Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. Nos. 92362-67 October 15, 1991

CIRILO A. CINCO, DOMINGO AMARO, ANTONIO ABALOS AND ANDRES

SABALZA, petitioners,
vs.
SANDIGANGBAYAN (Second Division) and THE PEOPLE OF THE PHILIPPINES, respondents.

Emerito M. Salva & Associates for petitioners.

MEDIALDEA, J.:p

This petition for review on certiorari seeks the reversal of a resolution issued by respondent
Sandiganbayan dated February 23, 1990, which denied the petitioners' motion to quash Criminal
Cases Nos. 13827 to 13832.

The antecedent facts as summarized by the respondent court are as follows:

1. On April 20, 1981, Fredeswinda P. BalanaLODGE a letter-complaint with the

Office of the Tanodbayan (now of the Special Prosecutor) against Cirilo A. Cinco,
Jose Bantigue, Domingo Amaro, Antonio Abalos, Andres Sabalza, and others. She
swore to her letter-complaint before Prosecutor Perfecto Llacar, Jr., who certified at
the bottom thereof that he personally examined the affiant and that he was satisfied
she executed and understood it (Annex A of Rejoinder, Record, pp. 125-132). The
charge was docketed as TBP Case No. 81-042401.

Cinco submitted his counter-affidavit on June 16, 1981, and supplemental counter-
affidavit on July 16, 1981. Amaro executed his counter-affidavit in June 1981 and
supplemental counter-affidavit on July 16, 1981; Abalos filed his counter-affidavit on
June 18, 1981; Bantigue, on June 25, 1981; and the others, on various dates in the
same year; Sabalza, however, did not.

2. On June 11, 1982, Balana filed another letter-complaint against Cinco and Amaro,
which she put under oath before Prosecutor Ricardo A. Buenviaje who also certified
in writing that he personally examined the affiant and that he was satisfied she
voluntarily executed and understood the letter-complaint (Annex B of Rejoinder,
Record, pp. 133-134). The additional charge was given the number TBP Case No.
82-061408.

Cinco submitted his counter-affidavit on August 11, 1982, and Amaro, on a date
which does not appear on record, but in or before 1986.

3. After the submission of the countervailing affidavits which the defense impliedly
admitted, Balana presented her reply affidavits.
4. The preliminary investigation of the charges was assigned to Prosecutor Ricardo
A. Buenviaje, and it was up for resolution when he was appointed to the judiciary in
1986. It was then re-assigned to Prosecutor Gregorio G. Pimentel Jr., who, on July
23, 1987, issued a resolution recommending the prosecution of the accused for
alleged violations of Section 3(e) of Republic Act No. 3019 (Annex C of Rejoinder,
Record, pp. 131-143). The resolution having been approved by Raul M. Gonzales,
the then Tanodbayan, the corresponding informations for the said violations were
filed with the Sandiganbayan on September 7, 1987, and docketed as Criminal
Cases Nos. 12420 and 12421 against Cinco; 12422 against Bantigue, Amaro, Cinco,
and Abalos; 12423 against Cinco; 12424 against Bantigue, Amaro, and Sabalza; and
12426 against Cinco.

5. The accused filed a motion to quash on May 17, 1988, praying that the said
informations be dismissed for lack of authority on the part of Tanodbayan Gonzales
or his prosecutor to file them and invoking Zaldivar vs. Sandiganbayan, 160 SCRA
843, which had held that the Tanodbayan, now called Special Prosecutor, was

... clearly without authority to conduct preliminary investigations and

to direct the filing of criminal cases with the Sandiganbayan, except
upon orders of the Ombudsman. This right to do so was lost effective
February 2, 1987. From that time, he has been divested of such
authority.

After hearing the prosecution, this Court promulgated a resolution on July 5, 1988,
granting the motion to quash. In that resolution, it observed

... (T)he dismissal of these cases will be without prejudice to the right
of the State, acting through the Hon. Ombudsman, to conduct a new
preliminary investigation and refile the cases if the evidence warrants
the same.

6. On August 4, 1988, Balana requested the re-filing of the cases, and in view
thereof, the accused, through counsel, in turn requested on December 26, 1988, that
she did so 'under separate and distinct charges in accordance with the new rules of
preliminary investigation' (Secs. 3 and 4, Rule 112 of the Rules of Court effective
October 1, 1988) so that the respondents can refute her charges and specific
evidences she may present in support of each separate charge (Annex A of Motion
to Quash, Record, pp. 61-61).

7. In his order of February 16, 1990, Prosecutor Eleuterio F. Guerrero, to whom the
charges of Balana were re-assigned for preliminary investigation, denied the request
of the accused and noting that the parties had already adduced their respective
evidence in the preliminary investigation conducted by the previous prosecutor, gave
her 10 days from receipt to manifest if she elected to adopt the same charges and
evidence already submitted. In the same order, he also granted the accused an
equal period to adduce their controverting evidence.

Balana opted on March 8, 1989, to adopt her said charges and evidence, and the
accused having failed to submit countervailing evidence or any pleading, Prosecutor
Guerrero construed their omission as waiver.
 8. On June 27, 1989, he issued a resolution finding prima facie cases for alleged
violations of Section 3 (e) of Republic Act No. 3019 and recommending the filing of
the corresponding informations. The Hon. Ombudsman approved the resolution.
Accordingly, (Criminal Cases Nos. 13827 to 13832 against the petitioners) were
instituted on August 28, 1989. Each information carries with it the certification of
Prosecutor Guerrero

that a preliminary investigation has been conducted in this case; that

there is a sufficient ground to engender a well-founded belief that the
crime charged herein has been committed and that the accused are
probably guilty thereof. (Rollo, pp. 136- 140).

On December 4, 1989, petitioners filed a Motion to Quash the informations filed in the
aforementioned criminal cases on the following grounds:

I. THE INFORMATIONS ARE NULL AND VOID BECAUSE SAME WERE FILED IN
VIOLATION OF SECTION 3 OF RULE 112 OF THE RULES OF COURT AS
AMENDED;

II. THAT THE OFFICER WHO FILED THE INFORMATIONS HAD NO AUTHORITY
TO DO SO; AND

III. THAT THE INFORMATIONS DO NOT CONFORM SUBSTANTIALLY TO THE

PRESCRIBED FORM. (Rollo, pp. 46-47)

After the filing of appropriate pleadings by the Ombudsman in opposition to and by the petitioners in
support of the foregoing motion, the respondent court, on December 20, 1989, issued a resolution,
the dispositive portion of which states:

WHEREFORE, finding the Motion to Quash dated November 24, 1989, and
submitted for resolution on January 29, 1990, to be without merit, the same is
DENIED.

SO ORDERED. (Rollo, p. 151)

Hence, this petition.

Petitioners submit the following assignment of errors:

1. THE RESPONDENT SANDIGANBAYAN COMMITTED GRAVE AND SERIOUS

ERROR IN NOT RULING THAT THE INFORMATIONS FILED IN CRIMINAL CASES
NOS. 13827-32 IN QUESTION, ARE NULL AND VOID BECAUSE SAME WERE
FILED IN VIOLATION OF SECTION 3 AND 4 OF RULE 112 OF THE NEW RULES
OF COURT AS AMENDED;

2. THAT RESPONDENT SANDIGANBAYAN COMMITTED SERIOUS AND GRAVE

ERROR IN NOT RULING THAT THE PROSECUTOR WHO FILED THE
INFORMATIONS HAD NO AUTHORITY TO DO SO; AND

3. THAT THE RESPONDENT SANDIGANBAYAN COMMITTED SERIOUS AND

GRAVE ERROR IN NOT FINDING THAT INFORMATIONS FILED IN CRIMINAL
 CASES NOS. 13827-32 DO NOT CONFORM SUBSTANTIALLY TO THE FORM
PRESCRIBED IN SECTION 4 OF RULE 112 OF THE NEW RULES OF COURT.
(Rollo, p. 19)

We affirm.

The peculiar circumstances of this case do not support petitioners' plea for a new preliminary
investigation. It is true that the first informations filed against the petitioners were nullified because
the then Special Prosecutor had no authority to do so in line with Our ruling in the Zaldivar case. Yet,
a careful analysis of the facts shows that the nullity did not extend to the entire preliminary
investigation proceedings undertaken by that office. We note that the preliminary investigation on
Balana's charges started wayback in 1981. Between the years 1981 and 1983, the contending
parties already submitted the counter and supplementale affidavits as well as a reply affidavit. All the
requisite papers having been submitted, the preliminary investigation was up for resolution in 1986
when the Prosecutor who handled the case was promoted to the Judiciary in that same year. It was
just unfortunate that the said resolution was issued in July 1987 and the informations filed in
September of that year. Under such facts, it cannot be said that the proceedings before February 2,
1987 were null and void inasmuch as the then Tanodbayan was clothed with authority to conduct the
same. Consequently, the portion of the investigation proceedings which consists in the oath of
Balana to her letters-complaint, the certifications of the Prosecutors Llacer and Buenviaje, Balana's
evidence, and petitioner's counter and supplemental affidavits with their evidence are still effective
and valid. To countenance the plea of petitioners who have already been afforded the right to a
preliminary investigation conformably with PD 911 would be fait accompli. A new pleriminary
investigation will be useless and repetitious because the same facts and evidence will be elicited.
The investigation proceedings in 1981 and 1983 being valid and proper, the Ombudsman through
the Special Prosecutor III Eleuterio Guerrero could simply take over and continue from that point.
This move will be more conducive to an orderly and speedy administration of justice.

Even granting arguendo that a new preliminary investigation is proper in this case, the same in effect
had already been given to the petitioners. It is noteworthy that before his evaluation of the records of
the first preliminary investigation, Special Prosecutor Officer III, Eleuterio F. Guerrero, required (1)
Balana to manifest if she elected to adopt the same charges and evidence already submitted; and
(2) petitioners to submit their controvering evidence if Balana decided to adopt the same charges.
This directive partakes of the nature of a preliminary investigation which is noting more than the
submission of the parties' respective affidavits, counter-affidavits and evidence to buttress their
separate allegations. Balana opted to adopt her charges and evidence. Petitioners did not submit
any countervailing evidence and consequently, lost the opportunity to submit additional arguments
and supporting evidence in their favor. Their failure, therefore, should not work against the right of
the complainant to an expenditious determination of her complaints.

Petitioners argue that the letters-complaint cannot serve as affidavits or evidence in support of the
charge against petitioners allegedly constituting violations of Section 3, sub-par. (e) of RA No. 3019
as amended; that complainant never positively Identified the other respondents and the offenses for
which they are charged; and that she never presented affidavits of witnesses in support of the
charge or charges against them.

We are not convinced. The Special Prosecutor has full discretion and control of the prosecution of
criminal actions. He alone has the power to decide which as between conflicting testimonies or
evidence should be believed (see People v. Liggayu, 97 Phil. 865). While indeed he has this full
power, it does not follow, however, that the designation of the offense by the Fiscal is binding upon
the court. Settled is the rule that it is crime after the trial and following its own ascertainment of the
facts needed to constitute the elements of the crime attributed to the accused (People v. Eleuterio,
G.R. No. 63971, May 9, 1989, 173 SCRA 243, 251). In his study of the entire records of the
preliminary investigation of Balana's charges, Special Prosecutor Guerrero believed that he has at
least a prima facie evidence to establish the guilt of the petitioners and hence, refiled the cases. This
is enough. It must be emphasized that the Fiscal is not required to prove the guilt of the accused
beyond reasonable doubt. Our statement in Trocio v. Manta (L-34834, November 15, 1982, 118
SCRA 241, 246), bears repeating, to wit:

... When a fiscal investigates a complaint in order to determine whether he should file
charges with the court against the person complained of, the scope of the
investigation is far short of a trial of an accused before the court. It is not required
that all reasonable doubt of the guilt of the accused must be removed; it is only
required that the evidence be sufficient to established probable cause that the
accused committed the crime charged. ... . (emphasis ours)

We also see no need for the Ombudsman to act favorably on petitioner's bill of particulars seeking to
segregate the particulars of each of the six cases to support the re-filing of the six dismissed cases.
The reason being that such procedure has no place in preliminary investigation where no finding of
guilt is made. In Bernabe, Jr., et al. v. Rosario (G.R. No. 83095, July 19, 1988, En Banc Minute
resolution), We held:

... The investigating fiscal, to be sure, has discretion to determine the specify and
adequacy of averments of the offense charged. He may dismiss the complaint
forthwith if he finds it to be insufficient in form or substance or if he otherwise finds no
ground to continue with the inquiry, or proceed with the investigation if the complaint
is, in his view, in due and proper form. It certainly is not his duty to require a more
particular statement of the allegations of the complaint merely upon the respondent's
motion, and specially where after an analysis of the complaint and its supporting
statements he finds it sufficiently definite to apprise the respondents of the offenses
with which they are charged .... Moreover, the procedural device of bill of particulars,
as the Solicitor General points out, appears to have reference to informations or
criminal complaints filed in a competent court upon which the accused are arraigned
and required to plead, and strictly speaking has not application to complaints
initiating a preliminary investigation which cannot result in any finding of guilt, but
only of probable cause. .... (Emphasis supplied)

It appears too that the respondent court found the petitioners' request for particulars of their
respective offenses under Sec. 3 of RA No. 3019, unmeritorious. Such findings, being unrebutted,
are binding on Us. Thus,

2. The accused cannot plausibly claim that they were misled by the designations of
the offenses charged against them and were at a loss as to what to controvert.

(a) For if their claim were true they could not have prepared, verified, and submitted
their respective counter-affidavits and supplemental counter-affidavits.

(b) They are not ordinary government employees with modicum education. They are
professionals. Amaro, Cinco, Abalos, and Sabalza are the School Administrator,
Collecting and Disbursing Officer, College Instructor, and Secondary School
Teacher, respectively, in Sumoroy Agro-Industrial School, a State College owned by
the Government. Bantigue is a lawyer and Hearing Officer in the Ministry (now
Department) of Education, Culture and Sports.
 (c) In the dismissed Criminal Cases Nos. 12422, 12424, and 12426, the accused
were also charged with violations of Section 3 (e) of Republic Act No. 3019. They
filed motion for reinvestigation wherein they never complained that they were
preliminary investigated for alleged offenses other than for those violations. Instead,
they narrated in Criminal Cases Nos. 12422 and 12426 their own versions of the
facts constituting their defenses. This means that when entry requested for
specification of the accusations under Section 3 (e), on plaints of Balana included
charges under Section 3 (e) and knew precisely what to controvert. So when
Prosecutor Guerrero denied on February 16, 1989, their request and gave them 10
days to submit controverting evidence, they could have presented those defenses.

3. The 1988 request for specification of the charges under Section 3 (e) came too
late, as it was made only long after the accused had presented their controverting
evidence in 1981 and 1982 and after the preliminary investigation had been deemed
submitted for resolution in or before 1986. To have granted the request was to
unnecessarily conduct a new preliminary investigation and delay the resolution of the
letter complaint. (Rollo, pp. 146-147)

Petitioners' apprehension that they might be put in jeopardy of being charged with informations or
crimes other than the crime imputed in the dismissed cases is baseless. There could be no double
jeopardy for the simple reason that they have not year pleaded to the offense (see Gaspar v.
Sandiganbayan, G. R. No. 68086, September 24, 1986, 144 SCRA 415, 420). Beside, a preliminary
investigation is not a trial for which double jeopardy attaches. We ruled in Tandoc v. Resultan (G. R.
Nos. 59241-44, July 5, 1989, 175 SCRA 37, 43) that:

Preliminary investigation is merely inquisitorial, and it is often that only means of

discovering the persons who may be reasonably charged with a crime, to enable the
fiscal to prepare his complain or information. It is not a trial of the case on the merits
and has no purpose except that of determining whether a crime has been committed
and whether there is probable cause to believe that the accused is guilty therefor,
and it does not place the person against whom it is taken in jeopardy.

Further, petitioners claim that the respondent court has supported their plea for another preliminary
investigation when in the resolution of July 7, 1988, it directed that the dismissal of the informations
against them will be without prejudice to the right of the Ombudsman to conduct a preliminary
investigation and to re-file the cases if the evidence warrants the same.

Such contention is untenable. That portion of the respondent court's resolution is orbiter
dictum which lacks the force of an adjudication and should not ordinarily be regarded as such (see
Morales v. Paredes, 55 Phil. 565, 567). We stated earlier that the fiscal or the Special Prosecutor
has full discretion and control of the prosecution. The courts generally will not interfere with this
power. As the respondent court held:

Nowhere in the resolution of July 5, 1988, did this Court direct the conduct of a new
preliminary investigation on the charges of Balana against the accused. It merely
observed in that resolution that

the dismissal of these cases will be without prejudice to the right of

the State, through the Hon. Ombudsman, to conduct of a new
preliminary investigation and refile the cases if the evidence warrants
the same.
 This certainly is not such an order by any stretch of the imagination. (Rollo, pp. 140-
141)

Lastly, petitioners protest against the certification issued by Special Prosecutor Guerrero as highly
irregular because it did not comply with Section 4, Rule 112 of the Rules of Court. They aver that he
did not personally examine the complainants and witnesses; that he did not inform the petitioners of
the complaint and of the evidence submitted against them and he did not give them to the
opportunity to submit controverting evidence since there was none to controvert. Hence, they
conclude that the said irregularity renders the present informations null and void.

We do not agree. The well-reasoned dissertation of the respondent court in refutation of the
aforesaid arguments needs no amplification. We therefore cite it as Our own:

1. It has been held that if a preliminary investigation was actually conducted, the
absence of the certification by the investigating fiscal that it was conducted is not
fatal. This is the ruling in Estrella, vs. Ruiz, 58 SCRA 779, 784, which arose when
Presidential Decree No. 77 on preliminary investigation was enforced.

It should be observed that Section 3 of Rule 110 [now Section 4]

defines an information as nothing more than an 'accusation in writing
charging a person with an offense subscribed by the fiscal and filed
with the court.' Thus, it is obvious that such certification is not an
essential part of the information itself and its absence cannot vitiate it
as such. What is not allowed is the filing of the information without a
preliminary investigation having been previously conducted, and the
injucntion that there should be a certification is only a consequence of
the requirement that a preliminary investigation should first be
conducted.

Since the absence of the certification does not render null and void the information
filed after a preliminary investigation was conducted, with more reasons the presence
of a certification deficient in any respect does not have that effect.

As already seen, in the instant cases, a preliminary investigation was actually held,
and the accused were even afforded two opportunities to submit their controverting
evidence.

2. Prosecutor Guerrero expressly certified in each information that a preliminary

investigation has been conducted in this case. Such preliminary investigation which
actually took place is presumed to have been regularly held-that is, in accordance
with law. It can therefore be said that the quoted certification impliedly includes the
statement that the accused were informed of the complaint and evidence against
them and that they were given the chance to controvert the same. That they were in
fact so informed and given the chance cannot be denied. They could not have
submitted their counter-affidavits and supplemental counter-affidavits in 1981 and
1982 had they not been aware of the accusations and evidence against them. With
respect to Sabalza who did not submit counter-affidavit, he did not avail of the
opportunity given him in the order of February 16, 1989, of Prosecutor Guerrero. He
waived his right to present evidence.

For the same reason, the same certification also carries with it the implied statement
that 'as shown by the record.' Llacar and Buenviaje' 'personally examined the
 complaint and his witnesses,' as in fact these prosecutors so certified in the letter-
complaints of Balana.

3. Untenable is the further contention that "sufficient ground to engender a well-

founded belief is less categorical than "reasonable ground to believe" and, therefore,
not enough compliance with law. The quoted phrases are equivalent expressions
conveying the same thought. This is a mere perusal of the pertinent provisions of law
demonstrates:

Preliminary investigation is an inquiry or proceeding for the purpose

of determining whether there is sufficient ground to engender a well-
founded belief that a crime cognizable by the Regional Trial Court
has been committed and that the respondent is probably guilty
thereof, and should be held for trial. (Sec. 1, Rule 112, 1985 Rules).

He shall certify under oath ... that there is reasonable ground to

believe that a crime has been committed and that the accused is
probably guilty thereof ... (Sec. 4, Rule 112, 1985 Rules). ' (Rollo, pp.
148-150)

ACCORDINGLY, the petition is hereby DENIED. The resolution of the Sandiganbayan, Second
Division dated February 23, 1990 is AFFIRMED. Costs against petitioners.

SO ORDERED.

Fernan, C.J., Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano, Padilla, Bidin, Griño-Aquino, Regalado
and Davide, Jr., JJ., concur.

Melencio-Herrera, J., is on leave.

FIRST DIVISION

OFFICE OF THE OMBUDSMAN, G.R. No. 164678

Petitioner,
Present:
Davide, Jr., C.J. (Chairman),
- versus - Quisumbing,
Ynares-Santiago,
Carpio, and
Azcuna, JJ.
MARY ANN T. CASTRO,
Respondent. Promulgated:

October 20, 2005

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

DECISION

YNARES-SANTIAGO, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court assails
the July 23, 2004 Decision[1] of the Court of Appeals in CA-G.R. SP No. 77646
which annulled and set aside the October 17, 2002 Decision[2] of the Ombudsman
in OMB-V-A-02-0124-C. The Ombudsman found respondent Asst. City
Prosecutor Mary Ann T. Castro guilty of Conduct Prejudicial to the Best Interest of
the Service.

The antecedent facts show that on June 19, 2001, a complaint for violation of
Social Security Act of 1997 was filed by Charito C. Ocampo against spouses
Salvador and Ethel Gonzales of Audionet Trading, before the Office of the City
Prosecutor. After preliminary investigation, Asst. City Prosecutor Victor C.
Laborte recommended in a resolution dated August 7, 2001, the filing of an
information against the spouses Gonzales for non-remittance of premiums to the
Social Security System (SSS). On September 28, 2001, an information was filed in
court.

On October 10, 2001, spouses Gonzales filed a Motion for Reconsideration

of the August 7, 2001 resolution before the Office of the City Prosecutor without
leave of court. On November 7, 2001, respondent Asst. City Prosecutor Mary Ann
T. Castro filed a Comment on the motion for reconsideration and recommended the
dismissal of the complaint.

Ocampo alleged that the filing of a comment by Castro after the information
has been filed in court is irregular. She claimed that once an information has been
filed in court, the investigating prosecutor or the Secretary of Justice should no
longer entertain a motion for reinvestigation or a motion for reconsideration.
Hence, she filed an administrative complaint[3]against Castro charging her with
conduct prejudicial to the best interest of the service.

Respondent Castro claimed that on October 30, 2001, Asst. City Prosecutor
Oscar Capacio, Chief of the Review and Reconsideration Section, Office of the
City Prosecutor, ordered her to reinvestigate the case filed against the spouses
Gonzales. After evaluation of the records and the documentary evidence, she was
convinced that there was no basis for the complaint hence she recommended its
dismissal. She submitted her comment and recommendation to Capacio for review,
then to City Prosecutor Jose Pedrosa, for approval.

She maintained that pursuant to Section 56 of the Manual for Prosecutors, a

motion for reconsideration is part of due process in preliminary investigation. She
alleged that depriving the accused of this right would be a denial of the right to a
full preliminary investigation preparatory to the filing of the information. The court
may therefore not proceed with the arraignment and trial pending resolution of the
motion for reconsideration. She claimed that leave of court is not necessary for the
filing of the comment as it was still part of the preliminary investigation over
which the Office of the City Prosecutor exercises jurisdiction.

On April 4, 2003, the Ombudsman rendered a Decision finding Castro guilty of

conduct prejudicial to the best interest of the service. The dispositive portion of
which reads:

Wherefore, premises considered, it is hereby deemed that

respondent Asst. City Prosecutor Mary Ann Castro is guilty of Conduct
Prejudicial To The Best Interest of The Service, and is hereby meted the
penalty of SUSPENSION FOR SIX MONTHS WITHOUT PAY.
The administrative complaint against prosecutor Jesus Feliciano is
hereby Dismissed.

SO DECIDED.[4]

The Ombudsman found that when the motion for reconsideration was filed, the
Office of the City Prosecutor no longer has jurisdiction over the complaint
considering that an information has been filed in court. Hence, the filing of a
comment thereon without leave of court was not proper, moreso because it
effectively resolved the merits of the motion for reconsideration without prior court
approval.

The Ombudsman noted that although the accused has the right to file a
motion for reconsideration, Castro should have verified the status of the case
before recommending its dismissal, which was done beyond the scope of her
authority in view of the prior filing of the information in court.

Upon denial of her motion for reconsideration,[5] Castro appealed to the

Court of Appeals which annulled the decision of the Ombudsman, thus:

WHEREFORE, finding merit in the Petition, the same is hereby

GRANTED and the Ombudsman (Visayas) Decision dated October 17,
2002 and Order dated June 5, 200[3] are hereby ANNULLED AND SET
ASIDE. Without costs.

SO ORDERED.[6]

The Court of Appeals held that the Regional or City Prosecutor may exercise the
power and authority of their superior, the Secretary of Justice, to review
resolutions of their subordinate in criminal cases despite an information filed in
court. The act of filing does not foreclose the authority of the City Prosecutor, in
behalf of the Secretary of Justice, to review the previously approved resolution of
Laborte.[7] Moreover, since Castros comment and recommendation was reviewed
by Capacio and approved by Pedrosa, the same is presumed to have been
performed in the regular performance of her duties.[8]

The appellate court likewise observed that the filing of the comment without prior
leave of court has been clarified by the trial judge. The latter disregarded Ocampos
claim that she was not notified of the filing of the comment or given the chance to
oppose the same considering that her counsel was properly served with a copy of
the motion to withdraw information based on the motion for reconsideration and
the comment earlier filed. Ocampo and her counsel were aware of the pending
motion to withdraw the information based on the comment submitted by Castro as
the same was heard on October 7, 2002. The trial judge was convinced that there
was no basis for the complaint, hence, it was ordered dismissed.[9]

The Court of Appeals noted that Castros actuations did not amount to gross
misconduct. The Office of the Solicitor General (OSG) admitted that there was no
particular law that Castro violated.[10]

Hence, the Ombudsman filed this petition on the sole issue of whether or not
Castro usurped the jurisdiction of the trial court in filing the Comment and
recommending the dismissal of the criminal case filed in court.

The petition lacks merit.

Petitioner avers that Castro disregarded the basic rule that once the case is
filed in court, leave of court must be secured prior to taking any action on a motion
for reconsideration filed by the accused with the Office of the City Prosecutor.
Thus, it is the intentional disregard of this established jurisprudence on jurisdiction
and the doctrinal laws on delineation of authority that made her administratively
liable for conduct prejudicial to the best interest of the service.[11]

Respondent Castro claims that she has not violated any law, rule or regulation that
would warrant any administrative sanction. She maintains that she was following
the order of her superior to reinvestigate the case. Therefore, there was no reason
for her to be suspended by the Ombudsman.[12]

She asserts that she is being discriminated and singled out by the Ombudsman who
should also have investigated her superiors who ordered the reinvestigation and
approved her recommendation, and the Secretary of Justice who gave his
imprimatur to the dismissal of the case. Notably, even the trial judge approved its
dismissal.[13]

Upon review, we find that Castros conduct in resolving the motion for
reconsideration is not prejudicial to the best interest of the service.

We note that it was Laborte who initially handled the case; found probable cause
that spouses Gonzales violated the SSS law; and recommended that an information
be filed against them. Capacio, as Chief of the Review and Reconsideration
Section, assigned the case to Castro after a motion for reconsideration was filed
with the Office of the City Prosecutor. By virtue of her functions, Castro has the
discretion to uphold, modify or reverse the findings and conclusion of Laborte.
Consequently, it was not unusual that, upon review of the evidence presented, her
observations would be diverse from that of Labortes.

Besides, a motion for reconsideration of the resolution of the preliminary

investigation conducted by the city prosecutor is allowed. Section 3 of the
Department of Justice Circular No. 70 reads:

SEC. 3. Period of appeal. The appeal shall be taken within fifteen

(15) days from receipt of the resolution, or of the denial of the motion
for reconsideration/reinvestigation if one has been filed within fifteen
(15) days from receipt of the assailed decision. Only one motion for
reconsideration shall be allowed.
Likewise, the filing of a motion for reconsideration is consistent with the
principle of due process and allowed under Section 56 of the Manual for
Prosecutors.[14] In the subject case, the information was filed in court on September
28, 2001. However, the spouses Gonzales received a copy of the unfavorable
recommendation of Laborte only on October 1, 2001.[15] Thus, they filed on
October 10, 2001 a motion for reconsideration which was the appropriate and
available remedy for them.

In Sales v. Sandiganbayan,[16] we held that the denial of the opportunity to

file a motion for reconsideration is tantamount to a denial of due process, thus:

The filing of a motion for reconsideration is an integral part of the

preliminary investigation proper. There is no dispute that the Information
was filed without first affording petitioner-accused his right to file a
motion for reconsideration. The denial thereof is tantamount to a denial
of the right itself to a preliminary investigation. This fact alone already
renders preliminary investigation conducted in this case incomplete. The
inevitable conclusion is that the petitioner was not only effectively
denied the opportunity to file a motion for reconsideration of the
Ombudsmans final resolution but also deprived of his right to a full
preliminary investigation preparatory to the filing of the information
against him.[17]
 In the instant case, the information was filed before the spouses Gonzales
could file a motion to reconsider the adverse recommendation of Laborte. The
filing of the information deprived them of the right to a full-blown preliminary
investigation.

We find that Castro did not usurp the jurisdiction of the trial court as the
comment was only recommendatory in nature. The judge was not deprived of the
authority to make a personal evaluation of the evidence before him and to act
accordingly. In fact, spouses Gonzales moved for the dismissal of the case not
before the Office of the City Prosecutor but before the trial court where the
information was filed. This Court in Roberts, Jr. v. Court of Appeals,[18] stated:
Whether to approve or disapprove the stand taken by the prosecution is not
the exercise of discretion required in cases like this. The trial judge must himself
be convinced that there was indeed no sufficient evidence against the accused,
and this conclusion can be arrived at only after an assessment of the evidence in
the possession of the prosecution. What was imperatively required was the trial
judges own assessment of such evidence, it not being sufficient for the valid and
proper exercise of judicial discretion merely to accept the prosecutions word for
its supposed insufficiency.

We are aware of our ruling in Crespo v. Mogul[19] that discourages the

Secretary of Justice from entertaining any appeal from the action of the fiscal once
the case is filed in court to avoid a situation whereby the opinion of the Secretary
of Justice who reviewed the action of the fiscal may be disregarded by the trial
court. However, the comment filed by Castro was only recommendatory. As such,
it could either be adopted or disregarded by the trial judge who has full discretion
and jurisdiction over the case. Castros participation in the case was in compliance
with the orders from her superiors. If at all, she was only performing her duty as a
reviewing officer.

WHEREFORE, the petition is DENIED. The July 23, 2004 Decision of the Court
of Appeals in CA-G.R. SP No. 77646 is AFFIRMED.

SO ORDERED.
 CONSUELO YNARES-SANTIAGO
Associate Justice

WE CONCUR:

HILARIO G. DAVIDE, JR.

Chief Justice

LEONARDO A. QUISUMBING ANTONIO T. CARPIO

Associate Justice Associate Justice

ADOLFO S. AZCUNA
Associate Justice
 CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that
the conclusions in the above Decision were reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.

HILARIO G. DAVIDE, JR.

Chief Justice

Republic of the Philippines

Supreme Court

Baguio City

THIRD DIVISION

LISAM ENTERPRISES, INC. G.R. No. 143264

represented by LOLITA A. SORIANO,
and LOLITA A. SORIANO,

Petitioners,
Present:
 - versus - VELASCO, JR., J., Chairperson,

PERALTA,

ABAD,

BANCO DE ORO UNIBANK, INC. MENDOZA, and

(formerly PHILIPPINE COMMERCIAL
PERLAS-BERNABE, JJ.
INTERNATIONAL BANK),* LILIAN S.
SORIANO, ESTATE OF LEANDRO A.
SORIANO, JR., REGISTER OF DEEDS
OF LEGASPI CITY, and JESUS L.
SARTE, Promulgated:

Respondents.

April 23, 2012

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

DECISION

PERALTA, J.:

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules
of Court, praying that the Resolution[1] of the Regional Trial Court of Legaspi City
(RTC), dated November 11, 1999, dismissing petitioners complaint, and its
Order[2] dated May 15, 2000, denying herein petitioners Motion for
Reconsideration and Motion to Admit Amended Complaint, be reversed and set
aside.

The records reveal the following antecedent facts.

On August 13, 1999, petitioners filed a Complaint against respondents for

Annulment of Mortgage with Prayer for Temporary Restraining Order &
Preliminary Injunction with Damages with the RTC of Legaspi City. Petitioner Lolita
A. Soriano alleged that she is a stockholder of petitioner Lisam Enterprises, Inc.
(LEI) and a member of its Board of Directors, designated as its Corporate
Secretary. The Complaint also alleged the following:

4. Sometime in 1993, plaintiff LEI, in the course of its business operation, acquired
by purchase a parcel of residential land with improvement situated at Legaspi City,
covered by Transfer Certificate of Title No. 37866, copy attached as Annex A, which
property is more particularly described as follows:

xxxx

5. On or about 28 March 1996, defendant Lilian S. Soriano and the late Leandro A.
Soriano, Jr., as husband and wife (hereafter Spouses Soriano), in their personal capacity
and for their own use and benefit, obtained a loan from defendant PCIB (Legaspi
Branch) (now known as Banco de Oro Unibank, Inc.) in the total amount of P20 Million;

6. That as security for the payment of the aforesaid creditACCOMMODATION ,

the late Leandro A. Soriano, Jr. and defendant Lilian S. Soriano, as president and
treasurer, respectively of plaintiff LEI, but without authority and consent of the board of
said plaintiff and with the use of a falsified board resolution, executed a real estate
mortgage on 28 March 1996, over the above-described property of plaintiff LEI in favor
of defendant PCIB, and had the same registered with the Office of the Registry of Deeds,
Legaspi City, copy of the Real Estate Mortgage is hereto attached and marked as Annex
B, and made part hereof, to the prejudice of plaintiffs;
7. That specifically, the Spouses Soriano, with intent to defraud and prejudice
plaintiff LEI and its stockholders, falsified the signatures of plaintiff Lolita A. Soriano as
corporate secretary and director of plaintiff LEI, in a document denominated as board
resolution purportedly issued by the board of plaintiff LEI on 6 November 1995, making
it appear that plaintiff LEI's Board met and passed a board resolution on said date
authorizing the Spouses Soriano to mortgage or encumber all or substantially all of the
properties of plaintiff LEI, when in fact and in truth, no resolution of that nature was
ever issued by the board of plaintiff LEI, nor a meeting was called to that effect, copy of
the resolution in question is hereto attached and marked as Annex C, and made part
hereof;

8. That plaintiff Lolita A. Soriano as Corporate Secretary of plaintiff LEI, had never
signed a board resolution nor issued a Secretary's Certificate to the effect that on 6
November 1995 a resolution was passed and approved by plaintiff LEI authorizing the
Spouses Soriano as president and treasurer, respectively, to mortgage the above-
described property of plaintiff LEI, neither did she appear personally before a notary
public on 28 March 1996 to acknowledge or attest to the issuance of a supposed board
resolution issued by plaintiff LEI on 6 November 1995;

9. That defendant PCIB, knowing fully well that the property being mortgaged by
the Spouses Soriano belongs to plaintiff LEI, a corporation, negligently and miserably
failed to exercise due care and prudence required of a banking institution. Specifically,
defendant PCIB failed to investigate and to delve into the propriety of the issuance of or
due execution of subject board resolution, which is the very foundation of the validity of
subject real estate mortgage. Further, it failed to verify the genuineness of the
signatures appearing in said board resolution nor to confirm the fact of its issuance with
plaintiff Lolita A. Soriano, as the corporate secretary of plaintiff LEI. Furthermore, the
height of its negligence was displayed when it disregarded or failed to notice that the
questioned board resolution with a Secretary's Certificate was notarized only on 28
March 1996 or after the lapse of more than four (4) months from its purported date of
issue on 6 November 1995. That these circumstances should have put defendant PCIB
on notice of the flaws and infirmities of the questioned board resolution. Unfortunately,
it negligently failed to exercise due care and prudence expected of a banking institution;

10. That having been executed without authority of the board of plaintiff LEI said
real estate mortgage dated 28 March 1996 executed by the Spouses Soriano, as officers
of plaintiff LEI in favor of defendant PCIB, is the null and void and has no legal effect
upon said plaintiff.Consequently, said mortgage deed cannot be used nor resorted to by
defendant PCIB against subject property of plaintiff LEI as no right or rights whatsoever
were created nor granted thereunder by reason of its nullity;

11. Worst, sometime in August 1998, in order to remedy the defects in the
mortgage transaction entered by the Spouses Soriano and defendant PCIB, the former,
with the unlawful instigation of the latter, signed a document denominated as Deed of
Assumption of Loans and Mortgage Obligations and Amendment of Mortgage; wherein
in said document, plaintiff LEI was made to assume the P20 Million personal
indebtedness of the Spouses Soriano with defendant PCIB, when in fact and in truth it
never so assumed the same as no board resolution duly certified to by plaintiff Lolita A.
Soriano as corporate secretary was ever issued to that effect, copy of said Deed is
hereto attached and marked as Annex D, and made part hereof;

12. Moreover, to make it appear that plaintiff LEI had consented to the execution of
said deed of assumption of mortgage, the Spouses Soriano again, through the unlawful
instigation and connivance of defendant PCIB, falsified the signature of plaintiff Lolita A.
Soriano as corporate secretary of plaintiff LEI in a document denominated as Corporate
Resolution to Borrow, to make it appear that plaintiff LEI so authorized the Spouses
Soriano to perform said acts for the corporation, when in fact and in truth no such
authority or resolution was ever issued nor granted by plaintiff LEI, nor a meeting called
and held for said purpose in accordance with its By-laws; copy of which is hereto
attached and marked as Annex E and made part hereof;

13. That said irregular transactions of defendant Lilian S. Soriano and her husband
Leandro A. Soriano, Jr., on one hand, and defendant PCIB, on the other, were discovered
by plaintiff Lolita A. Soriano sometime in April 1999. That immediately upon discovery,
said plaintiff, for herself and on behalf and for the benefit of plaintiff LEI, made demands
upon defendants Lilian S. Soriano and the Estate of Leandro A. Soriano, Jr., to free
subject property of plaintiff LEI from such mortgage lien, by paying in full their personal
indebtedness to defendant PCIB in the principal sum of P20 Million.However, said
defendants, for reason only known to them, continued and still continue to ignore said
demands, to the damage and prejudice of plaintiffs;
 14. Hence, on 25 June 1999, plaintiffs commenced a derivative suit against
defendants Lilian S. Soriano and the Estate of Leandro A. Soriano, Jr., before the
Securities and Exchange Commission, docketed as SEC Case No. 06-99-6339 for
Fraudulent Scheme and Unlawful Machination with Damages in order to protect and
preserve the rights of plaintiffs, copy of said complaint is hereto attached as AnnexF;

15. That plaintiffs, in order to seek complete relief from the unauthorized mortgage
transaction between the Spouses Soriano and defendant PCIB, were further compelled
to institute this instant case to seek the nullification of the real estate mortgage
dated 28 March 1999. Consequently, plaintiffs were forced to retain the services of a
lawyer with whom they contracted to payP100,000.00 as and for attorney's fee;

16. That unfortunately, the plaintiffs learned that on 30 July 1999, defendant Sarte,
in his capacity as Notary Public of Daraga, Albay and upon application of defendant
PCIB, issued a notice of Auction/Foreclosure Sale of the property subject of the
mortgage in question and has set the auction sale on 7 September 1999 x x x;

17. That by reason of the fraudulent and surreptitious schemes perpetrated by

defendant Lilian S. Soriano and her husband, the late Leandro A. Soriano, Jr., in unlawful
connivance and through the gross negligence of defendant PCIB, plaintiff Lolita A.
Soriano, as stockholder, suffered sleepless nights, moral shock, wounded feeling, hurt
pride and similar injuries, hence, should be awarded moral damages in the amount
of P200,000.00.

After service of summons on all defendants, the RTC issued a temporary

restraining order on August 25, 1990 and, after hearing, went on to issue a writ of
preliminary injunction enjoining respondent PCIB (now known as Banco de Oro
Unibank, Inc.) from proceeding with the auction sale of the subject property.

Respondents Lilian S. Soriano and the Estate of Leandro A. Soriano, Jr. filed
an Answer dated September 25, 1999, stating that the Spouses Lilian and Leandro
Soriano, Jr. were duly authorized by LEI to mortgage the subject property; that
proceeds of the loan from respondent PCIB were for the use and benefit of LEI;
that all notarized documents submitted to PCIB by the Spouses Soriano bore the
genuine signature of Lolita Soriano; and that although the Spouses Soriano indeed
received demands from petitioner Lolita Soriano for them to pay the loan, they
gave satisfactory explanations to the latter why her demands could not be
honored. It was, likewise, alleged in said Answer that it was respondent Lilian
Soriano who should be entitled to moral damages and attorney's fees.

On September 28, 1999, respondent PCIB filed a Motion to Dismiss the Complaint
on grounds of lack of legal capacity to sue, failure to state cause of action, and litis
pendencia.Petitioners filed an Opposition thereto, while PCIB's co-defendants
filed a Motion to Suspend Action.

On November 11, 1999, the RTC issued the first assailed Resolution dismissing
petitioners' Complaint. Petitioners then filed a Motion for Reconsideration of said
Resolution. While awaiting resolution of the motion for reconsideration,
petitioners also filed, on January 4, 2000, a Motion to Admit Amended Complaint,
amending paragraph 13 of the original complaint to read as follows:

13. That said irregular transactions of defendant Lilian S. Soriano and her husband
Leandro A. Soriano, Jr., on one hand, and defendant PCIB, on the other, were discovered
by plaintiff Lolita A. Soriano sometime in April 1999. That immediately upon discovery,
said plaintiff, for herself and on behalf and for the benefit of plaintiff LEI, made demands
upon defendant Lilian S. Soriano and the Estate of Leandro A. Soriano, Jr., to free subject
property of plaintiff LEI from such mortgage lien, by paying in full their personal
indebtedness to defendant PCIB in the principal sum of P20 Million.However, said
defendants, for reason only known to them, continued and still continue to ignore said
demands, to the damage and prejudice of plaintiffs; that plaintiff Lolita A. Soriano
likewise made demands upon the Board of Directors of Lisam Enterprises, Inc., to make
legal steps to protect the interest of the corporation from said fraudulent transaction,
but unfortunately, until now, no such legal step was ever taken by the Board, hence, this
action for the benefit and in behalf of the corporation;

On May 15, 2000, the trial court issued the questioned Order denying both the
Motion for Reconsideration and the Motion to Admit Amended Complaint. The
trial court held that no new argument had been raised by petitioners in their
motion for reconsideration to address the fact of plaintiffs' failure to allege in the
complaint that petitioner Lolita A. Soriano made demands upon the Board of
Directors of Lisam Enterprises, Inc. to take steps to protect the interest of the
corporation against the fraudulent acts of the Spouses Soriano and PCIB. The trial
court further ruled that the Amended Complaint can no longer be admitted,
because the same absolutely changed petitioners' cause of action.

Petitioners filed the present petition with this Court, alleging that what are
involved are pure questions of law, to wit:

FIRST, WHETHER OR NOT THE COURT COMMITTED A REVERSIBLE ERROR WHEN IT

DISMISSED THE ACTION ON THE GROUND THAT PETITIONER LOLITA A. SORIANO HAS NO
LEGAL CAPACITY TO SUE AS SHE IS NOT A REAL PARTY-IN-INTEREST;

SECOND, WHETHER OR NOT THE COURT COMMITTED A REVERSIBLE ERROR WHEN IT

DISMISSED THE ACTION ON THE GROUND THAT THERE IS ANOTHER ACTION PENDING
BETWEEN THE SAME PARTIES FOR THE SAME CAUSE;

THIRD, WHETHER OR NOT THE COURT COMMITTED A REVERSIBLE ERROR WHEN IT

DISMISSED THE ACTION ON THE GROUND THAT THE COMPLAINT STATES NO CAUSE OF
ACTION;

FOURTH, WHETHER OR NOT THE COURT COMMITTED A REVERSIBLE ERROR WHEN IT

DENIED THE ADMISSION OF PETITIONERS' AMENDED COMPLAINT FILED AS A MATTER OF
RIGHT, AFTER THE ORDER OF DISMISSAL WAS ISSUED BUT BEFORE ITS FINALITY.

FIFTH, WHETHER OR NOT THE COURT ERRED IN DISMISSING THE ACTION, INSTEAD OF
MERELY SUSPENDING THE SAME FOLLOWING THE DOCTRINE LAID DOWN IN UNION
GLASS. [3]
 The petition is impressed with merit.

The Court shall first delve into the matter of the propriety of the denial of the
motion to admit amended complaint. Pertinent provisions of Rule 10 of the Rules
of Court provide as follows:

Sec. 2. Amendments as a matter of right. − A party may amend his pleadings once as a
matter of right at any time before a responsive pleading is served x x x.

Sec. 3. Amendments by leave of court. − Except as provided in the next preceding

section, substantial amendments may be made only upon leave of court. But such leave
may be refused if it appears to the court that the motion was made with intent to delay.
xxx

It should be noted that respondents Lilian S. Soriano and the Estate of Leandro A.
Soriano, Jr. already filed their Answer, to petitioners' complaint, and the claims
being asserted were made against said parties. A responsive pleading having been
filed, amendments to the complaint may, therefore, be made only by leave of
court and no longer as a matter of right.However, in Tiu v. Philippine Bank of
Communications,[4] the Court discussed this rule at length, to wit:

x x x [A]fter petitioners have filed their answer, Section 3, Rule 10 of the Rules of Court
specifically allows amendment by leave of court. The said Section states:

SECTION 3. Amendments by leave of court. - Except as provided

in the next preceding section, substantial amendments may be
made only upon leave of court. But such leave may be refused if it
appears to the court that the motion was made with intent to
delay. Orders of the court upon the matters provided in this section
shall be made upon motion filed in court, and after notice to the
adverse party, and an opportunity to be heard.
This Court has emphasized the import of Section 3, Rule 10 of the 1997 Rules of
Civil Procedure inValenzuela v. Court of Appeals, thus:

Interestingly, Section 3, Rule 10 of the 1997 Rules of Civil

Procedure amended the former rule in such manner that the phrase
"or that the cause of action or defense is substantially altered" was
stricken-off and not retained in the new rules. The clear import of
such amendment in Section 3, Rule 10 is that under the new rules,
"the amendment may (now) substantially alter the cause of action
or defense." This should only be true, however, when despite a
substantial change or alteration in the cause of action or defense,
the amendments sought to be made shall serve the higher interests
of substantial justice, and prevent delay and equally promote the
laudable objective of the rules which is to secure a "just, speedy
and inexpensive disposition of every action and proceeding.

The granting of leave to file amended pleading is a matter particularly addressed

to the sound discretion of the trial court; and that discretion is broad, subject only
to the limitations that the amendments should not substantially change the cause
of action or alter the theory of the case, or that it was not made to delay the action.
Nevertheless, as enunciated in Valenzuela, even if the amendment substantially
alters the cause of action or defense, such amendment could still be allowed when
it is sought to serve the higher interest of substantial justice, prevent delay, and
secure a just, speedy and inexpensive disposition of actions and proceedings.

The courts should be liberal in allowing amendments to pleadings to avoid a

multiplicity of suits and in order that the real controversies between the
parties are presented, their rights determined, and the case decided on the
merits without unnecessary delay. This liberality is greatest in the early
stages of a lawsuit, especially in this case where the amendment was made
before the trial of the case, thereby giving the petitioners all the time allowed
by law to answer and to prepare for trial.

Furthermore, amendments to pleadings are generally favored and should be

liberally allowed in furtherance of justice in order that every case, may so far as
possible, be determined on its real facts and in order to speed up the trial of the
case or prevent the circuitry of action and unnecessary expense. That is, unless
there are circumstances such as inexcusable delay or the taking of the adverse
party by surprise or the like, which might justify a refusal of permission to
amend.[5]
Since, as explained above, amendments are generally favored, it would have been
more fitting for the trial court to extend such liberality towards petitioners by
admitting the amended complaint which was filed before the order dismissing the
original complaint became final and executory. It is quite apparent that since trial
proper had not yet even begun, allowing the amendment would not have caused
any delay. Moreover, doing

so would have served the higher interest of justice as this would provide the best
opportunity for the issues among all parties to be thoroughly threshed out and
the rights of all parties finally determined. Hence, the Court overrules the trial
court's denial of the motion to admit the amended complaint, and orders the
admission of the same.

With the amendment stating that plaintiff Lolita A. Soriano likewise made
demands upon the Board of Directors of Lisam Enterprises, Inc., to make legal
steps to protect the interest of the corporation from said fraudulent transaction,
but unfortunately, until now, no such legal step was ever taken by the Board,
hence, this action for the benefit and in behalf of the corporation, does the
amended complaint now sufficiently state a cause of action? In Hi-Yield Realty,
Incorporated v. Court of Appeals,[6] the Court enumerated the requisites for filing
a derivative suit, as follows:

a) the party bringing the suit should be a shareholder as of the time of the act or
transaction complained of, the number of his shares not being material;

b) he has tried to exhaust intra-corporate remedies, i.e., has made a demand on the
board of directors for the appropriate relief but the latter has failed or refused to heed
his plea; and

c) the cause of action actually devolves on the corporation, the wrongdoing or harm
having been, or being caused to the corporation and not to the particular stockholder
bringing the suit.[7]
A reading of the amended complaint will reveal that all the foregoing requisites
had been alleged therein. Hence, the amended complaint remedied the defect in
the original complaint and now sufficiently states a cause of action.

Respondent PCIB should not complain that admitting the amended complaint
after they pointed out a defect in the original complaint would be unfair to
them. They should have been well aware that due to the changes made by the
1997 Rules of Civil Procedure, amendments may now substantially alter the cause
of action or defense. It should not have been a surprise to them that petitioners
would redress the defect in the original complaint by substantially amending the
same, which course of action is now allowed under the new rules.

The next question then is, upon admission of the amended complaint, would it
still be proper for the trial court to dismiss the complaint? The Court answers in
the negative.

Saura v. Saura, Jr.[8] is closely analogous to the present case. In Saura,[9] the
petitioners therein, stockholders of a corporation, sold a disputed real property
owned by the corporation, despite the existence of a case in the Securities and
Exchange Commission (SEC) between stockholders for annulment of subscription,
recovery of corporate assets and funds, etc. The sale was done without the
knowledge of the other stockholders, thus, said stockholders filed a separate case
for annulment of sale, declaration of nullity of deed of exchange, recovery of
possession, etc., against the stockholders who took part in the sale, and the buyer
of the property, filing said case with the regular court (RTC). Petitioners therein
also filed a motion to dismiss the complaint for annulment of sale filed with the
RTC, on the ground of forum shopping, lack of jurisdiction, lack of cause of action,
and litis pendentiaamong others. The Court held that the complaint for
annulment of sale was properly filed with the regular court, because the buyer of
the property had no intra-corporate relationship with the stockholders, hence,
the buyer could not be joined as party-defendant in the SEC case.To include said
buyer as a party-defendant in the case pending with the SEC would violate the
then existing rule on jurisdiction over intra-corporate disputes. The Court also
struck down the argument that there was forum shopping, ruling that the issue of
recovery of corporate assets and funds pending with the SEC is a totally different
issue from the issue of the validity of the sale, so a decision in the SEC case would
not amount to res judicata in the case before the regular court. Thus, the Court
merely ordered the suspension of the proceedings before the RTC until the final
outcome of the SEC case.

The foregoing pronouncements of the Court are exactly in point with the issues in
the present case. Here, the complaint is for annulment of mortgage with the
mortgagee bank as one of the defendants, thus, as held in Saura,[10] jurisdiction
over said complaint is lodged with the regular courts because the mortgagee bank
has no intra-corporate relationship with the stockholders. There can also be no
forum shopping, because there is no identity of issues. The issue being threshed
out in the SEC case is the due execution, authenticity or validity of board
resolutions and other documents used to facilitate the execution of the mortgage,
while the issue in the case filed by petitioners with the RTC is the validity of the
mortgage itself executed between the bank and the corporation, purportedly
represented by the spouses Leandro and Lilian Soriano, the President and
Treasurer of petitioner LEI, respectively. Thus, there is no reason to dismiss the
complaint in this case.

IN VIEW OF THE FOREGOING, the Resolution of the Regional Trial Court of

Legaspi City, Branch 4, dated November 11, 1999, dismissing petitioners
complaint in Civil Case No. 9729, and its Order dated May 15, 2000, denying
herein petitioners Motion for Reconsideration and Motion to Admit Amended
Complaint, are hereby REVERSED andSET
ASIDE. The Regional Trial Court of Legaspi City, Branch 4, is
hereby DIRECTED toADMIT the Amended Complaint.
Considering further, that this case has been pending for some time and, under
R.A. No. 8799, it is now the regular courts which have jurisdiction over intra-
corporate disputes, the RegionalTrial Court of Legaspi City, Branch 4 is
hereby DIRECTED to PROCEED with dispatch in trying Civil Case No. 9729.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice

WE CONCUR:

PRESBITERO J. VELASCO, JR.

Associate Justice

Chairperson

ROBERTO A. ABAD JOSE CATRAL MENDOZA

Associate Justice Associate Justice

 ESTELA M. PERLAS-BERNABE

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Courts Division.

PRESBITERO J. VELASCO, JR.

Associate Justice

Third Division, Chairperson

 CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairpersons Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.

RENATO C. CORONA

Chief Justice

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 173946 June 19, 2013

BOSTON EQUITY RESOURCES, INC., Petitioner,
vs.
COURT OF APPEALS AND LOLITA G. TOLEDO, Respondents.

DECISION

PEREZ, J.:

Before the Court is a Petition for Review on Certiorari seeking to reverse and set aside: (1) the
Decision,1 dated 28 February 2006 and (2) the Resolution,2 dated 1 August 2006 of the Court of
Appeals in CA-G.R. SP No. 88586. The challenged decision granted herein respondent's petition for
certiorari upon a finding that the trial court committed grave abuse of discretion in denying
respondent's motion to dismiss the complaint against her.3Based on this finding, the Court of
Appeals reversed and set aside the Orders, dated 8 November 20044 and 22 December
2004,5 respectively, of the Regional Trial Court (RTC) of Manila, Branch 24.

The Facts

On 24 December 1997, petitioner filed a complaint for sum of money with a prayer for the issuance
of a writ of preliminary attachment against the spouses Manuel and Lolita Toledo.6 Herein
respondent filed an Answer dated 19 March 1998 but on 7 May 1998, she filed a Motion for Leave to
Admit Amended Answer7 in which she alleged, among others, that her husband and co-defendant,
Manuel Toledo (Manuel), is already dead.8 The death certificate9 of Manuel states "13 July 1995" as
the date of death. As a result, petitioner filed a motion, dated 5 August 1999, to require respondent
to disclose the heirs of Manuel.10 In compliance with the verbal order of the court during the 11
October 1999 hearing of the case, respondent submitted the required names and addresses of the
heirs.11 Petitioner then filed a Motion for Substitution,12 dated 18 January 2000, praying that Manuel
be substituted by his children as party-defendants. It appears that this motion was granted by the
trial court in an Order dated 9 October 2000.13

Pre-trial thereafter ensued and on 18 July 2001, the trial court issued its pre-trial order containing,
among others, the dates of hearing of the case.14

The trial of the case then proceeded. Herein petitioner, as plaintiff, presented its evidence and its
exhibits were thereafter admitted.

On 26 May 2004, the reception of evidence for herein respondent was cancelled upon agreement of
the parties. On 24 September 2004, counsel for herein respondent was given a period of fifteen days
within which to file a demurrer to evidence.15 However, on 7 October 2004, respondent instead filed
a motion to dismiss the complaint, citing the following as grounds: (1) that the complaint failed to
implead an indispensable party or a real party in interest; hence, the case must be dismissed for
failure to state a cause of action; (2) that the trial court did not acquire jurisdiction over the person of
Manuel pursuant to Section 5, Rule 86 of the Revised Rules of Court; (3) that the trial court erred in
ordering the substitution of the deceased Manuel by his heirs; and (4) that the court must also
dismiss the case against Lolita Toledo in accordance with Section 6, Rule 86 of the Rules of Court.16

The trial court, in an Order dated 8 November 2004, denied the motion to dismiss for having been
filed out of time, citing Section 1, Rule 16 of the 1997 Rules of Court which states that: "Within the
time for but before filing the answer to the complaint or pleading asserting a claim, a motion to
dismiss may be made x x x."17 Respondent’s motion for reconsideration of the order of denial was
likewise denied on the ground that "defendants’ attack on the jurisdiction of this Court is now barred
by estoppel by laches" since respondent failed to raise the issue despite several chances to do so.18
Aggrieved, respondent filed a petition for certiorari with the Court of Appeals alleging that the trial
court seriously erred and gravely abused its discretion in denying her motion to dismiss despite
discovery, during the trial of the case, of evidence that would constitute a ground for dismissal of the
case.19

The Court of Appeals granted the petition based on the following grounds:

It is elementary that courts acquire jurisdiction over the person of the defendant x x x only when the
latter voluntarily appeared or submitted to the court or by coercive process issued by the court to
him, x x x. In this case, it is undisputed that when petitioner Boston filed the complaint on December
24, 1997, defendant Manuel S. Toledo was already dead, x x x. Such being the case, the court a
quo could not have acquired jurisdiction over the person of defendant Manuel S. Toledo.

x x x the court a quo’s denial of respondent’s motion to dismiss was based on its finding that
respondent’s attack on the jurisdiction of the court was already barred by laches as respondent
failed to raise the said ground in its [sic] amended answer and during the pre-trial, despite her active
participation in the proceedings.

However, x x x it is well-settled that issue on jurisdiction may be raised at any stage of the
proceeding, even for the first time on appeal. By timely raising the issue on jurisdiction in her motion
to dismiss x x x respondent is not estopped from raising the question on jurisdiction.

Moreover, when issue on jurisdiction was raised by respondent, the court a quo had not yet decided
the case, hence, there is no basis for the court a quo to invoke estoppel to justify its denial of the
motion for reconsideration;

It should be stressed that when the complaint was filed, defendant Manuel S. Toledo was already
dead. The complaint should have impleaded the estate of Manuel S. Toledo as defendant, not only
the wife, considering that the estate of Manuel S. Toledo is an indispensable party, which stands to
be benefited or be injured in the outcome of the case. x x x

xxxx

Respondent’s motion to dismiss the complaint should have been granted by public respondent judge
as the same was in order. Considering that the obligation of Manuel S. Toledo is solidary with
another debtor, x x x, the claim x x x should be filed against the estate of Manuel S. Toledo, in
conformity with the provision of Section 6, Rule 86 of the Rules of Court, x x x.20

The Court of Appeals denied petitioner’s motion for reconsideration. Hence, this petition.

The Issues

Petitioner claims that the Court of Appeals erred in not holding that:

1. Respondent is already estopped from questioning the trial court’s jurisdiction;

2. Petitioner never failed to implead an indispensable party as the estate of Manuel is not an
indispensable party;

3. The inclusion of Manuel as party-defendant is a mere misjoinder of party not warranting

the dismissal of the case before the lower court; and
 4. Since the estate of Manuel is not an indispensable party, it is not necessary that petitioner
file its claim against the estate of Manuel.

In essence, what is at issue here is the correctness of the trial court’s orders denying respondent’s
motion to dismiss.

The Ruling of the Court

We find merit in the petition.

Motion to dismiss filed out of time

To begin with, the Court of Appeals erred in granting the writ of certiorari in favor of respondent. Well
settled is the rule that the special civil action for certiorari is not the proper remedy to assail the
denial by the trial court of a motion to dismiss. The order of the trial court denying a motion to
dismiss is merely interlocutory, as it neither terminates nor finally disposes of a case and still leaves
something to be done by the court before a case is finally decided on the merits.21 Therefore, "the
proper remedy in such a case is to appeal after a decision has been rendered."22

As the Supreme Court held in Indiana Aerospace University v. Comm. on Higher Education:23

A writ of certiorari is not intended to correct every controversial interlocutory ruling; it is resorted only
to correct a grave abuse of discretion or a whimsical exercise of judgment equivalent to lack of
jurisdiction. Its function is limited to keeping an inferior court within its jurisdiction and to relieve
persons from arbitrary acts – acts which courts or judges have no power or authority in law to
perform. It is not designed to correct erroneous findings and conclusions made by the courts.
(Emphasis supplied)

Even assuming that certiorari is the proper remedy, the trial court did not commit grave abuse of
discretion in denying respondent’s motion to dismiss. It, in fact, acted correctly when it issued the
questioned orders as respondent’s motion to dismiss was filed SIX YEARS AND FIVE MONTHS
AFTER SHE FILED HER AMENDED ANSWER. This circumstance alone already warranted the
outright dismissal of the motion for having been filed in clear contravention of the express mandate
of Section 1, Rule 16, of the Revised Rules of Court. Under this provision, a motion to dismiss shall
be filed within the time for but before the filing of an answer to the complaint or pleading asserting a
claim.24

More importantly, respondent’s motion to dismiss was filed after petitioner has completed the
presentation of its evidence in the trial court, giving credence to petitioner’s and the trial court’s
conclusion that the filing of the motion to dismiss was a mere ploy on the part of respondent to delay
the prompt resolution of the case against her.

Also worth mentioning is the fact that respondent’s motion to dismiss under consideration herein is
not the first motion to dismiss she filed in the trial court. It appears that she had filed an earlier
motion to dismiss26 on the sole ground of the unenforceability of petitioner’s claim under the Statute
of Frauds, which motion was denied by the trial court. More telling is the following narration of the
trial court in its Order denying respondent’s motion for reconsideration of the denial of her motion to
dismiss:
As can be gleaned from the records, with the admission of plaintiff’s exhibits, reception of
defendants’ evidence was set on March 31, and April 23, 2004 x x x . On motion of the defendants,
the hearing on March 31, 2004 was cancelled.

On April 14, 2004, defendants sought the issuance of subpoena ad testificandum and duces tecum
to one Gina M. Madulid, to appear and testify for the defendants on April 23, 2004. Reception of
defendants’ evidence was again deferred to May 26, June 2 and June 30, 2004, x x x.

On May 13, 2004, defendants sought again the issuance of a subpoena duces tecum and ad
testificandum to the said Gina Madulid. On May 26, 2004, reception of defendants [sic] evidence
was cancelled upon the agreement of the parties. On July 28, 2004, in the absence of defendants’
witness, hearing was reset to September 24 and October 8, 2004 x x x.

On September 24, 2004, counsel for defendants was given a period of fifteen (15) days to file a
demurrer to evidence. On October 7, 2004, defendants filed instead a Motion to Dismiss x x x.27

Respondent’s act of filing multiple motions, such as the first and earlier motion to dismiss and then
the motion to dismiss at issue here, as well as several motions for postponement, lends credibility to
the position taken by petitioner, which is shared by the trial court, that respondent is

deliberately impeding the early disposition of this case. The filing of the second motion to dismiss
was, therefore, "not only improper but also dilatory."28 Thus, the trial court, "far from deviating or
straying off course from established jurisprudence on the matter, x x x had in fact faithfully observed
the law and legal precedents in this case."29 The Court of Appeals, therefore, erred not only in
entertaining respondent’s petition for certiorari, it likewise erred in ruling that the trial court committed
grave abuse of discretion when it denied respondent’s motion to dismiss.

On whether or not respondent is estopped from

questioning the jurisdiction of the trial court

At the outset, it must be here stated that, as the succeeding discussions will demonstrate,
jurisdiction over the person of Manuel should not be an issue in this case. A protracted discourse on
jurisdiction is, nevertheless, demanded by the fact that jurisdiction has been raised as an issue from
the lower court, to the Court of Appeals and, finally, before this Court. For the sake of clarity, and in
order to finally settle the controversy and fully dispose of all the issues in this case, it was deemed
imperative to resolve the issue of jurisdiction.

1. Aspects of Jurisdiction

Petitioner calls attention to the fact that respondent’s motion to dismiss questioning the trial court’s
jurisdiction was filed more than six years after her amended answer was filed. According to
petitioner, respondent had several opportunities, at various stages of the proceedings, to assail the
trial court’s jurisdiction but never did so for six straight years. Citing the doctrine laid down in the
case of Tijam, et al. v. Sibonghanoy, et al.30 petitioner claimed that respondent’s failure to raise the
question of jurisdiction at an earlier stage bars her from later questioning it, especially since she
actively participated in the proceedings conducted by the trial court.

Petitioner’s argument is misplaced, in that, it failed to consider that the concept of jurisdiction has
several aspects, namely: (1) jurisdiction over the subject matter; (2) jurisdiction over the parties; (3)
jurisdiction over the issues of the case; and (4) in cases involving property, jurisdiction over the res
or the thing which is the subject of the litigation.31
The aspect of jurisdiction which may be barred from being assailed as a result of estoppel by laches
is jurisdiction over the subject matter. Thus, in Tijam, the case relied upon by petitioner, the issue
involved was the authority of the then Court of First Instance to hear a case for the collection of a
sum of money in the amount of P1,908.00 which amount was, at that time, within the exclusive
original jurisdiction of the municipal courts.

In subsequent cases citing the ruling of the Court in Tijam, what was likewise at issue was the
jurisdiction of the trial court over the subject matter of the case. Accordingly, in Spouses Gonzaga v.
Court of Appeals,32 the issue for consideration was the authority of the regional trial court to hear and
decide an action for reformation of contract and damages involving a subdivision lot, it being argued
therein that jurisdiction is vested in the Housing and Land Use Regulatory Board pursuant to PD 957
(The Subdivision and Condominium Buyers Protective Decree). In Lee v. Presiding Judge, MTC,
Legaspi City,33 petitioners argued that the respondent municipal trial court had no jurisdiction over
the complaint for ejectment because the issue of ownership was raised in the pleadings. Finally, in
People v. Casuga,34 accused-appellant claimed that the crime of grave slander, of which she was
charged, falls within the concurrent jurisdiction of municipal courts or city courts and the then courts
of first instance, and that the judgment of the court of first instance, to which she had appealed the
municipal court's conviction, should be deemed null and void for want of jurisdiction as her appeal
should have been filed with the Court of Appeals or the Supreme Court.

In all of these cases, the Supreme Court barred the attack on the jurisdiction of the respective courts
concerned over the subject matter of the case based on estoppel by laches, declaring that parties
cannot be allowed to belatedly adopt an inconsistent posture by attacking the jurisdiction of a court
to which they submitted their cause voluntarily.35

Here, what respondent was questioning in her motion to dismiss before the trial court was that
court’s jurisdiction over the person of defendant Manuel. Thus, the principle of estoppel by laches
finds no application in this case. Instead, the principles relating to jurisdiction over the person of the
parties are pertinent herein.

The Rules of Court provide:

RULE 9
EFFECT OF FAILURE TO PLEAD

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.

RULE 15
MOTIONS

Sec. 8. Omnibus motion. – Subject to the provisions of Section 1 of Rule 9, a motion attacking a
pleading, order, judgment, or proceeding shall include all objections then available, and all
objections not so included shall be deemed waived.

Based on the foregoing provisions, the "objection on jurisdictional grounds which is not waived even
if not alleged in a motion to dismiss or the answer is lack of jurisdiction over the subject matter. x x x
Lack of jurisdiction over the subject matter can always be raised anytime, even for the first time on
appeal, since jurisdictional issues cannot be waived x x x subject, however, to the principle of
estoppel by laches."36

Since the defense of lack of jurisdiction over the person of a party to a case is not one of those
defenses which are not deemed waived under Section 1 of Rule 9, such defense must be invoked
when an answer or a motion to dismiss is filed in order to prevent a waiver of the defense.37 If the
objection is not raised either in a motion to dismiss or in the answer, the objection to the jurisdiction
over the person of the plaintiff or the defendant is deemed waived by virtue of the first sentence of
the above-quoted Section 1 of Rule 9 of the Rules of Court.38

The Court of Appeals, therefore, erred when it made a sweeping pronouncement in its questioned
decision, stating that "issue on jurisdiction may be raised at any stage of the proceeding, even for
the first time on appeal" and that, therefore, respondent timely raised the issue in her motion to
dismiss and is, consequently, not estopped from raising the question of jurisdiction. As the question
of jurisdiction involved here is that over the person of the defendant Manuel, the same is deemed
waived if not raised in the answer or a motion to dismiss. In any case, respondent cannot claim the
defense since "lack of jurisdiction over the person, being subject to waiver, is a personal defense
which can only be asserted by the party who can thereby waive it by silence."39

2. Jurisdiction over the person of a defendant is acquired through a valid service of summons; trial
court did not acquire jurisdiction over the person of Manuel Toledo

In the first place, jurisdiction over the person of Manuel was never acquired by the trial court. A
defendant is informed of a case against him when he receives summons. "Summons is a writ by
which the defendant is notified of the action brought against him. Service of such writ is the means
by which the court acquires jurisdiction over his person."40

In the case at bar, the trial court did not acquire jurisdiction over the person of Manuel since there
was no valid service of summons upon him, precisely because he was already dead even before the
complaint against him and his wife was filed in the trial court. The issues presented in this case are
similar to those in the case of Sarsaba v. Vda. de Te.41

In Sarsaba, the NLRC rendered a decision declaring that Patricio Sereno was illegally dismissed
from employment and ordering the payment of his monetary claims. To satisfy the claim, a truck in
the possession of Sereno’s employer was levied upon by a sheriff of the NLRC, accompanied by
Sereno and his lawyer, Rogelio Sarsaba, the petitioner in that case. A complaint for recovery of
motor vehicle and damages, with prayer for the delivery of the truck pendente lite was eventually
filed against Sarsaba, Sereno, the NLRC sheriff and the NLRC by the registered owner of the truck.
After his motion to dismiss was denied by the trial court, petitioner Sarsaba filed his answer. Later
on, however, he filed an omnibus motion to dismiss citing, as one of the grounds, lack of jurisdiction
over one of the principal defendants, in view of the fact that Sereno was already dead when the
complaint for recovery of possession was filed.

Although the factual milieu of the present case is not exactly similar to that of Sarsaba, one of the
issues submitted for resolution in both cases is similar: whether or not a case, where one of the
named defendants was already dead at the time of its filing, should be dismissed so that the claim
may be pursued instead in the proceedings for the settlement of the estate of the deceased
defendant. The petitioner in the Sarsaba Case claimed, as did respondent herein, that since one of
the defendants died before summons was served on him, the trial court should have dismissed the
complaint against all the defendants and the claim should be filed against the estate of the deceased
defendant. The petitioner in Sarsaba, therefore, prayed that the complaint be dismissed, not only
against Sereno, but as to all the defendants, considering that the RTC did not acquire jurisdiction
over the person of Sereno.42 This is exactly the same prayer made by respondent herein in her
motion to dismiss.

The Court, in the Sarsaba Case, resolved the issue in this wise:

x x x We cannot countenance petitioner’s argument that the complaint against the other defendants
should have been dismissed, considering that the RTC never acquired jurisdiction over the person of
Sereno. The court’s failure to acquire jurisdiction over one’s person is a defense which is personal to
the person claiming it. Obviously, it is now impossible for Sereno to invoke the same in view of his
death. Neither can petitioner invoke such ground, on behalf of Sereno, so as to reap the benefit of
having the case dismissed against all of the defendants. Failure to serve summons on Sereno’s
person will not be a cause for the dismissal of the complaint against the other defendants,
considering that they have been served with copies of the summons and complaints and have long
submitted their respective responsive pleadings. In fact, the other defendants in the complaint were
given the chance to raise all possible defenses and objections personal to them in their respective
motions to dismiss and their subsequent answers.43 (Emphasis supplied.)

Hence, the Supreme Court affirmed the dismissal by the trial court of the complaint against Sereno
only.

Based on the foregoing pronouncements, there is no basis for dismissing the complaint against
respondent herein. Thus, as already emphasized above, the trial court correctly denied her motion to
dismiss.

On whether or not the estate of Manuel

Toledo is an indispensable party

Rule 3, Section 7 of the 1997 Rules of Court states:

SEC. 7. Compulsory joinder of indispensable parties. – Parties-in-interest without whom no final

determination can be had of an action shall be joined either as plaintiffs or defendants.

An indispensable party is one who has such an interest in the controversy or subject matter of a
case that a final adjudication cannot be made in his or her absence, without injuring or affecting that
interest. He or she is a party who has not only an interest in the subject matter of the controversy,
but "an interest of such nature that a final decree cannot be made without affecting that interest or
leaving the controversy in such a condition that its final determination may be wholly inconsistent
with equity and good conscience. It has also been considered that an indispensable party is a
person in whose absence there cannot be a determination between the parties already before the
court which is effective, complete or equitable." Further, an indispensable party is one who must be
included in an action before it may properly proceed.44

On the other hand, a "person is not an indispensable party if his interest in the controversy or subject
matter is separable from the interest of the other parties, so that it will not necessarily be directly or
injuriously affected by a decree which does complete justice between them. Also, a person is not an
indispensable party if his presence would merely permit complete relief between him or her and
those already parties to the action, or if he or she has no interest in the subject matter of the action."
It is not a sufficient reason to declare a person to be an indispensable party simply because his or
her presence will avoid multiple litigations.45
Applying the foregoing pronouncements to the case at bar, it is clear that the estate of Manuel is not
an indispensable party to the collection case, for the simple reason that the obligation of Manuel and
his wife, respondent herein, is solidary.

The contract between petitioner, on the one hand and respondent and respondent’s husband, on the
other, states:

FOR VALUE RECEIVED, I/We jointly and severally46 (in solemn) promise to pay BOSTON EQUITY
RESOURCES, INC. x x x the sum of PESOS: [ONE MILLION FOUR HUNDRED (P1,400,000.00)] x
x x.47

The provisions and stipulations of the contract were then followed by the respective signatures of
respondent as "MAKER" and her husband as "CO-MAKER."48 Thus, pursuant to Article 1216 of the
Civil Code, petitioner may collect the entire amount of the obligation from respondent only. The
aforementioned provision states: "The creditor may proceed against any one of the solidary debtors
or some or all of them simultaneously. The demand made against one of them shall not be an
obstacle to those which may subsequently be directed against the others, so long as the debt has
not been fully collected."

In other words, the collection case can proceed and the demands of petitioner can be satisfied by
respondent only, even without impleading the estate of Manuel. Consequently, the estate of Manuel
is not an indispensable party to petitioner’s complaint for sum of money.

However, the Court of Appeals, agreeing with the contention of respondent, held that the claim of
petitioner should have been filed against the estate of Manuel in accordance with Sections 5 and 6
of Rule 86 of the Rules of Court. The aforementioned provisions provide:

SEC. 5. Claims which must be filed under the notice. If not filed, barred; exceptions. All claims for
money against the decedent, arising from contract, express or implied, whether the same be due,
not due, or contingent, all claims for funeral expenses and judgment for money against the
decedent, must be filed within the time limited in the notice; otherwise, they are barred forever,
except that they may be set forth as counterclaims in any action that the executor or administrator
may bring against the claimants. x x x.

SEC. 6. Solidary obligation of decedent. Where the obligation of the decedent is solidary with
another debtor, the claim shall be filed against the decedent as if he were the only debtor, without
prejudice to the right of the estate to recover contribution from the other debtor. x x x.

The Court of Appeals erred in its interpretation of the above-quoted provisions.

In construing Section 6, Rule 87 of the old Rules of Court, the precursor of Section 6, Rule 86 of the
Revised Rules of Court, which latter provision has been retained in the present Rules of Court
without any revisions, the Supreme Court, in the case of Manila Surety & Fidelity Co., Inc. v.
Villarama, et. al.,49 held:50

Construing Section 698 of the Code of Civil Procedure from whence [Section 6, Rule 87] was taken,
this Court held that where two persons are bound in solidum for the same debt and one of them
dies, the whole indebtedness can be proved against the estate of the latter, the decedent’s liability
being absolute and primary; x x x. It is evident from the foregoing that Section 6 of Rule 87 provides
the procedure should the creditor desire to go against the deceased debtor, but there is certainly
nothing in the said provision making compliance with such procedure a condition precedent before
an ordinary action against the surviving solidary debtors, should the creditor choose to demand
payment from the latter, could be entertained to the extent that failure to observe the same would
deprive the court jurisdiction to take cognizance of the action against the surviving debtors. Upon the
other hand, the Civil Code expressly allows the creditor to proceed against any one of the solidary
debtors or some or all of them simultaneously. There is, therefore, nothing improper in the creditor’s
filing of an action against the surviving solidary debtors alone, instead of instituting a proceeding for
the settlement of the estate of the deceased debtor wherein his claim could be filed.

The foregoing ruling was reiterated and expounded in the later case of Philippine National Bank v.
Asuncion51where the Supreme Court pronounced:

A cursory perusal of Section 6, Rule 86 of the Revised Rules of Court reveals that nothing therein
prevents a creditor from proceeding against the surviving solidary debtors. Said provision merely
sets up the procedure in enforcing collection in case a creditor chooses to pursue his claim against
the estate of the deceased solidary debtor. The rule has been set forth that a creditor (in a solidary
obligation) has the option whether to file or not to file a claim against the estate of the solidary
debtor. x x x

xxxx

It is crystal clear that Article 1216 of the New Civil Code is the applicable provision in this matter.
Said provision gives the creditor the right to "proceed against anyone of the solidary debtors or some
or all of them simultaneously." The choice is undoubtedly left to the solidary creditor to determine
against whom he will enforce collection. In case of the death of one of the solidary debtors, he (the
creditor) may, if he so chooses, proceed against the surviving solidary debtors without necessity of
filing a claim in the estate of the deceased debtors. It is not mandatory for him to have the case
dismissed as against the surviving debtors and file its claim against the estate of the deceased
solidary debtor, x x x. For to require the creditor to proceed against the estate, making it a condition
precedent for any collection action against the surviving debtors to prosper, would deprive him of his
substantive rightsprovided by Article 1216 of the New Civil Code. (Emphasis supplied.)

As correctly argued by petitioner, if Section 6, Rule 86 of the Revised Rules of Court were applied
literally, Article 1216 of the New Civil Code would, in effect, be repealed since under the Rules of
Court, petitioner has no choice but to proceed against the estate of [the deceased debtor] only.
Obviously, this provision diminishes the [creditor’s] right under the New Civil Code to proceed
against any one, some or all of the solidary debtors. Such a construction is not sanctioned by
principle, which is too well settled to require citation, that a substantive law cannot be amended by a
procedural rule. Otherwise stated, Section 6, Rule 86 of the Revised Rules of Court cannot be made
to prevail over Article 1216 of the New Civil Code, the former being merely procedural, while the
latter, substantive.

Based on the foregoing, the estate of Manuel is not an indispensable party and the case can
proceed as against respondent only. That petitioner opted to collect from respondent and not from
the estate of Manuel is evidenced by its opposition to respondent’s motion to dismiss asserting that
the case, as against her, should be dismissed so that petitioner can proceed against the estate of
Manuel.

On whether or not the inclusion of Manuel as

party defendant is a misjoinder of party

Section 11 of Rule 3 of the Rules of Court states that "neither misjoinder nor non-joinder of parties is
ground for dismissal of an action. Parties may be dropped or added by order of the court on motion
of any party or on its own initiative at any stage of the action and on such terms as are just. Any
claim against a misjoined party may be severed and proceeded with separately."

Based on the last sentence of the afore-quoted provision of law, a misjoined party must have the
capacity to sue or be sued in the event that the claim by or against the misjoined party is pursued in
a separate case. In this case, therefore, the inclusion of Manuel in the complaint cannot be
considered a misjoinder, as in fact, the action would have proceeded against him had he been alive
at the time the collection case was filed by petitioner. This being the case, the remedy provided by
Section 11 of Rule 3 does not obtain here. The name of Manuel as party-defendant cannot simply be
dropped from the case. Instead, the procedure taken by the Court in Sarsaba v. Vda. de Te,52 whose
facts, as mentioned earlier, resemble those of this case, should be followed herein. There, the
Supreme Court agreed with the trial court when it resolved the issue of jurisdiction over the person of
the deceased Sereno in this wise:

As correctly pointed by defendants, the Honorable Court has not acquired jurisdiction over the
person of Patricio Sereno since there was indeed no valid service of summons insofar as Patricio
Sereno is concerned. Patricio Sereno died before the summons, together with a copy of the
complaint and its annexes, could be served upon him.

However, the failure to effect service of summons unto Patricio Sereno, one of the defendants
herein, does not render the action DISMISSIBLE, considering that the three (3) other defendants, x x
x, were validly served with summons and the case with respect to the answering defendants may
still proceed independently. Be it recalled that the three (3) answering defendants have previously
filed a Motion to Dismiss the Complaint which was denied by the Court.

Hence, only the case against Patricio Sereno will be DISMISSED and the same may be filed as a
claim against the estate of Patricio Sereno, but the case with respect to the three (3) other accused
[sic] will proceed. (Emphasis supplied.)53

As a result, the case, as against Manuel, must be dismissed.

In addition, the dismissal of the case against Manuel is further warranted by Section 1 of Rule 3 of
the Rules of Court, which states that: only natural or juridical persons, or entities authorized by law
may be parties in a civil action." Applying this provision of law, the Court, in the case of Ventura v.
Militante,54 held:

Parties may be either plaintiffs or defendants. x x x. In order to maintain an action in a court of

justice, the plaintiff must have an actual legal existence, that is, he, she or it must be a person in law
and possessed of a legal entity as either a natural or an artificial person, and no suit can be lawfully
prosecuted save in the name of such a person.

The rule is no different as regards party defendants. It is incumbent upon a plaintiff, when he
institutes a judicial proceeding, to name the proper party defendant to his cause of action. In a suit or
proceeding in personam of an adversary character, the court can acquire no jurisdiction for the
purpose of trial or judgment until a party defendant who actually or legally exists and is legally
capable of being sued, is brought before it. It has even been held that the question of the legal
personality of a party defendant is a question of substance going to the jurisdiction of the court and
not one of procedure.

The original complaint of petitioner named the "estate of Carlos Ngo as represented by surviving
spouse Ms. Sulpicia Ventura" as the defendant. Petitioner moved to dismiss the same on the
1âwphi1

ground that the defendant as named in the complaint had no legal personality. We agree.
x x x. Considering that capacity to be sued is a 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. (Emphases supplied.)

Indeed, where the defendant is neither a natural nor a juridical person or an entity authorized by law,
the complaint may be dismissed on the ground that the pleading asserting the claim states no cause
of action or for failure to state a cause of action pursuant to Section 1(g) of Rule 16 of the Rules of
Court, because a complaint cannot possibly state a cause of action against one who cannot be a
party to a civil action.55

Since the proper course of action against the wrongful inclusion of Manuel as party-defendant is the
dismissal of the case as against him, thus did the trial court err when it ordered the substitution of
Manuel by his heirs. Substitution is proper only where the party to be substituted died during the
pendency of the case, as expressly provided for by Section 16, Rule 3 of the Rules of Court, which
states:

Death of party;duty of counsel. – Whenever a party to a pending action dies, and the claim is not
thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days
after such death of the fact thereof, and to give the name and address of his legal representative or
representatives. x x x

The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the
appointment of an executor or administrator x x x.

The court shall forthwith order said legal representative or representatives to appear and be
substituted within a period of thirty (30) days from notice. (Emphasis supplied.)

Here, since Manuel was already dead at the time of the filing of the complaint, the court never
acquired jurisdiction over his person and, in effect, there was no party to be substituted.

WHEREFORE, the petition is GRANTED. The Decision dated 28 February 2006 and the Resolution
dated 1 August 2006 of the Court of Appeals in CA-G.R. SP No. 88586 are REVERSED and SET
ASIDE. The Orders of the Regional Trial Court dated 8 November 2004 and 22 December 2004,
respectively, in Civil Case No. 97-86672, are REINSTATED. The Regional Trial Court, Branch 24,
Manila is hereby DIRECTED to proceed with the trial of Civil Case No. 97-86672 against respondent
Lolita G. Toledo only, in accordance with the above pronouncements of the Court, and to decide the
case with dispatch.

SO ORDERED.

JOSE PORTUGAL PEREZ

Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

ARTURO D. BRION MARIANO C. DEL CASTILLO

Associate Justice Associate Justice
 MARTIN S. VILLARAMA, JR.*
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's Attestation, it
is hereby certified that the conclusions in the above Decision were reached in consultation before
the case was assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P. A. SERENO

Chief Justice

Footnotes

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 162342 October 11, 2006

JAIME H. BALLAO, petitioner,

vs.
COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION and CHINA BANKING
CORPORATION,respondents.

DECISION

QUISUMBING, J.:
This petition for review on certiorari assails the Decision1 dated August 28, 2003 of the Court of
Appeals in CA-G.R. SP. No. 65955 and its Resolution dated February 6, 2004 denying the motion
for reconsideration. The appellate court affirmed the Decision dated February 2, 2001 of the National
Labor Relations Commission (NLRC) reversing the Decision dated November 26, 1999 of the Labor
Arbiter.

The antecedent facts are as follows:

Petitioner Jaime H. Ballao was an employee of respondent China Banking Corporation (Chinabank).
As a "runner" in the cash department of Chinabank’s Binondo Branch, he was tasked, among others,
to get cash from the vault upon request of the teller.

On August 27, 1997, the cashier’s record reflected that the amount requisitioned did not tally with the
records of the tellers. The discrepancy was P150,000, which from the record of the cashier was the
same amount teller Anna Margaret Ngo requisitioned. The cash custodian Lauro Villapando
allegedly gave the cash to Ballao to be delivered to Ngo. Ballao and Ngo denied receiving the
amount.

After investigation, Chinabank found petitioner Ballao guilty of (1) serious misconduct; (2) fraud or
willful breach of trust reposed in him by Chinabank; (3) stealing or attempting to steal from the bank
or from others within the premises; and (4) falsifying bank records or documents and tampering bank
equipment or facilities for the purpose of defrauding the bank or committing a dishonest act.
Chinabank terminated Ballao’s services.

Seasonably, petitioner filed a complaint for illegal dismissal before the NLRC-NCR Arbitration
Branch, Quezon City. The Labor Arbiter found Ballao’s termination illegal, and ordered Chinabank to
pay his backwages and to reinstate him.

On appeal, however, the NLRC reversed the Labor Arbiter’s decision and dismissed the complaint
for lack of merit. Petitioner moved for reconsideration but it was denied for failure to file it within the
reglementary period.

Aggrieved, petitioner filed a petition for certiorari with the Court of Appeals. The appellate court held
that the NLRC decision already became final and executory, considering that no timely motion for
reconsideration was filed by Ballao. Petitioner sought reconsideration but it was denied.

Hence, the instant petition where petitioner maintains that:

x x x [THE COURT OF APPEALS ERRED] IN HAPHAZARDLY HOLDING THAT

PETITIONER’S MOTION FOR THE RECONSIDERATION OF THE NLRC’S FEBRUARY 2,
2001 DECISION WAS FILED ON MARCH 9, 2001 DESPITE NLRC’S RECEIPT OF THE
MOTION THAT WAS FILED THROUGH REGISTERED MAIL ON MARCH 5, 2001 AND
THE PRESENTATION OF THE REGISTRY RETURN CARD AND THE CERTIFICATION
FROM THE FRISCO (MAIN) POST OFFICE THAT THE MOTION WITH REGISTRY
NUMBER 8388 WAS ADDRESSED TO THE NLRC, BANAWE STREET, QUEZON CITY
AND WAS MAILED ON MARCH 5, 2001, THE TENTH DAY TO FILE SAID MOTION.

x x x THE LACK OF A VERIFICATION OF THE MOTION FOR RECONSIDERATION IS A

FORMAL, RATHER THAN A SUBSTANTIAL, DEFECT AND IS NOT FATAL.2
Simply stated, the issue in this case is whether Ballao’s motion for reconsideration of the NLRC
decision was properly denied by the Court of Appeals.

Petitioner argues that the appellate court erred

Simply stated, the issue in this case is whether Ballao’s motion for reconsideration of the NLRC
decision was properly denied by the Court of Appeals.

Petitioner argues that the appellate court erred in finding that the motion was filed out of time despite
submission of proof, namely, the certification from the Frisco (Main) Post Office and the registry
return card, that the same was filed on the tenth day of the reglementary period.3 Further, petitioner
argues that the lack of verification is merely a formal defect which may be corrected by requiring
compliance by petitioner to submit an oath, considering that he has a meritorious case.4

Chinabank, for its part, maintains that the motion was fatally defective because of petitioner’s failure
to verify it, and it should be considered as an unsigned pleading. Private respondent also avers that
there was no proof on record that the motion was filed on time and served on Chinabank. In sum,
Chinabank insists that petitioner was not illegally terminated.5

The Court of Appeals in dismissing the petition for certiorari found that the motion was not filed on
time and it was not under oath, and there was no proof of service on the other party, nor to its
counsel. It added that petitioner did not comply with the rules of the NLRC, and the motion should
have been treated as a mere scrap of paper, as if no motion for reconsideration was filed, thus
making the NLRC decision final and executory.6

Under Section 15,7 Rule VII of the NLRC Rules of Procedure, a motion for reconsideration of any
order, resolution or decision must be under oath and filed within ten (10) calendar days from receipt
of the order, resolution or decision.

In the present case, we note that petitioner received the NLRC decision on February 23, 2001, thus
the tenth day for filing a motion for reconsideration was March 5, 2001.8 In his manifestation9 filed on
March 9, 2001 with the NLRC, petitioner stated that he filed the motion through registered mail on
March 5, 2001, and that the pleadings attached therein were just copies of the motion. A registry
return receipt10 was also submitted which shows that the motion was posted on March 5, 2001 and
received by the NLRC on March 21, 2001. Furthermore, on record is another registry return
receipt11 showing that Chinabank, through counsel, received a copy of the motion on March 9, 2001.
Chinabank filed an opposition to said motion, thus, it could not claim that it was not served a copy.
These matters could not be ignored as these served as proofs that clearly, the motion for
reconsideration of petitioner was filed on time.

Time and again, we have said the lack of verification is merely a formal defect that is neither
jurisdictional nor fatal. In a proper case, the court may order the correction of the pleading or act on
the unverified pleading, if the attending circumstances are such that strict compliance with the rule
may be dispensed with in order to serve the ends of justice.12 It should be stressed that rules of
procedure are merely tools designed to facilitate the attainment of justice. They were conceived and
promulgated to effectively aid the court in the dispensation of justice. Courts cannot be enslaved by
technical rules, shorn of judicial discretion. In rendering justice, courts have always been, as they
ought to be, conscientiously guided by the norm that on the balance, technicalities take a backseat
vis-à-vis substantive rights, and not the other way around. Thus, if the application of the Rules would
tend to frustrate rather than promote justice, it is always within the Court’s power to suspend the
rules or except a particular case from its operation.13 This is more so in labor cases where social
justice should be emphasized. In light of the circumstances of this case, we find that the lack of
verification may be excused, so that the case could be decided on its merits.

Was petitioner illegally dismissed?

As a rule, the Supreme Court is not a trier of facts. Again, this applies with greater force in labor
cases. Factual findings of quasi-judicial bodies like the NLRC, particularly when they coincide with
those of the Labor Arbiter and if supported by substantial evidence, are accorded respect and even
finality by this Court. But where the findings of the NLRC and the Labor Arbiter are contradictory, as
in this case, the reviewing court may delve into the records and examine for itself the questioned
findings.14 Our perusal of the records shows that petitioner’s dismissal was unjustified.

The acts allegedly committed by petitioner were (1) making an unauthorized and fraudulent
requisition ofP150,000 from the vault and taking possession of the same without bank approval; (2)
falsifying bank document to make it appear that teller Ngo supposedly requested the said amount;
and (3) concealing the Teller’s Cash Transaction Documents to suppress/delay the discovery of the
fraud.15

In a memorandum16 dated April 13, 1998, private respondent dismissed Ballao for the following
reasons:

1. Serious misconduct (par. [a], of Article 282 Title I, Book Six, Labor Code);

2. Fraud or willful breach of trust reposed in [him] by the Bank (par. [c], Ibid.);

3. Stealing or attempting to steal from the Bank or from others within the Bank premises
(Table 6.1. Honesty, No. 1, CBC Code of Ethics); and

4. Falsifying Bank records or documents and tampering with Bank equipment or facilities for
the purpose of defrauding the Bank or to commit a dishonest act. (No. 11, Ibid.)

We note that the bank procedure for request of cash is that the runner forwards the original copies of
the machine-validated requisition slip of the tellers to the cashier or cash custodian. The latter will
thereafter release the requested denomination of cash and retains the original copy of the slip. The
tellers keep the duplicate copies of the requisition slips. The runners do not sign anything evidencing
receipt of the cash. During "off-line" hours, the slips must be stamped "posted" with the teller’s
signature.17

In this case, the requisition slip for the lost P150,000 forwarded to cash custodian Lauro Villapando
was a duplicate copy and was stamped "posted" but without the teller’s signature. It was
nevertheless honored by Villapando who admitted releasing the money. He said he gave the money
to Ballao as the slip bore Ballao’s initials. The initials on the slip do not prove, however, that
petitioner received the money when it was not even shown that it was customary for the cash
custodian to indicate the runner’s initials. The initials were not made by petitioner himself, and could
not indicate that he himself signed for the amount. Further, Chinabank’s claim that petitioner
admitted having received the money from Villapando did not appear on the records. As found by the
Labor Arbiter, the acts of stealing or attempting to steal from Chinabank and the falsification of
documents were not sufficiently established by these cited facts alone.18 On this point, we are in
agreement with the Labor Arbiter.
Article 28219 of the Labor Code, provides that serious misconduct and fraud or willful breach of trust
are valid causes for the employer to terminate an employee. The misconduct to be serious must be
of such grave and aggravated character and not merely trivial and unimportant. But such serious
misconduct must nevertheless be in connection with the employee’s work to constitute just cause for
his termination.20 However, as earlier discoursed, the serious misconduct of which petitioner is
accused has not been sufficiently, definitively and convincingly shown.

Now, to validly dismiss an employee on the ground of loss of trust and confidence, the following
requisites must be established: (a) the loss of confidence must not be simulated; (b) it should not be
used as a subterfuge for causes which are illegal, improper or unjustified; (c) it may not be arbitrarily
asserted in the face of overwhelming evidence to the contrary; (d) it must be genuine, not a mere
afterthought, to justify earlier action taken in bad faith; and (e) the employee involved holds a
position of trust and confidence. Proof beyond reasonable doubt is not required, but substantial
evidence is vital and the burden rests on the employer to establish such evidence. Any other rule
would place the employee absolutely at the mercy of the employer. Moreover, the term trust and
confidence is restricted to managerial employees only.21

Nothing on record shows that Chinabank had established the petitioner’s culpability for the loss of
the cited amount. Neither did Chinabank’s investigation reveal that petitioner committed the acts
complained of. While he handles money to be delivered to the requesting teller, the decision to
release the requested amount is made by the cash custodian. What is so obvious in this case is that
the money was released without following bank procedures. The bank, with all its expertise and
mastery of banking operations and procedure could not make its employee take the blame for any
loss without convincing proof nor sufficient evidence of the latter’s misconduct. In this case, we are
convinced that private respondent Chinabank failed to discharge the burden of showing a just cause
to dismiss the petitioner. To dismiss a lowly employee on mere suspicions and innuendos without
substantial proof by management of his alleged misconduct could result in unfairness and injustice.

WHEREFORE, the petition is GRANTED. The Decision dated August 28, 2003 of the Court of
Appeals in CA-G.R. SP. No. 65955 and its Resolution dated February 6, 2004 are REVERSED and
SET ASIDE. The Decision dated November 26, 1999 of the Labor Arbiter is hereby REINSTATED
and AFFIRMED.

Costs against private respondent.

SO ORDERED.

Carpio, Carpio Morales, Tinga, and Velasco, Jr., JJ., concur.

Footnotes

1Rollo, pp. 17-21. Penned by Associate Justice Edgardo F. Sundiam, with Associate
Justices Remedios Salazar-Fernando, and Mercedes Gozo-Dadole concurring.

2 Id. at 11.

3 Id. at 100; CA rollo, p. 148.

4 Rollo, p. 14.

5 Id. at 123-132.

6 Id. at 20.

7 SEC. 15. Motions for Reconsideration. Motion for reconsideration of any

decision/resolution/order of the Commission shall not be entertained except when based on
palpable or patent errors, provided that the motion is under oath and filed within ten (10)
calendar days from receipt of decision/resolution/order, with proof of service that a copy of
the same has been furnished, within the reglementary period, the adverse party, and
provided further, that only one such motion from the same party shall be entertained.

x x x x (As amended by Resolution No. 01-02, Series of 2002.)

8 Rollo, p. 19.

9 CA rollo, p. 147.

10 Id. at 148.

11 Rollo, p. 106.

12 Pfizer, Inc. v. Galan, G.R. No. 143389, May 25, 2001, 358 SCRA 240, 247.

13Great Southern Maritime Services Corporation v. Acuña, G.R. No. 140189, February 28,
2005, 452 SCRA 422, 435.

14Tres Reyes v. Maxim’s Tea House, G.R. No. 140853, February 27, 2003, 398 SCRA 288,
298.

15 CA rollo, p. 203.

16 Id. at 203-204.

17 Rollo, pp. 125-126 and CA rollo, pp. 243-244.

18 CA rollo, pp. 144-145.

19
ART. 282. Termination by employer.—An employer may terminate an employment for any
of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;

xxxx

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or
duly authorized representatives;
 xxxx

20Fujitsu Computer Products Corporation of the Philippines v. Court of Appeals, G.R. No.
158232, March 31, 2005, 454 SCRA 737, 767-768.

21Bank of the Philippine Islands v. Uy, G.R. No. 156994, August 31, 2005, 468 SCRA 633,
647.

Republic of the Philippines

SUPREME COURT
Baguio City

THIRD DIVISION

G.R. No. 197293 April 21, 2014

ALFREDO C. MENDOZA, Petitioner,

vs.
PEOPLE OF THE PHILIPPINES AND JUNO CARS, INC., Respondents.

DECISION

LEONEN, J.:

While the determination of probable cause to charge a person of a crime is the sole function of the.
prosecutor, the trial court may, in the protection of one's fundamental right to liberty, dismiss the
case if, upon a personal assessment of the evidence, it finds that the evidence does not establish
probable cause.

This is a petition for review on certiorari1 assailing the Court of Appeals' decision2 dated January 14,
2011, which reversed the Regional Trial Court's dismissal of the complaint against petitioner Alfredo
C. Mendoza for qualified theft and estafa.

This case stems from a complaint-affidavit filed by Juno Cars, Inc. through its representative, Raul
C. Evangelista, on January 8, 2008 for qualified theft and estafa against Alfredo.3

In the complaint-affidavit, Juno Cars alleged that on June 2, 2007, it hired Alfredo as Trade-In/Used
Car Supervisor. On November 19, 2007, its Dealer/Operator, Rolando Garcia, conducted a partial
audit of the used cars and discovered that five (5) cars had been sold and released by Alfredo
without Rolando’s or the finance manager’s permission.4

The partial audit showed that the buyers of the five cars made payments, but Alfredo failed to remit
the payments totalling P886,000.00. It was further alleged that while there were 20 cars under
Alfredo’s custody, only 18 were accounted for. Further investigation revealed that Alfredo failed to
turn over the files of a 2001 Hyundai Starex and a Honda City 1.5 LXI. Juno Cars alleged that taking
into account the unremitted amounts and the acquisition cost of the Honda City, Alfredo pilfered a
total amount of P1,046,000.00 to its prejudice and damage.5
In his counter-affidavit, Alfredo raised, among others, Juno Cars’ supposed failure to prove
ownership over the five (5) cars or its right to possess them with the purported unremitted payments.
Hence, it could not have suffered damage.6

On March 4, 2008, Provincial Prosecutor Rey F. Delgado issued a Resolution7 finding probable
cause and recommending the filing of an information against Alfredo for qualified theft and estafa.

Alfredo moved for reconsideration, but the motion was denied.8 He then filed a petition for review
with the Department of Justice on May 16, 2008.9

While Alfredo’s motion for reconsideration was still pending before the Office of the City Prosecutor
of Mandaluyong, two informations for qualified theft10 and estafa11 were filed before the Regional Trial
Court, Branch 212, Mandaluyong City. On March 31, 2008, Alfredo filed a motion for determination
of probable cause12 before the trial court. On April 28, 2008, he also filed a motion to defer
arraignment.

Several clarificatory hearings were scheduled but were not conducted.13 On February 4, 2009, the
parties agreed to submit all pending incidents, including the clarificatory hearing, for resolution.14

On March 3, 2009, the trial court, through Presiding Judge Rizalina Capco-Umali, issued an
order15 dismissing the complaint, stating that:

After conducting an independent assessment of the evidence on record which includes the assailed
Resolution dated 04 March 2008, the court holds that the evidence adduced does not support a
finding of probable cause for the offenses of qualified theft and estafa. x x x.16

Juno Cars filed a motion for reconsideration, which the trial court denied on July 3, 2009.17

Juno Cars then filed a petition for certiorari with the Court of Appeals, arguing that the trial court
acted without or in excess of its jurisdiction and with grave abuse of discretion when it dismissed the
complaint. It argued that "the determination of probable cause and the decision whether or not to file
a criminal case in court, rightfully belongs to the public prosecutor."18

On January 14, 2011, the Court of Appeals rendered a decision,19 reversed the trial court, and
reinstated the case. In its decision, the appellate court ruled that the trial court acted without or in
excess of its jurisdiction "in supplanting the public prosecutor’s findings of probable cause with her
own findings of insufficiency of evidence and lack of probable cause."20

Aggrieved, Alfredo filed a petition for review under Rule 45 before this court. In essence, he argued
that the trial court was correct in finding that there was no probable cause as shown by the evidence
on record. He argued that "judicial determination of probable cause is broader than [the] executive
determination of probable cause"21 and that "[i]t is not correct to say that the determination of
probable cause is exclusively vested on the prosecutor x x x."22

In its comment,23 Juno Cars argued that Alfredo presented questions, issues, and arguments that
were a mere rehash of those already considered and passed upon by the appellate court.

The Office of the Solicitor General, arguing for public respondent, stated in its comment24 that the
appellate court correctly sustained the public prosecutor in his findings of probable cause against
Alfredo. Since there was no showing of grave abuse of discretion on the part of Prosecutor Rey F.
Delgado, the trial court should respect his determination of probable cause.
In his reply,25 Alfredo reiterated that "judicial determination of probable cause[,] while not a superior
faculty[,] covers a broader encompassing perspective in the disposition of the issue on the existence
of probable cause."26He argued that the findings of the trial court should be accorded greater weight
than the appellate court’s. It merely reviewed the findings of the trial court.

The primordial issue is whether the trial court may dismiss an information filed by the prosecutor on
the basis of its own independent finding of lack of probable cause.

Time and again, this court has been confronted with the issue of the difference between the
determination of probable cause by the prosecutor on one hand and the determination of probable
cause by the judge on the other. We examine these two concepts again.

Juno Cars filed a complaint against Alfredo for qualified theft27 and estafa under Article 315, fourth
paragraph, no. 3(c)28 of the Revised Penal Code. Since qualified theft is punishable by reclusion
perpetua, a preliminary investigation must first be conducted "to determine whether there is sufficient
ground to engender a well-founded belief that a crime has been committed and the respondent is
probably guilty thereof, and should be held for trial," in accordance with Rule 112, Section 1 of the
Rules on Criminal Procedure.

At this stage, the conduct of the preliminary investigation and the subsequent determination of the
existence of probable cause lie solely within the discretion of the public prosecutor.29 If upon
evaluation of the evidence, the prosecutor finds sufficient basis to find probable cause, he or she
shall then cause the filing of the information with the court.

Once the information has been filed, the judge shall then "personally evaluate the resolution of the
prosecutor and its supporting evidence"30 to determine whether there is probable cause to issue a
warrant of arrest. At this stage, a judicial determination of probable cause exists.

In People v. Castillo and Mejia,31 this court has stated:

There are two kinds of determination of probable cause: executive and judicial. The executive
determination of probable cause is one made during preliminary investigation. It is a function that
properly pertains to the public prosecutor who is given a broad discretion to determine whether
probable cause exists and to charge those whom he believes to have committed the crime as
defined by law and thus should be held for trial. Otherwise stated, such official has the quasi-judicial
authority to determine whether or not a criminal case must be filed in court. Whether or not that
function has been correctly discharged by the public prosecutor, i.e., whether or not he has made a
correct ascertainment of the existence of probable cause in a case, is a matter that the trial court
itself does not and may not be compelled to pass upon.

The judicial determination of probable cause, on the other hand, is one made by the judge to
ascertain whether a warrant of arrest should be issued against the accused. The judge must satisfy
himself that based on the evidence submitted, there is necessity for placing the accused under
custody in order not to frustrate the ends of justice. If the judge finds no probable cause, the judge
cannot be forced to issue the arrest warrant.32

The difference is clear: The executive determination of probable cause concerns itself with whether
there is enough evidence to support an Information being filed. The judicial determination of
probable cause, on the other hand, determines whether a warrant of arrest should be issued. In
People v. Inting:33
x x x Judges and Prosecutors alike should distinguish the preliminary inquiry which determines
probable cause for the issuance of a warrant of arrest from the preliminary investigation proper
which ascertains whether the offender should be held for trial or released. Even if the two inquiries
are conducted in the course of one and the same proceeding, there should be no confusion about
the objectives. The determination of probable cause for the warrant of arrest is made by the Judge.
The preliminary investigation proper—whether or not there is reasonable ground to believe that the
accused is guilty of the offense charged and, therefore, whether or not he should be subjected to the
expense, rigors and embarrassment of trial—is the function of the Prosecutor.34 (Emphasis supplied)

While it is within the trial court’s discretion to make an independent assessment of the evidence on
hand, it is only for the purpose of determining whether a warrant of arrest should be issued. The
judge does not act as an appellate court of the prosecutor and has no capacity to review the
prosecutor’s determination of probable cause; rather, the judge makes a determination of probable
cause independent of the prosecutor’s finding.

People v. Court of Appeals and Jonathan Cerbo35 discussed the rationale. In that case, Jonathan
Cerbo allegedly shot Rosalinda Dy in the presence of his father, Billy Cerbo. An information for
murder was filed against Jonathan Cerbo. The daughter of Rosalinda Dy, as private complainant,
executed a complaint-affidavit charging Billy Cerbo with conspiracy. The prosecutor then filed a
motion to amend the information, which was granted by the court. The information was then
amended to include Billy Cerbo as one of the accused, and a warrant of arrest was issued against
him.

Billy Cerbo filed a motion to quash the warrant arguing that it was issued without probable cause.
The trial court granted this motion, recalled the warrant, and dismissed the case against him. The
Court of Appeals affirmed this dismissal. This court, however, reversed the Court of Appeals and
ordered the reinstatement of the amended information against Billy Cerbo, stating that:

In granting this petition, we are not prejudging the criminal case or the guilt or innocence of Private
Respondent Billy Cerbo. We are simply saying that, as a general rule, if the information is valid on its
face and there is no showing of manifest error, grave abuse of discretion or prejudice on the part of
the public prosecutor, courts should not dismiss it for ‘want of evidence,’ because evidentiary
matters should be presented and heard during the trial. The functions and duties of both the trial
court and the public prosecutor in "the proper scheme of things" in our criminal justice system should
be clearly understood.

The rights of the people from what could sometimes be an "oppressive" exercise of government
prosecutorial powers do need to be protected when circumstances so require. But just as we
recognize this need, we also acknowledge that the State must likewise be accorded due process.
Thus, when there is no showing of nefarious irregularity or manifest error in the performance of a
public prosecutor’s duties, courts ought to refrain from interfering with such lawfully and judicially
mandated duties.

In any case, if there was palpable error or grave abuse of discretion in the public prosecutor’s finding
of probable cause, the accused can appeal such finding to the justice secretary and move for the
deferment or suspension of the proceedings until such appeal is resolved.36 (Emphasis supplied)

In this case, the resolution dated March 4, 2008 of Prosecutor Rey F. Delgado found that the facts
and evidence were "sufficient to warrant the indictment of [petitioner] x x x."37 There was nothing in
his resolution which showed that he issued it beyond the discretion granted to him by law and
jurisprudence.
While the information filed by Prosecutor Delgado was valid, Judge Capco-Umali still had the
discretion to make her own finding of whether probable cause existed to order the arrest of the
accused and proceed with trial.

Jurisdiction over an accused is acquired when the warrant of arrest is served. Absent this, the court
cannot hold the accused for arraignment and trial.

Article III, Section 2 of the Constitution states:

The right of the people to be secure in their persons, houses, papers, and effects against
unreasonable searches and seizures of whatever nature and for any purpose shall be inviolable, and
no search warrant or warrant of arrest shall issue except upon probable cause to be determined
personally by the judge after examination under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the place to be searched and the persons or
things to be seized.

The Constitution prohibits the issuance of search warrants or warrants of arrest where the judge has
not personally determined the existence of probable cause. The phrase "upon probable cause to be
determined personally by the judge after examination under oath or affirmation of the complainant
and the witnesses he may produce" allows a determination of probable cause by the judge ex parte.

For this reason, Section 6, paragraph (a) of Rule 112 of the Rules on Criminal Procedure mandates
the judge to "immediately dismiss the case if the evidence on record fails to establish probable
cause." Section 6, paragraph (a) of Rule 112 reads:

Section 6. When warrant of arrest may issue. — (a) By the Regional Trial Court. — Within ten (10)
days from the filing of the complaint or information, the judge shall personally evaluate the resolution
of the prosecutor and its supporting evidence. He may immediately dismiss the case if the evidence
on record clearly fails to establish probable cause. If he finds probable cause, he shall issue a
warrant of arrest, or a commitment order if the accused has already been arrested pursuant to a
warrant issued by the judge who conducted the preliminary investigation or when the complaint or
information was filed pursuant to section 7 of this Rule. In case of doubt on the existence of probable
cause, the judge may order the prosecutor to present additional evidence within five (5) days from
notice and the issue must be resolved by the court within thirty (30) days from the filing of the
complaint of information.

In People v. Hon. Yadao:38

Section 6, Rule 112 of the Rules of Court gives the trial court three options upon the filing of the
criminal information: (1) dismiss the case if the evidence on record clearly failed to establish
probable cause; (2) issue a warrant of arrest if it finds probable cause; and (3) order the prosecutor
to present additional evidence within five days from notice in case of doubt as to the existence of
probable cause.

But the option to order the prosecutor to present additional evidence is not mandatory. The court’s
1âw phi1

first option under the above is for it to "immediately dismiss the case if the evidence on record clearly
fails to establish probable cause." That is the situation here: the evidence on record clearly fails to
establish probable cause against the respondents.39 (Emphasis supplied)

It is also settled that "once a complaint or information is filed in court, any disposition of the case,
whether as to its dismissal or the conviction or the acquittal of the accused, rests in the sound
discretion of the court."40
In this case, Judge Capco-Umali made an independent assessment of the evidence on record and
concluded that "the evidence adduced does not support a finding of probable cause for the offenses
of qualified theft and estafa."41 Specifically, she found that Juno Cars "failed to prove by competent
evidence"42 that the vehicles alleged to have been pilfered by Alfredo were lawfully possessed or
owned by them, or that these vehicles were received by Alfredo, to be able to substantiate the
charge of qualified theft. She also found that the complaint "[did] not state with particularity the exact
value of the alleged office files or their valuation purportedly have been removed, concealed or
destroyed by the accused,"43 which she found crucial to the prosecution of the crime of estafa under
Article 315, fourth paragraph, no. 3(c) of the Revised Penal Code. She also noted that:

x x x As a matter of fact, this court had even ordered that this case be set for clarificatory hearing to
clear out essential matters pertinent to the offense charged and even directed the private
complainant to bring documents relative to the same/payment as well as affidavit of
witnesses/buyers with the end view of satisfying itself that indeed probable cause exists to commit
the present case which private complainant failed to do.44

Accordingly, with the present laws and jurisprudence on the matter, Judge Capco-Umali correctly
dismissed the case against Alfredo.

Although jurisprudence and procedural rules allow it, a judge must always proceed with caution in
dismissing cases due to lack of probable cause, considering the preliminary nature of the evidence
before it. It is only when he or she finds that the evidence on hand absolutely fails to support a
finding of probable cause that he or she can dismiss the case. On the other hand, if a judge finds
probable cause, he or she must not hesitate to proceed with arraignment and trial in order that
justice may be served.

WHEREFORE, the petition is GRANTED. The decision dated January 14, 2011 of the Court of
Appeals in CA-G.R. SP. No. 110774 is REVERSED and SET ASIDE. Criminal Case Nos. MC08-
11604-05 against Alfredo C. Mendoza are DISMISSED.

SO ORDERED.

MARVIC MARIO VICTOR F. LEONEN

Associate Justice

WE CONCUR:

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson

DIOSDADO M. PERALTA ROBERTO A. ABAD

Associate Justice Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court's Division.
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P. A. SERENO

Chief Justice

Footnotes

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 173946 June 19, 2013

BOSTON EQUITY RESOURCES, INC., Petitioner,

vs.
COURT OF APPEALS AND LOLITA G. TOLEDO, Respondents.

DECISION

PEREZ, J.:

Before the Court is a Petition for Review on Certiorari seeking to reverse and set aside: (1) the
Decision,1 dated 28 February 2006 and (2) the Resolution,2 dated 1 August 2006 of the Court of
Appeals in CA-G.R. SP No. 88586. The challenged decision granted herein respondent's petition for
certiorari upon a finding that the trial court committed grave abuse of discretion in denying
respondent's motion to dismiss the complaint against her.3Based on this finding, the Court of
Appeals reversed and set aside the Orders, dated 8 November 20044 and 22 December
2004,5 respectively, of the Regional Trial Court (RTC) of Manila, Branch 24.

The Facts
On 24 December 1997, petitioner filed a complaint for sum of money with a prayer for the issuance
of a writ of preliminary attachment against the spouses Manuel and Lolita Toledo.6 Herein
respondent filed an Answer dated 19 March 1998 but on 7 May 1998, she filed a Motion for Leave to
Admit Amended Answer7 in which she alleged, among others, that her husband and co-defendant,
Manuel Toledo (Manuel), is already dead.8 The death certificate9 of Manuel states "13 July 1995" as
the date of death. As a result, petitioner filed a motion, dated 5 August 1999, to require respondent
to disclose the heirs of Manuel.10 In compliance with the verbal order of the court during the 11
October 1999 hearing of the case, respondent submitted the required names and addresses of the
heirs.11 Petitioner then filed a Motion for Substitution,12 dated 18 January 2000, praying that Manuel
be substituted by his children as party-defendants. It appears that this motion was granted by the
trial court in an Order dated 9 October 2000.13

Pre-trial thereafter ensued and on 18 July 2001, the trial court issued its pre-trial order containing,
among others, the dates of hearing of the case.14

The trial of the case then proceeded. Herein petitioner, as plaintiff, presented its evidence and its
exhibits were thereafter admitted.

On 26 May 2004, the reception of evidence for herein respondent was cancelled upon agreement of
the parties. On 24 September 2004, counsel for herein respondent was given a period of fifteen days
within which to file a demurrer to evidence.15 However, on 7 October 2004, respondent instead filed
a motion to dismiss the complaint, citing the following as grounds: (1) that the complaint failed to
implead an indispensable party or a real party in interest; hence, the case must be dismissed for
failure to state a cause of action; (2) that the trial court did not acquire jurisdiction over the person of
Manuel pursuant to Section 5, Rule 86 of the Revised Rules of Court; (3) that the trial court erred in
ordering the substitution of the deceased Manuel by his heirs; and (4) that the court must also
dismiss the case against Lolita Toledo in accordance with Section 6, Rule 86 of the Rules of Court.16

The trial court, in an Order dated 8 November 2004, denied the motion to dismiss for having been
filed out of time, citing Section 1, Rule 16 of the 1997 Rules of Court which states that: "Within the
time for but before filing the answer to the complaint or pleading asserting a claim, a motion to
dismiss may be made x x x."17 Respondent’s motion for reconsideration of the order of denial was
likewise denied on the ground that "defendants’ attack on the jurisdiction of this Court is now barred
by estoppel by laches" since respondent failed to raise the issue despite several chances to do so.18

Aggrieved, respondent filed a petition for certiorari with the Court of Appeals alleging that the trial
court seriously erred and gravely abused its discretion in denying her motion to dismiss despite
discovery, during the trial of the case, of evidence that would constitute a ground for dismissal of the
case.19

The Court of Appeals granted the petition based on the following grounds:

It is elementary that courts acquire jurisdiction over the person of the defendant x x x only when the
latter voluntarily appeared or submitted to the court or by coercive process issued by the court to
him, x x x. In this case, it is undisputed that when petitioner Boston filed the complaint on December
24, 1997, defendant Manuel S. Toledo was already dead, x x x. Such being the case, the court a
quo could not have acquired jurisdiction over the person of defendant Manuel S. Toledo.

x x x the court a quo’s denial of respondent’s motion to dismiss was based on its finding that
respondent’s attack on the jurisdiction of the court was already barred by laches as respondent
failed to raise the said ground in its [sic] amended answer and during the pre-trial, despite her active
participation in the proceedings.
However, x x x it is well-settled that issue on jurisdiction may be raised at any stage of the
proceeding, even for the first time on appeal. By timely raising the issue on jurisdiction in her motion
to dismiss x x x respondent is not estopped from raising the question on jurisdiction.

Moreover, when issue on jurisdiction was raised by respondent, the court a quo had not yet decided
the case, hence, there is no basis for the court a quo to invoke estoppel to justify its denial of the
motion for reconsideration;

It should be stressed that when the complaint was filed, defendant Manuel S. Toledo was already
dead. The complaint should have impleaded the estate of Manuel S. Toledo as defendant, not only
the wife, considering that the estate of Manuel S. Toledo is an indispensable party, which stands to
be benefited or be injured in the outcome of the case. x x x

xxxx

Respondent’s motion to dismiss the complaint should have been granted by public respondent judge
as the same was in order. Considering that the obligation of Manuel S. Toledo is solidary with
another debtor, x x x, the claim x x x should be filed against the estate of Manuel S. Toledo, in
conformity with the provision of Section 6, Rule 86 of the Rules of Court, x x x.20

The Court of Appeals denied petitioner’s motion for reconsideration. Hence, this petition.

The Issues

Petitioner claims that the Court of Appeals erred in not holding that:

1. Respondent is already estopped from questioning the trial court’s jurisdiction;

2. Petitioner never failed to implead an indispensable party as the estate of Manuel is not an
indispensable party;

3. The inclusion of Manuel as party-defendant is a mere misjoinder of party not warranting

the dismissal of the case before the lower court; and

4. Since the estate of Manuel is not an indispensable party, it is not necessary that petitioner
file its claim against the estate of Manuel.

In essence, what is at issue here is the correctness of the trial court’s orders denying respondent’s
motion to dismiss.

The Ruling of the Court

We find merit in the petition.

Motion to dismiss filed out of time

To begin with, the Court of Appeals erred in granting the writ of certiorari in favor of respondent. Well
settled is the rule that the special civil action for certiorari is not the proper remedy to assail the
denial by the trial court of a motion to dismiss. The order of the trial court denying a motion to
dismiss is merely interlocutory, as it neither terminates nor finally disposes of a case and still leaves
something to be done by the court before a case is finally decided on the merits.21 Therefore, "the
proper remedy in such a case is to appeal after a decision has been rendered."22

As the Supreme Court held in Indiana Aerospace University v. Comm. on Higher Education:23

A writ of certiorari is not intended to correct every controversial interlocutory ruling; it is resorted only
to correct a grave abuse of discretion or a whimsical exercise of judgment equivalent to lack of
jurisdiction. Its function is limited to keeping an inferior court within its jurisdiction and to relieve
persons from arbitrary acts – acts which courts or judges have no power or authority in law to
perform. It is not designed to correct erroneous findings and conclusions made by the courts.
(Emphasis supplied)

Even assuming that certiorari is the proper remedy, the trial court did not commit grave abuse of
discretion in denying respondent’s motion to dismiss. It, in fact, acted correctly when it issued the
questioned orders as respondent’s motion to dismiss was filed SIX YEARS AND FIVE MONTHS
AFTER SHE FILED HER AMENDED ANSWER. This circumstance alone already warranted the
outright dismissal of the motion for having been filed in clear contravention of the express mandate
of Section 1, Rule 16, of the Revised Rules of Court. Under this provision, a motion to dismiss shall
be filed within the time for but before the filing of an answer to the complaint or pleading asserting a
claim.24

More importantly, respondent’s motion to dismiss was filed after petitioner has completed the
presentation of its evidence in the trial court, giving credence to petitioner’s and the trial court’s
conclusion that the filing of the motion to dismiss was a mere ploy on the part of respondent to delay
the prompt resolution of the case against her.

Also worth mentioning is the fact that respondent’s motion to dismiss under consideration herein is
not the first motion to dismiss she filed in the trial court. It appears that she had filed an earlier
motion to dismiss26 on the sole ground of the unenforceability of petitioner’s claim under the Statute
of Frauds, which motion was denied by the trial court. More telling is the following narration of the
trial court in its Order denying respondent’s motion for reconsideration of the denial of her motion to
dismiss:

As can be gleaned from the records, with the admission of plaintiff’s exhibits, reception of
defendants’ evidence was set on March 31, and April 23, 2004 x x x . On motion of the defendants,
the hearing on March 31, 2004 was cancelled.

On April 14, 2004, defendants sought the issuance of subpoena ad testificandum and duces tecum
to one Gina M. Madulid, to appear and testify for the defendants on April 23, 2004. Reception of
defendants’ evidence was again deferred to May 26, June 2 and June 30, 2004, x x x.

On May 13, 2004, defendants sought again the issuance of a subpoena duces tecum and ad
testificandum to the said Gina Madulid. On May 26, 2004, reception of defendants [sic] evidence
was cancelled upon the agreement of the parties. On July 28, 2004, in the absence of defendants’
witness, hearing was reset to September 24 and October 8, 2004 x x x.

On September 24, 2004, counsel for defendants was given a period of fifteen (15) days to file a
demurrer to evidence. On October 7, 2004, defendants filed instead a Motion to Dismiss x x x.27

Respondent’s act of filing multiple motions, such as the first and earlier motion to dismiss and then
the motion to dismiss at issue here, as well as several motions for postponement, lends credibility to
the position taken by petitioner, which is shared by the trial court, that respondent is
deliberately impeding the early disposition of this case. The filing of the second motion to dismiss
was, therefore, "not only improper but also dilatory."28 Thus, the trial court, "far from deviating or
straying off course from established jurisprudence on the matter, x x x had in fact faithfully observed
the law and legal precedents in this case."29 The Court of Appeals, therefore, erred not only in
entertaining respondent’s petition for certiorari, it likewise erred in ruling that the trial court committed
grave abuse of discretion when it denied respondent’s motion to dismiss.

On whether or not respondent is estopped from

questioning the jurisdiction of the trial court

At the outset, it must be here stated that, as the succeeding discussions will demonstrate,
jurisdiction over the person of Manuel should not be an issue in this case. A protracted discourse on
jurisdiction is, nevertheless, demanded by the fact that jurisdiction has been raised as an issue from
the lower court, to the Court of Appeals and, finally, before this Court. For the sake of clarity, and in
order to finally settle the controversy and fully dispose of all the issues in this case, it was deemed
imperative to resolve the issue of jurisdiction.

1. Aspects of Jurisdiction

Petitioner calls attention to the fact that respondent’s motion to dismiss questioning the trial court’s
jurisdiction was filed more than six years after her amended answer was filed. According to
petitioner, respondent had several opportunities, at various stages of the proceedings, to assail the
trial court’s jurisdiction but never did so for six straight years. Citing the doctrine laid down in the
case of Tijam, et al. v. Sibonghanoy, et al.30 petitioner claimed that respondent’s failure to raise the
question of jurisdiction at an earlier stage bars her from later questioning it, especially since she
actively participated in the proceedings conducted by the trial court.

Petitioner’s argument is misplaced, in that, it failed to consider that the concept of jurisdiction has
several aspects, namely: (1) jurisdiction over the subject matter; (2) jurisdiction over the parties; (3)
jurisdiction over the issues of the case; and (4) in cases involving property, jurisdiction over the res
or the thing which is the subject of the litigation.31

The aspect of jurisdiction which may be barred from being assailed as a result of estoppel by laches
is jurisdiction over the subject matter. Thus, in Tijam, the case relied upon by petitioner, the issue
involved was the authority of the then Court of First Instance to hear a case for the collection of a
sum of money in the amount of P1,908.00 which amount was, at that time, within the exclusive
original jurisdiction of the municipal courts.

In subsequent cases citing the ruling of the Court in Tijam, what was likewise at issue was the
jurisdiction of the trial court over the subject matter of the case. Accordingly, in Spouses Gonzaga v.
Court of Appeals,32 the issue for consideration was the authority of the regional trial court to hear and
decide an action for reformation of contract and damages involving a subdivision lot, it being argued
therein that jurisdiction is vested in the Housing and Land Use Regulatory Board pursuant to PD 957
(The Subdivision and Condominium Buyers Protective Decree). In Lee v. Presiding Judge, MTC,
Legaspi City,33 petitioners argued that the respondent municipal trial court had no jurisdiction over
the complaint for ejectment because the issue of ownership was raised in the pleadings. Finally, in
People v. Casuga,34 accused-appellant claimed that the crime of grave slander, of which she was
charged, falls within the concurrent jurisdiction of municipal courts or city courts and the then courts
of first instance, and that the judgment of the court of first instance, to which she had appealed the
municipal court's conviction, should be deemed null and void for want of jurisdiction as her appeal
should have been filed with the Court of Appeals or the Supreme Court.
In all of these cases, the Supreme Court barred the attack on the jurisdiction of the respective courts
concerned over the subject matter of the case based on estoppel by laches, declaring that parties
cannot be allowed to belatedly adopt an inconsistent posture by attacking the jurisdiction of a court
to which they submitted their cause voluntarily.35

Here, what respondent was questioning in her motion to dismiss before the trial court was that
court’s jurisdiction over the person of defendant Manuel. Thus, the principle of estoppel by laches
finds no application in this case. Instead, the principles relating to jurisdiction over the person of the
parties are pertinent herein.

The Rules of Court provide:

RULE 9
EFFECT OF FAILURE TO PLEAD

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.

RULE 15
MOTIONS

Sec. 8. Omnibus motion. – Subject to the provisions of Section 1 of Rule 9, a motion attacking a
pleading, order, judgment, or proceeding shall include all objections then available, and all
objections not so included shall be deemed waived.

Based on the foregoing provisions, the "objection on jurisdictional grounds which is not waived even
if not alleged in a motion to dismiss or the answer is lack of jurisdiction over the subject matter. x x x
Lack of jurisdiction over the subject matter can always be raised anytime, even for the first time on
appeal, since jurisdictional issues cannot be waived x x x subject, however, to the principle of
estoppel by laches."36

Since the defense of lack of jurisdiction over the person of a party to a case is not one of those
defenses which are not deemed waived under Section 1 of Rule 9, such defense must be invoked
when an answer or a motion to dismiss is filed in order to prevent a waiver of the defense.37 If the
objection is not raised either in a motion to dismiss or in the answer, the objection to the jurisdiction
over the person of the plaintiff or the defendant is deemed waived by virtue of the first sentence of
the above-quoted Section 1 of Rule 9 of the Rules of Court.38

The Court of Appeals, therefore, erred when it made a sweeping pronouncement in its questioned
decision, stating that "issue on jurisdiction may be raised at any stage of the proceeding, even for
the first time on appeal" and that, therefore, respondent timely raised the issue in her motion to
dismiss and is, consequently, not estopped from raising the question of jurisdiction. As the question
of jurisdiction involved here is that over the person of the defendant Manuel, the same is deemed
waived if not raised in the answer or a motion to dismiss. In any case, respondent cannot claim the
defense since "lack of jurisdiction over the person, being subject to waiver, is a personal defense
which can only be asserted by the party who can thereby waive it by silence."39

2. Jurisdiction over the person of a defendant is acquired through a valid service of summons; trial
court did not acquire jurisdiction over the person of Manuel Toledo
In the first place, jurisdiction over the person of Manuel was never acquired by the trial court. A
defendant is informed of a case against him when he receives summons. "Summons is a writ by
which the defendant is notified of the action brought against him. Service of such writ is the means
by which the court acquires jurisdiction over his person."40

In the case at bar, the trial court did not acquire jurisdiction over the person of Manuel since there
was no valid service of summons upon him, precisely because he was already dead even before the
complaint against him and his wife was filed in the trial court. The issues presented in this case are
similar to those in the case of Sarsaba v. Vda. de Te.41

In Sarsaba, the NLRC rendered a decision declaring that Patricio Sereno was illegally dismissed
from employment and ordering the payment of his monetary claims. To satisfy the claim, a truck in
the possession of Sereno’s employer was levied upon by a sheriff of the NLRC, accompanied by
Sereno and his lawyer, Rogelio Sarsaba, the petitioner in that case. A complaint for recovery of
motor vehicle and damages, with prayer for the delivery of the truck pendente lite was eventually
filed against Sarsaba, Sereno, the NLRC sheriff and the NLRC by the registered owner of the truck.
After his motion to dismiss was denied by the trial court, petitioner Sarsaba filed his answer. Later
on, however, he filed an omnibus motion to dismiss citing, as one of the grounds, lack of jurisdiction
over one of the principal defendants, in view of the fact that Sereno was already dead when the
complaint for recovery of possession was filed.

Although the factual milieu of the present case is not exactly similar to that of Sarsaba, one of the
issues submitted for resolution in both cases is similar: whether or not a case, where one of the
named defendants was already dead at the time of its filing, should be dismissed so that the claim
may be pursued instead in the proceedings for the settlement of the estate of the deceased
defendant. The petitioner in the Sarsaba Case claimed, as did respondent herein, that since one of
the defendants died before summons was served on him, the trial court should have dismissed the
complaint against all the defendants and the claim should be filed against the estate of the deceased
defendant. The petitioner in Sarsaba, therefore, prayed that the complaint be dismissed, not only
against Sereno, but as to all the defendants, considering that the RTC did not acquire jurisdiction
over the person of Sereno.42 This is exactly the same prayer made by respondent herein in her
motion to dismiss.

The Court, in the Sarsaba Case, resolved the issue in this wise:

x x x We cannot countenance petitioner’s argument that the complaint against the other defendants
should have been dismissed, considering that the RTC never acquired jurisdiction over the person of
Sereno. The court’s failure to acquire jurisdiction over one’s person is a defense which is personal to
the person claiming it. Obviously, it is now impossible for Sereno to invoke the same in view of his
death. Neither can petitioner invoke such ground, on behalf of Sereno, so as to reap the benefit of
having the case dismissed against all of the defendants. Failure to serve summons on Sereno’s
person will not be a cause for the dismissal of the complaint against the other defendants,
considering that they have been served with copies of the summons and complaints and have long
submitted their respective responsive pleadings. In fact, the other defendants in the complaint were
given the chance to raise all possible defenses and objections personal to them in their respective
motions to dismiss and their subsequent answers.43 (Emphasis supplied.)

Hence, the Supreme Court affirmed the dismissal by the trial court of the complaint against Sereno
only.
Based on the foregoing pronouncements, there is no basis for dismissing the complaint against
respondent herein. Thus, as already emphasized above, the trial court correctly denied her motion to
dismiss.

On whether or not the estate of Manuel

Toledo is an indispensable party

Rule 3, Section 7 of the 1997 Rules of Court states:

SEC. 7. Compulsory joinder of indispensable parties. – Parties-in-interest without whom no final

determination can be had of an action shall be joined either as plaintiffs or defendants.

An indispensable party is one who has such an interest in the controversy or subject matter of a
case that a final adjudication cannot be made in his or her absence, without injuring or affecting that
interest. He or she is a party who has not only an interest in the subject matter of the controversy,
but "an interest of such nature that a final decree cannot be made without affecting that interest or
leaving the controversy in such a condition that its final determination may be wholly inconsistent
with equity and good conscience. It has also been considered that an indispensable party is a
person in whose absence there cannot be a determination between the parties already before the
court which is effective, complete or equitable." Further, an indispensable party is one who must be
included in an action before it may properly proceed.44

On the other hand, a "person is not an indispensable party if his interest in the controversy or subject
matter is separable from the interest of the other parties, so that it will not necessarily be directly or
injuriously affected by a decree which does complete justice between them. Also, a person is not an
indispensable party if his presence would merely permit complete relief between him or her and
those already parties to the action, or if he or she has no interest in the subject matter of the action."
It is not a sufficient reason to declare a person to be an indispensable party simply because his or
her presence will avoid multiple litigations.45

Applying the foregoing pronouncements to the case at bar, it is clear that the estate of Manuel is not
an indispensable party to the collection case, for the simple reason that the obligation of Manuel and
his wife, respondent herein, is solidary.

The contract between petitioner, on the one hand and respondent and respondent’s husband, on the
other, states:

FOR VALUE RECEIVED, I/We jointly and severally46 (in solemn) promise to pay BOSTON EQUITY
RESOURCES, INC. x x x the sum of PESOS: [ONE MILLION FOUR HUNDRED (P1,400,000.00)] x
x x.47

The provisions and stipulations of the contract were then followed by the respective signatures of
respondent as "MAKER" and her husband as "CO-MAKER."48 Thus, pursuant to Article 1216 of the
Civil Code, petitioner may collect the entire amount of the obligation from respondent only. The
aforementioned provision states: "The creditor may proceed against any one of the solidary debtors
or some or all of them simultaneously. The demand made against one of them shall not be an
obstacle to those which may subsequently be directed against the others, so long as the debt has
not been fully collected."
In other words, the collection case can proceed and the demands of petitioner can be satisfied by
respondent only, even without impleading the estate of Manuel. Consequently, the estate of Manuel
is not an indispensable party to petitioner’s complaint for sum of money.

However, the Court of Appeals, agreeing with the contention of respondent, held that the claim of
petitioner should have been filed against the estate of Manuel in accordance with Sections 5 and 6
of Rule 86 of the Rules of Court. The aforementioned provisions provide:

SEC. 5. Claims which must be filed under the notice. If not filed, barred; exceptions. All claims for
money against the decedent, arising from contract, express or implied, whether the same be due,
not due, or contingent, all claims for funeral expenses and judgment for money against the
decedent, must be filed within the time limited in the notice; otherwise, they are barred forever,
except that they may be set forth as counterclaims in any action that the executor or administrator
may bring against the claimants. x x x.

SEC. 6. Solidary obligation of decedent. Where the obligation of the decedent is solidary with
another debtor, the claim shall be filed against the decedent as if he were the only debtor, without
prejudice to the right of the estate to recover contribution from the other debtor. x x x.

The Court of Appeals erred in its interpretation of the above-quoted provisions.

In construing Section 6, Rule 87 of the old Rules of Court, the precursor of Section 6, Rule 86 of the
Revised Rules of Court, which latter provision has been retained in the present Rules of Court
without any revisions, the Supreme Court, in the case of Manila Surety & Fidelity Co., Inc. v.
Villarama, et. al.,49 held:50

Construing Section 698 of the Code of Civil Procedure from whence [Section 6, Rule 87] was taken,
this Court held that where two persons are bound in solidum for the same debt and one of them
dies, the whole indebtedness can be proved against the estate of the latter, the decedent’s liability
being absolute and primary; x x x. It is evident from the foregoing that Section 6 of Rule 87 provides
the procedure should the creditor desire to go against the deceased debtor, but there is certainly
nothing in the said provision making compliance with such procedure a condition precedent before
an ordinary action against the surviving solidary debtors, should the creditor choose to demand
payment from the latter, could be entertained to the extent that failure to observe the same would
deprive the court jurisdiction to take cognizance of the action against the surviving debtors. Upon the
other hand, the Civil Code expressly allows the creditor to proceed against any one of the solidary
debtors or some or all of them simultaneously. There is, therefore, nothing improper in the creditor’s
filing of an action against the surviving solidary debtors alone, instead of instituting a proceeding for
the settlement of the estate of the deceased debtor wherein his claim could be filed.

The foregoing ruling was reiterated and expounded in the later case of Philippine National Bank v.
Asuncion51where the Supreme Court pronounced:

A cursory perusal of Section 6, Rule 86 of the Revised Rules of Court reveals that nothing therein
prevents a creditor from proceeding against the surviving solidary debtors. Said provision merely
sets up the procedure in enforcing collection in case a creditor chooses to pursue his claim against
the estate of the deceased solidary debtor. The rule has been set forth that a creditor (in a solidary
obligation) has the option whether to file or not to file a claim against the estate of the solidary
debtor. x x x

xxxx
It is crystal clear that Article 1216 of the New Civil Code is the applicable provision in this matter.
Said provision gives the creditor the right to "proceed against anyone of the solidary debtors or some
or all of them simultaneously." The choice is undoubtedly left to the solidary creditor to determine
against whom he will enforce collection. In case of the death of one of the solidary debtors, he (the
creditor) may, if he so chooses, proceed against the surviving solidary debtors without necessity of
filing a claim in the estate of the deceased debtors. It is not mandatory for him to have the case
dismissed as against the surviving debtors and file its claim against the estate of the deceased
solidary debtor, x x x. For to require the creditor to proceed against the estate, making it a condition
precedent for any collection action against the surviving debtors to prosper, would deprive him of his
substantive rightsprovided by Article 1216 of the New Civil Code. (Emphasis supplied.)

As correctly argued by petitioner, if Section 6, Rule 86 of the Revised Rules of Court were applied
literally, Article 1216 of the New Civil Code would, in effect, be repealed since under the Rules of
Court, petitioner has no choice but to proceed against the estate of [the deceased debtor] only.
Obviously, this provision diminishes the [creditor’s] right under the New Civil Code to proceed
against any one, some or all of the solidary debtors. Such a construction is not sanctioned by
principle, which is too well settled to require citation, that a substantive law cannot be amended by a
procedural rule. Otherwise stated, Section 6, Rule 86 of the Revised Rules of Court cannot be made
to prevail over Article 1216 of the New Civil Code, the former being merely procedural, while the
latter, substantive.

Based on the foregoing, the estate of Manuel is not an indispensable party and the case can
proceed as against respondent only. That petitioner opted to collect from respondent and not from
the estate of Manuel is evidenced by its opposition to respondent’s motion to dismiss asserting that
the case, as against her, should be dismissed so that petitioner can proceed against the estate of
Manuel.

On whether or not the inclusion of Manuel as

party defendant is a misjoinder of party

Section 11 of Rule 3 of the Rules of Court states that "neither misjoinder nor non-joinder of parties is
ground for dismissal of an action. Parties may be dropped or added by order of the court on motion
of any party or on its own initiative at any stage of the action and on such terms as are just. Any
claim against a misjoined party may be severed and proceeded with separately."

Based on the last sentence of the afore-quoted provision of law, a misjoined party must have the
capacity to sue or be sued in the event that the claim by or against the misjoined party is pursued in
a separate case. In this case, therefore, the inclusion of Manuel in the complaint cannot be
considered a misjoinder, as in fact, the action would have proceeded against him had he been alive
at the time the collection case was filed by petitioner. This being the case, the remedy provided by
Section 11 of Rule 3 does not obtain here. The name of Manuel as party-defendant cannot simply be
dropped from the case. Instead, the procedure taken by the Court in Sarsaba v. Vda. de Te,52 whose
facts, as mentioned earlier, resemble those of this case, should be followed herein. There, the
Supreme Court agreed with the trial court when it resolved the issue of jurisdiction over the person of
the deceased Sereno in this wise:

As correctly pointed by defendants, the Honorable Court has not acquired jurisdiction over the
person of Patricio Sereno since there was indeed no valid service of summons insofar as Patricio
Sereno is concerned. Patricio Sereno died before the summons, together with a copy of the
complaint and its annexes, could be served upon him.
However, the failure to effect service of summons unto Patricio Sereno, one of the defendants
herein, does not render the action DISMISSIBLE, considering that the three (3) other defendants, x x
x, were validly served with summons and the case with respect to the answering defendants may
still proceed independently. Be it recalled that the three (3) answering defendants have previously
filed a Motion to Dismiss the Complaint which was denied by the Court.

Hence, only the case against Patricio Sereno will be DISMISSED and the same may be filed as a
claim against the estate of Patricio Sereno, but the case with respect to the three (3) other accused
[sic] will proceed. (Emphasis supplied.)53

As a result, the case, as against Manuel, must be dismissed.

In addition, the dismissal of the case against Manuel is further warranted by Section 1 of Rule 3 of
the Rules of Court, which states that: only natural or juridical persons, or entities authorized by law
may be parties in a civil action." Applying this provision of law, the Court, in the case of Ventura v.
Militante,54 held:

Parties may be either plaintiffs or defendants. x x x. In order to maintain an action in a court of

justice, the plaintiff must have an actual legal existence, that is, he, she or it must be a person in law
and possessed of a legal entity as either a natural or an artificial person, and no suit can be lawfully
prosecuted save in the name of such a person.

The rule is no different as regards party defendants. It is incumbent upon a plaintiff, when he
institutes a judicial proceeding, to name the proper party defendant to his cause of action. In a suit or
proceeding in personam of an adversary character, the court can acquire no jurisdiction for the
purpose of trial or judgment until a party defendant who actually or legally exists and is legally
capable of being sued, is brought before it. It has even been held that the question of the legal
personality of a party defendant is a question of substance going to the jurisdiction of the court and
not one of procedure.

The original complaint of petitioner named the "estate of Carlos Ngo as represented by surviving
spouse Ms. Sulpicia Ventura" as the defendant. Petitioner moved to dismiss the same on the
1âwphi1

ground that the defendant as named in the complaint had no legal personality. We agree.

x x x. Considering that capacity to be sued is a 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. (Emphases supplied.)

Indeed, where the defendant is neither a natural nor a juridical person or an entity authorized by law,
the complaint may be dismissed on the ground that the pleading asserting the claim states no cause
of action or for failure to state a cause of action pursuant to Section 1(g) of Rule 16 of the Rules of
Court, because a complaint cannot possibly state a cause of action against one who cannot be a
party to a civil action.55

Since the proper course of action against the wrongful inclusion of Manuel as party-defendant is the
dismissal of the case as against him, thus did the trial court err when it ordered the substitution of
Manuel by his heirs. Substitution is proper only where the party to be substituted died during the
pendency of the case, as expressly provided for by Section 16, Rule 3 of the Rules of Court, which
states:

Death of party;duty of counsel. – Whenever a party to a pending action dies, and the claim is not
thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days
after such death of the fact thereof, and to give the name and address of his legal representative or
representatives. x x x

The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the
appointment of an executor or administrator x x x.

The court shall forthwith order said legal representative or representatives to appear and be
substituted within a period of thirty (30) days from notice. (Emphasis supplied.)

Here, since Manuel was already dead at the time of the filing of the complaint, the court never
acquired jurisdiction over his person and, in effect, there was no party to be substituted.

WHEREFORE, the petition is GRANTED. The Decision dated 28 February 2006 and the Resolution
dated 1 August 2006 of the Court of Appeals in CA-G.R. SP No. 88586 are REVERSED and SET
ASIDE. The Orders of the Regional Trial Court dated 8 November 2004 and 22 December 2004,
respectively, in Civil Case No. 97-86672, are REINSTATED. The Regional Trial Court, Branch 24,
Manila is hereby DIRECTED to proceed with the trial of Civil Case No. 97-86672 against respondent
Lolita G. Toledo only, in accordance with the above pronouncements of the Court, and to decide the
case with dispatch.

SO ORDERED.

JOSE PORTUGAL PEREZ

Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

ARTURO D. BRION MARIANO C. DEL CASTILLO

Associate Justice Associate Justice

MARTIN S. VILLARAMA, JR.*

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's Attestation, it
is hereby certified that the conclusions in the above Decision were reached in consultation before
the case was assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P. A. SERENO

Chief Justice

Footnotes

* Designated Additional Member per raffle dated 19 June 2013.

1Penned hy Associate Justice Hakim S. Abdulwahid with Associate Justices Remedios A.

Salazar-Fernando and Estela M. Per las- Bernabe (now an Associate Justice of this Court)
concurring. Rollo, pp. 23-29.

2 Id. at 31.

3 Id. at 28.

4 CA rollo, pp. 9-11.

5 Id. at 12-15.

6 Id. at 16-21.

7 Id. at 23-28.

8 Id. at 24.

9 Id. at 49.

10 Id. at 31-33.

11 Id. at 36.

12 Id. at 34-35.

THIRD DIVISION

[G.R. No. 143464. March 5, 2003]

EMILIO S. YOUNG, petitioner, vs. JOHN KENG SENG a.k.a JOHN
SY,respondent.

DECISION
PANGANIBAN, J.:

In general, violation of the rule on forum shopping should be raised at the earliest
opportunity in a motion to dismiss or a similar pleading. Invoking it in the later stages of
the proceedings or on appeal may result in the dismissal of the action as an exception
only if the violation arises from or will result in (1) the loss of jurisdiction over the subject
matter, (2) the pendency of another action between the same parties for the same
cause, (3) the barring of the action by a prior judgment, or (4) the crossing of the Statute
of Limitations.

The Case

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
seeking to set aside the February 24, 2000 Decision and the May 26, 2000 Resolution
of the Court of Appeals (CA)[1] in CA-GR SP No. 52976. The decretal portion of the
assailed Decision reads as follows:

WHEREFORE, the petition at bench is DISMISSED. Costs against the petitioner. [2]

The assailed Resolution[3] denied petitioners Motion for Reconsideration.

The Facts

The factual antecedents are summarized by the CA as follows:

On September 16, 1996, the herein private respondent John Keng Seng, a.k.a. John
Sy, filed a complaint for accounting of general agency, injunction, turning over of
properties, and damages, with the Regional Trial Court of Bacolod City, Branch 53,
against the herein petitioner Emilio Young and his wife, Tita Young. The case was
docketed thereat as Civil Case No. 96-9508. The private respondent subsequently
filed an Amended Complaint with the same Court. The spouses Young, for their part,
filed a Motion to Dismiss the case for lack of cause of action.

On March 6, 1997, the Regional Trial Court of Bacolod City, Branch 53, issued an
order dismissing Civil Case No. 96-9508. The private respondents Motion for
Reconsideration of the aforesaid order was denied by the same court in its Order of
April 2, 1997.
On June 23, 1997, John Keng Seng filed another complaint for accounting and
damages with the Regional Trial Court of Bacolod City, Branch 44, against the herein
petitioner Emilio Young. The case was docketed in that court as Civil Case No. 97-
9830. Young filed a Motion to Dismiss the case on the ground that the complaint fails
to state a good, valid and/or worthwhile cause of action against the defendant. The
respondent court denied the Motion to Dismiss in its order of August 19, 1997. The
petitioner filed a Motion for Reconsideration of the aforesaid order based on the
following grounds:

The complainant x x x fails to state a good, valid and/or worthwhile cause of action as
against the defendant.

and

Plaintiff had fatally failed to comply with the rule against forum shopping, as he has
in fact deliberately submitted a false certification under oath as contained in the
complaint in the present suit.

The private respondent having filed his Opposition to Motion for Reconsideration,
and the petitioner, his Reply, the presiding judge of the Regional Trial Court of
Negros Occidental, Branch 44, Bacolod City, Judge Anastacio I. Lobaton, issued an
order x x x date[d] September 23, 1997 granting the petitioners Motion for
Reconsideration and dismissing Civil Case No. 97-9830. To this, the private
respondent filed a Motion for Reconsideration; to which, the petitioner, in turn,
tendered an Opposition.

On October 24, 1997, Judge A.I. Lobaton inhibited himself from the case, thusly

WHEREFORE, undersigned inhibits himself from hearing the cases wherein John
Keng Seng is one of the parties and let the following records be forwarded to the
Office of the Clerk of Court of RTC, Bacolod City for re-raffle.

SO ORDERED.

Bacolod City, October 24, 1997.

(SGD) ANASTACIO I. LOBATON

Presiding Judge

On December 16, 1998, the herein public respondent Judge Demosthenes L.

Magallanes, the presiding judge of the respondent Branch 54, Regional Trial Court of
Bacolod City, to whom the present case was re-raffled, issued an order, the decretal
part of which reads:

THEREFORE, in the light of the foregoing consideration, this Court is of the opinion
that the herein plaintiff had not violated the rule on forum shopping. The order dated
September 23, 1998 is therefore RECONSIDERED. The Clerk of Court is hereby
directed to set the case for further proceedings.

SO ORDERED.

Bacolod City, Philippines, December 16, 1998.

(SGD) DEMOSTHENES L. MAGALLANES

Judge

The petitioner moved for reconsideration of the above order, but his motion was
[denied] by the respondent court x x x in its order of April 23, 1999. (Citations
omitted) [4]

Ruling of the Court of Appeals

In dismissing petitioners appeal, the CA ruled that respondent did not violate the
rule on forum shopping, since Civil Case No. 96-9508 (the First Case) had been
dismissed by the RTC on March 6, 1997; while Civil Case No. 97-9830 (the Second
Case) had been filed only on June 23, 1997. It further held that failure to state a cause
of action -- the ground on which petitioner based his Motion to Dismiss -- [did] not, and
[could not], bar the refiling of the same action or claim.[5]
Hence, this Petition.[6]

The Issues

In his Memorandum,[7] petitioner assigns this lone error for the Courts consideration:

Whether or not in holding that respondent has not violated the rule against forum
shopping notwithstanding and despite the record clearly showing and the trial court
itself having categorically found via its Order of Sept. 23, 1997 there to have been the
willful and deliberate submission of a false certification (against forum shopping) as
well as non-compliance with the undertaking under Rule 7, Sec. 5 of the Rules of
Court, the Court of Appeals had decided a question of substance in a way not in
accord with law, that law being the rule abovementioned and jurisprudence; as well as
had sanctioned a substantial departure from the accepted and usual course of judicial
proceedings as to warrant the exercise by this Honorable Tribunal of its supervisory
powers thereover. (Citation omitted)
[8]

On the other hand, respondent raises these two issues before us:

I. Whether or not the Court of Appeals has sanctioned a substantial departure from the
accepted and usual course of judicial proceedings in upholding the order dated
September 16, 1998 in Civil Case No. 97-9830 of Hon. Judge Demosthenes
Magallanes denying petitioners motion to dismiss on the alleged ground of forum
shopping; and

II. Whether or not the petitioner is deemed to have waived the right to invoke forum
shopping as a ground for a motion to dismiss in Civil Case No. 97-9830. [9]

For purposes of clarity, we deem it wise to discuss the issues as follows: (1)
whether petitioner can still raise the alleged violation of the rule on non-forum shopping,
even if he failed to cite it as a ground in his Motion to Dismiss the Second Case; (2)
whether the CA erred in holding that respondent had not violated the rule on forum
shopping; and (3) whether such violation warrants the automatic dismissal of the
Second Case.

The Courts Ruling

The Petition is not meritorious. We sustain respondent, but not for the reasons
given by the Court of Appeals or the Regional Trial Court.

First Issue:
Waiver

Petitioner contends that the CA should have ordered the dismissal of the Second
Case. Allegedly, respondent was guilty of forum shopping when he deliberately and
willfully submitted a false certification of non-forum shopping.[10]
On the other hand, respondent claims that petitioner waived this ground by failing to
raise it in his Motion to Dismiss before the trial court.
Section 1 of Rule 9 of the Rules of Court provides that defenses and objections not
pleaded in a motion to dismiss or in an answer are deemed waived. However, courts
shall nonetheless dismiss the claim when it appears from the pleadings or the evidence
on record that (1) the court has no jurisdiction over the subject matter, (2) there is
another action pending between the same parties for the same cause, (3) the action is
barred by prior judgment, or 4) the statute of limitations has been crossed.
Bolstering this provision is Section 8 of Rule 15 which states: Subject to the
provisions of Section 1 of Rule 9, a motion attacking a pleading, order, judgment, or
proceeding shall include all objections then available, and all objections not so included
shall be deemed waived.
Applying these principles to the instant case, we hold that petitioner is barred from
raising the ground of forum shopping in the Court of Appeals and in this Court. If only for
his failure to invoke such ground at the first opportunity in his Motion to Dismiss filed in
the trial court,[11] his appeal should have been given short shrift and denied outright.
However, we deem it wise to give due course to the Petition herein to discuss -- for
the benefit of the bench and the bar -- the interrelated issues of whether respondent
violated the rule on non-forum shopping, and whether such violation warrants the
automatic dismissal of the present case.

Second and Third Issues:

Forum Shopping

Petitioner avers that respondent violated the rule on non-forum shopping when he
knowingly, deliberately and willfully certified falsely under oath that he had not
commenced any other action or petition before any court, tribunal or agency involving
the same issue.
It is said that forum shopping is committed by a party who, having received an
adverse judgment in one forum, seeks another opinion in another court, other than by
appeal or the special civil action of certiorari. More accurately, however, forum shopping
is the institution of 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 and/or to
grant the same or substantially the same reliefs.[12] It is an act of malpractice that is
prohibited and condemned because it trifles with the courts and abuses their
processes. It degrades the administration of justice and adds to the already congested
court dockets.[13]
To stamp out this abominable practice of trifling with the administration of justice,
the Supreme Court promulgated Administrative Circulars 28-91 and 04-94, which are
now embodied as Section 5 of Rule 7 of the Rules of Court, which we reproduce as
follows:

SEC. 5. Certification against forum shopping. The plaintiff or principal party shall
certify under oath in the complaint or other initiatory pleading asserting a claim for
relief, or in a sworn certification annexed thereto and simultaneously filed therewith:
(a) that he has not theretofore commenced any action or filed any claim involving the
same issues in any court, tribunal or quasi-judicial agency and, to the best of his
knowledge, no such other action or claim is pending therein; (b) if there is such other
pending action or claim, a complete statement of the present status thereof; and (c) if
he should thereafter learn that the same or similar action or claim has been filed or is
pending, he shall report that fact within five (5) days therefrom to the court wherein
his aforesaid complaint or initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere
amendment of the complaint or other initiatory pleading but shall be cause for the
dismissal of the case without prejudice, unless otherwise provided, upon motion and
after hearing. The submission of a false certification or non-compliance with any of
the undertakings therein shall constitute indirect contempt of court, without prejudice
to the corresponding administrative and criminal actions. If the acts of the party or his
counsel clearly constitute willful and deliberate forum shopping, the same shall be
ground for summary dismissal with prejudice and shall constitute direct contempt, as
well as a cause for administrative sanctions.

In dismissing a case based on forum shopping, it is important to consider the

vexation caused [to] the courts and parties-litigants by a party who asks different courts
to rule on the same or related causes or grant the same or substantially the same
reliefs.[14] Thus, to determine whether a party violated the rule against forum shopping,
the most important factor to ask is whether the elements oflitis pendentia[15] are present,
or whether a final judgment in one case will amount to res judicata[16] in
another.[17] 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.[18]
In First Philippine International Bank v. Court of Appeals,[19] the test for determining
the presence of forum shopping was explained by the Court as follows:

The test for determining whether a party violated the rule against forum shopping
has been laid down in the 1986 case of Buan v. Lopez, x x x by Chief Justice Narvasa,
and that is, forum shopping exists where the elements of litis pendentia are present or
where a final judgment in one case will amount to res judicata in the other, as
follows:

There thus exists between the action before this Court and the RTC Case No. 86-
36563 identity of parties, or at least such parties as represent the same interests in both
action, as well as identity of rights asserted and relief prayed for, the relief being
founded on the same facts, and the identity on the two preceding particulars is such
that any judgment rendered in the other action, will, regardless of which party is
successful, amount to res adjudicata in the action under consideration: all the
requisites, in fine, of auter action pendant.
xxxxxxxxx

As already observed, there is between the action at bar and the RTC Case No. 86-
36563, an identity as regards parties, or interests represented, rights asserted and relief
sought, as well as basis thereof, to a degree sufficient to give rise to the ground for
dismissal known as auter action pendant or lis pendens. That same identity puts into
operation the sanction of twin dismissals just mentioned. The application of this
sanction will prevent any further delay in the settlement of the controversy which
might ensue from attempts to seek reconsideration of or to appeal from the Order of
the Regional Trial Court in Civil Case No. 86-36563 promulgated on July 15, 1986,
which dismissed the petition upon grounds which appear persuasive.

Consequently, where a litigant (or one representing the same interest or person) sues
the same party against whom another action or actions for the alleged violation of the
same right and the enforcement of the same relief is/are still pending, the defense
of litis pendentia in one case is a bar to the others; and, a final judgment in one would
constitute res judicata and thus would cause the dismissal of the rest. In either case,
forum shopping could be cited by the other party as a ground to ask for summary
dismissal of the two (or more) complaints or petitions, which are direct contempt of
court, criminal prosecution, and disciplinary action against the erring lawyer. [20]

Ruling that respondent was not guilty of forum shopping, the RTC issued its Order
dated December 16, 1998, in which it said:

A close scrutiny of the records shows that Civil Case No. 96-9508 was dismissed on
March 6, 1997; Civil Case No. 97-9830 was filed on June 23, 1997, more than two
months after the first dismissal. This shows that when the latter case was filed, the
previous case was no longer pending. In short, the element of litis pendentia is not
present under the circumstances.

As to the second element, since the dismissal in Civil Case No. 96-9508 is based on
the theory that the complaint did not state a cause of action then it does not bar the
plaintiff from refiling the same action or claim with the proper allegations showing a
valid cause of action. No res judicata would arise in one action as to the other.

THEREFORE, in light of the foregoing consideration, this Court is of the opinion that
the herein plaintiff has not violated the rule on forum shopping. x x x

This holding was sustained by the CA. We opine, however, that a perusal of
respondents certification shows that there was a violation of the rule on non-forum
shopping. The certification is hereunder quoted verbatim:
5. That I hereby certify that I have not commenced any other action or petition before
any court, tribunal or agency involving the same issue and to the best of my
knowledge, no such action or proceeding is pending in the Supreme Court, Court of
Appeals, Regional Trial Court or any other tribunal or agency and that if I should
learn of any action filed in said office I will accordingly informed [sic] this Hon.
Court of said action and the status therein within five (5) days from knowledge
thereof.[21]

The foregoing certification is obviously inaccurate, if not downright false, because it

does not disclose the filing of the First Case. Had this violation been appropriately
brought up in the Motion to Dismiss, it could have resulted in the abatement of the
Second Case.
Nonetheless, strengthening our ruling on the First Issue, we hold that substantial
justice[22] requires the resolution of the present controversy on its merits. It must be noted
that the verification requirement is a formal, not a jurisdictional,
requirement. Moreover, the ground for the dismissal of the First Case was lack of
[23]

cause of action, which means that essentially, no case was filed, because the
Complaint was fatally defective on its face. Hence, its dismissal was not determinative
of the Second Case.[24]
We repeat: the First Case was dismissed because of lack of cause of action. It was
thus a dismissal without prejudice; respondent was not barred from filing a new suit
against petitioner involving the same facts, but raising a cause of action arising
therefrom. In fact, respondent actually filed the Second Case, even if he failed to
disclose in his certification that he had commenced the First Case against the same
defendant, herein petitioner. Furthermore, we must bear in mind that, whenever
possible and feasible, procedural rules should be liberally construed to ensure the just,
speedy and inexpensive disposition of actions and proceedings on their merits. [25]
In Loyola v. Court of Appeals,[26] we said that the rule on non-forum shopping was
designed to promote and facilitate the orderly administration of justice and, therefore,
should not be interpreted literally at all times.

The fact that the Circular requires that it be strictly complied with merely underscores
its mandatory nature in that it cannot be dispensed with or its requirements altogether
disregarded, but it does not thereby interdict substantial compliance with its
provisions under justifiable circumstances. [27]

WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. The
trial court isDIRECTED to hear the controversy and decide it with all deliberate
speed. Costs against petitioner.
SO ORDERED.
Puno, (Chairman), Sandoval-Gutierrez and Carpio-Morales, JJ., concur.
Corona, J., on leave.
[1]
Third Division. Penned by Justice Renato C. Dacudao (member); concurred in by Justices Quirino D.
Abad Santos Jr. (Division chairman) and B.A. Adefuin-de la Cruz (member).
[2]
Assailed CA Decision, p. 6; rollo, p. 120.
[3]
Rollo, pp. 128-129.
[4]
Assailed CA Decision, pp. 1-4; rollo, pp. 115-118.
[5]
Id., pp. 5 & 119.
[6]
The case was deemed submitted on April 26, 2001, upon this Courts receipt of respondents
Memorandum signed by Atty. Edmundo G. Manlapao. Petitioners Memorandum, signed by Atty.
Benjamin L. Hilado of Hilado, Hagad & Hilado, was received by the Court on April 17, 2001.
[7]
Rollo, pp. 155-177.
[8]
Id., p. 162. Original in upper case.
[9]
Respondents Memorandum, p. 8; rollo, 186.
10 Id., pp. 48-50.
11 Cf. Annex I of Motion to Dismiss dated July 27, 1997; CA rollo, pp. 141-144.
[12]
Executive Secretary v. Gordon, 298 SCRA 736, 741, November 18, 1998; First Philippine International
Bank v. Court of Appeals, 252 SCRA 259, 283, January 24, 1996; Chemphil Export & Import
Corporation v. Court of Appeals, 251 SCRA 257, 291-292, December 12, 1995; International
Container Terminal Services, Inc. v. Court of Appeals, 249 SCRA 389, 395-396, October 18,
1995.
[13]
Executive Secretary v. Gordon, supra; Chemphil Export & Import Corporation v. Court of Appeals,
supra.
[14]
Roxas v. Court of Appeals, 363 SCRA 207, 218, August 15, 2001, per de Leon Jr., J.
[15]
Before the pendency of one action can operate to abate a second one, there must be (1)
substantial identity of the parties and (2) substantial identity of causes of action and of the
issues. J. Northcott & Co., v. Villa-Abrille, 41 Phil. 462, March 17, 1921.
[16]
For the principle of res judicata to apply, the following elements must be present: (1) there is a decision
on the merits; (2) it was rendered by a court of competent jurisdiction; (3) the decision is final; and
(4) the two actions involve identical parties, subject matter and causes of action. Roxas v. Court
of Appeals, supra, p. 218.
[17]
Spouses Tirona v. Alejo, GR No. 129313, October 10, 2001.
[18]
Employees Compensation Commission v. Court of Appeals, 257 SCRA 717, 723, June 28, 1996; Buan
v. Lopez Jr., 145 SCRA 34, 38, October 13, 1986.
[19]
Supra.
[20]
Id., pp. 283-284, per Panganiban, J.
[21]
Appendix E, Complaint, p. 4; CA rollo, p. 44.
[22]
Basco v. Court of Appeals, 326 SCRA 768, February 29, 2000; Magno-Adamos v. Bagasao, 162
SCRA 747, June 28, 1988; Beutifont Inc. v. Court of Appeals, 157 SCRA 481, January 29,
 1988; Lianga Bay Logging Co., Inc. v, Court of Appeals, 157 SCRA 357, January 28,
1988, Francisco v. City of Davao, 12 SCRA 628, December 24, 1964.
[23]
Quimpo v. Dela Victoria, 46 SCRA 139, 144, July 31, 1972.
[24]
On the other hand, the present Rule on forum shopping gives petitioner remedies other than the denial
of the present Petition.
[25]
Section 6, Rule 1 of Rules of Court.
[26]
245 SCRA 477, June 29, 1995.
[27]
Id., pp. 483-484, per Davide Jr. (later CJ).

FIRST DIVISION

[G.R. No. 132624. March 13, 2000]

FIDEL M. BAARES II, LILIA C. VALERIANO, EDGAR M. BAARES, EMILIA

GATCHALIAN and FIDEL BESARINO, petitioners, vs. ELIZABETH
BALISING, ROGER ALGER, MERLINDA CAPARIC, EUSTAQUIO R.
TEJONES, ANDREA SAYAM, JENNY ISLA, WILMA ROGATERO,
PABLITO ALEGRIA, ROLANDO CANON, EDITHA ESTORES, EDMUNDO
DOROYA, TERESITA GUION, DANNY ANDARAYAN, LOURDES CADAY,
ROGELIO MANO, EVANGELINE CABILTES AND PUBLIC PROSECUTOR
OF RIZAL, Antipolo, Rizal, respondents.

DECISION

KAPUNAN, J.:

This is a petition for review on certiorari under Rule 45 of the Decision of the Regional
Trial Court of Antipolo, Rizal, Branch 71 dated August 26, 1997. [1]

The antecedent facts are as follows:

Petitioners Fidel M. Baares II, Lilia C. Valeriano, Edgar M. Baares, Emilia Gatchialian
and Fidel Besarino were the accused in sixteen criminal cases for estafa[2] filed by the
private respondents. The cases were assigned to the Municipal Trial Court of Antipolo,
Rizal, Branch II. Ncm

After the petitioners were arraigned and entered their plea of not guilty, [3] they filed a
Motion to Dismiss the aforementioned cases on the ground that the filing of the same
was premature, in view of the failure of the parties to undergo conciliation proceedings
before the Lupong Tagapamayapa of Barangay Dalig, Antipolo, Rizal.[4] Petitioners
averred that since they lived in the same barangay as private respondents, and the
amount involved in each of the cases did not exceed Two Hundred Pesos (P200.00),
the said cases were required under Section 412 in relation to Section 408 of the Local
Government Code of 1991[5] and Section 18 of the 1991 Revised Rule on Summary
Procedure.[6] to be referred to the Lupong Tagapamayapa or Pangkat ng
Tagapagkasundo of the barangay concerned for conciliation proceedings before being
filed in court.[7]

The municipal trial court issued an Order, dated July 17, 1995 [8] denying petitioners
Motion to Dismiss on the ground that they failed to seasonably invoke the non-referral of
the cases to the Lupong Tagapamayapa or Pangkat ng Tagapagkasundo. It added that
such failure to invoke non-referral of the case to the Lupon amounted to a waiver by
petitioners of the right to use the said ground as basis for dismissing the cases.[9]

Petitioners filed a motion for reconsideration of the aforementioned Order, claiming that
nowhere in the Revised Rules of Court is it stated that the ground of prematurity shall
be deemed waived if not raised seasonably in a motion to dismiss.[10]

On November 13, 1995, the municipal trial court issued an Order dismissing the sixteen
criminal cases against petitioners without prejudice, pursuant to Section 18 of the 1991
Revised Rule on Summary Procedure.[11] Scncm

More than two months later, on February 26, 1996, private respondents through
counsel, filed a Motion to Revive the abovementioned criminal cases against
petitioners, stating that the requirement of referral to the Lupon for conciliation had
already been complied with.[12] Attached to the motion was a Certification dated February
13, 1996 from the Lupong Tagapamayapa of Barangay Dalig, Antipolo, Rizal[13] stating
that the parties appeared before said body regarding the charges of estafa filed by
private respondents against petitioners but they failed to reach an amicable settlement
with respect thereto. Petitioners filed a Comment and Opposition to Motion to Revive
claiming that the Order of the municipal trial court, dated November 13, 1995 dismissing
the cases had long become final and executory; hence, private respondents should
have re-filed the cases instead of filing a motion to revive.[14]

On March 18, 1996, the municipal trial court issued an Order[15] granting private
respondents Motion to Revive. Petitioners filed a Motion for Reconsideration[16] of the
aforementioned Order which was denied by the municipal trial court. [17]

Petitioners thereafter filed with the Regional Trial Court of Antipolo, Rizal, a petition
for certiorari, injunction and prohibition assailing the Order dated March 18, 1996 of the
municipal trial court. They claimed that the said Order dated November 13, 1995
dismissing the criminal cases against them had long become final and executory
considering that the prosecution did not file any motion for reconsideration of said
Order.[18] In response thereto, private respondents filed their Comment, [19]arguing that the
motion to revive the said cases was in accordance with law, particularly Section 18 of
the Revised Rule on Summary Procedure.[20]
After the parties submitted additional pleadings to support their respective
contentions,[21] the Regional Trial Court rendered the assailed Decision denying the
petition for certiorari, injunction and prohibition, stating as follows:

Evaluating the allegations contained in the petition and respondents

comment thereto, the Court regrets that it cannot agree with the
petitioner(sic). As shown by the records the 16 criminal cases were
dismissed without prejudice at the instance of the petitioners for failure of
the private respondent to comply with the mandatory requirement of PD
1508. Since the dismissal of said cases was without prejudice, the Court
honestly believes that the questioned order has not attained finality at all.

WHEREFORE, premises considered, the petition is hereby DENIED for

lack of merit.Sdaamiso

SO ORDERED.[22]

The Regional Trial Court, likewise, denied petitioners Motion for Reconsideration[23] of
the aforementioned Decision for lack of merit.[24]

Hence, this Petition.

Petitioners raise the following questions of law:

1. Whether or not an order dismissing a case or action without prejudice

may attain finality if not appealed within the reglementary period, as in the
present case;

2. Whether or not the action or case that had been dismissed without
prejudice may be revived by motion after the order of dismissal had
become final and executory; and

3. Whether or not the court that had originally acquired jurisdiction of the
case that was dismissed without prejudice still has jurisdiction to act on
the motion to revive after the order of dismissal has become final and
executory.[25]

Petitioners contend that an order dismissing a case or action without prejudice may
attain finality if not appealed within the reglementary period. Hence, if no motion to
revive the case is filed within the reglementary fifteen-day period within which to appeal
or to file a motion for reconsideration of the courts order, the order of dismissal
becomes final and the case may only be revived by the filing of a new complaint or
information.[26] Petitioners further argue that after the order of dismissal of a case attains
finality, the court which issued the same loses jurisdiction thereon and, thus, does not
have the authority to act on any motion of the parties with respect to said case. [27]
On the other hand, private respondents submit that cases covered by the 1991 Revised
Rule on Summary Procedure such as the criminal cases against petitioners are not
covered by the rule regarding finality of decisions and orders under the Revised Rules
of Court. They insist that cases dismissed without prejudice for non-compliance with the
requirement of conciliation before theLupong Tagapamayapa or Pangkat ng
Tagapagkasundo of the barangay concerned may be revived summarily by the filing of
a motion to revive regardless of the number of days which has lapsed after the
dismissal of the case.[28]

Petitioners contentions are meritorious. Sdaad

A "final order" issued by a court has been defined as one which disposes of the subject
matter in its entirety or terminates a particular proceeding or action, leaving nothing else
to be done but to enforce by execution what has been determined by the court.[29] As
distinguished therefrom, an "interlocutory order" is one which does not dispose of a
case completely, but leaves something more to be adjudicated upon.[30]

This Court has previously held that an order dismissing a case without prejudice is a
final order[31] if no motion for reconsideration or appeal therefrom is timely filed.

In Olympia International vs. Court of Appeals,[32] we stated thus:

The dismissal without prejudice of a complaint does not however mean

that said dismissal order was any less final. Such order of dismissal is
complete in all details, and though without prejudice, nonetheless finally
disposed of the matter. It was not merely an interlocutory order but a final
disposition of the complaint.

The law grants an aggrieved party a period of fifteen (15) days from his receipt of the
courts decision or order disposing of the action or proceeding to appeal or move to
reconsider the same.[33]

After the lapse of the fifteen-day period, an order becomes final and executory and is
beyond the power or jurisdiction of the court which rendered it to further amend or
revoke.[34] A final judgment or order cannot be modified in any respect, even if the
modification sought is for the purpose of correcting an erroneous conclusion by the
court which rendered the same.[35]

After the order of dismissal of a case without prejudice has become final, and therefore
becomes outside the courts power to amend and modify, a party wishes to reinstate the
case has no other remedy but to file a new complaint.

This was explained in Ortigas & Company Limited Partnership vs. Velasco,[36] where we
ruled thus:Scsdaad
 The 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 Courts 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 filing of another complaintaccompanied, of
course, by the payment of the corresponding filing fees prescribed by law.

xxx

[S]ince theoretically every final disposition of an action does not attain

finality until after fifteen (15) days therefrom, and consequently within that
time the action still remains within the control of the Court, the plaintiff may
move and set aside his notice of dismissal and revive his action before
that period lapses. But after dismissal has become final after the lapse
of the fifteen-day reglementary period, the only way by which the
action may be resuscitated or "revived" is by the institution of a
subsequent action through the filing of another complaint and the
payment of fees prescribed by law. This is so because upon attainment
of finality of the dismissal through the lapse of said reglementary
period, the Court loses jurisdiction and control over it and can no
longer make a disposition in respect thereof inconsistent with such
dismissal.[37] (Emphasis supplied.)

Contrary to private respondents claim, the foregoing rule applies not only to civil cases
but to criminal cases as well. In Jaca vs. Blanco,[38] the Court defined a provisional
dismissal of a criminal case as a dismissal without prejudice to the reinstatement
thereof before the order of dismissal becomes final or to the subsequent filing of a new
information for the offense."[39] Supremax

Thus, the Regional Trial Court erred when it denied the petition for certiorari, injunction
and prohibition and ruled that the order of the municipal trial court, dated November 13,
1995 dismissing without prejudice the criminal cases against petitioners had not
attained finality and hence, could be reinstated by the mere filing of a motion to revive.

Equally erroneous is private respondents contention that the rules regarding finality of
judgments under the Revised Rules of Court[40] do not apply to cases covered by the
1991 Revised Rule on Summary Procedure. Private respondents claim that Section 18
of the 1991 Revised Rule on Summary Procedure allows the revival of cases which
were dismissed for failure to submit the same to conciliation at the barangay level, as
required under Section 412 in relation to Section 408 of the Local Government Code.
The said provision states:

Referral to Lupon. Cases requiring referral to the Lupon for conciliation

under the provisions of Presidential Decree No. 1508[41] where there is no
showing of compliance with such requirement, shall be dismissed without
 prejudice, and may be revived only after such requirement shall have
been complied with. This provision shall not apply to criminal cases where
the accused was arrested without a warrant.[42]

There is nothing in the aforecited provision which supports private respondents view.
Section 18 merely states that when a case covered by the 1991 Revised Rule on
Summary Procedure is dismissed without prejudice for non-referral of the issues to
the Lupon, the same may be revived only after the dispute subject of the dismissed
case is submitted to barangay conciliation as required under the Local Government
Code. There is no declaration to the effect that said case may be revived by mere
motion even after the fifteen-day period within which to appeal or to file a motion for
reconsideration has lapsed.

Moreover, the 1991 Revised Rule on Summary Procedure expressly provides that the
Rules of Court applies suppletorily to cases covered by the former:

Sec. 22. Applicability of the regular rules. The regular procedure

prescribed in the Rules of Court shall apply to the special cases herein
provided for in a suppletory capacity insofar as they are not inconsistent
therewith.[43]

A careful examination of Section 18 in relation to Section 22 of the 1991 Revised Rule

of Summary Procedure and Rule 40, Section 2 in relation to Rule 13, Sections 9 and
10,[44] and Rule 36, Section 2[45] of the 1997 Rules of Civil Procedure, as amended, leads
to no other conclusion than that the rules regarding finality of judgments also apply to
cases covered by the rules on summary procedure. Nothing in Section 18 of the 1991
Revised Rule on Summary Procedure conflicts with the prevailing rule that a judgment
or order which is not appealed or made subject of a motion for reconsideration within
the prescribed fifteen-day period attains finality.[46] Hence, the principle expressed in the
maximinterpretare et concordare legibus est optimus interpretandi, or that every statute
must be so construed and harmonized with other statutes as to form a uniform system
of jurisprudence [47] applies in interpreting both sets of Rules.

The rationale behind the doctrine of finality of judgments and orders, likewise, supports
our conclusion that said doctrine applies to cases covered by the 1991 Revised Rule on
Summary Procedure:

The doctrine of finality of judgments is grounded on fundamental considerations of

public policy and sound practice that at the risk of occasional error, the judgments of the
courts must become final at some definite date set by law.[48] Misjuris

It is but logical to infer that the foregoing principle also applies to cases subject to
summary procedure especially since the objective of the Rule governing the same is
precisely to settle these cases expeditiously.[49] To construe Section 18 thereof as
allowing the revival of dismissed cases by mere motion even after the lapse of the
period for appealing the same would prevent the courts from settling justiciable
controversies with finality,[50] thereby undermining the stability of our judicial system.

The Court also finds it necessary to correct the mistaken impression of petitioners and
the municipal trial court that the non-referral of a case for barangay conciliation as
required under the Local Government Code of 1991[51] may be raised in a motion to
dismiss even after the accused has been arraigned.

It is well-settled that the non-referral of a case for barangay conciliation when so

required under the law[52] is not jurisdictional in nature[53] and may therefore be deemed
waived if not raised seasonably in a motion to dismiss.[54] The Court notes that although
petitioners could have invoked the ground of prematurity of the causes of action against
them due to the failure to submit the dispute to Lupon prior to the filing of the cases as
soon as they received the complaints against them, petitioners raised the said ground
only after their arraignment.

However, while the trial court committed an error in dismissing the criminal cases
against petitioners on the ground that the same were not referred to the Lupon prior to
the filing thereof in court although said ground was raised by them belatedly, the said
order may no longer be revoked at present considering that the same had long become
final and executory, and as earlier stated, may no longer be annulled[55] by the Municipal
Trial Court, nor by the Regional Trial Court or this Court.[56] Scjuris

WHEREFORE, the petition is hereby GRANTED. The Decision of the Regional Trial
Court of Antipolo, Rizal, Branch II dated August 26, 1997 and its Order dated January
29, 1998 in SCA Case No. 96-4092 are hereby SET ASIDE and Criminal Cases Nos.
94-0829, 94-0830, 94-0831, 94-0832, 94-0833, 94-0836, 94-0838, 94-0839, 94-0841,
94-0843, 94-0847, 94-0848, 94-0850, 94-0854 and 94-0058 of the Municipal Trial Court
of Antipolo are ordered DISMISSED, without prejudice, pursuant to Sec. 18 of the 1991
Revised Rule on Summary Procedure.

SO ORDERED. KAPUNAN

Davide, Jr., C.J., (Chairman), Puno, and Ynares-Santiago, JJ., concur.

Pardo, J., on official business abroad.

[1]
SCA Case No. 96-4092.
[2]
Docketed as Criminal Case Nos. 94-0829, 94-0830, 94-0831, 94-0832, 94-0833, 94-0836, 94-0838, 94-0839, 94-
0841, 94-0843, 94-0847, 94-0848, 94-0850, 94-0854 and 94-0058 in the Municipal Trial Court of Antipolo Rizal,
Branch II.
[3]
Rollo, p. 91.
[4]
Motion to Dismiss, Id., at. 22-24.
[5]
Sections 412 and 408 of the Local Government Code of 1991 state thus:

Section 412.......Conciliation.-- (a) Pre-condition to Filing of Complaint in Court. -- No complaint, petition, action or
proceeding involving any matter within the authority of the lupon shall be filed or instituted directly in court or any
other government office for adjudication, unless there has been a confrontation between the parties before the lupon
chairman or the pangkat, and that no conciliation or settlement has been reached as certified by the lupon secretary
or pangkat secretary as attested to by the lupon or pangkat chairman or unless the settlement has been repudiated by
the parties thereto.

(b) Where Parties May Go Directly to Court.-- The parties may go directly to court in the following instances:

(1)......Where the accused is under detention;

(2)......Where a person has otherwise been deprived of personal liberty calling for habeas corpus
proceedings;

(3)......Where actions are coupled with provisional remedies such as preliminary injunction,
attachment, delivery of personal property, and support pendente lite; and

(4)......Where the action may otherwise be barred by the statute of limitations.

(c) Conciliation among members of indigenous cultural communities. -- The customs and traditions of indigenous
cultural communities shall be applied in settling disputes between members of the cultural communities.

Section 408. Subject Matter for Amicable Settlement; Exception Thereto. -- The lupon for each barangay shall have
authority to bring together the parties actually residing in the same city or municipality for amicable settlement of all
disputes except:

(a)......Where one party is the government, or any subdivision or instrumentality thereof;