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RepublicofthePhilippines
SUPREMECOURT
Manila

FIRSTDIVISION

G.R.No.159746July18,2012

SPOUSESRAMONMENDIOLAandARACELIN.MENDIOLA,Petitioners,
vs.

THEHON.COURTOFAPPEALS,PILIPINASSHELLPETROLEUMCORPORATION,andTABANGAOREALTY,
INC.,Respondents.

DECISION

BERSAMIN,J.:

Through their petition for certiorari, mandamus and prohibition, petitioners assail the resolutions promulgated on
November22,20021andJuly31,2002,2wherebytheCourtofAppeals(CA)respectivelydeniedpetitioners'motion
to dismiss the appeal and motion for reconsideration. They allege that the CA thereby committed grave abuse of
discretionamountingtolackorexcessofjurisdiction.

Antecedents

On July 31, 1985, Pilipinas Shell Petroleum Corporation (Shell) entered into an agreement for the distribution of
Shell petroleum products (such as fuels, lubricants and allied items) by Pacific Management & Development
(Pacific), a single proprietorship belonging to petitioner Ramon G. Mendiola (Ramon). To secure Pacifics
performanceofitsobligationsundertheagreement,petitionersexecutedonAugust1,1985arealestatemortgage
in favor of Shell3 covering their real estate and its improvements, located in the then Municipality of Paraaque,
Rizal,andregisteredunderTransferCertificateofTitleNo.S59807oftheRegistryofDeedsofRizal(inthename
of"RamonMendiola,marriedtoAraceliMendoza").4

Pacificultimatelydefaultedonitsobligations,impellingShelltocommenceextrajudicialforeclosureproceedingsin
April1987.Havingreceivedanoticeoftheextrajudicialforeclosurescheduledtobeheldatthemainentranceofthe
ParaaqueMunicipalHallonMay14,1987,5petitionersproceededtotheannouncedvenueonthescheduleddate
and time but did not witness any auction being conducted and did not meet the sheriff supposed to conduct the
auctiondespitetheirbeingatthelobbyfrom9:00amuntil11:30amofMay14,1987.6 Theylaterlearnedthatthe
auction had been held as scheduled by Deputy Sheriff Bernardo San Juan of the Regional Trial Court (RTC) in
Makati,andthattheirmortgagedrealtyhadbeensoldtoTabangaoRealty,Inc.(Tabangao),asthecorresponding
certificateofsalebearsout.7 They further learned that Tabangaos winning bidder bid of P670,000.00 had topped
ShellsbidofP660,000.00.8

AfterapplicationoftheproceedsofthesaletotheobligationofPacific,adeficiencyofP170,228.00(representing
theforeclosureexpensesequivalentof25%oftheamountclaimedplusinterest)remained.Thedeficiencywasnot
paidbyRamon.Thus,onSeptember2,1987,ShellsuedintheRTCinManilatorecoverthedeficiency,docketed
asCivil Case No. 8741852entitledPilipinasShellPetroleumCorporationv.Ramon G. Mendiola, doing business
underthenameandstylePacificManagement&Development(Manilacase).9

InhisanswerwithcounterclaimfiledonOctober28,1987,Ramonassertedthattheextrajudicialforeclosureofthe
mortgagehadbeendevoidofbasisinfactandinlawandthattheforeclosureandthefilingoftheactionweremade
inbadfaith,withmalice,fraudulentlyandingrossandwantonviolationofhisrights.

On March 22, 1988, petitioners commenced in the RTC in Makati an action to annul the extrajudicial foreclosure
docketedasCivilCaseNo.88398entitledRamonG.MendiolaandAraceliN.Mendiolav.PilipinasShellPetroleum
Corporation, Tabangao Realty, Inc., and Maximo C. Contreras, as Clerk of Court and Ex Oficio Sheriff of Rizal,10
whichwasassignedtoBranch134(Makaticase).

As defendants in the Makati case, Shell and Tabangao separately moved for dismissal,11 stating similar grounds,
namely:(a)thattheMakatiRTChadnojurisdictionduetothependencyoftheManilacase(b)thatthecomplaint
statednocauseofaction,theMakaticasehavingbeenfiledmorethanayearaftertheregistrationofthecertificate
ofsale(c)thatanotheraction(Manilacase)involvingthesamesubjectmatterwaspending(d)thatthevenuewas
improperlylaidand(e)thattheMakaticasewasalreadybarredbypetitionersfailuretoraiseitscauseofactionas
acompulsorycounterclaimintheManilacase.

AftertheMakatiRTCdeniedbothmotionsonSeptember23,1988,12Shellfileditsansweradcautelam,13wherebyit
deniedpetitionersallegationthatnoauctionhadbeenheldinsistedthattherehadbeenproperaccountingofthe
deliveriesmadetoPacificanditsclientsandaverredthatpetitionersfailuretofiletheircompulsorycounterclaimin
theManilacasealreadybarredtheaction.

PendingthetrialoftheMakaticase,theManilaRTCrendereditsjudgmentinfavorofShellonMay31,1990,viz:

WHEREFORE,INVIEWOFTHEFOREGOING,defendants(sic)isorderedtopayplaintiffsasfollows:

1.OntheFirstCauseofAction

a)P167,585.50representingthedeficiencyasofthedateoftheforeclosuresale

b)P2,643.26representingtheinterestdueontheunpaidprincipalasof30June1987and

c)Thesumcorrespondingtotheinterestdueontheunpaidprincipalfrom30June1987todate.

2.OntheSecondCauseofActionattorneysfeesandexpensesoflitigationto(sic)theamountof
P15,000.00andfinally,

3.Costsofsuit.

SOORDERED.14

As sole defendant in the Manila case, Ramon appealed (C.A.G.R. No. CV28056), but his appeal was decided
adverselytohimonJuly22,1994,15withtheCAaffirmingtheManilaRTCsdecisionandfindingthathewasguiltyof
forumshoppingforinstitutingtheMakaticase.

Undaunted,henextappealedtotheCourt(G.R.No.122795),whichdeniedhispetitionforreviewonFebruary26,
1996,16andupheldtheforeclosureofthemortgage.ThedecisionoftheCourtbecamefinalandexecutory,asborne
outbytheentryofjudgmentissuedonJune10,1996.17

Nonetheless, on February 3, 1998, the Makati RTC resolved the Makati case,18 finding that there had been no
auctionactuallyconductedonthescheduleddatethathadsuchauctiontakenplace,petitionerscouldhaveactively
participatedandenabledtoraisetheirobjectionsagainsttheamountoftheirsupposedobligationandthattheyhad
beenconsequentlydeprivedofnoticeandhearingastotheirliability.TheMakatiRTCdisposedasfollows:

WHEREFORE,premisesconsidered,plaintiffshavingdulyestablishedtheircasethattheSHERIFFsCertificateof
SaleofMay14,1987,isvoidforlackofactualauctionsaleandlackofvalidconsiderationastheamountutilizedby
theSHERIFFwasbasedonaninvalidamountasabasisofanExtraJudicialForeclosureofMortgagewherethe
amount of the mortgage is based on a future obligation unilaterally adjudicated by SHELL alone in violation of
MENDIOLAsrightofdueprocess,andjudgmentisherebyrenderedasfollows:

1.DeclaringasNULLandVOIDtheExtraJudicialForeclosureofMortgageofplaintiffshouseandlotunder
TCTNo.T59807issuedbytheRegisterofDeedsofRizal

2.DeclaringasNULLandVOIDtheCertificateofSaleissuedbyMaximoC.ContrerasonMay14,1987in
favorofTABANGAOREALTY,INC.

3. Ordering defendant PILIPINAS SHELL PETROLEUM CORPORATION to make a full accounting of the
extent of the future obligation of plaintiff MENDIOLA in the Mortgage Contract before any foreclosure
proceedingsareinitiated

4.OrderingdefendantsPILIPINASSHELLPETROLEUMCORPORATIONandTABANGAOREALTYINC.to
paytheamountofP20,000.00asandbywayofattorneysfeesand

5.Topaythecosts.

SOORDERED.

Shellsoughtthereconsiderationofthedecision,19maintainingthattheissuesraisedonthevalidityoftheforeclosure
saleand on the amountoftheoutstandingobligationofPacifichadbeensettled in the Manila case and that the
Makati RTC became bereft of jurisdiction to render judgment on the same issues pursuant to the principle of res
judicata.

TabangaoadoptedShellsmotionforreconsideration.

OnOctober5,1999,however,theMakatiRTCdeniedShellsmotionforreconsideration,20towit:

WHEREFORE, premises considered, there is NO RES JUDICATA to speak of in this case. Consequently, the
"MotionforReconsideration"filedbydefendantPilipinasShellPetroleumCorporation,whichwaslateradoptedby
defendant Tabangao Realty, Inc., is hereby DENIED. Plaintiffs "Motion for Execution" is likewise DENIED for
reasonsasstatedabove.

SOORDERED.21

AggrievedbythedecisionoftheMakatiRTC,ShellandTabangaofiledajointnoticeofappeal.22 Theappealwas
docketedintheCAasC.A.G.R.No.65764.

IntheirappellantsbrieffiledinC.A.G.R.No.65764,23ShellandTabangaoassignedthefollowingerrors,namely:

THE COURT A QUO COMMITTED GRAVE ERROR IN NOT DISMISSING THE CASE ON THE GROUND
OFLITISPENDENTIAAND,SUBSEQUENTLY,ONTHEGROUNDOFRESJUDICATA.

II

THE COURT A QUO COMMITTED MANIFEST ERROR IN DISREGARDING THAT THE LEGAL
REQUIREMENTSFORAVALIDEXTRAJUDICIALFORECLOSUREWERESATISFIED.

III

THE COURT A QUO COMMITTED SERIOUS ERROR IN RENDERING THE ASSAILED DECISION AND
ASSAILED RESOLUTION IN CONTRAVENTION OF THE RULINGS OF A COEQUAL COURT AND
SUPERIORCOURTS.

Insteadoffilingtheirappelleesbrief,petitionerssubmittedamotiontodismissappeal,24mainlypositingthatSection
1,Rule41oftheRulesofCourtprohibitedanappealoftheorderdenyingamotionforreconsideration.

On November 22, 2002, the CA denied petitioners motion to dismiss appeal through the first assailed resolution,
stating:25

For consideration is the Motion to Dismiss Appeal dated August 6, 2002 filed by counsel for plaintiffsappellees
prayingforthedismissaloftheappealonthegroundsthattheNoticeofAppealfiledbydefendantsappellantswas
specificallyinterposedsolelyagainsttheResolutionofthetrialcourtdatedOctober20,1999whichmerelydenied
defendantappellantsMotionforReconsiderationofthetrialcourtsdecision,datedFebruary3,1998.

Uponperusaloftherecordsofthecase,itseemsapparentthathereindefendantsappellantsintendedtoappealnot
onlytheResolutiondatedOctober2,1999butalsotheDecisiondatedFebruary3,1998.Assumingarguendothat
defendantsappellantsindeedcommittedatechnicalerror,itisbestthatthepartiesbegiveneverychancetofight
theircasefairlyandintheopenwithoutresorttotechnicalitytoaffordpetitionerstheirdayincourt(ZenithInsurance
vs.Purisima,114SCRA62).

TheMotiontoDismissAppealmustnotbegrantedifonlytostressthattherulesofproceduremaynotbemisused
asinstrumentsforthedenialofsubstantialjustice.WemustnotforgettheplaininjunctionofSection2of(nowSec.
6 of Rule 1, 1997 Revised Rules of Civil Procedure) Rule 1 that the "rules shall be liberally construed in order to
promote their object and to assist the parties in obtaining not only speedy, but more imperatively just and
inexpensivedeterminationofjusticeineveryactionandproceeding"(LimTanhuvs.Ramolete66SCRA425).

WHEREFORE,inviewoftheforegoing,theMotiontoDismissAppealisherebyDENIED.

SOORDERED.

OnJuly31,2002,theCAdeniedpetitionersmotionforreconsiderationthroughthesecondassailedresolution.26

Hence,petitionersbroughtthesespecialcivilactionsforcertiorari,mandamusandprohibition,insistingthattheCA
committedgraveabuseofdiscretionamountingtolackorexcessofjurisdictionindenyingtheirmotiontodismiss
appealandtheirmotionforreconsideration.
 Issue

Petitioners contend that the CA committed grave abuse of discretion in entertaining the appeal of Shell and
TabangaoincontraventionofSection1,Rule41oftheRulesofCourt,whichproscribesanappealofthedenialofa
motionforreconsideration.

ShellandTabangaocounterthattheirappealwasnotproscribedbecausetheactioncouldbesaidtobecompletely
disposed of only upon the rendition on October 5, 1999 of the assailed resolution denying their motion for
reconsideration that, as such, the decision of February 3, 1998 and the denial of their motion for reconsideration
formed one integrated disposition of the merits of the action and that the CA justifiably applied the rules of
procedureliberally.

Twoissueshavetobedetermined.Thefirstiswhetherornotanappealmaybetakenfromthedenialofamotion
forreconsiderationofthedecisionofFebruary3,1998.Thedeterminationofthisissuenecessarilydecideswhether
thepetitionsforcertiorari,prohibitionandmandamuswerewarranted.ThesecondiswhethertheMakaticasecould
prosperindependentlyoftheManilacase.TheCourthastopassuponandresolvethesecondissuewithoutwaiting
fortheCAtodecidetheappealonitsmeritsinviewoftheurgingbyShellandTabangaothattheMakaticasewas
barredduetolitispendentiaorresjudicata.

Ruling

Thepetitionforcertiorari,mandamusandprohibitionlacksmerit.

1.

AppealbyShellandTabangaoofthedenialoftheirmotionforreconsiderationwasnotproscribed

PetitionerscontentionthattheappealbyShellandTabangaoshouldberejectedonthegroundthatanappealof
thedenialoftheirmotionforreconsiderationwasprohibitedcannotbesustained.

ItistruethattheoriginaltextofSection1,Rule41ofthe1997RulesofCivilProcedureexpresslylimitedanappeal
toajudgmentorfinalorder,andproscribedthetakingofanappealfromanorderdenyingamotionfornewtrialor
reconsideration,amongothers,viz:

Section1.Subjectofappeal.Anappealmaybetakenfromajudgmentorfinalorderthatcompletelydisposesof
thecase,orofaparticularmatterthereinwhendeclaredbytheseRulestobeappealable.

Noappealmaybetakenfrom:

(a)Anorderdenyingamotionfornewtrialorreconsideration

(b)Anorderdenyingapetitionforrelieforanysimilarmotionseekingrelieffromjudgment

(c)Aninterlocutoryorder

(d)Anorderdisallowingordismissinganappeal

(e)Anorderdenyingamotiontosetasideajudgmentbyconsent,confessionorcompromiseontheground
offraud,mistakeorduress,oranyothergroundvitiatingconsent

(f)Anorderofexecution

(g) A judgment or final order for or against one or more of several parties or in separate claims,
counterclaims, crossclaims and thirdparty complaints, while the main case is pending, unless the court
allowsanappealtherefromand

(h)Anorderdismissinganactionwithoutprejudice.

In all the above instances where the judgment or final order is not appealable, the aggrieved party may file an
appropriatespecialcivilactionunderRule65.(n)

Theinclusionoftheorderdenyingamotionfornewtrialoramotionforreconsiderationinthelistofissuancesofa
trialcourtnotsubjecttoappealwasbyreasonofsuchordernotbeingthefinalorderterminatingtheproceedingsin
the trial court. This nature of the order is reflected in Section 9 of Rule 37 of the 1997 Rules of Civil Procedure,
which declares that such order denying a motion for new trial or reconsideration is not appealable, "the remedy
beinganappealfromthejudgmentorfinalorder."
InHeirsofSpousesTeofiloM.RetertaandElisaRetertav.SpousesLorenzoMoresandVirginiaLopez,27 theCourt
furtherexpounded:

The restriction against an appeal of a denial of a motion for reconsideration independently of a judgment or final
orderislogicalandreasonable.Amotionforreconsiderationisnotputtingforwardanewissue,orpresentingnew
evidence, or changing the theory of the case, but is only seeking a reconsideration of the judgment or final order
basedonthesameissues,contentions,andevidenceeitherbecause:(a)thedamagesawardedareexcessiveor
(b)theevidenceisinsufficienttojustifythedecisionorfinalorderor(c)thedecisionorfinalorderiscontrarytolaw.

Bydenyingamotionforreconsideration,orbygrantingitonlypartially,therefore,atrialcourtfindsnoreasoneither
toreverseortomodifyitsjudgmentorfinalorder,andleavesthejudgmentorfinalordertostand.Theremedyfrom
thedenialistoassailthedenialinthecourseofanappealofthejudgmentorfinalorderitself.

In Quelnan v. VHF Philippines, Inc.,28 however, the Court has interpreted the proscription against appealing the
orderdenyingamotionforreconsiderationtoreferonlytoamotionforreconsiderationfiledagainstaninterlocutory
order,nottoamotionforreconsiderationfiledagainstajudgmentorfinalorder,towit:

ThisCourtfindsthattheproscriptionagainstappealingfromanorderdenyingamotionforreconsiderationrefersto
aninterlocutoryorder,andnottoafinalorderorjudgment.Thatthatwastheintentionoftheabovequotedrulesis
gatheredfromPagtakhanv.CIR,39SCRA455(1971),citedinabovequotedportionofthedecisioninRepublic,in
whichthisCourtheldthatanorderdenyingamotiontodismissanactionisinterlocutory,hence,notappealable.

Therationalebehindtheruleproscribingtheremedyofappealfromaninterlocutoryorderistopreventunduedelay,
uselessappealsandundueinconveniencetotheappealingpartybyhavingtoassailordersastheyarepromulgated
bythecourt,whentheycanbecontestedinasingleappeal.Theappropriateremedyisthusforthepartytowaitfor
thefinaljudgmentororderandassignsuchinterlocutoryorderasanerrorofthecourtonappeal.

The denial of the motion for reconsideration of an order of dismissal of a complaint is not an interlocutory order,
however,butafinalorderasitputsanendtotheparticularmatterresolved,orsettlesdefinitelythemattertherein
disposedof,andnothingisleftforthetrialcourttodootherthantoexecutetheorder.

Not being an interlocutory order, an order denying a motion for reconsideration of an order of dismissal of a
complaintiseffectivelyanappealoftheorderofdismissalitself.

The reference by petitioner, in his notice of appeal, to the March 12, 1999 Order denying his Omnibus Motion
MotionforReconsiderationshouldthusbedeemedtorefertotheJanuary17,1999Orderwhichdeclaredhimnon
suitedandaccordinglydismissedhiscomplaint.

Iftheproscriptionagainstappealinganorderdenyingamotionforreconsiderationisappliedtoanyorder,thenthere
would have been no need to specifically mention in both abovequoted sections of the Rules "final orders or
judgments" as subject of appeal. In other words, from the entire provisions of Rule 39 and 41, there can be no
mistaking that what is proscribed is to appeal from a denial of a motion for reconsideration of an interlocutory
order.29

In Apuyan v. Haldeman,30 too, the Court categorized an order denying the motion for reconsideration as the final
resolutionoftheissuesatrialcourtearlierpasseduponanddecided,andaccordinglyheldthatthenoticeofappeal
filedagainsttheorderofdenialwasdeemedtorefertothedecisionsubjectofthemotionforreconsideration.31

Subsequently,inNeypesv.CourtofAppeals,32wherethedecisiveissuewaswhetherornottheappealwastaken
withinthereglementaryperiod,withpetitionerscontendingthattheyhadtimelyfiledtheirnoticeofappealbasedon
their submission that the period of appeal should be reckoned from July 22, 1998, the day they had received the
finalorderofthetrialcourtdenyingtheirmotionforreconsideration(oftheorderdismissingtheircomplaint),instead
ofonMarch3,1998,thedaytheyhadreceivedtheFebruary12,1998orderdismissingtheircomplaint,theCourt,
citingQuelnanv.VHFPhilippines,Inc.andApuyanv.Haldeman,ruledthatthereceiptbypetitionersofthedenialof
their motion for reconsideration filed against the dismissal of their complaint, which was a final order, started the
reckoningpointforthefilingoftheirappeal,towit:

Rule41,Section3ofthe1997RulesofCivilProcedurestates:

SEC. 3. Period of ordinary appeal. The appeal shall be taken wi thin fifteen (15) days from the notice of the
judgment or final order appealed from. Where a record on appeal is required, the appellant shall file a notice of
appealandarecordonappealwithinthirty(30)daysfromthenoticeofjudgmentorfinalorder.

Theperiodtoappealshallbeinterruptedbyatimelymotionfornewtrialorreconsideration.Nomotionforextension
oftimetofileamotionfornewtrialorreconsiderationshallbeallowed.(emphasissupplied)

Based on the foregoing, an appeal should be taken within 15 days from the notice of judgment or final order
appealedfrom.Afinaljudgmentororderisonethatfinallydisposesofacase,leavingnothingmoreforthecourtto
do with respect to it. It is an adjudication on the merits which, considering the evidence presented at the trial,
declares categorically what the rights and obligations of the parties are or it may be an order or judgment that
dismissesanaction.

As already mentioned, petitioners argue that the order of July 1, 1998 denying their motion for reconsideration
should be construed as the "final order," not the February 12, 1998 order which dismissed their complaint. Since
they received their copy of the denial of their motion for reconsideration only on July 22, 1998, the 15day
reglementaryperiodtoappealhadnotyetlapsedwhentheyfiledtheirnoticeofappealonJuly27,1998.

Whatthereforeshouldbedeemedasthe"finalorder,"receiptofwhichtriggersthestartofthe15dayreglementary
periodtoappealtheFebruary12,1998orderdismissingthecomplaintortheJuly1,1998orderdismissingthe
MR?

In the recent case of Quelnan v. VHF Philippines, Inc., the trial court declared petitioner Quelnan nonsuited and
accordingly dismissed his complaint. Upon receipt of the order of dismissal, he filed an omnibus motion to set it
aside.Whentheomnibusmotionwasfiled,12daysofthe15dayperiodtoappealtheorderhadlapsed.Helateron
received another order, this time dismissing his omnibus motion. He then filed his notice of appeal. But this was
likewisedismissedforhavingbeenfiledoutoftime.

Thecourtaquoruledthatpetitionershouldhaveappealedwithin15daysafterthedismissalofhiscomplaintsince
thiswasthefinalorderthatwasappealableundertheRules.Wereversedthetrialcourtanddeclaredthatitwasthe
denialofthemotionforreconsiderationofanorderofdismissalofacomplaintwhichconstitutedthefinalorderasit
waswhatendedtheissuesraisedthere.

This pronouncement was reiterated in the more recent case of Apuyan v. Haldeman et al. where we again
consideredtheorderdenyingpetitionerApuyansmotionforreconsiderationasthefinalorderwhichfinallydisposed
oftheissuesinvolvedinthecase.

Based on the aforementioned cases, we sustain petitioners view that the order dated July 1, 1998 denying their
motionforreconsiderationwasthefinalordercontemplatedintheRules.33

As the aftermath of these rulings, the Court issued its resolution in A.M. No. 07712SC to approve certain
amendments to Rules 41, 45, 58 and 65 of the Rules of Court effective on December 27, 2007. Among the
amendments was the delisting of an order denying a motion for new trial or motion for reconsideration from the
enumeration found in Section 1, Rule 41 of the 1997 Rules of Civil Procedure of what are not appealable. The
amendedrulenowreads:

Section1.Subjectofappeal.Anappealmaybetakenfromajudgmentorfinalorderthatcompletelydisposesof
thecase,orofaparticularmatterthereinwhendeclaredbytheseRulestobeappealable.

Noappealmaybetakenfrom:

(a)Anorderdenyingapetitionforrelieforanysimilarmotionseekingrelieffromjudgment

(b)Aninterlocutoryorder

(c)Anorderdisallowingordismissinganappeal

(d)Anorderdenyingamotiontosetasideajudgmentbyconsent,confessionorcompromiseontheground
offraud,mistakeorduress,oranyothergroundvitiatingconsent

(e)Anorderofexecution

(f)Ajudgmentorfinalorderfororagainstoneormoreofseveralpartiesorinseparateclaims,counterclaims,
crossclaims and thirdparty complaints, while the main case is pending, unless the court allows an appeal
therefromand

(g)Anorderdismissinganactionwithoutprejudice.

Inanyoftheforegoingcircumstances,theaggrievedpartymayfileanappropriatespecialcivilactionasprovidedin
Rule65.

Basedontheforegoingdevelopments,ShellandTabangaosappeal,albeitseeminglydirectedonlyattheOctober
5,1999denialoftheirmotionforreconsideration,wasproper.Thus,wesustaintheCAsdenialforbeinginaccord
withtherulesandpertinentprecedents.Wefurtherpointoutthatforpetitionerstoinsistthattheappealwaslimited
only to the assailed resolution of October 5, 1999 was objectively erroneous, because Shell and Tabangao
expresslyindicatedintheirappellantsbriefthattheirappealwasdirectedatboththeFebruary3,1998decisionand
theOctober5,1999resolution.34
The petition cannot prosper if the CA acted in accordance with law and jurisprudence. Certiorari, prohibition and
mandamus are extraordinary remedies intended to correct errors of jurisdiction and to check grave abuse of
discretion. The term grave abuse of discretion connotes capricious and whimsical exercise of judgment as is
equivalenttoexcess,oralackofjurisdiction.35Theabusemustbesopatentandgrossastoamounttoanevasion
ofapositivedutyoravirtualrefusaltoperformadutyenjoinedbylaw,ortoactatallincontemplationoflawas
where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility.36 Yet, here,
petitionersutterlyfailedtoestablishthattheCAabuseditsdiscretion,leastofallgravely.

2.Makaticaseisbarredandshouldbedismissedongroundofresjudicataandwaiver

The dismissal of the petition should ordinarily permit the CA to resume its proceedings in order to enable it to
resolvetheappealofShellandTabangao.ButtheCourtdeemsitselfboundtofirstdeterminewhethertheMakati
casecouldstillproceedbyvirtueoftheirinsistencethatthecauseofactionforannulmentoftheforeclosuresalein
theMakaticase,whichwasintimatelyintertwinedwiththecauseofactionforcollectionofthedeficiencyamountin
theManilacase,couldnotproceedindependentlyoftheManilacase.

ShellandTabangaosinsistencehasmerit.TheMakaticaseshouldhavebeenearlierdisallowedtoproceedonthe
groundoflitispendentia,or,oncethedecisionintheManilacasebecamefinal,shouldhavebeendismissedonthe
groundofbeingbarredbyresjudicata.

In the Manila case, Ramon averred a compulsory counterclaim asserting that the extrajudicial foreclosure of the
mortgagehadbeendevoidofbasisinfactandinlawandthattheforeclosureandthefilingoftheactionhadbeen
made in bad faith, with malice, fraudulently and in gross and wanton violation of his rights. His pleading thereby
showedthatthecauseofactionhelaterpleadedintheMakaticasethatofannulmentoftheforeclosuresalewas
identicaltothecompulsorycounterclaimhehadsetupintheManilacase.

Rule6ofthe1997RulesofCivilProceduredefinesacompulsorycounterclaimasfollows:

Section7.Compulsorycounterclaim.Acompulsorycounterclaimisonewhich,beingcognizablebytheregular
courtsofjustice,arisesoutoforisconnectedwiththetransactionoroccurrenceconstitutingthesubjectmatterof
theopposingpartysclaimanddoesnotrequireforitsadjudicationthepresenceofthirdpartiesofwhomthecourt
cannotacquirejurisdiction.Suchacounterclaimmustbewithinthejurisdictionofthecourtbothastotheamount
and the nature thereof, except that in an original action before the Regional Trial Court, the counterclaim may be
consideredcompulsoryregardlessoftheamount.(n)

Accordingly,acounterclaimiscompulsoryif:(a)itarisesoutoforisnecessarilyconnectedwiththetransactionor
occurrencewhichisthesubjectmatteroftheopposingpartysclaim(b)itdoesnotrequireforitsadjudicationthe
presenceofthirdpartiesofwhomthecourtcannotacquirejurisdictionand(c)thecourthasjurisdictiontoentertain
theclaimbothastoitsamountandnature,exceptthatinanoriginalactionbeforetheRTC,thecounterclaimmay
beconsideredcompulsoryregardlessoftheamount.

Acompulsorycounterclaimthatadefendingpartyhasatthetimehefileshisanswershallbecontainedtherein.37
PursuanttoSection2,Rule9ofthe1997RulesofCivilProcedure,acompulsorycounterclaimnotsetupshallbe
barred.

Thefourteststodeterminewhetheracounterclaimiscompulsoryornotarethefollowing,towit:(a)Aretheissues
offactorlawraisedbytheclaimandthecounterclaimlargelythesame?(b)Wouldresjudicatabarasubsequent
suit on defendants claims, absent the compulsory counterclaim rule? (c) Will substantially the same evidence
support or refute plaintiffs claim as well as the defendants counterclaim? and (d) Is there any logical relation
between the claim and the counterclaim, such that the conduct of separate trials of the respective claims of the
partieswouldentailasubstantialduplicationofeffortandtimebythepartiesandthecourt?38 Ofthefour,theone
compellingtestofcompulsorinessisthelogicalrelationbetweentheclaimallegedinthecomplaintandthatinthe
counterclaim.Suchrelationshipexistswhenconductingseparatetrialsoftherespectiveclaimsofthepartieswould
entail substantial duplication of time and effort by the parties and the court when the multiple claims involve the
same factual and legal issues or when the claims are offshoots of the same basic controversy between the
parties.39Ifthesetestsresultinaffirmativeanswers,thecounterclaimiscompulsory.

The four tests are affirmatively met as far as the Makati case was concerned. The Makati case had the logical
relation to the Manila case because both arose out of the extrajudicial foreclosure of the real estate mortgage
constituted to secure the payment of petitioners credit purchases under the distributorship agreement with Shell.
Specifically,therightofShelltodemandthedeficiencywaspredicatedonthevalidityoftheextrajudicialforeclosure,
suchthattherewouldnothavebeenadeficiencytobeclaimedintheManilacasehadShellnotvalidlyforeclosed
themortgage.Asearliershown,Ramonscauseofactionforannulmentoftheextrajudicialforeclosurewasatrue
compulsory counterclaim in the Manila case. Thus, the Makati RTC could not have missed the logical relation
betweenthetwoactions.
We hold, therefore, that the Makati case was already barred by res judicata. Hence, its immediate dismissal is
warranted.

Barbyresjudicataavailsifthefollowingelementsarepresent,towit:(a)theformerjudgmentorordermustbefinal
(b)thejudgmentorordermustbeonthemerits(c)itmusthavebeenrenderedbyacourthavingjurisdictionover
thesubjectmatterandtheparties(d)theremustbe,betweenthefirstandthesecondaction,identityofparties,of
subjectmatterandcauseofaction.40

TheManilaRTChadjurisdictiontohearanddecideonthemeritsShellscomplainttorecoverthedeficiency,andits
decisionrenderedonMay31,1990onthemeritsalreadybecamefinalandexecutory.Hence,thefirst,secondand
thirdelementswerepresent.

Anentthefourthelement,theMakatiRTCconcludedthattheManilacaseandtheMakaticasehadnoidentityasto
theircausesofaction,explainingthattheformerwasapersonalactioninvolvingthecollectionofasumofmoney,
butthelatterwasarealactionaffectingthevalidityoftheforeclosuresale,statinginitsorderofOctober5,1999
denyingShellsmotionforreconsiderationasfollows:

Finally,astowhetherthereisidentityofcausesofactionbetweenthetwo(2)cases,thisCourtfindsinnegative.

xxxx

True,thetestofidentityofcausesofactionliesnotintheformofanactionbutonwhetherthesameevidencewould
supportandestablishtheformerandthepresentcausesofaction.Thedifferenceofactionsintheaforesaidcases
isofnomoment.Ithasbeenheldthatapartycannotbyvaryingtheformofactionoradoptingadifferentmethodof
presentinghiscase,escapetheoperationoftheprinciplethatoneandthesamecauseofactionshallnotbetwice
litigatedbetweenthesamepartiesandtheirprivies.(Sangalangvs.Caparas,151SCRA53Gutierrezvs.Courtof
Appeals,193SCRA437.Thisrulinghoweverdoesnotfallsquarelyonthepresentcontroversy.

CivilCaseNo.42852isforcollectionofsumofmoney,apersonalactionwherewhatisatissueiswhetherspouses
MendiolahaveindebtednesstoPilipinasShell.Thereisnoconcretefindingsonquestionsregardingthevalidityof
sale affecting the mortgaged property, otherwise, there would be a determination of transferring of title over the
property which is already a real action. In the latter action, Manila courts has no jurisdiction considering that the
propertyislocatedinParanaque,thensittingunderMakatiRTC.Atanyrate,thisCourtisnotunmindfulofseriesof
cases which state that from an otherwise rigid rule outlining jurisdiction of courts being limited in character,
deviations have been sanctioned where the (1) parties agreed or have acquiesced in submitting the issues for
determinationbythecourt(2)thepartieswereaccordedfullopportunityinpresentingtheirrespectiveargumentsof
theissueslitigatedandoftheevidenceinsupportthereofand(3)thecourthasalreadyconsideredtheevidenceon
record and is convinced that the same is sufficient and adequate for rendering a decision upon the issues
controverted. xxx. While there is a semblance of substantial compliance with the aforesaid criteria, primarily
becausetheissueofvalidityofforeclosureproceedingswassubmittedfordeterminationofRTCManilawhenthis
wasstatedasanaffirmativedefensebyspousesMendiolaintheirAnswertothecomplaintinCivilCaseNo.42852,
however it appears from the Decision rendered in said case that the issue on validity of foreclosure sale was not
fully ventilated before the RTC Manila because spouses Mendiolas right to present evidence in its behalf was
declaredwaived.Naturally,wherethisissuewasnotfullylitigatedupon,noresolutionordeclarationcouldbemade
therein.

Ontheotherhand,CivilCaseNo.88398isanactionfordeclarationofnullityorannulmentofforeclosuresale,a
real action where the location of property controls the venue where it should properly be filed. This Court
undoubtedly has jurisdiction to adjudicate this case. Plaintiff spouses Mendiola merely claimed that no actual
foreclosuresalewasconducted,andiftherewas,thesamewasprematureforlackofnoticeandhearing.Takenote
thatplaintiffsdonotdenytheirindebtednesstoPilipinasShellalthoughtheamountbeingclaimedisdisputed.They
aresimplyassertingtheirrightsasownersofthemortgagedproperty,contendingthattheywerenotaffordeddue
processinthecourseofforeclosureproceedings.Andbasedmainlyonthetestimonialanddocumentaryevidence
presented,aswellasthepostulations,expositionsandargumentsraisedbyallpartiesinthiscase,itistheCourts
considered view that spouses Mendiola have established the material allegations in their complaint and have
convincinglyshowntothesatisfactionoftheCourtthattheyareentitledtothereliefsprayedfor.Withthesefindings
and adjudications, the Court does not find inconsistency with those held in Civil Case No. 42852. As to whether
spousesMendiolaisstillindebtedtoPilipinasShellisnotinissuehere,andnotevenasinglediscussiontouched
thatmatterasthiswouldtantamounttoencroachinguponthesubjectmatterlitigatedinCivilCaseNo.42852.41

TheforegoingconclusionoftheMakatiRTConlackofidentitybetweenthecausesofactionwaspatentlyunsound.
Theidentityofcausesofactiondoesnotmeanabsoluteidentityotherwise,apartymayeasilyescapetheoperation
ofresjudicatabychangingtheformoftheactionorthereliefsought.Thetesttodeterminewhetherthecausesof
actionareidenticalistoascertainwhetherthesameevidencewillsustaintheactions,orwhetherthereisanidentity
inthefactsessentialtothemaintenanceoftheactions.Ifthesamefactsorevidencewillsustaintheactions,then
theyareconsideredidentical,andajudgmentinthefirstcaseisabartothesubsequentaction.42PetitionersMakati
case and Shells Manila case undeniably required the production of the same evidence. In fact, Shells counsel
faced a dilemma upon being required by the Makati RTC to present the original copies of certain documents
becausethedocumentshadbeenmadepartoftherecordsoftheManilacaseelevatedtotheCAinconnectionwith
theappealoftheManilaRTCsjudgment.43Also,bothcasesarosefromthesametransaction(i.e.,theforeclosure
of the mortgage), such that the success of Ramon in invalidating the extrajudicial foreclosure would have
necessarilynegatedShellsrighttorecoverthedeficiency.

Apparently, the Makati RTC had the erroneous impression that the Manila RTC did not have jurisdiction over the
complaint of petitioners because the property involved was situated within the jurisdiction of the Makati RTC.
Thereby,theMakatiRTCconfusedvenueofarealactionwithjurisdiction.Itsconfusionwaspuzzling,considering
thatitwaswellawareofthedistinctionbetweenvenueandjurisdiction,andcertainlyknewthatvenueincivilactions
wasnotjurisdictionalandmightevenbewaivedbytheparties.44Tobeclear,venuerelatedonlytotheplaceoftrial
or the geographical location in which an action or proceeding should be brought and does not equate to the
jurisdictionofthecourt.Itisintendedtoaccordconveniencetotheparties,asitrelatestotheplaceoftrial,anddoes
notrestricttheiraccesstothecourts.45Incontrast,jurisdictionreferstothepowertohearanddetermineacause,46
andisconferredbylawandnotbytheparties.47

Byvirtueoftheconcurrenceoftheelementsofresjudicata,theimmediatedismissaloftheMakaticasewouldhave
beenauthorizedunderSection1,Rule9ofthe1997RulesofCivilProcedure,whichprovides:

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
recordthatthecourthasnojurisdictionoverthesubjectmatter,thatthereisanotheractionpendingbetweenthe
same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the
courtshalldismisstheclaim.(2a)

TheruleexpresslymandatedtheMakatiRTCtodismissthecasemotupropriooncethepleadingsortheevidence
onrecordindicatedthependencyoftheManilacase,or,lateron,disclosedthatthejudgmentintheManilacase
hadmeanwhilebecomefinalandexecutory.

Yet,weareappalledbytheMakatiRTC'sflagrantdisregardofthemandate. Itsreasonforthedisregardwasnot
1wphi1

wellfounded.Westressthatitsdisregardcannotbeeasilyignoredbecauseitneedlesslycontributedtotheclogging
ofthedocketsoftheJudiciary.Thus,wedeemittobeimperativetoagainremindalljudgestoconsciouslyheedany
clearmandateundertheRulesofCourtdesignedtoexpeditethedispositionofcasesaswellastodeclogthecourt
dockets.

WHEREFORE,weDISMISSthepetitionforcertiorari,prohibitionandmandamusforlackofmeritCONSIDERCivil
CaseNo.88398dismissedwithprejudiceonthe.groundofresjudicataandORDERpetitionerstopaythecostsof
suittorespondents.

TheOfficeoftheCourtAdministratorisDIRECTEDtodisseminatethisdecisiontoalltrialcourtsfortheirguidance.

SOORDERED.

LUCASP.BERSAMIN
Associatejustice

ActingChairperson,FirstDivision

WECONCUR:

ROBERTOA.ABAD*
Associatejustice

MARTINS.VILLARAMA,JR. BIENVENIDOL.REYES**
AssociateJustice AssociateJustice

ESTELAM.PERLASBERNABE
Associatejustice

ATTESTATION

IattestthattheconclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassigned
tothewriteroftheopinionoftheCourt'sDivision.

LUCASP.BERSAMIN
Associatejustice

ActingChairperson,FirstDivision
 CERTIFICATION

PursuanttoSection13,ArticleVIIIoftheConstitutionandtheDivisionActingChairperson'sAttestation,Icertifythat
theconclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassignedtothewriter
oftheopinionoftheCourt'sDivision.

ANTONIOT.CARPIO

SeniorAssociateJustice

(PerSection12,R.A.296,TheJudiciaryActof1948,asamended)

Footnotes
*
ViceJusticeTeresitaJ.LeonardoDeCastro,whoisonwellnessleave,perSpecialOrderNo.1252issued
onJuly12,2012.
**
ViceJusticeMarianoC.DelCastillo,whotookpartinthecaseintheCourtofAppeals,perraffleonJuly
16,2012.
1
Rollo, pp. 4546 penned by Associate Justice Juan Q. Enriquez, Jr. (retired), with Associate Justice
BernardoP.Abesamis(retired)andAssociateJusticeEdgardoF.Sundiam(deceased)concurring.
2
Id. at 66 penned by Associate Justice Amelita G. Tolentino, with Associate Justice Buenaventura J.
Guerrero (retired/deceased) and Associate Justice Mariano C. Del Castillo (now a Member of the Court)
concurring.
3
Records,pp.8086.
4
Id.at400401.
5
Id.at3.
6
TSNdatedApril16,1991,pp.1729.
7
Records,p.71.
8
TSNdatedDecember12,1991,pp.414.
9
Records,pp.199204.
10
Id.at17.
11
Id.at2437(urgentomnibusmotionfiledbyShell)id.at115128(motiontodismissfiledbyTabangao).
12
Id.at164.
13
Id.at169184.
14
Id.at546557.
15
Id.at535545.
16
Rollo,p.92.
17
Id.at93.
18
Records,pp.575578.
19
Id.at579594.
20
Id.at644650.
21
Id.at650.
22
Id.at651.
23
CArollo,pp.4989.
 24
Id.at147150.
25
Supra,noteno.1.
26
Supra,noteno.2.
27
G.R.No.159941,August17,2011,655SCRA580,592.
28
G.R.No.145911,July7,2004,433SCRA631,639.
29
Boldemphasissupplied.
30
G.R.No.129980,September20,2004,438SCRA402.
31
Id.at419.
32
G.R.No.141524,September14,2005,469SCRA633.
33
Boldemphasisanditalicsareintheoriginaltext.
34
CArollo,pp.5253.
35
LittonMills,Inc.v.GalleonTrader,Inc.,No.L40867,July26,1988,163SCRA489,494.
36
Duerov.CourtofAppeals,G.R.No.131282,January4,2002,373SCRA11,17.
37
Section8,Rule11,1997RulesofCivilProcedure.
38
Bungcayao,Sr.v.FortIlocandiaPropertyHoldingsandDevelopmentCorporation,G.R.No.170483,April
19,2010,618SCRA381,389Sandejasv.Ignacio,Jr.,G.R.No.155033,December19,2007,541SCRA61,
77 Lafarge Cement Philippines, Inc. v. Continental Cement Corporation, G.R. No. 155173, November 23,
2004,443SCRA522,534Tanv.KaakbayFinanceCorporation,G.R.No.146595,June20,2003,404SCRA
518,525.
39
LafargeCementPhilippines,Inc.v.ContinentalCementCorporation,supra,at534Tanv.KaakbayFinance
Corporation, supra, at 525526 Alday v. FGU Insurance Corporation, G.R. No. 138822, January 23, 2001,
350SCRA113,121.
40
DevelopmentBankofthePhilippinesv.LaCampanaDevelopmentCorporation,G.R.No.137694,January
17,2005,448SCRA384,392393Taganasv.Emuslan,G.R.No.146980,September2,2003,410SCRA
237,242.
41
Records,pp.648650.
42
Cruzv.CourtofAppeals,G.R.No.164797,February13,2006,482SCRA379,393LuzonDevelopment
Bankv.Conquilla,G.R.No.163338,September21,2005,470SCRA533,557.
43
SeeTSNdatedDecember16,1993,pp.116.
44
PhilippineBankofCommunicationsv.Lim,G.R.No.158138,April12,2005,455SCRA714,720Rudolf
LietzHoldings,Inc.v.TheRegistryofDeedsofParaaqueCity,G.R.No.133240,November15,2000,344
SCRA680,685.
45
Nocumv.Tan,G.R.No.145022,September23,2005,470SCRA639,648.
46
PlatinumToursandTravel,Inc.v.Panlilio,G.R.No.133365,September16,2003,411SCRA142,146.
47
Guinhawav.People,G.R.No.162822,August25,2005,468SCRA278,299.

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