earlier quoted, in the
absence of qualifying or restrictive words, the venue stipulation should only be deemed as an agreement on an additional
forum, and not as a restriction on a specified place.
Considering that Makati City was agreed upon by the parties to be the venue for all actions arising out of or in
connection with the loan obligation incurred by HealthTech, as well as the Real Estate Mortgages executed by PAGLAUM,
the CA committed reversible error in affirming the dismissal of Civil Case No. 01-1567 by RTC Br. 134 on the ground of
improper venue.
WHEREFORE, the Petition for Review is GRANTED. The Decision dated 31 May 2007 and Resolution dated 24
July 2007 in CA-G.R. CV No. 82053 of the Court of Appeals, as well as the Orders dated 11 March 2003 and 19
September 2003 issued by the Regional Trial Court, Makati City, Branch 134, are REVERSED and SET ASIDE. The
Complaint in Civil Case No. 01-1567 is hereby REINSTATED.
SO ORDERED.
THIRD DIVISION
G.R. No. 155701, March 11, 2015
LIM TECK CHUAN, Petitioner, v. SERAFIN UY AND LEOPOLDA CECILIO, LIM SING CHAN @ HENRY
LIM, Respondents.
DECISION
REYES, J.:
Before this Court is a petition for review on certiorari1 under Rule 45 filed by Lim Teck Chuan (petitioner) assailing the
Orders dated April 25, 20022 and October 21, 20023 of the Regional Trial Court (RTC) of Lapu-lapu City, Branch 27,
in Civil Case No. 4786-L, which dismissed the case upon a joint motion of respondents Serafin Uy (Serafin) and Leopolda
Cecilio (Leopolda) despite an opposition and manifestation of the petitioner to have his counterclaim prosecuted in the
same action, and denied the petitioners motion for reconsideration for being barren of merit, respectively.
The antecedent facts are as follows:
The subject matter of the present controversy is a piece of land known as Lot 5357 with an area of 33,610 square meters,
covered by Transfer Certificate of Title (TCT) No. T-0500, situated in BarrioAgus, Lapu-lapu City, Cebu, owned and
registered under the name of Antonio Lim Tanhu (Antonio), married to Dy Ochay.
Lot 5357 was sold by Antonio to the spouses Francisco Cabansag (Francisco) and Estrella Cabansag (Spouses
Cabansag) as evidenced by a Deed of Sale executed on January 8, 1966. Apparently, Francisco failed to transfer the title
of the property to their names because of his work and frequent travels abroad. 4cralawred
In 1988, Spouses Cabansag sold the lot to Serafin, as evidenced by a Deed of Sale dated April 8, 1988. To pave the way
for the transfer of title to Serafins name, Spouses Cabansag attempted to have the same transferred under their names
first. However, Francisco failed to do so as he lost the owners copy of TCT No. T-0500 together with other documents
pertaining to the sale of the subject lot. This prompted Serafin to exert efforts to secure copies of the lost documents
himself. On May 15, 1996, Serafin filed a petition before the RTC, docketed as Cadastral Case No. 21 praying for the
issuance of a new owners duplicate TCT in his name, thereby cancelling TCT No. T-0500 in the name of
Antonio.5cralawred
Serafins petition for the issuance of a new owners copy of TCT No. T-0500 was raffled to the RTC of Lapu-lapu City,
Branch 27, then sitting as a cadastral court (Cadastral Court). After due notice and hearing, the Cadastral Court issued
an Order6 on June 14, 1996 directing the Register of Deeds of Lapu-lapu City to issue a new owners duplicate copy of
TCT No. T-0500.
However, the aforesaid order was recalled and nullified on September 3, 19967 on the ground that the petitioner filed
an Opposition and/or Motion for Reconsideration with Manifestation for Special Appearance 8 dated August 22, 1996
alleging that he is one of the six legitimate descendants of Antonio; and that the original owners copy of TCT No. T-0500
was not lost and has always been in his custody. The court further directed the petitioner to deposit the said owners copy
of TCT No. T-0500 with said court.
In the meantime, on August 2, 1996, Lim Sing Chan alias Henry Lim (Henry) executed an Affidavit of Sole
Adjudication/Settlement of the Estate of Antonio Lim Tanhu with Deed of Sale 9 (Affidavit of Self-Adjudication) claiming that
he is the only surviving heir of Antonio. In the same document, Henry sold Lot 5357 to Leopolda in the amount of
P500,000.00.
With this turn of events, Serafin filed on July 25, 1997 a Complaint 10 for quieting of title, surrender of owners copy of
certificate of title, declaration of nullity of affidavit of adjudication and sale, annulment of tax declaration, and
other reliefs with a prayer for preliminary injunctionbefore the RTC, docketed as Civil Case No. 4786-L. Impleaded
as defendants were Leopolda, Henry, and the herein petitioner.
Leopolda filed her Answer11 (with counterclaim, and cross-claim against Henry), asserting that she was the buyer in good
faith and for value of Lot 5357. She alleged that the said property was never encumbered to any person during the
lifetime of Antonio; that the deed of sale in favor of Spouses Cabansag was simulated and spurious; and that the said
document was never registered with the proper government agency, nor was it ever annotated on the certificate of title
covering the said property. She claimed that the lot in question was sold to her as evidenced by the Affidavit of
Self-Adjudication executed by Henry; that she caused the issuance of a new tax declaration over the said property in her
name; that since then, she has been in open, actual and material possession of the subject lot in the concept of an owner.
For his part, the petitioner averred in his Answer12 (with counterclaim, and cross-claims against Leopolda and Henry), that
Lot 5357 was never transferred nor encumbered to any person during Antonios lifetime. The deed of sale in favor of
Spouses Cabansag was simulated and spurious, and was intended to defraud the estate of Antonio. Furthermore, the
petitioner questioned Henrys claim that he was an heir of Antonio, much less the only surviving heir of the latter.
Corollarily, the petitioner questioned the validity of Henrys Affidavit of Self-Adjudication and Leopoldas claim of title to the
subject property.
On November 11, 1997, Leopolda filed her Answer 13 to the petitioners cross-claim. She basically reiterated her
allegations raised in her Answer to Serafins complaint.
Henry did not file an answer to any of the claims against him.
On December 22, 1998, the pre-trial conference14 was conducted where the parties agreed to the following stipulation of
facts:chanRoblesvirtualLawlibrary
[T]hat Antonio Lim Tanhu was the registered owner of Lot 5357 of the Cadastral Survey of Opon located in Lapu-lapu
City[;] that Antonio Lim Tanhu died on April 13, 1991[;] that Antonio Lim Tanhu was succeeded upon his death by his six
children, namely, the defendant Lim Teck Chuan, Lim Sing Tai, Helen Lim, Lenesita Lim, Warlito Lim and Michael Lim Tan
Ho[;] that the defendant Lim Sing Chan is actually a fictitious person[;] that there exists an ancient document denominated
as Deed of Absolute Sale of Lot 5357 executed on January 8, 1966 by Antonio Lim Tanhu in favor of the spouses
Francisco Cabansag and Estrella M. Cabansag (Exhibit A)[;] that there also exists a document denominated as Deed of
Absolute Sale (Exhibit B) of Lot 5357 executed on April 8, 1988 by the spouses Francisco Cabansag and Estrella M.
Cabansag in favor of the plaintiff[;] and that there exists, too, a document denominated as Affidavit of [Sale]
Adjudication/Settlement of Estate of Antonio Lim Tanhu with Deed of Sale executed on May 2, 1996 by a certain Lim Sing
Chan (Exhibit 1-Cecilio). x x x.15cralawlawlibrary
The parties also agreed to the following issues:chanRoblesvirtualLawlibrary
1. Whether or not the plaintiff has valid causes of action for quieting of title, declaration of nullity of documents of
sale and tax declarations, reconveyance of title and damages against the defendants[;]
2. Whether or not the defendants Leopolda Cecilio and Lim Teck Chuan have valid counterclaims against the
plaintiff; and
3. Whether or not the defendant Lim Teck Chuan has a valid cross-claim against the defendant Leopolda Cecilio. 16
cralawlawlibrary
Thereafter, the pre-trial order was amended such that it should not be considered as established and stipulated facts that
Henry is a fictitious person and that the Deed of Sale of Lot 5357 purportedly executed by Antonio on January 8, 1966 is
genuine and authentic since there were actually no admissions made on these circumstances. 17cralawred
In the same Order18 dated July 17, 1999, the RTC denied Serafins motion for summary judgment19because under the
circumstances, there were actually genuine issues of fact to be resolved and passed upon by the court.
Eventually, the RTC set the initial trial of the case on March 28, 2001. 20 However, it was postponed upon motion of
Leopoldas counsel and upon the manifestation of Serafins counsel that there was an on-going negotiation for an
amicable settlement. For his part, the petitioners counsel manifested that the petitioner was not involved in any
negotiation for amicable settlement. The scheduled hearing was reset to July 11, 2001 21 and later to November 12,
2001.22cralawred
On September 20, 2001, Serafin and Leopolda submitted a Joint Motion to Dismiss.23 They averred
that:chanRoblesvirtualLawlibrary
1. That the case at [bench] is filed by the Plaintiff Serafin Uy against the defendants for quieting of title, surrender of
owner of certificate of title, declaration of nullity of affidavit of adjudication and sale annulment of tax declaration,
and other reliefs consistent with law, justice and equity[?];ChanRoblesVirtualawlibrary
2. That in the case at bench, Plaintiff Serafin Uy seeks the quieting of title on his right over Lot 5357 of the Cadastral
Survey of Opon situated at Barangay Agus, Lapu-lapu City, in view of the affidavit of adjudication and Sale dated
August 2, 1996 (Annex F) of the Complaint, and Tax Decl. No. 01532 issued in the name of Leopolda Cecilio
both of which documents affected Lot 5357 (Annex G to the Complaint);ChanRoblesVirtualawlibrary
3. That Plaintiff Serafin Uy and Defendant Leopolda Cecilio have amicably settled their differences in the case at
bench and Def. Leopolda Cecilio has agreed to waive her counterclaim for damages in the instant
case;ChanRoblesVirtualawlibrary
4. That Plaintiff Serafin Uy has already secured a certificate of title to Lot No. 5357 in his name dated July 26, 2001,
and has also agreed for the cancellation of the same, and for issuance of a new one, over said Lot 5357, in their
common names;ChanRoblesVirtualawlibrary
5. That whatever claim defendant Lim Teck Chuan may have on said Lot No. 5357, the same may be ventilated by
said defendant in an appropriate independent action that he may initiate and file[.]
PRAYER
WHEREFORE, this Honorable Court is most respectfully prayed and humbly implored to dismiss the Complaint and the
respective counterclaims of the defendants in the case at bench. 24cralawlawlibrary
On October 4, 2001, the petitioner filed his Opposition/Comment25 praying for the denial of the Joint Motion to Dismiss on
the ground of bad faith, and to prohibit Serafin and Leopolda from undertaking any further transaction involving the subject
lot. The pertinent portion of his opposition reads as follows:chanRoblesvirtualLawlibrary
1. That the [petitioner] opposes the Joint Motion to Dismiss filed by [Serafin] and [Leopolda] on the grounds:
1.1 that there [is] BAD FAITH on the part of [Serafin] and [Leopolda];
1.2. That the [petitioner] was not involved in any amicable settlements between [Serafin] and [Leopolda] because
both [Serafin] and [Leopolda] connived to MISLEAD this Honorable Court and to DEFRAUD the estate of
[Antonio];
1.3. That the [petitioner] has valid counterclaims against [Serafin] for moral damages of P 5,000,000[.00];
exemplary damages of P 1,200,000[.00]; and Attorneys fees of P 50,000[.00]; on the ground that [Serafin]
maliciously and deliberately presented to this Honorable Court the FALSIFIED AND FICTITIOUS deed of
sale PURPORTEDLY executed by [Antonio] in favor of [Francisco];
1.4. That the [petitioner] has valid cross[-]claims against Cross-defendants Lim Sing Chan alias Henry Lim whose
real name is Henry Lim Ormoc, and [Leopolda] for moral damages of P 5,000,000[.00] each, attorneys fees
of P 50,000[.00] each, and exemplary damages of P 1,000,000[.00] for [Henry] and P 1,600,000[.00] for
[Leopolda] because [Henry] and [Leopolda] connived with each other to defraud the estate of [Antonio] on the
ground that [Henry] MISREPRESENTED himself as an heir of [Antonio] while [Leopolda] has KNOWLEDGE
of such MISREPRESENTATION;
1.5. That the [petitioner] manifest[s] to this Honorable Court of his preference that the above-counterclaims and
cross-claims be resolved in the present case[.]26
cralawlawlibrary
The petitioner further averred that the transfer of Antonios title under TCT No. T-0500 in the name of Serafin is irregular
and illegal since the true owners copy of TCT No. T-0500 remained in his possession.
Henry continued to remain silent.
On October 10, 2001, Serafin filed his Reply27 to the comment/opposition of the petitioner. He substantially averred that:
1. With the end in view of registering Lot 5357 in his name, he instituted the instant case due to the existence of
certain documents affecting his title thereto, namely: Henrys Affidavit of Self-Adjudication with Deed of
Sale dated August 2, 1996 naming Leopolda as the buyer, and Tax Declaration No. 01532 issued in the name of
the latter;ChanRoblesVirtualawlibrary
2. Under his Affidavit of Self-Adjudication, Henry already transferred whatever right and interest he had on the
subject lot to Leopolda. On the other hand, by reason of the amicable settlement between him (Serafin) and
Leopolda, the latter waived and abandoned all her rights to Lot 5357. Ergo, as far as Leopolda is concerned, her
waiver negated all the legal consequences of Tax Declaration No. 01532 and Henrys Affidavit of Self-
Adjudication. Since the same were the very documents that cast clouds on his (Serafin) title over Lot 5357, his
main causes of action in the case at bench had become moot and academic as his title to the said lot had been
quieted;ChanRoblesVirtualawlibrary
3. The petitioner was impleaded because of the following points: a) he alleged that he is one of the heirs of the late
Antonio; b) he contested the claim of Henry that the latter is the only surviving heir of said decedent, and prayed
upon the court to declare Henry as an impostor; and c) he challenged the genuineness and due execution of the
deed of absolute sale between Antonio and Spouses Cabansag;ChanRoblesVirtualawlibrary
4. Aside from his claim for damages, the petitioners counterclaim sought the nullification of the Deed of Absolute
Sale dated January 8, 1966 between Antonio and Spouses Cabansag which required the impleading of persons
who were not parties in the case. These persons included Spouses Cabansag who was indispensable party to
any action for the annulment of the deed which was executed in their favor. However, to implead the said persons,
there was a need to summon them so that the court can acquire jurisdiction over them - and in order that they can
be summoned, there was a need for the petitioner to file a formal complaint against
them;ChanRoblesVirtualawlibrary
5. Moreover, the cross-claim of the petitioner against Henry can also be resolved in a separate action for the
declaration of the true heirs of Antonio wherein all the heirs of the latter will be impleaded, and where the
petitioner can prove that he was indeed one of the heirs of said decedent especially so that there is yet no
judicial or extra-judicial declaration as to who were Antonios heirs;ChanRoblesVirtualawlibrary
6. The dismissal of the case will not affect the rights of the petitioner because whatever claim he had on the subject
lot and against any party may be ventilated in an appropriate and separate action.
On November 6, 2001, the petitioner, through counsel, filed his Motion to Implead Indispensable Parties and
Supplemental Opposition to Joint Motion to Dismiss.28 Invoking Section 1129 of Rule 3 of the Rules of Court, the petitioner
averred that there is a need to implead Spouses Cabansag in order that a final determination of all the issues could be
had in the case.
Acting on the Joint Motion to Dismiss, the RTC issued the assailed Order 30 dated April 25, 2002 granting the same and
denying the petitioners motion to implead Spouses Cabansag. The order is quoted as
follows:chanRoblesvirtualLawlibrary
Going over the arguments of the parties, the Court finds the arguments of the movants as tenable. For what is the use of
so continuously litigating this case when [Serafin] admits and confirms that the principal reliefs he prayed for have already
been met or satisfied as his title to the property in question has already been quieted with him having already secured a
certificate of title to Lot No. 5357 in his name dated July 26, 2001, and has also agreed for the cancellation of the same,
and for the issuance of a new one, over said Lot 5357, in their common names. In fact, even without said reliefs having
been met or satisfied, nobody, not even the courts of justice, can compel a party-litigant in a civil action like [Serafin] to so
continuously litigate his case if he does not want to anymore.
Finding therefore, the subject motion to dismiss to be proper and in order, this case is ordered dismissed so with the
respective counterclaims of the defendants. Considering however, that [the petitioner] is not a party and even opposed
the subject motion to dismiss, the dismissal of his counterclaims and cross-claim is without prejudice to give him his day in
court. And with this pronouncement of dismissal, the motion to implead indispensable parties of [the petitioner] becomes
moot and academic and therefore is denied.31cralawlawlibrary
On May 30, 2002, the petitioner filed a Motion for Reconsideration 32 which was denied in the Order33dated October 21,
2002.
Aggrieved, the petitioner went up to this Court via a petition for review on certiorari under Rule 45 raising the lone
assignment of error that:chanRoblesvirtualLawlibrary
THE LOWER COURT ERRED IN DISMISSING CIVIL CASE 4786-L UPON A JOINT MOTION TO DISMISS FILED BY
THE RESPONDENTS WHO ARE PLAINTIFF AND ONE OF THE DEFENDANTS, RESPECTIVELY, IN THE
AFOREMENTIONED CASE DESPITE THE OPPOSITION BY HEREIN PETITIONER AND THE MANIFESTATION OF
THE LATTER OF HIS PREFERENCE MADE WITHIN FIFTEEN (15) DAYS FROM THE JOINT MOTION TO DISMISS,
TO HAVE HIS COUNTERCLAIM, AS WELL AS HIS CROSS-CLAIM, PROSECUTED IN THE SAME ACTION, IN
ACCORDANCE WITH SECTION 2, RULE 17 OF THE 1997 RULES OF CIVIL PROCEDURE. 34cralawlawlibrary
The petitioner faults the RTC for dismissing the case in its entirety in spite of his counterclaim and cross-claim. He
asserts that within 15 days from notice of the filing of the joint motion to dismiss, he filed his opposition thereto and
expressed his preference to have his counterclaim and cross-claim be resolved in the same action. Therefore, pursuant
to the provisions of Section 2, Rule 17 of the Rules of Court, his timely expression of such preference should be enough
for the trial court not to dismiss the case in its entirety, and to limit its action to the dismissal of the complaint.
Preliminarily, the respondents question the petitioners recourse to this Court in filing the instant petition alleging that no
appeal may be taken from an order of the RTC dismissing an action without prejudice. 35 Nonetheless, the Rules of Court
do not prohibit any of the parties from filing a Rule 45 petition with this Court in case only questions of law are raised or
involved.36 In Bukidnon Doctors Hospital, Inc. v. Metropolitan Bank & Trust Co.,37 the Court explained
Section 2(c), Rule 41 of the Rules of Court categorically provides that in all cases where only questions of law are raised,
the appeal from a decision or order of the Regional Trial Court shall be to the Supreme Court by petition for review
on certiorari in accordance with Rule 45. Section 2(c) of Rule 41 of the Rules of Court reads:
SEC. 2. Modes of appeal.
(a) Ordinary appeal. The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of
its original jurisdiction shall be taken by filing a notice of appeal with the court which rendered the judgment or final order
appealed from and serving a copy thereof upon the adverse party. No record on appeal shall be required except in
special proceedings and other cases of multiple or separate appeals where the law or these Rules so require. In such
cases, the record on appeal shall be filed and served in like manner.
(b) Petition for review. The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of
its appellate jurisdiction shall be by petition for review in accordance with Rule 42.
(c) Appeal by certiorari. In all cases where only questions of law are raised or involved, the appeal shall be to the
Supreme Court by petition for review on certiorari in accordance with Rule 45.cralawlawlibrary
Section 1 of Rule 45 provides:

SECTION 1. Filing of petition with Supreme Court. A party desiring to appeal by certiorari from a judgment or final order
or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by
law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of
law which must be distinctly set forth.
A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a
certain set of facts; or when the issue does not call for an examination of the probative value of the evidence presented,
the truth or falsehood of facts being admitted. A question of fact exists when the doubt or difference arises as to the truth
or falsehood of facts or when the query invites calibration of the whole evidence considering mainly the credibility of the
witnesses, the existence and relevancy of specific surrounding circumstances, as well as their relation to each other and
to the whole, and the probability of the situation. 38 (Citation omitted)cralawlawlibrary
Considering that the issue in the instant case is clearly one of law as it calls for the correct application of the Rules of
Court, the petitioners direct resort to this Court is proper.
The Court now looks into the propriety of the order of the RTC in dismissing the case. Needless to state, the Court is
again confronted with the issue of whether the dismissal of the complaint, specifically upon motion of the plaintiff under
Section 2 of Rule 17 of the Rules of Court also calls for the dismissal of the defendants counterclaim, as in the case at
bar.
Rule 17 of the Rules of Civil Procedure provides the following:chanRoblesvirtualLawlibrary
SECTION 1. Dismissal upon notice by plaintiff. A complaint may be dismissed by the plaintiff by filing a notice of
dismissal at any time before service of the answer or of a motion for summary judgment. Upon such notice being filed, the
court shall issue an order confirming the dismissal. Unless otherwise stated in the notice, the dismissal is without
prejudice, except that a notice operates as an adjudication upon the merits when filed by a plaintiff who has once
dismissed in a competent court an action based on or including the same claim.
SECTION 2. Dismissal upon motion of plaintiff. Except as provided in the preceding section, a complaint shall not be
dismissed at the plaintiffs instance save upon approval of the court and upon such terms and conditions as the court
deems proper. If a counterclaim has been pleaded by a defendant prior to the service upon him of the plaintiffs motion for
dismissal, the dismissal shall be limited to the complaint. The dismissal shall be without prejudice to the right of the
defendant to prosecute his counterclaim in a separate action unless within fifteen (15) days from notice of the motion he
manifests his preference to have his counterclaim resolved in the same action. Unless otherwise specified in the order, a
dismissal under this paragraph shall be without prejudice. A class suit shall not be dismissed or compromised without the
approval of the court.
SECTION 3. Dismissal due to fault of plaintiff. If, for no justifiable cause, the plaintiff fails to appear on the date of the
presentation of his evidence in chief on the complaint, or to prosecute his action for an unreasonable length of time, or to
comply with these Rules or any order of the court, the complaint may be dismissed upon motion of the defendant or upon
the courts own motion, without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a
separate action. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise declared by the
court.
SECTION 4. Dismissal of counterclaim, cross-claim, or third-party complaint. The provisions of this Rule shall apply to
the dismissal of any counterclaim, cross-claim, or third-party complaint. A voluntary dismissal by the claimant by notice as
in Section 1 of this Rule, shall be made before a responsive pleading or a motion for summary judgment is served or, if
there is none, before the introduction of evidence at the trial or hearing.cralawlawlibrary
The RTC granted the Joint Motion to Dismiss upon the behest of Serafin, the plaintiff therein on the main ground that the
case had become moot and academic since his title to Lot 5357 had been allegedly quieted and the reliefs prayed for
were obtained. In the Order dated October 21, 2002 denying the motion for reconsideration, the RTC elucidated
The Court in issuing the dismissal order dated April 25, 2002 had already made its position on the matter very clearly such
that it finds no reason to disturb the subject order. As clarified, a party-litigant in a civil action like the plaintiff herein,
cannot be compelled to so continuously litigate his case if he does not want to anymore as was obtaining in this case.
More so that the principal reliefs prayed for in the complaint had already been served as was so admitted by the plaintiff.
Being so, this Court finds it repugnant to go on with the hearing of movants-defendants counterclaim for what is to be
countered by the movant when the claim of the plaintiff, at his own instance, had already been dismissed it having been
served and satisfied as aforestated. And this is so because what is contemplated under the Rules authorizing the hearing
of defendants counterclaim is when the dismissal is not at the instance of the plaintiff. 39cralawlawlibrary
As can be gleaned from the assailed orders, the RTC erred when it dismissed the case when the present rules state that
the dismissal shall be limited only to the complaint. A dismissal of an action is different from a mere dismissal of the
complaint. For this reason, since only the complaint and not the action is dismissed, the defendant in spite of said
dismissal may still prosecute his counterclaim in the same action. 40 The case of Pinga v. Heirs of German Santiago41 is
quite instructive which this Court finds worth reiterating. In Pinga, the Court clearly stated that the dismissal of the
complaint does not necessarily result to the dismissal of the counterclaim, abandoning the rulings in Metals Engineering
Resources Corporation v. Court of Appeals,42International Container Terminal Services, Inc. v. Court of Appeals,43 and BA
Finance Corporation v. Co.44 The Court held that:chanRoblesvirtualLawlibrary
At present, even Section 2, concerning dismissals on motion of the plaintiff, now recognizes the right of the defendant to
prosecute the counterclaim either in the same or separate action notwithstanding the dismissal of the complaint, and
without regard as to the permissive or compulsory nature of the counterclaim.
In his commentaries on the 1997 Rules of Civil Procedure, Justice Regalado expounds on the effects of the amendments
to Section 2 and 3 of Rule 17:
2. Under this revised section 2, where the plaintiff moves for the dismissal of his complaint to which a counterclaim has
been interposed, the dismissal shall be limited to the complaint. Such dismissal shall be without prejudice to the right of
the defendant to either prosecute his counterclaim in a separate action or to have the same resolved in the same action.
Should he opt for the first alternative, the court should render the corresponding order granting and reserving his right to
prosecute his claim in a separate complaint. Should he choose to have his counterclaim disposed of in the same action
wherein the complaint had been dismissed, he must manifest such preference to the trial court within 15 days from notice
to him of plaintiffs motion to dismiss. These alternative remedies of the defendant are available to him regardless of
whether his counterclaim is compulsory or permissive. x x x.45 (Italics in the original)
cralawlawlibrary
In the instant case, the petitioners preference to have his counterclaim (and cross-claims) be prosecuted in the same
action was timely manifested. The records show that Serafin and Leopolda furnished the petitioners counsel with a copy
of their Joint Motion to Dismiss by posting it (via registered mail) on September 19, 2001. 46 Said motion was filed in court
the following day.47 On October 4, 2001, the petitioner filed his Opposition/Comment thereto.48 Copies of the said
opposition were personally served upon the opposing parties on the same date. 49 In paragraph 1.550 of said opposition,
the petitioner expressed his preference to have his counterclaim and cross-claim prosecuted in the same case, as he thus
stated:chanRoblesvirtualLawlibrary
1.5 That the undersigned defendant manifest to this Honorable Court of his preference that the above[ ]counterclaims
and cross-claims be resolved in the present case.51
cralawlawlibrary
There are valid reasons why the petitioner vehemently objected to the dismissal of the case upon the joint motion of
Serafin and Leopolda and insisted to have his counterclaim prosecuted in the same action.
Serafin instituted the instant case due to the existence of certain documents affecting his title, namely: Henrys Affidavit of
Self-Adjudication with Deed of Sale which names Leopolda as the buyer; and Tax Declaration No. 01532 which was
issued in the name of the latter. In his Affidavit of Self-Adjudication, Henry transferred whatever right and interest he had
on the subject lot to Leopolda. Subsequently, by reason of the amicable settlement between Serafin and Leopolda, the
latter waived and abandoned all her rights to Lot 5357.
On the other hand, the petitioner asserts that the subject property was never transferred nor encumbered to any person
during Antonios lifetime. He insists that the deed of sale in favor of Spouses Cabansag is simulated and spurious, and
was intended to defraud the estate of Antonio. Further, he asserts that said Spouses Cabansag are mere creations of
Serafin.
Forthwith, the foregoing contentions touch on the very merits of the case which this Court is not prepared to rule upon for
want of sufficient factual basis since this case was dismissed by the RTC even before the parties were able to present
their evidence on the merits. Nonetheless, the records show that Serafin had been aware of the petitioners claim over
the property as descendants of Antonio and Dy Ochay even before the institution of this case, which was why he
impleaded the petitioner in this case. Then, the Joint Motion to Dismiss was filed by Serafin and Leopolda on the ground
that both parties were able to settle their differences. It is rather intriguing that in said joint motion, it was alleged that
Serafin was already able to secure a certificate of title in his name dated July 26, 2001 and that both parties agreed for its
cancellation and have a title over said property issued in their common names.52 Clearly, the petitioner was peremptorily
left out of the picture. From the cases inception, the petitioners interests and that of his siblings over the subject property
were vigilantly defended as evidenced by the numerous and exchange of pleadings made by the parties. It can not
therefore be denied that the petitioner has certainly valid defenses and enforceable claims against the respondents for
being dragged into this case. Thus, the petitioners manifestation of his preference to have his counterclaim prosecuted in
the same action is valid and in accordance with Section 2, Rule 17 of the Rules of Court.
WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The Orders dated April 25, 2002 and
October 21, 2002 of the Regional Trial Court of Lapu-lapu City, Branch 27 in Civil Case No. 4786-L are MODIFIED in that
the counterclaim of Lim Teck Chuan as defendant in Civil Case No. 4786-L is REINSTATED. The Regional Trial Court
is ORDERED to hear and decide Lim Teck Chuans counterclaim with dispatch.
SO ORDERED.cralawlawlibrary
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 188944 July 9, 2014
SPOUSES RODOLFO BEROT AND LILIA BEROT, Petitioners,

vs.
FELIPE C. SIAPNO, Respondent.
DECISION
SERENO, CJ:
Before us is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules on Civil Procedure assailing the
Court of Appeals (CA) Decision dated 29 January 2009 in CA-G.R. CV No. 87995. 1 The assailed CA Decision affirmed
with modification the Decision2 in Civil Case No. 2004-0246-D issued by the Regional Trial Court (RTC), First Judicial
Region of Dagupan City, Branch 42. The RTC Decision allowed the foreclosure of a mortgaged property despite the
objections of petitioners claiming, among others, that its registered owner was impleaded in the suit despite being
deceased.
THE FACTS
Considering that there are no factual issues in this case, we adopt the findings of fact of the CA, as follows:
On May 23, 2002, Macaria Berot (or "Macaria") and spouses Rodolfo A. Berot (or "appellant") and Lilia P. Berot (or "Lilia")
obtained a loan from Felipe C. Siapno (or "appellee") in the sum of P250,000.00, payable within one year together with
interest thereon at the rate of 2% per annum from that date until fully paid.
As security for the loan, Macaria, appellant and Lilia (or "mortgagors", when collectively)mortgaged to appellee a portion,
consisting of 147 square meters (or "contested property"), of that parcel of land with an area of 718 square meters,
situated in Banaoang, Calasiao, Pangasinan and covered by Tax Declaration No. 1123 in the names of Macaria and her
husband Pedro Berot (or "Pedro"), deceased. On June 23, 2003, Macaria died.
Because of the mortgagors default,appellee filed an action against them for foreclosure of mortgageand damages on July
15, 2004 in the Regional Trial Court of Dagupan City (Branch 42). The action was anchored on the averment that the
mortgagors failed and refused to pay the abovementioned sum of P250,000.00 plus the stipulated interest of 2% per
month despite lapse of one year from May 23, 2002.
In answer, appellant and Lilia (or "Berot spouses", when collectively [referred to]) alleged that the contested property was
the inheritance of the former from his deceased father, Pedro; that on said property is their family home; that the mortgage
is void as it was constituted over the family home without the consent of their children, who are the beneficiaries thereof;
thattheir obligation is only joint; and that the lower court has no jurisdiction over Macaria for the reason that no summons
was served on her as she was already dead.
With leave of court, the complaint was amended by substituting the estate of Macaria in her stead. Thus, the defendants
named in the amended complaint are now the "ESTATE OF MACARIA BEROT, represented by Rodolfo A. Berot,
RODOLFO A. BEROT and LILIA P. BEROT".
After trial, the lower court rendered a decision dated June 30, 2006, the decretal portion of which reads:
WHEREFORE, the Court hereby renders judgment allowing the foreclosure of the subject mortgage. Accordingly, the
defendants are hereby ordered to pay to the plaintiff within ninety (90) days from notice of thisDecision the amount
of P250,000.00 representing the principal loan, with interest at two (2%) percent monthly from February, 2004 the month
when they stopped paying the agreed interest up to satisfaction of the claim and 30% of the amount to be collected as
and for attorneys fees. Defendants are also assessed to pay the sum of P20,000.00 as litigation expenses and another
sum of P10,000.00 as exemplary damages for their refusal to pay their aforestated loan obligation. If within the
aforestated 90-day period the defendants fail to pay plaintiff the above-mentioned amounts, the sale of the property
subject of the mortgage shall be made and the proceeds of the sale to be delivered to the plaintiff to cover the debt and
charges mentioned above, and after such payments the excess, if any shall be delivered to the defendants.
SO ORDERED.
Appellant filed a motion for reconsideration of the decision but it was denied per order dated September 8, 2006. Hence,
this appeal interposed by appellant imputing errors to the lower court in
1. SUBSTITUTING AS DEFENDANT THE ESTATE OF MACARIA BEROT WHICH HAS NO PERSONALITY TO SUE
AND TO BE SUED;
2. APPOINTING RODOLFO BEROT AS A REPRESENTATIVE OF THE ESTATE OF THE DECEASED MACARIA BEROT
TO THE PREJUDICE OF THE OTHER HEIRS, GRANTING FOR THE SAKE OF ARGUMENT THAT THE ESTATE OF
MACARIA BEROT HAS A PERSONALITY TO SUE AND BE SUED;
3. NOT FINDING THE MORTGAGE NULL AND VOID, WHICH WAS ENTERED INTOWITHOUT THE WRITTEN
CONSENT OF THE BENEFICIARIES OF THE FAMILY HOME WHO WERE OF LEGAL AGE;
4. MAKING DEFENDANTS LIABLE FOR THE ENTIRE OBLIGATION OF PH250,000.00, WHEN THE OBLIGATION IS
ONLY JOINT;
5. IMPOSING ATTORNEYS FEE(S) IN THE DISPOSITIVE PORTION WITHOUT MAKING A FINDING OF THE BASIS
THEREOF IN THE BODY; and
6. IMPOSING EXEMPLARY DAMAGES AND LITIGATION EXPENSES.
Appellant contends that the substitution of the estate of Macaria for her is improper as the estate has no legal personality
to be sued.3
On 29 January 2009, the CA, through its Seventh Division, promulgated a Decision that affirmed the RTC Decision but
with modification where it deleted the award of exemplary damages, attorneys fees and expenses of litigation. The
appellate court explained in its ruling that petitioners correctly argued that a decedents estate is not a legal entity and
thus, cannot sue or be sued. However,it noted that petitioners failed to object to the trial courts exercise of jurisdiction
over the estate of Macaria when the latter was impleaded by respondents by amending the original complaint. 4 Adopting
the rationale of the trial court on this matter, the CA held:
As aptly observed by the trial court:
It may be recalled that when the plaintiff filed his Amended Complaint substituting the estate of Macaria Berot in place of
Macaria Berot as party defendant, defendants made no objection thereto. Not even an amended answer was filed by the
defendants questioning the substitution of the estate of Macaria Berot. For these reasons, the defendants are deemed to
have waivedany objection on the personality of the estate of Macaria Berot. Section 1, Rule 9 of the Rules of Court
provides that, Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived.
(Order dated September 8, 2006)5 [Underscoring supplied]
The CA also found the action of respondent to be procedurally correct under Section 7, Rule 86 of the Rules ofCourt,
when it decided to foreclose on the mortgage of petitioner and prove his deficiency as an ordinary claim. 6The CA did not
make a categorical finding that the nature of the obligation was joint or solidary on the part of petitioners. 7 It neither
sustained their argument that the mortgage was invalidfor having beenconstituted over a family home without the written
consent of the beneficiaries who were of legal age.8 However, it upheld their argument that the award of exemplary
damages and attorneys fees in favor ofrespondent was improper for lack of basis, 9 when it ruled thus:
WHEREFORE, the appealed decision is AFFIRMED with MODIFICATION in that the award of exemplary damages,
attorneys fees and expenses of litigation is DELETED.
SO ORDERED.10
Petitioners moved for the reconsideration of the CA Decision, but their motion was denied through a Resolution dated 9
July 2009.11 Aggrieved by the denial of their Motion for Reconsideration, they now come to us through a Petition for
Review on Certiorari under Rule 45, proffering purely questions of law.
THE ISSUES
The following are the issues presented by petitioners for resolution by this Court:
The Court of Appeals erred in:
1. Holding that the intestate estate of Macaria Berot could be a proper party by waiver expressly or impliedly by voluntary
appearance;
2. In not holding that the obligation is joint12
THE COURTS RULING
We DENYthe Petition for lack of merit.
Petitioners were correct when they argued that upon Macaria Berots death on 23 June 2003, her legal personality
ceased, and she could no longer be impleaded as respondent in the foreclosure suit. It is also true that her death opened
to her heirs the succession of her estate, which in this case was an intestate succession. The CA, in fact, sustained
petitioners position that a deceased persons estate has no legal personality to be sued. Citing the Courts ruling in
Ventura v. Militante,13 it correctly ruled that a decedent does not have the capacity to be sued and may not be madea
defendant in a case:
A deceased person does not have suchlegal entity asis necessary to bring action so much so that a motion to substitute
cannot lie and should be denied by the court. An action begun by a decedents estate cannot be said to have been begun
by a legal person, since an estate is not a legal entity; such an action is a nullity and a motion to amend the party plaintiff
will not, likewise, lie, there being nothing before the court to amend. Considering that capacity to be sued isa correlative of
the capacity to sue, to the same extent, a decedent does not have the capacity to be sued and may not be named a party
defendant in a court action.
When respondent filed the foreclosure case on 15 June 2004 and impleaded Macaria Berot as respondent, the latter had
already passed away the previous year, on 23 June 2003. In their Answer 14 to the Complaint, petitioners countered among
others, that the trial court did not have jurisdiction over Macaria, because no summons was served on her, precisely for
the reason that she had already died. Respondent then amended his Complaint with leave of court and substituted the
deceased Macaria by impleading her intestate estate and identified Rodolfo Berot as the estates representative.
Thereafter, the case proceeded on the merits at the trial, where this case originated and where the Decision was
promulgated.
It can be gleaned from the records ofthe case that petitioners did not object when the estate of Macaria was impleaded as
respondent in the foreclosure case. Petitioner Rodolfo Berot did not object either when the original Complaint was
amended and respondent impleaded him as the administrator of Macarias estate, in addition to his being impleaded as an
individual respondent in the case. Thus, the trial and appellate courts were correct in ruling that, indeed,
petitionersimpliedly waived any objection to the trial courts exercise of jurisdiction over their persons at the inception of
the case. In resolving the Motion for Reconsideration of petitioners as defendants in Civil Case No. 2004-0246-D, the RTC
was in point when it ruled:
It may be recalled that when the plaintiff filed his Amended Complaint substituting the estate of Macaria Berot in place of
Macaria Berot as party defendant, defendants made no objections thereto. Not even an amended answer was filed by the
defendants questioning the substitution of the estate of Macaria Berot. For these reasons, the defendants are deemed to
have waivedany objection on the personality of the estate of Macaria Berot. Section 1, Rule 9 of the Rules of Court
provides that, "Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. x x
x. (Underscoring ours)15
Indeed, the defense of lack of jurisdiction over the person of the defendant is one that may bewaived by a party to a case.
In order to avail of that defense, one must timely raise an objection before the court. 16
The records of the case show that on 9 November 2004, a hearing was held on the Motion for Leave to Filefiled by
respondent to have her amended Complaint admitted. During the said hearing, the counsel for petitioners did not
interpose an objection to the said Motion for Leave. 17 On 18 March 2005, a hearing was held on respondents Motion to
Admit Amended Complaint, wherein counselfor petitioners again failed to interpose any objection. 18Thus, the trial court
admitted respondents Amended Complaint and ordered thata copy and a summons be served anew on petitioners. 19
In an Order20 dated 14 April 2005, the RTC noted that petitioners received the summons and the copy of the amended
Complaint on 3 February 2005 and yet they did not file an Answer. During the trial on the merits that followed, petitioners
failed to interpose any objection to the trial courts exercise of jurisdiction over the estate of Macaria Berot. Clearly, their
full participation in the proceedings of the case can only be construed as a waiver of any objection to or defense of the
trial courts supposed lack of jurisdiction over the estate.
In Gonzales v. Balikatan Kilusang Bayan sa Panlalapi, Inc., 21 we held that a partys appearance in a case is equivalent to
a service of summons and that objections must be timely raised:
In this regard, petitioners should be reminded of the provision in the Rules of Court that a defendantsvoluntary
appearance in an action shall be equivalent to service of summons. Further, the lack of jurisdiction over the person of the
defendant may be waived either expressly or impliedly. When a defendant voluntarily appears, he is deemed to have
submitted himself to the jurisdiction of the court. If he does not wish to waive this defense, he must do so seasonably by
motion, and object thereto.
It should be noted that Rodolfo Berot is the son of the deceased Macaria 22 and as such, he is a compulsory heir of his
mother. His substitution is mandated by Section 16, Rule 3 of the Revised Rules of Court. Notably, there is no indication
inthe records of the case that he had other siblings who would have been his co-heirs. The lower and appellate courts
veered from the real issue whether the proper parties have been impleaded. They instead focused on the issue whether
there was need for a formal substitution when the deceasedMacaria, and later its estate, was impleaded. As the
compulsory heir of the estate of Macaria, Rodolfo is the real party in interest in accordance with Section 2, Rule 3 of the
Revised Rules of Court. At the time of the filing of the complaint for foreclosure, as well as the time it was amended to
implead the estate of Macaria, it is Rodolfo as heir who is the real party in interest. He stands to be benefitted or
injured by the judgment in the suit.
Rodolfo is also Macarias co-defendant in the foreclosure proceedings in his own capacity as co-borrower ofthe loan. He
participated in the proceedings of the case, from the initial hearing of the case, and most particularly when respondent
filed his amended complaint impleading the estate of Macaria. When respondent amended his complaint, Rodolfo did not
file an amended Answer nor raise any objection, even if he was also identified therein as the representative ofthe estate of
the deceased Macaria. The lower court noted this omission by Rodolfo in its Order dated 8 September 2006 ruling on his
Motionfor Reconsideration to the said courts Decision dated 30 June 2006. Thus, his continued participation in the
proceedings clearly shows that the lower court acquired jurisdiction over the heir of Macaria.
In Regional Agrarian Reform Adjudication Board v. Court of Appeals, 23 we ruled that:
[W]e have to point out that the confusion in this case was brought about by respondents themselves when they included
in their complaint two defendants who were already dead. Instead of impleading the decedents heirs and current
occupants of the landholding, respondents filed their complaint against the decedents, contrary to the following provision
of the 1994 DARAB Rules of Procedure:
RULE V
PARTIES, CAPTION AND SERVICE OF PLEADINGS
SECTION 1. Parties in Interest. Every agrarian case must be initiated and defended inthe name of the real party in
interest. x x x.
A real party in interest is defined as "the party who stands to be benefited or injured by the judgment in the suit, or the
party entitled to the avails of a suit." The real parties in interest, at the time the complaint was filed, were no longer the
decedents Avelino and Pedro, but rather their respective heirs who are entitled to succeed to their rights (whether as
agricultural lessees or as farmers-beneficiaries) under our agrarian laws. They are the ones who, as heirs of the
decedents and actualtillers, stand to be removed from the landholding and made to pay back rentals to respondents if the
complaint is sustained.
Since respondents failed to correcttheir error (they did not amend the erroneous caption of their complaint to include the
real parties-ininterest), they cannot be insulated from the confusion which it engendered in the proceedings below. But at
any rate, notwithstanding the erroneous caption and the absence of a formal substitution of parties, jurisdiction was
acquired over the heirs of Avelino and Pedro who voluntarily participated in the proceedings below. This Court has ruled
that formal substitution of parties is not necessary when the heirs themselves voluntarily appeared, participated, and
presented evidence during the proceedings.
As such, formal substitution of the parties in this case is not necessary.
In Vda. De Salazar v. Court of Appeals24 we ruled that a formal substitution of the heirs in place of the deceased is no
longer necessary if the heirs continued to appear and participated in the proceedings of the case. In the cited case, we
explained the rationale of our ruling and related it to the due process issue, to wit:
We are not unaware of several cases where we have ruled that a party having died in an action that survives, the trial held
by the court without appearance of the deceased's legal representative or substitution of heirs and the judgment rendered
after such trial, are null and void because the court acquired no jurisdiction over the persons of the legal representatives
or of the heirs upon whom the trial and the judgment would be binding. This general rule notwithstanding, in denying
petitioner's motion for reconsideration, the Court of Appeals correctly ruled that formal substitution of heirs is not
necessary when the heirs themselves voluntarily appeared, participated in the case and presented evidence in defense of
deceased defendant. Attending the case at bench, after all, are these particular circumstances which negate petitioner's
belated and seemingly ostensible claim of violation of her rights to due process. We should not lose sight of the principle
underlying the general rule that formal substitution of heirs must be effectuated for them to be bound by a subsequent
judgment. Such had been the general rule established not because the rule on substitution of heirs and that on
appointment of a legal representative are jurisdictional requirements per se but because non-compliance therewith results
in the undeniable violation of the right to due process of those who, though not duly notified of the proceedings, are
substantially affected by the decision rendered therein. Viewing the rule on substitution of heirs in this light, the Court of
Appeals,in the resolution denying petitioner's motion for reconsideration, thus expounded:
Although the jurisprudential rule is that failure to make the substitution is a jurisdictional defect, it should be noted that the
purpose of this procedural rule is to comply with due process requirements. The original party having died, he could not
continue, to defend himself in court despite the fact that the action survived him. For the case to continue, the real party in
interest must be substituted for the deceased. The real party in interest is the one who would beaffected by the judgment.
It could be the administrator or executor or the heirs. In the instant case, the heirs are the proper substitutes. Substitution
gives them the opportunity to continue the defense for the deceased. Substitution is important because such opportunity
to defend is a requirement to comply with due process. Such substitution consists of making the proper changes in the
caption of the case which may be called the formal aspect of it. Such substitution also includes the process of letting the
substitutes know that they shall be bound by any judgment in the case and that they should therefore actively participate
in the defense of the deceased. This part may be called the substantive aspect. This is the heart of the procedural rule
because this substantive aspect is the one that truly embodies and gives effect to the purpose of the rule. It is this court's
view that compliance with the substantive aspect of the rule despite failure to comply with the formal aspect may he
considered substantial compliance.Such is the situation in the case at bench because the only inference that could be
deduced from the following facts was that there was active participation of the heirs in the defense ofthe deceased after
his death:
1. The original lawyer did not stop representing the deceased. It would be absurd to think that the lawyer would continue
to represent somebody if nobody is paying him his fees. The lawyer continued to represent him in the litigation before the
trial court which lasted for about two more years. A dead party cannot pay him any fee. With or without payment of fees,
the fact remains that the said counsel was allowed by the petitioner who was well aware of the instant litigation to continue
appearing as counsel until August 23, 1993 when the challenged decision was rendered;
2. After the death of the defendant, his wife, who is the petitioner in the instant case, even testified in the court and
declared that her husband is already deceased. She knew therefore that there was a litigation against her husband and
that somehow her interest and those of her children were involved;
3. This petition for annulmentof judgment was filed only after the appeal was decided against the defendant on April 3,
1995, more than one and a half year (sic) after the decision was rendered (even if we were to give credence to petitioner's
manifestation that she was notaware that an appeal had been made);
4. The Supreme Court has already established that there is such a thing as jurisdiction byestoppel. This principle was
established even in cases where jurisdiction over the subject matter was being questioned. In the instant case, only
jurisdiction over the person of the heirs is in issue. Jurisdiction over the person may be acquired by the court more easily
than jurisdiction over the subject matter. Jurisdiction over the person may be acquired by the simple appearance of the
person in court as did herein petitioner appear;
5. The case cited by the herein petitioner (Ferreria et al. vs. Manuela Ibarra vda. de Gonzales, etal.) cannot be availed of
to support the said petitioner's contention relative to nonacquisition of jurisdiction by the court. In that case, Manolita
Gonzales was not served notice and, more importantly, she never appeared in court, unlike herein petitioner who
appeared and even testified regarding the death of her husband.
In this case, Rodolfos continued appearance and participation in the proceedings of the case dispensed with the formal
substitution of the heirs in place of the deceased Macaria. The failure of petitioners to timely object to the trial courts
exercise of jurisdiction over the estate of Macaria Berot amounted to a waiver on their part. Consequently, it would be too
late for them at this point to raise that defense to merit the reversal of the assailed decision of the trial court. We are left
with no option other than to sustain the CAs affirmation of the trial courts Decision on this matter.
On the second issue of whether the nature of the loan obligation contracted by petitioners is joint or solidary, we rule that it
is joint.
Under Article 1207 of the Civil Code of the Philippines, the general rule is that when there is a concurrence of two or more
debtors under a single obligation, the obligation is presumed to be joint:
Art. 1207. The concurrence of two or more creditors or of two or more debtors in one and the same obligation does not
imply that each one of the former has a right to demand, orthat each one of the latter is bound to render, entire
compliance with the prestations. There is a solidary liability only when the obligation expressly so states, or when the law
or the nature of the obligation requires solidarity.
The law further provides that to consider the obligation as solidary in nature, it must expressly be stated as such, or the
law or the nature of the obligation itself must require solidarity. In PH Credit Corporation v. Court of Appeals, 25 we held
that:
A solidaryobligation is one in which each of the debtors is liable for the entire obligation, and each of the creditors is
entitled to demand the satisfaction of the whole obligation from any or all of the debtors. On the other hand, a
jointobligation is one in which each debtors is liable only for a proportionate part of the debt, and the creditor is entitled to
demand only a proportionate part of the credit from each debtor. The wellentrenched rule is that solidary obligations
cannot be inferred lightly. They must be positively and clearly expressed. A liability is solidary "only when the obligation
expressly so states, when the law so provides or when the nature of the obligation so requires."
In the instant case, the trial court expressly ruled that the nature of petitioners obligation to respondent was solidary. 26 It
scrutinized the real estate mortgage and arrived at the conclusion that petitioners had bound themselves to secure their
loan obligation by way of a realestate mortgage in the event that they failed to settle it. 27 But such pronouncement was not
expressly stated in its 30 June 2006 Decision. This was probably the reason why, when the trial court Decision was
appealed to it, the CA did not squarely address the issue when the latter ruled that:
It is noteworthy that the appealed decision makes no pronouncement that the obligation of the mortgagors is solidary; and
that said decision has not been modifiedby the trial court. Hence, it is unnecessary for US to make a declaration on the
nature of the obligation of the mortgagors.28 However, a closer scrutiny of the records would reveal that the RTC expressly
pronounced that the obligation of petitioners to the respondent was solidary. In resolving petitioners Motion for
Reconsideration to its 30 June 2006 Decision, the trial court categorically ruled that:
Defendants [sic] obligation with plaintiff is solidary. A careful scrutiny of the Real Estate Mortgage(Exh. "A") will show that
all the defendants, for a single loan, bind themselves to cede, transfer, and convey by way of real estate mortgage all their
rights, interest and participation in the subject parcelof land including the improvements thereon in favor of the plaintiff,
and warrant the same to be free from liens and encumbrances, and that should theyfail to perform their obligation the
mortgage will be foreclosed. From this it can be gleaned that each of the defendants obligated himself/herself to perform
the said solidary obligation with the plaintiff.29 We do not agree with this finding by the trial court.
We have scoured the records of the case, but found no record of the principal loan instrument, except an evidence that
the realestate mortgage was executed by Macaria and petitioners. When petitioner Rodolfo Berot testified in court, he
admitted that heand his mother, Macaria had contracted the loan for their benefit:
Q: On the Real Estate Mortgage, you and your mother obtained a loan from Mr. Siapno in the amountofP250,000.00, now
as between you and your mother whose loan is that?
A: It is the loan of my mother and myself, sir.30
The testimony of petitioner Rodolfo only established that there was that existing loan to respondent, and that the subject
property was mortgaged as security for the said obligation. His admission of the existence of the loan made him and his
late mother liable to respondent. We have examined the contents of the real estate mortgagebut found no indication in the
plain wordings of the instrument that the debtors the late Macaria and herein petitioners had expressly intended to
make their obligation to respondent solidary in nature. Absent from the mortgage are the express and indubitable terms
characterizing the obligation as solidary. Respondent was not able to prove by a preponderance of evidence that
petitioners' obligation to him was solidary. Hence, applicable to this case is the presumption under the law that the nature
of the obligation herein can only be considered as joint. It is incumbent upon the party alleging otherwise to prove with a
preponderance of evidence that petitioners' obligation under the loan contract is indeed solidary in character. 31
The CA properly upheld respondent's course of action as an availment of the second remedy provided under Section 7,
Rule 86 of the 1997 Revised Rules of Court.32 Under the said provision for claims against an estate, a mortgagee has the
legal option to institute a foreclosure suit and to recover upon the security, which is the mortgaged property.
During her lifetime, Macaria was the registered owner of the mortgaged property, subject of the assailed foreclosure.
Considering that she had validly mortgaged the property to secure a loan obligation, and given our ruling in this case that
the obligation is joint, her intestate estate is liable to a third of the loan contracted during her lifetime. Thus, the foreclosure
of the property may proceed, but would be answerable only to the extent of the liability of Macaria to respondent.
WHEREFORE, the CA Decision in CA-G.R. CV No. 87995 sustaining the RTC Decision in Civil Case No. 2004-0246-D is
hereby AFFIRMED with the MODIFICATION that the obligation of petitioners and the estate of Macaria Berot is declared
as joint in nature.
SO ORDERED.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 172505 October 1, 2014
ANTONIO M. GARCIA, Petitioner,

vs.
FERRO CHEMICALS, INC., Respondent.
DECISION
LEONEN, J.:
Before this court is a petition for review on certiorari1 assailing the decision2 of the Court of Appeals dated August 11, 2005
and its resolution3 dated April 27, 2006, denying petitioner Antonio Garcia's motion for reconsideration.
Antonio Garcia, as seller, and Ferro Chemicals, Inc., through Ramon Garcia, as buyer, entered into a deed of absolute
sale and purchase of shares of stock on July 15, 1988. The deed was for the sale and purchase of shares of stock from
various corporations, including one class "A" share in Alabang Country Club, Inc. and one proprietary membership in the
Manila Polo Club, Inc.4 These shares of stock were in the name of Antonio Garcia. 5The contract was allegedly entered into
to prevent these shares of stock from being sold at public auction to pay the outstanding obligations of Antonio Garcia. 6
On March 3, 1989, a deed of right of repurchase over the same shares of stock subject of the deed of absolute sale and
purchase of shares of stock was entered into between Antonio Garcia and Ferro Chemicals, Inc. Under the deed of right
of repurchase, Antonio Garcia can redeem the properties sold within 180 days from the signing of the agreement. 7
Before the end of the 180-day period, Antonio Garcia exercised his right to repurchase the properties. 8 However, Ferro
Chemicals, Inc. did not agree to the repurchase ofthe shares of stock. 9 Thus, Antonio Garcia filed an action for specific
performance and annulment of transfer of shares.10
On September 6, 1989, the class "A" share in Alabang Country Club, Inc. and proprietary membership in the Manila Polo
Club, Inc., which were included in the contracts entered intobetween Antonio Garcia and Ferro Chemicals, Inc., were sold
at public auction to Philippine Investment System Organization. 11
On September 3, 1990, the information based on the complaint of Ferro Chemicals, Inc. was filed against Antonio Garcia
before the Regional Trial Court.12 He was charged with estafaunder Article 318 (Other Deceits) of the Revised Penal Code
for allegedly misrepresenting to Ferro Chemicals, Inc. that the shares subject of the contracts entered into were free from
all liens and encumbrances. The information reads:
The undersigned Assistant Prosecutor accuses Antonio M. Garcia of the felony of Estafa as defined and penalized under
Art. 318 of the Revised Penal Code as amended, committed as follows:
THAT on or about 15 July 1988, in Makati, Metro Manila, Philippines, a place within the jurisdiction of this Honorable
Court, the above-named accused, with evident bad faith and deceit, did, then and there, willfully, unlawfully and
feloniously, misrepresent to FERRO CHEMICALS, INC. (FCI) represented by Ramon M. Garcia, that his share of
stock/proprietary share with Ayala Alabang Country Club, Inc. and Manila Polo Club, Inc. collectively valued at
about P10.00 Million Pesos, being part of other shares of stock subject matter of a Deed of Absolute Sale and Purchase
of Shares of Stock between the accused and FCI, were free from all liens, encumbrances and claims by third persons,
when in truth and in fact, accused well knew that aforesaid share of stock/proprietary share had already been garnished in
July 1985 and subsequently sold at public auction in September 1989, and which misrepresentation and assurance FCI
relied upon and paid the consideration in accordance with the stipulated condition/manner of payment, all to the damage
and prejudice of FCI in the aforestated amount of P10.00 Million Pesos.
Contrary to law.13
In the decision dated December 12, 1996 of the Regional Trial Court, Antonio Garcia was acquitted for insufficiency of
evidence.14 The Regional Trial Court held:
From the foregoing, it is very clear that private complainant was aware of the status of the subject CLUB SHARES. Thus,
the element of false pretense, fraudulent act or fraudulent means which constitute the very cause or the only motive which
induced the private complainant to enter into the questioned deed of sale (Exh. "A") is wanting in the case at
bar.15 (Underscoring in the original)
Ferro Chemicals, Inc. filed a motion for reconsideration, which was denied by the Regional Trial Court in the order dated
July 29, 1997.16
On August 25, 1997, Ferro Chemicals, Inc. appealed to the Court of Appeals the July 29, 1997 order of the Regional Trial
Court as to the civil aspect of the case.17 The notice of appeal18 filed was entitled "Notice of Appeal Ex Gratia Abudantia Ad
Cautelam (Of The Civil Aspect of the Case)." It alleged:
4. Herein private complainant hereby gives notice, out of extreme caution, that it is appealing the Decision dated 12
December 1996 and the Order dated 29 July 1997 on the civil aspect of the case to the Court of Appeals on the ground
that it is notin accordance with the law and the facts of the case.
5. This notice of appeal is without prejudice to the filing of an appropriate petition for certiorari under Rule 65 of the Rules
of Court on the criminal aspect, upon the giving of due course thereto, private complainant shall endeavor to seek the
consolidation of this appeal with the said petition.19
On October 15, 1997, the Makati City Prosecutors Office and Ferro Chemicals, Inc. also filed a petition for certiorari 20 with
this court, assailing the Regional Trial Courts December 12, 1996 decision and July 29, 1997 order acquitting Antonio
Garcia.21
The petition for certiorari22 filed before this court sought to annul the decision of the trial court acquitting Antonio Garcia.
People of the Philippines and Ferro Chemicals, Inc. argued that the trial court "acted in grave abuse of discretion
amounting to lack or excess of jurisdiction when it rendered the judgment of acquittal based on affidavits not at all
introduced in evidence by either of the parties thereby depriving the people of their substantive right to due process of
law."23 The verification/certification against forum shopping, signed by Ramon Garcia as president of Ferro Chemicals,
Inc., disclosed that the notice of appeal was filed "with respect to the civil aspect of the case." 24
In the resolution25 dated November 16, 1998, this court dismissed the petition for certiorari filed, and entry of judgment
was made on December 24, 1998.26
On the other hand, the Court of Appeals,27 in its decision28 dated August 11, 2005, granted the appeal and awarded Ferro
Chemicals, Inc. the amount of P1,000,000.00 as actual loss with legal interest and attorneys fees in the amount
of P20,000.00.29 The appellate court found that Antonio Garcia failed to disclose the Philippine Investment and Savings
Organizations lien over the club shares.30 Thus:
The issue in this case is whether or not Antonio Garcia disclosed to Ferro-Chemicals, during the negotiation stage of the
impending sale of the imputed club shares, the third attachment lien in favor of Philippine Investment and Savings
Organization (PISO) which, ultimately, became the basis of the auction sale of said club shares. We have scrutinized the
records of the case but found no evidence that Antonio Garcia intimated to his brother the third attachment lien of PISO
over the said club shares. While it is true that Antonio Garcia divulged the two liens of Security Bank and Insular Bank of
Asia and America, the lien of PISO was clearly not discussed. The affidavits executed by the two lawyers to the effect that
the lien of PISO was considered but deliberately left out in the deed cannot be given much weight as they were never
placed on the witness stand and cross-examined by Ferro-Chemicals. If their affidavits, although not offered, were
considered inthe criminal aspect and placed a cloud on the prosecutions thrust, theycannot be given the same probative
value in this civil aspect as only a preponderance of evidence is necessary to carry the day for the plaintiff, Ferro
Chemicals.
While Antonio Garcia insists that no consideration was ever made over the club shares as the same were merely given for
safekeeping, the document denominated as Deed of Absolute Sale states otherwise. It is a basic rule of evidence that
between documentary evidence and oral evidence, the former carries more weight.
Also, We have observed that in Antonio Garcias letter of redemption addressed to Ferro Chemicals, he mentioned his
interest in redeeming the company shares only. That he did not include the club shares only meant that said club shares
no longer had any much redeemable value as there was a lienover them. To redeem them would be pointless.
If they had no redeemable value to Antonio Garcia, to Ferro Chemical they were certainly marketable assets. The non-
disclosure of the third lien in favor of PISO materially affected Ferro Chemicals since it was not able to act on time to
protect its interest when the auction sale over the club shares actually took place. As a result, Ferro Chemicals suffered
losses due to the unfortunate public auction sale. It is but just and fair that Antonio Garcia be made to compensate the
loss pursuant to Articles 21 and 2199 of the Civil Code.
The actual loss suffered by Ferro Chemicals amounted to P1,000,000.00 which correspondents to the bid value of the
club shares at the time of the auction as evidenced by the Sheriffs Certificate of Sale. 31 (Citations omitted)
Antonio Garcia filed a motion for reconsideration and Ferro Chemicals, Inc. filed a partial motion for reconsideration of the
decision of the Court of Appeals.32 These motions were denied in the resolution33 dated April 27, 2006. Thus, Antonio
Garcia filed this petition for review on certiorari,34 assailing the decision and resolution of the Court of Appeals.
Antonio Garcia argues that the factual findings of the Court of Appeals were erroneous 35 and insists that "[Ferro
Chemicals, Inc.] was fully aware that the shares covered by the Deed of Absolute Sale, including the Subject Club Shares,
were not free from liens and encumbrances and that the Deed [of] Sale was executed [to] warehouse [Antonio Garcias]
assets based on, among other evidence, the affidavits executed by Jaime Gonzales . . . and Rolando Navarro. . . ." 36
Antonio Garcia faults the Court of Appeals in disregarding the affidavits executed by Jaime Gonzales and Rolando
Navarro. Antonio Garcia argues that even thiscourt in G.R. No. 130880 entitled People of the Philippines and Ferro
Chemicals, Inc. v. Hon. Dennis Villa Ignacio and Antonio Garcia where the admissibility of the affidavits was put in issue
held that the trial court did not commit any grave abuse of discretion in the challenged decision. 37 He then reasoned that
"pursuant to the law of the case, [the affidavits of Gonzalez and Navarro] are admissible and should be given weight." 38
Finally, Antonio Garcia claims thatboth he and and Ferro Chemicals, Inc. acted in bad faith when they entered into the
deed of absolute sale as a scheme to defraud Antonio Garcias creditors. Thus, they are in pari delicto and Ferro
Chemicals, Inc. should not be allowed to recover from Antonio Garcia. 39
In its comment,40 Ferro Chemicals, Inc. points out that Antonio Garcia raised factual issues not proper ina Rule 45 petition
and reiterates the findings of the Court of Appeals.41
There are pertinent and important issues that the parties failed to raise before the trial court, Court of Appeals, and this
court. Nonetheless, we resolve to rule on these issues.
As a general rule, this court through its appellate jurisdiction can only decide on matters or issues raised by the
parties.42 However, the rule admits of exceptions.43 When the unassigned error affects jurisdiction over the subject
matter44 or when the consideration of the error is necessary for a complete resolution of the case, 45 this court can still
decide on these issues.
We cannot turn a blind eye on glaring misapplications of the law or patently erroneous decisions or resolutions simply
because the parties failed to raise these errors before the court. Otherwise, we will be allowing injustice by reason of the
mistakes of the parties counsel and condoning reckless and negligent acts of lawyers to the prejudice of the litigants.
Failure to rule on these issues amounts to an abdication of our duty to dispense justice to all parties.
The issues are:
I. Whether the Regional Trial Court had jurisdiction over the case
II. Whether the act of FerroChemicals, Inc. in filing the notice of appeal before the Court of Appeals and the
petition for certiorari assailing the same trial court decision amounted to forum shopping
III. Whether Ferro Chemicals, Inc. was entitled to the awards given as civil liability ex delicto
The Regional Trial Court did not have jurisdiction
Jurisdiction of a court over the subject matter is vested by law. 46 In criminal cases, the imposable penalty of the crime
charged in the information determines the court that has jurisdiction over the case. 47
The information charged Antonio Garcia with violation of Article 318 of the Revised Penal Code, which is punishable by
arresto mayor, or imprisonment for a period of one (1) month and one (1) day to six (6) months. Article 318 states:
ART. 318: Other deceits. The penalty of arresto mayor and a fine of not less than the amount of the damage caused and
not more than twice such amount shall be imposed upon any person who shall defraud or damage another by any other
deceit not mentioned in the preceding articles of this chapter.
Any person who, for profit or gain, shall interpret dreams, make forecasts, tell fortunes, or take advantage of the credulity
of the public in any other similar manner, shall suffer the penalty of arresto mayoror a fine not exceeding 200 pesos.
When the information was filed on September 3, 1990, the law in force was Batas Pambansa Blg. 129 before it was
amended by Republic Act No. 7691. Under Section 32 of Batas Pambansa Blg. 129, the Metropolitan Trial Court had
jurisdiction over the case:
SEC. 32. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in criminal
cases.
....
2. Exclusive original jurisdiction over all offenses punishable with imprisonment of not exceeding four years and two
months, or a fine of not more than four thousand pesos, or both such fine and imprisonment, regardless of other
imposable accessory or other penalties, including the civil liability arising from such offenses or predicated thereon,
irrespective of kind, nature, value, or amount thereof: Provided, however, That in offenses involving damage to property
through criminal negligence they shall have exclusive original jurisdiction where the imposable fine does not exceed
twenty thousand pesos. (Emphasis supplied)
The Regional Trial Court did not have jurisdiction to hear and decide the case. This lack of jurisdiction resulted in voiding
all of the trial courts proceedings and the judgment rendered. 48 Although the trial courts lack of jurisdiction was never
raised as an issue in any part of the proceedings and even until it reached this court, we proceed with resolving the
matter.
In Pangilinan v. Court of Appeals,49 this court held:
Thus, we apply the general rule thatjurisdiction is vested by law and cannot be conferred or waived by the parties. Even
on appeal and even if the reviewing parties did not raise the issue of jurisdiction, the reviewing court is not precluded
fromruling that the lower court had no jurisdiction over the case[.]
....
Having arrived at the conclusion that the Regional Trial Court did not have jurisdiction to try the case against the
appellant, it is no longer necessary to consider the other issues raised as the decision of the Regional Trial Court is null
and void.50
The trial courts lack of jurisdiction cannot be cured by the parties silence on the matter. 51 The failure of the parties to raise
the matter of jurisdiction also cannot be construed as a waiver of the parties. Jurisdiction is conferred by law and cannot
be waived by the parties.
The assailed decision is void, considering that it originates from a void decision of the Regional Trial Court for lack of
jurisdiction over the subject matter.
Ferro Chemicals, Inc. committed forum shopping
Forum shopping is defined as "theact of a litigant who repetitively availed of several judicial remedies in different courts,
simultaneously or successively, all substantially founded on the same transactions and the same essential facts and
circumstances, and all raising substantially the same issues either pending in, or already resolved adversely by some
other court . . . to increase his chances of obtaining a favorable decision if not in one court, then in another." 52 Once
clearly established that forum shopping was committed willfully and deliberately by a party or his or her counsel, the case
may be summarily dismissed with prejudice, and the act shall constitute direct contempt and a cause for administrative
sanctions.53
Forum shopping is prohibited, and sanctions are imposed on those who commit forum shopping as "it trifles with the
courts, abuses their processes, degrades the administration of justice and adds to the already congested court
dockets."54 This court has said:
What is critical is the vexation brought upon the courts and the litigants by a party who asks different courts to rule on the
same or related causes and grant the same or substantially the same reliefs and in the process creates the possibility of
conflicting decisions being rendered by the different fora upon the same issues, regardless of whether the court in which
one of the suits was brought has no jurisdiction over the action. 55 (Citation omitted)
The test and requisites that must concur to establish when a litigant commits forum shopping are the following:
The test for determining the existence of forum shopping is whether the elements of litis pendentiaare present, or whether
a final judgment in one case amounts to res judicatain another. Thus, there is forum shopping when the following
elements are present: (a) identity of parties, or at least such parties asrepresent the same interests in both actions; (b)
identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity of the two
preceding particulars, such that any judgment rendered in the other action will, regardless of which party is successful,
amount to res judicatain the action under consideration; said requisites are also constitutive of the requisites for auter
action pendant or lis pendens.56 (Citation omitted)
There is no question that Ferro Chemicals, Inc. committed forum shopping when it filed an appeal before the Court of
Appeals and a petition for certiorari before this court assailing the same trial court decision. This is true even if Ferro
Chemicals, Inc.s notice of appeal to the Court of Appeals was entitled "Notice of Appeal Ex Gratia Abudantia Ad Cautelam
(Of The Civil Aspect of the Case)."57 The "civil aspect of the case" referred to by Ferro Chemicals, Inc. is for the recovery
of civil liability ex delicto. However, it failed to make a reservation before the trial court to institute the civil action for the
recovery of civil liability ex delictoor institute a separate civil action prior to the filing of the criminal case.
There is identity of parties. Petitioner, Antonio Garcia, and respondent, Ferro Chemicals, Inc., are both parties in the
appeal filed before the Court of Appeals and the petition for certiorari before this court.
There is identity of the rights asserted and reliefs prayed for in both actions. At a glance, it may appear that Ferro
Chemicals, Inc. asserted different rights: The appeal before the Court of Appeals is purely on the civil aspect of the trial
courts decision while the petition for certiorari before this court is allegedly only onthe criminal aspect of the case.
However, the civil liability asserted by Ferro Chemicals, Inc. before the Court of Appeals arose from the criminal act. It is in
the nature of civil liability ex delicto. Ferro Chemicals, Inc. did not reserve the right to institute the civil action for the
recovery of civil liability ex delictoor institute a separate civil action prior to the filing of the criminal case. 58 Thus, it is an
adjunct of the criminalaspect of the case.1wphi1 As held in Lim v. Kou Co Ping:59
The civil liability arising from the offense or ex delictois based on the acts or omissions that constitute the criminal offense;
hence, its trial is inherently intertwined with the criminal action.For this reason, the civil liability ex delictois impliedly
instituted with the criminal offense. If the action for the civil liability ex delictois instituted prior to or subsequent to the filing
of the criminal action, its proceedings are suspended until the final outcome of the criminal action. The civil liability based
on delict is extinguished when the court hearing the criminal action declares that the act or omission from which the civil
liability may arise did not exist."60 (Emphasis supplied, citations omitted).
When the trial courts decision was appealed as to its criminal aspect in the petition for certiorari before thiscourt, the civil
aspect thereof is deemed included in the appeal. Thus, the relief prayed for by Ferro Chemicals, Inc., that is, recovery of
civil liability ex delicto, is asserted in both actions before this court and the Court of Appeals.
Even the allegations in the notice of appeal readily show that Ferro Chemicals, Inc. committedforum shopping, to wit:
5. This notice of appeal is without prejudice to the filing of an appropriate petition for certiorari under Rule 65 of the Rules
of Court on the criminal aspect, upon the giving of due course thereto, private complainant shall endeavor to seek the
consolidation of this appeal with the said petition.61
As to the third requisite, on the assumption that the trial court had jurisdiction over the case, this courts decision in G.R.
No. 130880 affirming the trial courts decision acquitting the accused for lack of an essential element of the crime charged
amounts to res judicatato assert the recovery of civil liability arising from the offense. This courts resolution dismissing the
petition for certiorari filed by Ferro Chemicals, Inc. states:
In any event, petitioners failed to sufficiently show that any grave abuse of discretion was committed by the Regional Trial
Court in rendering the challenged decision and order which, on the contrary, appear to be in accord with the facts and the
applicable law and jurisprudence.62
Litigants cannot avail themselves of two separate remedies for the same relief in the hope that in one forum, the relief
prayed for will be granted. This is the evil sought tobe averted by the doctrine of non-forum shopping, and this is the
problem that has happened in this case. This court denied the petition for certiorari filed byFerro Chemicals, Inc. resulting
in finality of the trial courts decision.1awp++i1 The decision found Antonio Garcia not guilty of the offense charged, and no
civil liability was awarded to Ferro Chemicals, Inc. However, at present,there is a conflicting decision from the Court of
Appeals awarding Ferro Chemicals, Inc. civil indemnity arising from the offense charged.
When the civil action for the recovery of civil liability ex delicto is instituted with the criminal action, whether by choice of
private complainant (i.e., no reservation is made or no prior filing of a separate civil action) or as required by the law or
rules, the case will be prosecuted under the direction and control of the public prosecutor. 63The civil action cannot proceed
independently of the criminal case. This includes subsequent proceedings on the criminal action such as an appeal. In
any case, Ferro Chemicals, Inc. joined the public prosecutor in filing the petition for certiorari before this court. Ramon
Garcia, President of Ferro Chemicals, Inc., signed the verification and certification of non-forum shopping of the petition
for certiorari.64
We must clarify, however, that private complainants in criminal cases are not precluded from filing a motion for
reconsideration and subsequently an appeal on the civil aspect of a decision acquitting the accused. An exception to the
rule that only the Solicitor General can bring actions in criminal proceedings before the Court of Appeals or this court is
"when the private offended party questions the civil aspect of a decision of a lower court." 65 As discussed in Mobilia
Products, Inc. v. Hajime Umezawa:66
In a criminal case in which the offended party is the State, the interest of the private complainant or the offended party is
limited to the civil liability arising there from. Hence, if a criminal case is dismissed by the trial court or if there is an
acquittal, a reconsideration of the order of dismissal or acquittal may be undertaken, whenever legally feasible, insofar as
the criminal aspect there of is concerned and may be made only by the public prosecutor; or in the case of an appeal, by
the State only, through the OSG. The private complainant or offended party may not undertake such motion for
reconsideration or appeal on the criminal aspect of the case.However, the offended party or private complainant may file a
motion for reconsideration of such dismissal or acquittal or appeal therefrom but only insofar as the civil aspect thereof is
concerned. In so doing, the private complainant or offended party need not secure the conformity of the public prosecutor.
If the court denies his motion for reconsideration, the private complainant or offended party may appeal or file a petition for
certiorarior mandamus,if grave abuse amounting to excess or lack of jurisdiction is shown and the aggrieved party has no
right of appeal or given an adequate remedy in the ordinary course of law. 67 (Citations omitted)
This is in consonance with the doctrine that:
[T]he extinction of the penal action does not necessarily carry with it the extinction ofthe civil action, whether the latter is
instituted with or separately from the criminal action. The offended party may still claim civil liability ex delictoif there is a
finding in the final judgment in the criminal action that the act or omission from which the liability may arise exists.
Jurisprudence has enumerated three instances when, notwithstanding the accuseds acquittal, the offended party may still
claim civil liability ex delicto: (a) if the acquittal is based on reasonable doubt as only preponderance of evidence is
required; (b) if the court declared that the liability of the accused is only civil;and (c) if the civil liability of the accused does
not arise from or is not based upon the crime of which the accused is acquitted. 68
However, if the state pursues an appeal on the criminal aspect of a decision of the trial court acquitting the accused and
private complainant/s failed to reserve the right to institute a separate civil action,the civil liability ex delictothat is
inherently attached to the offense is likewise appealed. The appeal of the civil liability ex delictois impliedly instituted with
the petition for certiorari assailing the acquittal of the accused. Private complainant cannot anymore pursue a separate
appeal from that of the state without violating the doctrine of non-forum shopping.
On the other hand, the conclusion isdifferent if private complainant reserved the right to institute the civil action for the
recovery of civil liability ex delicto before the Regional Trial Court orinstitute a separate civil action prior to the filing of the
criminal case in accordance with Rule 111 of the Rules of Court. In these situations, the filing of an appealas to the civil
aspect of the case cannot be considered as forum shopping.1wphi1 This is not the situation here.
We see no more reason to discuss the issues presented by the parties in light of the foregoing discussion.
Entry of judgment having been made on the resolution of the court in G.R. No. 130880 involving the same parties and
issues and by virtue of the doctrine of finality of judgment, we reiterate the resolution of this court.
WHEREFORE, the resolution in G.R. No. 130880 is reiterated. We grant the petition insofar as it prays for the setting
aside of the Court of Appeals' decision d~ted August 11, 2005 and resolution dated April 27, 2006 as a final decision over
the assailed Regional Trial Court decision that was rendered on November 16, 1998 in G.R. No. 130880.
SO ORDERED.
SECOND DIVISION
G.R. No. 109645, January 21, 2015
ORTIGAS & COMPANY LIMITED PARTNERSHIP, Petitioner, v. JUDGE TIRSO VELASCO AND DOLORES V.
MOLINA, Respondents.
[G.R. No. 112564]
DOLORES V. MOLINA, Petitioner, v. HON. PRESIDING JUDGE OF RTC, QUEZON CITY, BR. 105 AND MANILA
BANKING CORPORATION, Respondents.
[G.R. No. 128422]
DOLORES V. MOLINA, Petitioner, v. THE HONORABLE COURT OF APPEALS AND EPIMACO ORETA,Respondents.
[G.R. No. 128911]
THE MANILA BANKING CORPORATION AND ALBERTO V. REYES, Petitioners, v. DOLORES V. MOLINA AND HON.
MARCIANO BACALLA, IN HIS CAPACITY AS PRESIDING JUDGE OF THE REGIONAL TRIAL COURT OF QUEZON
CITY, BRANCH 216, Respondent.
DECISION
LEONEN, J.:
These consolidated cases involve matters that have long been settled by this court. However, petitioner in G.R. Nos.
112564 and 128422, Dolores V. Molina, remained incessant in filing suits that led to the unnecessary clogging not only of
this court's but the lower courts' dockets as well.
G.R. Nos. 109645 and 112564 were decided by this court on July 25, 1994. 1 A Motion for Reconsideration was filed by
Dolores V. Molina (Molina) on August 10, 1994. She later filed two supplements to the Motion for Reconsideration. 2 Her
Motion for Reconsideration was denied with finality in the Resolution dated January 23, 1995. Despite the denial of
Molina's Motion for Reconsideration, she filed a "Motion for Leave to File the Herein Incorporated Second Motion for
Reconsideration and to Allow x x x Dolores V. Molina a Day in Court Relative to Her Petition for Reconstitution." 3 In the
Resolution dated March 1, 1995, this court denied with finality Molina's Motion for Reconsideration. 4
In the Resolution dated March 4, 1996, this court found Molina guilty of contempt of court and imposed a fine of
P1,000.00.5
On August 15, 1997, this court decided the administrative case against Judge Tirso Velasco (Judge Velasco). 6
In order to fully comprehend the facts of G.R. Nos. 128422 and 128911, we summarize this court's decision in G.R. Nos.
109645 and 112564.
I
G.R. No. 1096457
On November 14, 1991, Molina filed a Petition for Reconstitution of Transfer Certificate of Title (TCT) No. 124088. 8 She
alleged that the original copy of TCT No. 124088 was lost when the Quezon City Register of Deeds was gutted by fire on
June 11, 1988 and that she has an "owner's duplicate copy of the title . . . and that the title is not subject of any document
or contract creating a lien or encumbrance on the land therein described." 9
Several days later, Molina moved to withdraw her Petition, explaining that she had to go to the United States. Judge
Velasco granted her Motion to Withdraw and dismissed the case. 10
On April 3, 1992, Molina "filed an ex-parte motion for review of LRC Case No. Q-5404." 11 The Motion was granted on the
same date.12
The Office of the Solicitor General objected to the Ex-parte Motion on the ground that the owners of the adjacent
properties were not notified.13 In the Order dated July 3, 1992, Judge Velasco acknowledged that his court had yet to
acquire jurisdiction over the owners of the adjacent properties. 14
On July 13, 1992, Molina filed an Ex-parte Motion praying for Notices of Hearing to be served on the:
(a) "subject owners" of specified lots in the corresponding "Technical Description of the subject land;" (b) the "President of
the Corinthian Neighborhood Association or Corinthian Homeowners Association thru the Barangay Chairman of
Barangay Corinthian because the adjoining property designated as Vicente Madrigal is now part of this Barangay
Corinthian;" (c) the "Director, Bureau of Land, Plaza Cervantes Manila as adjoining owner designated as Public Land;"
and (d) the "City Engineer of Quezon City for the adjoining boundaries designated as Roads or Road Lot." 15
However, the Clerk of Court gave the Notices of Hearing only to the President of the Corinthian Neighborhood
Association, the Director of the Bureau of Lands, and the City Engineer of Quezon City. Thus, the owners of the adjacent
lots were not served copies of the Notices of Hearing. 16
At this point, Ortigas & Company Limited (Ortigas) found out about Molina's Petition and filed an Opposition. 17 Ortigas
subsequently filed a supplemental pleading and alleged the following:
(1) The "proliferation of syndicates taking advantage of the destruction by fire of land titles kept by the Quezon City
Register of Deeds."18
(2) Molina is 'a well-known land speculator' as shown by the petitions she has previously filed. Further, the bases for
her claims are contradictory. In Land Registration Case No. Q-336 (WIDORA case), Molina claimed ownership by
acquisition through prescription, having been in open and adverse possession of the property for more than thirty
(30) years while in Civil Case No. 90-4749, she claimed that she purchased the property from a certain Eusebia
Molina.19
(3) The Land Registration Authority's report which states that:
[T]he plan [being] relied upon by Molina, Psd-16740 "appears to be derived from two different surveys, numbered
Psu-1148 & Psu-20191, neither of which appear(s) to have been the subject of original registration; thus it is
presumed that no original title had been issued from which TCT-124088 could have emanated;" that said plan "is a
portion of (LRC) SWO-15352 which is being applied for registration of title in Land Reg. Case No. Q-336, LRC Rec.
No. N-50589," etc.20
Ortigas' counsel informed the Manila Mission of Jesus Christ of Latter Day Saints, Inc. (Mormons) of Molina's pending
Petition. Thus, the Mormons filed an Opposition.21
During the hearing, Molina did not mention that she acquired the land through prescription. Instead, she testified as
follows:
[S]he and her late husband had acquired the two (2) parcels of land in question from the latter's relatives in 1939; that she
had in truth seen the deed of sale and the titles in her husband's possession; that her husband was killed by the Japanese
in 1944; that it was only in the 1960's that she attempted to obtain titles to the property in her name, and sought the help
of President Marcos, who "became her boyfriend;" that Marcos had, in turn, referred her for legal assistance to former
Judge Echeverri; that she had subsequently left for the United States where she stayed until her return during the martial
law regime at which time, however, she could no longer get in touch with either Judge Echeverri or President Marcos; that
sometime in 1990 she met Gen. Fabian Ver in Singapore, and she was then told that Marcos had given instructions for
the delivery to her of the title to the disputed lands, to be accomplished back in Manila; that the title (TCT 124088) was
actually delivered to her by Col. Balbino Diego in November, 1990 at her house in Philam Life Homes Subdivision in
Quezon City; that she learned that the title had been entrusted to Col. Diego in 1986, when Gen. Ver and President
Marcos fled the country, but Diego had been unable to give her the title earlier because he was placed under house arrest
shortly after Marcos' deposal and remained under such restraint until May 11, 1988. 22
On September 23, 1992, Judge Velasco granted Molina's Petition and directed the Quezon City Register of Deeds to
reconstitute TCT No. 124088 in Molina's name.23
Ortigas and the Office of the Solicitor General filed their respective Notices of Appeal, while the Mormons filed a Motion for
Reconsideration.24
Meanwhile, Molina "filed a motion to strike the notice of appeal or in the alternative, to allow execution of the decision
pending appeal."25
Judge Velasco dismissed Ortigas' Notice of Appeal, denied the Mormons' Motion for Reconsideration, and granted
Molina's Motion for Execution pending appeal.26 Consequently, Molina was issued TCT No. RT-58287.27
The Solicitor General's Notice of Appeal was dismissed in a separate Order on the ground that:
the Solicitor General has not filed any formal opposition to the petition and neither has it introduced and/or formally offered
any evidence to warrant its dismissal, it appearing on the contrary, that the Land Management Bureau, the DENR, the
Register of Deeds and the City Engineer's Office of Quezon City, which are the government agencies directly involved in
this kind of proceeding has not registered any opposition to the petition, the notice of appeal filed by him 28 was sham aside
from being ten (10) days late.29
The Mormons withdrew their Appeal because Molina recognized their ownership and possession of "an area of 8,860 sq.
m. and covered by TCT No. 348048[.]"30
Molina subdivided the property covered by TCT No. RT-58287 into five parcels. One of the parcels of land was purchased
by Gateway Enterprises Co., Inc.31
Ortigas then filed a Petition for Certiorari and Mandamus with prayer for the issuance of a temporary restraining
order.32 Ortigas prayed that this court:
(1) Invalidate Judge Velasco's Orders dated October 14, 1992 and February 10, 1993; and
(2) That the TCTs issued, based on Judge Velasco's Order dated October 14, 1992, "be declared void ab initio and that,
alternatively, respondent Judge be ordered to act on the notices of appeal seasonably filed by forwarding the records of
LRC Case No. Q-5404 to the Court of Appeals." 33
II
G.R. No. 11256434
G.R. No. 112564 originated from an action for "Annulment of Transfer Certificate of Title with Damages and Prayer for
Preliminary Injunction and Restraining Order"35 filed by The Manila Banking Corporation (TMBC) against Molina and
Gateway Enterprises Company, Inc. This was docketed as Case No. Q93-15920. 36
TMBC alleged that it owned several parcels of land covered by TCT No. 124088. The subject properties of TMBC's claim
were "formerly covered by TCT Nos. 77652 and 77653"37 under Ortigas' name. These properties were converted into a
subdivision of several lots. Some of the lots were sold to Manila Interpublic Development Corporation and to Breeders
Feeds, Inc. The lots purchased by these two corporations were mortgaged to TMBC as security for their respective loans.
The mortgages were foreclosed, and titles were issued in TMBC's name "as the highest bidder at the foreclosure sales." 38
Molina filed a Motion to Dismiss, citing "litis pendentia, lack of jurisdiction, bar by prior judgment, plaintiffs [referring to
TMBC] lack of status as a real party in interest, and failure of the complaint to state a cause of action." 39
Molina also alleged that a restraining order was issued with regard to TCT No. 124088 and that the trial court where Case
No. Q93-15920 was pending "had no jurisdiction to annul the judgment of a coordinate court." 40
The trial court denied Molina's Motion to Dismiss.41
Molina filed supplemental pleadings to support her Motion to Dismiss, which were denied in the Order dated November
25, 1993.42
Molina filed a Petition for Certiorari before this court, praying for the annulment of the Orders denying her Motion to
Dismiss. She also prayed that this court dismiss the action for annulment filed by TMBC. 43
Molina filed the same Petition for Certiorari before the Court of Appeals on December 9, 1993. 44
III
Ruling in G.R. Nos. 109645 and 112564
In the Decision dated July 25, 1994, this court granted Ortigas' Petition for Certiorari in G.R. No. 109645 and denied
Molina's Petition in G.R. No. 112564. The dispositive portion of the Decision states:
WHEREFORE, the petition in G.R. No. 109645 is GRANTED; and that in G.R. No. 112564[,] DENIED for lack of merit.
In G.R. No. 109645, the Decision dated September 23, 1992 of Respondent Judge Tirso Velasco, Presiding Judge of
Branch 88 of the Regional Trial Court of Quezon City, in LRC Case No. Q-5404, as well as his Orders dated April 3, 1992,
October 14, 1992, and February 10, 1993, are NULLIFIED AND SET ASIDE; the titles of Dolores Molina upheld and
reconstituted by said decision and orders namely, Transfer Certificates of Title Numbered 124088 and RT-58287 and
those derived therefrom and subsequently issued namely, Transfer Certificates of Title Numbered 83163, 83164,
83165, 83166 and 83167 are all Declared NULL AND VOID and are hereby CANCELLED; said LRC Case No. Q-5404
of the Regional Trial Court of Quezon City is DISMISSED; and the temporary restraining order of this Court of May 12,
1993 is MADE PERMANENT.
In G.R. No. 112564, the Orders of respondent Presiding Judge of Branch 105 of the Regional Trial Court of Quezon City in
Case No. Q-93-15920 dated September 17, 1993 and November 25, 1993 are AFFIRMED; and said Judge is DIRECTED
to proceed to dispose of said Case No. Q-93-15920 with all deliberate dispatch conformably with this decision.
Dolores Molina and her counsel, Atty. Eufracio T. Layag, and Dr. Jose Teodorico V. Molina, are ORDERED to SHOW
CAUSE, within ten (10) days from notice of this judgment, why they should not be pronounced liable, and correspondingly
dealt with, for violation of the rule against forum-shopping.
SO ORDERED.45
This court explained that Judge Velasco had no jurisdiction to decide the reconstitution case since no notice was given to
the owners of the adjacent properties.46 This defect was in violation of Republic Act No. 26, Section 13. 47
In addition, Judge Velasco erred in reviving the case after Molina's Motion to Withdraw had been granted. This court
discussed that:
[t]he dismissal of the case, and the lapse of the reglementary period to reconsider or set aside the dismissal, effectively
operated to remove the case from the Court's docket. Even assuming the dismissal to be without prejudice, the case
could no longer be reinstated or "revived" by mere motion in the original docketed action, but only by the payment of the
corresponding filing fees prescribed by law. . . . There having been a dismissal or withdrawal of the action, albeit without
prejudice, and the order considering the action withdrawn having become final, revival of the case could not be done
except through the commencement of a new action, i.e., by the filing of another complaint and the payment of the
concomitant docketing fees.48
As to Molina's claim of ownership, her contradictory statements proved otherwise. In this court's Decision, the following
facts were noted:
(1) In the WIDORA case, Molina claimed that she, together with her predecessors-in-interest, were in "open, public,
adverse, continuous and uninterrupted possession"49 of the property for more than 30 years. Subsequently, she
claimed to have acquired the property through purchase from Eusebia Molina and her heirs.
(2) As to possession of document of title, Molina claimed that when she purchased the property from Eusebia Molina,
she had no time to attend to the property's titling since "she was so preoccupied as the sole breadwinner of the
family."50 She later changed her story and claimed that she asked President Marcos to help her. 51 Next, she claimed
that she was in possession of the owner's duplicate copy of TCT No. 124088. 52 She again changed her story and
claimed that the owner's duplicate copy was not in her possession but she had "a certification from the Land
Management Bureau [and] that there [was] a record of her property in a microfilm negative." 53
(3) The quitclaim and waiver she executed in favor of the Mormons was an "implied recognition of Ortigas'
ownership."54
(4) Jurisprudence shows that the validity of Ortigas' titles had been decided upon in several cases, namely:
(a) Cia. Agricola de Ultramar v. Domingo55

(b) Ortigas v. Hon. Ruiz56
(c) Del Rosario v. Ortigas57
(d) Navarro v. Ortigas58
(e) Resolution dated August 7, 1992, where this court affirmed the Court of Appeals Decision in CA G.R. SP No.
18085.59 The Court of Appeals stated that "Widora and Molina had no more right to apply for the same lands
which had already been titled in the name of Ortigas." 60
This court also held that Judge Velasco erred in dismissing the Notices of Appeal filed by Ortigas and the Office of the
Solicitor General61 and in granting Molina's Motion for Execution pending appeal. 62
The filing of numerous Petitions by Molina was noted, and this court held that she engaged in forum shopping. Thus, the
dispositive portion of the Decision ordered her and her counsel to show cause why they should not be held in contempt. 63
Ortigas filed a Motion for Reconsideration on the ground that its prayer, "that Hon. Judge Tirso D.C. Velasco be purged
from the judiciary,"64 was not granted.
On the other hand, Molina filed the Motion for Reconsideration dated August 10, 1994, and two supplements to the Motion
dated September 22, 1994.65 The Motion and the supplements were denied in the Resolution dated January 23, 1995.
Thus, the Decision dated July 25, 1994 became final and executory for G.R. No. 112564 and G.R. No. 109645. 66
Also, the Resolution dated January 23, 1995 included the pronouncement that Dr. Teodorico Molina and counsel Atty.
Eufracio Layag were "guilty of contempt of court for willful violation of the rule against forum shopping." 67 A fine of P500.00
wasimposed on each of them.68
Despite the denial of her Motion for Reconsideration, Molina still filed a "Motion for Leave to File the Herein Incorporated
Second Motion for Reconsideration and to Allow x x x Dolores V. Molina a Day in Court Relative to her Petition for
Reconstitution."69
The second Motion for Reconsideration was denied in the Resolution dated March 1, 1995. This court further resolved:
TO DIRECT that no further pleadings, motions or papers be henceforth filed in these cases except only as regards the
issues directly involved in the 'Motion for Reconsideration' (Re: Dismissal of Respondent Judge) of Ortigas & Co. Ltd.,
dated August 15, 1994.
IT IS SO ORDERED.70
In the Resolution dated July 24, 1995,71 this court increased the fine imposed on Dr. Teodorico Molina and counsel Atty.
Eufracio Layag to P1,000.00 and resolved:
(2) To DECLARE THESE CASES CLOSED AND TERMINATED, DIRECT ENTRY OF JUDGMENT, AND REITERATE
the direction 'that no further pleadings, motion or papers be henceforth filed in these cases except only as regards
the issues directly involved in the Motion for Reconsideration (Re: Dismissal of Respondent Judge) of Ortigas & Co.
Ltd., dated August 15, 1994' and the proceedings for contempt against Dr. Teodorico Molina and Atty. Eufracio
Layag; and
(3) To DIRECT the Clerk of Court to transmit the mittimus of both these cases to the corresponding Courts of origin for
appropriate action and disposition.72
Despite these Resolutions stating that "no further pleadings, motions, or others papers" be filed, Molina still filed the
following:
(a) [m]otion to refer the cases to the Court En Banc dated April 5, 1995 (denied by Resolution of June 19, 1995);
(b) [consolidated motion dated July 25, 1995, for reconsideration of the June 19, 1995 Resolution (denied by
Resolution dated August 28, 1995); and
(c) [m]otion dated August 21, 1995 for reconsideration of the July 24, 1995 Resolution (Re: increasing fines on
counsels and directing entry of judgment) (denied by Resolution dated October 25, 1995)." 73
TMBC filed a Motion for Contempt74 dated September 18, 1995, praying that Molina be declared in contempt of court and
that her Motion for Reconsideration dated August 21, 1995 be denied.
In the Resolution dated March 4, 1996,75 this court found Molina guilty of contempt of court:
It is clear that petitioner [Dolores V. Molina] was bent on pursuing her claims despite the Court's unequivocal declaration
that her claims were lacking in merit, that the proceedings were terminated, and that no further pleadings, motions or
papers should be filed. Her persistence constitutes a deliberate disregard, even defiance, of these Court's plain orders,
and an abuse of the rules of procedure to delay the termination of these cases.
Molina has had more than her day in court. She was accorded more than ample opportunity to present the merits of her
case. Her every argument was heard and considered. . . . There has been a final determination of the issues in these
cases and petitioner has been repeatedly directed to abide thereby. Her deliberate violation of the orders of the Court [is]
unjustified and inexcusable.
WHEREFORE, Dolores V. Molina is found GUILTY of contempt of court for willful disregard and disobedience of the
Resolutions of the Court, and a FINE OF ONE THOUSAND PESOS (P1,000.00) is hereby imposed on her, payable within
five (5) days from receipt of this Resolution, with the warning that any subsequent disregard and disobedience of this
Court's orders will be dealt with more severely.
Let this Resolution be published in the authorized Court reports for the information and guidance of the bench and the bar
respecting the nature and effect of denials of motions for reconsideration of judgments and final orders, the propriety of
second motions for reconsideration, and the prohibition against the filing of further pleadings, motions or other papers.
IT IS SO ORDERED.76 (Emphasis in the original)

With regard to the Administrative Complaint against Judge Velasco, TMBC joined Ortigas in praying that he be-removed
from the judiciary.77
TMBC's Administrative Complaint against Judge Velasco was filed on July 12, 1993 ahead of Ortigas' Complaint and was
docketed as Administrative Matter No. RTJ-93-1108.78
In the Resolution dated August 15, 1997, this court held:

WHEREFORE, Judge Tirso D. C. Velasco is hereby DISMISSED from the service, with forfeiture of all retirement benefits
and accrued leave credits, and with prejudice to reemployment in any branch or instrumentality of the government
including government-owned or controlled corporations. Immediately upon service on him of notice of this adjudgment, he
shall be deemed to have VACATED his office and his authority to act in any manner whatsoever as Judge shall be
considered to have automatically CEASED.
SO ORDERED.79 (Emphasis in the original)
SECOND DIVISION NESTOR BRACERO, Petitioner, -versusRODULFO ARCELO and THE HEIRS OF VICTORIANO
MONISIT, namely: LOURDES MENCHAVEZ, ROGELIO RUELO, and MARTINIANAAPOR, Respondents. G.R. No.
212496 Present: CARPIO, J, Chairperson, VELASCO, JR.,* DEL CASTILLO, MENDOZA, and LEONEN,JJ Promulgated:
MAR 1 B 201 x----------------------------------------------------------~~~ DECISION LEONEN,J.: Nestor Bracero filed this Petition1
for Review assailing the Court of Appeals' (a) August 28, 2013 Decision2 affirming in toto the Regional Trial Court Order3
denying his Urgent Motion to Vacate Order for the Issuance of the Writ of Execution Against Defendants Spouses Nestor
and Lilia Bracero and to Furnish Copy of the Decision to their Counsel4 (Urgent Motion to Vacate the Writ of Execution)
and (b) April 14, 2014 Resolution5 denying the motion for its reconsideration. 4 Designated acting member per S. 0. No.
1951dated.March18, 2015. Rollo, pp. 4-11. The Petition was filed pursuant to Rule 45 of the Rules of Court. Id. at 47-53.
The Decision was penned by Associate Justice Gabriel T. Ingles and concurred in by Associate Justices Pampio A.
Abarintos (Chair) and Marilyn B. Lagura-Yap of the Eighteenth Division. Id. at 37-38. . Id. at 31-32. Id. at 62--63. The
Resolution was penned by Associate Justice Gabriel T. Ingles (Chair) and concurred in by Associate Justices Marilyn B.
Lagura-Yap and Ma. Luisa C. Quijano-Padilla of the Special Former Eighteenth Division. ~ ~ Decision 2 G.R. No. 212496
Nestor Bracero prays that this court nullify the assailed Court of Appeals Decision and Resolution, as well as the Regional
Trial Courts February 11, 2010 Order; compel the trial court to furnish his counsel with a copy of its Decision so he may
appeal this Decision within the 15-day period from counsels receipt; prohibit the execution of the Regional Trial Court
Decision; and reprimand or admonish the Regional Trial Courts Clerk of Court for failing to send his counsel a copy of the
Decision.6 The heirs of Victoriano Monisit filed a Complaint7 for Quieting of Titles/Ownership, Recovery of Possession
with Damages against Rodulfo Arcelo and Nestor Bracero over a 48,632-square-meter parcel of land located in Lubo,
Sogod, Cebu.8 The Complaint stated that Victoriano Monisit owned the 48,632- square-meter land.9 The heirs of
Victoriano Monisit inherited this property identified as Lot No. 4327 upon his death and declared it under their names for
tax purposes in 2002.10 During Victoriano Monisits lifetime, 5,000 square meters of the land was mortgaged to Rodulfo
Arcelos grandmother, Damiana Mendoza. Damiana Mendozas death was followed by her sons death, and Rodulfo
Arcelo inherited the right over the mortgaged portion of the property.11 Sometime in 1982, Nestor Bracero, claiming to be
Rodulfo Arcelos tenant, cultivated this 5,000-square-meter mortgaged portion of the property.12 Sometime in 1993,
Victoriano Monisit sued Nestor Bracero for the recovery of the property he cultivated for his failure to share the
products.13 Nestor Bracero countered that the land he cultivated belonged to Rodulfo Arcelo.14 Both complaint and
counterclaim were dismissed.15 Victoriano Monisit died single on August 3, 1995, and his legal heirs extra-judicially
partitioned his properties. His heirs Lourdes Menchavez, 6 Id. at 10. 7 Id. at 1217. 8 Id. at 12. 9 Id. 10 Id. at 14 and 48.
Lot No. 4327 was declared under the heirs of Victoriano Monisit in Tax Declaration No. 11877. 11 Id. at 48. 12 Id. 13 Id.
This case was docketed as Civil Case No. CEB-6815 with Branch 11 of the Regional Trial Court of Cebu. 14 Id. 15 Id.
Decision 3 G.R. No. 212496 Rogelio Ruelo, and Martiniana Apor inherited Lot No. 4327 as their share and immediately
took possession.16 Meanwhile, Nestor Bracero expanded his occupation of the mortgaged portion of the property to the
entire 48,632 square meters. He consequently drove out Victoriano Monisits tenant worker Salvacion Montecillo and his
family.17 The heirs of Victoriano Monisit brought the matter to the Barangay Captain but no settlement was reached.18
Thus, they filed their Complaint for Quieting of Title/ Ownership, Recovery of Possession with Damages on January 8,
2004.19 Rodulfo Arcelo filed an Answer20 denying that Nestor Bracero was his tenant.21 He claimed he was only
impleaded as respondent to help the heirs oust Nestor Bracero from the property.22 Rodulfo Arcelo did not claim
ownership23 of the 5,000-square-meter portion.24 Nestor Bracero filed a Motion to Dismiss arguing prematurity, res
judicata, and lack of jurisdiction.25 The trial court denied Nestor Braceros Motion to Dismiss and also denied
reconsideration.26 The Court of Appeals dismissed his Petition for Certiorari and/or Prohibition and also denied
reconsideration.27 Meanwhile, trial proceeded. On motion by the heirs of Victoriano Monisit, the Regional Trial Courts
November 18, 2004 Order declared Nestor Bracero in default for failure to file an answer.28 On April 16, 2009, the trial
court ruled in favor of the heirs of Victoriano Monisit.29 On May 4, 2009, the trial court served Nestor Bracero with a copy
of its Decision.30 16 Id. 17 Id. 18 Id. 19 Id. at 5. 20 Id. at 1825. 21 Id. at 19. 22 Id. at 21. 23 Id. at 20. 24 Id. at 49. 25 Id.
at 48. 26 Id. The Motion to Dismiss was denied on July 22, 2004, while his Motion for Reconsideration was denied on
January 25, 2005. 27 Id. The Petition for Certiorari was dismissed on November 23, 2006, while his Motion for
Reconsideration was denied on June 19, 2007. 28 Id. at 4849. 29 Id. at 52. 30 Id. at 4950. Decision 4 G.R. No. 212496
The period to appeal lapsed. The heirs of Victoriano Monisit filed a motion for execution and furnished the counsels of
Nestor Bracero and Rodulfo Arcelo with copies. The trial court issued the Writ of Execution on October 7, 2009 without
opposition.31 Nestor Bracero received the Notice to Vacate on Execution32 dated January 8, 2010.33 On the same day,
his counsel Atty. Danilo Pilapil filed the Urgent Motion to Vacate the Writ of Execution on the ground that counsel was not
furnished a copy of the Regional Trial Court Decision.34 The heirs of Victoriano Monisit filed their Comment.35 The
Regional Trial Court, in its February 11, 2010 Order, denied the Urgent Motion to Vacate the Writ of Execution.36 The
Court of Appeals, in its August 28, 2013 Decision, affirmed in toto the Regional Trial Court Order.37 It also denied
reconsideration.38 Hence, petitioner Nestor Bracero filed this Petition. Petitioners counsel alleges that even if the motion
for execution indicated that he was furnished a copy, he never received such copy. Respondent heirs did not present a
post office certification to prove they furnished counsel with a copy.39 Assuming petitioners counsel received a copy of
this motion, he still could not have filed an opposition since petitioner was declared in default and had lost standing to file
any motion. He also could not have appealed the Regional Trial Court Decision since he was not furnished with a copy.40
Petitioners counsel raises that the Regional Trial Courts Clerk of Court departed from usual procedure by sending a copy
of the Decision directly to petitioner. He explains that his client is a poor farmer who lives in the remote mountain
barangay of Lubo with no telephone connection, and these circumstances made it easy to defeat his clients right to
appeal.41 31 Id. at 50. 32 Id. at 30. 33 Id. at 6. 34 Id. at 50. 35 Id. at 6 and 3436. 36 Id. at 6 and 38. The Order was
penned by Presiding Judge Edito Y. Enemecio of Branch 25 of the Regional Trial Court of Danao City. 37 Id. at 53. 38 Id.
at 63. 39 Id. at 8. 40 Id. 41 Id. at 89. Decision 5 G.R. No. 212496 Lastly, he argues that even if he received a copy of the
motion for execution, to require undersigned counsel to verify the existence of the decision with the Regional Trial Court
is to unfairly burden the undersigned counsel and to unduly exonerate the clerk of court who was remiss in his duty in
sending a copy of the Decision to the undersigned counsel.42 He explains that the court in Danao is 30 kilometers away
from his office in Mandaue.43 In their Comment,44 respondent heirs argue that petitioner has no legal claim on the
property.45 Petitioner did not file an answer to the Complaint or a motion to set aside the Order declaring him in default.46
Respondent heirs contend that petitioner no doubt received the Regional Trial Court Decision on May 4, 2009.47
Petitioner insists, however, that his counsel was not furnished a copy, and clients receipt was not equivalent to counsels
receipt.48 Respondent heirs submit that Barangay Lubo is along the national highway from Sogod, has electricity, and is
accessible to all kinds of transportation and communications.49 Thus, petitioners counsels claim that petitioner is a
poor farmer who is barely literate and lives in the remote barangay of Lubo lacks merit.50 Respondent heirs submit that
petitioner hired a private counsel who had been legally assisting him since 1985.51 Also, petitioner could not be
considered so nave not to be able to comprehend the importance of a decision to his case for purposes of informing his
counsel immediately upon receipt thereof in the same manner that he informed his counsel on the same day, January 8,
2010 when he was served by the Sheriff the Writ of Execution of the decision.52 Respondent heirs contend that
[petitioners] counsel did not categorically say that he was not informed by his client of the decision on the date of receipt
on May 4, 2009.53 Respondent heirs quote Santiago v. Guadiz, Jr.54 in that petitioners cannot invoke due process on
the basis of feigned ignorance as lack of formal notice cannot prevail against the fact of actual notice.55 42 Id. at 9. 43 Id.
44 Id. at 7177. 45 Id. at 72. 46 Id. 47 Id. at 73. 48 Id. 49 Id. 50 Id. 51 Id. 52 Id. 53 Id. at 74. 54 G.R. No. 85923, February
26, 1992, 206 SCRA 590 [Per J. Cruz, First Division]. 55 Rollo, p. 74. Decision 6 G.R. No. 212496 Petitioners counsel
was also served a copy of the motion for execution on September 11, 2009, with notice to submit the motion for court
approval on September 15, 2009. Thus, petitioners counsel had actual notice of the Decision, yet he did not file an
opposition.56 Respondent heirs argue that petitioner is now in estoppel to assail the Regional Trial Court Order dated
February 11, 2010.57 Lastly, respondent heirs add that petitioners argument of lost standing in court lacks merit. The trial
court acted on his Urgent Motion to Vacate the Writ of Execution when it directed plaintiffs to comment on this motion, and
they did.58 For his part, respondent Rodulfo Arcelo filed the Manifestation59 dated September 10, 2014 waiving his right
to file a Comment to the Petition. This court finds no reversible error by the Court of Appeals in affirming the Regional Trial
Court Order dated February 11, 2010 denying petitioners Urgent Motion to Vacate the Writ of Execution. The Court of
Appeals found that petitioners counsel was furnished a copy of the motion for execution.60 Respondent heirs also
alleged in their Comment to the Motion for Reconsideration61 before the Court of Appeals that: [c]ontrary to the
allegations that counsel for the movant-petitioner did not received [sic] [a] copy of the Motion for Execution and that no
certification from the post office was presented to this Honorable Court, in the comments filed by private respondents
dated July 11, 2011 to the petition (p.4, par.2) a copy of the Motion for Execution was served on counsel for petitioner on
September 11, 2009 with notice to submit said Motion for the consideration of the Honorable Court on September 15,
2009 at 9:00 in the morning. A certification to this effect was issued by Mandaue City Central postal office dated January
29, 2010 certifying that registry letter No. 971 addressed to Atty. Danilo Pilapil of Maguikay, Mandaue City was actually
delivered and received by Vergie Pilapil on September 11, 2009. Said certification was attached to Annex B as Annex A
thereof in the Comments to the Petition of herein private respondents dated July 11, 2011. 56 Id. 57 Id. 58 Id. at 75. 59 Id.
at 88. 60 Id. at 50. 61 Id. at 5860. Decision 7 G.R. No. 212496 This was not refuted then by movant-petitioner.62 Thus,
the issue to be resolved before this court is whether receipt of petitioners counsel of a copy of the motion for execution
amounts to effective official notice of the Regional Trial Court Decision dated April 16, 2009 if he was not furnished a copy
of the Decision. Rule 13, Section 2 of the Rules of Court states in part that [i]f any party has appeared by counsel, service
upon him shall be made upon his counsel or one of them, unless service upon the party himself is ordered by the court.
Notice sent directly to client is not notice in law.63 Nevertheless, this rule admits of exceptions. In Santiago, this court
considered the filing of a motion for reconsideration as actual notice of the assailed Decision: The petitioners also
maintain that they should have first been furnished with a copy of the final decision before a writ of execution could be
validly enforced against them. Formal service of the judgment is indeed necessary as a rule but not, as it happens, in the
case at bar. The reason is that the petitioners had filed a motion for reconsideration of the decision of Judge Guadiz,
which would indicate that they were then already informed of such decision. The petitioners cannot now invoke due
process on the basis of a feigned ignorance as the lack of formal notice cannot prevail against the fact of actual notice.64
In Ramos v. Spouses Lim,65 this court considered Atty. Estaniels receipt of Atty. Datukons Manifestation informing the
court that he had been formally substituted by Atty. Estaniel as counsel66 as an alerting medium that a final ruling has
been issued by the trial court[.]67 Atty. Datukon filed this Manifestation after he was served a copy of the motion for
execution.68 Thus, this court held that Atty. Estaniels period to appeal the trial court Decision commenced from his
receipt of Atty. Datukons Manifestation on April 1, 1996, when he was put on effective official notice of the Decision: 62 Id.
at 5859. 63 Ramos v. Spouses Lim, 497 Phil. 560, 565 (2005) [Per J. Garcia, Third Division], citing Mancenido v. Court of
Appeals, 386 Phil. 627, 633 (2000) [Per J. Quisumbing, Second Division], in turn citing Riego, et al. v. Riego, et al., 124
Phil. 659, 662 (1966) [Per J. Makalintal, En Banc]; Spouses Soriano v. Soriano, 558 Phil. 627, 642 (2007) [Per J. Chico-
Nazario, Third Division], citing De Leon v. Court of Appeals, 432 Phil. 775, 788 (2002) [Per J. Quisumbing, Second
Division]. 64 Santiago v. Guadiz, Jr., G.R. No. 85923, February 26, 1992, 206 SCRA 590, 597 [Per J. Cruz, First Division].
65 497 Phil. 560 (2005) [Per J. Garcia, Third Division]. 66 Id. at 562563. 67 Id. at 567. 68 Id. at 562. Decision 8 G.R. No.
212496 The foregoing notwithstanding, the Court of Appeals ruled, and rightly so, that although Atty. Estaniel was not
officially sent a copy of the trial courts January 31, 1996 decision, he was however, put on effective official notice thereof
on April 1, 1996. He must, therefore, be made accountable for his failure to seek, within the reglementary period counted
from April 1, 1996, a review of said decision. . . . . . . . The foregoing disposition and the premises holding it together
commend themselves for concurrence. In particular, we agree with the designation of April 1, 1996 as the controlling date
when Atty. Estaniel is considered to have effectively been put on notice of the trial courts decision and whence the period
of appeal should accordingly be reckoned. There can be no quibbling that Atty. Estaniel received a copy of Atty. Datukons
April 1, 1996 MANIFESTATION on the same date. Said manifestation carried all the basic earmarks of a proper pleading
or like papers filed in court. It carried the precise case number and title. The exact branch of the handling RTC was
particularly identified, the lawyers involved in the litigation were named and the specific subject covered by the
manifestation, i.e., motion for execution of the decision in Civil Case No. 580, was clearly discernible. Atty. Estaniel,
therefore, cannot plausibly feign ignorance as to what decision the motion for execution was about. . . . . . . . In a very real
sense, Atty. Datukons MANIFESTATION was an alerting medium that a final ruling has been issued by the trial court,
which should have thus prodded Atty. Estaniel and any prudent counsel for that matter to act accordingly. Canon 18
of the Code of Professional Responsibility imposes upon a lawyer the duty to serve his client with competence and
diligence. Subsumed in this imposition, which commences from the time a lawyer is retained until his effective release
from the case or final disposition of the whole subject of the litigation, is the duty to safeguard his clients interest with the
vigilance and attention of a good father of the family. In line with his duty as defined in Canon 18 of the Code, it behooved
Atty. Estaniel, upon receipt of Atty. Datukons manifestation, to posthaste inquire from the trial court or even from Atty.
Datukon himself, about the status of petitioners case since the manifestation, a copy of which he has thus been
furnished, already made specific reference to a motion for execution filed by the counsel of his clients adversary. Atty.
Estaniel must thus be held to task for his failure to exercise due diligence in the discharge of his duties as counsel.
Petitioners, too, must suffer the consequence of such failure because a client is bound by the conduct, negligence or
mistakes of his counsel.69 (Emphasis in the original, citations omitted) Petitioners counsel was furnished a copy of the
motion for execution 69 Id. at 565567. Decision 9 G.R. No. 212496 on September 11, 2009.70 As discussed by the Court
of Appeals, this motion categorically states that the trial court rendered its Decision on April 16, 2009, yet petitioners
counsel filed no opposition.71 At that time, he did not file any motion asserting that he was not furnished a copy of the
Decision.72 It was only on January 8, 2010 when his client informed him of the Writ of Execution did petitioners counsel
file an Urgent Motion to Vacate the Writ of Execution on the ground that he did not receive a copy of the Regional Trial
Court Decision.73 Jurisprudence reiterates that [l]itigants who are represented by counsel should not expect that all they
need to do is sit back, relax and await the outcome of their cases.74 This court has held that equity aids the vigilant, not
those who slumber on their rights[,]75 and a party should periodically keep in touch with his counsel, check with the
court, and inquire about the status of the case.76 The explanation of petitioners counsel that his client only finished
Grade 6 and lives in a remote mountain barangay77 fails to convince. Petitioner immediately informed his counsel about
the Notice to Vacate on Execution on the same day he was served a copy.78 This contradicts counsels explanation
implying difficulty in communicating with his client. This even raises the possibility that his client did immediately inform
him about the Regional Trial Court Decision upon receiving a copy. Equally unconvincing and disappointing is the
submission of petitioners counsel that even if he received a copy of the motion for execution, to require undersigned
counsel to verify the existence of the decision with the Regional Trial Court is to unfairly burden the undersigned counsel
and to unduly exonerate the clerk of court who was remiss in his duty in sending a copy of the Decision to the
undersigned counsel,79 and that the court in Danao is 30 kilometers away from his office in Mandaue.80 Counsels have
the duty to serve their clients with competence and diligence.81 The distance from counsels office to the court should not
be used as an excuse by counsel from keeping himself updated with the status 70 Rollo, pp. 50, 52, and 73. 71 Id. at 52.
72 Id. 73 Id. at 50 and 5253. 74 Ampo v. Court of Appeals, 517 Phil. 750, 756 (2006) [Per J. Ynares-Santiago, First
Division], citing Macondray & Co., Inc. v. Provident Insurance Corporation, 487 Phil. 158, 168 (2004) [Per J. Panganiban,
Third Division]. 75 Id. at 755, citing Philippine Rabbit Bus Lines, Inc. v. Judge Arciaga, 232 Phil. 400, 404 (1987) [Per J.
Paras, Second Division]. 76 Id., citing Macondray & Co., Inc. v. Provident Insurance Corporation, 487 Phil. 158, 168
(2004) [Per J. Panganiban, Third Division]. 77 Rollo, p. 9. 78 Id. at 50. 79 Id. at 9. 80 Id. 81 Code of Professional
Responsibility, Canon 18. Decision 10 G.R. No. 212496 of the cases he is handling. This court has held that "[r]elief will
not be granted to a party who seeks avoidance from the effects of the judgment when the loss of the remedy at law was
due to his own negligence. " 82 Petitioner, through his counsel, did not file an answer to the Complaint. After the trial court
declared petitioner in default for failure to file an answer, his counsel did not file an opposition to or motion to lift the Order
declaring him in default. After petitioner's counsel was furnished a copy of the motion for execution, he did not immediately
file an opposition to the motion or raise the ground that he was not furnished a copy of the Decision. Petitioner Nestor
Bracero, through his counsel Atty. Danilo Pilapil, had several opportunities to argue his position before the courts but failed
to take them. Petitioner should now be considered in estoppel from assailing the Regional Trial Court Order dated
February 11, 2010 denying petitioner's Urgent Motion to Vacate the Writ of Execution, affirmed by the Court of Appeals.
Also, "[t]o frustrate the winning party's right through dilatory schemes is to frustrate all the efforts, time and expenditure of
the courts, which thereby increases the costs of litigation. "83 WHEREFORE, the Petition is DENIED. SO ORDERED
THIRD DIVISION REINIER PACIFIC INTERNATIONAL G.R. No. 157020 SHIPPING, INC. and NEPTUNE SHIP
MANAGEMENT SVCS., PTE., LTD., Petitioners, Present: VELASCO, JR., J., Chairperson, - versus - PERALTA, ABAD,
MENDOZA, and LEONEN,JJ. CAPTAIN FRANCISCO B. GUEV ARRA, substituted by his heirs, Promulgated: &I
Respondents. Jl ;;.1 1 :J 7013 X --------------------------------------------------------~--~----~-:-----------~-- X DECISION ABAD, J.:
This petition for review concerns the reckoning of the extended period for the tiling of a pleading that ends on a Saturday,
Sunday, or legal holiday. May the pleading be filed on the following working day? The Facts and the Case On May 3, 2000
petitioner Reinier Pacitic International Shipping, Inc. (Reinier Shipping), as agent of Neptune Ship Management Services,
PTE, Limited, hired respondent Captain Francisco B. Guevarra to work as master of MY NOL SHEDAR. In the course of
his work on board, Reinier Shipping sent him Notice, relieving him of command of the vessel upon the insistence of its
charterers and owners. As a result, Guevarra tiled a case for illegal dismissal and damages against Reinier Shipping and
its principal. Decision G.R. No. 157020 2 Reinier Shipping countered that Guevarra had been negligent in the discharge of
his duties as ship master. One of the vessels hatch covers was damaged when it was discharging coal in Alabama,
U.S.A. As a result, the charterers were forced to shoulder the repair costs. Reinier had no choice but yield to the demands
of the charterers for Guevarras replacement. The Labor Arbiter found Guevarras dismissal illegal and ordered Reinier
Shipping and its principal to jointly and severally pay him the US$11,316.00 that represent his salaries for the remaining
balance of the contract plus attorneys fees of US$1,131.60. The Labor Arbiter found that Reinier Shipping denied
Guevarra his right to due process since it did not give him the opportunity to be heard. Guevarra claims that the damage
to the vessel had been caused by cargo-handling stevedores. Reinier Shipping did not bother to ascertain his guilt; it
merely invoked the demand of the charterers and vessel owners that he be replaced. Reinier Shipping appealed to the
National Labor Relations Commission (NLRC) but on February 22, 2002 the latter affirmed the Labor Arbiters decision.
The due date to file a petition for special civil action of certiorari before the Court of Appeals (CA) fell on July 26, 2002, a
Friday, but Reinier Shipping succeeded in obtaining an extension of 15 days, which period counted from July 26 began to
run on July 27, a Saturday, and fell due on August 10, a Saturday. Reinier Shipping filed its petition on the following
Monday, August 12, 2002. On November 11, 2002 the CA dismissed the petition for having been filed out of time.1 The CA
ruled that Reinier Shipping violated Supreme Courts A.M. 00-2-14-SC. Since August 10, 2002, the last day of the
extended period, fell on a Saturday, automatic deferment to the next working day did not apply and Reinier Shipping
should have filed its petition before August 10, a Saturday, considering that the court is closed on Saturdays. Issue
Presented Reinier Shipping filed the present petition raising the issue of whether or not the CA erred in dismissing its
petition for having been filed out of time. 1 CA-G.R. SP 71861; Resolution penned by now Supreme Court Associate
Justice Martin S. Villarama, Jr. and concurred in by Associate Justices Godardo A. Jacinto and Mario L. Guaria III.
Decision G.R. No. 157020 3 The Courts Ruling A.M. 00-2-14-SC clarifies the application of Section 1, Rule 22 of the
Rules of Court when the last day on which a pleading is due falls on a Saturday, Sunday, or legal holiday and the original
period is extended.2 The clarification states: Whereas, the aforecited provision applies in the matter of filing of pleadings
in courts when the due date falls on a Saturday, Sunday, or legal holiday, in which case, the filing of the said pleading on
the next working day is deemed on time; Whereas, the question has been raised if the period is extended ipso jure to the
next working day immediately following where the last day of the period is a Saturday, Sunday or legal holiday so that
when a motion for extension of time is filed, the period of extension is to be reckoned from the next working day and not
from the original expiration of the period; NOW THEREFORE, the Court Resolves, for the guidance of the Bench and the
Bar, to declare that Section 1, Rule 22 speaks only of the last day of the period so that when a party seeks an extension
and the same is granted, the due date ceases to be the last day and hence, the provision no longer applies. Any
extension of time to file the required pleading should therefore be counted from the expiration of the period regardless of
the fact that said due date is a Saturday, Sunday or legal holiday. (Emphasis supplied) Reinier Shippings last day for filing
its petition fell on July 26, a Friday. It asked for a 15-day extension before the period lapsed and this was granted. As it
happened, 15 days from July 26 fell on August 10, a Saturday. The CA held that Reinier Shipping should have filed its
petition before August 10 (Saturday) or at the latest on August 9 (Friday) since, in an extended period, the fact that the
extended due date (August 10) falls on a Saturday is to be disregarded. Reinier Shipping has no right to move the
extended due date to the next working day even if such due date fell on a Saturday. Since the courts were closed on
August 10 (Saturday), Reinier Shipping should have filed its petition, according to the CA, not later than Friday, August 9.
But this is obviously wrong since it would mean compelling Reinier Shipping to file its petition one day short of the 15-day
extension granted it. That would unjustly deprive it of the full benefit of that extension. Since its new due date fell on a
Saturday when courts are close, however, the clear 2 In computing any period of time prescribed or allowed by these
Rules, or by order of the court, or by any applicable statute, the day of the act or event from which the designated period
of time begins to run is to be excluded and the date of performance included. If the last day of the period, as thus
computed, falls on a Saturday a Sunday, or a legal holiday in the place where the court sits, the time shall not run until the
next working day. Decision 4 G.R. No. 157020 language of Section 1, Rule 21, applies. This gives Reinier Shipping up to
Monday (August 12), the next working day, within which to file its petition. The clarification provided in A.M. 00-2-14-SC
actually covers a situation where the due date falls on a Saturday, Sunday, or holiday. Precisely, what such clarification
wanted to address is the erroneous claim that "the period of extension" in such a case "is to be reckoned from the next
working day and not from the original expiration of the period." The correct rule, according to the clarification, is that"[ a]ny
extension of time to file the required pleading should x x x be counted from the expiration of the period regardless of the
fact that said due date is a Saturday, Sunday or legal holiday." For example, if a pleading is due on July 10 and this
happens to be a Saturday, the time for filing it shall not run, applying Section 1 of Rule 21, on July 1 0 (Saturday) nor on
July 11 (Sunday) but will resume to run on the next working day, which is July 12 (Monday). The pleading will then be due
on the latter date. If the period is extended by 10 days, such I 0 days will be counted, not from July 12 (Monday) but from
the original due date, July 10 (Saturday) "regardless of the fact that said due date is a Saturday." Consequently, the new
due date will be I 0 days from July I 0 or precisely on July 20. As stated above, the situation of Reinier Shipping is
different. WHEREFORE, the Court REVERSES and SETS ASIDE the Court of Appeals' Resolutions in CA-G.R. SP 71861
dated November 11, 2002 and January 23, 2003 and DIRECTS it to give due course to petitioner Reinier Pacific
International Shipping, Inc.'s petition before it. SO ORDERED.
SECOND DIVISION
G.R. No. 205249, October 15, 2014
SPOUSES BENEDICT AND SANDRA MANUEL, Petitioners, v. RAMON ONG, Respondent.
DECISION
LEONEN, J.:
This resolves a petition1 for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, praying that the June
28, 2012 decision2 and the December 19, 2012 resolution3 of the Court of Appeals in CA-G.R. SP No. 119270 be reversed
and set aside.
The assailed June 28, 2012 decision dismissed for lack of merit the petition for certiorari under Rule 65 of the 1997 Rules
of Civil Procedure filed by petitioners Benedict and Sandra Manuel (the Spouses Manuel) and sustained the November
30, 2010 and February 16, 2011 orders of the Regional Trial Court, La Trinidad, Benguet. 4 The assailed December 19,
2012 resolution of the Court of Appeals denied the Spouses Manuel's motion for reconsideration. The Regional Trial
Court's November 30, 2010 order denied their motion to lift order of default, while its February 16, 2011 order denied their
motion for reconsideration.5
On December 21, 2009, respondent Ramon Ong (Ong) filed with the Regional Trial Court, La Trinidad, Benguet, a
complaint for accion reivindicatoria.6 Ong charged the Spouses Manuel with having constructed improvements through
force, intimidation, strategy, threats, and stealth on a property he supposedly owned. 7 The case was docketed as Civil
Case No. 09-CV-2582.8
On January 19, 2010, Ong filed an "amended complaint." 9 On February 3, 2010, summons was issued directed to the
Spouses Manuel.10
On April 23, 2010, Ong filed with the Regional Trial Court a motion to declare the Spouses Manuel in default. 11 Per the
sheriffs return on summons, on February 12, 2010, Sheriff Joselito Sales, along with Ong's counsel, Atty. Christopher
Donaal, and a certain Federico Laureano, attempted to personally serve summons on the Spouses Manuel at their
address in Lower Bacong, Loacan, Itogon, Benguet. 12 The Spouses Manuel, however, requested that service be made at
another time considering that petitioner Sandra Manuel's mother was then critically ill. 13 The sheriffs return further
indicates that on March 16, 2010, another attempt at personal service was made. After Sheriff Joselito Sales had
personally explained to petitioner Sandra Manuel the content of the summons and the complaint, the latter refused to sign
and receive the summons and the complaint. Sheriff Joselito Sales was thus prompted to merely tender the summons and
complaint to petitioner Sandra Manuel and to advise her to file their answer within fifteen (15) days. 14 As the Spouses
Manuel failed to file their answer within this period, Ong asked that they be declared in default. 15
On June 28, 2010, the Regional Trial Court issued an order granting Ong's motion to declare the Spouses Manuel in
default. Following this, Ong moved for the ex parte presentation of evidence, which the Regional Trial Court granted. 16
On September 13, 2010, the Spouses Manuel filed a motion to lift the order of default. They alleged that it is the siblings of
petitioner Sandra Manuel who resided in Lower Bacong, Itogon, Benguet, while they resided in Ambiong, La Trinidad,
Benguet. Thus, summons could not have been properly served on them in the former address. They surmised that Ong
and his companions mistook petitioner Sandra Manuel's siblings as the defendants in Civil Case No. 09-CV-2582. They
further claimed that they only subsequently received via registered mail copies of (1) a compliance and manifestation filed
by Ong and (2) the Regional Trial Court's order scheduling the ex parte presentation of evidence. Attached to the Spouses
Manuel's motion to lift order of default was their answer. 17
In its order dated November 30, 2010, the Regional Trial Court denied the Spouses Manuel's motion to lift order of default.
It noted that, first, their motion was not sworn to, as required by the 1997 Rules of Civil Procedure, and, second, they did
not show that their failure to timely file an answer "was due to fraud, accident, mistake or excusable negligence." 18 In its
order dated February 16, 2011, the Regional Trial Court denied the Spouses Manuel's motion for reconsideration. 19
Aggrieved, the Spouses Manuel filed a petition for certiorari before the Court of Appeals.20
As mentioned, the assailed June 28, 2012 decision of the Court of Appeals dismissed the Spouses Manuel's Rule 65
petition for lack of merit. The assailed December 19, 2012 resolution of the Court of Appeals denied their motion for
reconsideration.
Hence, this petition.
For resolution is the sole issue of whether the Spouses Manuel may be granted relief from the Regional Trial Court's June
28, 2010 order of default.
Jurisdiction over the persons

of the Spouses Manuel
acquired
As a preliminary matter, we rule on whether jurisdiction over the persons of the Spouses Manuel, as defendants in Civil
Case No. 09-CV-2582, was validly acquired. This preliminary matter is determinative of whether the fifteen-day period
within which they must file their answer started to run, thereby facilitating the context in which they could have validly been
declared to be in default.
We hold that jurisdiction over the persons of both defendants in Civil Case No. 09-CV-2582 the Spouses Benedict and
Sandra Manuel was validly acquired. This is so because personal service of summons, via tender to petitioner Sandra
Manuel, was made by Sheriff Joselito Sales on March 16, 2010.
Rule 14, Section 6 of the 1997 Rules of Civil Procedure provides:chanRoblesvirtualLawlibrary
SEC. 6. Service in person on defendant. Whenever practicable, the summons shall be served by handing a copy
thereof to the defendant in person, or, if he refuses to receive and sign for it, by tendering it to him.
Tendering summons is itself a means of personal service as it is contained in Rule 14, Section 6. Personal service, as
provided by Rule 14, Section 6, is distinguished from its alternative : substituted service as provided by Rule 14,
Section 7:chanRoblesvirtualLawlibrary
SEC. 7. Substituted service. If, for justifiable causes, the defendant cannot be served within a reasonable time as
provided in the preceding section, service may be effected (a) by leaving copies of the summons at the defendant's
residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at
defendant's office or regular place of business with some competent person in charge thereof. (Emphasis supplied)
In this case, the sheriffs return on summons indicated that Sheriff Joselito Sales endeavored to personally hand the
summons and a copy of the complaint to the Spouses Manuel on two (2) separate occasions. He relented from doing so
on the first occasion in deference to the medical condition of petitioner Sandra Manuel's mother. On the second occasion,
he was constrained to tender the summons and copy of the complaint as petitioner Sandra Manuel refused to accept
them.
The Spouses Manuel did not deny the occurrence of the events narrated in the sheriffs return but claimed that no valid
service of summons was made. They claimed that they did not reside in Lower Bacong, Loacan, Itogon, Benguet, where
the service of summons, was made. From this, they surmised that the "Sandra Manuel" who was specifically identified in
the sheriffs return was someone other than petitioner Sandra Manuel.
The Spouses Manuel cannot capitalize on the supposed variance of address. Personal service of summons has nothing
to do with the location where summons is served. A defendant's address is inconsequential. Rule 14, Section 6 of the
1997 Rules of Civil Procedure is clear in what it requires:personally handing the summons to the defendant (albeit tender
is sufficient should the defendant refuse to receive and sign). What is determinative of the validity of personal service is,
therefore, the person of the defendant, not the locus of service.
In any case, the Court of Appeals is correct in pointing out that the Spouses Manuel's self-serving assertion must crumble
in the face of the clear declarations in the sheriffs return. 21 Pursuant to Rule 131, Section 3(m) of the Revised Rules on
Evidence,22 the acts of Sheriff Joselito Sales and the events relating to the attempt to personally hand the summons and a
copy of the complaint to the Spouses Manuel, as detailed in the sheriffs return, enjoy the presumption of
regularity.23 Moreover, Sheriff Joselito Sales must be presumed to have taken ordinary care and diligence in carrying out
his duty to make service upon the proper person(s) and not upon an impostor. 24
A sheriffs return, if complete on its face, must be accorded the presumption of regularity and, hence, taken to be an
accurate and exhaustive recital of the circumstances relating to the steps undertaken by a sheriff. In this case, the
Spouses Manuel have harped on their (self-serving) claim of maintaining residence elsewhere but failed to even allege
that there was anything irregular about the sheriffs return or that it was otherwise incomplete.
Having alleged irregularities in the service of summons, it was incumbent upon the Spouses Manuel to adduce proof of
their claims. All they mustered was their self-serving allegation of an alternative address. If at all, this claim of maintaining
residence elsewhere should not even be lent an iota of credibility considering that, as respondent Ramon Ong pointed
out, the barangay clearances, which the Spouses Manuel themselves attached to one of their pleadings (as proof of their
identities), actually indicated that they were residents of Bacong Loacan, Itogon, Benguet. 25cralawred Their lie is, thus,
revealed by their own pleading.
As the Spouses Manuel not only failed in discharging the burden of proving their allegation but even succeeded in
contradicting themselves, Sheriff Joselito Sales' recollection of events must be taken to be true. Thus, valid personal
service of summons, via tender to petitioner Sandra Manuel, was made. From this, it follows that jurisdiction over the
persons of petitioners Benedict and Sandra Manuel was acquired by the Regional Trial Court, La Trinidad, Benguet, in
Civil Case No. 09-CV-2582.
The Spouses Manuel are not

entitled to relief from the
order of default
As valid service of summons was made on them, it was incumbent upon the Spouses Manuel, pursuant to Rule 11,
Section 1 of the 1997 Rules of Civil Procedure,26 to file their answer within fifteen (15) days from March 16, 2011. Having
failed to do so, they were rightly declared to be in default.
Rule 9, Section 3 of the 1997 Rules of Civil Procedure provides for when a party to an action may be declared in default.
Further, Rule 9, Section 3(b) governs the grant of relief from orders of default:chanRoblesvirtualLawlibrary
SEC. 3. Default; declaration of. If the defending party fails to answer within the time allowed therefor, the court shall,
upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party
in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as his pleading may
warrant, unless the court in its discretion requires the claimant to submit evidence. Such reception of evidence may be
delegated to the clerk of court.
(a) Effect of order of default. A party in default shall be entitled to notice of subsequent proceedings but not to take part
in the trial.
(b) Relief from, order of default. A party declared in default may at any time after notice thereof and before judgment file
a motion under oath to set aside the order of default upon proper showing that his failure to answer was due to fraud,
accident, mistake or excusable negligence and that he has a meritorious defense. In such case, the order of default may
be set aside on such terms and conditions as the judge may impose in the interest of justice. (Emphasis supplied)
Pursuant to Rule 9, Section 3, a court may proceed to render judgment as the pleading may warrant should a defendant
fail to timely file his or her answer. However, a court may decline from immediately rendering judgment and instead
require the plaintiff to present evidence. Per Rule 9, Section 3(a), a party declared to be in default shall nevertheless be
"entitled to notice of subsequent proceedings," although he or she may no longer take part in the trial.
As explained in Spouses Delos Santos v. Carpio,27 "there are three requirements which must be complied with by the
claiming party before the court may declare the defending party in default:chanRoblesvirtualLawlibrary
(1) the claiming party must file a motion asking the court to declare the defending party in default;
(2) the defending party must be notified of the motion to declare him in default;
(3) the claiming party must prove that the defending party has failed to answer within the period provided by the Rule." 28
All these requisites were complied with by respondent Ramon Ong.
It is not disputed that Ong filed a motion to declare the Spouses Manuel in default. It is also not disputed that the latter
filed their answer after the fifteen-day period, counted from March 16, 2010, had lapsed. The Spouses Manuel only filed
their answer along with their motion to lift order of default on September 13, 2010.
It is similarly settled that the Spouses Manuel were notified that a motion to declare them in default had been filed. They
acknowledged in the present petition for certiorari that on June 23, 2010, Ong filed a compliance to the Regional Trial
Court's April 30, 2010 order that required the submission of the registry return card evidencing the mailing to the Spouses
Manuel of a copy of the motion to have them declared in default.
Not only were the requisites for declaring a party in default satisfied, the Spouses Manuel's motion to lift order of default
was also shown to be procedurally infirm.
Consistent with Rule 9, Section 3(b) of the 1997 Rules of Civil Procedure, "the remedy against an order of default is a
motion to set it aside on the ground of fraud, accident, mistake, or excusable negligence." [29 However, it is not only the
motion to lift order of default which a defendant must file. As this court emphasized in Agravante v. Patriarca,30 to the
motion to lift order, of default must "be appended an affidavit showing the invoked ground, and another, denominated
affidavit of merit, setting forth facts constituting the party's meritorious defense or defenses." 31
The heed for an affidavit of merit is consistent with Rule 8, Section 5 of the 1997 Rules of Civil Procedure, 32 which
requires that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake must be stated with
particularity."
In Montinola, Jr. v. Republic Planters Bank,33 this court noted that the three (3) requisites that must be satisfied by a
motion in order "to warrant the setting aside of an order of default for failure to file answer,
are:chanRoblesvirtualLawlibrary
(1) it must be made by motion under oath by one that has knowledge of the facts;
(2) it must be shown that the failure to file answer was due to fraud, accident, mistake or excusable negligence; and
(3) there must be a proper showing of the existence of a meritorious defense." [34(Citations omitted)
Consistent with Agravante, it is through an affidavit of merit that a defendant seeking relief from an order of default shows
that "the failure to file answer was due to fraud, accident, mistake or excusable negligence." 35
In this case, the Court of Appeals noted that the Spouses Manuel's motion to lift order of default was not made under oath.
We add that this motion was not accompanied by an affidavit of merit specifying the facts which would show that their
non-filing of an answer within fifteen (15) days from March 16, 2010 was due to fraud, accident, mistake, or excusable
negligence.
Failing both in making their motion under oath and in attaching an affidavit of merits, the Spouses Manuel's motion to lift
order of default must be deemed pro-forma. It is not even worthy of consideration.
Certainly, there is jurisprudence to the effect that an affidavit of merit is not necessary "where a motion to lift an order of
default is grounded on the very root of the proceedings [such as] where the court has not acquired jurisdiction over the
defendants."36 Similarly, there is jurisprudence stating that "when a motion to lift an order of default contains the reasons
for the failure to answer as well as the facts constituting the prospective defense of the defendant and it is sworn to by
said defendant, neither a formal verification nor a separate affidavit of merit is necessary." 37
However, in this case, the Spouses Manuel failed not only in attaching an affidavit of merit but also in making their motion
under oath. They are, therefore, left without any alternative on which to rest. Their motion is utterly ineffectual.
Apart from their failure to make their motion to lift order of default under oath and to attach to it an affidavit of merit, the
Court of Appeals also noted that the Spouses Manuel set their motion to lift order of default for hearing on the same date
that they filed it (i.e., September 13, 2010). Thus, they also violated Rule 15, Section 4 of the 1997 Rules of Civil
Procedure,38 which requires that service of a motion upon an adverse party must be made in such a manner that ensures
receipt by the latter "at least three (3) days before the date of hearing. . . ."
We do not lose sight of the admonitions that have been made in jurisprudence that, as a rule, courts should be liberal in
setting aside orders of default and that default judgments are frowned upon. 39Indeed, apart from a motion to lift order of
default, other remedies are available to a defaulted defendant even after judgment has been rendered. Thus, if judgment
had already been rendered but has not yet become final and executory, an appeal asserting that the judgment was
contrary to the law or to the evidence,40 or a motion for new trial under Rule 37, may be filed. 41 In the case of the latter, the
same affidavits as are required in a motion to lift order of default must be attached. 42 If judgment has become final and
executory, a defaulted defendant may file a petition for relief from judgment under Rule 38. 43 Still, should the defaulted
defendant fail to file a petition for relief, a petition for annulment of judgment on the ground of lack of jurisdiction or
extrinsic fraud remains available.44
However, jurisprudence, too, has qualified the intent that animates this liberality. As this court stated in Acance v. Court of
Appeals:45
The issuance of the orders of default should be the exception rather than the rule, to beallowed only in clear cases of
obstinate refusal by the defendant to comply with the orders of the trial court. 46 (Emphasis supplied)
Moreover, this liberality must be tempered with a recognition that, in the first place, it is. a defendant who is at fault in
failing to timely file an answer.
Rule 9, Section 3(b) gives an exclusive list of only four (4) grounds that allow for relief from orders of default. Moreover,
these grounds extrinsic fraud, accident, mistake, and excusable negligence relate to factors that are extraneous to a
defendant, that is, grounds that show that a defendant was prevented, by reasons beyond his or her influence, from timely
filing an answer.
The recognition that it is the defendant who is at fault and must suffer the consequences of his or her own failure is
analogous to the dismissal of an action due to the fault of a plaintiff, as provided by Rule 17, Section 3 of the 1997 Rules
of Civil Procedure. Rule 17, Section 3 reads:chanRoblesvirtualLawlibrary
SEC. 3. Dismissal due to fault of plaintiff. If for no justifiable cause, the plaintiff fails to appear on the date of the
presentation of his evidence in chief on the complaint, or to prosecute his action for an unreasonable length of time, or to
comply with these Rules or any order of the court, the complaint may be dismissed upon motion of the defendant or upon
the court's own motion, without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a
separate action. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise declared by the
court.
Rule 17, Section 3 is qualified by the phrase "for no justifiable cause." Thus, in cases covered by Rule 17, Section 3,
should the failure to comply with court processes be the result of the plaintiffs own fault, it is but logical that a plaintiff must
suffer the consequences of his own heedlessness. Rule 9, Section 3 on default applies the same logic to a culpable
defendant.
In this case, the Spouses Manuel only have themselves to blame in not properly receiving the summons and copy of the
complaint served on them. It has been shown that their claim that service of summons was made on persons other than
them deserves no credence. Quite the contrary, it is quite apparent that Sheriff Joselito Sales not only explained the
contents of the summons and the complaint but actually told them that they must file their answer in fifteen (15) days. It
was petitioner Sandra Manuel who refused to sign and receive the summons and the complaint. This is evidently an act of
obstinate refusal to submit to and to comply with court processes. Thus, the r Spouses Manuel are not deserving of any
leniency.
WHEREFORE, the petition for review on certiorari is DENIED. The June 28, 2012 decision and the December 19, 2012
resolution of the Court of Appeals in CA-G.R. SP No. 119270 are AFFIRMED.
SO ORDERED.chanroblesvirtuallawlibrary
FIRST DIVISION
G.R. No. 183795, November 12, 2014
PRUDENTIAL BANK (NOW BANK OF THE PHILIPPINE ISLANDS) AS THE DULY APPOINTED ADMINISTRATOR OF
THE ESTATE OF JULIANA DIEZ VDA. DE GABRIEL, Petitioner, v. AMADOR A. MAGDAMIT, JR., ON HIS BEHALF
AND AS SUBSTITUTED HEIR (SON) OF AMADOR MAGDAMIT, SR., AND AMELIA F. MAGDAMIT, AS SUBSTITUTED
HEIR (WIDOW) OF AMADOR MAGDAMIT, SR., Respondents.
DECISION
PEREZ, J.:
Before us is a Petition for Review under Rule 45 of the 1997 Rules of Civil Procedure assailing the Decision 1 and
Resolution2 of the Court of Appeals (CA) dated 3 September 2007 and 18 July 2008, respectively, in CA-G.R. SP No.
93368, affirming the Decision of the Regional Trial Court (RTC), 3dated 18 January 2006, in Civil Case No. 05-112499,
which reversed the ruling of the Metropolitan Trial Court (MeTC) on the ground that the MeTC did not acquire jurisdiction
over the person of the respondents due to invalid service of summons.
The facts as culled from the records are as follows:chanroblesvirtuallawlibrary
This is a case of unlawful detainer filed by petitioner Prudential Bank, now Bank of the Philippine Islands (petitioner), in its
capacity as administrator of the Estate of Juliana Diez Vda. De Gabriel (Estate). It is based on the ground of respondents'
failure to pay rentals and refusal to vacate the subject property, which is allegedly part of the Estate located at 1164
Interior, Julio Nakpil St., Paco, Manila, covered by Transfer Certificate of Title No. 118317 of the Registry of Deeds of
Manila.
In the Original Complaint4 filed before the MeTC, Branch 15 of Manila, petitioner impleaded Amador A. Magdamit, Jr.
(Magdamit, Jr.), as respondent.
Instead of filing an Answer, Magdamit, Jr. filed a Notice of Special Appearance with Motion to Dismiss. Among others,
Magdamit, Jr. argued that (1) petitioner was not duly authorized through a Board Resolution to institute the complaint, (2)
he was not the occupant of the subject property but instead, his parents, as grantees or awardees of Juliana Diez Vda. De
Gabriel, and (3) the MeTC did not acquire jurisdiction over his person because the summons was served at his former
address at 1164 Interior Julio Nakpil St., Paco, Manila. On 30 April 2003, petitioner filed a Motion to Strike Out this
pleading on the ground that it is prohibited. Petitioner then filed an Amended Complaint, this time, impleading both
Magdamit, Jr. and Amador Magdamit, Sr. (Magdamit, Sr.).
In an Order5 dated 26 June 2003, the MeTC granted petitioner's Motion to Strike Out Magdamit, Jr.'s Notice of Special
Appearance with Motion to Dismiss and ordered Magdamit, Jr. to file an Answer. The Order
reads:chanRoblesvirtualLawlibrary
After due consideration of the matter and arguments stated therein, the Court resolves to DENY the defendant's Motion to
dismiss, it appearing that the summons issued in this case was served, albeit substituted nevertheless valid. It is of no
consequence that defendant is also presently residing in Bacoor, Cavite. Suffice it to say that summons was served upon
him (although substituted) on the leased premises which plaintiff is justified in assuming that he is also residing thereat.
Moreover, it appears that he knew the person on whom summons was served (together with a copy of the complaint) as a
certain Dara Cabug only that he claims that the latter is not of "suitable age and discretion" to receive the summons.
Simply put, the requirement of due process has been satisfied. Be that as it may, it would not unduly prejudice the rights of
the plaintiff if defendant is given additional period of five (5) days from notice hereof within which to file his Answer. 6
In response to the Amended Complaint, both Magdamit, Jr. and Magdamit, Sr. filed their Answers separately. On 9 July
2003, Magdamit, Jr., filed his Answer with Counterclaim 7 (In a Special Appearance Capacity). On the other hand,
Magdamit, Sr. filed his Answer8 on 13 November 2003. Magdamit, Sr. argued that the MeTC did not acquire jurisdiction
over his person because the summons was not properly served as the summons was received by Madel Magalona, who
is not authorized to receive summons being a mere housemaid of Magdamit, Sr.'s daughter, Arleen Marie Cabug. Also,
Magdamit, Sr. argued that in the 1960s, the Spouses Francisco and Juliana Gabriel assigned the subject property to him
free of charge as a reward and in recompense for the long, faithful, and devoted services he rendered to them. Since
then, he had been continuously exercising acts of ownership over the subject property, including payment of real estate
taxes. Magdamit, Sr. further argued that amendment of the Complaint in order to implead him is improper. According to
Magdamit, Sr., amendment cannot be allowed so as to confer jurisdiction upon a court that never acquired it in the first
place, and the ejectment case cannot be instituted against Magdamit, Jr. because an action to recover possession cannot
be maintained against one who is not in actual or legal possession thereof. 9chanrobleslaw
Pending litigation of the case, Magdamit, Jr., who was made an original defendant in the MeTC, substituted his deceased
father, Magdamit, Sr.chanrobleslaw
Ruling of the MeTC
After trial, the MeTC ruled in favor of petitioner. According to the MeTC, "[t]he fact that the person who received the
summons was a 13-year old girl does not make the service of summons invalid. That she was of sufficient age and
discretion is shown by the fact that she was intelligent enough to immediately bring to the attention of defendant Atty.
Amador Magdamit, Jr. the summons and copy of the complaint she received." 10 The MeTC went on further, stating that
Magdamit Sr.'s claim of ownership is beyond its jurisdiction because the only issue in an ejectment case is "possession
defacto". The dispositive portion of the MeTC Decision dated 21 March 2005 reads:chanRoblesvirtualLawlibrary
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against defendants Amador Magdamit,
Sr.:chanroblesvirtuallawlibrary
1. ordering said defendant and all persons claiming right under him to vacate the subject three (3) lots covered by TCT
No. 118317 of the Registry of Deeds of Manila, located at and also known as 1164 Interior J. Nakpil St., Paco, Manila and
to peacefully surrender possession thereof to plaintiff;
2. ordering said defendant to pay plaintiff the sum of P180,000.00 representing rentals or reasonable compensation for
the use of the property due from August 2003 up to February 2005 and P10,000.00 per month thereafter until
defendants fully vacate the subject property;
3. ordering said defendant to pay plaintiff the sum of P20,000.00 as attorney's fees; and
4. to pay the costs.
The complaint is dismissed as against defendant Amador Magdamit, Jr. and the latter's counterclaim is likewise
dismissed.
SO ORDERED.11
Ruling of the RTC
On appeal, the RTC set aside the decision of the MeTC and dismissed the case for lack of jurisdiction over the person of
the respondents.12 According to the RTC, amending the original complaint to implead Magdamit, Sr. to cure a defect in the
complaint and introduce a non-existing cause of action, which petitioner did not possess at the outset, and to confer
jurisdiction upon the court that never acquired jurisdiction in the first place renders the complaint dismissible. The RTC
further stated that because the Return did not clearly indicate the impossibility of service of summons within a reasonable
time upon the respondents, the process server's resort to substituted service of summons was unjustified. The decision of
the RTC reads:chanRoblesvirtualLawlibrary
WHEREFORE, this Court finds merit on the appeal and consequently, the decision on appeal is hereby set aside, and this
case is accordingly dismissed for lack of jurisdiction over the persons of the defendants. 13
Ruling of the CA
Aggrieved, petitioner filed an appeal via a petition for review under Rule 42 of the Rules of Court before the CA. The
petitioner argued that the RTC erred in ruling that the MeTC did not acquire jurisdiction over the person of the
respondents due to improper service of summons considering that the respondents participated in the proceedings in the
MeTC by filing a Notice of Appearance with Motion to Dismiss, Answer with Counterclaim, entering into pre-trial,
submitting position papers, and presenting evidence, which militate against the alleged improper service of summons. On
3 September 2007, the CA denied the petition and affirmed the decision of the RTC.
According to the CA, the Return, with only a general statement and without specifying the details of the attendant
circumstances or of the efforts exerted to serve the summons, will not suffice for purposes of complying with the rules of
substituted service of summons. The CA also rejected petitioner's contention that respondents' voluntary submission to
the jurisdiction of the court cured any defect in the substituted service of summons when as early as during the infancy of
the proceedings in the MeTC, Magdamit, Jr. seasonably raised the ground of lack of jurisdiction over his person by filing a
Notice of Appearance with Motion to Dismiss, which the respondents incessantly reiterated in their pleadings even when
the case was elevated to the RTC, then to the CA. The dispositive portion of the decision of the CA
Having found that the MeTC did not acquire jurisdiction over the persons (sic) of respondents, it would be futile on Our
part to still pass upon the other errors assigned by petitioner.
WHEREFORE, premises considered, the petition is DENIED. Costs against petitioner.

SO ORDERED.14
The motion for reconsideration was likewise denied for lack of merit. Hence, this Petition, raising the following assignment
of errors:chanRoblesvirtualLawlibrary
"I. Whether or not the Court of Appeals erred in dismissing the Petition for Review of the Decision of the Regional Trial
Court of Manila dated January 18, 2006; and disposing of only the issue of lack of jurisdiction over the person of
respondents for alleged improper service of summons;
II. Whether or not the Court of Appeals erred in not ruling on the material and substantial issues in the case; and
III. Whether or not the Court of Appeals erred in affirming the decision of the Metropolitan Trial Court of Manila dismissing
of the Complaint against Magdamit, Jr., based on the ground that he was no longer residing at the subject property prior
to, and at the time of the filing of the ejectment complaint." 15
The pivotal issue is whether or not the MeTC acquired jurisdiction over the person of the respondents.
The petition is bereft of merit.
Both respondents, Magdamit, Jr. and Magdamit, Sr. argued that the MeTC did not acquire jurisdiction over their persons
due to defective or improper service of summons. Magdamit, Sr. argued that the MeTC could not have acquired
jurisdiction over his person due to improper/defective service of summons because it was served upon an incompetent
person, the housemaid of his daughter. Magdamit Sr. also argued that the MeTC did not acquire jurisdiction over him
because he was impleaded as a respondent only after the inherently invalid original complaint was amended. According to
Magdamit, Sr., the original complaint was inherently invalid because it was instituted against Magdamit, Jr., against whom
an action to recover possession cannot be maintained, because he is not in actual or legal possession thereof. Thus, the
amendment of the inherently invalid original complaint for the purpose of curing a defect to confer jurisdiction was invalid
as the MeTC never acquired jurisdiction in the first place. 16 Pertinent to the position of Magdamit, Sr. is the Sheriffs Return
dated 24 October 2003 on the service of summons on Magdamit, Jr. which reads:chanRoblesvirtualLawlibrary
1. That, on October 22, 2003, he proceeded to the place of defendant Amador Magdamit, Sr. at No. 1164 Int. Julio Nakpil
St., Paco, Manila, for the purpose of serving the Summons issued in the above-entitled case, but no service was effected
because he was not around;
2. That, on October 23, 2003, undersigned repaired (sic) anew to the said place but for the second time, he failed to
reached (sic) said defendant. Thus, he elected (sic) substituted service by serving the said summons together with the
copy of the complaint and annexes attached thereat (sic) to Ms. Madel Magalona, a person of sufficient age and living
thereat who however refused to acknowledge(d) receipt thereof;
3. That, undersigned explained to (this) Ms. Magalona the contents of the said process in a language she fully understood
and adviced (sic) her to gave (sic) the same to her employer as soon as he arrives. 17
On the other hand, Magdamit, Jr. argued that the MeTC did not acquire jurisdiction over his person because the summons
was not served at his residence but at the house of Magdamit, Sr., and on a person not authorized to receive summons.
The Sheriffs Return dated 25 March 2003 reads:chanRoblesvirtualLawlibrary
This is to certify, that on the 24th day of March, 2003, xxx served copy of the Summons together with the copy of the
Complaint and its attachment, upon defendant/s Amador A. Magdamit, Jr. at 1164 Int., J. Nakpil St., Paco, Manila, by
tendering the copy to Dara Cabug (grand daughter), a person of sufficient age, discretion and residing therein who
however refused to acknowledged (sic) receipt thereof.
That on several occasions despite deligent (sic) efforts exerted to serve the said processes personally to defendant/s
herein the same proved futile. Thus, substituted service was effected in accordance with the provision of Sec. 8, Rule 14,
Rules of Court.
In view of the foregoing, the original summons is now respectfully returned to the Honorable Court, DULY SERVED. 18
Fundamental is the rule that jurisdiction over a defendant in a civil case is acquired either through service of summons or
through voluntary appearance in court and submission to its authority. In the absence or when the service of summons
upon the person of the defendant is defective, the court acquires no jurisdiction over his person, and a judgment rendered
against him is null and void.19chanrobleslaw
In actions in personam such as ejectment, the court acquires jurisdiction over the person of the defendant through
personal or substituted service of summons. However, because substituted service is in derogation of the usual method of
service and personal service of summons is preferred over substituted service, parties do not have unbridled right to
resort to substituted service of summons.20Before substituted service of summons is resorted to, the parties must: (a)
indicate the impossibility of personal service of summons within a reasonable time; (b) specify the efforts exerted to locate
the defendant; and (c) state that the summons was served upon a person of sufficient age and discretion who is residing
in the address, or who is in charge of the office or regular place of business of the defendant. 21chanrobleslaw
In Manotoc v. Court of Appeals,22 we have succinctly discussed a valid resort to substituted service of
summons:chanRoblesvirtualLawlibrary
We can break down this section into the following requirements to effect a valid substituted
service:chanroblesvirtuallawlibrary
(1) Impossibility of Prompt Personal Service
The party relying on substituted service or the sheriff must show that defendant cannot be served promptly or
there is impossibility of prompt service. Section 8, Rule 14 provides that the plaintiff or the sheriff is given a
"reasonable time" to serve the summons to the defendant in person, but no specific time frame is mentioned. "Reasonable
time" is defined as "so much time as is necessary under the circumstances for a reasonably prudent and diligent man to
do, conveniently, what the contract or duty requires that should be done, having a regard for the rights and possibility of
loss, if any, to the other party." Under the Rules, the service of summons has no set period.
However, when the court, clerk of court, or the plaintiff asks the sheriff to make the return of the summons and the latter
submits the return of summons, then the validity of the summons lapses. The plaintiff may then ask for an alias summons
if the service of summons has failed. What then is a reasonable time for the sheriff to effect a personal service in order to
demonstrate impossibility of prompt service? To the plaintiff, "reasonable time" means no more than seven (7) days since
an expeditious processing of a complaint is what a plaintiff wants. To the sheriff, "reasonable time" means 15 to 30 days
because at the end of the month, it is a practice for the branch clerk of court to require the sheriff to submit a return of the
summons assigned to the sheriff for service. The Sheriffs Return provides data to the Clerk of Court, which the clerk uses
in the Monthly Report of Cases to be submitted to the Office of the Court Administrator within the first ten (10) days of the
succeeding month. Thus, one month from the issuance of summons can be considered "reasonable time" with regard to
personal service on the defendant.
Sheriffs are asked to discharge their duties on the service of summons with due care, utmost diligence, and reasonable
promptness and speed so as not to prejudice the expeditious dispensation of justice. Thus, they are enjoined to try their
best efforts to accomplish personal service on defendant. On the other hand, since the defendant is expected to try to
avoid and evade service of summons, the sheriff must be resourceful, persevering, canny, and diligent in serving the
process on the defendant. For substituted service of summons to be available, there must be several attempts by the
sheriff to personally serve the summons within a reasonable period [of one month] which eventually resulted in failure to
prove impossibility of prompt service. "Several attempts" means at least three (3) tries, preferably on at least two different
dates. In addition, the sheriff must cite why such efforts were unsuccessful. It is only then that impossibility of service can
be confirmed or accepted.
(2) Specific Details in the Return
The sheriff must describe in the Return of Summons the facts and circumstances surrounding the attempted
personal service. The efforts made to find the defendant and the reasons behind the failure must be clearly
narrated in detail in the Return. The date and time of the attempts on personal service, the inquiries made to locate the
defendant, the name/s of the occupants of the alleged residence or house of defendant and all other acts done, though
futile, to serve the summons on defendant must be specified in the Return to justify substituted service. The form on
Sheriffs Return of Summons on Substituted Service prescribed in the Handbook for Sheriffs published by the Philippine
Judicial Academy requires a narration of the efforts made to find the defendant personally and the fact of failure. Supreme
Court Administrative Circular No. 5 dated November 9, 1989 requires that "impossibility of prompt service should be
shown by stating the efforts made to find the defendant personally and the failure of such efforts," which should be made
in the proof of service.
(3) A Person of Suitable Age and Discretion
If the substituted service will be effected at defendant's house or residence, it should be left with a person of
"suitable age and discretion then residing therein." A person of suitable age and discretion is one who has attained
the age of full legal capacity (18 years old) and is considered to have enough discernment to understand the importance
of a summons. "Discretion" is defined as "the ability to make decisions which represent a responsible choice and for which
an understanding of what is lawful, right or wise may be presupposed". Thus, to be of sufficient discretion, such person
must know how to read and understand English to comprehend the import of the summons, and fully realize the need to
deliver the summons and complaint to the defendant at the earliest possible time for the person to take appropriate action.
Thus, the person must have the "relation of confidence" to the defendant, ensuring that the latter would receive or at least
be notified of the receipt of the summons. The sheriff must therefore determine if the person found in the alleged dwelling
or residence of defendant is of legal age, what the recipient's relationship with the defendant is, and whether said person
comprehends the significance of the receipt of the summons and his duty to immediately deliver it to the defendant or at
least notify the defendant of said receipt of summons. These matters must be clearly and specifically described in the
Return of Summons.
(4) A Competent Person in Charge
If the substituted service will be done at defendant's office or regular place of business, then it should be served on a
competent person in charge of the place. Thus, the person on whom the substituted service will be made must be
the one managing the office or business of defendant, such as the president or manager; and such individual
must have sufficient knowledge to understand the obligation of the defendant in the summons, its importance,
and the prejudicial effects arising from inaction on the summons. Again, these details must be contained in the
Return.23 (Emphasis and underscoring supplied; citations omitted)
The service of summons on Magdamit, Sr. failed to comply with the rule laid down in Manotoc. The resort to substituted
service after just two (2) attempts to personally serve the summons on Magdamit, Sr., is premature under our
pronouncement that:chanRoblesvirtualLawlibrary
What then is a reasonable time for the sheriff to effect a personal service in order to demonstrate impossibility of prompt
service? To the plaintiff, "reasonable time" means no more than seven (7) days since an expeditious processing of a
complaint is what a plaintiff wants. To the sheriff, "reasonable time" means 15 to 30 days because at the end of the month,
it is a practice for the branch clerk of court to require the sheriff to submit a return of the summons assigned to the sheriff
for service. The Sheriffs Return provides data to the Clerk of Court, which the clerk uses in the Monthly Report of Cases to
be submitted to the Office of the Court Administrator within the first ten (10) days of the succeeding month. Thus, one
month from the issuance of summons can be considered "reasonable time" with regard to personal service on the
defendant.24
Then too, the proof of service failed to specify the details of the attendant circumstances. The Return merely expressed a
general statement that because the Sheriff failed to reach Magdamit, Sr., he elected substituted service of summons. The
Return failed to state the impossibility to serve summons within a reasonable time. And the further defect in the service
was that the summons was served on a person not of sufficient discretion, an incompetent person, Madel Magalona, a
housemaid of Magdamit Sr.'s daughter, Arleen Marie Cabug.
Similar to the case of Magdamit, Sr., the service of summons on Magdamit, Jr. also failed to comply with the rules laid
down in Manotoc. The summons was served at 1163 Int., J. Nakpil St., Paco, Manila, Magdamit, Jr.'s former residence
when at the time, Magdamit, Jr. was residing at 0369 Jupiter St., Progressive Village 20 and 21, Molino I, Bacoor, Cavite.
In Keister v. Navarro,25 we have defined "dwelling house" or "residence" to refer to a place where the person named in the
summons is living at the time when the service is made, even though he may be temporarily out of the country at the time
to the time of service. Therefore, it is not sufficient for the Sheriff "to leave the copy at defendant's former dwelling house,
residence, or place of abode, as the case may be, after his removal therefrom". 26chanrobleslaw
Worse, the Return did not make mention of any attempt to serve the summons at the actual residence of Magdamit, Jr.
The Return merely expressed a general statement that the sheriff exerted efforts to serve the summons and that the same
was futile, "[t]hat on several occasions despite deligent (sic) efforts exerted to serve the said processes personally to
defendant/s herein the same proved futile," without any statement on the impossibility of service of summons within a
reasonable time. Further, the summons was served on a certain Dara Cabug, a person not of suitable age and discretion,
who is unauthorized to receive the same.
Notably, the requirement additionally is that
Thus, to be of sufficient discretion, such person must know how to read and understand English to comprehend the import
of the summons, and fully realize the need to deliver the summons and complaint to the defendant at the earliest possible
time for the person to take appropriate action. Thus, the person must have the "relation of confidence" to the defendant,
ensuring that the latter would receive or at least be notified of the receipt of the summons. The sheriff must therefore
determine if the person found in the alleged dwelling or residence of defendant is of legal age, what the recipient's
relationship with the defendant is, and whether said person comprehends the significance of the receipt of the summons
and his duty to immediately deliver it to the defendant or at least notify the defendant of said receipt of summons. These
matters must be clearly and specifically described in the Return of Summons. 27
The readily acceptable conclusion in this case is that the process server at once resorted to substituted service of
summons without exerting enough effort to personally serve summons on respondents. In Sps. Jose v. Sps. Boyon,28 we
discussed the effect of failure to specify the details of the effort exerted by the process server to personally serve
summons upon the defendants:chanRoblesvirtualLawlibrary
The Return of Summons shows no effort was actually exerted and no positive step taken by either the process server or
petitioners to locate and serve the summons personally on respondents. At best, the Return merely states the alleged
whereabouts of respondents without indicating that such information was verified from a person who had
knowledge thereof. Certainly, without specifying the details of the attendant circumstances or of the efforts
exerted to serve the summons, a general statement that such efforts were made will not suffice for purposes of
complying with the rules of substituted service of summons. 29 (Emphasis and underscoring supplied)
In the case at bar, the Returns contained mere general statements that efforts at personal service were made. Not having
specified the details of the attendant circumstances or of the efforts exerted to serve the summons, 30 there was a failure to
comply strictly with all the requirements of substituted service, and as a result the service of summons is rendered
ineffective.31chanrobleslaw
Filing an Answer does not amount to

voluntary appearance
The petitioner asserted that assuming arguendo that the service of summons was defective, respondents' filing of their
respective Answers and participation in the proceedings in the MeTC, such as attending the pre-trial and presenting
evidence, amount to voluntary appearance which vested the MeTC jurisdiction over their persons.
Indeed, despite lack of valid service of summons, the court can still acquire jurisdiction over the person of the defendant
by virtue of the latter's voluntary appearance. Section 20, Rule 14 of the Rules of Court clearly
states:chanRoblesvirtualLawlibrary
Sec. 20. Voluntary appearance. - The defendant's voluntary appearance in the action shall be equivalent to service of
summons. The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person shall not be
deemed a voluntary appearance.
However, such is not the case at bar. Contrary to petitioner's contention, respondents are not deemed to have voluntarily
submitted to the court's jurisdiction by virtue of filing an Answer or other appropriate responsive pleadings and by
participating in the case.
The mandate under the Rules on Summary Proceedings that govern ejectment cases, is expeditious administration of
justice such that the filing of an Answer is mandatory. To give effect to the mandatory character and speedy disposition of
cases, the defendant is required to file an answer within ten (10) days from service of summons, otherwise, the
court, motu proprio, or upon motion of the plaintiff, shall render judgment as may be warranted by the facts alleged in the
complaint, limited to the relief prayed for by the petitioner. 32 Through this rule, the parties are precluded from resorting to
dilatory maneuvers.
Compliantly, respondents filed their respective Answers. In the MeTC, at first, Magdamit, Jr. filed a Notice of Special
Appearance with Motion to Dismiss, where he seasonably raised the issue of lack of jurisdiction, which the MeTC later
ordered to be stricken out. In lieu thereof, Magdamit, Jr. filed an Answer with Counterclaim (In a Special Appearance
Capacity). Again, Magdamit, Jr. reiterated the lack of jurisdiction over his person and the subject matter. On the other
hand, Magdamit, Sr. filed an Answer with an allegation by special defense that the original complaint should be dismissed
outright because the MeTC did not acquire jurisdiction over his person and the subject matter. In sum, both respondents
filed their Answers via special appearance.
In Philippine Commercial International Bank v. Spouses Wilson Dy Hong Pi and Lolita Dy, 33 we held that filing of an
answer in a special appearance cannot be construed as voluntary appearance or submission to the court's
jurisdiction:chanRoblesvirtualLawlibrary
Preliminarily, jurisdiction over the defendant in a civil case is acquired either by the coercive power of legal processes
exerted over his person, or his voluntary appearance in court. As a general proposition, one who seeks an affirmative
relief is deemed to have submitted to the jurisdiction of the court. It is by reason of this rule that we have had occasion to
declare that the filing of motions to admit answer, for additional time to file answer, for reconsideration of a default
judgment, and to lift order of default with motion for reconsideration, is considered voluntary submission to the court's
jurisdiction. This, however, is tempered by the concept of conditional appearance, such that a party who makes a
special appearance to challenge, among others, the court's jurisdiction over his person cannot be considered to
have submitted to its authority.
Prescinding from the foregoing, it is thus clear that:chanroblesvirtuallawlibrary
(1) Special appearance operates as an exception to the general rule on voluntary appearance;
(2) Accordingly, objections to the jurisdiction of the court over the person of the defendant must be explicitly made, i.e.,
set forth in an unequivocal manner; and
(3) Failure to do so constitutes voluntary submission to the jurisdiction of the court, especially in instances where a
pleading or motion seeking affirmative relief is filed and submitted to the court for resolution. 34 (Emphasis
supplied and underscoring supplied)
Parallel to our ruling in Philippine Commercial International Bank, the respondents' act of filing their respective Answers
with express reservation should not be construed as a waiver of the lack of jurisdiction of the MeTC over their person
because of non-service/defective/improper service of summons and for lack of jurisdiction over the subject matter.
Hence, sans voluntary submission to the court's jurisdiction, filing an answer in compliance with the rules on summary
procedure in lieu of obtaining an adverse summary judgment does not amount to voluntary submission. As we already
held, a party who makes a special appearance in court, challenging the jurisdiction of said court, is not deemed to have
submitted himself to the jurisdiction of the court.35 It should not be construed as voluntary submission to the jurisdiction of
the court.
In view of the foregoing, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No.
93368, which upheld the ruling of the Regional Trial Court that the Metropolitan Trial Court in Civil Case No. 174798 did
not acquire jurisdiction over the person of the respondents due to invalid service of summons, are AFFIRMED.
SECOND DIVISION
G.R. No. 205800, September 10, 2014
MICROSOFT CORPORATION AND ADOBE SYSTEMS INCORPORATED, Petitioners, v. SAMIR FARAJALLAH,

VIRGILIO D.C. HERCE, RACHEL P. FOLLOSCO, JESUSITO G. MORALLOS, AND MA. GERALDINE S. GARCIA
(DIRECTORS AND OFFICERS OF NEW FIELDS (ASIA PACIFIC), INC.), Respondents.
DECISION
CARPIO, ACTING C.J.:
The Case
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court which seeks to reverse and set
aside the Decision1 of the Court of Appeals (CA) dated 28 June 2012 in CA-G.R. SP No. 116771 and the Resolution 2 of
the CA dated 30 January 2013. The Decision and Resolution sustained the orders of the Regional Trial Court of Manila,
Branch 21 (RTC) quashing Search Warrant Nos. 10-15912 and 10-15913.
The Facts
Microsoft Corporation and Adobe Systems Incorporated (petitioners) are corporations organized and existing under the
laws of the United States. Microsoft Corporation is the owner of all rights including copyright relating to all versions and
editions of Microsoft software3 and the corresponding users manuals, and the registered owner of the Microsoft MS
DOS trademarks in the Philippines. Adobe Systems Incorporated is the owner of all rights including copyright relating to
all versions and editions of Adobe Software.4cralawred
Samir Farajallah, Virgilio D.C. Herce, Rachel P. Follosco, Jesusito G. Morallos and Ma. Geraldine S. Garcia (respondents)
are the directors and officers of New Fields (Asia Pacific), Inc., a domestic corporation with principal office at Unit 1603,
East Tower, Philippine Stock Exchange Center, Exchange Road, Ortigas Center, Pasig City.
Petitioners claim that in September 2009, they were informed that New Fields was unlawfully reproducing and using
unlicensed versions of their software. Orion Support, Inc. (OSI) was engaged by petitioners to assist in the verification of
this information. Two OSI Market Researchers, Norma L. Serrano (Serrano) and Michael A. Moradoz (Moradoz) were
assigned to confirm the informant's tip. Serrano and Moradoz were trained to detect unauthorized copies of Adobe and
Microsoft software.5cralawred
On 17 March 2010, counsel for petitioners filed a letter-complaint with the Chief of the Philippine National Police Criminal
Investigation and Detection Group. The case was assigned to Police Senior Inspector Ernesto V. Padilla
(Padilla).6cralawred
On 26 March 2010, Padilla, Serrano, and Moradoz went to the office of respondents. Using a legitimate business pretext,
they were able to use two computers owned by New Fields and obtained the following information regarding the installed
Microsoft and Adobe software:ChanRoblesVirtualawlibrary
First computer
Installed Software Product I.D./Serial Number

Microsoft Windows XP Pro V2002 SP2 55274-640-1582543-23775
Microsoft Office Word 2007 Enterprise 89388-707-0358973-65509
Edition 2007
Adobe Acrobat 8 Pro (1) 1118-1061-0904-4874-2027
Second computer
Installed Software Product I.D./Serial Number
Microsoft Windows XP Pro V2002 SP2 55274-640-1582543-23442
Microsoft Office Word 2007 Enterprise 89388-707-0358973-65709
Edition 2007
Adobe Acrobat 8 Pro (1) 1118-1061-0904-4874-2027
Padilla was trained to distinguish original from counterfeit software, 7 and he saw the screens of the computers used by the
OSI staff, including the product I.D. Nos. of the installed software.
In their Joint Affidavit, Serrano and Moradoz stated that:ChanRoblesVirtualawlibrary
There are at least two (2) computers using common product identification and/or serial numbers of MICROSOFT and
ADOBE software. This is one indication that the software being used is unlicensed or was illegally reproduced or copied.
Based on the training we attended, all ADOBE and MICROSOFT software should only be installed in one computer,
unless they avail of an Open Licese Agreement from the software developer, which is not the case in NEW FIELDS. In
this case, the first three sets of numbers of the Product I.D. Nos. of the MICROSOFT Windows XP Pro operating System
software program installed in the two (2) computer units we used, i.e., 55274-640-1582543-xxxxx, were the same. We
also observed that the first three sets of numbers of the Product I.D Nos. of the MICROSOFT Office 2007 (Word) software
in the two (2) computers we used, i.e., 89388-707-0358973-xxxxx, were also the same. Ostensibly, this means that NEW
FIELDS only used one (1) installer of the MICROSOFT Windows XP operating system software and one (1) installer of
the MICROSOFT Office software program on two (2) computers. Based on our training, if the first three sets of
numbers of the Product I.D. Nos. of the MICROSOFT software installed are the same, it signifies that it came from
one installer. It does not matter [if] the last 5 digits of the Product I.D. Nos. are different because this is computer-
generated and therefore varies with every installation. Apart from the MICROSOFT software, the serial numbers
of the ADOBE software installed in the computer units we used were also the same, signifying that NEW FIELDS
only used one (1) installer of the ADOBE software program on two (2) computers. 8(Emphasis supplied)
They also observed that New Fields had 90 computers in their office with Microsoft software, none of which had the
Certificate of Authenticity issued by Microsoft.
After being informed of the results of the investigation, petitioners then issued certifications that they have not authorized
New Fields to copy, print, reproduce and/or publish unauthorized copies of Microsoft and Adobe software
products.9cralawred
An application for search warrants was filed by Padilla on 20 May 2010, before Judge Amor Reyes in her capacity as
Executive Judge of the RTC. Search Warrant Nos. 10-15912 and 10-15913 were issued on the same date. 10cralawred
The warrants were served on respondents on 24 May 2010. New Fields employees witnessed the search conducted by
the authorities. Several items were seized, including 17 CD installers and 83 computers containing unauthorized copies of
Microsoft and/or Adobe software.
On 6 June 2010, New Fields filed a motion seeking to quash one of the two warrants served (Search Warrant No. 10-
15912).11 The motion was received by petitioners on 10 June 2010 and was set for hearing on 11 June 2010. During the
hearing on the motion, petitioners were allowed by the RTC to file their Comment/Opposition on or before 21 June
2010.12cralawred
In their Comment/Opposition dated 21 June 2010,13 petitioners alleged that:ChanRoblesVirtualawlibrary
The Motion [to Quash] failed to comply with the mandatory 3-day notice rule under the Rules of Court. Hence it is nothing
but a worthless piece of paper.
xxxx
In this case, the Motion of Respondents was scheduled for hearing on 11 June 2010. However, Respondents only
furnished [petitioners] a copy of the Motion on 10 June 2010, or just 1 day before the scheduled hearing, which was in
clear violation of the 3-day notice rule.14cralawred
On 29 June 2010, the RTC issued an Order quashing both warrants and directing that all the items seized from the
respondents be returned x x x.15 According to the RTC, petitioners should have identified which specific computer had the
pirated software.16 The RTC added that no criminal charge has been filed yet, despite the fact that the seized items have
been in petitioners possession for several weeks since the warrants were issued. Lastly, the RTC dismissed the
petitioners contention that the three-day notice rule was not complied with because petitioners were already notified of the
motion personally.17cralawred
On 8 July 2010, petitioners received a copy of the Order, and Deputy Sheriff Edgardo Reyes of the RTC also effected the
return of the seized items, in compliance with the RTCs Order. 18cralawred
Petitioners filed an Urgent Manifestation and Motion for the Issuance of a Status Quo Order on 8 July 2010 wherein they
alleged that: (1) they intend to file a Motion for Reconsideration of the Order; and (2) the Order was not immediately
executory.19 Respondents received a copy of the motion the day it was filed.
On 9 July 2010, respondents moved to expunge petitioners motion for reconsideration, saying that petitioners failed to
comply with the three-day notice rule.20 The hearing on the motion was set on 13 July 2010. A copy of the motion was
received by petitioners on 20 July 2010.21cralawred
On 15 July 2010, petitioners filed a motion for reconsideration of the Order. 22 Respondents filed their
Comment/Opposition23 to the motion, which was received by petitioners on 12 August 2010. 24cralawred
The RTC denied petitioners motion for reconsideration in its Order dated 27 August 2010. 25cralawred
Petitioners filed a petition for certiorari 26 under Rule 65 on 8 November 2010 before the Court of Appeals. Petitioners
alleged that the RTC committed grave abuse of discretion in granting the Motion to Quash despite: (1) respondents failure
to comply with the three-day notice requirement; and (2) the existence of probable cause, and personal knowledge of the
warrant applicant.
The Ruling of the CA
The CA denied the petition for certiorari . The appellate court held that:ChanRoblesVirtualawlibrary
In the instant case, when the court a quo ordered petitioners to submit their comment on the motion to quash, it was, in
effect, giving petitioners their day in court. Thus, while the [three]-day notice rule was not strictly observed, its purpose
was still satisfied when respondent judge did not immediately rule on the motion giving petitioners x x x the opportunity to
study and oppose the arguments stated in the motion. 27cralawred
The Issue
The instant petition raised only one issue, to wit:ChanRoblesVirtualawlibrary
The Honorable Court of Appeals erred in ruling that Judge Amor Reyes of Branch 21, Regional Trial Court of Manila did
not commit grave abuse of discretion amounting to lack or excess of jurisdiction in issuing its Orders dated 29 June 2010
and 27 August 2010, quashing Search Warrant Nos. 10-15912 and 10-15913 and directing the immediate release of the
items seized pursuant to the said warrants, despite the pendency of appellate proceedings. 28
The Ruling of the Court
We rule that strict compliance with the three-day notice rule may be relaxed in this case. However, we sustain petitioners
contention that there was probable cause for issuance of a warrant, and the RTC and CA should have upheld the validity
of both warrants.
Compliance with the three-day notice rule
In Anama v. Court of Appeals,29 we ruled that the three-day notice rule is not absolute. The purpose of the rule is to
safeguard the adverse partys right to due process. Thus, if the adverse party was given a reasonable opportunity to study
the motion and oppose it, then strict compliance with the three-day notice rule may be dispensed with.
As correctly pointed out by the CA:ChanRoblesVirtualawlibrary
In the instant case, when the court a quo ordered petitioners to submit their comment on the motion to quash, it was, in
effect, giving petitioners their day in court. Thus, while the [three]-day notice rule was not strictly observed, its purpose
was still satisfied when respondent judge did not immediately rule on the motion giving petitioners x x x the opportunity to
study and oppose the arguments stated in the motion. 30cralawred
Existence of probable cause
Under Section 1 of Rule 45 of the Rules of Court, petitions for review by certiorari shall raise only questions of law. A
question of fact exists when there is a doubt as to the truth of certain facts, and it can only be resolved through a
reexamination of the body of evidence.31cralawred
In Microsoft Corporation v. Maxicorp, Inc.,32 we ruled that the existence of probable cause is a question of fact. 33 In the
same case, we also stated that:ChanRoblesVirtualawlibrary
Probable cause is dependent largely on the opinion and findings of the judge who conducted the examination and who
had the opportunity to question the applicant and his witnesses. For this reason, the findings of the judge deserve great
weight. The reviewing court should overturn such findings only upon proof that the judge disregarded the facts before him
or ignored the clear dictates of reason.34
This Court is not a trier of facts. As a general rule, we defer to the lower courts appreciation and evaluation of
evidence.35 This general rule, however, is not absolute. We will review the factual findings of the CA in any of the following
instances:ChanRoblesVirtualawlibrary
(1) when the factual findings of the Court of Appeals and the trial court are contradictory;
(2) when the conclusion is a finding grounded entirely on speculation, surmises, or conjectures;
(3) when the inference made by the Court of Appeals from its findings of fact is manifestly mistaken, absurd, or
impossible;
(4) when there is a grave abuse of discretion in the appreciation of facts;
(5) when the Appellate Court, in making its findings, went beyond the issues of the case and such findings are contrary to
the admissions of both appellant and appellee;
(6) when the judgment of the Court of Appeals is premised on a misapprehension of facts;
(7) when the Court of Appeals failed to notice certain relevant facts which, if properly considered, would justify a different
conclusion;
(8) when the findings of fact are themselves conflicting;
(9) when the findings of fact are conclusions without citation of the specific evidence on which they are based; and
(10) when the findings of fact of the Court of Appeals are premised on the absence of evidence but such findings are
contradicted by the evidence on record.36
In this case, we find reason to overturn the rulings of the RTC and CA, since there was grave abuse of discretion in the
appreciation of facts. The CA sustained the quashal of the warrant because the witnesses had no personal knowledge of
the facts upon which the issuance of the warrants may be justified, 37 and the applicants and the witnesses merely relied
on the screen shots acquired from the confidential informant. 38cralawred
We disagree with the conclusions of the CA. The assailed CA Decision itself stated:ChanRoblesVirtualawlibrary
Initial hearsay information or tips from confidential informants could very well serve as basis for the issuance of a search
warrant, if followed up personally by the recipient and validated. 39cralawred
Looking at the records, it is clear that Padilla and his companions were able to personally verify the tip of their informant.
In his Affidavit submitted to Judge Amor Reyes prior to the issuance of the warrant, Padilla stated
that:ChanRoblesVirtualawlibrary
At the time that I was inside the office premises of the NEW FIELDS, I saw the Product Keys or Product Identification
Numbers of the ADOBE and MICROSOFT computer software programs installed in some of the computer units. Ms.
Serrano and Mr. Moradoz were able to pull up these data since they were allowed to use some of the computers of the
target companies in line with the pretext that we used to gain entry into NEW FIELDS. I actively read and attentively
observed the information reflected from the monitor display unit of the computers that Ms. Serrano and Mr. Moradoz were
able to use. x x x.40
As mentioned earlier, Padilla has been trained to distinguish illegally reproduced Adobe and Microsoft software. Thus, in
his Affidavit, he stated that:ChanRoblesVirtualawlibrary
xxxx
6. I suspect that the ADOBE and MICROSOFT computer software programs that are being used in the premises of NEW
FIELDS are unauthorized, illegal or unlicensed copies because of the following reasons:ChanRoblesVirtualawlibrary
6.1. At least two (2) computer units are using a common Product Identification Number of MICROSOFT and ADOBE
software. This is one indication that the software being used is unlicensed or was illegally reproduced or copied. All
ADOBE and MICROSOFT computer software programs should only be used in one computer unit, unless they avail of an
Open License Agreement from the computer software developer, which [was not obtained by] NEW FIELDS. x x x. 41
The evidence on record clearly shows that the applicant and witnesses were able to verify the information obtained from
their confidential source. The evidence likewise shows that there was probable cause for the issuance of a search
warrant. Thus, the requirement of personal knowledge of the applicant and witnesses was clearly satisfied in this case.
WHEREFORE, the petition is GRANTED. The Decision dated 28 June 2012 and the Resolution dated 30 January 2013 of
the Court of Appeals, upholding the 29 June 2010 and 27 August 2010 Orders of the Regional Trial Court, are
hereby REVERSED and SET ASIDE. Search Warrant Nos. 10-15912 and 10-15913 are declared valid.
SO ORDERED.
SECOND DIVISION
G.R. No. 185922, January 15, 2014
HEIRS OF DR. MARIANO FAVIS, SR., REPRESENTED BY THEIR COHEIRS AND ATTORNEYSINFACT
MERCEDES A. FAVIS AND NELLY FAVISVILLAFUERTE, Petitioners, v. JUANA GONZALES, HER SON MARIANO G.
FAVIS, MA. THERESA JOANA D. FAVIS, JAMES MARK D. FAVIS, ALL MINORS REPRESENTED HEREIN BY THEIR
PARENTS, SPS. MARIANO FAVIS AND LARCELITA D. FAVIS, Respondents.
DECISION
PEREZ, J.:
Before this Court is a petition for review assailing the 10 April 2008 Decision 1 and 7 January 2009 Resolution2 of the Court
of Appeals in CAG.R. CV No. 86497 dismissing petitioners complaint for annulment of the Deed of Donation for failure to
exert earnest efforts towards a compromise.
Dr. Mariano Favis, Sr. (Dr. Favis) was married to Capitolina Aguilar (Capitolina) with whom he had seven children named
Purita A. Favis, Reynaldo Favis, Consolacion FavisQueliza, Mariano A. Favis, Jr., Esther F. Filart, Mercedes A. Favis,
and Nelly FavisVillafuerte. When Capitolina died in March 1944, Dr. Favis took Juana Gonzales (Juana) as his
commonlaw wife with whom he sired one child, Mariano G. Favis (Mariano). When Dr. Favis and Juana got married in
1974, Dr. Favis executed an affidavit acknowledging Mariano as one of his legitimate children. Mariano is married to
Larcelita D. Favis (Larcelita), with whom he has four children, named Ma. Theresa Joana D. Favis, Ma. Cristina D. Favis,
James Mark D. Favis and Ma. Thea D. Favis.
Dr. Favis died intestate on 29 July 1995 leaving the following properties:
1. A parcel of residential land located at Bonifacio St. Brgy. 1, Vigan, Ilocos Sur, consisting an area of 898 square meters,
more or less, bounded on the north by Salvador Rivero; on the East by Eleutera Pena; on the South by Bonifacio St., and
on the West by Carmen Giron; x x x;
2. A commercial building erected on the aforesaid parcel of land with an assessed value of P126,000.00; x x x;
3. A parcel of residential land located in Brgy. VII, Vigan, Ilocos Sur, containing an area of 154 sq. ms., more or less,
bounded on the North by the High School Site; on the East by Gomez St., on the South by Domingo [G]o; and on the
West by Domingo Go; x x x;
4. A house with an assessed value of P17,600.00 x x x;
5. A parcel of orchard land located in Brgy. VI, Vigan, Ilocos Sur, containing an area of 2,257 sq. ma. (sic) more or less,
bounded on the North by Lot 1208; on the East by Mestizo River; on the South by Lot 1217 and on the West by Lot 1211
B, 1212 and 1215 x x x.3
Beginning 1992 until his death in 1995, Dr. Favis was beset by various illnesses, such as kidney trouble, hiatal hernia,
congestive heart failure, Parkinsons disease and pneumonia. He died of cardiopulmonary arrest secondary to multi
organ/system failure secondary to sepsis secondary to pneumonia. 4
On 16 October 1994, he allegedly executed a Deed of Donation 5 transferring and conveying properties described in (1)
and (2) in favor of his grandchildren with Juana.
Claiming that said donation prejudiced their legitime, Dr. Favis children with Capitolina, petitioners herein, filed an action
for annulment of the Deed of Donation, inventory, liquidation and partition of property before the Regional Trial Court
(RTC) of Vigan, Ilocos Sur, Branch 20 against Juana, Spouses Mariano and Larcelita and their grandchildren as
respondents.
In their Answer with Counterclaim, respondents assert that the properties donated do not form part of the estate of the late
Dr. Favis because said donation was made inter vivos, hence petitioners have no stake over said properties. 6
The RTC, in its PreTrial Order, limited the issues to the validity of the deed of donation and whether or not respondent
Juana and Mariano are compulsory heirs of Dr. Favis.7cralawred
In a Decision dated 14 November 2005, the RTC nullified the Deed of Donation and cancelled the corresponding tax
declarations. The trial court found that Dr. Favis, at the age of 92 and plagued with illnesses, could not have had full
control of his mental capacities to execute a valid Deed of Donation. Holding that the subsequent marriage of Dr. Favis
and Juana legitimated the status of Mariano, the trial court also declared Juana and Mariano as compulsory heirs of Dr.
Favis. The dispositive portion reads:
WHEREFORE, in view of all the foregoing considerations, the Deed of Donation dated October 16, 1994 is hereby
annulled and the corresponding tax declarations issued on the basis thereof cancelled. Dr. Mariano Favis, Sr. having died
without a will, his estate would result to intestacy. Consequently, plaintiffs Heirs of Dr. Mariano Favis, Sr., namely Purita A.
Favis, Reynaldo A. Favis, Consolacion F. Queliza, Mariano A. Favis, Jr., Esther F. Filart, Mercedes A. Favis, Nelly F.
Villafuerte and the defendants Juana Gonzales now deceased and Mariano G. Favis, Jr. shall inherit in equal shares in
the estate of the late Dr. Mariano Favis, Sr. which consists of the following:
1. A parcel of residential land located at Bonifacio St. Brgy. 1, Vigan City, Ilocos Sur, consisting an area of 89 sq.
meters more or less, bounded on the north by Salvador Rivero; on the East by Eleutera Pena; on the South by Bonifacio
St., and on the West by Carmen Giron;
2. A commercial building erected on the aforesaid parcel of land with an assessed value of P126,000.00;
3. Onehalf (1/2) of the house located in Brgy. VI, Vigan City, Ilocos Sur[,] containing an area of 2,257 sq. meters more
or less, bounded on the north by Lot 1208; on the east by Mestizo River; on the South by Lot 1217 and on the West by Lot
1211B, 1212 and 1215.
4. The accumulated rentals of the new Vigan Coliseum in the amount of One Hundred Thirty [Thousand] (P130,000.00)
pesos per annum from the death of Dr. Mariano Favis, Sr. 8
Respondents interposed an appeal before the Court of Appeals challenging the trial courts nullification, on the ground of
vitiated consent, of the Deed of Donation in favor of herein respondents. The Court of Appeals ordered the dismissal of
the petitioners nullification case. However, it did so not on the grounds invoked by herein respondents as appellant.
The Court of Appeals motu proprio ordered the dismissal of the complaint for failure of petitioners to make an averment
that earnest efforts toward a compromise have been made, as mandated by Article 151 of the Family Code. The
appellate court justified its order of dismissal by invoking its authority to review rulings of the trial court even if they are not
assigned as errors in the appeal.
Petitioners filed a motion for reconsideration contending that the case is not subject to compromise as it involves future
legitime.
The Court of Appeals rejected petitioners contention when it ruled that the prohibited compromise is that which is entered
between the decedent while alive and compulsory heirs. In the instant case, the appellate court observed that while the
present action is between members of the same family it does not involve a testator and a compulsory heir. Moreover, the
appellate court pointed out that the subject properties cannot be considered as future legitime but are in fact, legitime, as
the instant complaint was filed after the death of the decedent.
Undaunted by this legal setback, petitioners filed the instant petition raising the following arguments:
1. The Honorable Court of Appeals GRAVELY and SERIOUSLY ERRED in DISMISSING the COMPLAINT.
2. Contrary to the finding of the Honorable Court of Appeals, the verification of the complaint or petition is not a
mandatory requirement.
3. The Honorable Court of Appeals seriously failed to appreciate that the filing of an intervention by Edward Favis had
placed the case beyond the scope of Article 151 of the Family Code.
4. Even assuming arguendo without admitting that the filing of intervention by Edward Favis had no positive effect to
the complaint filed by petitioners, it is still a serious error for the Honorable Court of Appeals to utterly disregard the fact
that petitioners had substantially complied with the requirements of Article 151 of the Family Code.
5. Assuming arguendo that petitioners cannot be construed as complying substantially with Article 151 of the Family
Code, still, the same should be considered as a nonissue considering that private respondents are in estoppel.
6. The dismissal of the complaint by the Honorable Court of Appeals amounts to grave abuse of discretion amounting
to lack and excess of jurisdiction and a complete defiance of the doctrine of primacy of substantive justice over strict
application of technical rules.
7. The Honorable Court of Appeals gravely and seriuosly erred in not affirming the decision of the Court a quo that the
Deed of Donation is void.9
In their Comment, respondents chose not to touch upon the merits of the case, which is the validity of the deed of
donation. Instead, respondents defended the ruling the Court of Appeals that the complaint is dismissible for failure of
petitioners to allege in their complaint that earnest efforts towards a compromise have been exerted.
The base issue is whether or not the appellate court may dismiss the order of dismissal of the complaint for failure to
allege therein that earnest efforts towards a compromise have been made.
The appellate court committed egregious error in dismissing the complaint. The appellate courts decision hinged on
Article 151 of the Family Code, viz:
Art. 151. No suit between members of the same family shall prosper unless it should appear from the verified complaint
or petition that earnest efforts toward a compromise have been made, but that the same have failed. If it is shown that no
such efforts were in fact made, the case must be dismissed.
This rule shall not apply to cases which may not be the subject of compromise under the Civil Code.
The appellate court correlated this provision with Section 1, par. (j), Rule 16 of the 1997 Rules of Civil Procedure, which
provides:
Section 1. Grounds. Within the time for but before filing the answer to the complaint or pleading asserting a claim, a
motion to dismiss may be made on any of the following grounds:
xxx
(j) That a condition precedent for filing the claim has not been complied with.
The appellate courts reliance on this provision is misplaced. Rule 16 treats of the grounds for a motion to dismiss the
complaint. It must be distinguished from the grounds provided under Section 1, Rule 9 which specifically deals with
dismissal of the claim by the court motu proprio. Section 1, Rule 9 of the 1997 Rules of Civil Procedure provides:
Section 1. Defenses and objections not pleaded. Defenses and objections not pleaded either in a motion to dismiss or
in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court
has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same
cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim.
Section 1, Rule 9 provides for only four instances when the court may motu proprio dismiss the claim, namely: (a) lack of
jurisdiction over the subject matter; (b) litis pendentia; (c) res judicata; and (d) prescription of action.10 Specifically
in Gumabon v. Larin,11 cited in Katon v. Palanca, Jr.,12 the Court held:
x x x [T]he motu proprio dismissal of a case was traditionally limited to instances when the court clearly had no jurisdiction
over the subject matter and when the plaintiff did not appear during trial, failed to prosecute his action for an unreasonable
length of time or neglected to comply with the rules or with any order of the court. Outside of these instances, any motu
proprio dismissal would amount to a violation of the right of the plaintiff to be heard. Except for qualifying and expanding
Section 2, Rule 9, and Section 3, Rule 17, of the Revised Rules of Court, the amendatory 1997 Rules of Civil Procedure
brought about no radical change. Under the new rules, a court may motu propriodismiss a claim when it appears from the
pleadings or evidence on record that it has no jurisdiction over the subject matter; when there is another cause of action
pending between the same parties for the same cause, or where the action is barred by a prior judgment or by statute of
limitations. x x x. 13
The error of the Court of Appeals is evident even if the consideration of the issue is kept within the confines of the
language of Section 1(j) of Rule 16 and Section 1 of Rule 9. That a condition precedent for filing the claim has not been
complied with, a ground for a motion to dismiss emanating from the law that no suit between members from the same
family shall prosper unless it should appear from the verified complaint that earnest efforts toward a compromise have
been made but had failed, is, as the Rule so words, a ground for a motion to dismiss. Significantly, the Rule requires that
such a motion should be filed within the time for but before filing the answer to the complaint or pleading asserting a
claim. The time frame indicates that thereafter, the motion to dismiss based on the absence of the condition precedent is
barred. It is so inferable from the opening sentence of Section 1 of Rule 9 stating that defense and objections not pleaded
either in a motion to dismiss or in the answer are deemed waived. There are, as just noted, only four exceptions to this
Rule, namely, lack of jurisdiction over the subject matter; litis pendentia; res judicata; and prescription of action. Failure to
allege in the complaint that earnest efforts at a compromise has been made but had failed is not one of the exceptions.
Upon such failure, the defense is deemed waived.
It was in Heirs of Domingo Valientes v. Ramas14 cited in P.L. Uy Realty Corporation v. ALS Management and Development
Corporation15 where we noted that the second sentence of Section 1 of Rule 9 does not only supply exceptions to the rule
that defenses not pleaded either in a motion to dismiss or in the answer are deemed waived, it also allows courts to
dismiss cases motu propio on any of the enumerated grounds. The tenor of the second sentence of the Rule is that the
allowance of a motu propio dismissal can proceed only from the exemption from the rule on waiver; which is but logical
because there can be no ruling on a waived ground.
Why the objection of failure to allege a failed attempt at a compromise in a suit among members of the same family is
waivable was earlier explained in the case of Versoza v. Versoza,16 a case for future support which was dismissed by the
trial court upon the ground that there was no such allegation of infringement of Article 222 of the Civil Code, the origin of
Article 151 of the Family Code. While the Court ruled that a complaint for future support cannot be the subject of a
compromise and as such the absence of the required allegation in the complaint cannot be a ground for objection against
the suit, the decision went on to state thus:
The alleged defect is that the present complaint does not state a cause of action. The proposed amendment seeks to
complete it. An amendment to the effect that the requirements of Article 222 have been complied with does not confer
jurisdiction upon the lower court. With or without this amendment, the subjectmatter of the action remains as one for
support, custody of children, and damages, cognizable by the court below.
To illustrate, Tamayo v. San Miguel Brewery, Inc.,17 allowed an amendment which merely corrected a defect in the
allegation of plaintiffappellants cause of action, because as it then stood, the original complaint stated no cause of
action. We there ruled out as inapplicable the holding in Campos Rueda Corporation v. Bautista,18 that an amendment
cannot be made so as to confer jurisdiction on the court x x x. (Italics supplied).
Thus was it made clear that a failure to allege earnest but failed efforts at a compromise in a complaint among members
of the same family, is not a jurisdictional defect but merely a defect in the statement of a cause of action. Versoza was
cited in a later case as an instance analogous to one where the conciliation process at the barangay level was not priorly
resorted to. Both were described as a condition precedent for the filing of a complaint in Court. 19 In such instances, the
consequence is precisely what is stated in the present Rule. Thus:
x x x The defect may however be waived by failing to make seasonable objection, in a motion to dismiss or answer, the
defect being a mere procedural imperfection which does not affect the jurisdiction of the court. 20 (Underscoring supplied).
In the case at hand, the proceedings before the trial court ran the full course. The complaint of petitioners was answered
by respondents without a prior motion to dismiss having been filed. The decision in favor of the petitioners was appealed
by respondents on the basis of the alleged error in the ruling on the merits, no mention having been made about any
defect in the statement of a cause of action. In other words, no motion to dismiss the complaint based on the failure to
comply with a condition precedent was filed in the trial court; neither was such failure assigned as error in the appeal that
respondent brought before the Court of Appeals.
Therefore, the rule on deemed waiver of the nonjurisdictional defense or objection is wholly applicable to respondent. If
the respondents as partiesdefendants could not, and did not, after filing their answer to petitioners complaint, invoke the
objection of absence of the required allegation on earnest efforts at a compromise, the appellate court unquestionably did
not have any authority or basis to motu propio order the dismissal of petitioners complaint.
Indeed, even if we go by the reason behind Article 151 of the Family Code, which provision as then Article 222 of the New
Civil Code was described as having been given more teeth 21 by Section 1(j), Rule 16 of the Rule of Court, it is safe to
say that the purpose of making sure that there is no longer any possibility of a compromise, has been served. As cited in
commentaries on Article 151 of the Family Code
This rule is introduced because it is difficult to imagine a sudden and more tragic spectacle than a litigation between
members of the same family. It is necessary that every effort should be made towards a compromise before a litigation is
allowed to breed hate and passion in the family. It is known that a lawsuit between close relatives generates deeper
bitterness than between strangers.22
The facts of the case show that compromise was never an option insofar as the respondents were concerned. The
impossibility of compromise instead of litigation was shown not alone by the absence of a motion to dismiss but on the
respondents insistence on the validity of the donation in their favor of the subject properties. Nor could it have been
otherwise because the Pretrial Order specifically limited the issues to the validity of the deed and whether or not
respondent Juana and Mariano are compulsory heirs of Dr. Favis. Respondents not only confined their arguments within
the pretrial order; after losing their case, their appeal was based on the proposition that it was error for the trial court to
have relied on the ground of vitiated consent on the part of Dr. Favis.
The Court of Appeals ignored the facts of the case that clearly demonstrated the refusal by the respondents to
compromise. Instead it ordered the dismissal of petitioners complaint on the ground that it did not allege what in fact was
shown during the trial. The error of the Court of Appeals is patent.
Unfortunately for respondents, they relied completely on the erroneous ruling of the Court of Appeals even when
petitioners came to us for review not just on the basis of such defective motu propio action but also on the proposition that
the trial court correctly found that the donation in question is flawed because of vitiated consent. Respondents did not
answer this argument.
The trial court stated that the facts are:
x x x To determine the intrinsic validity of the deed of donation subject of the action for annulment, the mental
state/condition of the donor Dr. Mariano Favis, Sr. at the time of its execution must be taken into account. Factors such as
his age, health and environment among others should be considered. As testified to by Dr. Mercedes Favis, corroborated
by Dr. Edgardo Alday and Dra. Ofelia Adapon, who were all presented as expert witnesses, Dr. Mariano Favis, Sr. had
long been suffering from Hiatal Hernia and Parkinsons disease and had been taking medications for years. That a
person with Parkinsons disease for a long time may not have a good functioning brain because in the later stage of the
disease, 1/3 of death develop from this kind of disease, and or dementia. With respect to Hiatal Hernia, this is a state
wherein organs in the abdominal cavity would go up to the chest cavity, thereby occupying the space for the lungs causing
the lungs to be compromised. Once the lungs are affected, there is less oxygenation to the brain. The Hernia would
cause the heart not to pump enough oxygen to the brain and the effect would be chronic, meaning, longer lack of
oxygenation to the brain will make a person not in full control of his faculties. Dr. Alday further testified that during his stay
with the house of Dr. Mariano Favis, Sr. (19921994), he noticed that the latter when he goes up and down the stairs will
stop after few seconds, and he called this pulmonary cripple a very advanced stage wherein the lungs not only one lung,
but both lungs are compromised. That at the time he operated on the deceased, the left and right lung were functioning
but the left lung is practically not even five (5%) percent functioning since it was occupied by abdominal organ. x x x.
Dr. Mariano Favis, Sr. during the execution of the Deed of Donation was already 92 years old; living with the defendants
and those years from 1993 to 1995 were the critical years when he was sick most of the time. In short, hes dependent on
the care of his housemates particularly the members of his family. It is the contention of the defendants though that Dr.
Mariano Favis, Sr. had full control of his mind during the execution of the Deed of Donation because at that time, he could
go on with the regular way of life or could perform his daily routine without the aid of anybody like taking a bath, eating his
meals, reading the newspaper, watching television, go to the church on Sundays, walking down the plaza to exercise and
most importantly go to the cockpit arena and bet. Dr. Ofelia Adapon, a neurology expert however, testified that a person
suffering from Parkinsons disease when he goes to the cockpit does not necessarily mean that such person has in full
control of his mental faculties because anyone, even a retarded person, a person who has not studied and have no
intellect can go to the cockpit and bet. One can do everything but do not have control of his mind. x x x That Hiatal Hernia
creeps in very insidiously, one is not sure especially if the person has not complained and no examination was done. It
could be there for the last time and no one will know. x x x.
The Deed of Donation in favor of the defendants Ma. Theresa, Joana D. Favis, Maria Cristina D. Favis, James Mark D.
Favis and Maria Thea D. Favis, all of whom are the children of Mariano G. Favis, Jr. was executed on [16 October] 1994,
seven (7) months after Dra. Mercedes Favis left the house of Dr. Favis, Sr. at Bonifacio St., Vigan City, Ilocos Sur, where
she resided with the latter and the defendants.
Putting together the circumstances mentioned, that at the time of the execution of the Deed of Donation, Dr. Mariano
Favis, Sr. was already at an advanced age of 92, afflicted with different illnesses like Hiatal hernia, Parkinsons disease
and pneumonia, to name few, which illnesses had the effects of impairing his brain or mental faculties and the deed being
executed only when Dra. Me[r]cedes Favis had already left his fathers residence when Dr. Mariano Favis, Sr. could have
done so earlier or even in the presence of Dra. Mercedes Favis, at the time he executed the Deed of Donation was not in
full control of his mental faculties. That although age of senility varies from one person to another, to reach the age of 92
with all those medications and treatment one have received for those illnesses, yet claim that his mind remains
unimpaired, would be unusual. The fact that the Deed of Donation was only executed after Dra. Mercedes Favis left his
fathers house necessarily indicates that they dont want the same to be known by the first family, which is an indicia of
bad faith on the part of the defendant, who at that time had influence over the donor. 23
The correctness of the finding was not touched by the Court of Appeals. The respondents opted to rely only on what the
appellate court considered, erroneously though, was a procedural infirmity. The trial courts factual finding, therefore,
stands unreversed; and respondents did not provide us with any argument to have it reversed.
WHEREFORE, the Decision of the Court of Appeals is REVERSED and SET ASIDE and the Judgment of the Regional
Trial Court of Vigan, Ilocos Sur, Branch 20 is AFFIRMED.chanroblesvirtualawlibrary ChanRoblesVirtualawlibrary
SO ORDERED.
SECOND DIVISION
G.R. No. 199990, February 04, 2015
SPOUSES ROLANDO AND HERMINIA SALVADOR, Petitioners, v. SPOUSES ROGELIO AND ELIZABETH RABAJA
AND ROSARIO GONZALES, Respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari seeking to reverse and set aside the August 22, 2011 Decision 1 and the January
5, 2012 Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No. 90296 which affirmed with modification the March
29, 2007 Decision of the Regional Trial Court Branch 214 (RTC-Branch 214), Mandaluyong City in Civil Case No. MC-03-
2175, for rescission of a contract (rescission case).
The Facts
This case stemmed from a dispute involving the sellers, petitioner spouses Rolando and Herminia Salvador (Spouses
Salvador); the sellers agent, Rosario Gonzales (Gonzales); and the buyers, respondent Spouses Rogelio and Elizabeth
Rabaja (Spouses Rabaja), over a parcel of land situated at No. 25, Merryland Village, 375 Jose Rizal Street,
Mandaluyong City (subject property), covered by Transfer Certificate of Title (TCT) No. 13426 and registered in the names
of Spouses Salvador. From 1994 until 2002, Spouses Rabaja were leasing an apartment in the subject lot.
Sometime in July 1998, Spouses Rabaja learned that Spouses Salvador were looking for a buyer of the subject property.
Petitioner Herminia Salvador (Herminia) personally introduced Gonzales to them as the administrator of the said property.
Spouses Salvador even handed to Gonzales the owners duplicate certificate of title over the subject property. On July, 3,
1998, Spouses Rabaja made an initial payment of P48,000.00 to Gonzales in the presence of Herminia. Gonzales then
presented the Special Power of Attorney3 (SPA), executed by Rolando Salvador (Rolando) and dated July 24, 1998. On
the same day, the parties executed the Contract to Sell4 which stipulated that for a consideration of P5,000,000.00,
Spouses Salvador sold, transferred and conveyed in favor of Spouses Rabaja the subject property. Spouses Rabaja
made several payments totalling P950,000.00, which were received by Gonzales pursuant to the SPA provided earlier as
evidenced by the check vouchers signed by Gonzales and the improvised receipts signed by Herminia.
Sometime in June 1999, however, Spouses Salvador complained to Spouses Rabaja that they did not receive any
payment from Gonzales. This prompted Spouses Rabaja to suspend further payment of the purchase price; and as a
consequence, they received a notice to vacate the subject property from Spouses Salvador for non-payment of rentals.
Thereafter, Spouses Salvador instituted an action for ejectment against Spouses Rabaja. In turn, Spouses Rabaja filed an
action for rescission of contract against Spouses Salvador and Gonzales, the subject matter of the present petition.
In the action for ejectment, the complaint was filed before the Metropolitan Trial Court of Mandaluyong City, Branch 60
(MeTC), where it was docketed as Civil Case No. 17344. In its August 14, 2002 Decision, 5 the MeTC ruled in favor of
Spouses Salvador finding that valid grounds existed for the eviction of Spouses Rabaja from the subject property and
ordering them to pay back rentals. Spouses Salvador were able to garnish the amount of P593,400.00 6 from Spouses
Rabajas time deposit account pursuant to a writ of execution issued by the MeTC. 7 Spouses Rabaja appealed to the
Regional Trial Court, Branch 212, Mandaluyong City (RTC-Br. 212) which reversed the MeTC ruling in its March 1, 2005
decision.8 The RTC-Br. 212 found that no lease agreement existed between the parties. Thereafter, Spouses Salvador
filed an appeal with the CA which was docketed as CA-G.R. SP No. 89259. On March 31, 2006, the CA ruled in favor of
Spouses Salvador and reinstated the MeTC ruling ejecting Spouses Rabaja.9 Not having been appealed, the CA decision
in CA-G.R. SP No. 89259 became final and executory on May 12, 2006. 10chanroblesvirtuallawlibrary
Meanwhile, the rescission case filed by Spouses Rabaja against Spouses Salvador and Gonzales and docketed as Civil
Case No. MC No. 03-2175 was also raffled to RTC-Br. 212. In their complaint, 11dated July 7, 2003, Spouses Rabaja
demanded the rescission of the contract to sell praying that the amount of P950,000.00 they previously paid to Spouses
Salvador be returned to them. They likewise prayed that damages be awarded due to the contractual breach committed
by Spouses Salvador.
Spouses Salvador filed their answer with counterclaim and cross-claim 12 contending that there was no meeting of the
minds between the parties and that the SPA in favor of Gonzales was falsified. In fact, they filed a case for falsification
against Gonzales, but it was dismissed because the original of the alleged falsified SPA could not be produced. They
further averred that they did not receive any payment from Spouses Rabaja through Gonzales. In her defense, Gonzales
filed her answer13 stating that the SPA was not falsified and that the payments of Spouses Rabaja amounting to
P950,000.00 were all handed over to Spouses Salvador.
The pre-trial conference began but attempts to amicably settle the case were unsuccessful. It was formally reset to
February 4, 2005, but Spouses Salvador and their counsel failed to attend. Consequently, the RTC issued the pre-trial
order14declaring Spouses Salvador in default and allowing Spouses Rabaja to present their evidence ex parte against
Spouses Salvador and Gonzales to present evidence in her favor.
A motion for reconsideration,15 dated March 28, 2005, was filed by Spouses Salvador on the said pre-trial order
beseeching the liberality of the court. The rescission case was then re-raffled to RTC-Br. 214 after the Presiding Judge of
RTC-Br. 212 inhibited herself. In the Order,16 dated October 24, 2005, the RTC-Br. 214 denied the motion for
reconsideration because Spouses Salvador provided a flimsy excuse for their non-appearance in the pre-trial conference.
Thereafter, trial proceeded and Spouses Rabaja and Gonzales presented their respective testimonial and documentary
evidence.
RTC Ruling
On March 29, 2007, the RTC-Br. 214 rendered a decision 17 in favor of Spouses Rabaja. It held that the signature of
Spouses Salvador affixed in the contract to sell appeared to be authentic. It also held that the contract, although
denominated as contract to sell, was actually a contract of sale because Spouses Salvador, as vendors, did not reserve
their title to the property until the vendees had fully paid the purchase price. Since the contract entered into was a
reciprocal contract, it could be validly rescinded by Spouses Rabaja, and in the process, they could recover the amount of
P950,000.00 jointly and severally from Spouses Salvador and Gonzales. The RTC stated that Gonzales was undoubtedly
the attorney-in-fact of Spouses Salvador absent any taint of irregularity. Spouses Rabaja could not be faulted in dealing
with Gonzales who was duly equipped with the SPA from Spouses Salvador.
The RTC-Br. 214 then ruled that the amount of P593,400.00 garnished from the time deposit account of Spouses Rabaja,
representing the award of rental arrearages in the separate ejectment suit, should be returned by Spouses
Salvador.18 The court viewed that such amount was part of the purchase price of the subject property which must be
returned. It also awarded moral and exemplary damages in favor of Spouses Rabaja and attorneys fees in favor of
Gonzales. The dispositive portion of the said decision reads:chanRoblesvirtualLawlibrary
WHEREFORE, this court renders judgment as follows:chanRoblesvirtualLawlibrary
a. Ordering the Contract to Sell entered into by the plaintiff and defendant spouses Rolando and Herminia
Salvador on July 24, 1998 as RESCINDED;chanrobleslaw
b. Ordering defendant spouses Rolando and Herminia Salvador and defendant Rosario S. Gonzales jointly and
severally liable to pay plaintiffs:chanRoblesvirtualLawlibrary
1. the amount of NINE HUNDRED FIFTY THOUSAND PESOS (P950,000.00), representing the payments
made by the latter for the purchase of subject property;chanrobleslaw
2. the amount of TWENTY THOUSAND PESOS (P20,000.00), as moral damages;chanrobleslaw

3. the amount of TWENTY THOUSAND PESOS (P20,000.00), as exemplary damages;chanrobleslaw
4. the amount of ONE HUNDRED THOUSAND PESOS (P100,000.00), as attorneys fees;chanrobleslaw
5. the cost of suit.
c. Ordering defendant Spouses Rolando and Herminia Salvador to pay plaintiffs the amount of FIVE HUNDRED
NINETY THREE THOUSAND PESOS (P593,000.00) (sic), representing the amount garnished from the
Metrobank deposit of plaintiffs as payment for their alleged back rentals;chanrobleslaw
d. Ordering the defendant Spouses Rolando and Herminia Salvador to pay defendant Rosario Gonzales on her
cross-claim in the amount of ONE HUNDRED THOUSAND PESOS (P100,000.00);chanrobleslaw
e. Dismissing the counterclaims of the defendants against the plaintiff.
SO ORDERED.19
Gonzales filed a motion for partial reconsideration, but it was denied by the RTC-Br. 114 in its Order, 20 dated September
12, 2007. Undaunted, Spouses Salvador and Gonzales filed an appeal before the CA.
CA Ruling
On March 29, 2007, the CA affirmed the decision of the RTC-Br. 114 with modifications. It ruled that the contract to sell
was indeed a contract of sale and that Gonzales was armed with an SPA and was, in fact, introduced to Spouses Rabaja
by Spouses Salvador as the administrator of the property. Spouses Rabaja could not be blamed if they had transacted
with Gonzales.
The CA then held that Spouses Salvador should return the amount of P593,400.00 pursuant to a separate ejectment
case, reasoning that Spouses Salvador misled the court because an examination of CA-G.R. SP No. 89260 showed that
Spouses Rabaja were not involved in that case. CA-G.R. SP No. 59260 was an action between Spouses Salvador and
Gonzales only and involved a completely different residential apartment located at 302-C Jupiter Street, Dreamland
Subdivision, Mandaluyong City.
The CA, however, ruled that Gonzales was not solidarily liable with Spouses Salvador. The agent must expressly bind
himself or exceed the limit of his authority in order to be solidarily liable. It was not shown that Gonzales as agent of
Spouses Salvador exceeded her authority or expressly bound herself to be solidarily liable. The decretal portion of the CA
decision reads:chanRoblesvirtualLawlibrary
WHEREFORE, the appeal is PARTLY GRANTED. The assailed Decision dated March 29, 2007 and the Order dated
September 12, 2007, of the Regional Trial Court, Branch 214, Mandaluyong City, in Civil Case No. MC-03-2175, are
AFFIRMED with MODIFICATION in that Rosario Gonzalez is not jointly and severally liable to pay Spouses Rabaja the
amounts enumerated in paragraph (b) of the Decision dated March 29, 2007.
SO ORDERED.21
Spouses Salvador filed a motion for reconsideration but it was denied by the CA in its January 5, 2012 Resolution.

ASSIGNMENT OF ERRORS
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE LOWER COURT GRAVELY ABUSED ITS
DISCRETION IN DECLARING PETITIONERS IN DEFAULT AND IN DEPRIVING THEM OF THE OPPORTUNITY TO
CROSS-EXAMINE RESPONDENTS SPS. RABAJA AS WELL AS TO PRESENT EVIDENCE FOR AND IN THEIR
BEHALF, GIVEN THE MERITORIOUS DEFENSES RAISED IN THEIR ANSWER THAT CATEGORICALLY AND
DIRECTLY DISPUTE RESPONDENTS SPS. RABAJAS CAUSE OF ACTION.
II
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE TRIAL COURT GRAVELY ERRED IN GIVING
CREDENCE TO THE TESTIMONY OF RESPONDENT GONZALES THAT PAYMENTS WERE INDEED REMITTED TO
AND RECEIVED BY PETITIONER HERMINIA SALVADOR EVEN AS THE IMPROVISED RECEIPTS WERE
EVIDENTLY MADE UP AND FALSIFIED BY RESPONDENT GONZALES.
III
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE TRIAL COURT GRAVELY ERRED IN RESCINDING
THE CONTRACT TO SELL WHEN THERE IS NOTHING TO RESCIND AS NO VALID CONTRACT TO SELL WAS
ENTERED INTO, AND IN DIRECTING THE REFUND OF THE AMOUNT OF P950,000.00 WHEN THE EVIDENCE
CLEARLY SHOWS THAT SAID AMOUNT WAS PAID TO AND RECEIVED BY RESPONDENT GONZALES ALONE
WHO MISAPPROPRIATED THE SAME.
IV
THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURTS DECISION FOR PETITIONERS TO
RETURN THE AMOUNT OF P543,400.00 REPRESENTING RENTALS IN ARREARS GARNISHED OR WITHDRAWN
BY VIRTUE OF A WRIT OF EXECUTION ISSUED IN AN EJECTMENT CASE WHICH WAS TRIED AND DECIDED BY
ANOTHER COURT.
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE LOWER COURT GRAVELY ERRED IN AWARDING
DAMAGES TO RESPONDENTS SPS. RABAJA, THERE BEING NO FACTUAL AND LEGAL BASES FOR SUCH
AWARD.
VI
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE TRIAL COURT GRAVELY ERRED IN AWARDING
P100,000.00 TO RESPONDENT GONZALES AS ATTORNEYS FEES WHEN RESPONDENT GONZALES, IN FACT,
COMMITTED FORGERY AND FALSIFICATION IN DEALING WITH THE PROPERTY OF PETITIONERS AND
MISAPPROPRIATED THE MONIES PAID TO HER BY RESPONDENTS SPS. RABAJA, THUS GIVING PREMIUM TO
HER FRAUDULENT ACTS.22
The foregoing can be synthesized into three main issues. First, Spouses Salvador contend that the order of default must
be lifted because reasonable grounds exist to justify their failure to attend the pre-trial conference on February 4,
2005. Second, Spouses Salvador raise in issue the veracity of the receipts given by Gonzales, the SPA and the validity of
the contract to sell. They claim that the improvised receipts should not be given credence because these were crude and
suspicious, measuring only by 2 x 2 inches which showed that Gonzales misappropriated the payments of Spouses
Rabaja for herself and did not remit the amount of P950,000.00 to them. As there was no consideration, then no valid
contract to sell existed. Third, Spouses Salvador argue that the ejectment case, from which the amount of P593,400.00
was garnished, already became final and executory and could not anymore be disturbed. Lastly, the award of damages in
favor of Spouses Rabaja and Gonzales was improper absent any legal and factual bases.
On January 21, 2013, Spouses Salvador filed their supplemental petition 23 informing the Court that RTC-Br. 213 had
rendered a decision in Civil Case No. MC00-1082, an action for rescission of the SPA. The said decision held that
Spouses Salvador properly revoked the SPA in favor of Gonzales due to loss of trust and confidence. On September 11,
2013, Gonzales filed her comment to the supplemental petition, 24 contending that the RTC-Branch 213 decision had no
bearing because it had not yet attained finality. On even date, Spouses Rabaja filed their Comment, 25 asserting that the
present petition is a mere rehash of the previous arguments of Spouses Salvador before the CA. On November 15, 2013,
Spouses Salvador replied that they merely wanted to show that the findings by the RTC-Br. 213 should be given weight as
a full-blown trial was conducted therein.26chanroblesvirtuallawlibrary
The Courts Ruling
As a general rule, the Courts jurisdiction in a Rule 45 petition is limited to the review of pure questions of law. A question
of law arises when the doubt or difference exists as to what the law is on a certain state of facts. Negatively put, Rule 45
does not allow the review of questions of fact. A question of fact exists when the doubt or difference arises as to the truth
or falsity of the allegations.27chanroblesvirtuallawlibrary
The present petition presents questions of fact because it requires the Court to examine the veracity of the evidence
presented during the trial, such as the improvised receipts, the SPA given to Gonzales and the contract to sell. Even the
petitioner spouses themselves concede and ask the Court to consider questions of fact, 28 but the Court finds no reason to
disturb the findings of fact of the lower courts absent any compelling reason to the contrary.
The failure of Spouses Salvador to attend pre-trial conference warrants the presentation of evidence ex parte by Spouses
Rabaja
On the procedural aspect, the Court reiterates the rule that the failure to attend the pre-trial conference does not result in
the default of an absent party. Under the 1997 Rules of Civil Procedure, a defendant is only declared in default if he fails
to file his Answer within the reglementary period.29On the other hand, if a defendant fails to attend the pre-trial conference,
the plaintiff can present his evidence ex parte. Sections 4 and 5, Rule 18 of the Rules of Court
provide:chanRoblesvirtualLawlibrary
Sec. 4. Appearance of parties.
It shall be the duty of the parties and their counsel to appear at the pre-trial. The non-appearance of a party may be
excused only if a valid cause is shown therefor or if a representative shall appear in his behalf fully authorized in writing to
enter into an amicable settlement, to submit to alternative modes of dispute resolution, and to enter into stipulations or
admissions of facts and of documents.
Sec. 5. Effect of failure to appear.
The failure of the plaintiff to appear when so required pursuant to the next preceding section shall be cause for dismissal
of the action. The dismissal shall be with prejudice, unless otherwise ordered by the court. A similar failure on the part
of the defendant shall be cause to allow the plaintiff to present his evidence ex parte and the court to render
judgment on the basis thereof.
[Emphasis supplied]
The case of Philippine American Life & General Insurance Company v. Joseph Enario 30 discussed the difference between
the non-appearance of a defendant in a pre-trial conference and the declaration of a defendant in default in the present
Rules of Civil Procedure. The decision instructs:chanRoblesvirtualLawlibrary
Prior to the 1997 Revised Rules of Civil Procedure, the phrase "as in default" was initially included in Rule 20 of the old
rules, and which read as follows:chanRoblesvirtualLawlibrary
Sec. 2. A party who fails to appear at a pre-trial conference may be non-suited or considered as in default.cralawred
It was, however, amended in the 1997 Revised Rules of Civil Procedure. Justice Regalado, in his book, REMEDIAL LAW
COMPENDIUM, explained the rationale for the deletion of the phrase "as in default" in the amended provision, to
wit:chanRoblesvirtualLawlibrary
1. This is a substantial reproduction of Section 2 of the former Rule 20 with the change that, instead of defendant being
declared "as in default" by reason of his non-appearance, this section now spells out that the procedure will be to allow
the ex parte presentation of plaintiffs evidence and the rendition of judgment on the basis thereof. While actually the
procedure remains the same, the purpose is one of semantical propriety or terminological accuracy as there were
criticisms on the use of the word "default" in the former provision since that term is identified with the failure to file a
required answer, not appearance in court.cralawred
Still, in the same book, Justice Regalado clarified that while the order of default no longer obtained, its effects were
retained, thus:chanRoblesvirtualLawlibrary
Failure to file a responsive pleading within the reglementary period, and not failure to appear at the hearing, is the sole
ground for an order of default, except the failure to appear at a pre-trial conference wherein the effects of a default on the
part of the defendant are followed, that is, the plaintiff shall be allowed to present evidence ex parte and a judgment based
thereon may be rendered against defendant.cralawred
From the foregoing, the failure of a party to appear at the pre-trial has indeed adverse consequences. If the absent party
is the plaintiff, then his case shall be dismissed. If it is the defendant who fails to appear, then the plaintiff is allowed to
present his evidence ex parte and the court shall render judgment based on the evidence presented. Thus, the plaintiff is
given the privilege to present his evidence without objection from the defendant, the likelihood being that the court will
decide in favor of the plaintiff, the defendant having forfeited the opportunity to rebut or present its own evidence. 31 The
stringent application of the rules on pre-trial is necessitated from the significant role of the pre-trial stage in the litigation
process. Pre-trial is an answer to the clarion call for the speedy disposition of cases. Although it was discretionary under
the 1940 Rules of Court, it was made mandatory under the 1964 Rules and the subsequent amendments in 1997. 32 The
importance of pre-trial in civil actions cannot be overemphasized. 33chanroblesvirtuallawlibrary
There is no dispute that Spouses Salvador and their counsel failed to attend the pre-trial conference set on February 4,
2005 despite proper notice. Spouses Salvador aver that their non-attendance was due to the fault of their counsel as he
forgot to update his calendar.34 This excuse smacks of carelessness, and indifference to the pre-trial stage. It simply
cannot be considered as a justifiable excuse by the Court. As a result of their inattentiveness, Spouses Salvador could no
longer present any evidence in their favor. Spouses Rabaja, as plaintiffs, were properly allowed by the RTC to present
evidence ex parte against Spouses Salvador as defendants. Considering that Gonzales as co-defendant was able to
attend the pre-trial conference, she was allowed to present her evidence. The RTC could only render judgment based on
the evidence presented during the trial.
Gonzales, as agent of Spouses Salvador, could validly receive the payments of Spouses Rabaja
Even on the substantial aspect, the petition does not warrant consideration. The Court agrees with the courts below in
finding that the contract entered into by the parties was essentially a contract of sale which could be validly rescinded.
Spouses Salvador insist that they did not receive the payments made by Spouses Rabaja from Gonzales which totalled
P950,000.00 and that Gonzales was not their duly authorized agent. These contentions, however, must fail in light of the
applicable provisions of the New Civil Code which state:chanRoblesvirtualLawlibrary
Art. 1900. So far as third persons are concerned, an act is deemed to have been performed within the scope of the
agent's authority, if such act is within the terms of the power of attorney, as written, even if the agent has in fact exceeded
the limits of his authority according to an understanding between the principal and the agent.
xxxx
Art. 1902. A third person with whom the agent wishes to contract on behalf of the principal may require the presentation of
the power of attorney, or the instructions as regards the agency. Private or secret orders and instructions of the principal
do not prejudice third persons who have relied upon the power of attorney or instructions shown them.
xxxx
Art. 1910. The principal must comply with all the obligations which the agent may have contracted within the scope of his
authority.cralawred
Persons dealing with an agent must ascertain not only the fact of agency, but also the nature and extent of the agents
authority. A third person with whom the agent wishes to contract on behalf of the principal may require the presentation of
the power of attorney, or the instructions as regards the agency. The basis for agency is representation and a person
dealing with an agent is put upon inquiry and must discover on his own peril the authority of the
agent.35chanroblesvirtuallawlibrary
According to Article 1990 of the New Civil Code, insofar as third persons are concerned, an act is deemed to have been
performed within the scope of the agent's authority, if such act is within the terms of the power of attorney, as written. In
this case, Spouses Rabaja did not recklessly enter into a contract to sell with Gonzales. They required her presentation of
the power of attorney before they transacted with her principal. And when Gonzales presented the SPA to Spouses
Rabaja, the latter had no reason not to rely on it.
The law mandates an agent to act within the scope of his authority which what appears in the written terms of the power
of attorney granted upon him.36 The Court holds that, indeed, Gonzales acted within the scope of her authority. The SPA
precisely stated that she could administer the property, negotiate the sale and collect any document and all payments
related to the subject property.37 As the agent acted within the scope of his authority, the principal must comply with all the
obligations.38As correctly held by the CA, considering that it was not shown that Gonzales exceeded her authority or that
she expressly bound herself to be liable, then she could not be considered personally and solidarily liable with the
principal, Spouses Salvador.39chanroblesvirtuallawlibrary
Perhaps the most significant point which defeats the petition would be the fact that it was Herminia herself who personally
introduced Gonzalez to Spouses Rabaja as the administrator of the subject property. By their own ostensible acts,
Spouses Salvador made third persons believe that Gonzales was duly authorized to administer, negotiate and sell the
subject property. This fact was even affirmed by Spouses Salvador themselves in their petition where they stated that they
had authorized Gonzales to look for a buyer of their property. 40 It is already too late in the day for Spouses Salvador to
retract the representation to unjustifiably escape their principal obligation.
As correctly held by the CA and the RTC, considering that there was a valid SPA, then Spouses Rabaja properly made
payments to Gonzales, as agent of Spouses Salvador; and it was as if they paid to Spouses Salvador. It is of no moment,
insofar as Spouses Rabaja are concerned, whether or not the payments were actually remitted to Spouses Salvador. Any
internal matter, arrangement, grievance or strife between the principal and the agent is theirs alone and should not affect
third persons. If Spouses Salvador did not receive the payments or they wish to specifically revoke the SPA, then their
recourse is to institute a separate action against Gonzales. Such action, however, is not any more covered by the present
proceeding.
The amount of P593,400.00 should not be returned by Spouses Salvador
Nevertheless, the assailed decision of the CA must be modified with respect to the amount of P593,400.00 garnished by
Spouses Salvador and ordered returned to Spouses Rabaja. The RTC ordered the return of the amount garnished holding
that it constituted a part of the purchase price. The CA ruled that Spouses Salvador misled the Court when they
improperly cited CA-G.R. SP No. 89260 to prove their entitlement to the said amount. Both courts erred in their ruling.
First, the garnishment of the amount of P593,400.00 against Spouses Rabaja was pursuant to the CA decision in CA-G.R.
SP No. 89259, an entirely different case involving an action for ejectment, and it does not concern the rescission case
which is on appeal before this Court. Moreover, the decision on the ejectment case is final and executory and an entry of
judgment has already been made.41 Nothing is more settled in law than that when a final judgment is executory, it thereby
becomes immutable and unalterable. The judgment may no longer be modified in any respect, even if the modification is
meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the
modification is attempted to be made by the court which rendered it or by the highest Court of the land. The doctrine is
founded on consideration of public policy and sound practice that, at the risk of occasional errors, judgments must
become final at some definite point in time.42chanroblesvirtuallawlibrary
The March 31, 2006 CA decision43in CA-G.R. SP No. 89259 has long been final and executory and cannot any more be
disturbed by the Court. Public policy dictates that once a judgment becomes final, executory and unappealable, the
prevailing party should not be denied the fruits of his victory by some subterfuge devised by the losing party. Unjustified
delay in the enforcement of a judgment sets at naught the role and purpose of the courts to resolve justiciable
controversies with finality.44chanroblesvirtuallawlibrary
Meanwhile, in ruling that the garnishment was improper and thus ordering the return of the garnished amount, the CA
referred to its decision in CA-G.R. SP No. 89260. Spouses Salvador, however, clarified in its motion for
reconsideration45 before the CA and in the present petition46 that the garnishment was pursuant to CA-G.R. SP No. 89259,
and not CA-G.R. SP No. 89260, another ejectment case involving another property. A perusal of the records reveals that
indeed the garnishment was pursuant to the ejectment case in the MeTC, docketed as Civil Case No. 17344, 47where
Spouses Rabaja were the defendants. The MeTC decision was then reinstated by the CA in CA-G.R. SP No. 89259, not
CA-G.R. SP No. 89260. There, a writ of execution48 and notice of pay49 were issued against Spouses Rabaja in the
amount of P591,900.00.
Second, Spouses Rabajas appeal with the RTC never sought relief in returning the garnished amount. 50 Such issue
simply emerged in the RTC decision. This is highly improper because the courts grant of relief is limited only to what has
been prayed for in the complaint or related thereto, supported by evidence, and covered by the partys cause of
action.51chanroblesvirtuallawlibrary
If Spouses Rabaja would have any objection on the manner and propriety of the execution, then they must institute their
opposition to the execution proceeding a separate case. Spouses Rabaja can invoke the Civil Code provisions on legal
compensation or set-off under Articles 1278, 1279 and 1270. 52 The two obligations appear to have respectively offset each
other, compensation having taken effect by operation of law pursuant to the said provisions of the Civil Code, since all the
requisites provided in Art. 1279 of the said Code for automatic compensation are duly present.
No award of actual, moral and exemplary damages
The award of damages to Spouses Rabaja cannot be sustained by this Court. The filing alone of a civil action should not
be a ground for an award of moral damages in the same way that a clearly unfounded civil action is not among the
grounds for moral damages.53 Article 2220 of the New Civil Code provides that to award moral damages in a breach of
contract, the defendant must act fraudulently or in bad faith. In this case, Spouses Rabaja failed to sufficiently show that
Spouses Salvador acted in a fraudulent manner or with bad faith when it breached the contract of sale. Thus, the award of
moral damages cannot be warranted.
As to the award of exemplary damages, Article 2229 of the New Civil Code provides that exemplary damages may be
imposed by way of example or correction for the public good, in addition to the moral, temperate, liquidated or
compensatory damages.54 The claimant must first establish his right to moral, temperate, liquidated or compensatory
damages. In this case, considering that Spouses Rabaja failed to prove moral or compensatory damages, then there
could be no award of exemplary damages.
With regard to attorneys fees, neither Spouses Rabaja nor Gonzales is entitled to the award. The settled rule is that no
premium should be placed on the right to litigate and that not every winning party is entitled to an automatic grant of
attorneys fees.55 The RTC reasoned that Gonzales was forced to litigate due to the acts of Spouses Salvador. The Court
does not agree. Gonzales, as agent of Spouses Salvador, should have expected that she would be called to litigation in
connection with her fiduciary duties to the principal.
In view of all the foregoing, the CA decision should be affirmed with the following
modifications:chanRoblesvirtualLawlibrary
1. The order requiring defendant Spouses Rolando and Herminia Salvador to pay plaintiffs the amount of Five
Hundred Ninety Three Thousand (P593,000.00) Pesos, representing the amount garnished from the Metrobank
deposit of plaintiffs as for their back rentals should be deleted;chanrobleslaw
2. The award of moral damages in the amount of Twenty Thousand (P20,000.00) Pesos; exemplary damages in the
amount of Twenty Thousand (P20,000.00) Pesos, and attorneys fees in the amount of One Hundred Thousand
(P100,000.00) Pesos in favor of Spouses Rabaja should be deleted; and
3. The award of attorneys fees in amount of One Hundred Thousand (P100,000.00) Pesos in favor of Gonzales
should be deleted.
The other amounts awarded are subject to interest at the legal rate of 6% per annum, to be reckoned from the date of
finality of this judgment until fully paid.
WHEREFORE, the petition is PARTLY GRANTED. The March 29, 2007 Decision of the Regional Trial Court, Branch 214,
Mandaluyong City, in Civil Case No. MC-03-2175, is MODIFIED to read as follows:chanRoblesvirtualLawlibrary
WHEREFORE, this Court renders judgment as follows:chanRoblesvirtualLawlibrary
a. Ordering the Contract to Sell entered into by Spouses Rogelio and Elizabeth Rabaja and Spouses Rolando and
Herminia Salvador on July 24, 1998 as RESCINDED;chanrobleslaw
b. Ordering Spouses Rolando and Herminia Salvador to pay Spouses Rogelio and Elizabeth
Rabaja:chanRoblesvirtualLawlibrary
1. The amount of Nine Hundred Fifty Thousand (P950,000.00) Pesos, representing the payments made by
the latter for the purchase of the subject property; and
2. The cost of suit;chanrobleslaw
c. Dismissing the counterclaims of Spouses Rolando and Herminia Salvador and Rosario Gonzales against
Spouses Rogelio and Elizabeth Rabaja
The amounts awarded are subject to interest at the legal rate of 6% per annum to be reckoned from the date of finality of
this judgment until fully paid.
As aforestated, this is without prejudice to the invocation by either party of the Civil Code provisions on legal
compensation or set-off under Articles 1278, 1279 and 1270.
SO ORDERED.
SPECIAL THIRD DIVISION
G.R. No. 204700 November 24, 2014
EAGLERIDGE DEVELOPMENT CORPORATION, MARCELO N. NAVAL and CRISPIN I. OBEN, Petitioners,

vs.
CAMERON GRANVILLE 3 ASSET MANAGEMENT, INC., Respondent.
RESOLUTION
LEONEN, J.:
For resolution is respondent Cameron Granville 3 Asset Management, Inc. 's motion for reconsideration 1 of our April 10,
2013 decision,2 which reversed and set aside the Court of Appeals' resolutions 3 and ordered respondent to produce the
Loan Sale and Purchase Agreement (LSPA) dated April 7, 2006, including its annexes and/or attachments, if any, in order
that petitioners may inspect or photocopy the same.
Petitioners Eagleridge Development Corporation, Marcelo N. Naval, and Crispin I. Oben filed on June 7, 2013 their motion
to ad.mit attached opposition.4 Subsequently, respondent filed its reply5 and petitioners their motion to admit attached
rejoinder.6
The motion for reconsideration raises the following points:
(1) The motion for production was filed out of time; 7
(2) The production of the LSPA would violate the parol evidence rule; and 8
(3) The LSPA is a privileged and confidential document. 9
Respondent asserts that there was no "insistent refusal" on its part to present the LSPA, but that petitioners filed their
motion for production way out of time, even beyond the protracted pre-trial period from September 2005 to 2011. 10 Hence,
petitioners had no oneto blame but themselves when the trial court denied their motion as it was filed only during the trial
proper.11
Respondent further submits that "Article 1634 [of the] Civil Code had been inappropriately cited by
[p]etitioners"12inasmuch as it is Republic Act No. 9182 (Special Purpose Vehicle Act) that is applicable. 13 Nonetheless,
even assuming that Article 1634 is applicable, respondent argued that petitioners are: 1) still liable to pay the whole of
petitioner Eagleridge Development Corporations (EDC) loanobligation, i.e., P10,232,998.00 exclusive of interests and/or
damages;14 and 2) seven (7) years late in extinguishing petitioner EDCs loan obligation because pursuant to Article 1634,
they should have exercised their right of extinguishment within 30 days from the substitution of Export and Industry Bank
or EIB (the original creditor) by respondent in December 2006. 15 According to respondent, the trial court order "granting
the substitution constituted sufficient judicial demand as contemplated under Article 1634." 16 Also, maintaining that the
LSPA is immaterial or irrelevant to the case, respondent contends that the "[o]rder of substitution settled the issue of
[respondents] standing before the [c]ourt and its right to fill in the shoes of [EIB]." 17 It argues that the production of the
LSPA will neither prevent respondent from pursuing its claim of 10,232,998.00, exclusive of interests and penalties, from
petitioner EDC, nor write off petitioner EDCs liability to respondent. 18 The primordial issue of whether petitioners owe
respondent a sum of money via the deed of assignment can allegedly "be readily resolved by application of Civil Code
provisions and/or applicable jurisprudence and not by the production/inspection of the LSPA[.]" 19 Respondent also argues
that "a consideration is not always a requisite [in assignment of credits, and] an assignee may maintain an action based
on his title and it is immaterial whether ornot he paid any consideration [therefor][.]" 20
Respondent also contends that: (1) the production of the LSPA will violate the parol evidence rule 21 under Rule 130,
Section 9 of the Rules of Court; (2) the LSPA is a privileged/confidential bank document; 22 and (3) under the Special
Purpose Vehicle Act, "the only obligation of both the assignor (bank) and the assignee (the SPV; respondent Cameron) is
to give notice to the debtor (Eagleridge, Naval,and Oben) that its account has been assigned/transferred to a special
purpose vehicle (Sec. 12, R.A. 9182) [and] [i]t does not require of the special purpose vehicle or the bank to disclose all
financial documents included in the assignment/sale/transfer[.]" 23
Finally, respondent points out that the deed of assignment is a contested document. "Fair play would be violated if the
LSPA is produced without [p]etitioners acknowledging that respondent Cameron Granville 3 Asset Management, Inc. is the
real party-in-interest because petitioners . . . would [thereafter] use . . . the contents of a document (LSPA) to its benefit
while at the same time"24 refuting the integrity of the deed and the legal personality of respondent to sue petitioners. 25
For their part, petitioners counter that their motion for production was not filed out of time, and "[t]here is no proscription,
under Rule 27 or any provision of the Rules of Court, from filing motions for production, beyond the pre-trial." 26
Further, assuming that there was a valid transfer of the loan obligation of petitioner EDC, Article 1634 is applicable and,
therefore, petitioners must be informed of the actual transfer price, which information may only be supplied by the
LSPA.27 Petitioners argue that the substitution of respondent in the case a quowas "not sufficient demandas
contemplated under Article 1634 of the Civil Code inasmuch asrespondent Cameron failed . . . to inform petitioner EDC of
the price it paid for the [transfer of the] loan obligation," 28 which made it "impossible for petitioners to reimburse what was
paid for the acquisition of the . . . loan obligation [of EDC]." 29 Additionally, petitioners contend that respondent was not a
party to the deed of assignment, but Cameron Granville Asset Management (SPV-AMC), Inc., hence, "as [to] the actual
parties to the Deed of Assignment are concerned, no such demand has yet been made." 30
Petitioners add that the amount of their liability to respondent is one of the factual issues to be resolved as stated in the
November 21, 2011 pretrial order of the Regional Trial Court, which makes the LSPA clearly relevant and material to the
disposition of the case.31
Petitioners next argue that the parol evidence rule is not applicable to them because they were not parties tothe deed of
assignment, and "they cannot be prevented from seeking evidence to determine the complete terms of the Deed of
Assignment."32 Besides, the deedof assignment made express reference to the LSPA, hence,the latter cannot be
considered as extrinsic to it.33
As to respondents invocation that the LSPA is privileged/confidential, petitioners counter that "it has not been shown that
the parties fall under . . . or, at the very least . . . analogous to [any of the relationships enumerated in Rule 130, Section
124] that would exempt [respondent] from disclosing information as to their transaction." 34
In reply, respondent argues that "[petitioners] cannot accept and reject the same instrument at the same time." 35According
to respondent, by allegedly "uphold[ing] the truth of the contents as well as the validity of [the] Deed of Assignment [in]
seeking the production of the [LSPA],"36 petitioners could no longer be allowed to impugn the validity of the same deed. 37
In their rejoinder, petitioners clarified that their consistent position was always to assail the validity of the deed of
assignment; that alternatively, they invoked the application of Article 1634 should the court uphold the validity of the
transfer of their alleged loan obligation; and that Rule 8, Section 2 of the Rules of Court "permits parties to set forth
alternative causes of action or defenses."38
We deny the motion for reconsideration.

Discovery mode of
production/inspection of
document may be availed of
even beyond pre-trial upon a
showing of good cause
The availment of a motion for production, as one of the modes of discovery, is not limited to the pre-trial stage. Rule 27
does not provide for any time frame within which the discovery mode of production or inspection of documents can be
utilized. The rule only requires leave of court "upon due application and a showing of due cause." 39 Rule 27, Section 1 of
the 1997 Rules of Court, states:
SECTION 1. Motion for production or inspection order Upon motion of any party showing good cause therefor the court
in which an action is pending may (a) order any party to produce and permit the inspection and copying or photographing,
by or on behalf of the moving party, of any designated documents, papers, books, accounts, letters, photographs, objects
or tangible things, not privileged, which constitute or contain evidence material to any matter involved in the action and
which are in his possession, custody or control[.] (Emphasis supplied)
In Producers Bank of the Philippines v. Court of Appeals, 40 this court held that since the rules are silent asto the period
within which modes of discovery (in that case, written interrogatories) may still be requested, it is necessary to determine:
(1) the purposeof discovery; (2) whether, based on the stage of the proceedings and evidence presented thus far, allowing
it is proper and would facilitate the disposition of the case; and (3) whether substantial rights of parties would be unduly
prejudiced.41 This court further held that "[t]he use of discovery is encouraged, for it operates with desirable flexibility
under the discretionary control of the trial court." 42
In Dasmarias Garments, Inc. v. Reyes,43 this court declared that depositions, as a mode ofdiscovery, "may be taken at
any time after the institution of any action [as there is] no prohibition against the taking of depositions after pre-
trial."44 Thus:
Dasmarias also contends that the "taking of deposition is a mode of pretrial discovery to be availed of before the action
comes to trial." Not so. Depositions may be taken at any time after the institution of any action, whenever necessary or
convenient. There is no rule that limits deposition-taking only to the period of pre-trial or before it; no prohibition against
the taking of depositions after pre-trial. Indeed, the law authorizes the taking of depositions of witnesses before or after an
appeal is taken from the judgment of a Regional Trial Court "to perpetuate their testimony for use in the event of further
proceedings in the said court" (Rule 134, Rules of Court), and even during the process of execution of a final and
executory judgment (East Asiatic Co. v. C.I.R., 40 SCRA 521, 544). 45
"The modes of discovery are accorded a broad and liberal treatment." 46 The evident purpose of discovery procedures is
"to enable the parties, consistent with recognized privileges, to obtain the fullest possible knowledge of the issues and
facts before civil trials"47 and, thus, facilitating an amicable settlement or expediting the trial of the case. 48
Technicalities in pleading should be avoided in order to obtain substantial justice. In Mutuc v. Judge Agloro, 49 this court
directed the bank to give Mutuc a complete statement asto how his debt was computed, and should he be dissatisfied
with that statement, pursuant to Rule 27 of the Rules of Court, to allow him to inspect and copy bank records supporting
the items in that statement.50 This was held to be "in consonance with the rules on discovery and the avowed policy of the
Rules of Court . . . to require the parties to lay their cards on the table to facilitate a settlement of the case before the
trial."51
We have determined that the LSPA isrelevant and material to the issue on the validity of the deed of assignment raised by
petitioners in the court a quo, and allowing its production and inspection by petitioners would be more in keeping with the
objectives of the discovery rules. We find no great practical difficulty, and respondent continuously fails to allege any, in
presenting the document for inspection and copying of petitioners. On the other hand, to deny petitioners the opportunity
to inquire into the LSPA would bar their access to relevant evidence and impair their fundamental right to due process. 52
Article 1634 of the New Civil Code is applicable
Contrary to respondents stance, Article 1634 of the Civil Code on assignment of credit in litigation is applicable.
Section 13 of the Special Purpose Vehicle Act clearly provides that in the transfer of the non-performing loans to a special
purpose vehicle, "the provisions on subrogation and assignment of credits under the New Civil Code shall apply." Thus:
Sec. 13. Nature of Transfer. All sales or transfers of NPAs to an SPV shall be in the nature of a true sale after proper
notice in accordance with the procedures asprovided for in Section 12: Provided, That GFIs and GOCCs shall be subject
to existing law on the disposition of assets: Provided, further, That in the transfer of the NPLs, the provisions on
subrogation and assignment of credits under the New Civil Code shall apply.
Furthermore, Section 19 of the Special Purpose Vehicle Act expressly states that redemption periods allowed to
borrowers under the banking law, the Rules of Court, and/or other laws are applicable. Hence, the right of redemption
allowed to a debtor under Article 1634 of the Civil Code is applicable to the case a quo.
Accordingly, petitioners may extinguish their debt by paying the assignee-special purpose vehicle the transfer price plus
the cost of money up to the time of redemption and the judicial costs.
Petitioners right to
extinguish their debt has not
yet lapsed
Petitioners right to extinguish their debt under Article 1634 on assignment of credits has not yet lapsed. The pertinent
provision is reproduced here:
Art. 1634. When a credit or other incorporeal right in litigation is sold, the debtor shall have a right to extinguish it by
reimbursing the assignee for the price the latter paid therefor, the judicial costs incurred by him, and the interest on the
price from the day on which the same was paid. A credit or other incorporeal right shall be considered in litigation from the
time the complaint concerning the same is answered.
The debtor may exercise his right within thirty days from the date the assignee demands payment from him. (Emphasis
supplied)
Under the last paragraph of Article 1634, the debtor may extinguish his or her debt within 30 days from the date the
assignee demands payment. In this case, insofar as the actual parties to the deed of assignment are concerned, no
demand has yet been made, and the 30-day period did not begin to run. Indeed, petitioners assailed before the trial court
the validity of the deed of assignment on the groundsthat it did not comply with the mandatory requirements of the Special
Purpose Vehicle Act,53 and it referred to Cameron Granville Asset Management (SPV-AMC), Inc., as the assignee, and not
respondent Cameron Granville 3 Asset Management, Inc.54 The law requires that payment should be made only "to the
person in whose favor the obligation has been constituted, or his [or her] successor in interest, or any person authorized
to receive it."55 It was held that payment made to a person who is not the creditor, his or her successor-in-interest, or a
person who is authorized to receive payment, even through error or good faith, is not effective payment which will bind the
creditor or release the debtor from the obligation to pay. 56 Therefore, it was important for petitioners to determine for sure
the proper assignee of the EIB credit or who to pay, in order to effectively extinguish their debt.
Moreover, even assuming that respondent is the proper assignee of the EIB credit, petitioners could not exercise their
right of extinguishment because they were not informed of the consideration paid for the assignment. 57
Respondent must, pursuant to Article 1634 of the Civil Code, disclose how much it paid to acquire the EIB credit, so that
petitioners could make the corresponding offer to pay, by way of redemption, the same amount in final settlement of their
obligation.
Respondent insists that the transfer price of the EIB credit is P10,232,998.00 (the actual amount and value of the credit),
and that petitioners should have paid the said amount within 30 days from the December 8, 2006 order of the Regional
Trial Court approving its substitution of EIB.58 Petitioners believe otherwise, and as the deed of assignment was silent on
the matter, it becomes necessary to verify the amount of the consideration from the LSPA.
Assuming indeed that respondent acquired the EIB credit for a lesser consideration, it cannot compel petitioners to pay or
answer for the entire original EIB credit, or more thanwhat it paid for the assignment.
Under the circumstances of this case, the 30-day period under Article 1634 within which petitioners could exercise their
right to extinguish their debt should begin to run only from the time they were informed of the actual price paid by the
assignee for the transfer of their debt. Parol evidence rule is not applicable
Claiming further the impropriety of allowing the production of the LSPA, respondent contends that the presentation of the
document and its annexes would violate the parol evidence rule in Rule 130, Section 9:
SEC. 9. Evidence of written agreements.When the terms of an agreement have been reduced to writing, it is considered
as containing all the terms agreed upon and there can be, between the parties and their successors in interest, no
evidence of such terms other than the contents of the written agreement.
However, a party may present evidence to modify, explain or add to the terms of the written agreement ifhe puts in issue
in his pleading:
(a) An intrinsic ambiguity, mistake or imperfection in the written agreement;
(b) The failure of the written agreement to express the true intent and agreement of the parties thereto;
(c) The validity of the written agreement; or

(d) The existence of other terms agreed to by the parties or their successors in interest after the execution of the
written agreement.
The term "agreement" includes wills.
We disagree.
The parol evidence rule does notapply to petitioners who are not parties to the deed of assignment and do not base a
claim on it.59 Hence, they cannot be prevented from seeking evidence to determine the complete terms of the deed of
assignment.
Even assuming that Rule 130, Section 9 is applicable, an exception to the rule under the second paragraph iswhen the
party puts in issue the validity of the written agreement, as in the case a quo.
Besides, what is forbidden under the parol evidence rule is the presentation of oral or extrinsic evidence, not those
expressly referred to in the written agreement. "[D]ocuments canbe read together when one refers to the other." 60 By the
express terms of the deed of assignment, it is clear that the deed of assignment was meant to be read in conjunction with
the LSPA.
As we have stated in our decision, Rule 132, Section 17 61 of the Rules of Court allows a party to inquire into the whole of
the writing or record when a part of it is given in evidence by the other party. Since the deed of assignment was produced
in court by respondent and marked as one of its documentary exhibits, the LSPA which was made a part thereof by
explicit reference and which is necessary for its understanding may also be inquired into by petitioners.
The LSPA is not privileged

and confidential in nature
Respondents contention that the LSPAis privileged and confidential is likewise untenable.
Indeed, Rule 27 contains the proviso that the documents sought to be produced and inspected must not be privileged
against disclosure. Rule 130, Section 24 describes the types of privileged communication. These are communication
between or involving the following: (a) between husband and wife; (b) between attorney and client; (c) between physician
and patient; (d) between priest and penitent; and (e) public officers and public interest.
Privileged communications under the rules of evidence is premised on an accepted need to protect a trust relationship. It
has not been shown that the parties to the deed of assignment fall under any of the foregoing categories.
This court has previously cited other privileged matters such as the following: "(a) editors may not be compelled to
disclose the source of published news; (b) voters may not be compelled to disclose for whom they voted; (c) trade
secrets; (d) information contained in tax census returns; . . . (d) bank deposits" 62 (pursuant to the Secrecy of Bank
Deposits Act); (e) national security matters and intelligence information; 63 and (f) criminal matters.64 Nonetheless, the
LSPA does not fall within any of these classes of information. Moreover, the privilegeis not absolute, and the court may
compel disclosure where it is indispensable for doing justice.
At any rate, respondent failed to discharge the burden of showing that the LSPA is a privileged
document.1wphi1Respondent did not present any law or regulation that considers bank documents such as the LSPA as
classified information. Its contention that the Special Purpose Vehicle Act 65 only requires the creditor-bank to give notice to
the debtor of the transfer of his or her account to a special purpose vehicle, and that the assignee-special purpose vehicle
has no obligation to disclose other financial documents related to the sale, is untenable. The Special Purpose Vehicle Act
does not explicitly declare these financial documents as privileged matters. Further, as discussed, petitioners are not
precluded from inquiring as to the true consideration of the assignment, precisely because the same law in relation to
Article 1634 allows the debtor to extinguish its debt by reimbursing the assignee-special purpose vehicle of the actual
price the latter paid for the assignment.
An assignment of a credit "produce[s] no effect as against third persons, unless it appears ina public instrument[.]" 66 It
strains reason why the LSPA, which by law must be a publicinstrument to be binding against third persons such as
petitioners-debtors, is privileged and confidential.
Alternative defenses are

allowed under the Rules
Finally, respondents contention that petitioners cannot claim the validity and invalidity of the deed ofassignment at the
same time is untenable.
The invocation by petitioners of Article 1634, which presupposes the validity of the deed of assignment orthe transfer of
the EIB credit to respondent, even if it would run counter to their defense on the invalidity of the deed of assignment, is
proper and sanctioned by Rule 8, Section 2 of the Rules of Court, which reads:
SEC. 2. Alternative causes of action or defenses. A party may set forth two or more statements of a claim or defense
alternatively or hypothetically, either in one causeof action or defense or in separate causes of action or defenses. When
two or more statements are made in the alternative and one of them if made independently would be sufficient, the
pleading is not made insufficient by the insufficiency of one or more of the alternative statements. (Emphasis supplied)
All told, respondent failed to allege sufficient reasons for us to reconsider our decision. Verily, the production and
inspection of the LSPA and its annexes fulfill the discovery-procedures objective of making the trial "less a game of blind
mans buff and morea fair contest with the basic issues and facts disclosed to the fullest practicable extent." 67
WHEREFORE, the motion for reconsideration is DENIED WITH FINALITY.
SO ORDERED.
THIRD DIVISION
G.R. No. 197530, July 09, 2014
ABOITIZ EQUITY VENTURES, INC., Petitioner, v. VICTOR S. CHIONGBIAN, BENJAMIN D. GOTHONG, AND CARLOS
A. GOTHONG LINES, INC. (CAGLI), Respondents.
DECISION
LEONEN, J.:
This is a petition for review on certiorari with an application for the issuance of a temporary restraining order and/or writ of
preliminary injunction under Rule 45 of the Rules of Court. This petition prays that the assailed orders dated May 5,
20111 and June 24, 20112 of the Regional Trial Court, Cebu City, Branch 10 in Civil Case No. CEB-37004 be nullified and
set aside and that judgment be rendered dismissing with prejudice the complaint 3 dated July 20, 2010 filed by
respondents Carlos A. Gothong Lines, Inc. (CAGLI) and Benjamin D. Gothong.
On January 8, 1996, Aboitiz Shipping Corporation (ASC), principally owned by the Aboitiz family, CAGLI, principally
owned by the Gothong family, and William Lines, Inc. (WLI), principally owned by the Chiongbian family, entered into an
agreement (the Agreement),4 whereby ASC and CAGLI would transfer their shipping assets to WLI in exchange for
WLIs shares of stock.5 WLI, in turn, would run their merged shipping businesses and, henceforth, be known as WG&A,
Inc. (WG&A).6cralawred
Sec. 11.06 of the Agreement required all disputes arising out of or in connection with the Agreement to be settled by
arbitration:chanRoblesvirtualLawlibrary
11.06 Arbitration
All disputes arising out of or in connection with this Agreement including any issue as to this Agreements validity or
enforceability, which cannot be settled amicably among the parties, shall be finally settled by arbitration in accordance with
the Arbitration Law (Republic Act No. 876) by an arbitration tribunal composed of four (4) arbitrators. Each of the parties
shall appoint one (1) arbitrator, the three (3) to appoint the fourth arbitrator who shall act as Chairman. Any award by the
arbitration tribunal shall be final and binding upon the parties and shall be enforced by judgment of the Courts of Cebu or
Metro Manila.7
Among the attachments to the Agreement was Annex SL-V. 8 This was a letter dated January 8, 1996, from WLI, through
its President (herein respondent) Victor S. Chiongbian addressed to CAGLI, through its Chief Executive Officer Bob D.
Gothong and Executive Vice President for Engineering (herein respondent) Benjamin D. Gothong. On its second page,
Annex SL-V bore the signatures of Bob D. Gothong and respondent Benjamin D. Gothong by way of a conforme on behalf
of CAGLI.
Annex SL-V confirmed WLIs commitment to acquire certain inventories of CAGLI. These inventories would have a total
aggregate value of, at most, P400 million, as determined after a special examination of the [i]nventories. 9 Annex SL-V
also specifically stated that such acquisition was pursuant to the Agreement. 10cralawred
The entirety of Annex SL-Vs substantive portion reads:chanRoblesvirtualLawlibrary
We refer to the Agreement dated January 8, 1996 (the Agreement) among William Lines, Inc. (Company C), Aboitiz
Shipping Corporation (Company A) and Carlos A. Gothong Lines, Inc. (Company B) regarding the transfer of various
assets of Company A and Company B to Company C in exchange for shares of capital stock of Company C. Terms
defined in the Agreement are used herein as therein defined.
This will confirm our commitment to acquire certain spare parts and materials inventory (the Inventories) of Company B
pursuant to the Agreement.
The total aggregate value of the Inventories to be acquired shall not exceed P400 Million as determined after a special
examination of the Inventories as performed by SGV & Co. to be completed on or before the Closing Date under the
agreed procedures determined by the parties.
Subject to documentation acceptable to both parties, the Inventories to be acquired shall be determined not later than
thirty (30) days after the Closing Date and the payments shall be made in equal quarterly instalments over a period of two
years with the first payment due on March 31, 1996.11
Pursuant to Annex SL-V, inventories were transferred from CAGLI to WLI. These inventories were assessed to have a
value of P514 million, which was later adjusted to P558.89 million. 12 Of the total amount of P558.89 million, CAGLI was
paid the amount of ?400 Million.13 In addition to the payment of P400 million, petitioner Aboitiz Equity Ventures (AEV)
noted that WG&A shares with a book value of P38.5 million were transferred to CAGLI. 14cralawred
As there was still a balance, in 2001, CAGLI sent WG&A (the renamed WLI) demand letters for the return of or the
payment for the excess [i]nventories.15 AEV alleged that to satisfy CAGLIs demand, WLI/WG&A returned inventories
amounting to P120.04 million.16 As proof of this, AEV attached copies of delivery receipts signed by CAGLIs
representatives as Annex K of the present petition. 17cralawred
Sometime in 2002, the Chiongbian and Gothong families decided to leave the WG&A enterprise and sell their interest in
WG&A to the Aboitiz family. As such, a share purchase agreement 18 (SPA) was entered into by petitioner AEV and the
respective shareholders groups of the Chiongbians and Gothongs. In the SPA, AEV agreed to purchase the Chiongbian
group's 40.61% share and the Gothong group's 20.66% share in WG&As issued and outstanding stock. 19cralawred
Section 6.5 of the SPA provided for arbitration as the mode of settling any dispute arising from the SPA. It
6.5 Arbitration. Should there be any dispute arising between the parties relating to this Agreement including the
interpretation or performance hereof which cannot be resolved by agreement of the parties within fifteen (15) days after
written notice by a party to another, such matter shall then be finally settled by arbitration in Cebu City in accordance with
the Philippine Arbitration Law. Substantive aspects of the dispute shall be settled by applying the laws of the Philippines.
The decision of the arbitrators shall be final and binding upon the parties hereto and the expense of arbitration (including
without limitation the award of attorneys fees to the prevailing party) shall be paid as the arbitrators shall determine. 20
Section 6.8 of the SPA further provided that the Agreement (of January 8, 1996) shall be deemed terminated except its
Annex SL-V. It reads:chanRoblesvirtualLawlibrary
6.8 Termination of Shareholders Agreement. The Buyer and the Sellers hereby agree that on Closing, the Agreement
among Aboitiz Shipping Corporation, Carlos A. Gothong Lines, Inc. and William Lines, Inc. dated January 8, 1996, as the
same has been amended from time to time (the Shareholders Agreement) shall all be considered terminated, except
with respect to such rights and obligations that the parties to the Shareholders Agreement have under a letter dated
January 8, 1996 (otherwise known as SL-V) from William Lines, Inc. to Carlos A. Gothong Lines, Inc. regarding certain
spare parts and materials inventory, which rights and obligations shall survive through the date prescribed by the
applicable statute of limitations.21
As part of the SPA, the parties entered into an Escrow Agreement 22 whereby ING Bank N.V.-Manila Branch was to take
custody of the shares subject of the SPA.23 Section 14.7 of the Escrow Agreement provided that all disputes arising from it
shall be settled through arbitration:chanRoblesvirtualLawlibrary
14.7 All disputes, controversies or differences which may arise by and among the parties hereto out of, or in relation to, or
in connection with this Agreement, or for the breach thereof shall be finally settled by arbitration in Cebu City in
accordance with the Philippine Arbitration Law. The award rendered by the arbitrator(s) shall be final and binding upon the
parties concerned. However, notwithstanding the foregoing provision, the parties reserve the right to seek redress before
the regular court and avail of any provisional remedies in the event of any misconduct, negligence, fraud or tortuous acts
which arise from any extra-contractual conduct that affects the ability of a party to comply with his obligations and
responsibilities under this Agreement.24
As a result of the SPA, AEV became a stockholder of WG&A. Subsequently, WG&A was renamed Aboitiz Transport
Shipping Corporation (ATSC).25cralawred
Petitioner AEV alleged that in 2008, CAGLI resumed making demands despite having already received P120.04 million
worth of excess inventories.26 CAGLI initially made its demand to ATSC (the renamed WLI/WG&A) through a letter 27 dated
February 14, 2008. As alleged by AEV, however, CAGLI subsequently resorted to a shotgun approach 28 and directed its
subsequent demand letters to AEV29 as well as to FCLC30 (a company related to respondent Chiongbian).
AEV responded to CAGLIs demands through several letters. 31 In these letters, AEV rebuffed CAGLI's demands noting
that: (1) CAGLI already received the excess inventories; (2) it was not a party to CAGLI's claim as it had a personality
distinct from WLI/WG&A/ATSC; and (3) CAGLI's claim was already barred by prescription.
In a reply-letter32 dated May 5, 2008, CAGLI claimed that it was unaware of the delivery to it of the excess inventories and
asked for copies of the corresponding delivery receipts. 33 CAGLI threatened that unless it received proof of payment or
return of excess inventories having been made on or before March 31, 1996, it would pursue arbitration. 34cralawred
In letters written for AEV (the first dated October 16, 2008 by Aboitiz and Company, Inc.s Associate General Counsel
Maria Cristina G. Gabutina35 and the second dated October 27, 2008 by SyCip Salazar Hernandez and Gatmaitan 36), it
was noted that the excess inventories were delivered to GT Ferry Warehouse. 37 Attached to these letters were a listing
and/or samples38 of the corresponding delivery receipts. In these letters it was also noted that the amount of excess
inventories delivered (P120.04 million) was actually in excess of the value of the supposedly unreturned inventories
(P119.89 million).39 Thus, it was pointed out that it was CAGLI which was liable to return the difference between P120.04
million and P119.89 million.40cralawred
Its claims not having been satisfied, CAGLI filed on November 6, 2008 the first of two applications for arbitration (first
complaint)41 against respondent Chiongbian, ATSC, ASC, and petitioner AEV, before the Cebu City Regional Trial Court,
Branch 20. The first complaint was docketed as Civil Case No. CEB-34951.
In response, AEV filed a motion to dismiss42 dated February 5, 2009. AEV argued that CAGLI failed to state a cause of
action as there was no agreement to arbitrate between CAGLI and AEV. 43Specifically, AEV pointed out that: (1) AEV was
never a party to the January 8, 1996 Agreement or to its Annex SL-V; 44 (2) while AEV is a party to the SPA and Escrow
Agreement, CAGLI's claim had no connection to either agreement; (3) the unsigned and unexecuted SPA attached to the
complaint cannot be a source of any right to arbitrate; 45 and (4) CAGLI did not say how WLI/WG&A/ATSC's obligation to
return the excess inventories can be charged to AEV.
On December 4, 2009, the Cebu City Regional Trial Court, Branch 20 issued an order 46 dismissing the first complaint with
respect to AEV. It sustained AEVs assertion that there was no agreement binding AEV and CAGLI to arbitrate CAGLIs
claim.47 Whether by motion for reconsideration, appeal or other means, CAGLI did not contest this dismissal.
On February 26, 2010, the Cebu City Regional Trial Court, Branch 20 issued an order 48 directing the parties remaining in
the first complaint (after the discharge of AEV) to proceed with arbitration.
The February 26, 2010 order notwithstanding, CAGLI filed a notice of dismissal 49 dated July 8, 2010, withdrawing the first
complaint. In an order50 dated August 13, 2010, the Cebu City Regional Trial Court, Branch 20 allowed this withdrawal.
ATSC (the renamed WLI/WG&A) filed a motion for reconsideration 51 dated September 20, 2010 to the allowance of
CAGLI's notice of dismissal. This motion was denied in an order 52 dated April 15, 2011.
On September 1, 2010, while the first complaint was still pending (n.b., it was only on April 15, 2011 that the Cebu City
Regional Trial Court, Branch 20 denied ATSCs motion for reconsideration assailing the allowance of CAGLIs notice of
disallowance), CAGLI, now joined by respondent Benjamin D. Gothong, filed a second application for arbitration (second
complaint)53 before the Cebu City Regional Trial Court, Branch 10. The second complaint was docketed as Civil Case No.
CEB-37004 and was also in view of the return of the same excess inventories subject of the first complaint.
On October 28, 2010, AEV filed a motion to dismiss54 the second complaint on the following grounds:55 (1) forum
shopping; (2) failure to state a cause of action; (3) res judicata; and (4) litis pendentia.
In the first of the two (2) assailed orders dated May 5, 2011, 56 the Cebu City Regional Trial Court, Branch 10 denied AEV's
motion to dismiss.
On the matter of litis pendentia, the Regional Trial Court, Branch 10 noted that the first complaint was dismissed with
respect to AEV on December 4, 2009, while the second complaint was filed on September 1, 2010. As such, the first
complaint was no longer pending at the time of the filing of the second complaint. 57 On the matter of res judicata, the trial
court noted that the dismissal without prejudice of the first complaint [left] the parties free to litigate the matter in a
subsequent action, as though the dismiss[ed] action had not been commenced. 58 It added that since litis pendentia and
res judicata did not exist, CAGLI could not be charged with forum shopping. 59 On the matter of an agreement to arbitrate,
the Regional Trial Court, Branch 10 pointed to the SPA as clearly express[ing] the intention of the parties to bring to
arbitration process all disputes, if amicable settlement fails. 60 It further dismissed AEVs claim that it was not a party to the
SPA, as already touching on the merits of the case61 and therefore beyond its duty to determine if they should proceed
to arbitration or not.62cralawred
In the second assailed order63 dated June 24, 2011, the Cebu City Regional Trial Court, Branch 10 denied AEV's motion
for reconsideration.
Aggrieved, AEV filed the present petition.64 AEV asserts that the second complaint is barred by res judicata and litis
pendentia and that CAGLI engaged in blatant forum shopping. 65 It insists that it is not bound by an agreement to arbitrate
with CAGLI and that, even assuming that it may be required to arbitrate, it is being ordered to do so under terms that are
manifestly contrary to the . . . agreements on which CAGLI based its demand for arbitration. 66cralawred
For resolution are the following issues:cralawlawlibrary
I. Whether the complaint in Civil Case No. CEB-37004 constitutes forum shopping and/or is barred by res judicata
and/or litis pendentia
II. Whether petitioner, Aboitiz Equity Ventures, Inc., is bound by an agreement to arbitrate with Carlos A. Gothong
Lines, Inc., with respect to the latters claims for unreturned inventories delivered to William Lines, Inc./WG&A,
Inc./Aboitiz Transport System Corporation
AEV availed of the wrong

remedy in seeking relief
from this court
Before addressing the specific matters raised by the present petition, we emphasize that AEV is in error in seeking relief
from this court via a petition for review on certiorari under Rule 45 of the Rules of Court. As such, we are well in a position
to dismiss the present petition outright. Nevertheless, as the actions of the Cebu City Regional Trial Court, Branch 10 are
tainted with grave abuse of discretion amounting to lack or excess of jurisdiction, this court treats the present Rule 45
petition as a Rule 65 petition and gives it due course.
A petition for review on certiorari under Rule 45 is a mode of appeal. This is eminently clear from the very title and from
the first section of Rule 45 (as amended by A.M. No. 07-7-12-SC):chanRoblesvirtualLawlibrary
Rule 45
APPEAL BY CERTIORARI TO THE SUPREME COURT
SECTION 1. Filing of petition with Supreme Court. A party desiring to appeal by certiorari from a judgment, final order or
resolution of the Court of Appeals, the Sandiganbayan, the Court of Tax Appeals, the Regional Trial Court or other courts,
whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition may
include an application for a writ of preliminary injunction or other provisional remedies and shall raise only questions of
law, which must be distinctly set forth. The petitioner may seek the same provisional remedies by verified motion filed in
the same action or proceeding at any time during its pendency. (Emphasis supplied)
Further, it is elementary that an appeal may only be taken from a judgment or final order that completely disposes of the
case.67 As such, no appeal may be taken from an interlocutory order 68(i.e., one which refers to something between the
commencement and end of the suit which decides some point or matter but it is not the final decision of the whole
controversy69). As explained inSime Darby Employees Association v. NLRC,70 [a]n interlocutory order is not appealable
until after the rendition of the judgment on the merits for a contrary rule would delay the administration of justice and
unduly burden the courts.71cralawred
An order denying a motion to dismiss is interlocutory in character. Hence, it may not be the subject of an appeal. The
interlocutory nature of an order denying a motion to dismiss and the remedies for assailing such an order were discussed
in Douglas Lu Ym v. Nabua:72cralawred
An order denying a motion to dismiss is an interlocutory order which neither terminates nor finally disposes of a case, as it
leaves something to be done by the court before the case is finally decided on the merits. As such, the general rule is that
the denial of a motion to dismiss cannot be questioned in a special civil action for certiorari which is a remedy designed to
correct errors of jurisdiction and not errors of judgment. Neither can a denial of a motion to dismiss be the subject of an
appeal unless and until a final judgment or order is rendered. In order to justify the grant of the extraordinary remedy
of certiorari, the denial of the motion to dismiss must have been tainted with grave abuse of discretion amounting to lack
or excess of jurisdiction.73 (Emphasis supplied)
Thus, where a motion to dismiss is denied, the proper recourse is for the movant to file an answer. 74Nevertheless, where
the order denying the motion to dismiss is tainted with grave abuse of discretion amounting to lack or excess of
jurisdiction, the movant may assail such order via a Rule 65 (i.e.,certiorari, prohibition, and/or mandamus) petition. This is
expressly recognized in the third paragraph of Rule 41, Section 1 of the Rules of Court. 75 Following the enumeration in the
second paragraph of Rule 41, Section 1 of the instances when an appeal may not be taken, the third paragraph specifies
that [in] any of the foregoing circumstances, the aggrieved party may file an appropriate special civil action as provided in
Rule 65.76cralawred
Per these rules, AEV is in error for having filed what it itself calls a Petition for Review on Certiorari [Appeal by Certiorari
under Rule 45 of the Rules of Court].77 Since AEV availed of the improper remedy, this court is well in a position to
dismiss the present petition.
Nevertheless, there have been instances when a petition for review on certiorari under Rule 45 was treated by this court
as a petition for certiorari under Rule 65. As explained in China Banking Corporation v. Asian Construction and
Development Corporation:78cralawred
[I]n many instances, the Court has treated a petition for review on certiorari under Rule 45 as a petition for certiorari under
Rule 65 of the Rules of Court, such as in cases where the subject of the recourse was one of jurisdiction, or the act
complained of was perpetrated by a court with grave abuse of discretion amounting to lack or excess of jurisdiction. 79
In this case, the May 5, 2011 and June 24, 2011 orders of the Cebu City Regional Trial Court, Branch 10 in Civil Case No.
CEB-37004 are assailed for having denied AEVs motion to dismiss despite: first, the second complaint having been filed
in a manner constituting forum shopping; second, the prior judgment on the merits made in Civil Case No. CEB-34951,
thereby violating the principle of res judicata; and third, the (then) pendency of Civil Case No. CEB-34951 with respect to
the parties that, unlike AEV, were not discharged from the case, thereby violating the principle of litis pendentia. The same
orders are assailed for having allowed CAGLIs application for arbitration to continue despite supposedly clear and
unmistakable evidence that AEV is not bound by an agreement to arbitrate with CAGLI.
As such, the Cebu City, Regional Trial Court, Branch 10s orders are assailed for having been made with grave abuse of
discretion amounting to lack or excess of jurisdiction in that the Cebu City Regional Trial Court, Branch 10 chose to
continue taking cognizance of the second complaint, despite there being compelling reasons for its dismissal and the
Cebu City, Regional Trial Court Branch 20s desistance. Conformably, we treat the present petition as a petition for
certiorari under Rule 65 of the Rules of Court and give it due course.
The complaint in Civil Case

No. CEB-37004 constitutes
forum shopping and is barred
by res judicata
The concept of and rationale against forum shopping were explained by this court in Top Rate Construction & General
Services, Inc. v. Paxton Development Corporation:80cralawred
FORUM SHOPPING is committed by a party who institutes two or more suits in different courts, either simultaneously or
successively, in order to ask the courts to rule on the same or related causes or to grant the same or substantially the
same reliefs, on the supposition that one or the other court would make a favorable disposition or increase a party's
chances of obtaining a favorable decision or action. It is an act of malpractice for it trifles with the courts, abuses their
processes, degrades the administration of justice and adds to the already congested court dockets. What is critical is the
vexation brought upon the courts and the litigants by a party who asks different courts to rule on the same or related
causes and grant the same or substantially the same reliefs and in the process creates the possibility of conflicting
decisions being rendered by the different fora upon the same issues, regardless of whether the court in which one of the
suits was brought has no jurisdiction over the action.81chanrobleslaw
Equally settled is the test for determining forum shopping. As this court explained in Yap v. Chua:82cralawred
To determine whether a party violated the rule against forum shopping, the most important factor to ask is whether the
elements of litis pendentia are present, or whether a final judgment in one case will amount to res judicata in another;
otherwise stated, the test for determining forum shopping is whether in the two (or more) cases pending, there is identity
of parties, rights or causes of action, and reliefs sought. 83
Litis pendentia refers to that situation wherein another action is pending between the same parties for the same cause of
action, such that the second action becomes unnecessary and vexatious. 84 It requires the concurrence of three (3)
requisites: (1) the identity of parties, or at least such as representing the same interests in both actions; (2) the identity of
rights asserted and relief prayed for, the relief being founded on the same facts; and (3) the identity of the two cases such
that judgment in one, regardless of which party is successful, would amount to res judicata in the other.85cralawred
In turn, prior judgment or res judicata bars a subsequent case when the following requisites concur: (1) the former
judgment is final; (2) it is rendered by a court having jurisdiction over the subject matter and the parties; (3) it is a
judgment or an order on the merits; (4) there is between the first and the second actions identity of parties, of
subject matter, and of causes of action.86cralawred
Applying the cited concepts and requisites, we find that the complaint in Civil Case No. CEB-37004 is barred by res
judicata and constitutes forum shopping.
First, between the first and second complaints, there is identity of parties. The first complaint was brought by CAGLI as
the sole plaintiff against Victor S. Chiongbian, ATSC, and AEV as defendants. In the second complaint, CAGLI was joined
by Benjamin D. Gothong as (co-)plaintiff. As to the defendants, ATSC was deleted while Chiongbian and AEV were
retained.
While it is true that the parties to the first and second complaints are not absolutely identical, this court has clarified that,
for purposes of forum shopping, [a]bsolute identity of parties is not required [and that it] is enough that there is substantial
identity of parties.87cralawred
Even as the second complaint alleges that Benjamin D. Gothong is . . . suing in his personal capacity, 88 Gothong failed to
show any personal interest in the reliefs sought by the second complaint. Ultimately, what is at stake in the second
complaint is the extent to which CAGLI may compel AEV and Chiongbian to arbitrate in order that CAGLI may then
recover the value of its alleged unreturned inventories. This claim for recovery is pursuant to the agreement evinced in
Annex SL-V. Annex SL-V was entered into by CAGLI and not by Benjamin D. Gothong. While it is true that Benjamin D.
Gothong, along with Bob D. Gothong, signed Annex SL-V, he did so only in a representative, and not in a personal,
capacity. As such, Benjamin D. Gothong cannot claim any right that personally accrues to him on account of Annex SL-V.
From this, it follows that Benjamin D. Gothong is not a real party in interest one who stands to be benefitted or injured
by the judgment in the suit or the party entitled to the avails of the suit 89 and that his inclusion in the second complaint
is an unnecessary superfluity.
Second, there is identity in subject matter and cause of action. There is identity in subject matter as both complaints are
applications for the same relief. There is identity in cause of action as both complaints are grounded on the right to be paid
for or to receive the value of excess inventories (and the supposed corresponding breach thereof) as spelled out in Annex
SL-V.
The first and second complaints are both applications for arbitration and are founded on the same instrument Annex
SL-V. Moreover, the intended arbitrations in both complaints cater to the same ultimate purpose, i.e., that CAGLI may
recover the value of its supposedly unreturned inventories earlier delivered to WLI/WG&A/ATSC.
In both complaints, the supposed propriety of compelling the defendants to submit themselves to arbitration are anchored
on the same bases: (1) Section 6.8 of the SPA, which provides that the January 8, 1996 Agreement shall be deemed
terminated but that the rights and obligations arising from Annex SL-V shall continue to subsist; 90 (2) Section 6.5 of the
SPA, which requires arbitration as the mode for settling disputes relating to the SPA; 91 and, (3) defendants refusal to
submit themselves to arbitration vis-a-vis Republic Act No. 876, which provides that [a] party aggrieved by the failure,
neglect or refusal of another to perform under an agreement in writing providing for arbitration may petition the court for an
order directing that such arbitration proceed in the manner provided for in such agreement. 92cralawred
Both complaints also rely on the same factual averments: 93cralawred
1. that ASC, CAGLI, and WLI entered into an agreement on January 8, 1996;chanroblesvirtuallawlibrary
2. that under Annex SL-V of the Agreement, WLI/WG&A committed to acquire certain [inventories], the total
aggregate value of which shall not exceed P400 Million;94cralawred
3. that after examination, it was ascertained that the value of the transferred inventories exceeded P400
million;chanroblesvirtuallawlibrary
4. that pursuant to Annex SL-V, WG&A paid CAGLI P400 million but that the former failed to return or pay for spare
parts representing a value in excess of P400 million;chanroblesvirtuallawlibrary
5. [t]hat on August 31, 2001, [CAGLI] wrote the WG&A through its AVP Materials Management, Ms. Concepcion M.
Magat, asking for the return of the excess spare parts; 95cralawred
6. that on September 5, 2001, WG&As Ms. Magat replied that the matter is beyond her authority level and that she
must elevate it to higher management;chanroblesvirtuallawlibrary
7. that several communications demanding the return of the excess spare parts were sent to WG&A but these did
not elicit any response; andChanRoblesVirtualawlibrary
8. [t]hat the issue of excess spare parts, was taken over by events, when on July 31, 2002, 96the Chiongbians and
Gothongs entered into an Escrow Agreement with AEV.
Third, the order dated December 4, 2009 of the Cebu City Regional Trial Court, Branch 20, which dismissed the first
complaint with respect to AEV, attained finality when CAGLI did not file a motion for reconsideration, appealed, or, in any
other manner, questioned the order.
Fourth, the parties did not dispute that the December 4, 2009 order was issued by a court having jurisdiction over the
subject matter and the parties. Specifically as to jurisdiction over the parties, jurisdiction was acquired over CAGLI as
plaintiff when it filed the first complaint and sought relief from the Cebu City Regional Trial Court, Branch 20; jurisdiction
over defendants AEV, ATSC, and Victor S. Chiongbian was acquired with the service of summons upon them.
Fifth, the dismissal of the first complaint with respect to AEV was a judgment on the merits. As explained in Cabreza, Jr. v.
Cabreza:97cralawred
A judgment may be considered as one rendered on the merits when it determines the rights and liabilities of the parties
based on the disclosed facts, irrespective of formal, technical or dilatory objections; or when the judgment is rendered
after a determination of which party is right, as distinguished from a judgment rendered upon some preliminary or formal
or merely technical point.98
Further, as this court clarified in Mendiola v. Court of Appeals,99 [i]t is not necessary . . . that there [be] a trial100 in order
that a judgment be considered as one on the merits.
Prior to issuing the December 4, 2009 order dismissing the first complaint with respect to AEV, the Cebu City Regional
Trial Court, Branch 20 allowed the parties the full opportunity to establish the facts and to ventilate their arguments
relevant to the complaint. Specifically, the Cebu City Regional Trial Court, Branch 20 admitted: 1) AEVs motion to
dismiss;101 2) CAGLIs opposition to the motion to dismiss;102 3) AEVs reply and opposition;103 4) CAGLIs rejoinder;104 and
5) AEVs sur-rejoinder.105cralawred
Following these, the Cebu City Regional Trial Court, Branch 20 arrived at the following findings and made a definitive
determination that CAGLI had no right to compel AEV to subject itself to arbitration with respect to CAGLIs claims under
Annex SL-V:chanRoblesvirtualLawlibrary
After going over carefully the contentions and arguments of both parties, the court has found that no contract or document
exists binding CAGLI and AEV to arbitrate the formers claim. The WLI Letter upon which the claim is based confirms only
the commitment of William Lines, Inc. (WLI) to purchase certain material inventories from CAGLI. It does not involve AEV.
The court has searched in vain for any agreement or document showing that said commitment was passed on to and
assumed by AEV. Such agreement or document, if one exists, being an actionable document, should have been attached
to the complaint. While the Agreement of January 8, 1996 and the Share Purchase Agreement provide for arbitration of
disputes, they refer to disputes arising from or in connection with the Agreements themselves. No reference is made, as
included therein, to the aforesaid commitment of WLI or to any claim that CAGLI may pursue based thereon or relative
thereto. Section 6.8 of the Share Purchase Agreement, cited by plaintiff CAGLI, does not incorporate therein, expressly or
impliedly, the WLI commitment above-mentioned. It only declares that the rights and obligations of the parties under the
WLI Letter shall survive even after the termination of the Shareholders Agreement. It does not speak of arbitration.
Finally, the complaint does not allege the existence of a contract obliging CAGLI and AEV to arbitrate CAGLIs claim under
the WLI Letter. Consequently, there is no legal or factual basis for the present complaint for application for
arbitration.106 (Emphasis supplied)
In the assailed order dated May 5, 2011, the Cebu City Regional Trial Court, Branch 10 made much of the Cebu City
Regional Trial Court, Branch 20s pronouncement in the latters December 4, 2009 order that the [first] complaint fails to
state a cause of action.107 Based on this, the Cebu City Regional Trial Court, Branch 10 concluded that the dismissal of
the first complaint was one made without prejudice, thereby leav[ing] the parties free to litigate the matter in a subsequent
action, as though the dismissal [sic] action had not been commenced. 108cralawred
The Cebu City Regional Trial Court, Branch 10 is in serious error. In holding that the second complaint was not barred by
res judicata, the Cebu City Regional Trial Court, Branch 10 ignored established jurisprudence.
Referring to the earlier cases of Manalo v. Court of Appeals109 and Mendiola v. Court of Appeals,110this court emphasized
in Luzon Development Bank v. Conquilla111 that dismissal for failure to state a cause of action may very well be considered
a judgment on the merits and, thereby, operate as res judicata on a subsequent case:chanRoblesvirtualLawlibrary
[E]ven a dismissal on the ground of failure to state a cause of action may operate as res judicata on a subsequent case
involving the same parties, subject matter, and causes of action, provided that the order of dismissal actually ruled on
the issues raised. What appears to be essential to a judgment on the merits is that it be a reasoned decision, which
clearly states the facts and the law on which it is based. 112(Emphasis supplied)
To reiterate, the Cebu City Regional Trial Court, Branch 20 made a definitive determination that CAGLI had no right to
compel AEV to subject itself to arbitration vis-a-vis CAGLIs claims under Annex SL-V. This determination was arrived
at after due consideration of the facts established and the arguments advanced by the parties. Accordingly, the Cebu City
Regional Trial Court, Branch 20s December 4, 2009 order constituted a judgment on the merits and operated as res
judicata on the second complaint.
In sum, the requisites for res judicata have been satisfied and the second complaint should, thus, have been dismissed.
From this, it follows that CAGLI committed an act of forum shopping in filing the second complaint. CAGLI instituted two
suits in two regional trial court branches, albeit successively and not simultaneously. It asked both branches to rule on the
exact same cause and to grant the exact same relief. CAGLI did so after it had obtained an unfavorable decision (at least
with respect to AEV) from the Cebu City Regional Trial Court, Branch 20. These circumstances afford the reasonable
inference that the second complaint was filed in the hopes of a more favorable ruling.
Notwithstanding our pronouncements sustaining AEVs allegations that CAGLI engaged in forum shopping and that the
second complaint was barred by res judicata, we find that at the time of the filing of the second complaint, AEV had
already been discharged from the proceedings relating to the first complaint. Thus, as between AEV and CAGLI, the first
complaint was no longer pending at the time of the filing of the second complaint. Accordingly, the second complaint could
not have been barred by litis pendentia.
There is no agreement
binding AEV to arbitrate with
CAGLI on the latters claims
arising from Annex SL-V
For arbitration to be proper, it is imperative that it be grounded on an agreement between the parties. This was adequately
explained in Ormoc Sugarcane Planters Association, Inc. v. Court of Appeals:113cralawred
Section 2 of R.A. No. 876 (the Arbitration Law) pertinently provides:

Sec. 2. Persons and matters subject to arbitration. Two or more persons or parties may submit to the arbitration of one
or more arbitrators any controversy existing between them at the time of the submission and which may be the subject of
an action, or the parties to any contract may in such contract agree to settle by arbitration a controversy thereafter arising
between them. Such submission or contract shall be valid, enforceable and irrevocable, save upon such grounds as exist
at law for the revocation of any contract. . . . (Emphasis ours)
The foregoing provision speaks of two modes of arbitration: (a) an agreement to submit to arbitration some future dispute,
usually stipulated upon in a civil contract between the parties, and known as an agreement to submit to arbitration, and (b)
an agreement submitting an existing matter of difference to arbitrators, termed thesubmission agreement. Article XX of the
milling contract is an agreement to submit to arbitration because it was made in anticipation of a dispute that might arise
between the parties after the contracts execution.
Except where a compulsory arbitration is provided by statute, the first step toward the settlement of a difference by
arbitration is the entry by the parties into a valid agreement to arbitrate. An agreement to arbitrate is a contract, the
relation of the parties is contractual, and the rights and liabilities of the parties are controlled by the law of contracts. In an
agreement for arbitration, the ordinary elements of a valid contract must appear, including an agreement to arbitrate some
specific thing, and an agreement to abide by the award, either in express language or by implication. 114(Emphasis
supplied)
In this petition, not one of the parties AEV, CAGLI, Victor S. Chiongbian, and Benjamin D. Gothong has alleged
and/or shown that the controversy is properly the subject of compulsory arbitration [as] provided by statute. 115 Thus, the
propriety of compelling AEV to submit itself to arbitration must necessarily be founded on contract.
Four (4) distinct contracts have been cited in the present petition:chanRoblesvirtualLawlibrary
1. The January 8, 1996 Agreement in which ASC, CAGLI, and WLI merged their shipping enterprises, with WLI
(subsequently renamed WG&A) as the surviving entity. Section 11.06 of this Agreement provided for arbitration as
the mechanism for settling all disputes arising out of or in connection with the Agreement.
2. Annex SL-V of the Agreement between CAGLI and WLI (and excluded ASC and any other Aboitiz-controlled
entity), and which confirmed WLIs commitment to acquire certain inventories, worth not more than P400 million,
of CAGLI. Annex SL-V stated that the acquisition was pursuant to the Agreement. 116 It did not contain an
arbitration clause.
3. The September 23, 2003 Share Purchase Agreement or SPA in which AEV agreed to purchase the Chiongbian
and Gothong groups' shares in WG&As issued and outstanding stock. Section 6.5 of the SPA provided for
arbitration as the mode of settling any dispute arising from the SPA. Section 6.8 of the SPA further provided that
the Agreement of January 8, 1996 shall be deemed terminated except its Annex SL-V.
4. The Escrow Agreement whereby ING Bank N.V.-Manila Branch was to take custody of the shares subject of the
SPA. Section 14.7 of the Escrow Agreement provided that all disputes arising from it shall be settled via
arbitration.
The obligation for WLI to acquire certain inventories of CAGLI and which is the subject of the present petition was
contained in Annex SL-V. It is therefore this agreement which deserves foremost consideration. As to this particular
agreement, these points must be underscored: first, that it has no arbitration clause; second, Annex SL-V is only between
WLI and CAGLI.
On the first point, it is clear, pursuant to this courts pronouncements in Ormoc Sugarcane Planters Association, that
neither WLI nor CAGLI can compel arbitration under Annex SL-V. Plainly, there is no agreement to arbitrate.
It is of no moment that Annex SL-V states that it was made pursuant to the Agreement or that Section 11.06 of the
January 8, 1996 Agreement provides for arbitration as the mode of settling disputes arising out of or in connection with the
Agreement.
For one, to say that Annex SL-V was made pursuant to the Agreement is merely to acknowledge: (1) the factual context
in which Annex SL-V was executed and (2) that it was that context that facilitated the agreement embodied in it. Absent
any other clear or unequivocal pronouncement integrating Annex SL-V into the January 8, 1996 Agreement, it would be
too much of a conjecture to jump to the conclusion that Annex SL-V is governed by the exact same stipulations which
govern the January 8, 1996 Agreement.
Likewise, a reading of the Agreements arbitration clause will reveal that it does not contemplate disputes arising from
Annex SL-V.
Section 11.06 of the January 8, 1996 Agreement requires the formation of an arbitration tribunal composed of four (4)
arbitrators. Each of the parties WLI, CAGLI, and ASC shall appoint one (1) arbitrator, and the fourth arbitrator, who
shall act as chairman, shall be appointed by the three (3) arbitrators appointed by the parties. From the manner by which
the arbitration tribunal is to be constituted, the necessary implication is that the arbitration clause is applicable to three-
party disputes as will arise from the tripartite January 8, 1996 Agreement and not to two-party disputes as will arise
from the two-party Annex SL-V.
From the second point that Annex SL-V is only between WLI and CAGLI it necessarily follows that none but
WLI/WG&A/ATSC and CAGLI are bound by the terms of Annex SL-V. It is elementary that contracts are characterized by
relativity or privity, that is, that [c]ontracts take effect only between the parties, their assigns and heirs. 117 As such, one
who is not a party to a contract may not seek relief for such contracts breach. Likewise, one who is not a party to a
contract may not be held liable for breach of any its terms.
While the principle of privity or relativity of contracts acknowledges that contractual obligations are transmissible to a
partys assigns and heirs, AEV is not WLIs successor-in-interest. In the period relevant to this petition, the transferee of
the inventories transferred by CAGLI pursuant to Annex SL-V assumed three (3) names: (1) WLI, the original name of the
entity that survived the merger under the January 8, 1996 Agreement; (2) WG&A, the name taken by WLI in the wake of
the Agreement; and (3) ATSC, the name taken by WLI/WG&A in the wake of the SPA. As such, it is now ATSC that is
liable under Annex SL-V.
Pursuant to the January 8, 1996 Agreement, the Aboitiz group (via ASC) and the Gothong group (via CAGLI) became
stockholders of WLI/WG&A, along with the Chiongbian group (which initially controlled WLI). This continued until,
pursuant to the SPA, the Gothong group and the Chiongbian group transferred their shares to AEV. With the SPA, AEV
became a stockholder of WLI/WG&A, which was subsequently renamed ATSC. Nonetheless, AEVs status as ATSCs
stockholder does not subject it to ATSCs obligations
It is basic that a corporation has a personality separate and distinct from that of its individual stockholders. Thus, a
stockholder does not automatically assume the liabilities of the corporation of which he is a stockholder. As explained
in Philippine National Bank v. Hydro Resources Contractors Corporation:118cralawred
A corporation is an artificial entity created by operation of law. It possesses the right of succession and such powers,
attributes, and properties expressly authorized by law or incident to its existence. It has a personality separate and distinct
from that of its stockholders and from that of other corporations to which it may be connected. As a consequence of its
status as a distinct legal entity and as a result of a conscious policy decision to promote capital formation, a corporation
incurs its own liabilities and is legally responsible for payment of its obligations. In other words, by virtue of the separate
juridical personality of a corporation, the corporate debt or credit is not the debt or credit of the stockholder. This protection
from liability for shareholders is the principle of limited liability. 119
In fact, even the ownership by a single stockholder of all or nearly all the capital stock of a corporation is not, in and of
itself, a ground for disregarding a corporations separate personality. As explained in Secosa v. Heirs of
Francisco:120cralawred
It is a settled precept in this jurisdiction that a corporation is invested by law with a personality separate from that of its
stockholders or members. It has a personality separate and distinct from those of the persons composing it as well as
from that of any other entity to which it may be related. Mere ownership by a single stockholder or by another corporation
of all or nearly all of the capital stock of a corporation is not in itself sufficient ground for disregarding the separate
corporate personality. A corporations authority to act and its liability for its actions are separate and apart from the
individuals who own it.
The so-called veil of corporation fiction treats as separate and distinct the affairs of a corporation and its officers and
stockholders. As a general rule, a corporation will be looked upon as a legal entity, unless and until sufficient reason to the
contrary appears. When the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or
defend crime, the law will regard the corporation as an association of persons. Also, the corporate entity may be
disregarded in the interest of justice in such cases as fraud that may work inequities among members of the corporation
internally, involving no rights of the public or third persons. In both instances, there must have been fraud and proof of it.
For the separate juridical personality of a corporation to be disregarded, the wrongdoing must be clearly and convincingly
established. It cannot be presumed.121 (Emphasis supplied)
AEVs status as ATSCs stockholder is, in and of itself, insufficient to make AEV liable for ATSCs obligations. Moreover,
the SPA does not contain any stipulation which makes AEV assume ATSCs obligations. It is true that Section 6.8 of the
SPA stipulates that the rights and obligations arising from Annex SL-V are not terminated. But all that Section 6.8 does is
recognize that the obligations under Annex SL-V subsist despite the termination of the January 8, 1996 Agreement. At no
point does the text of Section 6.8 support the position that AEV steps into the shoes of the obligor under Annex SL-V and
assumes its obligations.
Neither does Section 6.5 of the SPA suffice to compel AEV to submit itself to arbitration. While it is true that Section 6.5
mandates arbitration as the mode for settling disputes between the parties to the SPA, Section 6.5 does not
indiscriminately cover any and all disputes which may arise between the parties to the SPA. Rather, Section 6.5 is limited
to dispute[s] arising between the parties relating to this Agreement [i.e., the SPA]. 122 To belabor the point, the obligation
which is subject of the present dispute pertains to Annex SL-V, not to the SPA. That the SPA, in Section 6.8, recognizes
the subsistence of Annex SL-V is merely a factual recognition. It does not create new obligations and does not alter or
modify the obligations spelled out in Annex SL-V.
AEV was drawn into the present controversy on account of its having entered into the SPA. This SPA made AEV a
stockholder of WLI/WG&A/ATSC. Even then, AEV retained a personality separate and distinct from WLI/WG&A/ATSC.
The SPA did not render AEV personally liable for the obligations of the corporation whose stocks it held.
The obligation animating CAGLIs desire to arbitrate is rooted in Annex SL-V. Annex SL-V is a contract entirely different
from the SPA. It created distinct obligations for distinct parties. AEV was never a party to Annex SL-V. Rather than
pertaining to AEV, Annex SL-V pertained to a different entity: WLI (renamed WG&A then renamed ATSC). AEV is, thus,
not bound by Annex SL-V.
On one hand, Annex SL-V does not stipulate that disputes arising from it are to be settled via arbitration. On the other
hand, the SPA requires arbitration as the mode for settling disputes relating to it and recognizes the subsistence of the
obligations under Annex SL-V. But as a separate contract, the mere mention of Annex SL-V in the SPA does not suffice to
place Annex SL-V under the ambit of the SPA or to render it subject to the SPAs terms, such as the requirement to
arbitrate.
WHEREFORE, the petition is GRANTED. The assailed orders dated May 5, 2011 and June 24, 2011 of the Regional Trial
Court, Cebu City, Branch 10 in Civil Case No. CEB-37004 are declared VOID. The Regional Trial Court, Cebu City,
Branch 10 is ordered to DISMISS Civil Case No. CEB-37004.
SO ORDERED

SUPREME COURT
Manila
SPECIAL SECOND DIVISION
G.R. No. 190818 November 10, 2014
METRO MANILA SHOPPING MECCA CORP., SHOEMART, INC., SM PRIME HOLDINGS, INC., STAR APPLIANCES
CENTER, SUPER VALUE, INC., ACE HARDWARE PHILIPPINES, INC., HEAL TH AND BEAUTY, INC., JOLLIMART
PHILS. CORP., and SURPLUS MARKETING CORPORATION, Petitioners,
vs.
MS. LIBERTY M. TOLEDO, in her official capacity as the City Treasurer of Manila, and THE CITY OF
MANILA, Respondents.
RESOLUTION
PERLAS-BERNABE, J.:
The Court hereby resolves the Manifestation and Motion 1 dated August 2, 2013 filed by petitioners Metro Manila Shopping
Mecca Corp., Shoemart, Inc., SM Prime Holdings, Inc., Star Appliances Center, Super Value, Inc., Ace Hardware
Philippines, Inc., Health and Beauty, Inc., Jollimart Phils. Corp., and Surplus Marketing Corporation (petitioners), seeking
the approval of the terms and conditions of the parties' Universal Compromise Agreement 2dated June 1, 2012 (UCA) in
lieu of the Court's Decision3 dated June 5, 2013 (subject Decision) which denied petitioners' claim for tax refund/credit of
their local business taxes paid to respondent City of Manila.
In their Manifestation and Motion, petitioners alleged that pursuant to the UCA, the parties agreed to amicably settle all
cases between them involving claims for tax refund/credit, including the instant case. 4 The pertinent portions of the UCA
provide:5
2.b. It is further agreed that there shall be no refunds/tax credit certificates to be given or issued by the City of
Manilain the following cases:
2.b.1. SC GR 190818 (CTA EB No. 480)entitled "Supervalue, Inc., Ace Hardware Philippines, Inc., H and B Inc.,
Metro Manila Shopping Mecca Corp., SM Land, Inc. (formerly Shoemart, Inc.), SM Prime Holdings, Inc., Star
Appliance Center, Inc., Surplus Marketing Corp. versus The City of Manila and the City Treasurer [of] Manila,"
which emanated from an Order in favour of the SM Group issued by Branch 47 of the Regional Trial Court of
Manila in Civil Case No. 03-108175 entitled "Ace Hardware Phils., Inc., SM Prime Holdings, Inc., Star Appliance
Center, Inc., Supervalue, Inc., Watsons Personal Care Stores (Phils.) Inc. versus The City of Manila and the City
Treasurer of Manila," and is currently pending before the Supreme Court. (Emphases and underscoring supplied)
In their Comment (with Manifestation of Earnest Apology to the Supreme Court) 6 dated June 4, 2014, respondent City of
Manila and Liberty Toledo, in her capacity as Treasurer of the City of Manila (respondents), confirmed the authenticity and
due execution of the UCA. They, however, submitted that the UCA had no effect on the subject Decision since the taxes
paid subject of the instant case was not included in the agreement. 7
The Court adopts the terms and conditions of the UCA pertinent to this case.
A compromise agreement is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an
end to one already commenced.8 It contemplates mutual concessions and mutual gains to avoid the expenses of litigation;
or when litigation has already begun, to end it because of the uncertainty of the result. 9 Its validity is dependent upon the
fulfillment of the requisites and principles of contracts dictated by law; and its terms and conditions must not be contrary to
law, morals, good customs, public policy, and public order. 10 When given judicial approval, a compromise agreement
becomes more than a contract binding upon the parties. Having been sanctioned by the court, it is entered as a
determination of a controversy and has the force and effect of a judgment. It is immediately executory and not appealable,
except for vices of consent or forgery. The nonfulfillment of its terms and conditions justifies the issuance of a writ of
execution; in such an instance, execution becomes a ministerial duty of the court. 11
A review of the whereas clauses12 of the UCA reveals the various court cases filed by petitioners, including this case, for
the refund and/or issuance of tax credit covering the local business taxes payments they paid to respondent City of Manila
pursuant to Section 21 of the latters Revenue Code. 13 Thus, contrary to the submission of respondents, the local
business taxes subject of the instant case is clearly covered by the UCA since they were also paid in accordance with the
same provision of the Revenue Code of Manila.1wphi1
In this relation, it is observed thatthe present case would have been rendered moot and academic had the parties
informed the Court of the UCAs supervening execution. 14 Be that as it may, and considering that: (a) the UCA appears to
have been executed in accordance with the requirements of a valid compromise agreement; (b) the UCA was executed
more than a year prior to the promulgation of the subject Decision; and (c) the result of both the UCA and the subject
Decision are practically identical, i.e., that petitioners are not entitled to any tax refund/credit, the Court herein resolves to
approve and adopt the pertinent terms and conditions of the UCA insofar as they govern the settlementof the present
dispute.
WHEREFORE, the petitioners Manifestation and Motion dated August 2, 2013 is GRANTED. The Decision dated June 5,
2013 of the Court is hereby SET ASIDE. In lieu thereof, the terms and conditions of the Universal Compromise Agreement
between the parties pertinent to the instant case are APPROVED and ADOPTED as the Decision of the Court.
The parties are ordered to faithfully comply with the terms and conditions of the said agreement.
This case is considered closed and tenninated. No costs.
SO ORDERED.

SUPREME COURT
Baguio City
SECOND DIVISION
G.R. No. 173802 April 7, 2014
NATIONAL HOUSING AUTHORITY, Petitioner,

vs.
COURT OF APPEALS, BERNABE NOBLE, WILLIAM GAN, JULIO RODRIGUEZ, JR., SAMUEL LIM, SANDRA YAP
NG, ALFONSO UY, and BOARD OF COMMISSIONERS, Respondents.
RESOLUTION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 is the Resolution2 dated June 30, 2006 of the Court of Appeals (CA) in CA-
G.R. CV No. 73725 which dismissed petitioner National Housing Authority's (NHA) appeal and held that the Order 3 dated
August 3, 1998 of the Regional Trial Court (RTC) of Cagayan de Oro City, Misamis Oriental (Misamis), Branch 17 (court a
quo) in Civil Case No. 7847 (Assailed Order) had become final and executory. 4
The Facts
On May 25, 1981, the NHA filed a case against respondents Bernabe Noble, et al. (respondents-landowners) for the
expropriation of their properties situated in Lapasan, Cagayan de Oro City (subject properties), pursuant to Letter of
Instructions No. (LOI) 555, mandating a nationwide Slum Improvement and Resettlement Program, and LOI 557,
otherwise known as "Adopting Slum Improvement." The case was docketed as Civil Case No. 7847 and originally raffled
to Branch V of the then Court of First Instance of Misamis Oriental, but was transferred to Branch 20 of the Misamis RTC
(Branch 20), upon the effectivity of Batas Pambansa Bilang 129. 5 Consequently, Branch 20 issued a writ of possession
placing the respondent-landowners properties under the NHAs control. 6
Thereafter, the case was transferred to Branch 23 of the Misamis RTC (Branch 23), which appointed commissioners who
appraised the fair market value (FMV) of the subject properties at P470.00 per square meter, as of 1984. Later on, the
case was once more transferred to the court a quo, which then issued an Order dated April 5, 1990, approving the
aforementioned amount as just compensation, and ordering the NHA to pay respondents-landowners the same. 7
Dissatisfied, the NHA appealed the commissioners valuation of the subject properties before the CA, docketed as CA-
G.R. CV No. 33832. On August 11, 1992, the CA rendered a decision remanding the case to the court a quo for further
proceedings on the issue of just compensation. On May 12, 1993, the CA issued an Entry of Judgment which closed and
terminated the said appeal proceeding.8
Accordingly, the records were remanded to the court a quo for further proceedings, during which a new set of
commissioners was appointed to re-appraise the FMV of the subject properties. Eventually, the commissioners pegged
the just compensation at P705.00 per square meter, taking into consideration the value of the subject properties in 1984
and the accumulated improvements thereon since then. 9
The Court A Quo Ruling
On August 3, 1998, the court a quo issued the Assailed Order, approving the commissioners valuation of the subject
properties at P705.00 per square meter and, thus, ordering the NHA to pay respondents-landowners the amounts due to
them.10
Claiming that it only received a copy of the Assailed Order on March 3, 1999, the NHA filed a Manifestation and Motion for
Reconsideration (motion) on March 11, 1999, arguing that the FMV of the subject properties should have been determined
at the time the expropriation proceeding was instituted. For its part, respondents-landowners opposed the NHAs motion
on the ground that it was belatedly filed and thus, the said order already became final and executory. In particular,
respondents-landowners contended that contrary to the NHAs claim, the registry return receipt on record shows that it
received a copy of the questioned Order on November 10, 1998. 11
Finding respondents-landowners opposition to be well-taken, the court a quo denied the NHAs motion on May 21, 1990.
Aggrieved, the NHA appealed to the CA.12
The CA Ruling
In a Resolution13 dated September 9, 2002, the CA initially dismissed the NHAs appeal on the ground that it failed to file
its appellants brief on time. The NHA moved for reconsideration, which was granted in a Resolution 14 dated September
10, 2003. As such, the CA ordered respondents-landowners to file their comment to said appeal. However, instead of filing
their comment as directed, respondents-landowners moved for the resolutions reconsideration, contending that the
appeal should be dismissed since the Assailed Order had long become final and executory due to the NHAs failure to
timely file a motion for reconsideration therefrom or perfect its appeal within the prescribed reglementary period. 15
In a Resolution16 dated June 30, 2006, the CA dismissed the appeal and held that the Assailed Order had already become
final and executory. Accordingly, it ordered that the entire records of the case be remanded to the court a quo for
execution proceedings. The CA held that contrary to NHAs claim that it only received a copy of the Assailed Order on
March 3, 1999 and, thus, timely filed its motion for reconsideration on March 11, 1999, the registry return receipt on record
clearly shows that it already received a copy of the same on November 10, 1998. It opined that the issuance of the
registry return receipt enjoys the presumption of regularity, and, hence, the entries on said receipt should be given full
evidentiary weight, including, among others, the date indicated thereon. As a result, the Assailed Order had long become
final and executory and the outright dismissal of NHAs appeal was deemed to be proper.1wphi117
At odds with the CAs ruling, the NHA filed the instant petition.
The Issue Before the Court

The primordial issue raised for the Courts resolution is whether or not the CA erred in finding that the Assailed Order had
already become final and executory.
The Courts Ruling
The petition is without merit.
It is well-settled that a decision that has acquired finality becomes immutable and unalterable, and may no longer be
modified in any respect, even if the modification is meant to correct erroneous conclusions of fact and law, and whether it
be made by the court that rendered it or by the Highest Court of the land. This principle, commonly known as the doctrine
of immutability of judgment, has a two-fold purpose, namely: (a) to avoid delay in the administration of justice and thus,
procedurally, to make orderly the discharge of judicial business; and (b) to put an end to judicial controversies, at the risk
of occasional errors, which is precisely why courts exist. Verily, it fosters the judicious perception that the rights and
obligations of every litigant must not hang in suspense for an indefinite period of time. As such, it is not regarded as a
mere technicality to be easily brushed aside, but rather, a matter of public policy which must be faithfully complied. 18
In this case, the Court concurs with the CAs view that the Assailed Order had already become final and executory at the
time when the NHA sought to have it reconsidered before the court a quo. As evidenced by the registry return receipt on
record, the NHA received a copy of the Assailed Order on November 10, 1998. However, it moved for reconsideration
therefrom only on March 11, 1999, or more than four (4) months from notice. As the motion was filed way beyond the 15-
day reglementary period prescribed therefor, the court a quos judgment had already lapsed into finality. Consequently, the
Assailed Order cannot be made subject to further appellate review and now constitutes res judicata as to every matter
offered and received in the proceedings below as well as to any other matter admissible therein and which might have
been offered for that purpose.19
In an effort to remove itself from this quandary, the NHA points out that as per the registry return receipt on record, it
received a copy of the Assailed Order on November 10, 1998 through a certain Atty. Epifanio P. Recafia (Atty. Recafia).
The NHA claims that as early as January 1997, Atty. Recafia ceased to be connected with it and thus, it contends that he
could not have validly received a copy of the Assailed Order in its behalf. 20
The contention is untenable.
Other than its bare assertions and a self-serving certification 21 emanating from its own human resource management
department, the NHA has not shown any sufficient proof that the service of a copy of the Assailed Order to it on November
10, 1998 is invalid. Moreover, the NHA could have easily presented Atty. Recafia, or at least a statement of his, to disown
any authority to receive a copy of the Assailed Order in the former' s behalf but it failed to do so. Succinctly put, the NHA's
unsubstantiated asservations cannot prevail over the contrary statement of a postal official as embodied in the registry
return receipt, considering that it is the latter's primary duty to send mail matters and thus, accorded with the presumption
of regularity.22
WHEREFORE, the petition is DENIED. The Resolution dated June 30, 2006 of the Court of Appeals in CA-G.R. CV No.
73725 is hereby AFFIRMED.
SO ORDERED.
EN BANC
G.R. No. 187836, March 10, 2015
SOCIAL JUSTICE SOCIETY (SJS) OFFICERS, NAMELY, SAMSON S. ALCANTARA, AND VLADIMIR ALARIQUE T.
CABIGAO, Petitioners, v. ALFREDO S. LIM, IN HIS CAPACITY AS MAYOR OF THE CITY OF MANILA, Respondent.
[G.R. No. 187916]
JOSE L. ATIENZA, JR., BIENVINIDO M. ABANTE, MA. LOURDES M. ISIP-GARCIA, RAFAEL P. BORROMEO
JOCELYN DAWIS-ASUNCION, MINORS MARIAN REGINA B. TARAN, MACAILA RICCI B. TARAN, RICHARD
KENNETH B. TARAN, REPRESENTED AND JOINED BY THEIR PARENTS RICHARD AND MARITES TARAN,
MINORS CZARINA ALYSANDRA C. RAMOS, CEZARAH ADRIANNA C. RAMOS, AND CRISTEN AIDAN C. RAMOS
REPRESENTED AND JOINED BY THEIR MOTHER DONNA C. RAMOS, MINORS JAZMIN SYLLITA T. VILA AND
ANTONIO T. CRUZ IV, REPRESENTED AND JOINED BY THEIR MOTHER MAUREEN C.
TOLENTINO, Petitioners,v. MAYOR ALFREDO S. LIM, VICE MAYOR FRANCISCO DOMAGOSO, COUNCILORS
ARLENE W. KOA, MOISES T. LIM, JESUS FAJARDO LOUISITO N. CHUA, VICTORIANO A. MELENDEZ, JOHN
MARVIN C. NIETO, ROLANDO M. VALERIANO, RAYMUNDO R. YUPANGCO, EDWARD VP MACEDA, RODERICK D.
VALBUENA, JOSEFINA M. SISCAR, SALVADOR PHILLIP H. LACUNA, LUCIANO M. VELOSO, CARLO V. LOPEZ,
ERNESTO F. RIVERA,1 DANILO VICTOR H. LACUNA, JR., ERNESTO G. ISIP, HONEY H. LACUNA-PANGAN,
ERNESTO M. DIONISO, JR. AND ERICK IAN O. NIEVA, Respondents.
CHEVRON PHILIPPINES INC., PETRON CORPORATION AND PILIPINAS SHELL PETROLEUM

CORPORATION, Intervenors.
RESOLUTION
PEREZ, J.:
In the Decision2 promulgated on 25 November 2014, this Court declared Ordinance No.
8187UNCONSTITUTIONAL and INVALID with respect to the continued stay of the Pandacan Oil Terminals. The following
timelines were set for the relocation and transfer of the terminals:chanRoblesvirtualLawlibrary
[T]he intervenors Chevron Philippines, Inc., Pilipinas Shell Petroleum Corporation, and Petron Corporation shall, within a
non-extendible period of forty-five (45) days, submit to the Regional Trial Court, Branch 39, Manila an updated
comprehensive plan and relocation schedule, which relocation shall be completed not later than six (6) months from the
date the required documents are submitted. The presiding judge of Branch 39 shall monitor the strict enforcement of this
Decision.3
Now before us are the following submissions of the intervenor oil companies, to wit: (1) Motion for Reconsideration 4 of the
Decision dated 25 November 2014 filed by intervenor Pilipinas Shell Petroleum Corporation (Shell); (2) Motion for
Clarification5 filed by intervenor Chevron Philippines, Inc. (Chevron); and (3) Manifestation of Understanding of the
Dispositive Portion of the Decision of 15 December 20146 (the correct date of promulgation is 25 November 2014) filed by
intervenor Petron Corporation (Petron).
Shell seeks reconsideration of the Decision based on the following grounds:chanRoblesvirtualLawlibrary
1. Erroneous reliance on the factual pronouncements in G.R. No. 156052 entitled Social Justice Society v. Atienza,
which, it argues, were completely unsupported by competent evidence;chanrobleslaw
2. Adoption of imagined fears, causes, surmises and conjectures interposed by the petitioners, which it also raises
as totally unsupported by evidence because the petitions, which involve factual issues, were wrongfully filed with
this Court;chanrobleslaw
3. Conclusion that there is no substantial difference between the conditions in 2001 and the present setup with
respect to the oil depots operations; and
4. Failure to dismiss the petitions despite the enactment of Ordinance No. 8187, which, it maintains, has rendered
the cases moot and academic.7
The Motion for Reconsideration must be denied.
It bears stressing that these cases were called in session several times to give the members of the Court time to study
and present their respective positions. Before the Decision was finally promulgated, the Court had thoroughly deliberated
on the arguments of the parties, including the basic issues herein raised the rationale for upholding the position of the
Court in G.R. No. 156052, on one hand, and the safety measures adopted by the intervenors, including the alleged
imagined fears, causes, surmises and conjectures interposed by the petitioners, on the other; the argument of whether
or not the petition should have been filed with the trial court or at least referred to the Court of Appeals to receive
evidence; and the issue on whether or not the enactment of Ordinance No. 8283 has rendered the instant petitions moot
and academic. And for failure to reconcile diverse views on several issues, a Concurring and Dissenting Opinion was
written.
The grounds relied on being mere reiterations of the issues already passed upon by the Court, there is no need to cut
and paste pertinent portions of the Decision or re-write the ponencia in accordance with the outline of the instant motion.
As succinctly put by then Chief Justice Andres R. Narvasa in Ortigas and Co. Ltd. Partnership v. Judge Velasco 8 on the
effect and disposition of a motion for reconsideration:chanRoblesvirtualLawlibrary
The filing of a motion for reconsideration, authorized by Rule 52 of the Rules of Court, does not impose on the Court the
obligation to deal individually and specifically with the grounds relied upon therefor, in much the same way that the Court
does in its judgment or final order as regards the issues raised and submitted for decision. This would be a useless
formality or ritual invariably involving merely a reiteration of the reasons already set forth in the judgment or final order for
rejecting the arguments advanced by the movant; and it would be a needless act, too, with respect to issues raised for the
first time, these being, as above stated, deemed waived because not asserted at the first opportunity. It suffices for the
Court to deal generally and summarily with the motion for reconsideration, and merely state a legal ground for its denial
(Sec. 14, Art. VIII, Constitution); i.e., the motion contains merely a reiteration or rehash of arguments already submitted to
and pronounced without merit by the Court in its judgment, or the basic issues have already been passed upon, or the
motion discloses no substantial argument or cogent reason to warrant reconsideration or modification of the judgment or
final order; or the arguments in the motion are too unsubstantial to require consideration, etc. 9
II
Chevron, in its Motion for Clarification,10 manifests that it has already ceased using the Pandacan terminals since June
2014. However, the Pandacan Depot Services, Inc. (PDSI), an incorporated joint venture of Chevron, Petron and Shell,
and of which Chevron continues to be a shareholder, still maintains the operations through Petron and Shell.
Thus:chanRoblesvirtualLawlibrary
2. At the outset, CHEVRON respectfully manifests that it has already completed the relocation of its depot and terminal
operations from the Pandacan area, as it ceased using the Pandacan terminals for its fuel and lubricants operations last
June 2014. CHEVRON currently has zero volume of lubricants and fuel products for commercial use stored at the
Pandacan terminals and the supply requirements of its customers are being withdrawn from the other supply facilities
available to CHEVRON.
3. While CHEVRON has ceased using the Pandacan terminals, it continues to be a shareholder as well as hold a
governance role in Pandacan Depot Services Inc. (PDSI), the operator of the Pandacan terminals for fuels products
operations. PDSI is an incorporated joint venture established pursuant to the joint venture agreements between
CHEVRON, Petron and PSPC. Notwithstanding CHEVRONs ceasing to use the facility, Petron and PSPC continue to use
the Pandacan terminals for their own commercial fuel and lubricant operation. This joint venture continues to exist until
terminated and dissolved by the mutual agreement of CHEVRON, Petron, and PSP or as provided for in the agreements
of the parties.11
With the withdrawal of its products from the Pandacan terminals yet with the continued operation of the PDSI, Chevron
now pleads that this Court review and clarify a portion of the Decision concerning what it understands as an unqualified
statement that all oil depots, in general, even those outside of Pandacan, have no place in any densely populated
area.12 The exact wordings in the Decision sought to be clarified read:chanRoblesvirtualLawlibrary
Even assuming that the respondents and intervenors were correct, the very nature of the depots where millions of liters of
highly flammable and highly volatile products [are stored], regardless of whether or not the composition may cause
explosions, has no place in a densely populated area. Surely, any untoward incident in the oil depots, be it related to
terrorism of whatever origin or otherwise, would definitely cause not only destruction to properties within and among the
neighboring communities but certainly mass deaths and injuries. 13
Stressing that a judgment should be confined to the lis mota of the case, Chevron posits that the paragraph sought to be
clarified was a sweeping and categorical pronouncement sans factual basis or evidence against all oil depots inasmuch
as the prevailing circumstances, types of products stored or the safety measures in place vary from one depot to another.
If such is left as is, it claims that it would be tantamount to interference with the policy making of the political departments
of the government.
We differ.
There are overwhelming reasons stated in the Decision to support the Courts pronouncement that the very nature of
depots has no place in a densely populated area, among others, the very history of the Pandacan terminals where flames
spread over the entire City of Manila when fuel storage dumps were set on fire in December 1941 14 and the other incident
of explosion,15 which were both considered in G.R. No. 156052.
Indeed, the bases of the assailed paragraph were confined to the lis mota of these cases, and no other depots were
considered. But would the situation be different if, given the same composition of flammable and volatile products, the
depots are placed in another densely populated area?
The answer was well explained in the Decision. Thus:chanRoblesvirtualLawlibrary

For, given that the threat sought to be prevented may strike at one point or another, no matter how remote it is as
perceived by one or some, we cannot allow the right to life to be dependent on the unlikelihood of an event. Statistics and
theories of probability have no place in situations where the very life of not just an individual but of residents of big
neighborhoods is at stake.16
Moreover, the Decision should be taken as a whole and considered in its entirety. The Decision is clear it is the Citys
Ordinance No. 8187 that has been declared unconstitutional and invalid insofar as the continued stay of the Pandacan Oil
Terminals is concerned.
For the same reasons, the allegation of encroachment on the policy making power of the political departments of the
government is bereft of merit.
The prayer that the submission of an updated comprehensive plan and relocation schedule, including the period for
relocation, be deferred until after the Motion is resolved with finality is denied. The compliance period prescribed in the
Decision shall remain.
III
In its Manifestation of Understanding of the Dispositive Portion of the Decision of 15 December 2014, 17 (the correct date of
promulgation is 25 November 2014) Petron seeks to clarify whether the dispositive portion thereof on the submission of
updated comprehensive plan and relocation schedule within forty-five (45) days is limited to the operation itself and does
not include the removal of the facilities. It ratiocinates that it is the operation, and not the presence of the facilities, that
runs contrary to Ordinance No. 8119 (Manila Comprehensive Land Use Plan and Zoning Ordinance of
2006).18chanroblesvirtuallawlibrary
Petron should have cited Ordinance No. 8027, the ordinance ordered to be enforced in G.R. No. 156052, instead of
Ordinance No. 8119.
To recall, the Court, in G.R. No. 156052, ruled that Ordinance No. 8027 was not impliedly repealed by Ordinance No.
8119. It explained:chanRoblesvirtualLawlibrary
x x x The repealing clause of Ordinance No. 8119 cannot be taken to indicate the legislative intent to repeal all prior
inconsistent laws on the subject matter, including Ordinance No. 8027, a special enactment, since the aforequoted
minutes (an official record of the discussions in the Sanggunian) actually indicated the clear intent to preserve the
provisions of Ordinance No. 8027.
To summarize, the conflict between the two ordinances is more apparent than real. The two ordinances can be reconciled.
Ordinance No. 8027 is applicable to the area particularly described therein whereas Ordinance No. 8119 is applicable to
the entire City of Manila.19
At first blush, the clause cease and desist appears to specifically refer only to the operations, considering that Sec. 3 of
Ordinance No. 8027 provides for a period of six (6) months from the date of its effectivity within which to cease and desist
from the operations of businesses.20chanroblesvirtuallawlibrary
However, in the Decision dated 7 March 2007 in G.R. No. 156052, the Court granted the petition 21which sought the
enforcement of Ordinance No. 8027 and the immediate removal of the terminalsof the oil companies. By so granting
the petition, it necessarily follows that the relocation and transfer it ordered contemplates the complete removal of the
facilities.
These cases being a mere sequel to the earlier petition, we so hold that the relocation and transfer contemplated therein
include the removal of the facilities, especially so when the city plans on building commercial establishments to replace
the Pandacan terminals and provide a source of employment for displaced employees. Accordingly, the comprehensive
plan to be submitted within forty-five (45) days from receipt of the Decision shall also include the removal of the facilities.
On the matter of the enforcement of the assailed Decision in these cases, Petron further posits that its first theory, that is,
that the removal of the facilities is excluded from the comprehensive plan to be submitted to the Regional Trial Court,
would be in accord with its Manifestation dated 30 November 2010, which it emphasized, the Court noted in the Decision
and quoted as follows:chanRoblesvirtualLawlibrary
2. Without prejudice to its position in the instant case as elucidated in its Memorandum, Petron files this Manifestation to
inform this Honorable Court that in accordance with its agreement with and to honor its commitment to the City of Manila,
Petron has decided to cease operation of its petroleum product storage facilities in Pandacan, Manila within five (5)
years or not later than January 2016 for the following reasons, x x x. 22(Emphasis in the Manifestation of Understanding x x
x)
Let Petron be reminded that the Court did not, by noting its Manifestation dated 30 November 2010, consent to consider
January 2016 as a separate deadline for compliance with our Decision, which, to repeat, includes the removal of facilities
after cessation of operations. The timelines prescribed in the assailed Decision shall be observed to the letter.
WHEREFORE, the Court hereby resolves to:chanRoblesvirtualLawlibrary
1. DENY Shells Motion for Reconsideration of the Decision dated 25 November 2014;chanrobleslaw
2. DENY the prayers in the Motion for Clarification of Chevron that: a) the wordings the very nature of the depots where
millions of liter[s] of highly flammable and highly volatile products x x x [have] no place in a densely populated area be
removed from the Decision dated 25 November 2014; and b) the submission of an updated comprehensive plan and
relocation schedule, including the period for relocation, be deferred until after the Motion is resolved with
finality;chanrobleslaw
3. CLARIFY that the relocation and transfer necessarily include the complete removal of the facilities from the Pandacan
terminals and should be made part of the required comprehensive plan and relocation schedule; and
4. REMIND Petron that the Court did not, by noting its Manifestation dated 30 November 2010, consent to consider
January 2016 as a separate deadline for compliance with our Decision, which, to repeat, includes the removal of facilities
after cessation of operations. The timelines prescribed in the assailed Decision shall be observed to the letter.
In anticipation of further attempts to delay the enforcement of this Courts Decision dated 25 November 2014, the parties
to these cases are hereby REMINDED of the pronouncements in Ortigas and Co. Ltd. Partnership v. Judge Velasco 23 on
the import of the denial of a motion for reconsideration. Thus:chanRoblesvirtualLawlibrary
The denial of a motion for reconsideration signifies that the grounds relied upon have been found, upon due deliberation,
to be without merit, as not being of sufficient weight to warrant a modification of the judgment or final order. It means not
only that the grounds relied upon are lacking in merit but also that any other, not so raised, is deemed waived and may no
longer be set up in a subsequent motion or application to overturn the judgment; and this is true, whatever may be the title
given to such motion or application, whether it be second motion for reconsideration or motion for clarification
or plea for due process or prayer for a second look, or motion to defer, or set aside, entry of judgment, or x
x x, etc..24 (Emphasis supplied)
This Resolution is final. Under pain of contempt, no further pleadings, motions or papers in the guise of the above-
enumerated submissions shall, thus, be entertained in these cases.
SO ORDERED.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 75000 February 27, 1987
DENSO (PHILS.), INC., petitioner,

vs.
THE INTERMEDIATE APPELLATE COURT AND KAYAMANAN DEVELOPMENT CORPORATION, respondents.
NARVASA, J.:
On June 23, 1984, at about 11 o'clock in the evening, a fire broke out at the Nippondenso Building at Pasong Tamo Ext.,
Makati, Metro Manila. The building was owned by the Kayamanan Development Corporation (hereafter, simply referred to
as KAYAMANAN), and was then under lease to Denso (Phils), Inc. (hereafter, simply DENSO). The fire caused extensive
damage. DENSO and its correspondent firm in Japan, NIPPONDENSO, reportedly suffered losses amounting to
P6,131,976.65 and P682,212.58, respectively. On the other hand, KAYAMANAN's loss was placed at P1,750,000.00. 1
A year or so later, KAYAMANAN instituted an action against DENSO in the Regional Trial Court at Makati, which was
docketed as Civil Case No. 10768, for recovery of (a) unpaid rentals from June, 1984 to March, 1985, amounting to an
aggregate of P471,546.69; (b) the cost of repairing the damage caused by the fire to the leased building, it being alleged
that DENSO was bound to bear said cost under their lease agreement; and (c) unrealized monthly rents and attorney's
fees. 2
Summons was served on DENSO on June 10, 1985. It would seem, however, that the summons (together with the
accompanying copy of the complaint) was not referred by DENSO to its counsel until June 22, 1985. This prompted the
latter to file on June 25, 1985 a "MOTION FOR EXTENSION OF TIME TO FILE ANSWER," pleading the late referral, the
need to attend to other legal work of equal importance, as well as the time requirement for study of the factual and legal
points involved in the action, and praying, in consequence, for an additional period of 15 days from June 25 within which
to present the requisite responsive pleading. 3 The motion closed with a "Notice of Hearing" addressed to the Clerk of
Court, asking that the motion be submitted to the court for consideration and approval immediately upon its receipt; and a
notation that a copy of the motion had been furnished plaintiff KAYAMANAN's counsel. 4 The copy of the motion was
actually received by KAYAMANAN's counsel the following day, June 26, 1985 . 5
The motion for extension was however denied by Order of Judge Teofilo Guadiz, Jr. dated June 26, 1985, "considering,"
according to His Honor, "that there was no proof of service that plaintiff received a copy of said motion." 6 At 4 o'clock in
the afternoon of that same day, June 26, 1985, KAYAMANAN presented an "Ex parte Motion to Declare Defendant in
Default" asserting that the reglementary period of 15 days for DENSO to file answer had expired on June 25, 1985 without
any answer having been filed, but making no reference to DENSO's motion for extension which, as above stated, had
been received by it on June 26, 1985. 7 On the same day, June 26, l985, Judge Guadiz promulgated an Order deeming
the motion for default to be "well-taken," and accordingly declaring DENSO in default and setting the reception of
KAYAMANAN's evidence ex-parte on the following day, June 27, 1985, at 2 o'clock in the afternoon. 8 At that appointed
date and time, the Court-did receive KAYAMANAN's evidence ex-parte; and four (4) days later, on July 1, 1985,Judge
Guadiz rendered judgment by default, sentencing DENSO to pay to KAYAMANAN P471,546.69 as accumulated monthly
rentals and cost of services from June, 1984 to March 1985; P2,856,000.30 as the reasonable cost of repair of the
"damage building" (sic); and 10% of the total amounts awarded, as attorney's fees. 9
While all this was happening, and evidently in complete ignorance thereof, DENSO's counsel drew up its answer to the
complaint, which was completed on July 5, 1985 and filed on July 8, 1985. To this pleading were appended copies of
letters from DENSO to KAYAMANAN appealing for a 30% rental rebate due to the prejudicial consequences of the fire
of June 23, 1984; giving notice of the termination of the lease on May 12, 1985; and formally turning over the leased
premisses-as well a copy of the Police Arson Investigation Report of the fire. 10
Inevitably, DENSO learned of the order of default and the judgment by default. It then filed on August 2, 1985 a verified
motion for reconsideration of said order and judgment. 11 Acting thereon, the Trial Court promulgated an Order dated
September 3, 1985, setting aside, "in the interest of substantial justice," the order of default dated June 26, 1985 as well
as the decision dated July 1, 1985; but hearing was rescheduled only for the presentation of defendant DENSO's
evidence, the Court explicitly stating that the evidence already presented (by KAYAMANAN) would remain on record
"without the right of cross examination on the part of the defendant." 12 The hearing was set on October 2, 1985 but at
DENSO's instance, was re-scheduled on October 24, 1985.
At the hearing on October 24, 1985, DENSO orally asked the Court to reconsider its Order of September 3, 1985 and
accord it the opportunity to cross-examine KAYAMANAN's witnesses, who had given their testimony ex-parte. The Court
opted to give DENSO time to move formally for reconsideration 13 and reset the hearing to November 21, 1985 (which was
again reset on January 9, 1986 because the Judge was on official leave in November). 14
DENSO submitted its formal motion for reconsideration dated November 4, 1985 praying for the right to cross-examine
KAYAMANAN's witnesses on November 6, 1985. 15 The record does not show that any opposition to the motion was
ever filed. Two days later, however, on November 8, 1985, DENSO received notice of the Order of the Court dated
October 24, 1985 (the date of the hearing), denying its (DENSO's) motion to be allowed to cross-examine KAYAMANAN's
witnesses, and scheduling the initial hearing for the presentation of the defense witnesses on November 21, 1985. 16 Four
days afterwards, on November 12, 1985, the Court promulgated another Order, denying DENSO's motion for
reconsideration of November 4, 1985 for lack of merit. According to the Court:
What is important is that defendant is afforded the opportunity to present its evidence and thus enable the
Court to see the other side of the coin, the defendant being offered a chance to present its evidence in the
Order dated September 3, 1985. 17
DENSO submitted not however receive a copy of his Order of November 12, 1985 until January 9, 1986, the day finally
set (by the Court) for the reception of its evidence. At this time, DENSO drew the Court's attention to its motion for
reconsideration of November 4, 1985 which, as far as it knew, was yet unresolved. DENSO was thereupon furnished with
a copy of the Order of November 12, 1985. DENSO then asked for deferment of the hearing so that it might elevate this
adverse ruling to a higher court. 18 This was denied, and when DENSO declared itself as not ready to proceed with the
presentation of evidence, the Court dictated an Order stating that "this being the third time that defendant failed to present
its evidence notwithstanding the chance given to it, the 'Decision' dated July 1, 1985 is revived." 19
Without awaiting service of the Order dictated on January 9, 1986, DENSO filed on January 15, 1986 a petition for
certiorari with the Intermediate Appellate Court, docketed as AC-G.R. SP No. 08150, praying for the annulment of the
series of orders of Judge Guadiz already referred to, starting with the order of default of June 26, 1985 and culminating in
the order of January 9, 1986 reviving the judgment by default.
The Intermediate Appellate Court (Fourth Special Cases Division) considered the crucial issue to be "the propriety or
impropriety" of the order of September 3, 1985 which, while setting aside the previous order of default and the judgment
by default, prescribed that the evidence already presented would remain in the record and denied petitioner the right to
cross-examine the respondent's witnesses who had testified at the ex-parte hearing. It declared unnecessary further
consideration of the order of default and judgment by default thus set aside, and limited its review of the proceedings to
the question of whether or not the petitioner was properly denied the right of cross-examination. 20
On that question the Appellate Court ruled that the right of cross-examination, while a part of due process so that denial
thereof amounts to depriving a party of his day in court, is nonetheless waivable; that since petitioner received on
September 16, 1985 copy of the order of September 3, 1985 setting the judgment by default aside and scheduling the
case for hearing only for reception of defendant's evidence without right to cross-examine plaintiff's witnesses but did
not move for its reconsideration until October 24, 1985, or after a lapse of 38 days, such inaction amounted to a waiver of
the claimed right to cross-examine; and, moreover, said motion for reconsideration came too late because the order
sought to be reconsidered was by then already final, the applicable period of appeal being only fifteen (15) days from
notice of said order, 21 and that (in any event) DENSO was guilty of laches. 22
The error in these pronouncements is immediately apparent. They assume that the order in question is a final-and
appealable order, when it is in fact interlocutory. The distinction between final and interlocutory orders is a well-settled
one.
The concept of "final" judgment, as distinguished from one which has "become final" (or "executory" as of
right [final and executory]), is definite and settled. A "final" judgment or order is one that finally disposes of
a case, leaving nothing more to be done by the Court in respect thereto, e.g., an adjudication on the
merits which, on the basis of the evidence presented at the trial, declares categorically what the rights
and obligations of the parties are and which party is in the right; or a judgment or order that dismisses an
action on the ground, for instance, of res judicata or prescription. Once rendered, the task of the Court is
ended, as far as deciding the controversy or determining the rights and liabilities of the litigants is
concerned. Nothing more remains to be done by the Court except to await the parties' next move (which
among others, may consist of the filing of a motion for new trial or reconsideration, or the taking of an
appeal) and ultimately, of course, to cause the execution of the judgment once it becomes 'final' or, to use
the established and more distinctive term, "final and executory." ...
xxx xxx xxx
Conversely, an order that does not finally dispose of the case, and does not end the Court's task of
adjudicating the parties' contentions and determining their rights and liabilities as regards each other, but
obviously indicates that other things remain to be done by the Court, is "interlocutory," e.g., an order
denying a motion to dismiss under Rule 16 of the Rules, or granting a motion for extension of time to file a
pleading, or authorizing amendment thereof, or granting or denying applications for postponement, or
production or inspection of documents or things, etc. Unlike a "final" judgment or order, which is
appealable, as above pointed out, an "interlocutory" order may not be questioned on appeal except only
as part of an appeal that may eventually be taken from the final judgment rendered in the case. 23
That the order of September 3, 1985 was interlocutory in character is beyond cavil. In setting aside the order of default
and the succeeding judgment by default, it left the case open for further proceedings before the Trial Court, not the least
of which was the reception of evidence for the petitioner. Therefore, it could not become final in the sense that final
judgments become "final and executory." No appeal therefrom would lie except in the context and as part of an appeal
from a subsequent final judgment on the merits, and a motion for reconsideration thereof was not subject to the limiting
fifteen-day period of appeal prescribed for final judgments or orders.
Neither will the Court consider laches as having set in by reason of petitioner's allowing thirty-eight (38) days to pass
before seeking a reconsideration of the order, having in mind not only that such a relatively brief period cannot by any
reckoning be deemed an unreasonable length of time, but also the fact that while laches is a defense which operates
independently of the statute of limitations and is subject to no fixed periods, it is also founded on equity and may be
invoked only if the delay in asserting a claim has worked a change in the conditions such as would render unjust or
inequitable the grant of the relief sought.
In order t hat the defense of laches may prosper, the following elements must be present: (1) conduct on
the part of defendant, or one under whom he claims, giving rise to the situation complained of, (2) delay in
asserting complainant's right after knowledge or notice of defendant's conduct and an opportunity to sue,
(3) lack of knowledge or notice on the part of the defendant that complainant would assert the right on
which he bases suit, and (4) injury or prejudice to defendant in the event relief is accorded. *** 24
*** (I)t must be realized that, unlike prescription, the defense of laches is not dependent on the existence
of a statutory period of limitation. It can be invoked without reckoning any specific or fixed period; it is
sufficient that there be an unreasonable and unexplained delay in bringing the action that its maintenance
would already constitute inequity or injustice to the party claiming it. *** 25
No perceivable prejudice would attach to the respondent if the petitioner were allowed to cross-examine the witnesses it
has presented. If said witnesses told the truth, respondent has nothing to fear from their cross-examination, the effect of
which would only be to enhance their credibility.
Petitioner's motion for reconsideration of the order of September 3, 1985, therefore, hardly deserved the short shrift that it
received from the Intermediate Appellate Court because it was in no sense untimely, and neither lapse of a statutory
period nor laches could correctly be invoked to justify the summary refusal to inquire into the antecedents of said order.
What that Court considered to be moot and academic an inquiry into the merits of Judge Guadiz's separate orders of
June 26, 1985 denying the motion for extension of time to file answer and declaring the petitioner in default lay
precisely at the heart of the matter before it and now before this Court. Both orders were premised on what the Judge
perceived to be a failure to comply with the rule that notice of motions must be served by the movant on all parties
concerned at least three (3) days prior to the hearing thereof. 26 What His Honor evidently overlooked-and this was error-
was that the rule on notice is not unqualifiedly applicable to all motions, and that there are motions which may be
heard ex-parte, as the Rules themselves clearly acknowledge. 27 Among the latter class of motions are precisely those
seeking extension of time to plead, and the reason these are not strictly held to the requirement of notice is that they are
non-contentious and do not as a rule involve the substantial rights of the other parties in the suit.
* * * The motion for extension of time within which a party may plead is not a litigated motion where notice
to the adverse party is necessary to afford the latter an opportunity to resist the application, but an ex-
parte motion' made to the court in behalf of one or the other of the parties to the action, in the absence
and usually without the knowledge of the other party or parties.' As 'a general rule, notice of motion is
required where a party has a right to resist the relief sought by the motion and principles of natural justice
demand that his rights be not affected without an opportunity to be heard.
It has been said that "ex-parte motions are frequently permissible in procedural matters, and also in
situations and under circumstances of emergency; and an exception to a rule requiring notice is
sometimes made where notice or the resulting delay might tend to defeat the objection (sic) of the
motion." 28
Upon similar premises, this Court has consistently held, since as early as in 1946, 29 that motions for extension of time to
file record on appeal may be filed and passed upon ex-parte, and the rulings on that point are applicable, without
differentiation, to motions for extension of time to file answer.
Petitioner's motion for extension of time to file answer was, therefore, improperly denied for lack of proof of service on the
respondent, said motion having been seasonably filed and, as already fully shown, there being no impediment to its being
heard ex-parte. No pretense is made that the motion was denied as having been filed merely for delay, but even if that
ground were read into the otherwise clear terms of the order of denial which do not even hint thereat, it would still be
belied by the fact that what was sought was only an extension of the originalreglementary period as well as that prima
facie meritorious reasons were pleaded for the desired extension. The petitioner's answer, alleging defenses 30 which, if
established, could defeat the respondent's claim, wholly or in part, was filed well within the period of extension prayed for.
All these considered, the order declaring petitioner in default for alleged failure to timely file answer was clearly arbitrary; it
ought not to have been issued and should be struck down.
While the order of default was in fact set aside by the Trial Judge on motion of the petitioner, he failed to afford petitioner
the complete relief that the arbitrary and improper issuance of said order and of the earlier order denying the motion for
extension clearly called for. Ideally, the slate should have been wiped clean by setting aside also the hearing at which the
respondent presented its evidence ex-parte, so that the parties would stand on even terms with neither having the
advantage of the other. Instead, the Judge prescribed that the evidence presented by the KAYAMANAN would remain in
the record without right on the part of DENSO to cross-examine the witnesses who had already testified, and by
necessary implication, also denied DENSO the right to object to the documentary evidence submitted by respondent.
This, too, was abuse of discretion. If a defendant is improperly declared in default his time to answer not having expired
because of a timely ex-parte motion for extension he should be entitled to relief which should consist not only in the
admission of his responsive pleading, but of the right to cross-examine the witnesses presented and to object to the
exhibits offered in his absence, if not indeed to have trial commence all over again. He should not, under these
circumstances, be penalized by loss of the right to cross-examine. This would be grossly unwarranted and unfair; it would
amount to a denial of due process.
The Appellate Court's observation that "*** it cannot be denied that the petitioner had other remedies at hand after the
court a quo had set aside the questioned Order of default and Default Judgment ***" 31 It is somewhat perplexing. Given
the character of said orders, particularly of the order of default, this Court is hard put to conceive how DENSO could have
acted to protect its rights otherwise than as it did here, namely by exhausting all recourse toward a reconsideration before
the Trial Court and then applying for corrective relief in the Intermediate Appellate Court.
WHEREFORE, the petition is granted. The Decision of the Intermediate Appellate Court under review is reversed and set
aside. Petitioner's answer to the respondent's complaint in Civil Case No. 10768 is ordered admitted. All the orders issued
in said case and complained of in the petition, the judgment by default rendered therein, and the ex-parte proceeding of
June 27, 1985 at which the respondent presented its evidence are vacated. Civil Case No. 10768 shall stand for
proceedings de novo as if only complaint and answer had been filed therein. Costs against the respondent.
SO ORDERED.
SECOND DIVISION
G.R. No. 189574, July 18, 2014
ESTRELLA D. S. BAEZ, Petitioner, v. SOCIAL SECURITY SYSTEM AND DE LA SALLE UNIVERSITY, Respondents.
DECISION
PEREZ, J.:
In this Petition for Review on Certiorari under Rule 45 of the Rules of Court, Estrella Baez (petitioner) assails the 4
November 2008 Resolution1 of the Court of Appeals in CA-G.R. SP No. 103693, which dismissed her petition and affirmed
the denial of her claim for death benefits by the Employees' Compensation Commission (ECC) in its 4 April 2008
Decision.2 Likewise subject of the petition is the 10 September 2009 Court of Appeals Resolution 3 which denied
petitioners motion for reconsideration.
The undisputed facts are as follow:
Baylon R. Baez (Baylon), the husband of petitioner, was employed by De La Salle University (DLSU) on 19 July 1967.
From 25 January 1991 to 26 August 2006, Baylon worked as a Laboratory Technician at the Chemistry Department of
DLSU. Some of his duties and responsibilities, as described in his Certificate of Employment,
were:chanroblesvirtuallawlibrary
1. Primarily assigned to the operation of College of Science Chemistry Laboratories and stockrooms x x x;
xxxx
2. Preparing reagents and other laboratory materials before each assigned laboratory class(es) and dispensing them
during classes even if on leave, prepares the reagents ahead of time;
xxxx
8. Maintaining cleanliness and general order in the stockrooms x x x;
9. Check[ing] and monitoring the continuous supply of fuel gas x x x;
xxxx
10. Facilitat[ing] the movement of gas order cylinders during installation and receiving the same in good condition;
xxxx
15. Handl[ing] the inventory of laboratory stocks (e.g. chemicals, glassware, apparatus, laboratory consumables,
laboratory fixtures and furniture) x x x.4
From 9-15 April 2006, Baylon was confined at Manila Doctors Hospital due to fever, weakness, dysuria and flank pains.
He was diagnosed to be suffering from urinary tract infection. 5 About a month later or on 18 May 2006, he was confined
again for seven (7) days for functional dyspepsia.6 On 9 June 2006, he was admitted at the Medical Center Manila on
complaints of vomiting and weakness. He was diagnosed to be suffering from Systemic Lupus Erythematosus (SLE).
On 30 July 2006, Dr. Erle S. Castillo (Dr. Castillo) prepared a clinical abstract/toxicologic assessment on Baylon and she
stated that based on the occupational history of the patient, x x x the probability of a chemically induced disease [cannot
be discounted].7
On 9 August 2006, Baylon was again admitted at the Medical Center Manila before he succumbed to the complications of
his disease on 27 August 2006. He died of SLE with Auto-Immune Hemolytic
Anemia, SLE Nephritis, SLE Vasculitis and Thrombocytopenia Secondary to SLE.8
On 30 October 2006, Baylons attending physician, Dr. Dennis Torres (Dr. Torres), issued a Medical Certificate stating that
Baylon who was confined and expired in Medical Center Manila for Systemic Lupus Erythematosus may have been
precipitated by the chronic exposure to chemicals which is an occupational hazard in his performance of being a
laboratory technician.9
Based on medical opinions of Dr. Castillo and Dr. Torres, petitioner filed a claim for death benefits under the Employees
Compensation Law before the Social Security System (SSS).
On 21 September 2007, SSS denied petitioners claim on two grounds: 1) the cause of death, cardiac complication of
SLE, is not considered work-related; and 2) SLE is not included in the list of occupational diseases. 10
Petitioner appealed SSSs denial of her claim with the ECC. On 4 April 2008, the ECC affirmed the denial of death
benefits by the SSS. In denying the claim, the ECC delved into the nature of SLE and found that, SLE is caused by a
genetic tendency to mount an abnormal immune response against ones own tissues or organs leading to their destruction
or malfunction. The said disease is diagnosed by its characteristic clinical presentation and by DNA studies. 11
Petitioner impugned the findings of the ECC in a Petition for Review before the Court of Appeals. Petitioner initially
moved for a 30-day extension to file a petition for review due to absence of counsel and pending acceptance of her case
by the UP Office of Legal Aid. The Court of Appeals granted a 15-day extension so petitioner had until 15 June 2008 to
file her petition for review.12 She filed the same on 4 July 2008.
In a Resolution dated 4 November 2008, the Court of Appeals dismissed the petition for review because it was filed out of
time.
In the instant petition, petitioner explains that the petition for review before the Court of appeals was filed beyond the 15-
day extension period because she was in the process of obtaining free legal assistance in the preparation of her appeal
and she only received the Resolution of the Court of Appeals giving her only 15 days or until 15 June 2008 to file her
petition on 26 June 2008. Petitioner urges the Court to relax the rules and dispose the case on the merits.
Petitioner argues in the main that the work of her husband as a Chemistry Laboratory Technician which involved chronic
exposure to chemicals might have precipitated the latters illness and eventual death. Petitioner presented the Toxicologic
Assessment made by Dr. Castillo, as well as the Medical Certificate prepared by Dr. Torres to support her claim. She
insisted that the medical opinions of the two physicians, based on medical records and findings, constitute substantial
evidence to back up her claim. She pointed out that the ECC should not have disregarded medical records and opinions
solely on the ground that the nature of the illness was auto-immune. Citing jurisprudence, petitioner contends that
medical opinion to the contrary can be disregarded especially when there is some basis in facts for inferring a work-
connection.
DLSU filed its Comment praying for the dismissal of the petition on grounds of lack of jurisdiction and lack of cause of
action. DLSU argues that it never participated in the proceedings and was never served summons in any form or manner
or even apprised of any claim, motion or decision whether in the SSS, ECC or the Court of Appeals. Moreover, DLSU
claims that petitioners claim for death benefits was directed towards the SSS with no allegation of any responsibility that
DLSU may have for the same.
In its Comment, SSS defends the appellate courts decision to dismiss the appeal, in that the perfection of appeal in the
manner and within the period prescribed by the rules is not only mandatory but jurisdictional. SSS maintains that there is
no probability, much less certainty, of establishing a causal relation between the disease in question which cause the
subject members death and his actual duties during his employment. SSS asserts that petitioner failed to show relevant
evidence to establish a causal relationship.
There is no merit in the petition.
Petitioner received a copy of the Decision on 16 May 2008. Thus, she had until 31 May 2008 to file her petition. Instead,
petitioner filed a motion for extension of 30 days from 31 May 2008 within which to file her petition. The Court of Appeals
granted petitioner a mere 15-day extension pursuant to Section 4, Rule 43 13 of the Rules of Court,
thus:chanroblesvirtuallawlibrary
However, in the interest of justice, the Court resolved to grant the petitioner-appellant a non-extendible period of fifteen
days from May 31, 2008 or until June 15, 2008 within which to file her intended petition for review, otherwise, the instant
case shall be dismissed.14
Petitioner had until 15 June 2008 to file her petition. Petitioner filed the petition only 4 July 2008. Even if the reckoning
point is the extended period, the petition was filed out of time. The Court of Appeals simply applied the rule.
It is doctrinally entrenched that appeal is not a constitutional right, but a mere statutory privilege. Hence, parties who seek
to avail themselves of it must comply with the statutes or rules allowing it. 15 The rule is that failure to file or perfect an
appeal within the reglementary period will make the judgment final and executory by operation of law. Perfection of an
appeal within the statutory or reglementary period is not only mandatory but also jurisdictional; failure to do so renders the
questioned decision/resolution final and executory, and deprives the appellate court of jurisdiction to alter the
decision/resolution, much less to entertain the appeal. 16 Filing of an appeal beyond the reglementary period may, under
meritorious cases, be excused if the barring of the appeal would be inequitable and unjust in light of certain circumstances
therein.17
While there are instances when the Court has relaxed the governing periods of appeal in order to serve substantial
justice, this was done only in exceptional cases.18 We find no compelling reason to justify the filing of the petition for
review before the Court of Appeals beyond the reglementary period.
Just as significant, even if we grant petitioners prayer for a ruling on the merits of the case, denial of the petition cannot
be avoided.
The findings of fact of the SSS are supported by substantial evidence and affirmed by the ECC and the Court of Appeals.
This Court is not a trier of facts. The Court accords great weight to the factual findings of lower courts or agencies whose
function is to resolve factual matters. It is not for the Court to weigh evidence all over again. Moreover, findings of fact of
administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to
specific matters, are generally accorded not only respect but finality when affirmed by the Court of Appeals. 19
In order for the beneficiary of an employee to be entitled to death benefits under the SSS, the cause of death of the
employee must be a sickness listed as an occupational disease by ECC; or any other illness caused by employment,
subject to proof that the risk of contracting the same is increased by the working conditions. 20
It is undisputed that SLE is not listed as an occupational disease under Annex A of the Rules on Employees
Compensation. Thus, petitioner has to prove by substantial evidence the causal relationship between her husbands
illness and his working conditions.
For petitioners claim to prosper, she must submit such proof as would constitute a reasonable basis for concluding either
that the conditions of employment caused her husbands ailment or that such working conditions had aggravated the risk
of contracting that ailment.21
Baylon was diagnosed with SLE. But petitioner filed her claim on the basis of the doctors and toxicologists assessments
that Baylons illness may have been precipitated by his exposure to chemicals. Petitioner alleges that in the course of her
husbands duty as a laboratory technician, he was chronically exposed to the following chemicals: Ninhydrin, alpha
napthol, ethanol, cupric acetate, glacial acetic acid, phenylhydrazine, orcinol, sodium citrate, potassium tartrate, bromine,
carbon tetrachloride, sodium hydroxide, mercuric nitrate, arsenic, mercury, zinc chloride, ammonia, antimony, tricarboxylic
acid, benzidine, chromic acid, hydrogen sulfide, potassium permanganate, phenols, naphthalene, benzene, lead,
thiourea, and heptanes, among others.22
While there are certain chemicals accepted as increasing the risks of contracting SLE such as chlorinated pesticides and
crystalline silica,23 the law requires proof by substantial evidence, or such relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion, that the nature of his employment or working conditions increased the
risk of contracting the ailment or that its progression or aggravation was brought about thereby. 24
Petitioner relied unqualifiedly on the toxicological report which failed to prove the causal relationship between Baylons
work and his illness. The report made an indirect link between SLE and chemicals through drug-induced lupus.
SLE and Drug-Induced Lupus Erythematosus are both autoimmune diseases. Drug-induced lupus is a temporary and
mild form of lupus caused by certain prescription medications. They include some types of high blood pressure drugs
(such as hydralazine, ACE inhibitors, and calcium channel blockers) and diuretics (hydrochlorothiazide). Symptoms
resolve once the medication is stopped.25
On record, Baylon contracted SLE. There was nothing on the record which shows that Baylon was diagnosed with drug-
induced lupus.
Furthermore, the toxicological report made mention of certain drugs with chemical structures related to aromatic amines
or substituted hydrazines, listed in the inventory of the school, can affect the immune system. This would
include Benzenes, Naphthylamine, Toluene, Dinitrophenylhydrazine, etc. However, these drugs were not proven to have
been administered on Baylon. These substances which can induce the disease all pertain to drugs which are orally
administered on the patient. There is no showing that the drugs given to Baylon had increased his risk of contracting
Drug-Induced Lupus and SLE.
Once again, we reiterate our holding in Lorenzo v. Government Service Insurance System26 that while we sympathize with
the petitioner, it is important to note that such sympathy must be balanced by the equally vital interest of denying
undeserving claims for compensation. Compassion for the victims of diseases not covered by the law ignores the need to
show a greater concern for the trust fund to which the tens of millions of workers and their families look to for
compensation whenever covered accidents, diseases and deaths occur.
With respect to the inclusion of DLSU as respondent, we find that the Court of Appeals erred in impleading DLSU. The
original case title before the ECC is, Estrella D.S. Baez v. Social Security System (De La Salle University), to
emphasize that DLSU is the Baylons employer. DLSU was not furnished a copy of the ECCs Decision. When petitioner
filed her motion for extension, as well as petition for review, she did not implead DLSU, but the Court of Appeals in its
Decision and Resolution added DLSU as a respondent, without however furnishing it copies of the Decision and
Resolution. However, the erroneous inclusion made by the Court of Appeals appears to be inadvertent and harmless. For
clarification purposes, the case against DLSU should be dismissed in this case for lack of cause of action and jurisdiction.
WHEREFORE, based on the foregoing, the petition is DENIED. The Resolution of the Court of Appeals in CA-G.R. SP
No. 103693 dated 4 November 2008 dismissing the petition for review, and its Resolution dated 10 September 2009,
which denied the motion for reconsideration, are AFFIRMED.
SO ORDERED.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 207443 July 23, 2014
GENATO INVESTMENTS, INC., Petitioner,

vs.
HON. JUDGE OSCAR P. BARRIE~TOS, in his capacity as the Presiding Judge of the Regional Trial Court, of
Caloocan City, Branch 123, EMILY .p. DIZON, in her capacity as the Branch Clerk of Court of the Regional Trial
Court of Caloocan City, Branch 123, JIMMY T. SORO, Court Process Server of the Regional Trial Court of .
Caloocan, Branch 123, EVELINA M. GARMA, City Treasurer of Caloocan City, PHILLIP L. YAM, Officer-in-Charge,
Real Property Tax Division of the Caloocan City Treasurer's Office, ANTHONY B. PULMANO, Officer-in-Charge,
City Assessor of Caloocan City, and LAVERNE REALTY & DEVELOPMENT CORPORATION, Respondents.
DECISION
PEREZ, J.:
This is a Petition for Review on Certiorari1 of the Resolution2 of the Court of Appeals (CA) dated 27 February 2013, which
denied petitioner Genato Investment, Inc.s (petitioner) Petition 3 for Annulment of Judgment against the Orders dated 31
August 20114 and 26 April 20125 of the Regional Trial Court of Caloocan City(RTC Caloocan) in LRC-Case No. C-5748. In
the said orders, the RTC Caloocan granted private respondent Laverne Realty & Development Corporations (private
respondent) Petition6 for the cancellation of Transfer Certificate of Title (TCT) No. 33341 7 of the Register of Deeds of
Caloocan City in the name of petitioner and the issuance of a new title in the name ofprivate respondent, and directed the
issuance of a Writ of Possession8 over the subject property in favor of private respondent.
Antecedent Facts
TCT No. 33341 is registered under the name of petitioner and covers two (2) adjacent parcels of land, Lots Nos. 1-A and
13-B-1, situated at Rizal Avenue Extension, Caloocan City, witha combined areaof 796.80 sq.m., with Lot No. 1-A having
an area of 341.00 sq.m., and Lot No. 13-B-1 having an area of 445.80 sq.m., more orless. Together, both lots have a total
assessed value of P8,697,870.00.
On 14 October 2009, due to alleged deficiency in real property taxes due on Lot No. 13-B-1 for the years 1993 to 2008 in
the amount of P2,678,439.04, the Office of the City Treasurer of Caloocan City sold at public auction Lot No. 13-B-1, in
which private respondent emerged as the highest bidder.
The Office of the City Treasurer, through the City Treasurer of Caloocan, Evelina M. Garma (respondent Garma), issued
on 15 October 2009, a Certificate of Sale of Delinquent Property to Purchaser 9 and on 21 January 2011, a Final Deed of
Conveyance10 over Lot 13-B-1 in favor of private respondent.
Petitioner was not made aware of any of the proceedings before the Office of the City Treasurer, as the Notice of
Levy11 and Warrant of Levy12 issued by the Office of the City Treasurer, through respondent Garma, were sent to petitioner
at an inexistent office in Tondo, Manila and were, thus, returned unserved. 13
By virtue of the above-mentioned final deed of conveyance, private respondent on 4 May 2011 filed LRC-Case No. C-
5748 with the RTC Caloocan praying for the consolidation of the ownership of the property covered by TCT No. 33341,
the cancellation of the same TCT in the name of petitioner, and the issuance of a new titlein the name of private
respondent, notwithstanding the fact that the delinquency sale involved only Lot No. 13-B-1. 14
The RTC issued an Order on 13 June 2011 setting the initial hearing on the Petition, and directing that copiesof the said
order be posted at the subject premises and furnished petitioner.However, the records of the case, particularly the
Certificate of Posting15 dated 16 July 2011 and the Process Server's Returns dated 13 and 16 July 2011 16 executed by
respondent Jimmy T. Soro (respondent Soro), the Process Server of RTC Caloocan, will show that the order was not
posted at the subject premises, and that petitioner did not receive any such copies of the Order, as respondent Soro
sought to serve the same at the inexistent offices.
On 31 August 2011, after private respondent adduced its evidence, the RTC Caloocan issued an Order 17 granting private
respondent's petition. Inasmuch as petitioner was unaware ofthe proceedings, the same order became final and
executory. Thereafter, RTC Caloocan, upon motion18 of private respondent, issued another Order dated 26 April 2012
directing the issuance of a Writ of Possession in favor of private respondent. The said writ, 19 signed by the Branch Clerk of
the RTC Caloocan, respondent Emily P. Dizon (respondent Dizon), was issued on 27 April 2012.
Petitioner learned of the auction saleonly after 9 May 2012, when the Sheriff of the RTC Caloocan, respondent Renebert
B. Baloloy (respondent Baloloy), left a Notice to Vacate 20 in the subject premises. Petitioner claimed that it was very much
surprised at the auction sale of Lot 13-B-1 because it had been religiously paying its real property taxes thereon up to
2012. In fact, it had in its possession a Certification 21 dated 19 September 2011 issued by the Office of the City Treasurer
of Caloocan, through its OIC Land Tax Division, respondent PhillipL. Yam (respondent Yam), stating that the real property
taxes due on Lots 1-A and 13-B-1, with a combined assessed value of P8,697,870.00, up to the 4th quarter of 2011, have
been duly paid by petitioner.
Notwithstanding the representations made by petitioner with the RTC Caloocan 22 and Office of the City Treasurer, Baloloy,
proceeded to implement the Writ of Possession on 15May 2012 over both Lots Nos. 1-A and 13-B-1 and their
improvements. As a result thereof, private respondent wrested physical possession of the entire property covered by TCT
No. 33341 from petitioner.
Feeling aggrieved, petitioner filed with the CA a Petition for Certiorari 23 under Rule 65 of the Rules ofCourt, but later
withdrew24 the same, reasoning that the withdrawal would enable it to comply with the rules on forum shopping. The CA
granted petitioners prayer to withdraw.25
On 14 January 2013, petitioner, filed with the CA a Petition for Annulment of Judgment praying, among others, for the
annulment and setting aside of the Orders dated 31 August 2011 and 26 April 2012 and the Writ of Possession issued by
the RTC Caloocan. Petitioner likewise prayed that the CA direct private respondentto vacate the property and surrender
possession thereof to petitioner.
Ruling of the Court of Appeals
On 27 February 2013, the CA issued a Resolution26 dismissing CA G.R. SP No. 128187 on the ground that the Petition for
Annulment of Judgment that petitioner filed is not the proper remedy, as it had other available remedies to question the
Orders of the RTC Caloocan. Citing Estate of the late Mercedes Jacob v. Court of Appeals 27 the CA, stated that where the
land subject of the case was already registered in the name of the buyer in the auction sale, the proper remedy to annul
said transfer was to file an action for reconveyance on the ground of fraud. The CA added that the Petition for
Certioraripetitioner had earlier filed but later withdrew showed that other remedies were available to petitioner. The CA,
likewise, denied petitioner's motion for reconsideration. 28
Hence, this Petition.
Our Ruling
Petitioner questions the dismissal by the CA in CA-G.R. SP No. 128187, and contends that:
a. Under the particular factual circumstances surrounding this case, a petition for annulment of judgment is the
only and appropriate remedy of petitioner to question the Orders of the RTC Caloocan, which allowed private
respondent to consolidate ownership and take possession of the property covered by TCT No. 33341; and
b. All the requisite elements for the filing of a petition for annulment of judgment on the groundsof extrinsic fraud,
lack of jurisdiction, and want of due process, are present in this case.
We grant the Petition.
We first tackle the procedural issue. Based on the records of this case, it is undisputed that the Order of the RTC
Caloocan dated 31 August 2011 became final and executory on 11 October 2011, when the latter issued an Entry of
Judgment for the same. The general rule isthat a final and executory judgment can no longer be disturbed, altered, or
modified in any respect, and that nothing further can be done but to execute it. A final and executory decision may,
however, be invalidated via a Petition for Relief or a Petition to Annul the same under Rules 38 or 47, respectively, of the
Rules of Court.29
Under Rule 38, when a judgment or final order is entered, or any other proceeding is thereafter taken against a party in
any court through fraud, accident, mistake, or excusable negligence, he may file a petition in such court and in the same
case praying thatthe judgment, order or proceeding be set aside. The verified petition must be filed within sixty (60) days
after the petitioner learns of the judgment, final order, or other proceeding to be set aside, and not more than six (6)
months after such judgment or final order was entered. However, it is uncontested that petitioner learned about the
proceedings in LRC-Case No. C-5748 more than six (6) months after the Order dated 31 August 2011 had become final
and executory on 11 October 2011. Thus, this remedy under Rule 38 of the Rules of Court was clearly unavailing.
Thus, the only remedy leftto petitioner in this case is a petition for annulment of judgment under Rule 47, which it, in fact,
filed.
The principle we laid down in Estate of the late Mercedes Jacob v. Court of Appeals is not applicable. We disagree with
the reasoning of the CA and respondents that petitioner in this particular case should have filed either an action for
reconveyance or annulment of the auction sale, because to do so would have required the court hearing the action to
modify or interfere with the judgment or order of another co-equal court, especially in this case where the said judgment
ororder had attained finality. Wellentrenched in our jurisdiction is the doctrine that a court has no power to do so, as that
action may lead to confusion and seriously hinder the administration of justice. 30
We have repeatedly ruled that a Petition for Annulment of Judgment under Rule 47 of the Rules of Court is a remedy
granted only under exceptional circumstances where a party,without fault on his part, has failed to avail of the ordinary
remedies of new trial, appeal, petition for relief or other appropriate remedies. The same petition is not available as a
substitute for a remedy which was lost due to the partys own neglect in promptly availing of the same. 31 There is here no
attempted substitution; annulment of judgment is the only remedy available to petitioner.
Regarding the previous filing of a Petition for Certiorariunder Rule 65 such is of no moment as petitioner timely withdrew
the same before any relief could be afforded by the CA.
We now proceed to the substantive and more pressing issue.1wphi1 We agree with the position of petitioner thatall the
requisite elements for the filing of a petition for annulment of judgment on the grounds of extrinsic fraud, lack of
jurisdiction, and want of due process, are present in this case.
It should be stressed that petitioner instituted the case before the CA precisely to seek relief from the declaration of nullity
of TCT No. 33341, which had been issued without first giving petitioner an opportunity to be heard.
In Castigador v. Nicolas,32 we had the occasion to state that: The petition filed with the CA contained the following
allegations, among others: (1) the auction sale of the land is null and void for lack of actual and personal notice to herein
petitioner; (2) the RTC did not comply with the procedure prescribed in Section 71, Presidential Decree No. 1529 requiring
notice by the Register of Deeds to the registered owner as to the issuance of a certificate of sale; and (3) petitioner was
not afforded due process when she was not notified ofthe proceedings instituted by respondent for the cancellation of her
title. The petition need not categorically state the exact words extrinsic fraud; rather, the allegations in the petition should
be so crafted to easily point out the ground on which it was based. The allegations in the petition filed with the CA
sufficiently identify the ground upon which the petition was based - extrinsic fraud. 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 schemeof the prevailing litigant prevented a party from having his day in court. The allegations clearly
charged the RTC and respondent with depriving petitioner of the opportunity to oppose the auction sale and the
cancellation of her title and ventilate her side. This allegation, if true, constitutes extrinsic fraud.
Petitioner not only puts in question the complete lack of due process in the conduct of the auction sale and the
proceedings before the RTC Caloocan, but the absolute lack of basis for the declaration by the Office of the City Treasurer
that it had been delinquent in the payment of real property taxes due on its property, particularly Lot 13-B-1.
Technicalities aside, we are particularly alarmed by the material allegations and serious charges brought up by petitioner
in its pleadings, which go into the very core of the action for annulment of judgment and, more importantly, which noneof
the respondents dispute.
Petitioner fully paid its real estate taxes due on Lot 13-B-1.
Petitioner confronts respondents with copies of its Real Property Tax Receipts 33 issued by the Office of the City Treasurer
of the City of Caloocan spanning the period from 2000 to 2012,as well as the Payment History 34 from 1995 to 2011
evidencing full payment ofreal property taxes due on its land, whose assessed value was adjusted in 2005
to P8,697,870.00.
Petitioner likewise confronts respondents with the Certification 35 dated 19 September 2011 issued by the Office of the City
Treasurer of Caloocan, through its OIC Land Tax Division, respondent Yam, certifying that the real property taxes due on
Lots 1-A and 13-B-1, with an assessed value of P8,697,870.00, up to the 4th quarter of 2011, and previous years, have
been duly paid by petitioner.
We note that respondents, particularly respondents Garma and Yam, the City Treasurer and the OIC Land Tax Division,
have been inexplicably silent as regards all that petitioner presented for our consideration.
Multiple Tax Declarations refer to one and the same property.
Petitioner alleges and brings to our attention the matter that it religiously paid in full itsreal property taxes due on its land,
Lots Nos. 1-A and 13-B-1, with an assessed value ofP8,697,870.00, under a single tax declaration issued by the Office
ofthe City Assessor of Caloocan,36 no. D12-109-00012-C under Property Index No. 113-12-109-01-013, as certified by the
OIC City Assessor, respondent Anthony L. Pulmano (respondent Pulmano). 37
The alleged delinquency of petitioner in its real property taxes and the basis for the auction sale stemmed from the
supposed non-payment of real property taxes due on Lot 13-B-1, with an assessed value of P4,866,350.00 covered by
another tax declaration,38 D12-109-00013-C under Property Index No. 113-12-109-01-014.
Shortly before private respondent took over the property of petitioner in 2012, the Office of the City Assessor, through
respondent Pulmano, issued yet another tax declaration, no. 12-109-00153-12-C under Property Index No. 113-12-109-
01-013, this time covering only Lot No. 1-A, with an assessed value of P3,831,520.00. Thisnew issuance cancelled
petitioners originalTax Declaration No. D12-109-00012-C under Property Index No. 113-12-109-01-013, which previously
covered both Lots Nos. 1-A and 13-B-1.
As petitioner duly points out,39 a simple mathematical application would show that if the assessed values in the 2nd and
3rd tax declarations were added, P4,866,350.00 and P3,831,520.00, the same would amount toP8,697,870.00, the
assessed value of the property as indicated in the original tax declaration.
Therefore, if all the tax declarations issued by respondent Pulmano refer to one and the same property of petitioner, and
the latter fully paid all its realty taxes due on the same, thenit would follow that the finding of delinquency did not have any
basis.
We note that respondent Pulmano, much like respondents Garma and Yam, has been inexplicably silent as regards the
foregoing.
Private respondent took possession ofboth Lots Nos. 1-A and 13-B-1.
Notwithstanding the foregoing serious anomalies attending the delinquency sale, petitioner, again, confronts respondents,
particularly public respondents Judge Oscar P. Barrientos,Dizon and Baloloy, as well as private respondent, with the
charge thatthe latter, with the assistance of respondent Baloloy, forcibly ejected petitioner from the whole property, even if
it was only Lot 13-B-1 that was the subject of the writ of possession.
Again, none of the respondents contested this claim.
It certainly is unallowable that petitioner be deprived of his property, or a portion thereof, without any lawful court order or
process. We take into consideration the previous actions ofprivate respondent, which as again pointed out by petitioner,
appear to indicate that it was the intention of private respondent all along to gain possession over both lots covered by
TCT No. 33341. We are called upon to read the foregoing act of deprivation in totality with the other actions of
respondents,which none of them deny, despite being given ample opportunity to do so. It would have beena simple matter
for respondents to refute the allegations of petitioner and aver that the evidence presented by petitioner to prove full
payment of real property taxes do not refer to the same property subject of the auction sale; or that the tax declarations
refer to different properties owned by petitioner, and not those subject of this case; or that respondent Baloloy neither
implemented the writ of possession over, nor did private respondent take possession of Lot No. 1-A. Instead, respondents
Garma and Yam, in their Comment,40 make no factual declarations and curiously limit their allegations to a purely
procedural standpoint that petitioner should have pursued an action for reconveyance of the property, a point wehave
already resolved. Respondent Pulmano, for his part, alleged in his Manifestation 41 that he chose not to file any comment
to the Petition, despite ourexpress directive in Our Resolution dated 24 July 2013 requiring all the respondents to
comment in the petition. Respondent Pulmano went so far as toimpose his own condition on us, that he shall file his
Comment in the event that we give due course to the petition.
Indeed, it is evident that respondents have chosen, by their complete and palpable silence on the substantive matter, to
merely rely on the presumption of regularity in the performance of official duties. 42
As a general rule, we have time and again stated that we are not a trier of facts. However, such rule is subject to several
recognized exceptions:43
(1) When the findings are grounded entirely on speculation, surmises and conjectures;
(2) When the inference made is manifestly mistaken, absurd or impossible;
(3) When there is a grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts;
(5) When the findings of fact are conflicting;
(6) When in making its findings the Court of Appeals went beyond the issues of the case, or its findings are
contrary to the admissions of both appellant and appellee;
(7) When the findings are contraryto those of the trial court;
(8) When the findings of fact are conclusions without citation of specific evidence on which they are based;
(9) When the facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed by
the respondents; and
(10) When the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and
contradicted by the evidence on record.
(11) When the Court ofAppeals manifestly overlooked certain relevant facts not disputed by the parties,which, if
properly considered, would justify a different conclusion. (Emphasis and underscoring supplied)
In this case, we stress that the factual allegations in the petition, showing that petitioner fully paid its real property taxes on
Lot No. 13-B-1 until 2011, were not refuted by any of the respondents. Further, petitioner presented more than sufficient
evidence to support the said factual allegations. This failure of respondents to refute such claim affords us the opportunity
to go over the factual antecedents to aid us in the resolution of this case. In the face of overwhelming evidence,
respondents reliance on the presumption of regularity in the performance by publicrespondents of their official duties must
fail. The presumption of regularity is a disputable presumption under Rule 131 of the Rules of Court, which may be
rebutted by affirmative evidence.44
As mentioned above, the Notice of Levy and Warrant of Levy, were sent to an inexistent office of petitioner at Tondo,
Manila and were, thus, returned unserved. Further, the Order dated 13 June 2011, setting the initial hearing on the
petition, was neither posted nor properly served upon petitioner. Clearly, petitioner was deprived of its property without
due process of law. Inasmuch as it had sufficiently shown that it fully paid its real estate taxes up to 2011, there was no
basis to collect any tax liability, and no obligation arose on the part of petitioner to pay the amount of real property taxes
sought to be collected. Consequently, petitioner should not have been declared delinquent in the payment of the said
taxes to Caloocan City, and the latter did not acquire any right to sell Lot 13-B-1 in a public auction. Besides, it appears
that private respondent acted hastily in filing LRC-Case No. C-5748 by failing to ascertain the actual principal office of
petitioner to enable the RTC Caloocan to properly acquire jurisdiction over the person of petitioner.
Considering the foregoing, private respon~ent did not acquire any valid right to petition the RTC Caloocan for the
cancellation of TCT No. 33341 and, more importantly, take possession of Lot 13-B-1, much less Lot 1-A. We reiterate the
principle that strict adherence to the statutes governing tax sales is imperative, not only for the protection of the taxpayers,
but also to allay any possible suspicion of collusion between the buyer and the public officials called upon to enforce the
laws.45
WHEREFORE, the petition is GRANTED. The Resolutions of the Court of Appeals dated 27 February 2013 and 30 May
2013 in CA-G.R. SP No. 128187 are SET ASIDE. Necessarily, the Orders dated 31 August 2011, 26 April 2012 and 19
November 2012, and the Writ of Possession dated 27 April 2012 in LRC Case No. C-5748, are all vacated.
SO ORDERED.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 176598 July 9, 2014
PETRONIO CLIDORO, DIONISIO CLIDORO, LOLITA CLIDORO, CALIXTO CARD ANO, JR., LOURDES CLIDORO-
LARIN, MATEO CLIDORO and MARLIZA CLIDORO-DE UNA, Petitioners,
vs.
AUGUSTO JALMANZAR, GREGORIO CLIDORO, JR., SENECA CLIDORO-CIOCSON, MONSERAT CLIDORO-
QUIDAY, CELESTIAL CLIDORO-BINASA, APOLLO CLIDORO, ROSALIE CLIDORO-CATOLICO, SOPHIE CLIDORO,
and JOSE CLIDORO, JR., Respondents.
DECISION
PERALTA, J.:
This deals with the Petition for Review on Certiorari under Rule 45 of the Rules of Court praying that the Decision 1of the
Court of Appeals (CA), dated October 17, 2006, and its Resolution 2 dated February 6, 2007, denying herein petitioner's
motion for reconsideration of the Decision, be reversed and set aside.
The antecedent facts, as set forth in the CA Decision, are undisputed, to wit:
The instant appeal stemmed from a complaint, docketed as Civil Case No. T-2275 for revival of judgment filed by Rizalina
Clidoro, et al. against Onofre Clidoro, et al., praying that the Decisiondated November 13, 1995 of the Court of Appeals
(CA) in CA-G.R. CV No. 19831, which affirmed with modification the RTC Decision dated March 10, 1988 in Civil Case
No. T-98 for partition, berevived and that the corresponding writ of execution be issued. The dispositive portion ofthe CA
Decision reads:
The estate of the late Mateo Clidoro, excepting that described in paragraph (i) of the Complaint, is hereby ordered
partitioned in the following manner:
1. One-fifth portion to the Plaintiffs-Appellees, by right of representation to the hereditary share of Gregorio Clidoro, Sr.;
2. One-fifth portion to Defendant-Appellant Antonio Clidoro or his legal heirs;
3. One-fifth portion to Appellant Josaphat Clidoro;
4. One-fifth portion to Appellant Aida Clidoro; 5. One-tenth portion to Gregoria Clidoro, as her legitime in the hereditary
share of Onofre Clidoro; and
6. One-tenth portion to Catalino Morate, as successor-ininterest to the legitime of Consorcia Clidoro.
SO ORDERED.
On September 3, 2003, defendants-appellees except Gregoria Clidoro-Palanca, moved to dismiss the said complaint on
the following grounds: "1.) The petition, not being brought up against the real partiesin-interest, is dismissible for lack of
cause of action; 2.) The substitution of the parties defendant is improper and is not in accordance with the rules; 3.) Even
if the decision is ordered revived, the same cannot be executed since the legal requirements of Rule 69, Section 3 of the
1997 Rules of Civil Procedure has not been complied with; and 4.) The Judgment of the Honorable Court ordering
partition is merely interlocutory as it leaves something more to be done to complete the disposition of the case."
After the filing of plaintiffs-appellants' Comment/Opposition to the Motion to Dismiss, defendants-appellees' Reply,
plaintiffs-appellants' Rejoinder and defendants-interestedparties' Sur-Rejoinder, the RTC issued the assailed Order dated
December 8, 2003 dismissing the instant complaint for lack of cause of action, the pertinent portion of which reads:
"xxx
The complaint shows that most of the parties-plaintiffs, partiesdefendants and interested parties are already deceased
and have no more natural or material existence. This is contrary to the provision of the Rules (Sec. 1, Rule 3, 1997 Rules
of Civil Procedure). They could no longer be considered as the real parties-in-interest. Besides, pursuant to Sec. 3, Rule 3
(1997 Rules of Civil Procedure), where the action is allowed to be prosecuted or defended by a representative or
someone acting in fiduciary capacity, the beneficiary shall be included in the title of the case. In the instant case the
beneficiaries are already deceased persons. Also, the Complaint states thatthey were the original parties in Civil Case No.
T-98 for Partition, but this is not so (paragraph 2). Some of the parties are actually not parties to the original case, but
representing the original parties who are indicated as deceased.
From the foregoing, the Court finds the instant complaint to be flawed in form and substance. The suit is not brought by
the real parties-ininterest, thus a motion to dismiss on the ground that the complaint states no cause of action is proper
(Section 1(g), Rule 16).
WHEREFORE, the instant complaint is ordered DISMISSED for lack of cause of action.
SO ORDERED."
Plaintiffs-appellants moved for reconsideration of the foregoing Order with prayer to admit the attached Amended
Complaint impleading the additional heirs of the interested party Josaphat Clidoro and the original plaintiffs Rizalina
Clidoro-Jalmanzar, Cleneo Clidoro and Aristoteles Clidoro. The same was,however, denied in the second assailed order. x
x x3
Respondents then appealed to the CA, and on October 17, 2006, the CA promulgated its Decision reversing and setting
aside the Orders of the RTC, and remanding the case to the RTC for further proceedings. Petitioners motion for
reconsideration of the Decision was denied per Resolution dated February 6, 2007.
Hence, the present petition where the following issues are raised:
A. THE HONORABLE COURT OF APPEALS FAILED TO CONSIDER THAT THERE WAS NO PROPER SUBSTITUTION
OF PARTIES IN THE INSTANT ACTION FOR REVIVAL OF JUDGMENT.
B. THE HONORABLE COURT OF APPEALS ERRED IN CONSIDERING THE RESPONDENTS AS WELL AS THE
PETITIONERS AS THE REAL PARTIES-IN-INTEREST.
C. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT AMENDMENT TO PLEADINGS WAS
PROPERLY MADE AND IS APPLICABLE TO THE INSTANT ACTION.
D. THE HONORABLE COURT OFAPPEALS ERRED IN RULING THAT THERE WAS MERE MISJOINDER OF PARTIES
IN THE INSTANT ACTION.4
The petition deserves scant consideration.
Reduced to its essence, the pivotal issue here is whether the complaint for revival of judgment may be dismissed for lack
of cause of action as it was not brought by or against the real parties-in-interest.
First of all, the Court emphasizes that lack of cause of action is not enumerated under Rule 16 of the Rules of Court as
one of the grounds for the dismissal of a complaint. As explained in Vitangcol v. New Vista Properties, Inc., 5 to wit:
Lack of cause of action is, however, not a ground for a dismissal of the complaint through a motion to dismiss under Rule
16 of the Rules of Court, for the determination of a lack of cause of action can only be made during and/or after trial. What
is dismissible via that mode is failure of the complaint to state a cause of action. Sec. 1(g) of Rule 16 of the Rules of Court
provides that a motion may be made on the ground "that the pleading asserting the claim states no cause of action."
The rule is that in a motion to dismiss, a defendant hypothetically admits the truth ofthe material allegations of the ultimate
facts contained in the plaintiff's complaint. When a motion to dismiss is grounded on the failure tostate a cause of action, a
ruling thereon should, as rule, be based only on the facts alleged in the complaint.x x x
xxxx
In a motion to dismiss for failureto state a cause of action, the focus is on the sufficiency, not the veracity, of the material
allegations. The test of sufficiency of facts alleged in the complaint constituting a cause of action lies on whether or not the
court, admitting the facts alleged, could render a valid verdict in accordance with the prayer of the complaint.x x x 6
Again, in Manaloto v. Veloso III,7 the Court reiterated as follows:
When the ground for dismissal is that the complaint states no cause of action, such fact can be determined only from the
facts alleged in the complaint and fromno other, and the court cannot consider other matters aliunde. The test, therefore,
is whether, assuming the allegations of fact in the complaint to be true, a valid judgment could be rendered in accordance
withthe prayer stated therein.8
In this case, it was alleged in the complaint for revival of judgment that the parties therein were also the parties inthe
action for partition. Applying the foregoing test of hypothetically admitting this allegation in the complaint, and not looking
into the veracity of the same, it would then appear that the complaint sufficiently stated a cause of action as the plaintiffs in
the complaint for revival of judgment (hereinafter respondents), as the prevailing parties in the action for partition, had a
right to seek enforcement of the decision in the partition case.
It should be borne in mind that the action for revival of judgment is a totally separate and distinct case from the original
Civil Case No. T-98 for Partition. As explained in Saligumba v. Palanog, 9 to wit:
An action for revival of judgment is no more than a procedural means of securing the execution of a previous judgment
which has become dormant after the passage of five years without it being executed upon motion of the prevailing party. It
isnot intended to re-open any issue affecting the merits of the judgment debtor's case nor the propriety or correctness of
the first judgment. An action for revival of judgment is a new and independent action, different and distinct fromeither the
recovery of property case or the reconstitution case [in this case, the original action for partition], wherein the cause of
action is the decision itself and not the merits of the action upon which the judgment sought to be enforced is rendered. x
x x10
With the foregoing in mind, it is understandable that there would be instances where the parties in the original case and in
the subsequent action for revival of judgment would not be exactly the same. The mere fact that the names appearing as
parties in the the complaint for revival of judgment are different from the names of the parties in the original case would
not necessarily mean that theyare not the real parties-in-interest. What is important is that, as provided in Section 1, Rule
3 of the Rules of Court, they are "the party who stands to be benefited or injured by the judgment in the suit, or the party
entitled to the avails of the suit." Definitely, as the prevailing parties in the previous case for partition, the plaintiffs in the
case for revival of judgment would be benefited by the enforcement of the decision in the partition case.
Moreover, it would appear that petitioners are mistaken in alleging that respondents are not the real parties-in-interest.
The complaint for revival of judgment impleaded the following parties:
[[reference - http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/july2014/176598.pdf]]
PLAINTIFFS DEFENDANTS
1. Rizalina Clidoro (deceased) 1. Onofre Clidoro (deceased) rep.
rep. herein by Augusto Jalmanzar by Gregoria Clidoro-Palanca
(daughter)
2. Gregorio Clidoro, Jr. 2. Antonio Clidoro (deceased)
herein rep. by Petronio Clidoro,
3. Urbana Costales (deceased) 3. Carmen Clidoro-Cardano, rep.
by Calixto Cardano, Jr. (husband)
4. Cleneo Clidoro (deceased) 4. Dionisio Clidoro
5. Seneca Clidoro Ciocson 5. Lourdes Clidoro-Lari
6. Monserrat Clidoro 6. Lolita Clidoro
7. Celestial Clidoro 7. Mateo Clidoro
8. Aristoteles Clidoro (deceased) INTERESTED PARTIES

9. Apollo Clidoro 1. AidaClidoro (deceased)
10. Rosalie Clidoro 2. Josaphat Clidoro (deceased),
herein rep. by Marliza Clidoro-De
Una
11. Sophie Clidoro
12. Jose Clidoro, Jr.
On the other hand, the parties to the original case for partition are named as follows:
[[reference - http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/july2014/176598.pdf]]
PLAINTIFFS DEFENDANTS
1. Rizalina Clidoro 1. Onofre Clidoro
2. Gregorio Clidoro, Jr. 2. Antonio Clidoro
3. Sofia Cerdena INTERESTED PARTIES
4. Urbana Costales 1. Aida Clidoro
5. Cleneo Seneca 2. Josaphat Clidoro
6. Monserrat Clidoro
7. Celestial Clidoro
8. Aristoteles Clidoro
9. Apollo Clidoro
10. Rosalie Clidoro
A comparison of the foregoing would show that almost all of the plaintiffs in the original case for partition, in whose favor
the court adjudged certain shares in the estate of deceased Mateo Clidoro, are also the plaintiffs in the action for revival of
judgment. Meanwhile, the defendants impleaded in the action for revival are allegedly the representatives of the
defendants in the original case, and this appears to hold water, as Gregoria ClidoroPalanca, named as the representative
of defendant Onofre Clidoro in the complaint for revival of judgment, was also mentioned and awarded a portion of the
estate in the judgment in the original partition case. In fact, the trial court itself stated in its Order 11 of dismissal dated
December 8, 2003, that "[s]ome of the parties are actually not parties to the original case, but representing the original
parties who are indicated as deceased."
In Basbas v. Sayson,12 the Court pointed out that even just one of the co-owners, by himself alone, can bring an action for
the recovery of the coowned property, even through an action for revival of judgment, because the enforcement of the
judgment would result in such recovery of property. Thus, as in Basbas, it is not necessary in this case that all of the
parties, in whose favor the case for partition was adjudged, be made plaintiffs to the action for revival of judgment. Any
which one of said prevailing parties, who had an interest in the enforcement of the decision, may file the complaint for
revival of judgment, even just by himself.
Verily, the trial court erred in dismissing the complaint for revival of judgment on the ground of lack of, or failure to state a
cause of action. The allegations in the complaint, regarding the parties' interest in having the decision in the partition case
executed or implemented, sufficiently state a cause of action. The question of whether respondents were the real
partiesin-interest who had the right to seek execution of the final and executory judgment in the partition case should have
been threshed out in a full-blown trial.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals, dated October 17, 2006, and its Resolution
dated February 6, 2007 in CA-G.R. No. 82209, are hereby AFFIRMED in toto.
SO ORDERED.
SECOND DIVISION
G.R. No. 194751, November 26, 2014
AURORA N. DE PEDRO, Petitioner, v. ROMASAN DEVELOPMENT CORPORATION, Respondent.
DECISION
LEONEN, J.:
Regardless of the type of action whether it is in personam, in rem or quasi in rem the preferred mode of service of
summons is personal service. To avail themselves of substituted service, courts must rely on a detailed enumeration of
the sheriffs actions and a showing that the defendant cannot be served despite diligent and reasonable efforts. The
sheriffs return, which contains these details, is entitled to a presumption of regularity, and on this basis, the court may
allow substituted service. Should the sheriffs return be wanting of these details, substituted service will be irregular if no
other evidence of the efforts to serve summons was presented.
Failure to serve summons will mean that the court failed to acquire jurisdiction over the person of the defendant.
However, the filing of a motion for new trial or reconsideration is tantamount to voluntary appearance.
This Rule 45 petition seeks the review of the Court of Appeals July 7, 2010 decision in CA G.R. SP. No. 96471. The Court
of Appeals denied petitioners action for annulment of the Regional Trial Court decision, which, in turn, nullified her
certificate of title.
This case originated from separate complaints for nullification of free patent and original certificates of title, filed against
several defendants.1 One of the defendants is petitioner Aurora De Pedro (De Pedro). 2 The complaints were filed by
respondent Romasan Development Corporation before the Regional Trial Court of Antipolo City on July 7,
1998.3chanRoblesvirtualLawlibrary
Respondent Romasan Development Corporation alleged in its complaints that it was the owner and possessor of a parcel
of land in Antipolo City.4 The land was covered by Transfer Certificate of Title (TCT) No.
Based on respondents narrative, its representative, Mr. Rodrigo Ko, discovered sometime in November 1996 that De
Pedro put up fences on a portion of its Antipolo property. 6 Mr. Ko confronted De Pedro regarding her acts, but she was
able to show title and documents evidencing her ownership. 7chanRoblesvirtualLawlibrary
Mr. Ko informed respondent about the documents.8 Upon checking with the Community Environment and Natural
Resources Office-Department of Environment and Natural Resources (CENRO-DENR), it was discovered that the DENR
issued free patents covering portions of respondents property to the following:chanroblesvirtuallawlibrary
a. Defendant Nora Jocson, married to Carlito Jocson - OCT No. P-723, Free Patent No. 045802-91-616;
b. Defendants Heirs of Marcelino Santos[,] represented by Cristino Santos - OCT No. P-727, Free Patent No.
045802-91-919;
c. Defendant Aurora de Pedro married to Elpidio de Pedro - OCT No. 691, Free Patent No. 045802-91-914;
d. Defendant Wilson Dadia - OCT No. P-722, Free Patent No. 045802-91-915; and
e. Defendant Prudencio Marana - OCT No. P-721, Free Patent N[o]. 045802-91-923. 9 (Emphasis supplied)
Based on these free patents, the Register of Deeds issued titles covering portions of respondents property. 10 Original
Certificate of Title (OCT) No. 691, Free Patent No. 045802-91-914 was signed by the Provincial Environment and Natural
Resources Office in favor of De Pedro on December 9, 1991. 11chanRoblesvirtualLawlibrary
Respondent further alleged in its separate complaints that the government could not legally issue the free patents
because at the time of their issuance, the land was already released for disposition to private individuals. 12 OCT No. 438,
from which respondents TCT No. 236044 originated, was already issued as early as August 30,
Respondent also prayed for the payment of attorneys fees and exemplary damages. 14chanRoblesvirtualLawlibrary
Attempts to personally serve summons on De Pedro failed.15 The officers return, dated February 22, 1999 reads in
part:chanroblesvirtuallawlibrary
OFFICERS RETURN
I HEREBY CERTIFY that on the 15th and 18th day of February, 1999, I have served a copy of the summons with complaint
and annexes dated January 29, 1999 issued by Regional Trial Court, Fourth Judicial Region, Branch 74, Antipolo City
upon defendants in the above-entitled case on the following, to wit;
1. AURORA N. DE PEDRO Unserved for the reason that according to the messenger of Post Office of Pasig their [sic] is
no person in the said given address.16
Respondent filed a motion to serve summons and the complaint by publication. 17chanRoblesvirtualLawlibrary
On August 17, 1998, the Regional Trial Court granted the motion. 18 The summons and the complaint were published in
Peoples Balita on its April 24, May 1, and May 8, 1998 issues. 19chanRoblesvirtualLawlibrary
On July 15, 1999, respondent moved to declare all defendants in its complaints, including De Pedro, in default for failure
to file their answers.20 Respondent also moved to be allowed to present evidence ex parte.21 The Regional Trial Court
granted the motions on August 19, 1999.22chanRoblesvirtualLawlibrary
On January 7, 2000, the Regional Trial Court issued an order declaring as nullity the titles and free patents issued to all
defendants in respondents complaint, including the free patent issued to De Pedro. 23 Thus:chanroblesvirtuallawlibrary
Accordingly the Court declares as a nullity the following titles and Free Patents issued to the Defendants.
a. Defendant Nora Jocson married to Carlito Jocson OCT No. P-723; Free Patent N[o]. 045802-91-616;
b. Defendant Heirs of Marcelino Santos represented by Cristino Santos OCT N[o]. P-727; Free Patent N[o].
045802-91-919;
c. Defendant Aurora N. de Pedro married to Elpidio de Pedro OCT No. P-691; Free Patent No. 045802-91-914;
d. Defendant Wilson Dadia OCT No. P-722; Free Patent No. 045802-91-915;
e. Defendant Prudencio Marana OCT No. P-721; Free Patent N[o]. 045802-91-923.
There being clear bad faith on the part of the Private defendants in obtaining said Free Patents and titles in their names
covering the portions of the property of the plaintiff, said defendants are each ordered to pay to the plaintiff the amount of
P20,000.00 as attorneys fees, P3,000.00 as appearance fee and also P50,000.00 as moral damages with costs against
said private defendants.
Once the Decision becomes final and in order to give full force and effect to the Decision of the Court nullifying the titles
and patents issued to the defendants, the latter are directed to surrender the same within a period of ten (10) days from
the finality of said Decision to the Registry of Deeds of Marikina City and failure on the part of the defendants to surrender
the owners duplicate of the titles in their possession, defendant Register of Deeds of Marikina City is authorized to cancel
the same without the presentation of said owners duplicate of titles in the possession of the defendants. 24 (Emphasis
supplied)
In so ruling, the Regional Trial Court noted that none of the defendants, including De Pedro, filed an answer to
respondents complaints.25 The Regional Trial Court also noted the committee report admitting CENROs irregularity in the
issuance of the free patents to the defendants in the case. 26chanRoblesvirtualLawlibrary
The Regional Trial Court also found that the title and free patent issued to De Pedro were void. 27 As early as August 30,
1937, or before the free patents were issued to the defendants in the case, OCT No. 438 was already issued to the
propertys original owner.28 Hence, the property was already segregated from the mass of public domain that can be
disposed by the government.29chanRoblesvirtualLawlibrary
On March 30, 2000, De Pedro, through counsel, filed before the Regional Trial Court a motion for new trial, alleging that
the counsel received notice of the January 7, 2000 decision on March 16, 2000. 30chanRoblesvirtualLawlibrary
De Pedro argued that the Regional Trial Court did not acquire jurisdiction over her person because of improper and
defective service of summons. Citing the officers return dated February 22, 1999, De Pedro pointed out that summons
was not personally served upon her for the reason that according to the messenger of Post Office of Pasig their (sic) is
no person in the said given address.31chanRoblesvirtualLawlibrary
De Pedro also argued that the case should have been dismissed on the ground of litis pendentia. She alleged that there
was a pending civil case filed by her, involving the same property, when respondent filed the complaints against her and
several others.32chanRoblesvirtualLawlibrary
On September 30, 2002, the Regional Trial Court issued an order denying De Pedros motion for new
trial.33chanRoblesvirtualLawlibrary
The Regional Trial Court ruled that summons was validly served upon De Pedro through publication, in accordance with
the Rules of Court.34 Moreover, counting from the date of the summons publication beginning on March 2, 2000, the
motion for new trial was filed beyond the 15-day period within which the motion may be filed. 35 Therefore, the Regional
Trial Court decision had become final and executory.36chanRoblesvirtualLawlibrary
The Regional Trial Court also ruled that the reckoning period for filing the motion for new trial cannot be De Pedros
counsels receipt of the decision. This is because at the time of the issuance of the courts decision, which had already
become final and executory, De Pedros counsel was yet to enter his appearance for De
Pedro.37chanRoblesvirtualLawlibrary
De Pedro filed a petition for certiorari before the Court of Appeals, alleging that the Regional Trial Court committed grave
abuse of discretion when it denied her motion for new trial. 38chanRoblesvirtualLawlibrary
On March 30, 2006, the Court of Appeals dismissed the petition for certiorari for lack of merit, and affirmed the denial of
De Pedros motion for new trial.39chanRoblesvirtualLawlibrary
The Court of Appeals noted De Pedros belated filing of her motion for new trial. The Court of Appeals also noted De
Pedros failure to allege any ground that would justify the grant of a motion for new trial under Rule 37, Section 1 of the
Revised Rules of Civil Procedure.40chanRoblesvirtualLawlibrary
De Pedros motion for reconsideration was denied in the Court of Appeals resolution dated August 24,
De Pedro elevated the case to this court, but this was likewise denied in the resolution dated October 4, 2006 for failure to
pay the Special Allowance for the Judiciary and sheriffs fees. 42chanRoblesvirtualLawlibrary
On October 11, 2006, De Pedro filed before the Court of Appeals a petition for annulment of the January 7, 2000 judgment
of the Regional Trial Court43 on grounds of lack of jurisdiction, litis pendentia, and for having been dispossessed of her
property without due process.
Citing Pantaleon v. Asuncion,44 De Pedro pointed out that [d]ue process of law requires personal service to support
a personal judgment, and, when the proceeding is strictly in personam brought to determine the personal rights and
obligations of the parties, personal service within the state or a voluntary appearance in the case is essential to the
acquisition of jurisdiction [so] as to constitute compliance with the constitutional requirement of due
process.45chanRoblesvirtualLawlibrary
De Pedro also claimed to be the real owner of the property by virtue of OCT No. P-691. 46 She pointed out that the same
Regional Trial Court branch ordered the reconstitution of her title to the property in 1997. 47 The Regional Trial Court also
issued a certificate of finality stating that an Entry of Judgment had already been issued by the Court of Appeals dated
January 16, 2006.48chanRoblesvirtualLawlibrary
On July 7, 2010, the Court of Appeals promulgated its decision denying De Pedros petition for annulment of judgment. 49
The dispositive portion of the Court of Appeals decision reads:chanroblesvirtuallawlibrary
WHEREFORE, this petition is hereby DENIED.50

The Court of Appeals ruled that since petitioner already availed herself of the remedy of new trial, and raised the case
before the Court of Appeals via petition for certiorari, she can no longer file a petition for annulment of
judgment.51chanRoblesvirtualLawlibrary
De Pedros motion for reconsideration was denied on December 3, 2010: 52chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, the motion for reconsideration is DENIED for lack of merit.53
On January 13, 2011, De Pedro filed before this court a Rule 45 petition, seeking the reversal of the July 7, 2010 Court of
Appeals decision and the December 3, 2010 Court of Appeals resolution. 54chanRoblesvirtualLawlibrary
The issues in this case are:
I. Whether the trial court decision was void for failure of the trial court to acquire jurisdiction over the person of
petitioner Aurora N. De Pedro; and
II. Whether filing a motion for new trial and petition for certiorari is a bar from filing a petition for annulment of
judgment.
Petitioner argues that respondents prayer for attorneys fees, appearance fees, exemplary damages, and costs of suit
sought to establish personal obligations upon petitioner in favor of respondent. 55 Hence, the case filed by respondent
before the Regional Trial Court was an action in personam, which required personal service upon her for the courts
acquisition of jurisdiction over her person.56 In this case, the Regional Trial Court allowed service of summons by
publication instead of ordering that summons be served by substituted service. 57 Improper service of summons rendered
the trial court decision null and void.58 It means that the court could not acquire jurisdiction over the person of
petitioner.59chanRoblesvirtualLawlibrary
Petitioner also argues that respondents complaints were dismissible on the ground of litis pendentia,pointing to the
alleged pending case between the same parties and involving same subject matter at the time when respondent filed its
complaint before the Regional Trial Court in 1998.60 The alleged pending case was filed in 1997 by petitioner and her
spouse against respondent, seeking enforce[ment] of their rights as owners, and claim[ing] damages for the unlawful and
illegal acts of dispossession, terrorism and violence which they, their family and their close relatives were subjected to by
[respondent].61chanRoblesvirtualLawlibrary
On her ownership of the property, petitioner argues that she was able to obtain OCT No. P-691 in 1991 in strict and
faithful compliance with all the requirements.62 When the Register of Deeds lost the records pertaining to the property, the
Regional Trial Court ordered the reconstitution of the title on September 23, 1997. 63 The same trial court issued the
certificate of finality of the order on March 16, 2006. 64chanRoblesvirtualLawlibrary
Moreover, petitioner refers to a counter-affidavit issued by a certain Jesus Pampellona, Deputy Public Land Inspector of
CENRO-Antipolo, in the preliminary investigation of a case before the Department of Justice, docketed as I.S. No. 99-503
and entitled: Rodrigo Sy v. Maximo Pentino, et al. Petitioner highlights Pampellonas statements that the free patent
applicants for the property were found to be in actual, public, adverse and continuous possession on the specific lots
applied for by them with several improvements like the house of Mrs. Aurora de Pedro and several fruit[-]bearing trees
with an average age of 20-25 years scattered within the twelve (12) hectares area applied for by the above named
applicants;65 Based on the affidavit, Pampellona was unaware, at the time, of any previous title issued in favor of any
person or entity covering the subject lots above mentioned as there was at that time, no existing record, both in the
CENRO, Antipolo, Rizal, or at the Land Management Bureau in Manila, attesting to the issuance of previous titles on the
subject lots.66chanRoblesvirtualLawlibrary
Lastly, petitioner argues that the trial court decision was null and void, considering that petitioners title was cancelled in
contravention of Section 48 of Presidential Decree No. 1529, which prohibits collateral attack upon certificates of
title.67chanRoblesvirtualLawlibrary
In its comment, respondent argues that the process server tried other forms of substituted service, including service by
registered mail.68chanRoblesvirtualLawlibrary
Respondent also argues that petitioner was in evident malice and bad faith when she allegedly did not disclose in her
petition other actions taken by her after the Regional Trial Court had denied her motion for new trial. 69 Particularly,
petitioner filed a petition for certiorari before the Court of Appeals, pertaining to the trial courts denial of the motion for new
trial.70 When the petition for certiorari was denied, petitioner also filed a petition for review before this court, which was
also denied.71 For these reasons, petitioners petition for review before this court deserves outright
dismissal.72chanRoblesvirtualLawlibrary
The sheriffs return must show the details of the efforts exerted to personally serve summons upon defendants
or respondents, before substituted service or service by publication is availed
Courts may exercise their powers validly and with binding effect if they acquire jurisdiction over: (a) the cause of action or
the subject matter of the case; (b) the thing or the res; (c) the parties; and (d) the remedy.
Jurisdiction over the subject matter refers to the power or authority of courts to hear and decide cases of a general
class.73 It is conferred by the Constitution or by law.74 It is not acquired through administrative issuances or court orders.
It is not acquired by agreement, stipulation, waiver, 75 or silence.76 Any decision by a court, without a law vesting
jurisdiction upon such court, is void.
Jurisdiction over the thing or res is the power of the court over an object or thing being litigated. The court may acquire
jurisdiction over the thing by actually or constructively seizing or placing it under the courts
custody.77chanRoblesvirtualLawlibrary
Jurisdiction over the parties refers to the power of the court to make decisions that are binding on persons. The courts
acquire jurisdiction over complainants or petitioners as soon as they file their complaints or petitions. Over the persons of
defendants or respondents, courts acquire jurisdiction by a valid service of summons or through their voluntary
submission.78 Generally, a person voluntarily submits to the courts jurisdiction when he or she participates in the trial
despite improper service of summons.
Courts79 and litigants must be aware of the limits and the requirements for the acquisition of court jurisdiction. Decisions
or orders issued by courts outside their jurisdiction are void. Complaints or petitions filed before the wrong court or
without acquiring jurisdiction over the parties may be dismissed. 80chanRoblesvirtualLawlibrary
Petitioner argued that the trial court did not acquire jurisdiction over her person because she was not properly served with
summons. After the summons had returned unserved to petitioner because there [was] no person in the said given
address,81 the trial court allowed the publication of the summons to petitioner.
Jurisdiction over the parties is required regardless of the type of action whether the action is in personam, in
rem, or quasi in rem.
In actions in personam, the judgment is for or against a person directly. 82 Jurisdiction over the parties is required in
actions in personam because they seek to impose personal responsibility or liability upon a
person.83chanRoblesvirtualLawlibrary
Courts need not acquire jurisdiction over parties on this basis in in rem and quasi in rem actions. Actions in rem or quasi
in rem are not directed against the person based on his or her personal liability. 84chanRoblesvirtualLawlibrary
Actions in rem are actions against the thing itself. They are binding upon the whole world.85 Quasi in rem actions are
actions involving the status of a property over which a party has interest. 86 Quasi in rem actions are not binding upon the
whole world. They affect only the interests of the particular parties. 87chanRoblesvirtualLawlibrary
However, to satisfy the requirements of due process, jurisdiction over the parties in in rem and quasi in rem actions is
required.
The phrase, against the thing, to describe in rem actions is a metaphor. It is not the thing that is the party to an in
rem action; only legal or natural persons may be parties even in in rem actions. Against the thing means that resolution
of the case affects interests of others whether direct or indirect. It also assumes that the interests in the form of rights
or duties attach to the thing which is the subject matter of litigation. In actions in rem, our procedure assumes an active
vinculum over those with interests to the thing subject of litigation.
Due process requires that those with interest to the thing in litigation be notified and given an opportunity to defend those
interests. Courts, as guardians of constitutional rights, cannot be expected to deny persons their due process rights while
at the same time be considered as acting within their jurisdiction.
Violation of due process rights is a jurisdictional defect. This court recognized this principle inAducayen v. Flores.88 In the
same case, this court further ruled that this jurisdictional defect is remedied by a petition for
certiorari.89chanRoblesvirtualLawlibrary
Similarly in Vda. de Cuaycong v. Vda. de Sengbengco,90 this court held that a decision that was issued in violation of a
persons due process rights suffers a fatal infirmity. 91chanRoblesvirtualLawlibrary
The relation of due process to jurisdiction is recognized even in administrative cases wherein the standard of evidence is
relatively lower. Thus, in Montoya v. Varilla:92chanRoblesvirtualLawlibrary
The cardinal precept is that where there is a violation of basic constitutional rights, courts are ousted from their
jurisdiction. The violation of a partys right to due process raises a serious jurisdictional issue which cannot be glossed
over or disregarded at will. Where the denial of the fundamental right of due process is apparent, a decision rendered in
disregard of that right is void for lack of jurisdiction. 93
An action for annulment of certificate of title is quasi in rem. It is not an action against a person on the basis of his
personal liability,94 but an action that subjects a persons interest over a property to a burden. The action for annulment of
a certificate of title threatens petitioners interest in the property. Petitioner is entitled to due process with respect to that
interest. The court does not have competence or authority to proceed with an action for annulment of certificate of title
without giving the person, in whose name the certificate was issued all the opportunities to be heard.
Hence, regardless of the nature of the action, proper service of summons is imperative. A decision rendered without
proper service of summons suffers a defect in jurisdiction. Respondents institution of a proceeding for annulment of
petitioners certificate of title is sufficient to vest the court with jurisdiction over the res, but it is not sufficient for the court to
proceed with the case with authority and competence.
Personal service of summons is the preferred mode of service of summons. 95 Thus, as a rule, summons must be served
personally upon the defendant or respondent wherever he or she may be found. If the defendant or respondent refuses to
receive the summons, it shall be tendered to him or her. 96chanRoblesvirtualLawlibrary
If the defendant or respondent is a domestic juridical person, personal service of summons shall be effected upon its
president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel wherever he or she
may be found.97chanRoblesvirtualLawlibrary
Other modes of serving summons may be done when justified. Service of summons through other modes will not be
effective without showing serious attempts to serve summons through personal service. Thus, the rules allow summons
to be served by substituted service only for justifiable causes and if the defendant or respondent cannot be served within
reasonable time.98 Substituted service is effected (a) by leaving copies of the summons at the defendants residence with
some person of suitable age and discretion then residing therein, or (b) by leaving the copies at defendants office or
regular place of business with some competent person in charge thereof. 99chanRoblesvirtualLawlibrary
Service of summons by publication in a newspaper of general circulation is allowed when the defendant or respondent is
designated as an unknown owner or if his or her whereabouts are unknown and cannot be ascertained by diligent
inquiry.100 It may only be effected after unsuccessful attempts to serve the summons personally, and after diligent inquiry
as to the defendants or respondents whereabouts.
Service of summons by extraterritorial service is allowed after leave of court when the defendant or respondent does not
reside or is not found in the country or is temporarily out of the country. 101chanRoblesvirtualLawlibrary
If a defendant or respondent voluntarily appears in trial or participates in the proceedings, it is generally construed as
sufficient service of summons.102chanRoblesvirtualLawlibrary
In this case, summons was served by publication.
A look into the content of the sheriffs return will determine if the circumstances warranted the deviation from the rule
preferring personal service of summons over other modes of service. The sheriffs return must contain a narration of the
circumstances showing efforts to personally serve summons to the defendants or respondents and the impossibility of
personal service of summons. Citing Hamilton v. Levy,103 this court said of substituted service in Domagas v.
Jensen:104chanRoblesvirtualLawlibrary
The pertinent facts and circumstances attendant to the service of summons must be stated in the proof of service or
Officers Return; otherwise, any substituted service made in lieu of personal service cannot be upheld. This is necessary
because substituted service is in derogation of the usual method of service. It is a method extraordinary in character and
hence may be used only as prescribed and in the circumstances authorized by statute. Here, no such explanation was
made. Failure to faithfully, strictly, and fully comply with the requirements of substituted service renders said service
ineffective.105
This court also said in Manotoc v. Court of Appeals:chanroblesvirtuallawlibrary
The date and time of the attempts on personal service, the inquiries made to locate the defendant, the name/s of the
occupants of the alleged residence or house of defendant and all other acts done, though futile, to serve the summons on
defendant must be specified in the Return to justify substituted service. The form on Sheriffs Return of Summons on
Substituted Service prescribed in the Handbook for Sheriffs published by the Philippine Judicial Academy requires a
narration of the efforts made to find the defendant personally and the fact of failure.
....
However, in view of the numerous claims of irregularities in substituted service which have spawned the filing of a great
number of unnecessary special civil actions of certiorari and appeals to higher courts, resulting in prolonged litigation and
wasteful legal expenses, the Court rules in the case at bar that the narration of the efforts made to find the defendant and
the fact of failure written in broad and imprecise words will not suffice. The facts and circumstances should be stated with
more particularity and detail on the number of attempts made at personal service, dates and times of the attempts,
inquiries to locate defendant, names of occupants of the alleged residence, and the reasons for failure should be included
in the Return to satisfactorily show the efforts undertaken. That such efforts were made to personally serve summons on
defendant, and those resulted in failure, would prove impossibility of prompt personal service.
Moreover, to allow sheriffs to describe the facts and circumstances in inexact terms would encourage routine performance
of their precise duties relating to substituted servicefor it would be quite easy to shroud or conceal carelessness or laxity
in such broad terms.106
A sheriffs return enjoys the presumption of regularity in its issuance if it contains (1) the details of the circumstances
surrounding the sheriffs attempt to serve the summons personally upon the defendants or respondents; and (2) the
particulars showing the impossibility of serving the summons within reasonable time. 107 It does not enjoy the presumption
of regularity if the return was merely pro forma.
Failure to state the facts and circumstances that rendered service of summons impossible renders service of summons
and the return ineffective. In that case, no substituted service or service by publication can be valid.
This court in Manotoc explained that the presumption of regularity in the issuance of the sheriffs return does not apply to
patently defective returns. Thus:chanroblesvirtuallawlibrary
The court a quo heavily relied on the presumption of regularity in the performance of official duty. It reasons out that [t]he
certificate of service by the proper officer isprima facie evidence of the facts set out herein, and to overcome the
presumption arising from said certificate, the evidence must be clear and convincing.
The Court acknowledges that this ruling is still a valid doctrine. However, for the presumption to apply, the Sheriffs Return
must show that serious efforts or attempts were exerted to personally serve the summons and that said efforts failed.
These facts must be specifically narrated in the Return. To reiterate, it must clearly show that the substituted service must
be made on a person of suitable age and discretion living in the dwelling or residence of defendant. Otherwise, the Return
is flawed and the presumption cannot be availed of. As previously explained, the Return of Sheriff Caelas did not comply
with the stringent requirements of Rule 14, Section 8 on substituted service. (Emphasis supplied)
In the case of Venturanza v. Court of Appeals, it was held that x x x the presumption of regularity in the performance of
official functions by the sheriff is not applicable in this case where it is patent that the sheriffs return is defective.
(Emphasis supplied) While the Sheriffs Return in the Venturanza case had no statement on the effort or attempt to
personally serve the summons, the Return of Sheriff Caelas in the case at bar merely described the efforts or attempts in
general terms lacking in details as required by the ruling in the case of Domagas v. Jensen and other cases. It is as if
Caelas Return did not mention any effort to accomplish personal service. Thus, the substituted service is void. 108
In this case, the sheriffs return states:
OFFICERS RETURN
I HEREBY CERTIFY that on the 15th and 18th day of February, 1999, I have served a copy of the summons with complaint
and annexes dated January 29, 1999 issued by Regional Trial Court, Fourth Judicial Region, Branch 74, Antipolo City
upon defendants in the above-entitled case on the following, to wit;
1. AURORA N. DE PEDRO Unserved for the reason that according to the messenger of Post Office of Pasig their [sic] is
no person in the said given address.109
This return shows no detail of the sheriffs efforts to serve the summons personally upon petitioner. The summons was
unserved only because the post office messenger stated that there was no Aurora N. De Pedro in the service address.
The return did not show that the sheriff attempted to locate petitioners whereabouts. Moreover, it cannot be concluded
based on the return that personal service was rendered impossible under the circumstances or that service could no
longer be made within reasonable time.
The lack of any demonstration of effort on the part of the sheriff to serve the summons personally upon petitioner is a
deviation from this courts previous rulings that personal service is the preferred mode of service, and that the sheriff must
narrate in his or her return the efforts made to effect personal service. Thus, the sheriffs return in this case was
defective. No substituted service or service by publication will be allowed based on such defective return.
The issuance of a judgment without proper service of summons is a violation of due process rights. The judgment,
therefore, suffers a jurisdictional defect. The case would have been dismissible had petitioner learned about the case
while trial was pending. At that time, a motion to dismiss would have been proper. After the trial, the case would have
been the proper subject of an action for annulment of judgment.
Petitioner learned about the action for annulment of title only after trial. Instead of filing an action for annulment of
judgment, however, she filed a motion for new trial without alleging any proper ground. Rule 37 of the Rules of Court
provides that a party may move and the court may grant a new trial based on the following
causes:chanroblesvirtuallawlibrary
(a) Fraud, accident, mistake or excusable negligence which ordinary prudence could not have guarded against and by
reason of which such aggrieved party has probably been impaired in his rights; or
(b) Newly discovered evidence, which he could not, with reasonable diligence, have discovered and produced at the trial,
and which if presented would probably alter the result. 110
Petitioner insisted in her motion for new trial that the trial court did not acquire jurisdiction over her person. She did not
allege that fraud, accident, mistake, or excusable negligence impaired her rights. Neither did she allege that she found
newly discovered evidence that could have altered the trial court decision. When her motion for new trial was denied, she
filed a petition for certiorari, insisting that her motion for new trial should have been granted on the ground of lack of
jurisdiction over her person. The Court of Appeals denied the petition for her failure to allege any ground for new trial. We
cannot attribute error on the part of the Court of Appeals for this denial because, indeed, lack of jurisdiction is not a ground
for granting a new trial.
What cannot be denied is the fact that petitioner was already notified of respondents action for annulment of petitioners
title when she filed a motion for new trial and, later, a petition for certiorari. At that time, petitioner was deemed, for
purposes of due process, to have been properly notified of the action involving her title to the property. Lack of jurisdiction
could have already been raised in an action for annulment of judgment.
Thus, when petitioner erroneously filed her motion for new trial and petition for certiorari instead of an action for
annulment of judgment, she was deemed to have voluntarily participated in the proceedings against her title. The actions
and remedies she chose to avail bound her. Petitioners failure to file an action for annulment of judgment at this time was
fatal to her cause. We cannot conclude now that she was denied due process.cralawred
II
Petitioner is already barred from

filing a petition for annulment of
judgment
A petition for annulment of judgment is a recourse that is equitable in character. 111 It is independent of the case112 and is
allowed only in exceptional cases as where there is no available or other adequate
remedy.113chanRoblesvirtualLawlibrary
An action for annulment of judgment may be filed to assail Regional Trial Court judgments when resort to other remedies
can no longer be had through no fault of petitioner. Section 1 of Rule 47 of the Rules of Civil Procedure
provides:chanroblesvirtuallawlibrary
Section 1. Coverage. This Rule shall govern the annulment by the Court of Appeals of judgments or final orders and
resolutions in civil actions of Regional Trial Courts for which the ordinary remedies of new trial, appeal, petition for relief or
other appropriate remedies are no longer available through no fault of the petitioner.
An action for annulment of judgment may be based on only two grounds: 1) extrinsic fraud; and 2) lack of jurisdiction.
Section 2 of Rule 47 of the Rules of Court states:chanroblesvirtuallawlibrary
Section 2. Grounds for Annulment. The annulment may be based only on the grounds of extrinsic fraud and lack of
jurisdiction.
Extrinsic fraud shall not be a valid ground if it was availed of, or could have been availed of, in a motion for new trial or
petition for relief.
Lack of jurisdiction being a valid ground for annulment of judgments, circumstances that negate the courts acquisition of
jurisdiction including defective service of summons are causes for an action for annulment of
judgments.114chanRoblesvirtualLawlibrary
However, this court had an occasion to say that an action for annulment of judgment may not be invoked (1) where the
party has availed himself of the remedy of new trial, appeal, petition for relief, or other appropriate remedy and lost; or (2)
where he has failed to avail himself of those remedies through his own fault or negligence. 115 Thus, an action for
annulment of judgment is not always readily available even if there are causes for annulling a judgment.
In this case, petitioners main grounds for filing the action for annulment are lack of jurisdiction over her person, and litis
pendentia. These are the same grounds that were raised in the motion for new trial filed before and denied by the
Regional Trial Court.
Applying the above rules, we rule that the Court of Appeals did not err in denying petitioners petition for annulment of the
Regional Trial Courts judgment. Petitioner had already filed a motion for new trial and petition for certiorari invoking lack
of jurisdiction as ground.
Petitioners filing of the petition for annulment of judgment after she had filed a motion for new trial and lost, with both
actions raising the same grounds, reveals an intent to secure a judgment in her favor by abusing and making a mockery
of the legal remedies provided by law.
This kind of abuse is what this court tries to guard against when it limited its application, and stated in some of the cases
that an action for annulment of judgment cannot be invoked when other remedies had already been availed.
As this court explained in Macalalag v. Ombudsman:116chanRoblesvirtualLawlibrary
Rule 47, entitled Annulment of Judgments or Final Orders and Resolutions, is a new provision under the 1997 Rules of
Civil Procedure albeit the remedy has long been given imprimatur by the courts. The rule covers annulment by the Court
of Appeals of judgments or final orders and resolutions in civil actions of Regional Trial Courts for which the ordinary
remedies of new trial, appeal, petition for relief or other appropriate remedies could no longer be availed of through no
fault of the petitioner. An action for annulment of judgment is a remedy in law independent of the case where the
judgment sought to be annulled is rendered. The concern that the remedy could so easily be resorted to as an instrument
to delay a final and executory judgment, has prompted safeguards to be put in place in order to avoid an abuse of the
rule. Thus, the annulment of judgment may be based only on the grounds of extrinsic fraud and lack of jurisdiction, and
the remedy may not be invoked (1) where the party has availed himself of the remedy of new trial, appeal, petition for
relief or other appropriate remedy and lost therefrom, or (2) where he has failed to avail himself of those remedies through
his own fault or negligence.117 (Emphasis supplied)
Similarly, this court ruled in Sigma Homebuilding Corporation v. Inter-Alia Management Corporation, et
al.:118chanRoblesvirtualLawlibrary
A petition for annulment of judgment is an extraordinary remedy and is not to be granted indiscriminately by the Court. It is
allowed only in exceptional cases and cannot be used by a losing party to make a mockery of a duly promulgated
decision long final and executory. The remedy may not be invoked where the party has availed himself of the remedy of
new trial, appeal, petition for relief or other appropriate remedy and lost,or where he has failed to avail himself of those
remedies through his own fault or negligence.
Litigation must end sometime. It is essential to an effective and efficient administration of justice that, once a judgment
becomes final, the winning party should not be deprived of the fruits of the verdict. Courts must therefore guard against
any scheme calculated to bring about that undesirable result. Thus, we deem it fit to finally put an end to the present
controversy.119 (Emphasis supplied)
Thus, an action for annulment of judgment will not so easily and readily lend itself to abuse by parties aggrieved by final
judgments.120 Petitioner cannot abuse the courts processes to revive a case that has already been rendered final
against her favor, for the purpose of securing a favorable judgment. An action for annulment of judgment cannot be used
by petitioner who has lost her case through fault of her own, to make a complete farce of a duly promulgated decision
that has long become final and executory.121chanRoblesvirtualLawlibrary
III
Filing an action for annulment of

title is not a violation of Section
48 of Presidential Decree No. 1529
Petitioner insists that the annulment of her title was a violation of Section 48 of Presidential Decree No. 1529, which
Sec. 48. Certificate not subject to collateral attack. A certificate of title shall not be subject to collateral attack. It cannot
be altered, modified, or cancelled except in a direct proceeding in accordance with law.
Petitioner is mistaken. In Sarmiento, et al. v. Court of Appeals,122 this court said:chanroblesvirtuallawlibrary
An action is deemed an attack on a title when the object of the action or proceeding is to nullify the title, and thus
challenge the judgment pursuant to which the title was decreed. The attack is direct when the object of the action is to
annul or set aside such judgment, or enjoin its enforcement. On the other hand, the attack is indirect or collateral when, in
an action to obtain a different relief, an attack on the judgment is nevertheless made as an incident thereof. 123
An action for annulment of certificate of title is a direct attack on the title because it challenges the judgment decree of
title.
In Goco v. Court of Appeals,124 this court said that [a]n action for annulment of certificates of title to property [goes] into
the issue of ownership of the land covered by a Torrens title and the relief generally prayed for by the plaintiff is to be
declared as the lands true owner.125chanRoblesvirtualLawlibrary
Hence, there was no violation of Section 48 of Presidential Decree No. 1529 when petitioners title was declared null and
void by the Regional Trial Court.
Petitioner, however, points to the following statement made by this court in another case involving these same
parties:126chanRoblesvirtualLawlibrary
The resolution of the issue will not involve the alteration, correction or modification either of OCT No. P-691 under the
name of petitioner Aurora de Pedro, or TCT No. 236044 under the name of respondent corporation. If the subject property
is found to be a portion of the property covered by OCT No. P-691 but is included in the technical description of the
property covered by TCT No. 236044, the latter would have to be corrected. On the other hand, if the subject property is
found to be a portion of the property covered by TCT No. 236044, but is included in the property covered by OCT NO. P-
691, then the latter title must be rectified. However, the rectification of either title may be made only via an action filed for
the said purpose, comformably with Section 48 of Act No. 496
....
A. The action of the petitioners against respondents, based on the material allegations of the complaint, if one for
recovery of possession of the subject property and damages. However, such action is not a direct but a collateral
attack of TCT No. 236044. Neither did the respondents directly attack OCT No. P-691 in their answer to the
complaint. Although the respondents averred in said answer, by way of special and affirmative defenses, that the
subject property is covered by TCT No. 236044 issued in the name of the respondent corporation, and as such
the said respondent is entitled to the possession thereof to the exclusion of the petitioners, such allegations does
not constitute a direct attack on OCT No. P-691, but is likewise a collateral attack thereon... 127
Petitioner misreads the import of what we said in that case. That case involves petitioners action for recovery of
possession and damages against respondents. It also involved respondents allegations that the property was covered by
a certificate of title in its name and, therefore, its entitlement to the possession of the property. It does not involve an
action for annulment of title.
When this court said that such action is not a direct but a collateral attack of TCT No. 236044 or that such allegations
does [sic] not constitute a direct attack on OCT No. P-691, but is likewise a collateral attack thereon, we were referring to
both parties action for and allegations of possessory rights over the property. This court was not referring to an action for
annulment of title, which is the case involved here. To reiterate, an action for annulment constitutes a direct attack on a
certificate of title.
IV
The requisites of litis pendentia are
not satisfied when respondent filed
its action for annulment of title
Petitioner argued that the case for annulment of title was dismissible on the ground of litis pendentiabecause there was a
pending civil case filed by her against respondent.
The requisites of litis pendentia are: (a) identity of parties, or interests in both actions; (b) identity of rights asserted and
relief prayed for, the relief being founded on the same facts; and (c) the identity of the two preceding particulars is such
that any judgment rendered in the other action, will, regardless of which party is successful, amount to res judicata in the
action under consideration.128chanRoblesvirtualLawlibrary
Although both cases involve the same parcel of land, petitioner was not able to show that there was identity of the relief
prayed for. A review of the complaint in the said civil case shows that it was a case for damages, for alleged improper
conduct of respondent relating the property. The action filed by respondent was an action for annulment of petitioners
title.
Petitioner was also not able to show that the relief prayed for in both cases were founded on the same facts. Petitioners
complaint for damages was founded on the alleged misconduct of respondent. Respondents action for annulment of title
was founded on the alleged irregularity in the issuance of petitioners title.
Hence, the petitioner was not able to show that all the requisites for litis pendentia are present. Respondents action for
annulment of title cannot be dismissed on this ground.
A certificate of title does not vest ownership
Petitioner argues that her certificate of title was erroneously declared null and void because based on OCT No. P-691,
she is the real owner of the property.
It is true that certificates of title are indefeasible and binding upon the whole world. However, certificates of title do not
vest ownership.129 They merely evidence title or ownership of the property. 130 Courts may, therefore, cancel or declare a
certificate of title null and void when it finds that it was issued irregularly.
In this case, the trial court ruled based on the committee report that the free patents and original certificate of title issued
to petitioner were irregularly issued, and, therefore, invalid.
The principle of bar by prior judgment is embodied in Rule 39, Section 47(b) of the Rules of
Court:chanroblesvirtuallawlibrary
Section 47. Effect of judgments or final orders. The effect of a judgment or final order rendered by a court of the
Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows:
....
(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or as to any other matter that
could have been missed in relation thereto, conclusive between the parties and their successors in interest, by title
subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same
title and in the same capacity[.] (Emphasis supplied)
In this case, the trial court, by annulling petitioners certificate of title and declaring its issuance irregular, directly adjudged
petitioners certificate of title as void. Because petitioner failed to appeal and cause the annulment of the trial courts
judgment as to her titles validity, this question is already barred. This judgment has already attained finality and can no
longer be litigated.
This court explained in FGU Insurance Corporation v. Regional Trial Court131 the doctrine of finality of judgment,
thus:chanroblesvirtuallawlibrary
Under the doctrine of finality of judgment or immutability of judgment, a decision that has acquired finality becomes
immutable and unalterable, and may no longer be modified in any respect, even if the modification is meant to correct
erroneous conclusions of fact and law, and whether it be made by the court that rendered it or by the Highest Court of the
land. Any act which violates this principle must immediately be struck down. 132
In any case, even if petitioners original certificate of title was not irregularly issued as she claims, her original certificate of
title was issued later than the title from which respondents title originated. As a rule, original titles issued earlier prevail
over another original title issued later.133 Therefore, petitioners later-issued title cannot prevail over respondents title,
which was derived from an earlier issued original certificate of title.
WHEREFORE, the petition is DENIED. The Court of Appeals July 7, 2010 decision in CA G.R. SP. No. 96471
is AFFIRMED.
EN BANC
G.R. No. 213525, January 27, 2015
FORTUNE LIFE INSURANCE COMPANY, INC., Petitioner, v. COMMISSION ON AUDIT (COA) PROPER; COA
REGIONAL OFFICE NO. VI-WESTERN VISAYAS; AUDIT GROUP LGS-B, PROVINCE OF ANTIQUE; AND
PROVINCIAL GOVERNMENT OF ANTIQUE, Respondents.
RESOLUTION
BERSAMIN, J.:
Petitioner Fortune Life Insurance Company, Inc. seeks the reconsideration 1 of the resolution promulgated on August 19,
2014,2 whereby the Court dismissed its petition for certiorari under Rule 64 in relation to Rule 65 of the Rules of Court due
to its non-compliance with the provisions of Rule 64, particularly for: (a) the late filing of the petition; (b) the non-
submission of the proof of service and verified declaration; and (c) the failure to show grave abuse of discretion on the
part of the respondents.3chanRoblesvirtualLawlibrary
Antecedents
Respondent Provincial Government of Antique (LGU) and the petitioner executed a memorandum of agreement
concerning the life insurance coverage of qualified barangay secretaries, treasurers andtanod, the former obligating
P4,393,593.60 for the premium payment, and subsequently submitting the corresponding disbursement voucher to COA-
Antique for pre-audit.4 The latter office disallowed the payment for lack of legal basis under Republic Act No. 7160 (Local
Government Code). Respondent LGU appealed but its appeal was denied.
Consequently, the petitioner filed its petition for money claim in the COA. 5 On November 15, 2012, the COA issued its
decision denying the petition,6 holding that under Section 447 and Section 458 of theLocal Government Code only
municipal or city governments are expressly vested with the power to secure group insurance coverage
for barangay workers; and noting the LGUs failure to comply with the requirement of publication under Section 21 of
Republic Act No. 9184 (Government Procurement Reform Act).
The petitioner received a copy of the COA decision on December 14, 2012, 7 and filed its motion for reconsideration on
January 14, 2013.8 However, the COA denied the motion,9 the denial being received by the petitioner on July 14,
Hence, the petitioner filed the petition for certiorari on August 12, 2014, but the petition for certiorariwas dismissed as
earlier stated through the resolution promulgated on August 19, 2014 for (a) the late filing of the petition; (b) the non-
submission of the proof of service and verified declaration; and (c) the failure to show grave abuse of discretion on the
part of the respondents.cralawred
Issues
In its motion for reconsideration, the petitioner submits that it filed the petition for certiorari within the reglementary period
following the fresh period rule enunciated in Neypes v. Court of Appeals;11 and that the petition for certiorari included an
affidavit of service in compliance with Section 3, Rule 13 of the Rules of Court. It admits having overlooked the submission
of a verified declaration; and prays that the declaration attached to the motion for reconsideration be admitted by virtue of
its substantial compliance with the Efficient Use of Paper Rule 12 by previously submitting a compact disc (CD) containing
the petition for certiorari and its annexes. It disagrees with the Court, insisting that it showed and proved grave abuse of
discretion on the part of the COA in issuing the assailed decision.cralawred
Ruling
We deny the motion for reconsideration for being without merit.
I
Petitioner did not comply with
the rule on proof of service
The petitioner claims that the affidavit of service attached to the petition for certiorari complied with the requirement on
proof of service.
The claim is unwarranted. The petitioner obviously ignores that Section 13, Rule 13 of the Rules of Court concerns two
types of proof of service, namely: the affidavit and the registry receipt, viz:chanroblesvirtuallawlibrary
Section 13. Proof of Service. x x x. If service is made by registered mail, proof shall be made by such affidavit and the
registry receipt issued by the mailing office. The registry return card shall be filed immediately upon its receipt by the
sender, or in lieu thereof the unclaimed letter together with the certified or sworn copy of the notice given by the
postmaster to the addressee.
Section 13 thus requires that if the service is done by registered mail, proof of service shall consist of the affidavit of the
person effecting the mailing and the registry receipt, both of which must be appended to the paper being served. A
compliance with the rule is mandatory, such that there is no proof of service if either or both are not
submitted.13chanRoblesvirtualLawlibrary
Here, the petition for certiorari only carried the affidavit of service executed by one Marcelino T. Pascua, Jr., who declared
that he had served copies of the petition by registered mail under Registry Receipt Nos. 70449, 70453, 70458, 70498
and 70524 attached to the appropriate spaces found on pages 64-65 of the petition. 14 The petition only bore, however,
the cut print-outs of what appeared to be the registry receipt numbers of the registered matters, not the registry receipts
themselves. The rule requires to be appended the registry receipts, not their reproductions. Hence, the cut print-outs did
not substantially comply with the rule. This was the reason why the Court held in the resolution of August 19, 2014 that the
petitioner did not comply with the requirement of proof of service. 15chanRoblesvirtualLawlibrary
II
Fresh Period Rule under Neypes
did not apply to the petition for certiorari
under Rule 64 of the Rules of Court
The petitioner posits that the fresh period rule applies because its Rule 64 petition is akin to a petition for review brought
under Rule 42 of the Rules of Court; hence, conformably with the fresh period rule,the period to file a Rule 64 petition
should also be reckoned from the receipt of the order denying the motion for reconsideration or the motion for new
trial.16chanRoblesvirtualLawlibrary
The petitioners position cannot be sustained.
There is no parity between the petition for review under Rule 42 and the petition for certiorari under Rule 64.
As to the nature of the procedures, Rule 42 governs an appeal from the judgment or final order rendered by the Regional
Trial Court in the exercise of its appellate jurisdiction. Such appeal is on a question of fact, or of law, or of mixed question
of fact and law, and is given due course only upon aprima facie showing that the Regional Trial Court committed an error
of fact or law warranting the reversal or modification of the challenged judgment or final order. 17 In contrast, the petition
forcertiorari under Rule 64 is similar to the petition for certiorari under Rule 65, and assails a judgment or final order of the
Commission on Elections (COMELEC), or the Commission on Audit (COA). The petition is not designed to correct only
errors of jurisdiction, not errors of judgment.18 Questions of fact cannot be raised except to determine whether the
COMELEC or the COA were guilty of grave abuse of discretion amounting to lack or excess of jurisdiction.
The reglementary periods under Rule 42 and Rule 64 are different. In the former, the aggrieved party is allowed 15 days
to file the petition for review from receipt of the assailed decision or final order, or from receipt of the denial of a motion for
new trial or reconsideration.19 In the latter, the petition is filed within 30 days from notice of the judgment or final order or
resolution sought to be reviewed. The filing of a motion for new trial or reconsideration, if allowed under the procedural
rules of the Commission concerned, interrupts the period; hence, should the motion be denied, the aggrieved party may
file the petition within the remaining period, which shall not be less than five days in any event, reckoned from the notice
of denial.20chanRoblesvirtualLawlibrary
The petitioner filed its motion for reconsideration on January 14, 2013, which was 31 days after receiving the assailed
decision of the COA on December 14, 2012.21 Pursuant to Section 3 of Rule 64, it had only five days from receipt of the
denial of its motion for reconsideration to file the petition. Considering that it received the notice of the denial on July 14,
2014, it had only until July 19, 2014 to file the petition. However, it filed the petition on August 13, 2014, which was 25
days too late.
We ruled in Pates v. Commission on Elections22 that the belated filing of the petition for certiorariunder Rule 64 on the
belief that the fresh period rule should apply was fatal to the recourse. As such, the petitioner herein should suffer the
same fate for having wrongly assumed that the fresh period rule under Neypes23 applied. Rules of procedure may be
relaxed only to relieve a litigant of an injustice that is not commensurate with the degree of his thoughtlessness in not
complying with the prescribed procedure.24 Absent this reason for liberality, the petition cannot be allowed to prosper.
III
Petition for certiorari further lacked merit
The petition for certiorari is also dismissible for its lack of merit.
The petitioner insists on having fully shown that the COA committed grave abuse of discretion, to wit: (1) the challenged
decision was rendered by a divided COA proper; (2) the COA took almost a year before promulgating its decision, and
more than a year in resolving the motion for reconsideration, in contravention of the express mandate of the Constitution;
(3) the resolution denying the motion for reconsideration was made up of only two sentences; (4) the matter involved a
novel issue that called for an interpretation of the pertinent provisions of the Local Government Code; and (5) in issuing
the resolution, COA Commissioners Grace Pulido-Tan and Heidi L. Mendoza made it appear that they knew the Local
Government Code better than former Senator Aquilino Pimentel who offered an opinion on the
matter.25chanRoblesvirtualLawlibrary
Grave abuse of discretion implies such capricious and whimsical exercise of judgment as to be equivalent to lack or
excess of jurisdiction; in other words, power is exercised in an arbitrary or despotic manner by reason of passion,
prejudice, or personal hostility; and such exercise is so patent or so gross as to amount to an evasion of a positive duty or
to a virtual refusal either to perform the duty enjoined or to act at all in contemplation of law. 26chanRoblesvirtualLawlibrary
A close look indicates that the petition for certiorari did not sufficiently disclose how the COA committed grave abuse of its
discretion. For sure, the bases cited by the petitioner did not approximate grave abuse of discretion. To start with, the
supposed delays taken by the COA in deciding the appeal were neither arbitrary nor whimsical on its part. Secondly, the
mere terseness of the denial of the motion for reconsideration was not a factor in demonstrating an abuse of discretion.
And, lastly, the fact that Senator Pimentel, even if he had been the main proponent of the Local Government Code in the
Legislature, expressed an opinion on the issues different from the COA Commissioners own did not matter, for it was the
latters adjudication that had any value and decisiveness on the issues by virtue of their being the Constitutionally officials
entrusted with the authority for that purpose.
It is equally relevant to note that the COA denied the money claim of the petitioner for the further reason of lack of
sufficient publication as required by the Government Procurement Act. In that light, the COA acted well within its authority
in denying the petitioners claim.
IV
Petitioner and its counsel
exhibited harshness and disrespect
towards the Court and its Members
The petitioner contends that the Court erred in appreciating the petitioners non-compliance with the requirement of the
proof of service, alleging that even a perfunctory scrutiny of the petition forcertiorari and its annexes could have easily
shown that it had attached an affidavit of service to the petition. It goes on to make the following statements,
viz:chanroblesvirtuallawlibrary
25. Apparently, the staff of the Justice-in-charge failed to verify the PETITION and its annexes up to its last page, thus, the
erroneous finding that there was non-submission of the proof of service;
26. In turn, the same omission was hoisted upon the other members of this Honorable Court who took the observation
from the office of the Justice-in-charge, to be the obtaining fact, when in truth and in fact, it is not; 27
The petitioner and its counsel thereby exhibited their plain inability to accept the ill consequences of their own
shortcomings, and instead showed an unabashed propensity to readily lay blame on others like the Court and its
Members. In doing so, they employed harsh and disrespectful language that accused the Court and its Members of
ignorance and recklessness in the performance of their function of adjudication.
We do not tolerate such harsh and disrespectful language being uttered against the Court and its Members. We consider
the accusatory language particularly offensive because it was unfounded and undeserved. As this resolution earlier
clarifies, the petition for certiorari did not contain a proper affidavit of service. We do not need to rehash the clarification.
Had the petitioner and its counsel been humbler to accept their self-inflicted situation and more contrite, they would have
desisted from their harshness and disrespect towards the Court and its Members. Although we are not beyond error, we
assure the petitioner and its counsel that our resolutions and determinations are arrived at or reached with much care and
caution, aware that the lives, properties and rights of the litigants are always at stake. If there be errors, they would be
unintended, and would be the result of human oversight. But in this instance the Court and its Members committed no
error. The petition bore only cut reproductions of the supposed registry receipts, which even a mere perfunctory scrutiny
would not pass as the original registry receipts required by the Rules of Court.
Accordingly, the petitioner and its counsel, Atty. Eduardo S. Fortaleza, should fully explain in writing why they should not
be punished for indirect contempt of court for their harsh and disrespectful language towards the Court and its Members;
and, in his case, Atty. Fortaleza should further show cause why he should not be disbarred.chanrobleslaw
WHEREFORE, the Court DENIES the Motion for Reconsideration for its lack of merit; ORDERS the petitioner and its
counsel, Atty. Eduardo S. Fortaleza, to show cause in writing within ten (10) days from notice why they should not be
punished for indirect contempt of court; and FURTHER DIRECTSAtty. Fortaleza to show cause in the same period why he
should not be disbarred.
SECOND DIVISION
G.R. No. 184203, November 26, 2014
CITY OF LAPU-LAPU, Petitioner, v. PHILIPPINE ECONOMIC ZONE AUTHORITY, Respondent.
G.R. NO. 187583
PROVINCE OF BATAAN, REPRESENTED BY GOVERNOR ENRIQUE T. GARCIA, JR., AND EMERLINDA S.

TALENTO, IN HER CAPACITY AS PROVINCIAL TREASURER OF BATAAN,Petitioners, v. PHILIPPINE ECONOMIC
ZONE AUTHORITY, Respondent.
DECISION
LEONEN, J.:
The Philippine Economic Zone Authority is exempt from payment of real property taxes.
These are consolidated1 petitions for review on certiorari the City of Lapu-Lapu and the Province of Bataan separately
filed against the Philippine Economic Zone Authority (PEZA).
In G.R. No. 184203, the City of Lapu-Lapu (the City) assails the Court of Appeals decision 2 dated January 11, 2008 and
resolution3 dated August 6, 2008, dismissing the Citys appeal for being the wrong mode of appeal. The City appealed the
Regional Trial Court, Branch 111, Pasay Citys decision finding the PEZA exempt from payment of real property taxes.
In G.R. No. 187583, the Province of Bataan (the Province) assails the Court of Appeals decision 4dated August 27, 2008
and resolution5 dated April 16, 2009, granting the PEZAs petition for certiorari. The Court of Appeals ruled that the
Regional Trial Court, Branch 115, Pasay City gravely abused its discretion in finding the PEZA liable for real property
taxes to the Province of Bataan.
Facts common to the consolidated petitions
In the exercise of his legislative powers,6 President Ferdinand E. Marcos issued Presidential Decree No. 66 in 1972,
declaring as government policy the establishment of export processing zones in strategic locations in the Philippines.
Presidential Decree No. 66 aimed to encourage and promote foreign commerce as a means of making the Philippines a
center of international trade, of strengthening our export trade and foreign exchange position, of hastening
industrialization, of reducing domestic unemployment, and of accelerating the development of the
country.7chanRoblesvirtualLawlibrary
To carry out this policy, the Export Processing Zone Authority (EPZA) was created to operate, administer, and manage the
export processing zones established in the Port of Mariveles, Bataan 8and such other export processing zones that may be
created by virtue of the decree.9chanRoblesvirtualLawlibrary
The decree declared the EPZA non-profit in character10 with all its revenues devoted to its development, improvement,
and maintenance.11 To maintain this non-profit character, the EPZA was declared exempt from all taxes that may be due
to the Republic of the Philippines, its provinces, cities, municipalities, and other government agencies and
instrumentalities.12 Specifically, Section 21 of Presidential Decree No. 66 declared the EPZA exempt from payment of real
property taxes:chanroblesvirtuallawlibrary
Section 21. Non-profit Character of the Authority; Exemption from Taxes. The Authority shall be non-profit and shall devote
and use all its returns from its capital investment, as well as excess revenues from its operations, for the development,
improvement and maintenance and other related expenditures of the Authority to pay its indebtedness and obligations and
in furtherance and effective implementation of the policy enunciated in Section 1 of this Decree. In consonance therewith,
the Authority is hereby declared exempt:ChanRoblesVirtualawlibrary
....
(b) From all income taxes, franchise taxes, realty taxes and all other kinds of taxes and licenses to be paid to the National
Government, its provinces, cities, municipalities and other government agencies and instrumentalities[.]
In 1979, President Marcos issued Proclamation No. 1811, establishing the Mactan Export Processing Zone. Certain
parcels of land of the public domain located in the City of Lapu-Lapu in Mactan, Cebu were reserved to serve as site of
the Mactan Export Processing Zone.
In 1995, the PEZA was created by virtue of Republic Act No. 7916 or the Special Economic Zone Act of 1995 13 to
operate, administer, manage, and develop economic zones in the country. 14 The PEZA was granted the power to register,
regulate, and supervise the enterprises located in the economic zones. 15 By virtue of the law, the export processing zone
in Mariveles, Bataan became the Bataan Economic Zone 16 and the Mactan Export Processing Zone the Mactan Economic
Zone.17chanRoblesvirtualLawlibrary
As for the EPZA, the law required it to evolve into the PEZA in accordance with the guidelines and regulations set forth in
an executive order issued for [the] purpose.18chanRoblesvirtualLawlibrary
On October 30, 1995, President Fidel V. Ramos issued Executive Order No. 282, directing the PEZA to assume and
exercise all of the EPZAs powers, functions, and responsibilities as provided in Presidential Decree No. 66, as amended,
insofar as they are not inconsistent with the powers, functions, and responsibilities of the PEZA, as mandated under [the
Special Economic Zone Act of 1995].19 All of EPZAs properties, equipment, and assets, among others, were ordered
transferred to the PEZA.20chanRoblesvirtualLawlibrary
Facts of G.R. No. 184203
In the letter21 dated March 25, 1998, the City of Lapu-Lapu, through the Office of the Treasurer, demanded from the
PEZA ?32,912,350.08 in real property taxes for the period from 1992 to 1998 on the PEZAs properties located in the
Mactan Economic Zone.
The City reiterated its demand in the letter 22 dated May 21, 1998. It cited Sections 193 and 234 of the Local Government
Code of 1991 that withdrew the real property tax exemptions previously granted to or presently enjoyed by all persons.
The City pointed out that no provision in the Special Economic Zone Act of 1995 specifically exempted the PEZA from
payment of real property taxes, unlike Section 21 of Presidential Decree No. 66 that explicitly provided for EPZAs
exemption. Since no legal provision explicitly exempted the PEZA from payment of real property taxes, the City argued
that it can tax the PEZA.
The City made subsequent demands23 on the PEZA. In its last reminder24 dated May 13, 2002, the City assessed the
PEZA ?86,843,503.48 as real property taxes for the period from 1992 to 2002.
On September 11, 2002, the PEZA filed a petition for declaratory relief 25 with the Regional Trial Court of Pasay City,
praying that the trial court declare it exempt from payment of real property taxes. The case was raffled to Branch 111.
The City answered26 the petition, maintaining that the PEZA is liable for real property taxes. To support its argument, the
City cited a legal opinion dated September 6, 1999 issued by the Department of Justice, 27 which stated that the PEZA is
not exempt from payment of real property taxes. The Department of Justice based its opinion on Sections 193 and 234 of
the Local Government Code that withdrew the tax exemptions, including real property tax exemptions, previously granted
to all persons.
A reply28 was filed by the PEZA to which the City filed a rejoinder. 29chanRoblesvirtualLawlibrary
Pursuant to Rule 63, Section 3 of Rules of Court, 30 the Office of the Solicitor General filed a comment 31 on the PEZAs
petition for declaratory relief. It agreed that the PEZA is exempt from payment of real property taxes, citing Sections 24
and 51 of the Special Economic Zone Act of 1995.
The trial court agreed with the Solicitor General. Section 24 of the Special Economic Zone Act of 1995
SEC. 24. Exemption from National and Local Taxes. Except for real property taxes on land owned by developers, no
taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof,
five percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted
as follows:
a. Three percent (3%) to the National Government;
b. Two percent (2%) which shall be directly remitted by the business establishments to the treasurers office of the
municipality or city where the enterprise is located.
Section 51 of the law, on the other hand, provides:chanroblesvirtuallawlibrary
SEC. 51. Ipso-Facto Clause. All privileges, benefits, advantages or exemptions granted to special economic zones
under Republic Act No. 7227, shall ipso-facto be accorded to special economic zones already created or to be created
under this Act. The free port status shall not be vested upon new special economic zones.
Based on Section 51, the trial court held that all privileges, benefits, advantages, or exemptions granted to special
economic zones created under the Bases Conversion and Development Act of 1992 apply to special economic zones
created under the Special Economic Zone Act of 1995. Since these benefits include exemption from payment of national
or local taxes, these benefits apply to special economic zones owned by the PEZA.
According to the trial court, the PEZA remained tax-exempt regardless of Section 24 of the Special Economic Zone Act of
1995. It ruled that Section 24, which taxes real property owned by developers of economic zones, only applies to private
developers of economic zones, not to public developers like the PEZA. The PEZA, therefore, is not liable for real property
taxes on the land it owns.
Characterizing the PEZA as an agency of the National Government, the trial court ruled that the City had no authority to
tax the PEZA under Sections 133(o) and 234(a) of the Local Government Code of 1991.
In the resolution32 dated June 14, 2006, the trial court granted the PEZAs petition for declaratory relief and declared it
exempt from payment of real property taxes.
The City filed a motion for reconsideration,33 which the trial court denied in its resolution 34 dated September 26, 2006.
The City then appealed35 to the Court of Appeals.
The Court of Appeals noted the following issues the City raised in its appellants brief: (1) whether the trial court had
jurisdiction over the PEZAs petition for declaratory relief; (2) whether the PEZA is a government agency performing
governmental functions; and (3) whether the PEZA is exempt from payment of real property taxes.
The issues presented by the City, according to the Court of Appeals, are pure questions of law which should have been
raised in a petition for review on certiorari directly filed before this court. Since the City availed itself of the wrong mode of
appeal, the Court of Appeals dismissed the Citys appeal in the decision 36 dated January 11, 2008.
The City filed a motion for extension of time to file a motion for reconsideration, 37 which the Court of Appeals denied in the
resolution38 dated April 11, 2008.
Despite the denial of its motion for extension, the City filed a motion for reconsideration. 39 In the resolution40 dated August
6, 2008, the Court of Appeals denied that motion.
In its petition for review on certiorari with this court, 41 the City argues that the Court of Appeals hid under the skirts of
technical rules42 in resolving its appeal. The City maintains that its appeal involved mixed questions of fact and law.
According to the City, whether the PEZA performed governmental functions cannot completely be addressed by law but
[by] the factual and actual activities [the PEZA is] carrying out. 43chanRoblesvirtualLawlibrary
Even assuming that the petition involves pure questions of law, the City contends that the subject matter of the case is of
extreme importance with [far-reaching] consequence that [its magnitude] would surely shape and determine the course of
our nations future.44 The Court of Appeals, the City argues, should have resolved the case on the merits.
The City insists that the trial court had no jurisdiction to hear the PEZAs petition for declaratory relief. According to the
City, the case involves real property located in the City of Lapu-Lapu. The petition for declaratory relief should have been
filed before the Regional Trial Court of the City of Lapu-Lapu. 45chanRoblesvirtualLawlibrary
Moreover, the Province of Bataan, the City of Baguio, and the Province of Cavite allegedly demanded real property taxes
from the PEZA. The City argues that the PEZA should have likewise impleaded these local government units as
respondents in its petition for declaratory relief. For its failure to do so, the PEZA violated Rule 63, Section 2 of the Rules
of Court, and the trial court should have dismissed the petition. 46chanRoblesvirtualLawlibrary
This court ordered the PEZA to comment on the Citys petition for review on certiorari. 47chanRoblesvirtualLawlibrary
At the outset of its comment, the PEZA argues that the Court of Appeals decision dated January 11, 2008 had become
final and executory. After the Court of Appeals had denied the Citys appeal, the City filed a motion for extension of time to
file a motion for reconsideration. Arguing that the time to file a motion for reconsideration is not extendible, the PEZA filed
its motion for reconsideration out of time. The City has no more right to appeal to this court.48chanRoblesvirtualLawlibrary
The PEZA maintains that the City availed itself of the wrong mode of appeal before the Court of Appeals. Since the City
raised pure questions of law in its appeal, the PEZA argues that the proper remedy is a petition for review on certiorari
with this court, not an ordinary appeal before the appellate court. The Court of Appeals, therefore, correctly dismissed
outright the Citys appeal under Rule 50, Section 2 of the Rules of Court. 49chanRoblesvirtualLawlibrary
On the merits, the PEZA argues that it is an agency and instrumentality of the National Government. It is therefore
exempt from payment of real property taxes under Sections 133(o) and 234(a) of the Local Government Code. 50 It adds
that the tax privileges under Sections 24 and 51 of the Special Economic Zone Act of 1995 applied to
it.51chanRoblesvirtualLawlibrary
Considering that the site of the Mactan Economic Zone is a reserved land under Proclamation No. 1811, the PEZA claims
that the properties sought to be taxed are lands of public dominion exempt from real property
taxes.52chanRoblesvirtualLawlibrary
As to the jurisdiction issue, the PEZA counters that the Regional Trial Court of Pasay had jurisdiction to hear its petition for
declaratory relief under Rule 63, Section 1 of the Rules of Court. 53 It also argued that it need not implead the Province of
Bataan, the City of Baguio, and the Province of Cavite as respondents considering that their demands came after the
PEZA had already filed the petition in court.54chanRoblesvirtualLawlibrary
Facts of G.R. No. 187583
After the City of Lapu-Lapu had demanded payment of real property taxes from the PEZA, the Province of Bataan
followed suit. In its letter55 dated May 29, 2003, the Province, through the Office of the Provincial Treasurer, informed the
PEZA that it would be sending a real property tax billing to the PEZA. Arguing that the PEZA is a developer of economic
zones, the Province claimed that the PEZA is liable for real property taxes under Section 24 of the Special Economic Zone
Act of 1995.
In its reply letter56 dated June 18, 2003, the PEZA requested the Province to suspend the service of the real property tax
billing. It cited its petition for declaratory relief against the City of Lapu-Lapu pending before the Regional Trial Court,
Branch 111, Pasay City as basis.
The Province argued that serving a real property tax billing on the PEZA would not in any way affect [its] petition for
declaratory relief before [the Regional Trial Court] of Pasay City. 57 Thus, in its letter58 dated June 27, 2003, the Province
notified the PEZA of its real property tax liabilities for June 1, 1995 to December 31, 2002 totalling ?110,549,032.55.
After having been served a tax billing, the PEZA again requested the Province to suspend collecting its alleged real
property tax liabilities until the Regional Trial Court of Pasay City resolves its petition for declaratory
relief.59chanRoblesvirtualLawlibrary
The Province ignored the PEZAs request. On January 20, 2004, the Province served on the PEZA a statement of unpaid
real property tax for the period from June 1995 to December 2004. 60chanRoblesvirtualLawlibrary
The PEZA again requested the Province to suspend collecting its alleged real property taxes. 61 The Province denied the
request in its letter62 dated January 29, 2004, then served on the PEZA a warrant of levy 63 covering the PEZAs real
properties located in Mariveles, Bataan.
The PEZAs subsequent requests64 for suspension of collection were all denied by the Province. 65 The Province then
served on the PEZA a notice of delinquency in the payment of real property taxes 66 and a notice of sale of real property for
unpaid real property tax.67 The Province finally sent the PEZA a notice of public auction of the latters properties in
Mariveles, Bataan.68chanRoblesvirtualLawlibrary
On June 14, 2004, the PEZA filed a petition for injunction 69 with prayer for issuance of a temporary restraining order and/or
writ of preliminary injunction before the Regional Trial Court of Pasay City, arguing that it is exempt from payment of real
property taxes. It added that the notice of sale issued by the Province was void because it was not published in a
newspaper of general circulation as required by Section 260 of the Local Government Code. 70chanRoblesvirtualLawlibrary
The case was raffled to Branch 115.
In its order71 dated June 18, 2004, the trial court issued a temporary restraining order against the Province. After the
PEZA had filed a P100,000.00 bond,72 the trial court issued a writ of preliminary injunction, 73 enjoining the Province from
selling the PEZAs real properties at public auction.
On March 3, 2006, the PEZA and Province both manifested that each would file a memorandum after which the case
would be deemed submitted for decision. The parties then filed their respective
memoranda.74chanRoblesvirtualLawlibrary
In the order75 dated January 31, 2007, the trial court denied the PEZAs petition for injunction. The trial court ruled that the
PEZA is not exempt from payment of real property taxes. According to the trial court, Sections 193 and 234 of the Local
Government Code had withdrawn the real property tax exemptions previously granted to all persons, whether natural or
juridical.76 As to the tax exemptions under Section 51 of the Special Economic Zone Act of 1995, the trial court ruled that
the provision only applies to businesses operating within the economic zones, not to the
PEZA.77chanRoblesvirtualLawlibrary
The PEZA filed before the Court of Appeals a petition for certiorari 78 with prayer for issuance of a temporary restraining
order.
The Court of Appeals issued a temporary restraining order, enjoining the Province and its Provincial Treasurer from selling
PEZA's properties at public auction scheduled on October 17, 2007. 79 It also ordered the Province to comment on the
PEZAs petition.
In its comment,80 the Province alleged that it received a copy of the temporary restraining order only on October 18, 2007
when it had already sold the PEZAs properties at public auction. Arguing that the act sought to be enjoined was already
fait accompli, the Province prayed for the dismissal of the petition for certiorari.
The PEZA then filed a supplemental petition for certiorari, prohibition, and mandamus 81 against the Province, arguing that
the Provincial Treasurer of Bataan acted with grave abuse of discretion in issuing the notice of delinquency and notice of
sale. It maintained that it is exempt from payment of real property taxes because it is a government instrumentality. It
added that its lands are property of public dominion which cannot be sold at public auction.
The PEZA also filed a motion82 for issuance of an order affirming the temporary restraining order and a writ of preliminary
injunction to enjoin the Province from consolidating title over the PEZAs properties.
In its resolution83 dated January 16, 2008, the Court of Appeals admitted the supplemental petition for certiorari,
prohibition, and mandamus. It required the Province to comment on the supplemental petition and to file a memorandum
on the PEZAs prayer for issuance of temporary restraining order.
The Province commented84 on the PEZAs supplemental petition, to which the PEZA replied. 85chanRoblesvirtualLawlibrary
The Province then filed a motion86 for leave to admit attached rejoinder with motion to dismiss. In the rejoinder with
motion to dismiss,87 the Province argued for the first time that the Court of Appeals had no jurisdiction over the subject
matter of the action.
According to the Province, the PEZA erred in filing a petition for certiorari. Arguing that the PEZA sought to reverse a
Regional Trial Court decision in a local tax case, the Province claimed that the court with appellate jurisdiction over the
action is the Court of Tax Appeals. The PEZA then prayed that the Court of Appeals dismiss the petition for certiorari for
lack of jurisdiction over the subject matter of the action.
The Court of Appeals held that the issue before it was whether the trial court judge gravely abused his discretion in
dismissing the PEZAs petition for prohibition. This issue, according to the Court of Appeals, is properly addressed in a
petition for certiorari over which it has jurisdiction to resolve. It, therefore, maintained jurisdiction to resolve the PEZAs
petition for certiorari.88chanRoblesvirtualLawlibrary
Although it admitted that appeal, not certiorari, was the PEZAs proper remedy to reverse the trial courts decision, 89 the
Court of Appeals proceeded to decide the petition for certiorari in the broader interest of
justice.90chanRoblesvirtualLawlibrary
The Court of Appeals ruled that the trial court judge gravely abused his discretion in dismissing the PEZAs petition for
prohibition. It held that Section 21 of Presidential Decree No. 66 and Section 51 of the Special Economic Zone Act of
1995 granted the PEZA exemption from payment of real property taxes. 91 Based on the criteria set in Manila International
Airport Authority v. Court of Appeals,92 the Court of Appeals found that the PEZA is an instrumentality of the national
government. No taxes, therefore, could be levied on it by local government units. 93chanRoblesvirtualLawlibrary
In the decision94 dated August 27, 2008, the Court of Appeals granted the PEZAs petition for certiorari. It set aside the
trial courts decision and nullified all the Provinces proceedings with respect to the collection of real property taxes from
the PEZA.
The Province filed a motion for reconsideration,95 which the Court of Appeals denied in the resolution 96 dated April 16,
2009 for lack of merit.
In its petition for review on certiorari with this court, 97 the Province of Bataan insists that the Court of Appeals had no
jurisdiction to take cognizance of the PEZAs petition for certiorari. The Province maintains that the Court of Tax Appeals
had jurisdiction to hear the PEZAs petition since it involved a local tax case decided by a Regional Trial
Court.98chanRoblesvirtualLawlibrary
The Province reiterates that the PEZA is not exempt from payment of real property taxes. The Province points out that the
EPZA, the PEZAs predecessor, had to be categorically exempted from payment of real property taxes. The EPZA,
therefore, was not inherently exempt from payment of real property taxes and so is the PEZA. Since Congress omitted
from the Special Economic Zone Act of 1995 a provision specifically exempting the PEZA from payment of real property
taxes, the Province argues that the PEZA is a taxable entity. It cited the rule in statutory construction that provisions
omitted in revised statutes are deemed repealed.99chanRoblesvirtualLawlibrary
With respect to Sections 24 and 51 of the Special Economic Zone Act of 1995 granting tax exemptions and benefits, the
Province argues that these provisions only apply to business establishments operating within special economic
zones,100 not to the PEZA.
This court ordered the PEZA to comment on the Provinces petition for review on certiorari. 101chanRoblesvirtualLawlibrary
In its comment,102 the PEZA argues that the Court of Appeals had jurisdiction to hear its petition for certiorari since the
issue was whether the trial court committed grave abuse of discretion in denying its petition for injunction. The PEZA
maintains that it is exempt from payment of real property taxes under Section 21 of Presidential Decree No. 66 and
Section 51 of the Special Economic Zone Act of 1995.
The Province filed its reply,103 reiterating its arguments in its petition for review on certiorari.
On the PEZAs motion,104 this court consolidated the petitions filed by the City of Lapu-Lapu and the Province of
Bataan.105chanRoblesvirtualLawlibrary
The issues for our resolution are the following:
I. Whether the Court of Appeals erred in dismissing the City of Lapu-Lapus appeal for raising pure questions of law;
II. Whether the Regional Trial Court, Branch 111, Pasay City had jurisdiction to hear, try, and decide the City of Lapu-
Lapus petition for declaratory relief;
III. Whether the petition for injunction filed before the Regional Trial Court, Branch 115, Pasay City, is a local tax case
appealable to the Court of Tax Appeals; and
IV. Whether the PEZA is exempt from payment of real property taxes.
We deny the consolidated petitions.
I.
The Court of Appeals did not err in

dismissing the City of Lapu-Lapus
appeal for raising pure questions of law
Under the Rules of Court, there are three modes of appeal from Regional Trial Court decisions. The first mode is through
an ordinary appeal before the Court of Appeals where the decision assailed was rendered in the exercise of the Regional
Trial Courts original jurisdiction. Ordinary appeals are governed by Rule 41, Sections 3 to 13 of the Rules of Court. In
ordinary appeals, questions of fact or mixed questions of fact and law may be raised. 106chanRoblesvirtualLawlibrary
The second mode is through a petition for review before the Court of Appeals where the decision assailed was rendered
by the Regional Trial Court in the exercise of its appellate jurisdiction. Rule 42 of the Rules of Court governs petitions for
review before the Court of Appeals. In petitions for review under Rule 42, questions of fact, of law, or mixed questions of
fact and law may be raised.107chanRoblesvirtualLawlibrary
The third mode is through an appeal by certiorari before this court under Rule 45 where only questions of law shall be
raised.108chanRoblesvirtualLawlibrary
A question of fact exists when there is doubt as to the truth or falsity of the alleged facts. 109 On the other hand, there is a
question of law if the appeal raises doubt as to the applicable law on a certain set of facts. 110chanRoblesvirtualLawlibrary
Under Rule 50, Section 2, an improper appeal before the Court of Appeals is dismissed outright and shall not be referred
to the proper court:chanroblesvirtuallawlibrary
SEC. 2. Dismissal of improper appeal to the Court of Appeals. An appeal under Rule 41 taken from the Regional Trial
Court to the Court of Appeals raising only questions of law shall be dismissed, issues purely of law not being reviewable
by said court. Similarly, an appeal by notice of appeal instead of by petition for review from the appellate judgment of a
Regional Trial Court shall be dismissed.
An appeal erroneously taken to the Court of Appeals shall not be transferred to the appropriate court but shall be
dismissed outright.
Rule 50, Section 2 repealed Rule 50, Section 3 of the 1964 Rules of Court, which provided that improper appeals to the
Court of Appeals shall not be dismissed but shall be certified to the proper court for resolution:chanroblesvirtuallawlibrary
Sec. 3. Where appealed case erroneously, brought. Where the appealed case has been erroneously brought to the
Court of Appeals, it shall not dismiss the appeal, but shall certify the case to the proper court, with a specific and clear
statement of the grounds therefor.
With respect to appeals by certiorari directly filed before this court but which raise questions of fact, paragraph 4(b) of
Circular No. 2-90 dated March 9, 1990 states that this court retains the option, in the exercise of its sound discretion and
considering the attendant circumstances, either itself to take cognizance of and decide such issues or to refer them to the
Court of Appeals for determination.
In Indoyon, Jr. v. Court of Appeals,111 we said that this court cannot tolerate ignorance of the law on appeals. 112 It is not
this courts task to determine for litigants their proper remedies under the Rules. 113chanRoblesvirtualLawlibrary
We agree that the City availed itself of the wrong mode of appeal before the Court of Appeals. The City raised pure
questions of law in its appeal. The issue of whether the Regional Trial Court of Pasay had jurisdiction over the PEZAs
petition for declaratory relief is a question of law, jurisdiction being a matter of law. 114 The issue of whether the PEZA is a
government instrumentality exempt from payment of real property taxes is likewise a question of law since this question is
resolved by examining the provisions of the PEZAs charter as well as other laws relating to the
PEZA.115chanRoblesvirtualLawlibrary
The Court of Appeals, therefore, did not err in dismissing the Citys appeal pursuant to Rule 50, Section 2 of the Rules of
Court.
Nevertheless, considering the important questions involved in this case, we take cognizance of the Citys petition for
review on certiorari in the interest of justice.
In Municipality of Pateros v. The Honorable Court of Appeals,116 the Municipality of Pateros filed an appeal under Rule 42
before the Court of Appeals, which the Court of Appeals denied outright for raising pure questions of law. This court
agreed that the Municipality of Pateros committed a procedural infraction 117 and should have directly filed a petition for
review on certiorari before this court. Nevertheless, in the interest of justice and in order to write finis to [the]
controversy,118 this court opt[ed] to relax the rules119 and proceeded to decide the case. This court
said:chanroblesvirtuallawlibrary
While it is true that rules of procedure are intended to promote rather than frustrate the ends of justice, and while the swift
unclogging of the dockets of the courts is a laudable objective, it nevertheless must not be met at the expense of
substantial justice.
The Court has allowed some meritorious cases to proceed despite inherent procedural defects and lapses. This is in
keeping with the principle that rules of procedure are mere tools designed to facilitate the attainment of justice, and that
strict and rigid application of rules which should result in technicalities that tend to frustrate rather than promote
substantial justice must always be avoided. It is a far better and more prudent cause of action for the court to excuse a
technical lapse and afford the parties a review of the case to attain the ends of justice, rather than dispose of the case on
technicality and cause grave injustice to the parties, giving a false impression of speedy disposal of cases while actually
resulting in more delay, if not a miscarriage of justice. 120
Similar to Municipality of Pateros, we opt to relax the rules in this case. The PEZA operates or otherwise administers
special economic zones all over the country. Resolving the substantive issue of whether the PEZA is taxable for real
property taxes will clarify the taxing powers of all local government units where special economic zones are operated.
This case, therefore, should be decided on the merits.
II.
The Regional Trial Court of Pasay had

no jurisdiction to hear, try, and decide
the PEZAs petition for declaratory relief
against the City of Lapu-Lapu
Rule 63 of the Rules of Court governs actions for declaratory relief. Section 1 of Rule 63
SECTION 1. Who may file petition. Any person interested under a deed, will, contract or other written instrument, or
whose rights are affected by a statute, executive order or regulation, ordinance, or any other governmental regulation
may, before breach or violation, thereof, bring an action in the appropriate Regional Trial Court to determine any question
of construction or validity arising, and for a declaration of his rights or duties, thereunder.
An action for reformation of an instrument, to quiet title to real property or remove clouds therefrom, or to consolidate
ownership under Article 1607 of the Civil Code, may be brought under this Rule.
The court with jurisdiction over petitions for declaratory relief is the Regional Trial Court, the subject matter of litigation in
an action for declaratory relief being incapable of pecuniary estimation. 121 Section 19 of the Judiciary Reorganization Act
of 1980 provides:chanroblesvirtuallawlibrary
SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive original jurisdiction:
(1) In all civil actions in which the subject of litigation is incapable of pecuniary estimation[.]
Consistent with the law, the Rules state that a petition for declaratory relief is filed in the appropriate Regional Trial
Court.122
A special civil action for declaratory relief is filed for a judicial determination of any question of construction or validity
arising from, and for a declaration of rights and duties, under any of the following subject matters: a deed, will, contract or
other written instrument, statute, executive order or regulation, ordinance, or any other governmental regulation. 123
However, a declaratory judgment may issue only if there has been no breach of the documents in question. 124 If the
contract or statute subject matter of the action has already been breached, the appropriate ordinary civil action must be
filed.125 If adequate relief is available through another form of action or proceeding, the other action must be preferred
over an action for declaratory relief.126chanRoblesvirtualLawlibrary
In Ollada v. Central Bank of the Philippines,127 the Central Bank issued CB-IED Form No. 5 requiring certified public
accountants to submit an accreditation under oath before they were allowed to certify financial statements submitted to
the bank. Among those financial statements the Central Bank disallowed were those certified by accountant Felipe B.
Ollada. 128chanRoblesvirtualLawlibrary
Claiming that the requirement restrained the legitimate pursuit of ones trade, 129 Ollada filed a petition for declaratory
relief against the Central Bank.
This court ordered the dismissal of Olladas petition without prejudice to [his] seeking relief in another appropriate
action.130 According to this court, Olladas right had already been violated when the Central Bank refused to accept the
financial statements he prepared. Since there was already a breach, a petition for declaratory relief was not proper.
Ollada must pursue the appropriate ordinary civil action or proceeding. 131 This court
explained:chanroblesvirtuallawlibrary
Petitioner commenced this action as, and clearly intended it to be one for Declaratory Relief under the provisions of Rule
66 of the Rules of Court. On the question of when a special civil action of this nature would prosper, we have already held
that the complaint for declaratory relief will not prosper if filed after a contract, statute or right has been breached or
violated. In the present case such is precisely the situation arising from the facts alleged in the petition for declaratory
relief. As vigorously claimed by petitioner himself, respondent had already invaded or violated his right and caused him
injury all these giving him a complete cause of action enforceable in an appropriate ordinary civil action or proceeding.
The dismissal of the action was, therefore, proper in the light of our ruling in De Borja vs. Villadolid, 47 O.G. (5) p. 2315,
and Samson vs. Andal, G.R. No. L-3439, July 31, 1951, where we held that an action for declaratory relief should be filed
before there has been a breach of a contract, statutes or right, and that it is sufficient to bar such action, that there had
been a breach which would constitute actionable violation. The rule is that an action for Declaratory Relief is proper
only if adequate relief is not available through the means of other existing forms of action or proceeding (1 C.J.S. 1027-
1028). 132
It is also required that the parties to the action for declaratory relief be those whose rights or interests are affected by the
contract or statute in question.133 There must be an actual justiciable controversy or the ripening seeds of
one134 between the parties. The issue between the parties must be ripe for judicial determination. 135 An action for
declaratory relief based on theoretical or hypothetical questions cannot be filed for our courts are not advisory
courts.136chanRoblesvirtualLawlibrary
In Republic v. Roque,137 this court dismissed respondents petition for declaratory relief for lack of justiciable controversy.
According to this court, [the respondents] fear of prospective prosecution [under the Human Security Act] was solely
based on remarks of certain government officials which were addressed to the general
public.138chanRoblesvirtualLawlibrary
In Velarde v. Social Justice Society,139 this court refused to resolve the issue of whether or not [a religious leaders
endorsement] of a candidate for elective office or in urging or requiring the members of his flock to vote for a specific
candidate is violative [of the separation clause].140 According to the court, there was no justiciable controversy and
ordered the dismissal of the Social Justice Societys petition for declaratory relief. This court
explained:chanroblesvirtuallawlibrary
Indeed, SJS merely speculated or anticipated without factual moorings that, as religious leaders, the petitioner and his co-
respondents below had endorsed or threatened to endorse a candidate or candidates for elective offices; and that such
actual or threatened endorsement "will enable [them] to elect men to public office who [would] in turn be forever beholden
to their leaders, enabling them to control the government"[;] and "pos[ing] a clear and present danger of serious erosion of
the peoples faith in the electoral process[;] and reinforc[ing] their belief that religious leaders determine the ultimate result
of elections," which would then be violative of the separation clause.
Such premise is highly speculative and merely theoretical, to say the least. Clearly, it does not suffice to constitute a
justiciable controversy. The Petition does not even allege any indication or manifest intent on the part of any of the
respondents below to champion an electoral candidate, or to urge their so-called flock to vote for, or not to vote for, a
particular candidate. It is a time-honored rule that sheer speculation does not give rise to an actionable right.
Obviously, there is no factual allegation that SJS rights are being subjected to any threatened, imminent and inevitable
violation that should be prevented by the declaratory relief sought. The judicial power and duty of the courts to settle
actual controversies involving rights that are legally demandable and enforceable cannot be exercised when there is no
actual or threatened violation of a legal right.
All that the 5-page SJS Petition prayed for was "that the question raised in paragraph 9 hereof be resolved." In other
words, it merely sought an opinion of the trial court on whether the speculated acts of religious leaders endorsing elective
candidates for political offices violated the constitutional principle on the separation of church and state. SJS did not ask
for a declaration of its rights and duties; neither did it pray for the stoppage of any threatened violation of its declared
rights. Courts, however, are proscribed from rendering an advisory opinion. 141
In sum, a petition for declaratory relief must satisfy six requisites:chanroblesvirtuallawlibrary
[F]irst, the subject matter of the controversy must be a deed, will, contract or other written instrument, statute, executive
order or regulation, or ordinance; second, the terms of said documents and the validity thereof are doubtful and require
judicial construction; third, there must have been no breach of the documents in question; fourth, there must be an actual
justiciable controversy or the "ripening seeds" of one between persons whose interests are adverse; fifth, the issue must
be ripe for judicial determination; and sixth, adequate relief is not available through other means or other forms of action
or proceeding.142 (Emphases omitted)
We rule that the PEZA erred in availing itself of a petition for declaratory relief against the City. The City had already
issued demand letters and real property tax assessment against the PEZA, in violation of the PEZAs alleged tax-exempt
status under its charter. The Special Economic Zone Act of 1995, the subject matter of PEZAs petition for declaratory
relief, had already been breached. The trial court, therefore, had no jurisdiction over the petition for declaratory relief.
There are several aspects of jurisdiction.143 Jurisdiction over the subject matter is the power to hear and determine cases
of the general class to which the proceedings in question belong. 144 It is conferred by law, which may either be the
Constitution or a statute.145 Jurisdiction over the subject matter means the nature of the cause of action and the relief
sought.146 Thus, the cause of action and character of the relief sought as alleged in the complaint are examined to
determine whether a court had jurisdiction over the subject matter. 147 Any decision rendered by a court without jurisdiction
over the subject matter of the action is void.148chanRoblesvirtualLawlibrary
Another aspect of jurisdiction is jurisdiction over the person. It is the power of [a] court to render a personal judgment or
to subject the parties in a particular action to the judgment and other rulings rendered in the action. 149 A court
automatically acquires jurisdiction over the person of the plaintiff upon the filing of the initiatory pleading. 150 With respect
to the defendant, voluntary appearance in court or a valid service of summons vests the court with jurisdiction over the
defendants person.151 Jurisdiction over the person of the defendant is indispensable in actions in personam or those
actions based on a partys personal liability.152 The proceedings in an action in personam are void if the court had no
jurisdiction over the person of the defendant.153chanRoblesvirtualLawlibrary
Jurisdiction over the res or the thing under litigation is acquired either by the seizure of the property under legal process,
whereby it is brought into actual custody of the law; or as a result of the institution of legal proceedings, in which the
power of the court is recognized and made effective. 154 Jurisdiction over the res is necessary in actions in rem or those
actions directed against the thing or property or status of a person and seek judgments with respect thereto as against
the whole world.155 The proceedings in an action in rem are void if the court had no jurisdiction over the thing under
litigation.156chanRoblesvirtualLawlibrary
In the present case, the Regional Trial Court had no jurisdiction over the subject matter of the action, specifically, over the
remedy sought. As this court explained in Malana v. Tappa:157chanRoblesvirtualLawlibrary
. . . an action for declaratory relief presupposes that there has been no actual breach of the instruments involved or of
rights arising thereunder. Since the purpose of an action for declaratory relief is to secure an authoritative statement of
the rights and obligations of the parties under a statute, deed, or contract for their guidance in the enforcement thereof, or
compliance therewith, and not to settle issues arising from an alleged breach thereof, it may be entertained only before
the breach or violation of the statute, deed, or contract to which it refers. A petition for declaratory relief gives a practical
remedy for ending controversies that have not reached the state where another relief is immediately available; and
supplies the need for a form of action that will set controversies at rest before they lead to a repudiation of obligations, an
invasion of rights, and a commission of wrongs.
Where the law or contract has already been contravened prior to the filing of an action for declaratory relief, the courts can
no longer assume jurisdiction over the action. In other words, a court has no more jurisdiction over an action for
declaratory relief if its subject has already been infringed or transgressed before the institution of the action. 158 (Emphasis
supplied)
The trial court should have dismissed the PEZAs petition for declaratory relief for lack of jurisdiction.
Once an assessment has already been issued by the assessor, the proper remedy of a taxpayer depends on whether the
assessment was erroneous or illegal.
An erroneous assessment presupposes that the taxpayer is subject to the tax but is disputing the correctness of the
amount assessed.159 With an erroneous assessment, the taxpayer claims that the local assessor erred in determining
any of the items for computing the real property tax, i.e., the value of the real property or the portion thereof subject to tax
and the proper assessment levels. In case of an erroneous assessment, the taxpayer must exhaust the administrative
remedies provided under the Local Government Code before resorting to judicial action.
The taxpayer must first pay the real property tax under protest. Section 252 of the Local Government Code
SECTION 252. Payment Under Protest. -(a) No protest shall be entertained unless the taxpayer first pays the tax. There
shall be annotated on the tax receipts the words "paid under protest". The protest in writing must be filed within thirty (30)
days from payment of the tax to the provincial, city treasurer or municipal treasurer, in the case of a municipality within
Metropolitan Manila Area, who shall decide the protest within sixty (60) days from receipt.
(b) The tax or a portion thereof paid under protest, shall be held in trust by the treasurer concerned.
(c) In the event that the protest is finally decided in favor of the taxpayer, the amount or portion of the tax protested shall
be refunded to the protestant, or applied as tax credit against his existing or future tax liability.
(d) In the event that the protest is denied or upon the lapse of the sixty day period prescribed in subparagraph (a), the
taxpayer may avail of the remedies as provided for in Chapter 3, Title II, Book II of this Code.
Should the taxpayer find the action on the protest unsatisfactory, the taxpayer may appeal with the Local Board of
Assessment Appeals within 60 days from receipt of the decision on the protest:chanroblesvirtuallawlibrary
SECTION 226. Local Board of Assessment Appeals. - Any owner or person having legal interest in the property who is not
satisfied with the action of the provincial, city or municipal assessor in the assessment of his property may, within sixty
(60) days from the date of receipt of the written notice of assessment, appeal to the Board of Assessment Appeals of the
provincial or city by filing a petition under oath in the form prescribed for the purpose, together with copies of the tax
declarations and such affidavits or documents submitted in support of the appeal.
Payment under protest and appeal to the Local Board of Assessment Appeals are successive administrative remedies to
a taxpayer who questions the correctness of an assessment.160 The Local Board Assessment Appeals shall not entertain
an appeal without the action of the local assessor 161 on the protest.
If the taxpayer is still unsatisfied after appealing with the Local Board of Assessment Appeals, the taxpayer may appeal
with the Central Board of Assessment Appeals within 30 days from receipt of the Local Boards
decision:chanroblesvirtuallawlibrary
SECTION 229. Action by the Local Board of Assessment Appeals. - (a) The Board shall decide the appeal within one
hundred twenty (120) days from the date of receipt of such appeal. The Board, after hearing, shall render its decision
based on substantial evidence or such relevant evidence on record as a reasonable mind might accept as adequate to
support the conclusion.
(b) In the exercise of its appellate jurisdiction, the Board shall have the power to summon witnesses, administer oaths,
conduct ocular inspection, take depositions, and issue subpoena and subpoena duces tecum. The proceedings of the
Board shall be conducted solely for the purpose of ascertaining the facts without necessarily adhering to technical rules
applicable in judicial proceedings.
(c) The secretary of the Board shall furnish the owner of the property or the person having legal interest therein and the
provincial or city assessor with a copy of the decision of the Board. In case the provincial or city assessor concurs in the
revision or the assessment, it shall be his duty to notify the owner of the property or the person having legal interest
therein of such fact using the form prescribed for the purpose. The owner of the property or the person having legal
interest therein or the assessor who is not satisfied with the decision of the Board, may, within thirty (30) days after receipt
of the decision of said Board, appeal to the Central Board of Assessment Appeals, as herein provided. The decision of the
Central Board shall be final and executory. (Emphasis supplied)
On the other hand, an assessment is illegal if it was made without authority under the law. 162 In case of an illegal
assessment, the taxpayer may directly resort to judicial action without paying under protest the assessed tax and filing an
appeal with the Local and Central Board of Assessment Appeals.
In Ty v. Trampe,163 the Municipal Assessor of Pasig sent Alejandro B. Ty a notice of assessment with respect to Tys real
properties in Pasig. Without resorting to the administrative remedies under the Local Government Code, Ty filed before
the Regional Trial Court a petition, praying that the trial court nullify the notice of assessment. In assessing the real
property taxes due, the Municipal Assessor used a schedule of market values solely prepared by him. This, Ty argued,
was void for being contrary to the Local Government Code requiring that the schedule of market values be jointly
prepared by the provincial, city, and municipal assessors of the municipalities within the Metropolitan Manila Area.
This court ruled that the assessment was illegal for having been issued without authority of the Municipal Assessor.
Reconciling provisions of the Real Property Tax Code and the Local Government Code, this court held that the schedule
of market values must be jointly prepared by the provincial, city, and municipal assessors of the municipalities within the
Metropolitan Manila Area.
As to the issue of exhaustion of administrative remedies, this court held that Ty did not err in directly resorting to judicial
action. According to this court, payment under protest is required only where there is a question as to the
reasonableness of the amount assessed.164 As to appeals before the Local and Central Board of Assessment Appeals,
they are fruitful only where questions of fact are involved. 165chanRoblesvirtualLawlibrary
Ty raised the issue of the legality of the notice of assessment, an issue that did not go into the reasonableness of the
amount assessed. Neither did the issue involve a question of fact. Ty raised a question of law and, therefore, need not
resort to the administrative remedies provided under the Local Government Code.
In the present case, the PEZA did not avail itself of any of the remedies against a notice of assessment. A petition for
declaratory relief is not the proper remedy once a notice of assessment was already issued.
Instead of a petition for declaratory relief, the PEZA should have directly resorted to a judicial action. The PEZA should
have filed a complaint for injunction, the appropriate ordinary civil action 166 to enjoin the City from enforcing its demand
and collecting the assessed taxes from the PEZA. After all, a declaratory judgment as to the PEZAs tax-exempt status is
useless unless the City is enjoined from enforcing its demand.
Injunction is a judicial writ, process or proceeding whereby a party is ordered to do or refrain from doing a certain act. 167
It may be the main action or merely a provisional remedy for and as incident in the main action. 168 The essential
requisites of a writ of injunction are: (1) there must be a right in esse or the existence of a right to be protected; and (2)
the act against which the injunction is directed to constitute a violation of such right. 169chanRoblesvirtualLawlibrary
We note, however, that the City confused the concepts of jurisdiction and venue in contending that the Regional Trial
Court of Pasay had no jurisdiction because the real properties involved in this case are located in the City of Lapu-Lapu.
On the one hand, jurisdiction is the power to hear and determine cases of the general class to which the proceedings in
question belong.170 Jurisdiction is a matter of substantive law.171 Thus, an action may be filed only with the court or
tribunal where the Constitution or a statute says it can be brought. 172 Objections to jurisdiction cannot be waived and may
be brought at any stage of the proceedings, even on appeal. 173 When a case is filed with a court which has no jurisdiction
over the action, the court shall motu proprio dismiss the case.174chanRoblesvirtualLawlibrary
On the other hand, venue is the place of trial or geographical location in which an action or proceeding should be
brought.175 In civil cases, venue is a matter of procedural law.176 A partys objections to venue must be brought at the
earliest opportunity either in a motion to dismiss or in the answer; otherwise the objection shall be deemed waived. 177
When the venue of a civil action is improperly laid, the court cannot motu proprio dismiss the
case.178chanRoblesvirtualLawlibrary
The venue of an action depends on whether the action is a real or personal action. Should the action affect title to or
possession of real property, or interest therein, it is a real action. The action should be filed in the proper court which has
jurisdiction over the area wherein the real property involved, or a portion thereof, is situated. 179 If the action is a personal
action, the action shall be filed with the proper court where the plaintiff or any of the principal plaintiffs resides, or where
the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be
found, at the election of the plaintiff.180chanRoblesvirtualLawlibrary
The City was objecting to the venue of the action, not to the jurisdiction of the Regional Trial Court of Pasay. In essence,
the City was contending that the PEZAs petition is a real action as it affects title to or possession of real property, and,
therefore, the PEZA should have filed the petition with the Regional Trial Court of Lapu-Lapu City where the real
properties are located.
However, whatever objections the City has against the venue of the PEZAs action for declaratory relief are already
deemed waived. Objections to venue must be raised at the earliest possible opportunity. 181 The City did not file a motion
to dismiss the petition on the ground that the venue was improperly laid. Neither did the City raise this objection in its
answer.
In any event, the law sought to be judicially interpreted in this case had already been breached. The Regional Trial Court
of Pasay, therefore, had no jurisdiction over the PEZAs petition for declaratory relief against the City.
III.
The Court of Appeals had no jurisdiction

over the PEZAs petition for certiorari
against the Province of Bataan
Appeal is the remedy to obtain a reversal or modification of a judgment on the merits. 182 A judgment on the merits is one
which determines the rights and liabilities of the parties based on the disclosed facts, irrespective of the formal, technical
or dilatory objections.183 It is not even necessary that the case proceeded to trial. 184 So long as the judgment is
general185 and the parties had a full legal opportunity to be heard on their respective claims and contentions, 186 the
judgment is on the merits.
On the other hand, certiorari is a special civil action filed to annul or modify a proceeding of a tribunal, board, or officer
exercising judicial or quasi-judicial functions.187 Certiorari, which in Latin means to be more fully informed, 188 was
originally a remedy in the common law. This court discussed the history of the remedy of certiorari in Spouses Delos
Santos v. Metropolitan Bank and Trust Company:189chanRoblesvirtualLawlibrary
In the common law, from which the remedy of certiorari evolved, the writ of certiorari was issued out of Chancery, or the
Kings Bench, commanding agents or officers of the inferior courts to return the record of a cause pending before them, so
as to give the party more sure and speedy justice, for the writ would enable the superior court to determine from an
inspection of the record whether the inferior courts judgment was rendered without authority. The errors were of such a
nature that, if allowed to stand, they would result in a substantial injury to the petitioner to whom no other remedy was
available. If the inferior court acted without authority, the record was then revised and corrected in matters of law. The writ
of certiorari was limited to cases in which the inferior court was said to be exceeding its jurisdiction or was not proceeding
according to essential requirements of law and would lie only to review judicial or quasi-judicial acts. 190
In our jurisdiction, the term certiorari is used in two ways. An appeal before this court raising pure questions of law is
commenced by filing a petition for review on certiorari under Rule 45 of the Rules of Court. An appeal by certiorari, which
continues the proceedings commenced before the lower courts, 191 is filed to reverse or modify judgments or final
orders.192 Under the Rules, an appeal by certiorari must be filed within 15 days from notice of the judgment or final order,
or of the denial of the appellants motion for new trial or reconsideration. 193chanRoblesvirtualLawlibrary
A petition for certiorari under Rule 65, on the other hand, is an independent and original action filed to set aside
proceedings conducted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of
jurisdiction.194 Under the Rules, a petition for certiorari may only be filed if there is no appeal or any plain, speedy, or
adequate remedy in the ordinary course of law.195 The petition must be filed within 60 days from notice of the judgment,
order, or resolution.196chanRoblesvirtualLawlibrary
Because of the longer period to file a petition for certiorari, some litigants attempt to file petitions for certiorari as
substitutes for lost appeals by certiorari. However, Rule 65 is clear that a petition for certiorari will not prosper if appeal is
available. Appeal is the proper remedy even if the error, or one of the errors, raised is grave abuse of discretion on the
part of the court rendering judgment.197 If appeal is available, a petition for certiorari cannot be filed.
In this case, the trial courts decision dated January 31, 2007 is a judgment on the merits. Based on the facts disclosed by
the parties, the trial court declared the PEZA liable to the Province of Bataan for real property taxes. The PEZAs proper
remedy against the trial courts decision, therefore, is appeal.
Since the PEZA filed a petition for certiorari against the trial courts decision, it availed itself of the wrong remedy. As the
Province of Bataan contended, the trial courts decision dated January 31, 2007 is only an error of judgment appealable
to the higher level court and may not be corrected by filing a petition for certiorari. 198 That the trial court judge allegedly
committed grave abuse of discretion does not make the petition for certiorari the correct remedy. The PEZA should have
raised this ground in an appeal filed within 15 days from notice of the assailed resolution.
This court, in the liberal spirit pervading the Rules of Court and in the interest of substantial justice, 199 has treated
petitions for certiorari as an appeal: (1) if the petition for certiorari was filed within the reglementary period within which to
file a petition for review on certiorari; (2) when errors of judgment are averred; and (3) when there is sufficient reason to
justify the relaxation of the rules.200 Considering that the nature of an action is determined by the allegations of the
complaint or the petition and the character of the relief sought, 201 a petition which actually avers errors of judgment rather
than errors than that of jurisdiction202 may be considered a petition for review.
However, suspending the application of the Rules has its disadvantages. Relaxing procedural rules may reduce the
effective enforcement of substantive rights,203 leading to arbitrariness, caprice, despotism, or whimsicality in the
settlement of disputes.204 Therefore, for this court to suspend the application of the Rules, the accomplishment of
substantial justice must outweigh the importance of predictability of court procedures.
The PEZAs petition for certiorari may be treated as an appeal. First, the petition for certiorari was filed within the 15-day
reglementary period for filing an appeal. The PEZA filed its petition for certiorari before the Court of Appeals on October
15, 2007,205 which was 12 days from October 3, 2007206 when the PEZA had notice of the trial courts order denying the
motion for reconsideration.
Second, the petition for certiorari raised errors of judgment. The PEZA argued that the trial court erred in ruling that it is
not exempt from payment of real property taxes given Section 21 of Presidential Decree No. 66 and Sections 11 and 51 of
the Special Economic Zone Act of 1995.207chanRoblesvirtualLawlibrary
Third, there is sufficient reason to relax the rules given the importance of the substantive issue presented in this case.
However, the PEZAs petition for certiorari was filed before the wrong court. The PEZA should have filed its petition before
the Court of Tax Appeals.
The Court of Tax Appeals has the exclusive appellate jurisdiction over local tax cases decided by Regional Trial Courts.
Section 7, paragraph (a)(3) of Republic Act No. 1125, as amended by Republic Act No. 9282,
Sec. 7. Jurisdiction. The [Court of Tax Appeals] shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
....
3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally decided or resolved by them in
the exercise of their original or appellate jurisdiction[.]
The local tax cases referred to in Section 7, paragraph (a)(3) of Republic Act No. 1125, as amended, include cases
involving real property taxes. Real property taxation is governed by Book II of the Local Government Code on Local
Taxation and Fiscal Matters. Real property taxes are collected by the Local Treasurer, 208 not by the Bureau of Internal
Revenue in charge of collecting national internal revenue taxes, fees, and charges. 209chanRoblesvirtualLawlibrary
Section 7, paragraph (a)(5) of Republic Act No. 1125, as amended by Republic Act No. 9282, separately provides for the
exclusive appellate jurisdiction of the Court of Tax Appeals over decisions of the Central Board of Assessment Appeals
involving the assessment or collection of real property taxes:chanroblesvirtuallawlibrary
Sec. 7. Jurisdiction. The [Court of Tax Appeals] shall exercise:

a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
....
5. Decisions of the Central Board of Assessment Appeals in the exercise of its appellate jurisdiction over cases involving
the assessment and taxation of real property originally decided by the provincial or city board of assessment appeals[.]
This separate provision, nevertheless, does not bar the Court of Tax Appeals from taking cognizance of trial court
decisions involving the collection of real property tax cases. Sections 256210 and 266211of the Local Government Code
expressly allow local government units to file in any court of competent jurisdiction civil actions to collect basic real
property taxes. Should the trial court rule against them, local government units cannot be barred from appealing before
the Court of Tax Appeals the highly specialized body specifically created for the purpose of reviewing tax
cases.212chanRoblesvirtualLawlibrary
We have also ruled that the Court of Tax Appeals, not the Court of Appeals, has the exclusive original jurisdiction over
petitions for certiorari assailing interlocutory orders issued by Regional Trial Courts in a local tax case. We explained
in The City of Manila v. Hon. Grecia-Cuerdo213 that while the Court of Tax Appeals has no express grant of power to issue
writs of certiorari under Republic Act No. 1125,214 as amended, the tax courts judicial power as defined in the
Constitution215 includes the power to determine whether or not there has been grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of the [Regional Trial Court] in issuing an interlocutory order of jurisdiction in
cases falling within the exclusive appellate jurisdiction of the tax court. 216 We further
elaborated:chanroblesvirtuallawlibrary
Indeed, in order for any appellate court to effectively exercise its appellate jurisdiction, it must have the authority to issue,
among others, a writ of certiorari. In transferring exclusive jurisdiction over appealed tax cases to the CTA, it can
reasonably be assumed that the law intended to transfer also such power as is deemed necessary, if not indispensable, in
aid of such appellate jurisdiction. There is no perceivable reason why the transfer should only be considered as partial, not
total.
....
If this Court were to sustain petitioners' contention that jurisdiction over their certiorari petition lies with the CA, this Court
would be confirming the exercise by two judicial bodies, the CA and the CTA, of jurisdiction over basically the same
subject matter precisely the split-jurisdiction situation which is anathema to the orderly administration of justice. The
Court cannot accept that such was the legislative motive, especially considering that the law expressly confers on the
CTA, the tribunal with the specialized competence over tax and tariff matters, the role of judicial review over local tax
cases without mention of any other court that may exercise such power. Thus, the Court agrees with the ruling of the CA
that since appellate jurisdiction over private respondents' complaint for tax refund is vested in the CTA, it follows that a
petition for certiorari seeking nullification of an interlocutory order issued in the said case should, likewise, be filed with the
same court. To rule otherwise would lead to an absurd situation where one court decides an appeal in the main case while
another court rules on an incident in the very same case.
Stated differently, it would be somewhat incongruent with the pronounced judicial abhorrence to split jurisdiction to
conclude that the intention of the law is to divide the authority over a local tax case filed with the RTC by giving to the CA
or this Court jurisdiction to issue a writ of certiorari against interlocutory orders of the RTC but giving to the CTA the
jurisdiction over the appeal from the decision of the trial court in the same case. It is more in consonance with logic and
legal soundness to conclude that the grant of appellate jurisdiction to the CTA over tax cases filed in and decided by the
RTC carries with it the power to issue a writ of certiorari when necessary in aid of such appellate jurisdiction. The
supervisory power or jurisdiction of the CTA to issue a writ of certiorari in aid of its appellate jurisdiction should co-exist
with, and be a complement to, its appellate jurisdiction to review, by appeal, the final orders and decisions of the RTC, in
order to have complete supervision over the acts of the latter. 217 (Citations omitted)
In this case, the petition for injunction filed before the Regional Trial Court of Pasay was a local tax case originally decided
by the trial court in its original jurisdiction. Since the PEZA assailed a judgment, not an interlocutory order, of the Regional
Trial Court, the PEZAs proper remedy was an appeal to the Court of Tax Appeals.
Considering that the appellate jurisdiction of the Court of Tax Appeals is to the exclusion of all other courts, the Court of
Appeals had no jurisdiction to take cognizance of the PEZAs petition. The Court of Appeals acted without jurisdiction in
rendering the decision in CA-G.R. SP No. 100984. Its decision in CA-G.R. SP No. 100984 is
void.218chanRoblesvirtualLawlibrary
The filing of appeal in the wrong court does not toll the period to appeal. Consequently, the decision of the Regional Trial
Court, Branch 115, Pasay City, became final and executory after the lapse of the 15th day from the PEZAs receipt of the
trial courts decision.219 The denial of the petition for injunction became final and executory.
IV.
The remedy of a taxpayer depends on the

stage in which the local government unit is
enforcing its authority to impose real
property taxes
The proper remedy of a taxpayer depends on the stage in which the local government unit is enforcing its authority to
collect real property taxes. For the guidance of the members of the bench and the bar, we reiterate the taxpayers
remedies against the erroneous or illegal assessment of real property taxes.
Exhaustion of administrative remedies under the Local Government Code is necessary in cases of erroneous
assessments where the correctness of the amount assessed is assailed. The taxpayer must first pay the tax then file a
protest with the Local Treasurer within 30 days from date of payment of tax. 220 If protest is denied or upon the lapse of the
60-day period to decide the protest, the taxpayer may appeal to the Local Board of Assessment Appeals within 60 days
from the denial of the protest or the lapse of the 60-day period to decide the protest. 221 The Local Board of Assessment
Appeals has 120 days to decide the appeal.222chanRoblesvirtualLawlibrary
If the taxpayer is unsatisfied with the Local Boards decision, the taxpayer may appeal before the Central Board of
Assessment Appeals within 30 days from receipt of the Local Boards decision. 223chanRoblesvirtualLawlibrary
The decision of the Central Board of Assessment Appeals is appealable before the Court of Tax Appeals En Banc. 224 The
appeal before the Court of Tax Appeals shall be filed following the procedure under Rule 43 of the Rules of
Court.225chanRoblesvirtualLawlibrary
The Court of Tax Appeals decision may then be appealed before this court through a petition for review on certiorari under
Rule 45 of the Rules of Court raising pure questions of law. 226chanRoblesvirtualLawlibrary
In case of an illegal assessment where the assessment was issued without authority, exhaustion of administrative
remedies is not necessary and the taxpayer may directly resort to judicial action. 227 The taxpayer shall file a complaint for
injunction before the Regional Trial Court228 to enjoin the local government unit from collecting real property taxes.
The party unsatisfied with the decision of the Regional Trial Court shall file an appeal, not a petition for certiorari, before
the Court of Tax Appeals, the complaint being a local tax case decided by the Regional Trial Court. 229 The appeal shall be
filed within fifteen (15) days from notice of the trial courts decision.
The Court of Tax Appeals decision may then be appealed before this court through a petition for review on certiorari under
Rule 45 of the Rules of Court raising pure questions of law. 230chanRoblesvirtualLawlibrary
In case the local government unit has issued a notice of delinquency, the taxpayer may file a complaint for injunction to
enjoin the impending sale of the real property at public auction. In case the local government unit has already sold the
property at public auction, the taxpayer must first deposit with the court the amount for which the real property was sold,
together with interest of 2% per month from the date of sale to the time of the institution of action. The taxpayer may then
file a complaint to assail the validity of the public auction. 231 The decisions of the Regional Trial Court in these cases shall
be appealable before the Court of Tax Appeals,232 and the latters decisions appealable before this court through a petition
for review on certiorari under Rule 45 of the Rules of Court. 233chanRoblesvirtualLawlibrary
V.
The PEZA is exempt from payment

of real property taxes
The jurisdictional errors in this case render these consolidated petitions moot. We do not review void decisions rendered
without jurisdiction.
However, the PEZA alleged that several local government units, including the City of Baguio and the Province of Cavite,
have issued their respective real property tax assessments against the PEZA. Other local government units will likely
follow suit, and either the PEZA or the local government units taxing the PEZA may file their respective actions against
each other.
In the interest of judicial economy234 and avoidance of conflicting decisions involving the same issues, 235 we resolve the
substantive issue of whether the PEZA is exempt from payment of real property taxes.
Real property taxes are annual taxes levied on real property such as lands, buildings, machinery, and other improvements
not otherwise specifically exempted under the Local Government Code. 236 Real property taxes are ad valorem, with the
amount charged based on a fixed proportion of the value of the property. 237 Under the law, provinces, cities, and
municipalities within the Metropolitan Manila Area have the power to levy real property taxes within their respective
territories.238chanRoblesvirtualLawlibrary
The general rule is that real properties are subject to real property taxes. This is true especially since the Local
Government Code has withdrawn exemptions from real property taxes of all persons, whether natural or
juridical:chanroblesvirtuallawlibrary
SEC. 234. Exemptions from Real Property Tax. The following are exempted from payment of real property tax:
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial
use thereof has been granted, for consideration or otherwise, to a taxable person;
(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, nonprofit or religious
cemeteries and all lands, buildings, and improvements actually, directly, and exclusively used for religious, charitable or
educational purposes;
(c) All machineries and equipment that are actually, directly and exclusively used by local water districts and government-
owned or controlled corporations engaged in the supply and distribution of water and/or generation and transmission of
electric power;
(d) All real property owned by duly registered cooperatives as provided under R.A. No. 6938; and
(e) Machinery and equipment used for pollution control and environmental protection.
Except as provided herein, any exemption from payment of real property taxes previously granted to, or presently enjoyed
by, all persons, whether natural or juridical, including government-owned or -controlled corporations are hereby withdrawn
upon the effectivity of this Code. (Emphasis supplied)
The person liable for real property taxes is the taxable person who had actual or beneficial use and possession [of the
real property for the taxable period,] whether or not [the person owned the property for the period he or she is being
taxed].239chanRoblesvirtualLawlibrary
The exceptions to the rule are provided in the Local Government Code. Under Section 133(o), local government units
have no power to levy taxes of any kind on the national government, its agencies and instrumentalities and local
government units:chanroblesvirtuallawlibrary
SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. Unless otherwise provided herein, the
exercise of taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following:
....
(o) Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities and local
government units.
Specifically on real property taxes, Section 234 enumerates the persons and real property exempt from real property
taxes:chanroblesvirtuallawlibrary
use thereof has been granted, for consideration or otherwise, to a taxable person;
(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, nonprofit or religious
cemeteries and all lands, buildings, and improvements actually, directly, and exclusively used for religious, charitable or
educational purposes;
(c) All machineries and equipment that are actually, directly and exclusively used by local water districts and government-
electric power;
(d) All real property owned by duly registered cooperatives as provided under R.A. No. 6938; and
(e) Machinery and equipment used for pollution control and environmental protection.
Except as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed
by, all persons, whether natural or juridical, including all government-owned or -controlled corporations are hereby
withdrawn upon the effectivity of this Code. (Emphasis supplied)
For persons granted tax exemptions or incentives before the effectivity of the Local Government Code, Section 193
withdrew these tax exemption privileges. These persons consist of both natural and juridical persons, including
government-owned or controlled corporations:chanroblesvirtuallawlibrary
SEC. 193. Withdrawal of Tax Exemption Privileges. Unless otherwise provided in this code, tax exemptions or incentives
granted to or presently enjoyed by all persons, whether natural or juridical, including government-owned or controlled
corporations, except local water districts, cooperatives duly registered under R.A. 6938, non stock and non profit hospitals
and educational institutions, are hereby withdrawn upon effectivity of this Code.
As discussed, Section 234 withdrew all tax privileges with respect to real property taxes.
Nevertheless, local government units may grant tax exemptions under such terms and conditions as they may deem
necessary:chanroblesvirtuallawlibrary
SEC. 192. Authority to Grant Tax Exemption Privileges. Local government units may, through ordinances duly approved,
grant tax exemptions, incentives or reliefs under such terms and conditions as they may deem necessary.
In Mactan Cebu International Airport Authority v. Hon. Marcos,240 this court classified the exemptions from real property
taxes into ownership, character, and usage exemptions.
Ownership exemptions are exemptions based on the ownership of the real property. The exemptions of real property
owned by the Republic of the Philippines, provinces, cities, municipalities, barangays, and registered cooperatives fall
under this classification.241chanRoblesvirtualLawlibrary
Character exemptions are exemptions based on the character of the real property. Thus, no real property taxes may be
levied on charitable institutions, houses and temples of prayer like churches, parsonages, or convents appurtenant
thereto, mosques, and non profit or religious cemeteries. 242chanRoblesvirtualLawlibrary
Usage exemptions are exemptions based on the use of the real property. Thus, no real property taxes may be levied on
real property such as: (1) lands and buildings actually, directly, and exclusively used for religious, charitable or educational
purpose; (2) machineries and equipment actually, directly and exclusively used by local water districts or by government-
electric power; and (3) machinery and equipment used for pollution control and environmental
protection.243chanRoblesvirtualLawlibrary
Persons may likewise be exempt from payment of real properties if their charters, which were enacted or reenacted after
the effectivity of the Local Government Code, exempt them payment of real property taxes. 244chanRoblesvirtualLawlibrary
V. (A)
The PEZA is an instrumentality of the national government
An instrumentality is any agency of the National Government, not integrated within the department framework, vested
with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds,
and enjoying operational autonomy, usually through a charter.245chanRoblesvirtualLawlibrary
Examples of instrumentalities of the national government are the Manila International Airport Authority, 246 the Philippine
Fisheries Development Authority,247 the Government Service Insurance System,248 and the Philippine Reclamation
Authority.249 These entities are not integrated within the department framework but are nevertheless vested with special
functions to carry out a declared policy of the national government.
Similarly, the PEZA is an instrumentality of the national government. It is not integrated within the department framework
but is an agency attached to the Department of Trade and Industry. 250 Book IV, Chapter 7, Section 38(3)(a) of the
Administrative Code of 1987 defines attachment:chanroblesvirtuallawlibrary
SEC. 38. Definition of Administrative Relationship. Unless otherwise expressly stated in the Code or in other laws
defining the special relationships of particular agencies, administrative relationships shall be categorized and defined as
follows:
....
(3) Attachment.(a) This refers to the lateral relationship between the department or its equivalent and the attached
agency or corporation for purposes of policy and program coordination. The coordination may be accomplished by having
the department represented in the governing board of the attached agency or corporation, either as chairman or as a
member, with or without voting rights, if this is permitted by the charter; having the attached corporation or agency comply
with a system of periodic reporting which shall reflect the progress of the programs and projects; and having the
department or its equivalent provide general policies through its representative in the board, which shall serve as the
framework for the internal policies of the attached corporation or agency[.]
Attachment, which enjoys a larger measure of independence251 compared with other administrative relationships such as
supervision and control, is further explained in Beja, Sr. v. Court of Appeals:252chanRoblesvirtualLawlibrary
An attached agency has a larger measure of independence from the Department to which it is attached than one which is
under departmental supervision and control or administrative supervision. This is borne out by the lateral relationship
between the Department and the attached agency. The attachment is merely for policy and program coordination. With
respect to administrative matters, the independence of an attached agency from Departmental control and supervision is
further reinforced by the fact that even an agency under a Departments administrative supervision is free from
Departmental interference with respect to appointments and other personnel actions in accordance with the
decentralization of personnel functions under the Administrative Code of 1987. Moreover, the Administrative Code
explicitly provides that Chapter 8 of Book IV on supervision and control shall not apply to chartered institutions attached to
a Department.253
With the PEZA as an attached agency to the Department of Trade and Industry, the 13-person PEZA Board is chaired by
the Department Secretary.254 Among the powers and functions of the PEZA is its ability to coordinate with the Department
of Trade and Industry for policy and program formulation and implementation. 255 In strategizing and prioritizing the
development of special economic zones, the PEZA coordinates with the Department of Trade and
Industry.256chanRoblesvirtualLawlibrary
The PEZA also administers its own funds and operates autonomously, with the PEZA Board formulating and approving the
PEZAs annual budget.257 Appointments and other personnel actions in the PEZA are also free from departmental
interference, with the PEZA Board having the exclusive and final authority to promote, transfer, assign and reassign
officers of the PEZA.258chanRoblesvirtualLawlibrary
As an instrumentality of the national government, the PEZA is vested with special functions or jurisdiction by law.
Congress created the PEZA to operate, administer, manage and develop special economic zones in the Philippines. 259
Special economic zones are areas with highly developed or which have the potential to be developed into agro-industrial,
industrial tourist/recreational, commercial, banking, investment and financial centers. 260 By operating, administering,
managing, and developing special economic zones which attract investments and promote use of domestic labor, the
PEZA carries out the following policy of the Government:chanroblesvirtuallawlibrary
SECTION 2. Declaration of Policy. It is the declared policy of the government to translate into practical realities the
following State policies and mandates in the 1987 Constitution, namely:
(a) The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides
incentives to needed investments. (Sec. 20, Art. II)
(b) The State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods, and
adopt measures that help make them competitive. (Sec. 12, Art. XII)
In pursuance of these policies, the government shall actively encourage, promote, induce and accelerate a sound and
balanced industrial, economic and social development of the country in order to provide jobs to the people especially
those in the rural areas, increase their productivity and their individual and family income, and thereby improve the level
and quality of their living condition through the establishment, among others, of special economic zones in suitable and
strategic locations in the country and through measures that shall effectively attract legitimate and productive foreign
investments.261
Being an instrumentality of the national government, the PEZA cannot be taxed by local government units.
Although a body corporate vested with some corporate powers, 262 the PEZA is not a government-owned or controlled
corporation taxable for real property taxes.
Section 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines the term government-owned or
controlled corporation:chanroblesvirtuallawlibrary
SEC. 2. General Terms Defined. Unless the specific words of the text, or the context as a whole, or a particular statute,
shall require a different meaning:
....
(13) Government-owned or controlled corporation refers to any agency organized as a stock or non-stock corporation,
vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the
Government directly or through its instrumentalities either wholly, or, where applicable as in the case of stock corporations,
to the extent of at least fifty-one (51) per cent of its capital stock: Provided, That government-owned or controlled
corporations may be further categorized by the Department of the Budget, the Civil Service Commission, and the
Commission on Audit for purposes of the exercise and discharge of their respective powers, functions and responsibilities
with respect to such corporations.
Government entities are created by law, specifically, by the Constitution or by statute. In the case of government-owned
or controlled corporations, they are incorporated by virtue of special charters 263to participate in the market for special
reasons which may be related to dysfunctions or inefficiencies of the market structure. This is to adjust reality as against
the concept of full competition where all market players are price takers. Thus, under the Constitution, government-owned
or controlled corporations are created in the interest of the common good and should satisfy the test of economic
viability.264 Article XII, Section 16 of the Constitution provides:chanroblesvirtuallawlibrary
Section 16. The Congress shall not, except by general law, provide for the formation, organization, or regulation of private
corporations. Government-owned or controlled corporations may be created or established by special charters in the
interest of the common good and subject to the test of economic viability.
Economic viability is the capacity to function efficiently in business. 265 To be economically viable, the entity should not
go into activities which the private sector can do better.266chanRoblesvirtualLawlibrary
To be considered a government-owned or controlled corporation, the entity must have been organized as a stock or non-
stock corporation.267chanRoblesvirtualLawlibrary
Government instrumentalities, on the other hand, are also created by law but partake of sovereign functions. When a
government entity performs sovereign functions, it need not meet the test of economic viability. In Manila International
Airport Authority v. Court of Appeals,268 this court explained:chanroblesvirtuallawlibrary
In contrast, government instrumentalities vested with corporate powers and performing governmental or public functions
need not meet the test of economic viability. These instrumentalities perform essential public services for the common
good, services that every modern State must provide its citizens. These instrumentalities need not be economically viable
since the government may even subsidize their entire operations. These instrumentalities are not the "government-owned
or controlled corporations" referred to in Section 16, Article XII of the 1987 Constitution.
Thus, the Constitution imposes no limitation when the legislature creates government instrumentalities vested with
corporate powers but performing essential governmental or public functions. Congress has plenary authority to create
government instrumentalities vested with corporate powers provided these instrumentalities perform essential government
functions or public services. However, when the legislature creates through special charters corporations that perform
economic or commercial activities, such entities known as "government-owned or controlled corporations" must
meet the test of economic viability because they compete in the market place.
....
Commissioner Blas F. Ople, proponent of the test of economic viability, explained to the Constitutional Commission the
purpose of this test, as follows:chanroblesvirtuallawlibrary
MR. OPLE: Madam President, the reason for this concern is really that when the government creates a corporation, there
is a sense in which this corporation becomes exempt from the test of economic performance. We know what happened in
the past. If a government corporation loses, then it makes its claim upon the taxpayers' money through new equity
infusions from the government and what is always invoked is the common good. That is the reason why this year, out of a
budget of P115 billion for the entire government, about P28 billion of this will go into equity infusions to support a few
government financial institutions. And this is all taxpayers' money which could have been relocated to agrarian reform, to
social services like health and education, to augment the salaries of grossly underpaid public employees. And yet this is
all going down the drain.
Therefore, when we insert the phrase "ECONOMIC VIABILITY" together with the "common good," this becomes a
restraint on future enthusiasts for state capitalism to excuse themselves from the responsibility of meeting the market test
so that they become viable. And so, Madam President, I reiterate, for the committee's consideration and I am glad that I
am joined in this proposal by Commissioner Foz, the insertion of the standard of "ECONOMIC VIABILITY OR THE
ECONOMIC TEST," together with the common good.
....
Clearly, the test of economic viability does not apply to government entities vested with corporate powers and performing
essential public services. The State is obligated to render essential public services regardless of the economic viability of
providing such service. The non-economic viability of rendering such essential public service does not excuse the State
from withholding such essential services from the public. 269(Emphases and citations omitted)
The law created the PEZAs charter. Under the Special Economic Zone Act of 1995, the PEZA was established primarily to
perform the governmental function of operating, administering, managing, and developing special economic zones to
attract investments and provide opportunities for preferential use of Filipino labor.
Under its charter, the PEZA was created a body corporate endowed with some corporate powers. However, it was not
organized as a stock270 or non-stock271 corporation. Nothing in the PEZAs charter provides that the PEZAs capital is
divided into shares.272 The PEZA also has no members who shall share in the PEZAs profits.
The PEZA does not compete with other economic zone authorities in the country. The government may even subsidize
the PEZAs operations. Under Section 47 of the Special Economic Zone Act of 1995, any sum necessary to augment [the
PEZAs] capital outlay shall be included in the General Appropriations Act to be treated as an equity of the national
government.273chanRoblesvirtualLawlibrary
The PEZA, therefore, need not be economically viable. It is not a government-owned or controlled corporation liable for
real property taxes.
V. (B)
The PEZA assumed the non-profit character, including the tax exempt status, of the EPZA
The PEZAs predecessor, the EPZA, was declared non-profit in character with all its revenues devoted for its
development, improvement, and maintenance. Consistent with this non-profit character, the EPZA was explicitly declared
exempt from real property taxes under its charter. Section 21 of Presidential Decree No. 66
Section 21. Non-profit Character of the Authority; Exemption from Taxes. The Authority shall be non-profit and shall devote
and use all its returns from its capital investment, as well as excess revenues from its operations, for the development,
improvement and maintenance and other related expenditures of the Authority to pay its indebtedness and obligations and
in furtherance and effective implementation of the policy enunciated in Section 1 of this Decree. In consonance therewith,
the Authority is hereby declared exempt:ChanRoblesVirtualawlibrary
....
(b) From all income taxes, franchise taxes, realty taxes and all other kinds of taxes and licenses to be paid to the National
Government, its provinces, cities, municipalities and other government agencies and instrumentalities[.]
The Special Economic Zone Act of 1995, on the other hand, does not specifically exempt the PEZA from payment of real
property taxes.
Nevertheless, we rule that the PEZA is exempt from real property taxes by virtue of its charter. A provision in the Special
Economic Zone Act of 1995 explicitly exempting the PEZA is unnecessary. The PEZA assumed the real property
exemption of the EPZA under Presidential Decree No. 66.
Section 11 of the Special Economic Zone Act of 1995 mandated the EPZA to evolve into the PEZA in accordance with the
guidelines and regulations set forth in an executive order issued for this purpose. President Ramos then issued
Executive Order No. 282 in 1995, ordering the PEZA to assume the EPZAs powers, functions, and responsibilities under
Presidential Decree No. 66 not inconsistent with the Special Economic Zone Act of 1995:chanroblesvirtuallawlibrary
SECTION 1. Assumption of EPZAs Powers and Functions by PEZA. All the powers, functions and responsibilities of
EPZA as provided under its Charter, Presidential Decree No. 66, as amended, insofar as they are not inconsistent with the
powers, functions and responsibilities of the PEZA, as mandated under Republic Act No. 7916, shall hereafter be
assumed and exercised by the PEZA. Henceforth, the EPZA shall be referred to as the PEZA.
The following sections of the Special Economic Zone Act of 1995 provide for the PEZAs powers, functions, and
responsibilities:chanroblesvirtuallawlibrary
SEC. 5. Establishment of ECOZONES. To ensure the viability and geographical dispersal of ECOZONES through a
system of prioritization, the following areas are initially identified as ECOZONES, subject to the criteria specified in
Section 6:
....
The metes and bounds of each ECOZONE are to be delineated and more particularly described in a proclamation to be
issued by the President of the Philippines, upon the recommendation of the Philippine Economic Zone Authority (PEZA),
which shall be established under this Act, in coordination with the municipal and / or city council, National Land Use
Coordinating Committee and / or the Regional Land Use Committee.
SEC. 6. Criteria for the Establishment of Other ECOZONES. In addition to the ECOZONES identified in Section 5 of this
Act, other areas may be established as ECOZONES in a proclamation to be issued by the President of the Philippines
subject to the evaluation and recommendation of the PEZA, based on a detailed feasibility and engineering study which
must conform to the following criteria:
(a) The proposed area must be identified as a regional growth center in the Medium-Term Philippine Development Plan or
by the Regional Development Council;
(b) The existence of required infrastructure in the proposed ECOZONE, such as roads, railways, telephones, ports,
airports, etc., and the suitability and capacity of the proposed site to absorb such improvements;
(c) The availability of water source and electric power supply for use of the ECOZONE;
(d) The extent of vacant lands available for industrial and commercial development and future expansion of the
ECOZONE as well as of lands adjacent to the ECOZONE available for development of residential areas for the
ECOZONE workers;
(e) The availability of skilled, semi-skilled and non-skilled trainable labor force in and around the ECOZONE;
(f) The area must have a significant incremental advantage over the existing economic zones and its potential profitability
can be established;
(g) The area must be strategically located; and
(h) The area must be situated where controls can easily be established to curtail smuggling activities.
Other areas which do not meet the foregoing criteria may be established as ECOZONES: Provided, That the said area
shall be developed only through local government and/or private sector initiative under any of the schemes allowed in
Republic Act No. 6957 (the build-operate-transfer law), and without any financial exposure on the part of the national
government: Provided, further, That the area can be easily secured to curtail smuggling activities: Provided, finally, That
after five (5) years the area must have attained a substantial degree of development, the indicators of which shall be
formulated by the PEZA.
SEC. 7. ECOZONE to be a Decentralized Agro-Industrial, Industrial, Commercial / Trading, Tourist, Investment and
Financial Community. - Within the framework of the Constitution, the interest of national sovereignty and territorial integrity
of the Republic, ECOZONE shall be developed, as much as possible, into a decentralized, self-reliant and self-sustaining
industrial, commercial/trading, agro-industrial, tourist, banking, financial and investment center with minimum government
intervention. Each ECOZONE shall be provided with transportation, telecommunications, and other facilities needed to
generate linkage with industries and employment opportunities for its own inhabitants and those of nearby towns and
cities.
The ECOZONE shall administer itself on economic, financial, industrial, tourism development and such other matters
within the exclusive competence of the national government.
The ECOZONE may establish mutually beneficial economic relations with other entities within the country, or, subject to
the administrative guidance of the Department of Foreign Affairs and/or the Department of Trade and Industry, with foreign
entities or enterprises.
Foreign citizens and companies owned by non-Filipinos in whatever proportion may set up enterprises in the ECOZONE,
either by themselves or in joint venture with Filipinos in any sector of industry, international trade and commerce within the
ECOZONE. Their assets, profits and other legitimate interests shall be protected: Provided, That the ECOZONE through
the PEZA may require a minimum investment for any ECOZONE enterprises in freely convertible currencies: Provided,
further, That the new investment shall fall under the priorities, thrusts and limits provided for in the Act.
SEC. 8. ECOZONE to be Operated and Managed as Separate Customs Territory. The ECOZONE shall be managed
and operated by the PEZA as separate customs territory.
The PEZA is hereby vested with the authority to issue certificate of origin for products manufactured or processed in each
ECOZONE in accordance with the prevailing rules or origin, and the pertinent regulations of the Department of Trade and
Industry and/or the Department of Finance.
SEC. 9. Defense and Security. The defense of the ECOZONE and the security of its perimeter fence shall be the
responsibility of the national government in coordination with the PEZA. Military forces sent by the national government for
the purpose of defense shall not interfere in the internal affairs of any of the ECOZONE and expenditure for these military
forces shall be borne by the national government. The PEZA may provide and establish the ECOZONES internal security
and firefighting forces.
SEC. 10. Immigration. Any investor within the ECOZONE whose initial investment shall not be less than One Hundred
Fifty Thousand Dollars ($150,000.00), his/her spouse and dependent children under twenty-one (21) years of age shall be
granted permanent resident status within the ECOZONE. They shall have freedom of ingress and egress to and from the
ECOZONE without any need of special authorization from the Bureau of Immigration.
The PEZA shall issue working visas renewable every two (2) years to foreign executives and other aliens, processing
highly-technical skills which no Filipino within the ECOZONE possesses, as certified by the Department of Labor and
Employment. The names of aliens granted permanent resident status and working visas by the PEZA shall be reported to
the Bureau of Immigration within thirty (30) days after issuance thereof.
SEC. 13. General Powers and Functions of the Authority. The PEZA shall have the following powers and functions:
(a) To operate, administer, manage and develop the ECOZONE according to the principles and provisions set forth in this
Act;
(b) To register, regulate and supervise the enterprises in the ECOZONE in an efficient and decentralized manner;
(c) To coordinate with local government units and exercise general supervision over the development, plans, activities and
operations of the ECOZONES, industrial estates, export processing zones, free trade zones, and the like;
(d) In coordination with local government units concerned and appropriate agencies, to construct, acquire, own, lease,
operate and maintain on its own or through contract, franchise, license, bulk purchase from the private sector and build-
operate-transfer scheme or joint venture, adequate facilities and infrastructure, such as light and power systems, water
supply and distribution systems, telecommunication and transportation, buildings, structures, warehouses, roads, bridges,
ports and other facilities for the operation and development of the ECOZONE;
(e) To create, operate and/or contract to operate such agencies and functional units or offices of the authority as it may
deem necessary;
(f) To adopt, alter and use a corporate seal; make contracts, lease, own or otherwise dispose of personal or real property;
sue and be sued; and otherwise carry out its duties and functions as provided for in this Act;
(g) To coordinate the formulation and preparation of the development plans of the different entities mentioned above;
(h) To coordinate with the National Economic Development Authority (NEDA), the Department of Trade and Industry (DTI),
the Department of Science and Technology (DOST), and the local government units and appropriate government
agencies for policy and program formulation and implementation; and
(i) To monitor and evaluate the development and requirements of entities in subsection (a) and recommend to the local
government units or other appropriate authorities the location, incentives, basic services, utilities and infrastructure
required or to be made available for said entities.
SEC. 17. Investigation and Inquiries. Upon a written formal complaint made under oath, which on its face provides
reasonable basis to believe that some anomaly or irregularity might have been committed, the PEZA or the administrator
of the ECOZONE concerned, shall have the power to inquire into the conduct of firms or employees of the ECOZONE and
to conduct investigations, and for that purpose may subpoena witnesses, administer oaths, and compel the production of
books, papers, and other evidences: Provided, That to arrive at the truth, the investigator(s) may grant immunity from
prosecution to any person whose testimony or whose possessions of documents or other evidence is necessary or
convenient to determine the truth in any investigation conducted by him or under the authority of the PEZA or the
administrator of the ECOZONE concerned.
SEC. 21. Development Strategy of the ECOZONE. - The strategy and priority of development of each ECOZONE
established pursuant to this Act shall be formulated by the PEZA, in coordination with the Department of Trade and
Industry and the National Economic and Development Authority; Provided, That such development strategy is consistent
with the priorities of the national government as outlined in the medium-term Philippine development plan. It shall be the
policy of the government and the PEZA to encourage and provide Incentives and facilitate private sector participation in
the construction and operation of public utilities and infrastructure in the ECOZONE, using any of the schemes allowed in
Republic Act No. 6957 (the build-operate-transfer law).
SEC. 22. Survey of Resources. The PEZA shall, in coordination with appropriate authorities and neighboring cities and
municipalities, immediately conduct a survey of the physical, natural assets and potentialities of the ECOZONE areas
under its
jurisdiction.
SEC. 26. Domestic Sales. Goods manufactured by an ECOZONE enterprise shall be made available for immediate
retail sales in the domestic market, subject to payment of corresponding taxes on the raw materials and other regulations
that may be adopted by the Board of the PEZA.
However, in order to protect the domestic industry, there shall be a negative list of Industries that will be drawn up by the
PEZA. Enterprises engaged in the industries included in the negative list shall not be allowed to sell their products locally.
Said negative list shall be regularly updated by the PEZA.
The PEZA, in coordination with the Department of Trade and Industry and the Bureau of Customs, shall jointly issue the
necessary implementing rules and guidelines for the effective Implementation of this section.
SEC. 29. Eminent Domain. The areas comprising an ECOZONE may be expanded or reduced when necessary. For this
purpose, the government shall have the power to acquire, either by purchase, negotiation or condemnation proceedings,
any private lands within or adjacent to the ECOZONE for:
a. Consolidation of lands for zone development purposes;
b. Acquisition of right of way to the ECOZONE; and
c. The protection of watershed areas and natural assets valuable to the prosperity of the ECOZONE.
If in the establishment of a publicly-owned ECOZONE, any person or group of persons who has been occupying a parcel
of land within the Zone has to be evicted, the PEZA shall provide the person or group of persons concerned with proper
disturbance compensation: Provided, however, That in the case of displaced agrarian reform beneficiaries, they shall be
entitled to the benefits under the Comprehensive Agrarian Reform Law, including but not limited to Section 36 of Republic
Act No. 3844, in addition to a homelot in the relocation site and preferential employment in the project being undertaken.
SEC. 32. Shipping and Shipping Register. Private shipping and related business including private container terminals
may operate freely in the ECOZONE, subject only to such minimum reasonable regulations of local application which the
PEZA may prescribe.
The PEZA shall, in coordination with the Department of Transportation and Communications, maintain a shipping register
for each ECOZONE as a business register of convenience for ocean-going vessels and issue related certification.
Ships of all sizes, descriptions and nationalities shall enjoy access to the ports of the ECOZONE, subject only to such
reasonable requirement as may be prescribed by the PEZA In coordination with the appropriate agencies of the national
government.
SEC. 33. Protection of Environment. - The PEZA, in coordination with the appropriate agencies, shall take concrete and
appropriate steps and enact the proper measure for the protection of the local environment.
SEC. 34. Termination of Business. - Investors In the ECOZONE who desire to terminate business or operations shall
comply with such requirements and procedures which the PEZA shall set, particularly those relating to the clearing of
debts. The assets of the closed enterprise can be transferred and the funds con be remitted out of the ECOZONE subject
to the rules, guidelines and procedures prescribed jointly by the Bangko Sentral ng Pilipinas, the Department of Finance
and the PEZA.
SEC. 35. Registration of Business Enterprises. - Business enterprises within a designated ECOZONE shall register with
the PEZA to avail of all incentives and benefits provided for in this Act.
SEC. 36. One Stop Shop Center. - The PEZA shall establish a one stop shop center for the purpose of facilitating the
registration of new enterprises in the ECOZONE. Thus, all appropriate government agencies that are Involved In
registering, licensing or issuing permits to investors shall assign their representatives to the ECOZONE to attend to
Investors requirements.
SEC. 39. Master Employment Contracts. - The PEZA, in coordination with the Department of Tabor and Employment,
shall prescribe a master employment contract for all ECOZONE enterprise staff members and workers, the terms of which
provide salaries and benefits not less than those provided under this Act, the Philippine Labor Code, as amended, and
other relevant issuances of the national government.
SEC. 41. Migrant Worker. - The PEZA, in coordination with the Department of Labor and Employment, shall promulgate
appropriate measures and programs leading to the expansion of the services of the ECOZONE to help the local
governments of nearby areas meet the needs of the migrant workers.
SEC. 42. Incentive Scheme. - An additional deduction equivalent to onehalf (1/2) of the value of training expenses
incurred in developing skilled or unskilled labor or for managerial or other management development programs incurred
by enterprises in the ECOZONE can be deducted from the national government's share of three percent (3%) as provided
In Section 24.
The PEZA, the Department of Labor and Employment, and the Department of Finance shall jointly make a review of the
incentive scheme provided In this section every two (2) years or when circumstances so warrant.
SEC. 43. Relationship with the Regional Development Council. - The PEZA shall determine the development goals for the
ECOZONE within the framework of national development plans, policies and goals, and the administrator shall, upon
approval by the PEZA Board, submit the ECOZONE plans, programs and projects to the regional development council for
inclusion in and as inputs to the overall regional development plan.
SEC. 44. Relationship with the Local Government Units. - Except as herein provided, the local government units
comprising the ECOZONE shall retain their basic autonomy and identity. The cities shall be governed by their respective
charters and the municipalities shall operate and function In accordance with Republic Act No. 7160, otherwise known as
the Local Government
Code of 1991.
SEC. 45. Relationship of PEZA to Privately-Owned Industrial Estates. Privately-owned industrial estates shall retain
their autonomy and independence and shall be monitored by the PEZA for the implementation of incentives.
SEC. 46. Transfer of Resources. - The relevant functions of the Board of Investments over industrial estates and agri-
export processing estates shall be transferred to the PEZA. The resources of government-owned Industrial estates and
similar bodies except the Bases Conversion Development Authority and those areas identified under Republic Act No.
7227, are hereby transferred to the PEZA as the holding agency. They are hereby detached from their mother agencies
and attached to the PEZA for policy, program and operational supervision.
The Boards of the affected government-owned industrial estates shall be phased out and only the management level and
an appropriate number of personnel shall be retained.
Government personnel whose services are not retained by the PEZA or any government office within the ECOZONE shall
be entitled to separation pay and such retirement and other benefits they are entitled to under the laws then in force at the
time of their separation: Provided, That in no case shall the separation pay be less than one and one-fourth (1 1/4) month
of every year of service.
The non-profit character of the EPZA under Presidential Decree No. 66 is not inconsistent with any of the powers,
functions, and responsibilities of the PEZA. The EPZAs non-profit character, including the EPZAs exemption from real
property taxes, must be deemed assumed by the PEZA.
In addition, the Local Government Code exempting instrumentalities of the national government from real property taxes
was already in force274 when the PEZAs charter was enacted in 1995. It would have been redundant to provide for the
PEZAs exemption in its charter considering that the PEZA is already exempt by virtue of Section 133(o) of the Local
Government Code.
As for the EPZA, Commonwealth Act No. 470 or the Assessment Law was in force when the EPZAs charter was
enacted. Unlike the Local Government Code, Commonwealth Act No. 470 does not contain a provision specifically
exempting instrumentalities of the national government from payment of real property taxes. 275 It was necessary to put an
exempting provision in the EPZAs charter.
Contrary to the PEZAs claim, however, Section 24 of the Special Economic Zone Act of 1995 is not a basis for the PEZAs
exemption. Section 24 of the Special Economic Zone Act of 1995 provides:chanroblesvirtuallawlibrary
Sec. 24. Exemption from National and Local Taxes. Except for real property taxes on land owned by developers, no
taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof,
five percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted
as follows:chanroblesvirtuallawlibrary
(a) Three percent (3%) to the National Government;
(b) Two percent (2%) which shall be directly remitted by the business establishments to the treasurer's office of the
municipality or city where the enterprise is located. (Emphasis supplied)
Tax exemptions provided under Section 24 apply only to business establishments operating within economic zones.
Considering that the PEZA is not a business establishment but an instrumentality performing governmental functions,
Section 24 is inapplicable to the PEZA.
Also, contrary to the PEZAs claim, developers of economic zones, whether public or private developers, are liable for real
property taxes on lands they own. Section 24 does not distinguish between a public and private developer. Thus, courts
cannot distinguish.276 Unless the public developer is exempt under the Local Government Code or under its charter
enacted after the Local Government Codes effectivity, the public developer must pay real property taxes on their land.
At any rate, the PEZA cannot be taxed for real property taxes even if it acts as a developer or operator of special
economic zones. The PEZA is an instrumentality of the national government exempt from payment of real property taxes
under Section 133(o) of the Local Government Code. As this court said in Manila International Airport Authority, there
must be express language in the law empowering local governments to tax national government instrumentalities. Any
doubt whether such power exists is resolved against local governments. 277chanRoblesvirtualLawlibrary
V. (C)
Real properties under the PEZAs title are owned by the Republic of the Philippines
Under Section 234(a) of the Local Government Code, real properties owned by the Republic of the Philippines are exempt
from real property taxes:chanroblesvirtuallawlibrary
use thereof has been granted, for consideration or otherwise, to a taxable person[.]
Properties owned by the state are either property of public dominion or patrimonial property. Article 420 of the Civil Code
of the Philippines enumerates property of public dominion:chanroblesvirtuallawlibrary
Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State,
banks, shores, roadsteads, and others of similar character;
(2) Those which belong to the State, without belonging for public use, and are intended for some public service or for the
development of the national wealth.
Properties of public dominion are outside the commerce of man. These properties are exempt from levy, encumbrance
or disposition through public or private sale.278 As this court explained inManila International Airport
Authority:chanroblesvirtuallawlibrary
Properties of public dominion, being for public use, are not subject to levy, encumbrance or disposition through public or
private sale. Any encumbrance, levy on execution or auction sale of any property of public dominion is void for being
contrary to public policy. Essential public services will stop if properties of public dominion are subject to encumbrances,
foreclosures and auction sale[.]279
On the other hand, all other properties of the state that are not intended for public use or are not intended for some public
service or for the development of the national wealth are patrimonial properties. Article 421 of the Civil Code of the
Philippines provides:chanroblesvirtuallawlibrary
Art. 421. All other property of the State, which is not of the character stated in the preceding article, is patrimonial property.
Patrimonial properties are also properties of the state, but the state may dispose of its patrimonial property similar to
private persons disposing of their property. Patrimonial properties are within the commerce of man and are susceptible to
prescription, unless otherwise provided.280chanRoblesvirtualLawlibrary
In this case, the properties sought to be taxed are located in publicly owned economic zones. These economic zones are
property of public dominion. The City seeks to tax properties located within the Mactan Economic Zone, 281 the site of
which was reserved by President Marcos under Proclamation No. 1811, Series of 1979. Reserved lands are lands of the
public domain set aside for settlement or public use, and for specific public purposes by virtue of a presidential
proclamation.282 Reserved lands are inalienable and outside the commerce of man, 283 and remain property of the
Republic until withdrawn from public use either by law or presidential proclamation. 284 Since no law or presidential
proclamation has been issued withdrawing the site of the Mactan Economic Zone from public use, the property remains
reserved land.
As for the Bataan Economic Zone, the law consistently characterized the property as a port. Under Republic Act No.
5490, Congress declared Mariveles, Bataan a principal port of entry 285 to serve as site of a foreign trade zone where
foreign and domestic merchandise may be brought in without being subject to customs and internal revenue laws and
regulations of the Philippines.286 Section 4 of Republic Act No. 5490 provided that the foreign trade zone in Mariveles,
Bataan shall at all times remain to be owned by the Government:chanroblesvirtuallawlibrary
SEC. 4. Powers and Duties. The Foreign Trade Zone Authority shall have the following powers and duties:
a. To fix and delimit the site of the Zone which at all times remain to be owned by the Government, and which shall
have a contiguous and adequate area with well defined and policed boundaries, with adequate enclosures to
segregate the Zone from the customs territory for protection of revenues, together with suitable provisions for
ingress and egress of persons, conveyance, vessels and merchandise sufficient for the purpose of this Act[.]
(Emphasis supplied)
The port in Mariveles, Bataan then became the Bataan Economic Zone under the Special Economic Zone Act of 1995. 287
Republic Act No. 9728 then converted the Bataan Economic Zone into the Freeport Area of
Bataan.288chanRoblesvirtualLawlibrary
A port of entry, where imported goods are unloaded then introduced in the market for public consumption, is considered
property for public use. Thus, Article 420 of the Civil Code classifies a port as property of public dominion. The Freeport
Area of Bataan, where the government allows tax and duty-free importation of goods, 289 is considered property of public
dominion. The Freeport Area of Bataan is owned by the state and cannot be taxed under Section 234(a) of the Local
Government Code.
Properties of public dominion, even if titled in the name of an instrumentality as in this case, remain owned by the
Republic of the Philippines. If property registered in the name of an instrumentality is conveyed to another person, the
property is considered conveyed on behalf of the Republic of the Philippines. Book I, Chapter 12, Section 48 of the
Administrative Code of 1987 provides:chanroblesvirtuallawlibrary
SEC. 48. Official Authorized to Convey Real Property. Whenever real property of the government is authorized by law to
be conveyed, the deed of conveyance shall be executed in behalf of the government by the following:
....
(2) For property belonging to the Republic of the Philippines, but titled in the name ofany political subdivision or of any
corporate agency or instrumentality, by the executive head of the agency or instrumentality. (Emphasis supplied)
In Manila International Airport Authority, this court explained:chanroblesvirtuallawlibrary
[The exemption under Section 234(a) of the Local Government Code] should be read in relation with Section 133(o) of the
same Code, which prohibits local governments from imposing [t]axes, fess or charges of any kind on the National
Government, its agencies and instrumentalities x x x. The real properties owned by the Republic are titled either in the
name of the Republic itself or in the name of agencies or instrumentalities of the National Government. The Administrative
Code allows real property owned by the Republic to be titled in the name of agencies or instrumentalities of the national
government. Such real properties remained owned by the Republic of the Philippines and continue to be exempt from real
estate tax.
The Republic may grant the beneficial use of its real property to an agency or instrumentality of the national government.
This happens when title of the real property is transferred to an agency or instrumentality even as the Republic remains
the owner of the real property. Such arrangement does not result in the loss of the tax exemption/ Section 234(a) of the
Local Government Code states that real property owned by the Republic loses its tax exemption only if the beneficial use
thereof has been granted, for consideration or otherwise, to a taxable person. . . .290 (Emphasis in the original; italics
supplied)
Even the PEZAs lands and buildings whose beneficial use have been granted to other persons may not be taxed with real
property taxes. The PEZA may only lease its lands and buildings to PEZA-registered economic zone enterprises and
entities.291 These PEZA-registered enterprises and entities, which operate within economic zones, are not subject to real
property taxes. Under Section 24 of the Special Economic Zone Act of 1995, no taxes, whether local or national, shall be
imposed on all business establishments operating within the economic zones:chanroblesvirtuallawlibrary
SEC. 24. Exemption from National and Local Taxes. Except for real property on land owned by developers, no taxes,
local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof, five
percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted as
follows:
municipality or city where the enterprise is located.292(Emphasis supplied)
In lieu of revenues from real property taxes, the City of Lapu-Lapu collects two-fifths of 5% final tax on gross income paid
by all business establishments operating within the Mactan Economic Zone:chanroblesvirtuallawlibrary
SEC. 24. Exemption from National and Local Taxes. Except for real property on land owned by developers, no taxes,
local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof, five
percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted as
follows:
municipality or city where the enterprise is located.293(Emphasis supplied)
For its part, the Province of Bataan collects a fifth of the 5% final tax on gross income paid by all business establishments
operating within the Freeport Area of Bataan:chanroblesvirtuallawlibrary
Section 6. Imposition of a Tax Rate of Five Percent (5%) on Gross Income Earned. - No taxes, local and national, shall be
imposed on business establishments operating within the FAB. In lieu thereof, said business establishments shall pay a
five percent (5%) final tax on their gross income earned in the following percentages:
(a) One per centum (1%) to the National Government;
(b) One per centum (1%) to the Province of Bataan;
(c) One per centum (1%) to the treasurer's office of the Municipality of Mariveles; and
(d) Two per centum (2%) to the Authority of the Freeport of Area of Bataan. 294(Emphasis supplied)
Petitioners, therefore, are not deprived of revenues from the operations of economic zones within their respective
territorial jurisdictions. The national government ensured that local government units comprising economic zones shall
retain their basic autonomy and identity.295chanRoblesvirtualLawlibrary
All told, the PEZA is an instrumentality of the national government. Furthermore, the lands owned by the PEZA are real
properties owned by the Republic of the Philippines. The City of Lapu-Lapu and the Province of Bataan cannot collect
real property taxes from the PEZA.chanrobleslaw
WHEREFORE, the consolidated petitions are DENIED.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 203288 July 18, 2014
REMEDIOS M. MAULEON, Petitioner,

vs.
LOLINA MORAN PORTER, represented by ERVIN C. MORAN, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated April 11, 2012 and the Resolution3 dated August
30, 2012 of the Court of Appeals (CA) in CA-G.R. SP No. 121353 which affirmed the Decision 4 dated June 25, 2010 of the
Regional Trial Court of Caloocan City, Branch 128 (RTC) in SP. Civil Action No. C-984 dismissing petitioner Remedios M.
Mauleon's (petitioner) petition for certiorari filed in the said case.
The Facts
On December 2, 2008, respondent Lolina Moran Porter (respondent), represented by Ervin C. Moran, filed a complaint for
ejectment against petitioner5 and all persons claiming rights from her, seeking to recover possession of the property
located at 10th Avenue, Caloocan City, covered by Transfer Certificate ofTitle (TCT) No. C-390954 6 (subject property).
Respondent alleged therein that she is the absolute owner of the subject property which she purchased from petitioner
and her husband, Renato M. Mauleon, by virtue of a Deed of Absolute Sale executed on August 28, 2007. 7 Despite the
sale, however, the petitioner continued to occupy the subject property through respondents tolerance. But when she
made demands to vacate the last of which was through a letter dated November 3, 2008 petitioner refused to do so,
and evenfailed to pay rent at the rate of P10,000.00 per month, reckoned from September 2007. As the parties failed to
settle the matter beforethe barangay, respondent instituted a suit for unlawful detainer before the Metropolitan Trial Court
of Caloocan City, Branch 53 (MeTC), docketed as Civil Case No. 08-29491. 8
In defense, petitioner claimed that respondents complaint is dismissible on the grounds that: (a) respondent failed to
include her husband as party-plaintiff; and (b) there is a pending action for annulment of documents, title and
reconveyance with damages between the parties before the Regional Trial Court of CaloocanCity, Branch 125 (annulment
of documents and reconveyance case).9
During the preliminary conference held on March 27, 2009, petitioner failed to appear, despite notice. Thus, respondent
moved for the rendition of judgment pursuant to Section 6 in relation to Section 7 of the Rules on Summary Procedure,
which the MeTC granted.10 Thereafter, the MeTC rendered a Decision11 dated April 24, 2009 (MeTC Decision) ordering
petitioner to vacate the subject property, and to pay respondent the amount ofP20,000.00 as attorneys fees and the costs
of suit.
Instead of appealing the aforesaid MeTC Decision, petitioner filed a "Most Very Urgent Manifestation withOmnibus Motion
to Reconsider the Order dated March 27, 2009, to Suspend the Proceedings and/or to Dismiss the Case," and another
"Manifestation with Motion to Resove [sic] Pending Incidents, to Dismiss the case and/or Nullify the Proceedings as well
as the Precipitate Rendition of Decision"12 before the MeTC. On the other hand, respondent filed a motion for execution of
the MeTC Decision, which she claimed to have attained finality. 13Petitioners motions were denied by the MeTC in an
Order14 dated August 18, 2009 (August 18, 2009 Order), while respondents motion for the issuance ofa writ of execution
was granted.15
Dissatisfied, petitioner filed a petition for certiorari16 under Rule 65 of the Rules of Court before the RTC, docketed as SP.
Civil Action No. C-984, seeking the nullification of the MeTC Decision as well as the August 18, 2009 Order granting its
execution for having been issued with grave abuse of discretion amounting to lack orexcess of jurisdiction, hinged on the
following arguments: (a) the MeTC Decision and the August 18, 2009 Order were issued with undue haste in violation of
petitioners right to due process; (b) her motion for postponement of the March 27, 2009 hearing deserved
consideration;17 (c) she is not bound by the reckless or gross negligence of her counsel; 18 and (d) the pending annulment
of documents and reconveyance case was determinative of the ejectment case. 19
The RTC Ruling
In a Decision20 dated June 25, 2010, the RTC dismissed the abovementioned certioraripetition for lack of merit.
It held that the pendency of the annulment of documents and reconveyance case did not abate an ejectment suit nor bar
the execution of the judgment therein; neither did it deprive the MeTC of its jurisdiction over the unlawful detainer case
which merely involves the issue of possession de facto. 21 It further ruled that the assailed MeTC Decision and August 18,
2009 Order were not issued with grave abuse of discretion, finding that petitioner was not deprived of her rightto adduce
evidence. Instead, records showed that petitioner and her counsel failed to appear at the scheduled preliminary
conference on March 27, 2009, and while she claimed to have moved for its postponement, her motion was filed by her
counsel only after the MeTC Judge issued the order inopen court submitting the case for decision. 22
Unconvinced, petitioner filed a motion for reconsideration which was, however, denied in a Resolution 23 dated May 31,
2011, prompting her to elevate the matter on appeal to the CA. The CA Ruling
In a Decision24 dated April 11, 2012, the CA denied petitioners appeal and affirmed the RTCs dismissal of her certiorari
petition.
Preliminarily, the CA found that the filing of the certioraripetition before the RTC was inappropriately resorted to by
petitioner as a substitute for an appeal.25 It also declared that the MeTC had jurisdiction to entertain the ejectment case
considering the following allegations in respondents complaint, namely: (a) respondent is the registered owner of the
subject property by virtue of a Deed of Absolute Sale executed in her favor by Renato M. Mauleon; (b) after the sale of the
property, petitioner continued to stay on the subject property based on respondents tolerance; and (c) a demand to
vacate dated November 3,2008 was made on petitioner but the same went unheeded. 26 Moreover, it affirmed the RTCs
finding that the pendency of a prior case for annulmentof documents and reconveyance is not a valid reason to frustrate
the summary remedy of ejectment,27 and further held that petitioner was not deprived of due process given that she was
actually afforded the opportunityto be heard, notwithstanding the negligent acts of her counsel to which she was equally
bound.28
Unperturbed, petitioner sought reconsideration which was once more denied in a Resolution 29 dated August 30, 2012,
hence, the instant petition with prayer for the issuance of a temporary restraining order (TRO).
The Proceedings Before the Court
In a Resolution30 dated November 12, 2012, the Court granted petitioners application for a TRO inorder to preserve the
status quo. Meanwhile, the parties were required to file their Comment 31 and Reply32 which they complied with on
November 26, 201233 and April 2, 2013,34 respectively.
The Issue Before the Court
The core issue for the Courts resolution is whether or not the CA erred in upholding the dismissal of petitioners
certioraripetition.
The Courts Ruling
The petition lacks merit.
At the outset, it bears to note thatpetitioners course of action before the RTC was principally anchored on the validity of
the August 18, 2009 Order which granted the execution of the MeTC Decision. On this score, Section 1(e), Rule 41 of the
Rules of Court explicitly provides that an order of execution is not appealable, hence, an aggrieved party may resort to the
special civil action of certiorariunder Rule 65 of the Rules of Court. This is because an order of execution is not a final
order or resolution within the contemplation of the rules, but is issued to carry out the enforcement of a final judgment or
order against the losing party, hence, generally not appealable. 35 While there are circumstanceswherein appeal from an
improper execution is allowed,36 none obtains in this case. Consequently, the Court finds that petitioner properly availed of
the remedy of certiorari before the RTC, contrary to the finding of the CA 37 that she should have appealed therefrom.
Notwithstanding the foregoing, the Court nonetheless perceives no reversible error on the part of the CA in upholding the
RTCs finding that no grave abuse of discretion attended the issuance of the MeTC Decision and the August 18, 2009
Order directing its execution.
Records show that during the scheduled preliminary conference on March 27, 2009, petitioner and her counsel failed to
appear despite notice. Hence, the MeTC was justified in granting respondents motion to render judgment in the ejectment
case pursuant to Section 6 in relation to Section 7 of the Rules on Summary Procedure which read as follows:
SEC. 6. Effect of failure to answer. Should the defendant fail to answer the complaint within the period above provided,
the court, motu proprio, or on motion of the plaintiff, shall render judgment as may be warranted by the facts alleged in the
complaint and limited to what is prayed for therein: Provided, however, That the court may in its discretion reduce the
amount of damages and attorneys fees claimed for being excessive or otherwise unconscionable. This is without
prejudice to the applicability of Section 4, Rule 18 of the Rules of Court, if there are two or more defendants.
SEC. 7. Preliminary conference; appearance of parties. - Not later than thirty (30) days after the last answer is filed, a
preliminary conference shall be held. x x x.
xxxx
If a sole defendant shall fail to appear, the plaintiff shall be entitled to judgment in accordance with Section 6 hereof. x x x.
The use of the word "shall" inthe foregoing provisions makes the attendance of the parties in the preliminary conference
mandatory, and nonappearance thereat is excusable only when the party offers a justifiable cause for his failure to
attend.38 The petitioner in this case, however, failed in this respect.
It is undisputed that petitioners counsel filed an urgent motion to postpone the March 27, 2009 hearing onthe same date
and only after the MeTC judge had already granted respondents motion for rendition of judgment. As such, the MeTC
properly declared that the aforesaid motion deserves scant consideration and, infact, should not even be received
considering the three (3)-day notice rule on motions, 39 stated in Section 4, Rule 15 of the Rules of Court, viz.:
SEC. 4. Hearing of motion. Except for motions which the court may act upon without prejudicing the rights of the
adverse party, every written motion shall be set for hearing by the applicant.
Every written motion required to be heard and the notice of the hearing thereof shall be served in sucha manner as to
ensure its receipt by the other party at least three (3) days before the date of hearing, unless the court for good cause sets
the hearing on shorter notice. (Emphasis supplied) Petitioners asseveration that her non-appearance in the March 27,
2009 hearing was due to her counsels assurance that he had duly filed a motion for postponement, which the MeTC
should have purportedly granted,40 cannot be sustained since no party has the right to assume that such motion would be
approved by the courts.41 Consequently, absent any justifiable reason for her and her counsels non-appearance at the
said preliminary conference, the Court concurs with the RTCs finding that no grave abuse of discretion can be ascribed
against the MeTC in submitting the case for decision 42and, subsequently, ordering petitioners ejectment from the subject
property.
Similarly, no grave abuse of discretion can be attributed against the MeTC in issuing the August 18, 2009 Order directing
the execution of its Decision. Section 19, Rule 70 of the Rules of Court provides for the immediate execution of judgment
in favor of the plaintiff in ejectment cases, which can only be stayed if the defendant perfects an appeal, files a
supersedeas bond, and makes periodic deposit of rental or other reasonable compensation for the use and occupancy of
the subject premises during the pendency of the appeal. 43 These requirements are mandatory and concurrent, without
which execution will issue as a matter of right.44
In this case, it is evident that petitioner failed to interpose an appeal from the MeTC Decision rendering the same final and
executory. Hence, the August 18, 2009 Order granting its execution was properly issued.
It is settled that when a decision has acquired finality, the same becomes immutable and unalterable. By this principle of
immutability of judgments, the Court is now precluded from further examining the MeTC Decision and to further dwell on
petitioners perceived errors therein, i.e., that her possession of the subject property was not by virtue of respondents
tolerance, hence, the ejectment complaint should have been dismissed for lack of jurisdiction; and that the pending
annulment of documents and reconveyance case was prejudicial to the ejectment suit. As held in the case of Ocampo v.
Vda. de Fernandez:45
Nothing is more settled in law than that when a final judgment is executory, it thereby becomes immutable and
unalterable.1wphi1 The judgment may no longer be modified in any respect, even if the modification is meant to correct
whatis perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is attempted to
be made by the court rendering it or by the highest Court of the land. The doctrine is founded on considerations of public
policy and sound practice that, at the risk of occasional errors, judgments must become final at some definite point in time.
Resultantly, the implementation and execution of judgments that had attained finality are already ministerial on the courts.
Public policy also dictates that once a judgment becomes final, executory, and unappealable, the prevailing party should
not be denied the fruits of his victory by some subterfuge devised by the losing party. Unjustified delay in the enforcement
of a judgment sets at naught the role of courts in disposing justiciable controversies with finality. Hence, once a judgment
becomes final, the prevailing party is entitled as a matter of right to a writ of execution, the issuance of which is the trial
courts ministerial duty.
Finally, the Court finds that the CA did not err in holding that petitioner was bound by the negligence of her former counsel
which, as she purports, led her to lose her case and her right to appeal. Seeing no cogent reason to deviate therefrom,
the Court hereunder quotes the CAs ruling on this score with full approval:
We likewise cannot countenance the argument raised by appellant [petitioner herein] that she should not be bound by the
negligence of her former counsel. Appellant claims thather failure to attend the preliminary conference which resulted in
the alleged precipitate and hasty rendition of the decision of the MTC was due to the assurance of her former counsel that
her appearance was not necessary. Moreover, appellant claims that her former counsel failed to file a timely notice of
appeal, thus, she lost her right thereto.
The general rule is that a client is bound by the acts, even mistakes, of his counsel in the realm of procedural technique.
The exception to this rule is when the negligence of counsel is so gross, reckless and inexcusable that the clientis
deprived of his day in court. In which case, the remedy then is to reopen the case and allow the party who was denied his
day in court to adduce his evidence. However, a thorough review of the instant case reveals that appellant cannot seek
refuge or obtain reprieve under these principles.
A review of the records would disclose that appellant was not deprived of her day in court beforethe MTC. After the filing
of the complaint, appellant was able to file her Answer to the complaint, hence, it cannot be successfully argued that she
was deprived of her day in court. x x x.
On her lost appeal, time and again it has been held that the right to appeal is not a natural right or a part of due process. It
is merely a statutory privilege, and may be exercised only in the manner and in accordance with the provisions of the law.
The party who seeks to avail of the same must comply with the requirements of the rules. Failing to do so, the right to
appeal is lost. Hence, there is no justifiable reason to exempt petitioner 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. 46
WHEREFORE, premises considered, the instant petition is DENIED. The Decision dated April 11, 2012 and the
Resolution dated August 30, 2012 of the Court of Appeals in CA-G.R. SP No. 121353 are hereby AFFIRMED. Accordingly,
the temporary restraining order issued by the Court on November 12, 2012 is LIFTED and DISSOLVED.
SO ORDERED.

Remedial Law Cases

Încărcat de

Informații document

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Remedial Law Cases

Încărcat de

Drepturi de autor:

Formate disponibile

Remedial Law Cases

Republic of the Philippines

G.R. No. 178911 September 17, 2014

DEL CASTILLO, J.:

We trust that you will give thismatter preferential attention. 7

Leoncio opposed Pag-IBIGs manifestation.16

Ruling of the Regional Trial Court Branch 28

Ruling of the Court of Appeals

Hence, the present Petition.

Petitioners raise the following grounds for the Petition:

Respondent Lims Arguments

The Petition is dismissed.

No proper initiatory pleading was filed before the trial court.

No payment of docket fees.

Republic of the Philippines

UNION BANK OF THE PHILIPPINES,

J. KING & SONS CO., INC.

June 18, 2012

(a) In those cases where a specific rule or law provides otherwise; or

a. Real Estate Mortgage dated February 11, 1994 executed by Paglaum

b. Real Estate Mortgage dated February 11, 1994 executed by Paglaum

d. Continuing Surety Agreement of Benjamin B. Dy;

G.R. No. 155701, March 11, 2015

The antecedent facts are as follows:

The parties also agreed to the following issues:chanRoblesvirtualLawlibrary

Henry continued to remain silent.

Section 1 of Rule 45 provides:

Rule 17 of the Rules of Civil Procedure provides the following:chanRoblesvirtualLawlibrary

G.R. No. 188944 July 9, 2014

SPOUSES RODOLFO BEROT AND LILIA BEROT, Petitioners,

6. IMPOSING EXEMPLARY DAMAGES AND LITIGATION EXPENSES.

As aptly observed by the trial court:

The Court of Appeals erred in:

2. In not holding that the obligation is joint12

THE COURTS RULING

We DENYthe Petition for lack of merit.

In Regional Agrarian Reform Adjudication Board v. Court of Appeals, 23 we ruled that:

PARTIES, CAPTION AND SERVICE OF PLEADINGS

As such, formal substitution of the parties in this case is not necessary.

A: It is the loan of my mother and myself, sir.30

Republic of the Philippines

G.R. No. 172505 October 1, 2014

ANTONIO M. GARCIA, Petitioner,

The issues are:

The Regional Trial Court did not have jurisdiction

In Pangilinan v. Court of Appeals,49 this court held:

Ferro Chemicals, Inc. committed forum shopping

This is in consonance with the doctrine that:

G.R. No. 109645, January 21, 2015

[G.R. No. 112564]

[G.R. No. 128422]

[G.R. No. 128911]

(3) The Land Registration Authority's report which states that:

The trial court denied Molina's Motion to Dismiss.41

(a) Cia. Agricola de Ultramar v. Domingo55

IT IS SO ORDERED.76 (Emphasis in the original)

In the Resolution dated August 15, 1997, this court held:

SO ORDERED.79 (Emphasis in the original)

G.R. No. 205249, October 15, 2014

SPOUSES BENEDICT AND SANDRA MANUEL, Petitioners, v. RAMON ONG, Respondent.

Hence, this petition.

Jurisdiction over the persons

Rule 14, Section 6 of the 1997 Rules of Civil Procedure provides:chanRoblesvirtualLawlibrary