This complaint arose from the dismissal of the complainants by the respondents.
They were
Remedy to correct errors of jurisdiction
Jamer v NLRC
DECISION
HERMOSISIMA, JR., J.:
The decision[1] of public respondent National Labor Relations Commission (NLRC)[2] in
NLRC NCR CA 002074-91,[3] promulgated on November 12 1993, is herein sought to be annulled
for having been rendered with grave abuse of discretion, it having reversed and set aside the
decision[4] of Labor Arbiter Pablo C. Espiritu, Jr. by dismissing the petitioners complaint for
illegal dismissal against private respondent Isetann Department Store (Isetann, for brevity). The
decretal part of the NLRC decision reads:
WHEREFORE, premises considered, the appealed decision is hereby set aside and new one
promulgated declaring that the dismissal from the service of complainants Corazon Jamer and
Cristina Amortizado was valid and for cause. Consequently, the order of reinstatement with
backwages and attorneys fees are likewise vacated and set aside. [5]
Although the Labor Arbiter[6] and the NLRC reached contrary conclusions, both agree on
the following facts:
Complainant, Corazon Jamer was employed on February 10, 1976 as a Cashier at Joy Mart, a
sister company of Isetann. After two (2) years, she was later on promoted to the position of
counter supervisor. She was transferred to Isetann, Carriedo Branch, as a money changer. In
1982 she was transferred to the Cubao Branch of Isetann, as a money changer, till her dismissal
on August 31, 1990.
Complainant Cristina Amortizado, on the other hand, was employed also at Joy Mart in May,
1977 as a sales clerk. In 1980 she was promoted to the position as counter cashier. Thereafter,
she was transferred to Young Un Department Store as an assistant to the money changer. Later
on, or in 1985, she transferred to Isetann, Cubao Branch where she worked as a Store Cashier
till her dismissal on August 31, 1990.
Both complainants were receiving a salary of P4,182.00 for eight (8) hours work at the time of
their dismissal.
Respondent Isetann Department Store on the other hand, is a corporation duly organized and
existing under laws of the Philippines and is engaged in retail trade and the department store
business. Individual respondent, John Go is the President/General (Manager) of respondent
Department Store.
both dismissed on August 31, 1990 on the alleged ground of dishonesty in their work as Store
Cashiers.
Complainants (sic) function as Store Cashiers is to accumulate, at the end of daily operations,
the cash sales receipts of the selling floor cash register clerks. At the close of business hours, all
the cash sales of the floor cash register clerks are turned over by them to the Store Cashiers,
complainants herein, together with the tally sheets prepared by the cash register clerks.
Thereafter, complainants will reconcile the cash sales with the tally sheets to determine
shortages or coverages(sic) and deposit the same with the bank depositor(sic) of respondents
company. Thereafter, the recorded transactions are forwarded to the main branch of respondents
company at Carriedo for counter-checking.
On July 16, 1990, complainants discovered a shortage of P15,353.78. It was complainant
Corazon Jamer who first discovered the shortage. In fact at first, she thought that it was merely
a P1,000.00 shortage but when she reconciled the cash receipts, from the cash register counters,
with the tally sheets and the actual money on hand, the shortage amounted to P15,353.78. She
informed her co-store cashier, complainant Cristina Amortizado, about the shortage. Cristina
Amortizado also reconciled and re-counted the sale previous to July 16, 1990 and she also
confirmed that there was a discrepancy or a shortage of P15,353.78.. They did not, (sic)
immediately report the shortage to management hoping to find the cause of the shortage but to
no avail they failed to reconcile the same. Hence, they had no other alternative but to report the
same to the management on July 17, 1990.
Complainants, together with another Store Cashier, Lutgarda Inducta, were asked to explain and
they submitted their respective written explanations for the shortage of P15,353.78. and
the P450.00 under deposit last July 14, 1990.
Respondents placed both complainants and their co-store cashier Lutgarda Inducta under
preventive suspension for the alleged shortages. Thereafter, respondents conducted an
administrative investigation. Finding the explanation of the complainants to be unsatisfactory,
respondent dismissed the complainants from the service on August 31, 1990. Aggrieved and not
satisfied with the decision of management terminating their services, complainant instituted this
present action on September 26, 1990 for illegal dismissal praying for reinstatement with
payment of backwages and other benefits. [7]
In justifying complainants dismissal from their employment, respondents alleged:
When the transactions for July 15, 1990 were being reconciled, a shortage of P15,353.78 was
discovered. Also uncovered was an under-deposit of P450.00 of cash receipts for July 14, 1990.
Considering that the foregoing deficits were attributable to herein appellees and to another store
cashier, Mrs. Lutgarda Inducta, who were the ones on duty those days respondent Isetanns
Human Resources Division Manager, Teresita A. Villanueva, issued letters (Exh. 1 and 5)
individually addressed to herein appellees and Mrs. Inducta requiring them to submit written
explanations in regard to their above malfeasance within 48 hours from receipt thereof. Pursuant
to said letters, they were likewise placed under preventive suspension.
Thereafter, the Committee o Discipline of appellant Isetann conducted a series of investigations
probing appellees and Mrs. Inductas aforestated shortages. In addition to the shortage
of P15,353.78(sic) and underdeposit of P450.00, said investigation also included the following
sums which appellees failed to turnover or account for:
a) P1,000.00- amount borrowed by Lutgarda Inducta from Corazon Jamer;
b) P 70.00- over replenishment of petty cash expenses incurred by Cristina Amortizado.
After the administrative investigation, the Committee on Discipline rendered its decision (Exhs.
3, 3-A, to 3-D) dated August 23, 1990 duly approved by the General Manager of respondent
Isetann, finding the appellees and Mrs. Inducta responsible for said shortages and consequently
requiring them to restitute the same to respondent Isetann. This Decision and the notices of
termination were sent by respondent Isetann to the appellees, and which the latter admittedly
received.
On the other hand, the complainants account of the factual antecedents that let (sic) to their
dismissal is as follows:
Aside from the foregoing persons, Alex Mejia had and was allowed by management to have
uncontrolled access to the said room including the vault. Ostensibly, the purpose was to assist in
the bringing in or taking out of coin bags, monies, etc.
There were therefore, at a minimum at least six (6) persons who could have had access to the
company funds. To ascribe liability to the store cashiers alone, in the absence of a clear proof of
any wrongdoing is not only unfair and discriminatory but is likewise illegal.
Parenthetically, and within the parameters of their assigned tasks, herein complainants could not
be faulted in any way for the said shortage as there is no showing that the loss occurred at the
time they were in control of the funds concerned.
Complainants do not dispute the fact that there appeared to be a shortage of P15.373.78(sic) for
the July 15, 1990 (a Sunday) sales and which were tallied and the loss discovered on the
following day, July 16, 1990. They however vehemently deny any culpability or participation in
any kind, directly or indirectly, in regard to the said loss or shortage. Given the kind of trust
reposed upon them by respondents for fourteen and thirteen years respectively they were not
about, although they could have done so before given the negligence and laxity of management
in regard to the control and handling of funds of the store, to break said trust.
At the time the persons who had access either to the vault the money and/or the keys aside from
herein complainants, were: 1) Lutgarda Inducta, also a store cashier on duty at the time; 2) the
SOM Mrs. Samonte, the supervisor in charge; 3) Alex Mejia, an employee assigned as utility
man; and 4) Boy Cabatuando.
There were (sic) three (3) keys to the money changers room, and these keys were assigned and
distributed to: a) master key is or was with the SOMs (Mrs. Samonte) room at the 3 rd floor of
the building; b) another key is or was in the possession of the keeper of the keys, i.e. Boy
Cabatuando; and c) the third and last key is any of the store cashiers depending on who is on
duty at the time.
Likewise, there were four (4) persons who were aware and knew of the vault combination.
These were the three store cashiers, i.e. herein complainants, Lutgarda Inducta and their SOM,
Mrs. Samonte.[8]
On July 23, 1991, Labor Arbiter Nieves V. de Castro, to whom the instant contoversy was
originally assigned, rendered a decision[9] in favor of herein petitioners, finding that petitioners
had been illegally dismissed, the dispositive portion of which reads:
WHEREFORE, respondents are hereby directed to reinstate complainants to service effective
August 1, 1991 with full backwages and without loss of seniority rights.
SO ORDERED.[10]
Expectedly, respondents Isetann and John Go appealed the aforesaid decision to the NLRC.
On January 31, 1992, the NLRC issued a resolution [11] remanding this case to the NLRC National
Capital Region Arbitrattion Branch for further proceedings in the following manner:
WHEREFORE, premises considered, the challenged decision is hereby SET ASIDE and
VACATED.
The entire records of this case is hereby remanded to the NLRC National Capital Region
Arbitration Branch for further proceedings.
Considering that the Labor Arbiter a quo rendered a decision in this case and in order to dispel
any suspicion of pre-judgment of this case, the Executive Labor Arbiter is hereby directed to
have this case re-raffled to another Labor Arbiter.
SO ORDERED.[12]
Consequently, the present case was then re-raffled to Labor Arbiter Pablo C. Espiritu, Jr.
After a full-blown trial, the said Labor Arbiter found for the petitioners and declared that there
was no justification, whether in fact or in law, for their dismissal. The decretal part of the
decision[13] dated March 31, 1993, states:
WHEREFORE, above premises considered, judgement(sic) is hereby rendered finding the
dismissal of complainants, Cristina Amortizado and Corazon Jamer to be illegal and
concomitantly, (r)espondents are hereby ordered to pay complainants, Corazon Jamer the
amount of P125,460.00 and Cristina Amortizado the amount of P125,460.00, representing full
backwages from the time of their dismissal (August 31, 1990) till actual or payroll reinstatement
at the option of the respondent (computed until promulgation only). Respondents are also
hereby further ordered to reinstate the complainants to their former position as Store Cashiers
without loss of seniority rights, privileges and benefits, failure to do so backwages shall
continue to run but in no case to exceed three (3) years.
Respondents are also ordered to pay complainants the amount of P25,092.00 representing 10%
attorneys fees based in the total judgement(sic) award of P250,920.00.
SO ORDERED.[14]
Dissatisfied over the decision of the Labor Arbiter which struck private respondents as
grossly contrary to the evidence presented, the herein private respondents once again appealed to
the NLRC. And, as earlier stated, the NLRC rendered the challenged decision [15] on November
12, 1993, vacating the decision of the Labor Arbiter and entering a new one dismissing the
petitioners complaint.
Hence, this petition wherein the main issue to be resolved is whether NLRC committed
grave abuse of discretion in finding that petitioners were validly dismissed on the ground of loss
of trust and confidence.
At the outset, the Court notes petitioners inexcusable failure to move for the reconsideration
of respondent NLRCs decision. Thus, the present petition suffers from a procedural defect that
warrants its outright dismissal. While in some exceptional cases we allowed the immediate
recourse to this Court, we find nothing herein that could warrant an exceptional treatment to this
petition which will justify the omission. This premature action of petitioners constitutes a fatal
infirmity as ruled in a long line of decisions,[16] most recently in the case of Building Care
Corporation vs. National Labor Relations Commission, et al.:[17]
the filing of such a motion is intended to afford public respondent an opportunity to correct any
actual or fancied error attributed to it by way of a re-examination of the legal and factual aspects
of the case. Petitioners inaction or negligence under the circumstances is tantamount to a
deprivation of the right and opportunity of the respondent Commission to cleanse itself of an
error unwittingly committed or to vindicate itself of an act unfairly imputed. xxx
xxx And for failure to avail of the correct remedy expressly provided by law, petitioner has
permitted the subject Resolution to become final and executory after the lapse of the ten day
period within which to file such motion for reconsideration.
Likewise, a motion for reconsideration is an adequate remedy;
hence certiorari proceedings,as in this case, will not prosper. [18] Rule 65, Section 1 of the Rules
of Civil Procedure, as amended, clearly provides that:
When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted
without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to
lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy
in the ordinary course of law, a person aggrieved thereby may file a verified petition in the
proper court, alleging the facts with certainty and praying that judgment be rendered annulling
or modifying the proceedings of such tribunal, board or officer, xxx
The unquestioned rule in this jurisdiction is that certiorari will lie only if there is no appeal
or any other plain, speedy and adequate remedy in the ordinary course of law against the acts of
respondent.[19] In the case at bench, the plain and adequate remedy referred to in Rule 65, Section
1, is a motion for reconsideration of the challenged decision and the resolution thereof, which was
expected to provide an adequate and a more speedy remedy than the present petition
for certiorari.
Petitioners asseverate that respondent NLRC committed a grave abuse of discretion when it
reversed the findings of facts of the Labor Arbiter.
We find said submissions untenable.
In asserting that there was a grave abuse of discretion, petitioners advert to alleged variances
in the factual findings of the Labor Arbiter and the respondent NLRC. This is inept and erroneous.
Firstly, errors of judgment, as distinguished from errors of jurisdiction, are not within the province
of a special civil action for certiorari.[20] Secondly, a careful reading of the records of this case
would readily show that there is any error by public respondent in its analysis of the facts and its
evaluation of the evidence, it is not of such a degree as may be stigmatized as a grave abuse of
discretion does not necessarily follow just because there is a reversal by the NLRC of the decision
of the Labor Arbiter. Neither does the mere variance in the evidentiary assessment of the NLRC
and that of the Labor Arbiter would, as a matter of course, so warrant another full review of the
facts. The NLRCs decision, so long as it is not bereft of support from the records, deserves respect
from the Court.[21]
We must once more reiterate our much repeated but not well-heeded rule that the special
civil action for certiorari is a remedy designed for the correction of errors of jurisdiction and not
errors of judgment. The rationale for this rule is simple. When a court exercises its jurisdiction
being exercised when the error is committed. If it did, every error committed by a court would
deprive it of its jurisdiction and every erroneous judgment would be a void judgment. This cannot
be allowed. The administration of justice would not countenance such a rule. Consequently, an
error of judgment that the court may commit in the exercise of its jurisdiction is not correctible
through the original special civil action of certiorari.[22]
On the merits, we find and so hold that substantial evidence exists to warrant the finding
that petitioners were validly dismissed for just cause and after observance of due process.
Under the Labor Code, as amended, the requirements for the lawful dismissal of an
employee by his employer are two-fold: the substantive and the procedural. Not only must the
dismissal be for a valid or authorized cause as provided by law (Articles 282, 283 and 284, of the
Labor Code, as amended), but the rudimentary requirements of due process, basic of which are
the opportunity to be heard and to defend himself, must be observed before an employee may be
dismissed.[23]
 With respect to the first requisite, Article 282 of the Labor Code, as amended, provides:
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;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or
any immediate member of his family or his duly authorized representative; and
(e) Other causes analogous to the foregoing. (Italics supplied)
In the instant case, we find no difficulty in agreeing with the findings of the public
respondent that the herein petitioners were guilty of acts of dishonesty by incurring several
occurrences of shortages in the amounts of P15,353.78, P1,000.00, P450.00 and P70.00 which
they failed to turnover and account for/and in behalf of respondent Isetann. Fittingly, the findings
of the NLRC are worth stressing at this point, to wit:
With regard to the several occurrences of shortages of the amounts
of P15,353.78, P1,000.00, P450.00 and P70.00 , the Labor Arbiter has failed to consider the fact
that complainants-appellees were accorded the chance to explain their side as to the shortages
and that they have utterly failed to do so providing basis for their valid dismissal. This fact has
been established by the respondents-appellants in the findings of the Committee on Discipline
on Exhibits 3, 3-A to 3-D, as follows:
a) On the Shortage of P15,353.78:
The 3 respondents, Lutgarda Inducta, Cristy Amortizado and Corazon Jamer denied any
involvement in the loss of P15,353.78. Although the money, is under their responsibility, not
one of them gave any explanation about the shortage or loss.
b) On the amount of P1,000.00 borrowed by Inducta from Jamer:
On July 18, 1990, Lutgarda Inducta borrowed money from respondents (sic) Jamer amounting
to P1,000.00 to cover her shortage.
Ms. Jamer said that Ms. Inducta paid the amount on that day. But Ms. Jamer did not report the
shortage.
c) On the Underdeposit of Cash = P450.00.
The computation of Ms. Amortizado s sales collections last July 14, 1990 resulted to an overage
of P350.00. Amortizado turned over the amount of P350.00, to cover up a shortage incurred by
her and Mrs. Inducta.
Jamer used the money given to her by Amortizado (P350.00), and borrowed (P150.00) from the
change fund to cover the total shortage amounting to P500.00 which she had then.
Jamer cannot trace how the shortage came about. Inducta and Jamer shouldered the total
shortage amounting to P500.00, P330.00 for Jamer and P200.00 for Inducta. Jamer claimed that
she returned the P350.00 in the box. However, the claim of respondent was further verified from
the payroll section which revealed that a value slip was issued last July 1990. Jamer and Inducta
were charged for P200.00 each. A value slip was issued last August 10, 1990 charging P100.00
to Amortizado.
Jamer admitted that she failed to inform the Audit Staff regarding the P350.00 overage which
she received from Amortizado. A(s) per report of Ms. Agnes Gonzales dated 26 July 1990, there
was a total under deposit of cash amounting to P450.00.
Total cash admitted P65,428.05
(cash in drawer)
Total cash remitted P64,978.05
(per tally sheet) _________
Overage P 450.00
d) On the P70.00 Replenishment of Petty Cash Expenses:
During the 3rd Administrative hearing, the Committee informed Ms. Amortizado regarding the
over replenishment of petty cash expenses as revealed by the Finance Manager last August 10,
1990.
Mrs. Amortizado readily admitted and explained that she forgot to inform Mrs. Inducta
regarding the P70.00. She admitted her failure to correct the amount from P100.00 to P30.00
(total expenses spent for the taxi fair).
She added that she previously incurred a shortage amounting to P100.00. Then she used
the P70.00 to cover for the shortage. The remaining balance of P30.00 was paid by Amortizado.
Amortizado informed the Committee that she is willing to refund the P70.00 shortage.
(Underscoring supplied).[24]
From the foregoing premises, it is crystal clear that the failure of petitioners to report the
aforequoted shortages and overages to management as soon as they arose resulted in the breach
of the fiduciary trust reposed in them by respondent company, thereby causing the latter to lose
confidence in them. This warrants their dismissal. Moreover, it must be pointed out that herein
petitioners have in fact admitted the underpayment of P450.00 not only in their Sinumpaang
Salaysay but also during the hearing conducted before Labor Arbiter Pablo C. Espiritu.[25] And,
the record shows that the petitioners in fact made a last ditch effort to conceal the same. Were it
not for its timely discovery by private respondents trusted employees, the incident could not have
been discovered at all. Furthermore, it is worth stressing at this juncture that the petitioners have
also expressly admitted the shortage of P15,353.78a substantial amountin their respective sworn
statements, and they were not able to satisfactorily explain such shortage. [26] The Court is
convinced that these particular acts or omissions provided Isetann with enough basis to forfeit its
trust and confidence over herein petitioners.
The NLRC, therefore, did not act with grave abuse of discretion in declaring that petitioners
were legally dismissed from employment. The failure of petitioners to report to management the
aforementioned irregularities constitute fraud or willful breach of the trust reposed in them by
their employer or duly authorized representative one of the just causes in terminating employment
as provided for by paragraph (c), Article 282 of the Labor Code, as amended.
In other words, petitioners admissions in their sworn statements, together with the other
documentary evidences on record, constituted breach of trust on their part which justifies their
dismissal. Private respondents Isetann Department Store and Mr. John Go cannot be compelled
to retain employees who are clearly guilty of malfeasance as their continued employment will be
prejudicial to the formers best interest.[27] The law, I protecting the rights of the employees,
authorizes neither oppression nor self-destruction of the employer.[28]
The cause of social justice is not served by upholding the interest of petitioners in disregard
of the right of private respondents. Social justice ceases to be an effective instrument for the
equalization of the social and economic forces by the State when it is used to shield
wrongdoing.[29] While it is true that compassion and human consideration should guide the
disposition of cases involving termination of employment since it affects ones source or means
of livelihood, it should not be overlooked that the benefits accorded to labor do not include
compelling an employer to retain the services of an employee who has been shown to be a gross
liability to the employer. It should be made clear that when the law tilts the scale of justice in
favor of labor, it is but a recognition of the inherent economic inequality between labor and
management. The intent is to balance the scale of justice; to put up the two parties on relatively
equal positions. There may be cases where the circumstances warrant favoring labor over the
interests of management but never should the scale be so tilted if the result is an injustice to the
employer, Justicia remini regarda est (Justice is to be denied to none).[30]
Thus, this Court has held time and again, in a number of decisions, [31] that:
Loss of confidence is a valid ground for dismissing an employee and proof beyond reasonable
doubt of the employees misconduct is not required to dismiss him on this charge. It is sufficient
if there is some basis for such loss of confidence or if the employer has reasonable ground to
believe or to entertain the moral conviction that the employee concerned is responsible for the
misconduct and that the nature of his participation therein rendered him absolutely unworthy of
the trust and confidence demanded by his position. [32]
Parenthetically, the fact that petitioners Jamer and Amortizado had worked for respondent
company for fourteen (14) and thirteen (13) years, respectively, should be taken against them.
The infractions that they committed, notwithstanding their long years of service with the
company, reflects a regrettable lack of loyaltyloyalty that they should have shouldered instead of
betrayed. If the petitioners length of service is to be regarded as a justifying circumstance in
moderating the dismissal, it will actually become a prize for disloyalty, perverting the meaning
of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables. [33]
Petitioners also maintain that the NLRC acted with grave abuse of discretion when it failed
to consider the fact that, other than petitioners themselves, there were four (4) other persons who
had access to the company vaults, and hence, could have been responsible for the aforesaid cash
shortages imputed to them. They aver therefore, that there was a serious flaw and laxity in the
supervision and handling of company funds by respondent Isetann.[34]
We also find this contention devoid of merit.
First, it must pointed out that the petitioners remark that there was laxity in the accounting
procedures of the company is a matter addressed to the respondent employer. However, this does
not excuse dishonesty of employees and should not in any case hamper the right of the employer
to terminate the employment of petitioners on the ground of loss of confidence or breach of trust.
Precisely, the accounting procedure which called for improvements was based primarily on trust
and confidence.[35]
Secondly, it must be noted that the herein petitioners were store cashiers and as such, a
special and unique employment relationship exists between them and the respondent company.
More than most key positions, that of cashier calls for the utmost trust and confidence because
their primary function involves basically the handling of a highly essential property of the
respondent employer --- the sales and revenues of the store. Employers are consequently given
wider latitude of discretion in terminating the employment of managerial employees or other
personnel occupying positions of responsibility, such as in the instant case, than in the case of
ordinary rank-and-file employees, whose termination on the basis of these same grounds requires
proof of involvement in the malfeasance in question. Mere uncorroborated assertions and
accusations by the employer will not suffice.[36] In that respect , we quote with approval the
observations of the NLRC:
To expound further, for the position of a cashier, the honesty and integrity of the persons
assuming said position are the primary considerations for the nature of her work requires that
her actuations should be beyond suspicion as they are accorded the responsibility of handling
money and whatever they would do to such property of the employer largely depend on their
trustworthiness. Hence, the right of the employer to dismiss a cashier guilty of breach and trust
and confidence should be recognized. In a case decided by the Supreme Court it has been ruled
that:
Honesty and integrity are the primary considerations in petitioners position. The nature of his
work requires that the actuations should be beyond suspicion, our empathy with the cause of
labor should not blind us to the rights of management. As we have held, this Court should help
stamp out, rather than tolerate, the commission of irregular acts whenever these are noted.
Malpractices should not be allowed to continue but should be rebuked. (Del Carmen vs. NLRC,
203 SCRA 245)[37]
Finally, we are convinced that the NLRC did not commit grave abuse of discretion in
evaluating the evidence. Petitioners merely denied the charges against them. Denials are weak
forms of defenses, particularly when they are not substantiated by clear and convincing
evidence.[38] The petitioners failure to satisfactorily explain the cash shortages, for which sums
they are responsible, given their respective positions in respondent company, is enough reason to
warrant their dismissal on the ground of loss of confidence. They cannot place the burden on
somebody else given the factual circumstances of this case. As succinctly put by the NLRC:
dismissal is sought and, second, a subsequent notice informing the employee of the decision to
dismiss him.[41]
In accordance with this requirement, petitioners were given the required notices, on August
2, 1990 and then on August 23, 1990. The Court finds that petitioners were accorded due process
before they were dismissed on August 31, 1990. It is a well-established rule that the essence of
due process is simply an opportunity to be heard, or as applied to administrative proceedings, an
opportunity to explain ones side or an opportunity to seek a reconsideration of the action or ruling
complained of.[42] It is evident from the records , that herein petitioners were given all the
opportunities to defend themselves and air their side before the Committee on Discipline, having
been notified by respondent Isetanns Human Resources Division Manager, Teresita A.
Villanueva, on August 2, 1990 through letters individually sent to them. However, offered no
explanation or theory which could account for money lost in their possession. Hence, the company
had no other alternative but to terminate their employment. As we elucidated in the case of
Philippine Savings Bank vs. National Labor Relations Commission,[43] to wit:

That there were other persons who had access to the vaults of the appellant company implying
that these other persons could have been responsible for the loss of the P15,353.78 is of no
moment inasmuch as the appellees were the ones who took first custody of the possession of
said collections. As store cashiers, it is expected of them to exercise ordinary prudence to count
the collection and record the same in the tally sheet before depositing to said vault to avoid a
slightest suspicion of having pocketed part of it should a shortage arise. They did not exert
efforts to exercise such prudence demanded of their positions hence, appellants should not be
blamed when they were called for an investigation when said shortage was discovered.
xxx the requirement of due process is satisfied when a fair and reasonable opportunity to
explain his side of the controversy is afforded the party. A formal or trial-type hearing is not at
all times and in all circumstances essential, especially when the employee chooses not to speak,
WHEREFORE, the assailed decision of the National Labor Relations Commission in
NLRC NCR CA 002074-91 is hereby AFFIRMED. The petition is DISMISSED for lack of merit.
SO ORDERED.

xxx xxx xxx

That the occurrence of shortages is merely an isolated one and therefore should not be taken
against the complainant-appellees as a ground for loss of trust and confidence that would cause
their termination cannot be given any credence. The shortages having been established and
admitted has provided the employer sufficient basis for loss of confidence and whether such
occurrence is merely an isolated one or has been repeatedly committed is no longer material.
The bone of contention here is whether there is some basis for such loss of trust and confidence
and if the employer has reasonable ground to believe or to entertain the moral conviction that
the employee concerned is responsible for the misconduct which in the instant case has been
established.[39]

We reiterate the rule that in cases of dismissal for breach of trust and confidence, proof
beyond reasonable doubt of the employees misconduct is not required. It is sufficient that the
employer had reasonable ground to believe that the employees are responsible for the misconduct
which renders him unworthy of the trust and confidence demanded by their position. [40] In the
case at hand, it cannot be doubted that respondents succeeded in discharging its burden of proof.
As regards to the second requisite, the law requires that the employer must furnish the
worker sought to be dismissed with two (2) written notices before termination may be validly
effected: first, a notice apprising the employee of the particular acts or omission for which his

Questions of fact cannot be raised
Day v RTC Zamboanga
DECISION
PARAS, J.:
This is a petition to review the decision of the Regional Trial Court of Zamboanga City, Branch
XIII dated July 8, 1986 setting aside the decision of the Municipal Trial Court of Zamboanga
City, Branch II in Civil Case No. 3717 (169-11).
The following, in brief, are the facts of the case:chanrob1es virtual 1aw library
Herein petitioner Victorino Day is the registered owner of a parcel of land covered by Original
Certificate of Title No. P-2667 and situated at Tomas Claudio St., Zamboanga City. Private
respondent Go Chu is the owner of a building constructed on the said lot occupying an area of
101 square meters.chanrobles lawlibrary : rednad
Private respondent was asked by petitioner to peacefully vacate and remove that portion of the
former’s building standing on the latter’s lot. Due to private respondent’s refusal to vacate the
premises, on April 17, 1982, petitioner instituted a formal complaint against respondent with the
Office of the Barangay Chairman, Zone I, Zamboanga City. As no amicable settlement could be
reached in the case, the Barangay Chairman, on April 20, 1982, issued a certification that
conciliation of the dispute at the barangay level had failed. (MTC Decision, Annex "A",
Petition, pp. 1-2; Rollo, p. 25.)
The dispute was continuously discussed by the parties through 1982, 1983, and 1984. On
October 16, 1984, petitioner agreed to accept P1,000.00 from private respondent as rental for
the use of his lot from 1979 to December 1984. As petitioner had received the P1,000.00 as
compensation for respondent’s use of his land, respondent claimed the existence of a lease
contract between them. Respondent Go Chu, however, failed to prove the existence of a formal
or even verbal contract of lease.
On January 15, 1985, petitioner again made another demand on private respondent to remove
the building. Because of private respondent’s adamant and continued refusal to vacate the
disputed lot, petitioner filed on March 25, 1985 an action for unlawful detainer with application
for a writ of preliminary mandatory injunction. Apparently, petitioner Day did not use the
former Barangay Certification in commencing the said suit against private Respondent. On
April 15, 1986, the trial court rendered a decision in favor of petitioner Day, the dispositive
portion reading as follows:jgc:chanrobles.com.ph
"WHEREFORE, in view of the foregoing findings of facts judgment is hereby rendered in favor
of the plaintiff and against the defendant to remove that portion of his building which stands on
the 101 square meters over plaintiffs property; to pay plaintiff the amount of P950.00 monthly
compensation from January 1986 until defendant vacates the premises; to pay attorney’s fees in
the sum of P5,000.00 and to pay the costs of the action. Defendant’s compulsory counterclaims
are hereby ordered dismissed." (Rollo, p. 27)
On April 23, 1986, without having first filed a motion for reconsideration, private respondent
Go Chu filed an original action for certiorari with respondent court, against Judge Cabato and
petitioner Victorino Day. Pending hearing of the application for preliminary injunction,
respondent court issued a temporary restraining order in the case.
On May 12, 1986, petitioner filed his Answer and Opposition to the Petition, to which private
respondent filed a reply.
At the hearing of the application for preliminary injunction, the parties waived further oral
arguments and submitted the case based on their pleadings and documents.chanrobles
virtualawlibrary chanrobles.com:chanrobles.com.ph
On May 27, 1986, respondent court issued an order resolving all the matters and issues in the
petition in favor of herein petitioner Day, that the petition on its main is "lacking in merit except
that there are still certain matters which the respondent court would like to resolve after hearing
thereon." (Rollo, p. 3). The application for preliminary injunction was likewise denied and the
hearing of the main petition was set on June 24, 1986. At the said hearing, respondent court
gave the parties opportunity to adduce additional arguments on the merits of the case. They,
however, submitted the case for decision without further arguments, relying therefore on the
pleadings and documents on record.
On July 8, 1986, however, respondent court issued another order granting the petition
for certiorari and setting aside the decision of Judge Cabato of the Municipal Trial Court. In
connection therewith, the parties were directed to submit their dispute before the Lupong
Tagapayapa pursuant to the requirements of PD 1508. Petitioner’s motion for reconsideration
was denied on June 25, 1987.
Hence, this petition.
The following issues are presented for the court’s determination:chanrob1es virtual 1aw library
1) Whether or not the respondent court may modify or reverse its own order (of May 27, 1986)
after the lapse of 15 days from its issuance;
2) Whether or not B.P. 129 allows the plaintiff in an unlawful detainer case to apply for a writ
of preliminary injunction;
3) Whether or not prior conciliation proceedings pursuant to P.D. 1508 is applicable to
petitioner’s suit in the Municipal Trial Court;
4) Whether or not respondent court may entertain the petition for review on certiorari when the
proper remedy is ordinary appeal;
5) Whether or not respondent court, in a petition for certiorari, may entertain procedural
questions or questions of facts or substance already decided by the lower court; and
6) Whether or not respondent court may grant a Writ of Certiorari on grounds other than those
specified under Section 1, Rule 65 of the Rules of Court.
On the first issue, petitioner maintains that the respondent court has no jurisdiction to reverse its
own order after the lapse of 15 days from its issuance because the May 27, 1986 order was a
final order, all issues in the main petition having been resolved therein. Said controversial order
reads as follows:chanrobles law library
"Although the primary objective of this order is the determination of whether or not to issue a
writ of preliminary injunction in the instant case, yet in the consideration thereof, the Court
finds the main petition for certiorari as it appears on the pleadings to be LACKING IN MERIT
. Hence, it follows that where the petitioner is not entitled to the primary relief demanded, he
cannot likewise be entitled to the ancillary remedy of injunction, because injunction is not to
protect contingent or future right or enforce an abstract right (EMILLA VS. RADO, 23 SCRA
1983) or to protect a right not in esse. (DIZON VS. YATCO, 13 SCRA 167). However, there
are STILL CERTAIN MATTERS in the main petition that can only be completely resolved
after a hearing thereon." (Emphasis ours) And the Petition was set for hearing on June 24,
1986." (Rollo, p. 4-A)
According to petitioner, since the respondent court resolved no new or other matter in its July 8,
1986 order, the May 27, 1986 order should be considered as already a final one insofar as the
issues resolved therein are concerned. To quote the petitioner, "this phrase ‘certain matters’
referred to by the respondent court did not touch or dwell on ‘certain matters’ not yet passed
upon by it, but reversed itself on the same matters already resolved by it earlier after the lapse of
the 15-day period without any motion for reconsideration ever asked by herein private
respondent Go Chu." (Petition, p. 4)
Private respondent, on the other hand argues that the order of May 27, 1986 was merely an
interlocutory order that did not finally dispose of the action and that the dispositive portion
thereof dealt only with the preliminary injunction incident; that the denial of the issuance of the
writ of preliminary injunction and the setting of further hearing on the main petition was the
highlight of the said order and that since the order was interlocutory in nature, nothing
precluded respondent judge from further hearing the case after the issuance of the May 27, 1986
order and deciding it on its merits on July 8, 1986.
We find the contention of the petitioner meritorious. In the case of de Ocampo v. Republic, L-
19533, Oct. 31, 1963, 9 SCRA 440, this Court said. "The test to ascertain whether an order is
interlocutory or final is: does it leave something to be done in the court with respect to the
merits of the case? If it does, it is interlocutory; if it does not, it is final." In the instant case, it is
evident that the respondent court resolved no new or other matter in the order of July 8, 1986.
Such being the case, it necessarily follows that the order of May 27, 1986 should be deemed as a
final order in so far as the issues resolved therein are concerned. An order which decides an
issue or issues in a complaint is final and appealable, although the other issue or issues have not
been resolved, if the latter issues are distinct and separate from the others. Thus, the respondent
court was without jurisdiction to modify or reverse the earlier order after the expiration of
fifteen (15) days from and after receipt thereof by the parties, considering that there was no
motion for reconsideration filed by then private respondent Go Chu.
As regards the second issue, We agree with petitioner that Section 33 of B.P. 129 allows the
plaintiff in an unlawful detainer action to apply for a writ of preliminary injunction. With the
advent of B.P. 129, Art. 539 of the New Civil Code, Sec. 88 of the Judiciary Act of 1948, and
Sec. 3, Rule 70 of the Rules of Court have been substantially modified. B.P. 129 provides:
"provided the main action is within its jurisdiction, an inferior court can appoint a receiver and it
has jurisdiction to issue a writ of preliminary injunction in either forcible entry or unlawful
detainer cases." (Regalado, Remedial Law Compendium, Second Revised Edition, p. 33).
"Under the present law, an inferior court has jurisdiction to grant provisional remedies in proper
cases. These proper cases would be:chanrob1es virtual 1aw library
1) Preliminary attachment under Rule 57, provided the principal action is within its jurisdiction
such as an action for recovery of personal property valued at not more than P20,000.00; an
action for recovery of a sum of money not exceeding P20,000.00; an action of forcible entry and
unlawful detainer.
2) Preliminary injunction under Rule 58 in both forcible entry and unlawful detainer also in
cases mentioned in the preceding paragraph." (Dean Jose Y. Feria, Phil. Legal Studies, Series
No. 1, the Judiciary Reorganization Act of 1980, 1981 edition, pp. 43-44.)
The third issue centers on the applicability of prior conciliation proceedings pursuant to P.D.
1508, section 6 of which reads as follows:jgc:chanrobles.com.ph
"Sec. 6. Conciliation, pre-condition to filing of complaint. — No complaint, petition, action or
proceeding involving any matter within the authority of the Lupon as provided in Sec. 2 hereof
shall be filed or instituted in court or any other government office for adjudication unless there
has been a confrontation of the parties before the Lupon Chairman or the Pangkat and no
conciliation or settlement has been reached as certified by the Lupon Secretary or the Pangkat
Secretary, attested by the Lupon or Pangkat Chairman, or unless the settlement has been
repudiated. However, the parties may go directly to court in the following cases:chanrob1es
virtual 1aw library
(1) where the accused is under detention;
(2) where a person has otherwise been deprived of personal liberty calling for habeas
corpusproceedings;
(3) actions 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.
It is clear from the foregoing that prior conciliation proceedings as mandated by P.D. 1508 were
inapplicable to the petitioner’s suit before the Municipal Trial Court of Zamboanga City, the
action being for ejectment with application for a writ of preliminary mandatory injunction. P.D.
1508 provides that an action "coupled with provisional remedies such as preliminary
injunction," etc. does not require conciliation proceedings as a pre-condition for filing an action
in court. The case of petitioner being an exception to the requirement of prior conciliation by
P.D. 1508, it was not necessary for petitioner to first secure the necessary certification to file
action from the proper barangay court. Even assuming that petitioner’s complaint for ejectment
in the Municipal Trial Court did not fall within the exceptions enumerated in Sec. 6 of P.D.
1508, the lower court in its decision ruled that the April 1982 certification to file action issued
by the proper Barangay Court was sufficient compliance with P.D. 1508.
As to the fourth issue, private respondent is of the firm belief that the action he filed before the
respondent Regional Trial Court was both an original action for certiorari and a petition
for certiorari as a mode of appeal. We disagree. Applying Sec. 22 of B.P. 129 (governing law in
the matter of appeals from the inferior courts to the Regional Trial Courts), decisions of inferior
courts may be elevated to the Regional Trial Court only by ordinary appeal, that is, by filing a
Notice of Appeal with the inferior court. The said proviso does not admit of any other mode of
elevating decisions of inferior courts to the Regional Trial Court presumably to carry out the
purpose of B.P. 129 which is to simplify judicial procedure to effect a speedy administration of
justice.chanrobles.com.ph : virtual law library
Anent the fifth issue, We hold that respondent court has no jurisdiction in a certiorari case to
entertain procedural questions or questions of facts or substance already passed upon by the
lower court. The barangay certificate of 1982 was admitted and found to be sufficient by the
Municipal Trial Court, Branch II, Zamboanga City, after considering the circumstances
surrounding its issuance. This is a procedural question or a question of fact which cannot be
raised or corrected in a certiorari case, but should be assigned as error and reviewed in the
appeal properly taken from the decision rendered by the trial court on the merits of the case.
(Lamagan v. de la Cruz, 40 SCRA 101). It should be remembered that except for the lower
court’s admission in evidence of the Barangay Certification of 1982 and the said court’s
appreciations of the said Certification as sufficient compliance with P.D. 1508, the respondent
court’s order (RTC), which is herein sought to be nullified, resolved all the matters raised by
private respondent in his petition, against the latter. Admissibility of evidence is a matter that is
addressed to the sound discretion of the trial court (the lower court in this case). Such being the
case, no potent reason existed to justify respondent court’s substitution of the lower court’s
judgment with its own judgment.
"Errors in the appreciation of evidence may not be reviewed by certiorari because they do not
involve any jurisdictional question." (Mujer v. CFI of Laguna, 35 O.G. 1384; Abig v.
Constantino, L-12460, May 31, 1961)
Further, in an original action for certiorari, questions of fact cannot be raised much less passed
upon by the respondent court. Thus, it has been ruled that:jgc:chanrobles.com.ph
"Questions of fact cannot be raised in an original action for certiorari. Only established or
admitted facts can be considered." (Rubio v. Reyes, Et Al., L-24581, May 27, 1968)
It is therefore clear that respondent court erred in reversing the lower court’s findings regarding
the sufficiency of the Barangay Certificate of 1982. It was an error for the respondent court to
rule upon a question of fact or procedural question already decided by the lower court.
Finally, the question on whether or not the respondent court can grant a writ of certiorari on
grounds other than those specified under Sec. 1, Rule 65 of the Rules of Court, Our answer is in
the negative.
In an original action for certiorari under Sec. 1, Rule 65 of the Rules of Court, the grounds for
the issuance of the Writ of Certiorari are as follows, to wit:chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph
(a) Lack of jurisdiction;
(b) Grave abuse of discretion; and
(c) When the court acts without or in excess of jurisdiction.
We have consistently adhered to the principle that only errors of jurisdiction are correctible
by certiorari. As early as in the case of Herrera v. Barreto, 25 Phil. 245, 271, the Supreme Court
ruled: "The office of the Writ of Certiorari has been reduced to the correction of defects of
jurisdiction solely and cannot legally be used for any other purpose."cralaw virtua1aw library
Clearly, the only grounds which may serve as the basis for the respondent court to raise the writ
of certiorari are lack of jurisdiction or grave abuse of discretion by the inferior court or that the
said inferior court acted without or in excess of jurisdiction in its appreciation of the barangay
certification as constituting sufficient compliance with P.D. 1508.
In the ejectment suit filed by petitioner against private respondent, the lower court undoubtedly
acquired jurisdiction over the subject matter and over the person of then defendant (now private
respondent) by the filing of the complaint and service of summons upon then defendant (now
private respondent) and the filing by the latter of his answer. Thus, it cannot be said that the
lower court had no jurisdiction to render the decision set aside by respondent court. Assuming
that the lower court committed a mistake on the merits of the case, it was in the exercise of such
jurisdiction. The error, if at all, is at most one of judgment and not of jurisdiction, which cannot
be the object of a petition for certiorari. The proper remedy in such case was appeal. Errors in
the application of the law and the appreciation of evidence committed by a court after it has
acquired jurisdiction over a case, are correctible only by appeal (So Chu v. Nepomuceno, 29
Phil. 208; Valencia v. Victoriano, 50 O.G. 5815, Dec. 1954 (CA) citing Herrera v. Barreto, Et
Al., 26 Phil. 245).chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph
Neither can it be said that the lower court committed a grave abuse of discretion or exceeded its
jurisdiction when it appreciated the barangay certification as sufficient compliance with P.D.
1508. In the petition for certiorari filed by private respondent before the respondent court, he
did not allege that the lower court’s decision was outside or in excess of its jurisdiction, or was
issued in grave abuse of discretion. Private respondent merely alleged that the lower court
"erroneously" appreciated facts and evidence, issued interlocutory orders, and appreciated the
issues. He also challenged the soundness of the decision. These do not constitute excess of
jurisdiction or grave abuse of discretion. It must be remembered that there is "excess of
jurisdiction" where the court has jurisdiction but has transcended the same or acted without any
statutory authority. (Soriano v. del Rosario, 55 Phil. 924). There is "grave abuse of discretion"
where there is a capricious and whimsical exercise of judgment amounting to lack of
jurisdiction or where the power is exercised in an arbitrary and despotic manner by reasons of
passion or personal hostility, and it is so patent and gross as to amount to an invasion of positive
duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.
(Tavera-Luna, Inc. v. Nable, 67 Phil. 341) We find no such grave abuse of discretion committed
by the lower court in appreciating the barangay certification to be sufficient compliance with
P.D. 1508. In fact, the respondent court categorically ruled that there was no grave abuse of
discretion or excess of jurisdiction on the part of the lower court when it held
that:jgc:chanrobles.com.ph

"The foregoing recital and discussions of each particular questioned act of the respondent judge
would plainly show that no grave abuse of discretion has been committed by him. If any, they
could have been assigned as errors in an ordinary appeal, which to the mind of the Court should
have been the remedy resorted to by the herein petitioner." (Paragraph 2, Page 5 of the Order of
the Respondent Court dated May 27, 1986.) (Rollo, p. 142)

WHEREFORE, finding merit in the appeal of petitioner, the assailed order of the respondent
court is hereby SET ASIDE and the order of the Municipal Trial Court of Zamboanga City,
Branch II in Civil Case No. 3717 (169-11) is hereby REINSTATED.

SO ORDERED.

Only issue involved is jurisdiction, either want of or excess thereof
Gerardo v De la Pena
DECISION
PARAS, J.:
This is a petition for Certiorari, prohibition and mandamus seeking to reverse and set aside the
order 1 dated August 13, 1982 of the then Court of First Instance of Ilocos Norte and Laoag City
which denied petitioners' motion for reconsideration of the resolution dated July 26, 1982 of the
said court which dismissed with prejudice Civil Case No. 7590 on the ground of res judicata.
The properties involved in the instant case are Lots 26022, 26158 and 9525 of Laoag Cadastre
(Rollo, p. 13) containing an area of 34,478 square meters of agricultural lands and 722 square
meters of residential land (Ibid., p. 5).chanrobles virtual law library
The original owner of said properties was Angel Gerardo, married to Andrea Tungpalan who
predeceased him; that he declared said properties for taxation purposes as early as 1921; that out
of the marriage, the following children were born, namely Filomina, Berta, Santiago and Delfina,
all surnamed Gerardo; that Filomina was survived by her children, Policarpo and Basilio, both
surnamed Batacan (private respondents herein); that Berta was survived by her children, Isabel,
Irineo, Eduardo, Dionicio, Dominga and Herminio, all surnamed Bangloy (private respondents
herein); that Santiago was survived by his children Vicente, Valentina, Cornelio, Faustino,
Benjamin, Angel and Constante, all surnamed Gerardo (petitioners herein). (Ibid., p. 13)
The record further reveals that before the cadastral hearing involving the properties in question
could commence, Angel Gerardo, father of Santiago Gerardo who in turn was the father of herein
petitioners, died. Subsequently, Santiago Gerardo filed the corresponding answers for the three
(3) lots in question. It was alleged in said answers that he (Santiago) was the heir of Angel Gerardo
and that said three (3) lots were being claimed by him as his inheritance from his late father, Angel
Gerardo (Ibid., p. 14).
After hearing, Lots 26022 and 26158 were registered in the name of Santiago Gerardo and OCT
No. 15059 was correspondingly issued in the latter's name, and so with OCT No. 9801 covering
Lot 9525 (Ibid.)
About sixteen (16) years later, or on April 28, 1960; private respondents instituted an action for
ownership, partition and accounting against herein petitioners in the then Court of First Instance
of Ilocos Norte, which was docketed as Civil Case No. 3191-11, praying, among others, for the
cancellation of OCT Nos. 15059 and 9801 (Ibid., pp. 14, 26)
On February 18, 1964, the lower court rendered judgment in favor of private respondents and
against herein petitioners, declaring all the former and the latter as legal heirs of the late Angel
Gerardo and co-owners of Lots 26022, 26158 and 9525 (Ibid., pp. 14, 27).
Petitioners elevated the case to the Court of Appeals, which dismissed the same in a resolution
dated September 21, 1965 (Ibid., p. 28). Consequently, the judgment in Civil Case No. 3191-11
became final and executory on October 11, 1965 (Ibid., p. 15).
Upon motion of herein private respondents, on January 31, 1966, a writ of execution was issued
and the same was duly served as per sheriff's return dated February 12, 1966, placing private
respondents in possession of their respective portions or shares in the properties in question (Ibid.,
p. 28).
Again, upon motion of herein private respondents, an alias writ of execution dated April 6, 1970
was issued by the lower court for the collection of damages and the costs of suit from herein
petitioners. Accordingly, levy on execution was made on the rights, shares, interest and
participation of herein petitioners in question. Thereafter, said shares, interest and participation
of herein petitioners were sold at public auction to a certain Luis Antonio. The certificate of sale
covering said properties were then registered in the Office of the Register of Deeds of Ilocos
Norte on March 16, 1971 (Ibid., pp. 28-29).
Several years later, or on March 18, 1982, petitioners herein filed a complaint as pauper-litigants
for reconveyance of properties, annulment of judgment and damages against private respondents
in the lower court, which was docketed as Civil Case No. 7590 (Ibid., p. 4).
On May 4, 1982, private respondents filed a motion to dismiss said complaint on the grounds of
res judicata, prescription of action and lack of cause of action, which motion was granted by the
lower court in its resolution dated July 26, 1982 discoursing, viz:
"The essential requisites for the existence of res judicata are:
'(1) the former judgment must be final;
'(2) it must have been rendered by a court having jurisdiction of the subject matter and the parties;
'(3) it must be a judgment on the merits; and
'(4) there must be between the first and second actions identity of the parties, identity of the subject
matter and identity of cause of action.'
"There is no doubt that the judgment in Civil Case No. 3191-II became final on October 11, 1965,
and likewise, that the court in taking cognizance of the case had jurisdiction over the subject
matter and the parties because it involves question of co-ownership of real properties arising from
rights of the parties as heirs of Angel Gerardo, their predecessor-in-interest. Likewise, it had
jurisdiction over the persons of the parties, the defendants having been duly summoned and filed
their corresponding answers to the plaintiffs' complaint; that the judgment rendered was on the
merits of the case because there was actual trial where both parties presented their evidence; and
lastly, in both cases, the same parties and properties, and the same causes of action are involved.
All the essential requisites of res judicata, therefore, are present.' (Ibid., p. 15).: nad
The motion for reconsideration having been denied, petitioners elevated the case to this Court by
way of Certiorari, prohibition and mandamus.
The only issue for resolution in the instant case is whether or not the lower court committed a
grave abuse of discretion when it ordered the dismissal of the complaint in Civil Case No. 7590
on the ground of res judicata.
The petition is devoid of merit. (Canlas v. Court of Appeals, 164 SCRA 160 [1988]; Macabingkil v. People's Homesite and
Housing Corporation, 72 SCRA 326 [1976]).
The Supreme Court possesses no authority to rule upon non-jurisdictional issues in
aCertiorari proceeding. The only question involved in Certiorari is jurisdiction; either want of or In the instant case, there is no showing whatsoever that extrinsic or collateral fraud, as
in excess thereof (C & C Commercial Corporation v. Philippine National Bank, et al., 175 SCRA hereinabove defined, indeed vitiated the proceedings in Civil Case No. 3191-11. Hence, there is
1 [1989]). In the case at bar, respondent Judge correctly dismissed the complaint in Civil Case no cause of action for annulment of the judgment in the said case.
No. 7590 based on res judicata considering the prior judgment in Civil Case No. 3191-11.
Moreover, the trial court has no jurisdiction to entertain an action to annul the judgment in the
There is res judicata when the following requisites are present: (1) the judgment or order must be prior case, Civil Case No. 3191-11 rendered by a court of coordinate branch. Exclusive original
final; (2) the court rendering it must have jurisdiction over the subject matter and of the parties; jurisdiction over actions for annulment of judgments of a regional trial court is vested in the Court
(3) identity of parties, identity of subject matter and identity of cause of action (Maglalang v. of Appeals (Section 9[2], Batas Pambansa Blg. 129) (Islamic Da'Wah Council of the Philippines
Court of Appeals, 175 SCRA 808 [1989]). v. Court of Appeals, supra).- nad
There is no question that petitioners have no right at all to claim exclusive ownership of the PREMISES CONSIDERED, the instant petition is hereby DISMISSED and the order appealed
properties in question. Ownership thereof having been settled in favor of both herein petitioners from is hereby AFFIRMED.
and private respondents as co-owners of the subject properties in Civil Case No. 3191-11 which
SO ORDERED.
constitutes res judicata to Civil Case No. 7590. Such prior judgment in Civil Case No. 3191-11 is
conclusive in the subsequent suit, i.e., Civil Case No. 7590, between the same parties on the same
subject matter, and the same cause of action, not only as to matter which were decided in the first
action but could have been properly set up in the prior suit, which the petitioners apparently failed
to do.
Grave abuse of discretion means such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction. The abuse of discretion must be grave as where the power is
exercised in an arbitrary or despotic manner by reason of passion or personal hostility and must
be so patent and gross as to amount to an evasion of positive duty enjoined by or to act at all in
contemplation of law (Carson, et al. v. Judge Pantanosas, Jr., G.R. No. 75934, December 15,
1989), which circumstances are not obtaining in the present case.
Respondent judge who dismisses a complaint on the ground of res judicata does not commit grave
abuse of discretion.
Petitioners maintain that the judgment in Civil Case No. 3191-11, being inconsistent with the
decisions in Cadastral Cases Nos. 31, 44 and 47 dated August 31, 1937, November 28, 1934 and
December 31, 1935, respectively, awarding OCT No. 15059 solely in the name of the late
Santiago Gerardo (petitioners' father), OCT No. 9801 likewise solely in the latter's name, and
OCT No. 11942, naming Santiago Gerardo as one of the co-owners of the parcel of land embraced
in the said title, respectively (Ibid., pp. 5-6), is void ab initio (Ibid., p. 8).
It is well-settled that a judgment may be annulled on the ground of extrinsic or collateral fraud
(Islamic Da'Wah Council of the Philippines vs. Court of Appeals, G.R. No. 80892, September 29,
1989) and such extrinsic or collateral fraud must be committed by the adverse party (Sanchez v.
Tupas, 158 SCRA 465 [1988]). It is only extrinsic or collateral fraud that can serve as a basis for
the annulment of judgment. There is extrinsic or collateral fraud "where it is one the effect of
which prevents a party from having a trial, or real contest, or from presenting all of his case to the
court, or where it operates upon matters pertaining, not to the judgment itself, but of the manner
in which it was procured so that there is not a fair submission of the controversy." In other words,
extrinsic fraud refers to any fraudulent act of the prevailing party in the litigation which is
committed outside of the trial of the case, whereby the defeated party has been prevented from
exhibiting fully his side of the case, by fraud or deception practiced on him by his opponent
Distinction between certiorari under 45 as a mode of appeal and certiorari under 65 as
special civil action
Banco Filipino v CA
Before us is a Petition for Review on Certiorari of the Decision of the Court of Appeals[1] in
CA-G.R. CV No. 45891 entitled CALVIN S. ARCILLA and ELSA B. ARCILLA vs. BANCO
FILIPINO SAVINGS and MORTGAGE BANK, ET. AL. which affirmed the decision of the
Regional Trial Court (RTC), Branch 33, Manila ordering BANCO FILIPINO to pay CALVIN
and ELSA ARCILLA the amount of P126,139.00 with interest thereon at 12% per annum from
the filing of the complaint.
The undisputed facts as found by the Court of Appeals are as follows:
"Elsa Arcilla and her husband, Calvin Arcilla, the Appellees in the present
recourse, secured, on three (3) occasions, loans from the Banco Filipino
Savings and Mortgage Bank, the Appellant in the present recourse, in the
total amount of P107,946.00 as evidenced by "Promissory Note" executed by
the Appellees in favor of the Appellant. To secure the payment of said loans,
the Appellees executed "Real Estate Mortgages" in favor of the Appellants
over their parcels of land located in BF-Paraaque, covered by Transfer
Certificate of Title Nos. 444645, 450406, 450407 and 455410 of the Registry
of Deeds of Paraaque (Annexes "B" to "B-2", Amended Complaint). Under
said deeds, the Appellant may increase the rate of interest, on said loans,
within the limits allowed by law, as Appellants Board of Directors may
prescribe for its borrowers. At that time, under the Usury Law, Act 2655, as
amended, the maximum rate of interest for loans secured by real estate
mortgages was 12% per annum. On January 10, 1975, the Appellees and the
Appellant executed a "Deed of Consolidation and Amendment of Real Estate
Mortgage" whereby the aforementioned loans of the Appellees and the "Real
Estate Mortgage" executed by them as security for the payment of said loans
were consolidated (pages 33-35, Record). Likewise, under said deed, the loan
of the Appellees from the Appellant was increased to P188,000.00. The
Appellees executed a "Promissory Note", dated January 15, 1975, whereby
they bound and obliged themselves, jointly and severally, to pay the
Appellant the aforesaid amount of P188,000.00 with interest at the rate of
12% per annum, in nineteen (19) years from date thereof, in stated
installments of P2,096.93 a month (page 32, Records).
On January 2, 1976, the Central Bank of the Philippines issued Central Bank Circular No. 494,
quoted infra, as follows:
xxx
3. The maximum rate of interest, including commissions, premiums, fees and
other charges on loans with maturity of more than seven hundred thirty (730)
days, by banking institutions, including thrift banks, or by financial
intermediaries authorized to engage in quasi-banking functions shall be
nineteen percent (19%) per annum.
xxx
7. Except as provided in this Circular and Circular No. 493, loans or
renewals thereof shall continue to be governed by the Usury Law, as
amended. (idem, supra)
In the meantime, the Skyline Builders, Inc., through its President, Appellee Calvin Arcilla,
secured loans from the Bank of the Philippine Islands in the total amount of P450,000.00. To
insure payment of the aforesaid loan, the FGU Insurance Corporation, issued PG Bond No.
1003 for the amount of P225,000.00 (pages 434-436, Records) in favor of the Bank of the
Philippine Islands. Skyline Buildings, Inc., and the Appellees executed an "Agreement of
Counter-Guaranty with Mortgage" in favor of the FGU Insurance Corporation covering the
aforesaid parcels of land to assure payment of any amount that the insurance company may pay
on account of said loans (pages 429-436, Records). The mortgage was annotated as Entry No.
58009 at the dorsal portion of Appellees titles.
After October 30, 1978, the Appellant prepared and issued a "Statement of Account" to the
Appellees on their loan account to the effect that, as of October 30, 1978, the balance of their
loan account, inclusive of interests, computed at 17% per annum, amounted to 284,490.75 (page
555, Records). It turned out that the Appellant unilaterally increased the rate of interest on the
loan account of the Appellees from 12% per annum, as covenanted in the "Real Estate
Mortgage" and "Deed of Consolidated and Amended Real Estate Mortgage" to 17% per annum
on the authority of the aforequoted Central Bank Circular.
The Appellees failed to pay their monthly amortizations to Appellant. The latter forthwith filed,
on April 3, 1979, a petition, with the Provincial Sheriff, for the extrajudicial foreclosure of
Appellees "Real Esate Mortgage" in favor of the Appellant for the amount of
P342,798.00 inclusive of the 17% per annum which purportedly was the totality of Appellees
account with the Appellant on their loans. The Appellant was the purchaser of the property at
public auction for the aforesaid amount of P324,798.00. On May 25, 1979, the Sheriff executed
a "Certificate of Sale" over the aforesaid properties in favor of the Appellant for the aforesaid
amount (pages 37-38, Records).
The Appellant filed a "Petition for a Writ of Possession" with the Regional Trial Court entitled
"Banco Filipino Savings and Mortgage Bank vs. Elsa Arcilla, et al., LRC Case No. P-7757-P".
On February 28, 1980, the Court rendered a Decision granting the Petition of the Appellant. The
Appellees appealed to the Court of Appeals but the latter Court, on June 29, 1985, promulgated
a Decision affirming the Decision of the Regional Trial Court (pages 190-198, Records).
In the meantime, the FGU Insurance Corporation, Inc., redeemed the aforesaid properties from
the Appellant by paying to the latter the amount of P389,289.41 inclusive of interest computed
at 17% per annum. The Appellant and FGU Insurance Corp., Inc., executed, on May 27, 1980, a
"Deed of Redemption" (pages 126-129, Records).
On September 2, 1985, the Appellees filed a complaint in the Court a quo for the "Annulment of
the Loan Contracts, Foreclose Sale with Prohibition and Injunction, Etc." entitled "Calvin
Arcilla, et al. vs. Banco Filipino Savings and Mortgage Bank, et al." (pages 1-38, Records).
The Appellees averred, in their complaint, inter alia, that the loan contracts and mortgages
between the Appellees and the Appellant were null and void because: (a) the interests, charges,
etc., were deducted in advance from the face value of the "Promissory Notes" executed by the
Appellees; and (b) the rate of interests charged by the Appellant were usurious. The Appellees
prayed that judgment be rendered in their favor as follows:
"x x x
WHEREFORE, it is respectfully prayed
a) Pending hearing on the prayer for the issuance of the Writ of Preliminary
Injunction, a restraining order be immediately issued against the defendants
or anyone acting in their behalf from enforcing the writ of possession issued
against the plaintiffs;
b) After notice and hearing, a writ of preliminary injunction be issued against
the defendants, particularly defendants FGU Insurance Corporation and the
City Sheriff of Pasay City, MM, or any of his deputies or anyone acting in
their behalf from enforcing the writ of possession;
c) After trial
1) To make the injunction permanent;
2) Declare the loan contracts null and void;
3) Declare the extrajudicial foreclosure null and void;
4) Ordering the defendants to pay the plaintiffs the sums of
P100,000.00 as moral damages; P50,000.00 as attorney fees; and,
costs of suit.
PLAINTIFFS further pray for such other reliefs and remedies just
and equitable in the premises." (pages 88-89, Records)
In its Answer to the Complaint, the Appellant averred that the interests
charged by it on Appellees loan accounts and that the said loan contracts and
mortgages were lawful. The Appellant further averred that the Appellees
action had already prescribed.
In the interim, the Supreme Court promulgated its Decision in the precedent -
setting case of "Banco Filipino Savings and Mortgage Bank vs. Hon. Miguel
Navarro, et al., 152 SCRA 346" where it declared that Central Bank Circular
No. 494 was not the "law" envisaged in the mortgage deeds of borrowers of
the Bank; that the escalation clause incorporated in said deeds giving
authority to the Appellant to increase the rate of interests without the
corresponding deescalation clause should not be given effect because of its
one-sidedness in favor of the Appellant; that the aforesaid Central Bank
Circular did not apply to loans secured by real estate mortgages, and that,
therefore, the Appellant cannot rely said Circular as authority for it to
unilaterally increase the rate of interests on loans secured by Real Estate
Mortgages.
In the meantime, the FGU Insurance Corp., Inc., filed a "Motion for
Substitution" with the Regional Trial Court, in LRC Case No. Pq-7757-P
praying that it be substituted as the Petitioner in said case (pages 354-356,
Records). The Appellees were served with a copy of said motion and filed
their Opposition thereto. However, on November 10, 1987, the Regional
Trial Court rendered a Decision granting the motion of FGU Insurance
Company (page 369, Records)
On December 3, 1987, the Appellees filed a Motion, with the Court a quo,
for leave to file an "Amended Complaint" to implead FGU Insurance
Corporation as party defendant (pages 83-129, Records). The Court granted
said motion and admitted Appellees Amended Complaint.
After the requisite pre-trial, the Court a quo issued a Pre-Trial Order which
defined, inter alia, Appellees action against the Appellant, and the latters
defenses, to wit:
"x x x
On the part of the defendants Banco Filipino Savings to simplify
the case, it seeks to declare as null and void plaintiffs loan contract
with Banco Filipino obtained in May 1974, on the ground that the
interest agreed in the contract was usurious. Plaintiffs also seek to
declare as null and void the foreclosure of their mortgage by Banco
Filipino on the ground that the loan with the said mortgagee
foreclosure maybe validly done.
 DEFENSES
1. Prescription
2. Laches
3. Estoppel" (page 496, Records)
In the meantime, the Appellees and FGU Insurance Corporation entered into
and forged a "Compromise Agreement." The Court a quo promulgated a
Decision, dated April 3, 1991, based on said "Compromise Agreement."
Under the "Compromise Agreement", the Appellees bound and obliged
themselves, jointly and severally, to pay to FGU Insurance Corporation the
amount of P1,964,117.00 in three (3) equal installments and that:
"x x x
6. Upon faithful compliance by plaintiffs Calvin S. Arcilla and Elsa
B. Arcilla with their Agreement, defendant FGU Insurance
Corporation shall renounce in their favor all its rights, interests and
claims to the four (4) parcels of land mentioned in paragraph No. 4
of this Compromise Agreement, together with all the improvements
thereon, and plaintiffs Calvin S. Arcilla and Elsa B. Arcilla shall be
subrogated to all such rights, interests and claims. In addition,
defendant FGU Insurance Corporation shall execute in favor of
plaintiffs Calvin S. Arcilla and Elsa B. Arcilla a deed of
cancellation of the real estate mortgage constituted in its favor on
the above-mentioned four (4) parcels of land, together with all the
improvements thereon. All documentary stamps and expenses for
registration of the said deed of cancellation of mortgage shall be for
the account of plaintiffs Calvin S. Arcilla and Elsa B. Arcilla.
7. Subject to the provisions of paragraph No. 4 of this Compromise
Agreement, the execution of this Compromise Agreement shall be
without prejudice to the prosecution of the claims of plaintiffs
Calvin S. Arcilla and Elsa B. Arcilla. (pages 543-544, Records)
Thereafter, the Appellees and the Appellant agreed, upon the prodding of the
Court a quo, that the only issue to be resolved by the Court a quo was,
whether or not the Appellees were entitled to the refund, under the Decision
of the Supreme Court in "Banco Filipino Savings and Mortgage Bank vs.
Hon. Miguel Navarro, et al.," supra. On November 8, 1991, the Appellees
filed a "Motion for Summary Judgment" appending thereto, inter alia, the
Affidavit of Appellee Calvin S. Arcilla and the appendages thereof (pages
550-555, Records). Appellant filed its Opposition but did not append any
affidavit to said Opposition. On March 26, 1993, the Court a
quo promulgated a Decision, the decretal portion of which reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered
in favor of the plaintiffs and against defendant Banco Filipino
ordering defendant Banco Filipino to pay spouses Calvin S. Arcilla
and Elsa B. Arcilla the sum of P126,139.00 with interest thereon at
12% per annum reckoned from the filing of the complaint.
SO ORDERED. (pages 584-585, Records)"[2]
Petitioner appealed to the Court of Appeals, which affirmed the decision of the RTC the
dispositive portion of which reads:
"IN THE LIGHT OF ALL THE FOREGOING, the assailed Decision is
AFFIRMED. Appellants appeal is DISMISSED. With costs against the
Appellant.
SO ORDERED."[3]
Their Motion for Reconsideration[4] was denied hence this petition where the petitioner assigns
the following errors:
"I. THE HONORABLE COURT OF APPEALS ERRED WHEN IT
HELD THAT THE CAUSE OF ACTION OF THE PRIVATE
RESPONDENTS ACCRUED ON OCTOBER 30, 1978, AND
THEREFORE THE FILING OF THEIR COMPLAINT FOR
ANNULMENT OF THEIR LOAN CONTRACTS WITH THE
PETITIONER IN 1985 WAS NOT YET BARRED BY
PRESCRIPTION.
II. THE HONORABLE COURT OF APPEALS ERRED WHEN IT
HELD THAT THE MATERIAL ALLEGATIONS OF THE PRIVATE
RESPONDENTS COMPLAINT WERE SUFFICIENT TO WARRANT
THE RELIEFS GRANTED TO THEM BY THE LOWER COURT,
PATICULARLY THE REFUND OF P126,139.00 REPRESENTING
ALLEGED EXCESS INTEREST PAID ON THEIR LOAN.
III. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING
THAT THE PRIVATE RESPONDENTS WERE ENTITLED TO THE
SAID REFUND OF P126,139.00 CLAIMED BY THEM."[5]
The petitioner maintains that the complaint filed by herein private respondents was an action for
Annulment of Loan Contracts, foreclosure sale with prohibition and injunction. It is contended
that these causes of action accrued on the date of the execution of the promissory note and deed
of mortgage on January 15, 1975 and not October 30, 1978 as found by the Court of Appeals.
Thus, private respondents cause of action has already prescribed inasmuch as the case was filed
on September 2, 1985 or more than ten years thereafter. Petitioner further contends that private
respondents cannot rely on the ruling in the case of Banco Filipino Savings & Mortgage Bank
vs. Navarro[6] considering that they were not parties to said case. Petitioner also maintains that
the order of the lower court, which was affirmed by the Court of Appeals ordering the petitioner
to refund the excess interest paid by private respondents in the amount of P126,318.00 was
without any legal basis since private respondents never raised the issue of interest nor prayed for
any relief with respect thereto. Moreover, the private respondents never paid said amount to the
petitioner. While the amount was included in the bid price of the bank when it bought the
mortgaged properties during the public auction, said bid price did not prejudice the private
respondents because when the private respondents repurchased the properties, the amount they
paid was different and independent of the redemption price of the bank. Besides, the agreement
between the private respondents and FGU Insurance Corporation was one of sale and not
redemption. Thus, any amount paid by the private respondents to FGU was voluntarily entered
into by them and was not a consequence of the foreclosure of the mortgage properties.
Conversely, private respondents allege that their action has not prescribed considering that
prescription begins to run from the day the action may be brought; the date their right of action
accrued. It is their contention that the period of prescription of their action should commence to
run from October 30, 1978 when the petitioner unilaterally increased the rate of interest on
private respondents loan to 17% per annum. Thus, when private respondents filed their action
against the petitioner on September 2, 1985 or almost eight years thereafter, their action had not
yet prescribed. Moreover, private respondents aver that they are entitled to the refund inasmuch
as the escalation clause incorporated in the loan contracts do not have a corresponding de-
escalation clause and is therefore illegal.
The appeal is unmeritorious.
There are only two issues, which must be resolved in the present appeal. First, has the action of
the private respondents prescribed; and second, are the respondents entitled to the refund of the
alleged interest overpayments.
Petitioners claim that the action of the private respondents has prescribed is bereft of merit.
Under Article 1150 of the Civil Code, the time for prescription of all kinds of actions, when
there is no special provision which ordains otherwise, shall be counted from the day they may
be brought. Thus, the period of prescription of any cause of action is reckoned only from the
date the cause of action accrued.[7] And a cause of action arises when that which should have
been done is not done, or that which should not have been done is done. [8] The period should not
be made to retroact to the date of the execution of the contract on January 15, 1975 as claimed
by the petitioner for at that time, there would be no way for the respondents to know of the
violation of their rights.[9] The Court of Appeals therefore correctly found that respondents
cause of action accrued on October 30, 1978, the date they received the statement of account
showing the increased rate of interest, for it was only from that moment that they discovered the
petitioners unilateral increase thereof. We quote with approval the pertinent portions of the
Court of Appeals decision as follows:
"It is the legal possibility of bringing the action that determines the starting
point for the computation of the period of prescription (Constancia C.
Telentino vs. Court of Appeals, et al., 162 SCRA 66). In fine, the ten-year
prescriptive period is to be reckoned from the accrual of Appellees right of
action, not necessarily on the very date of the execution of the contracts
subject of the action (Naga Telepone Co. Inc. vs. Court of Appeals, et al.,
230 SCRA 351). A partys right of action accrues only when the confluence
of the following elements is established:
"xxx: a) a right in favor of the plaintiff by whatever means and
under whatever law it arises or is created; b) an obligation on the
part of defendant to respect such right; and c) an act or omission on
the part of such defendant violative of the right of the plaintiff
(Cole vs. Vda. de Gregorio, 116 SCRA 670 [1982]; Mathay vs.
Consolidated Bank & Trust Co., 58 SCRA 559 [1974]; Vda. de
Enriquez vs. Dela Cruz, 54 SCRA 1 [1973]. It is only when the last
element occurs or takes place that it can be said in law that a cause
of action has arisen (Cole vs. Vda. De Gregorio, supra)" (Maria U.
Espaol vs. Chairman, etc., et al.,, 137 SCRA 314, page 318)
More, the aggrieved must have either actual or presumptive knowledge of the
violation, by the guilty party of his rights either by an act or omission. The
question that now comes to the fore is when the Appellees became precisely
aware of the unilateral increase, by the Appellant, of the rate of interest on
their loan account to 17% per annum. As can be ascertained from the records,
the Appellees discovered or should have discovered, for the first time, the
unilateral increase by the Appellant of the rate of interest to 17% per annum
when they received the "Statement of Account" of the Appellant as of
October 30, 1978. Hence, it was only then that the prescriptive period for the
Appellees to institute their action in the Court a quo commenced. Since the
Appellees filed their complaint in the Court a quo on September 2, 1985, the
same was seasonably filed within the ten-year prescriptive period."[10]
Anent the second issue as to whether the respondents are entitled to recover the alleged
overpayments of interest, we find that they are despite the absence of any prayer therefor. This
Court has ruled that it is the material allegations of fact in the complaint, not the legal
conclusion made therein or the prayer that determines the relief to which the plaintiff is
entitled.[11] It is the allegations of the pleading which determine the nature of the action and the
Court shall grant relief warranted by the allegations and the proof even if no such relief is
prayed for.[12] Thus, even if the complaint seeks the declaration of nullity of the contract, the
Court of Appeals correctly ruled that the factual allegations contained therein ultimately seek
the return of the excess interests paid.
The amended complaint[13] of herein private respondents specifically allege that the contracts of
loan entered into by them and the petitioner were contrary to and signed in violation of the
Usury Law[14] and consequentially pray that said contracts be declared null and void. The
amended complaint reads:
"6. The aforementioned loans granted by defendant Banco Filipino to the
plaintiffs as stated on the face of the promissory note and real estate
mortgage (Annexes "B" to "D", inclusive) were not actually received by the
plaintiffs because interests, charges, etc. were deducted in advance from the
face value of the loans not in accordance with the contracts;
7. Even the loan contracts (Annexes "B" to "D", inclusive) required by
defendant Banco Filipino to be signed by the plaintiffs were contrary to and
in violation of the then Usury Law, as amended;
8. Assuming arguendo that the loan contracts between plaintiffs and
defendant Banco Filipino are valid, the extra-judicial foreclosure of the
properties of the plaintiffs on May 24, 1979 was null and void for having
been conducted in clear violation of the law (Act 3135), namely: a) lack of
roper notice to the plaintiffs; b) lack of proper publication and posting as
required by law; c) the alleged sale was conducted at the place other than that
prescribed by law, among others;
9. On May 27, 1990, defendant Banco Filipino purportedly executed in favor
of defendant FGU Insurance Corporation a Deed of Redemption over the
foreclosed properties of the plaintiffs, again, without notice to the latter, as
evidenced by the said Deed of Redemption, copy of which is hereto attached
and marked as Annex "F".
10. The Deed of Redemption (Annex "F") is clearly null and void for having
been executed in violation of Rule 39, Rules of Court, and other related
provisions of the Rules of Court."[15]
The loan contracts with real estate mortgage entered into by and between the petitioner and
respondent stated that the petitioner may increase the interest on said loans, within the limits
allowed by law, as petitioners Board of Directors may prescribe for its borrowers. At the time
the contracts were entered into, said escalation clause was valid.[16] It was only pursuant to P.D.
No. 1684 which became effective March 17, 1980 wherein to be valid, escalation clauses should
provide: 1.) that there can be an increase in interest if increased by law or by the Monetary
Board; and 2.) in order for such stipulation to be valid, it must include a provision for the
reduction of the stipulated interest in the event that the maximum rate of interest is reduced by
law or by the Monetary Board.[17]
Given the validity of the escalation clause, could the petitioner increase the stipulated interest
pursuant to the Central Bank Circular 494 from 12% to 17%.
We rule that it may not.
The escalation clause in the loan contracts reads as follows:
"xxx g) The rate of interest charged on the obligation secured by this
mortgage, as well as the interest on the amount which may have been
advanced by the Mortgagee in accordance with paragraph (b) and (d) hereof,
shall be subject, during the terms of this contract, to such an increase, within
the limits allowed by law, as the Board of Directors of the Mortgagee may
prescribe for its debtors; xxx" (emphasis supplied)[18]
In Banco Filipino Savings & Mortgage Bank vs. Navarro, [19] which involved a similar
escalation clause[20], we ruled that Central Bank Circular 494, although it has the force and
effect of law, is not a law and is not the law contemplated by the parties which authorizes the
petitioner to unilaterally raise the interest rate of the loan.[21] Consequently, the reliance by the
petitioner on Central Bank Circular 494 to unilaterally raise the interest rates on the loan in
question was without any legal basis.
Petitioners argument that the Banco Filipino case cannot be applied to the present case since the
respondents were not intervenors therein is flawed. Only the judgment in said case cannot bind
the respondents as they were not parties thereto, however, the doctrine enunciated therein is a
judicial decision and forms part of the legal system of the land. [22] It forms a precedent, which
must be adhered to under the doctrine of stare decisis.[23] Thus, even if the respondents were not
parties to the above-mentioned case, the doctrine enunciated therein may be applied to the
present case.
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 45891 is
AFFIRMED and the instant petition is hereby DENIED.
No pronouncement as to costs.
SO ORDERED.
General Rule if appeal available, no certiorari
Fajardo v Francisco
DAVIDE, JR., J.:
This is a special civil action for certiorari which seeks to annul the 4 September 1991 Order of
the respondent Judge dismissing the complaints of the petitioners for lack of jurisdiction, and
the 20 September 1991 Order denying the petitioners' motion for reconsideration. The
respondent Judge had ruled that jurisdiction over the cases pertained to the Housing and Land
Use Regulatory Board (HLRB) and not the Regional Trial Court. The petitioners asseverate that
the RTC has jurisdiction over the cases.
The pleadings of the parties disclose the following facts:
Private respondents Isabelo Jareño and Purita Jareño (hereinafter JAREÑOS) are the owners
and developers of a subdivision known as the Calamba Central Compound. On various dates,
they as SELLERS, and the petitioners as BUYERS signed separate contracts, each designated as
a CONTRACT TO SELL, under which, for the considerations therein stated, they bound
themselves to sell to the petitioners the lots subject thereof, and after the latter shall have paid
the purchase price and interest, to execute in favor of the petitioners the corresponding deeds of
transfer of title, free from any lien or encumbrance except those expressly provided for in the
Contract to Sell. The Contracts to Sell are herein described:
Petitioners-Buyers Lot subject Date of execution of
of contract to sell contract to sell
1) Spouses Julian a) Lot No. 9, Block
and Teresita No. 3, covered by
Cuizon TCT No. T-66231 25 January 19791
b) Lot No. 11, Block
No. 1.2 24 April 19793
2) Teresita Rivera Lot No. 12, BLock 5 December 1985 4
and Ricardo No. 3, covered by
Villanueva TCT No. 7-62229
3) Spouses Rene and Lot No. 14, Block 17 December 1985 5
Beverly Rodelas No. 3, covered by
TCT No. T-66231
4) Spouses Salvador Lot No. 9, Block 17 March 1988 6
and Engracia No. 2, covered by
Gianan TCT No. T-66273
On the other hand, private respondent Fernando Realty and Development Corporation
(hereinafter FERNANDO) as SELLER, and petitioner Emily Yu Fajardo as BUYER signed on
22 February 1985 a CONTRACT TO SELL 7 under which for the considerations therein stated,
FERNANDO agreed to sell to Fajardo Lot No. 10, Block No. 3, also located at the Calamba
Central Compound Subdivision, 8 and upon full payment of the agreed price and interest
thereon, to execute a deed of absolute sale in favor of Fajardo.
It appears, however, that on 18 October 1986, the JAREÑOS sold the aforesaid lots subject of
the different contracts to sell to private respondent Ruben Habacon (hereinafter HABACON)
under separate documents denominated as "Kasulatan ng Bilihan." 9 On 18 February 1991,
HABACON caused the cancellation of the certificates of title covering the said lots and the
issuance of new ones in his name. 10
When the petitioners learned of these, they filed on 21 June 1991 separate complaints with the
court a quo for annulment of the sales in favor of HABACON and of the new certificates of title
issued to him, for reinstatement of the certificates of title cancelled by those issued to
HABACON, and for accounting and damages. They prayed in their complaints for a judgment
(a) declaring the "Kasulatan na Bilihan" executed in favor of HABACON as an equitable
mortgage; (b) annulling the new certificates of title issued to HABACON and reinstating those
previously cancelled by the new certificates of title; (c) ordering HABACON and the
JAREÑOS to determine the unpaid balance of the purchase price under the Contracts to Sell, to
accept payments thereof, and to execute the deeds of absolute sale in favor of the petitioners;
and (e) ordering the defendants to pay actual and exemplary damages and attorney's fees
specified therein, as well as the costs.
The complaints were docketed as Civil Cases Nos. 1683-91-C, 11 1684-91-C, 12 1685-91-
C, 13 1686-91-C, 14 and 1688-91-C, 15 and were assigned to Branch 37 of the Regional Trial
Court of Calamba.
On 9 August 1991, HABACON filed a motion to dismiss the complaints on the ground that the
plaintiffs (petitioners herein) have no legal capacity to sue because they were not parties to the
"BILIHAN." 16
In its Order of 12 August 1991, 17 the trial court, through the respondent Judge, directed the
plaintiffs to show cause why their complaints should not be dismissed for lack of jurisdiction
pursuant to P.D. No. 957 (Subdivision and Condominium Buyers' Protective Decree), as
amended by P.D. No. 1344, and the doctrine laid down by this Court in Solid Homes, Inc. vs.
Payawal. 18
In their compliance 19 with the show cause order, the petitioners maintained that it is the trial
court, and not the HLRB, which has jurisdiction over the complaint. They contend that Solid
Homes, Inc. vs. Payawal is inapplicable because in their cases: (1) the title of the developers, the
JAREÑOS, had already passed to a third person, HABACON; (2) their action is for the
annulment of the title of a third person; (3) HABACON is not a developer; and (4) Section
19(1) of B.P. Blg. 129 vests upon the Regional Trial Court the jurisdiction to hear and decide all
civil actions which involve title to or possession of any real property or any interest therein,
except actions for unlawful detainer and forcible entry.
In its Order of 4 September 1991, 20 the trial court dismissed the aforesaid civil cases for lack of
jurisdiction. It held:
The Court does not agree with the plaintiffs. PD No. 957 as amended by P.D.
No. 1344 gives the National Housing Authority now the Human Settlement
Regulatory Commission (HSRC) 21 inclusive [sic] jurisdiction to hear and,
decide cases of "unsound real estate business practices" (Sec. 1(a), P.D.
1344). This authority is broad enough to include all kinds of real estate
transactions involving subdivision lot or condominium, wherein either the
subdivision lot or condominium buyer, project owner, developer, dealer,
broker or salesman is involved.
The petitioners filed a motion for the reconsideration of the order, but the trial court denied this
in its Order of 20 September 1991. 22 It ruled that while HABACON may not be the developer,
the JAREÑOS are, and by selling the same lots to HABACON after they were previously sold
to different parties, the JAREÑOS may have committed an "unsound business practice."
Moreover, it ruled that Section 19(2) of B.P. Blg. 129, being a general law, should yield to P.D.
No. 957, as amended by P.D. No. 1344, which is a special law.
On 24 December 1991, the petitioners filed the instant special civil action for certiorari to annul
the 4 September 1991 and 20 September 1991 Orders of the trial court on the ground that the
judge acted with grave abuse of discretion amounting to lack of jurisdiction in dismissing their
complaints and that they have no other plain, speedy, and adequate remedy in the ordinary
course of law. The petitioners maintain that the trial court has jurisdiction over their complaints.
In the Resolution of 18 November 1991, 23 we required the respondents to comment on the
petition. Private respondent HABACON filed his comment and opposition on 27 August
1992 24 while public respondent Cesar S. Reyes filed his comment on 24 August 1993. 25 Both
respondents rely on our pronouncement in Solid Homes, Inc. vs. Payawal and echo the ruling of
the trial court in the questioned orders. The copy of the resolution sent to the JAREÑOS was
returned unserved and in the Resolution of 21 July 1993, we considered it as served on
them. 26 As required, the petitioners filed a reply to the comment. 27 On 8 November 1993, we
resolved to give due course to the petition and required the parties to submit their memoranda,
which the petitioners complied with on 29 December 1993 28 and the private respondents, on 28
March 1994. 29
The core issue in this case is whether the trial court gravely abused its discretion in dismissing,
for lack of jurisdiction, the complaints filed by the petitioners. Before resolving this issue, a
procedural matter must first be considered. Generally, an order of dismissal, whether right or
wrong, is a
final order, and hence a proper subject of appeal, not certiorari. 30 The remedies of appeal
and certiorari are mutually exclusive and not alternative or
successive. 31 Accordingly, although the special civil action of certiorari is not proper when an
ordinary appeal is available, it may be granted where it is shown that the appeal would be
inadequate, slow, insufficient, and will not promptly relieve a party from the injurious effects of
the order complained of, or where appeal is inadequate and
ineffectual. 32 Nevertheless, certiorari cannot be a substitute for the lost or lapsed remedy of
appeal, 33 where such loss is occasioned by the petitioner's own neglect or error in the choice of
remedies. 34
The petitioners admit that they received a copy of the trial court's order dismissing their
complaints on 4 October 1991. 35 The instant petition was filed on 24 October 1991 or beyond
the 15-day period to appeal from the order. The petitioners have not even attempted to explain
why they were unable to appeal from the challenged order within the reglementary period. This
civil action then was resorted to as a substitute for the lost or lapsed remedy of appeal, and since
none of the exceptions to the rigid rule barring substitution of remedies was alleged to exist in
this petition, or even indicated by the pleadings, this petition must be dismissed.
Even if we were to accept this petition in the broader interest of justice, it must still fail for the
trial court correctly ruled that it has no jurisdiction over the subject matter in Civil Cases Nos.
1683-91-C, 1684-91-C, 1685-91-C, 1686- 91-C, and 1688-91-C. Jurisdiction thereon was
originally vested in the National Housing Authority (NHA) under P.D. No. 957, as amended by
P.D. No. 1344. Under E.O. No. 648 of 7 February 1981, this jurisdiction was transferred to the
Human Settlements Regulatory Commission (HSRC) which, pursuant to E.O. No. 90 of 17
December 1986, was renamed as the Housing and Land Use Regulatory Board.
We agree with the trial court that the complaints do involve unsound real estate business
practices on the part of the owners and developers of the subdivision who entered into Contracts
to Sell with the petitioners. By virtue of Section 1 of P.D. No. 1344 and our decision in Solid
Homes, Inc. vs. Payawal, the NHA, now HLRB, has the exclusive jurisdiction to hear and
decide the matter. In addition to involving unsound real estate business practices, the complaints
also involve specific performance of the contractual and statutory obligations of the owners or
developers of the subdivision. The claims for annulment of the "Kasulatan ng Bilihan" in favor
of HABACON and the certificates of title issued to him and for damages are merely incidental.
Section 1 of P.D. No. 1344, promulgated on 2 April 1978, provides as follows:
Sec. 1. In the exercise of its functions to regulate the real estate trade and
business and in addition to its powers provided for in Presidential Decree No.
957, the National Housing Authority shall have exclusive jurisdiction to hear
and decide cases of the following nature:
A. Unsound real estate business practices;
 B. Claims involving refund and any
other claims filed by subdivision lot or
condominium unit buyer against the
project owner, developer, dealer,
broker or salesman; and
C. Cases involving specific
performance of contractual and
statutory obligations filed by buyers of
subdivision lots or condominium units
against the owner, developer, dealer,
broker or salesman. (Italics supplied)
is an essentially judicial power exercisable ordinarily only by the courts of
justice. This departure from the traditional allocation of governmental
powers is justified by expediency, or the need of the government to respond
swiftly and competently to the pressing problems of the modern world.
Accordingly, the trial court committed no grave abuse of discretion in dismissing the complaints
of the petitioners.
WHEREFORE, the due course Resolution of 8 November 1993 is RECALLED and, for lack of
merit, the instant petition is DISMISSED with costs against the petitioners.
SO ORDERED.

Conformably with this section, we had earlier upheld the jurisdiction of the NHA to determine
the rights of the parties under a contract to sell a subdivision lot in Antipolo Reality Corp. vs.
National Housing Authority 36 and struck down the exercise of jurisdiction by the Regional Trial
Court over a case instituted by a lot buyer for delivery of title against the subdivision owner
in Solid Homes, Inc. vs. Payawal. We also sustained the jurisdiction of the HLRB over
complaints for (a) the refund of reservation fees for the purchase of a subdivision lot, 37 (b)
specific performance filed by a lot buyer against the seller of a subdivision lot, 38 (c) annulment
of the mortgage constituted by the project owner without the buyer's consent, the mortgage
foreclosure sale, and the condominium certificate of title issued to the highest bidder at the said
foreclosure sale, 39 and (d) collection of the balance of the unpaid purchase price of a
subdivision lot filed by the developer of a subdivision against the lot
buyer. 40

In CT Torres Enterprises, Inc. vs. Hibionada, 41 we further declared that incidental claims for
damages may be resolved by the HLRB. Thus:

It is clear from Section 1(c) of the above quoted PD No. 1344 that the
complaint for specific performance with damages filed by Diongon with the
Regional Trial Court of Negros Occidental comes under the jurisdiction of
the Housing and Land Use Regulatory Board. Diongon is a buyer of a
subdivision lot seeking specific performance of the seller's obligation to
deliver to him the corresponding certificate of title.

The argument that only courts of justice can adjudicate claims resoluble
under the provisions of the Civil Code is out of step with the
fast-changing times. There are hundreds of administrative bodies now
performing this function by virtue of a valid authorization from the
legislature. This quasi-judicial function, as it is called, is exercised by them
as an incident of the principal power entrusted to them of regulating certain
activities falling under their particular expertise.

In the Solid Homes case for example the Court affirmed the competence of
the Housing and Land use Regulatory Board to award damages although this
May be availed of even when appeal is available or period to appeal has expired
Luis v CA
QUIASON, J.:
This is a petition for review on certiorari under Rule 46 of the Revised Rules of Court, to annul
the decision of the Court of Appeals (CA-G.R. CV. No. 09842), which set aside the order of
dismissal on the ground of res judicata of Civil Case No. 6779-M of the Regional Trial Court,
Branch XVI, Malolos, Bulacan.
Sometime in 1980, respondent Rodillo commenced with the Court of First Instance of
Valenzuela, Bulacan, Civil Case No. 1120-V-80 (entitled "Maria Clara Rodillo versus Spouses
Luis Ilasco, Jr. and Rosario dela Cruz") to declare null and void the donation given to
petitioners Luis Ilasco and Rosario dela Cruz by Cipriano Rodillo and Victoria dela Cruz and
the reconveyance of the one-half portion of the same to respondent Rodillo.
In her complaint, respondent Rodillo alleged: (a) Her widowed grandmother, Asuncion Laurel,
who died on June 23, 1943, had two sons, Nicolas and Cipriano Rodillo. Nicolas predeceased
Asuncion, having died on December 25, 1942. Nicolas' sole heir was respondent Rodillo, his
daughter;
(b) Upon the death of Asuncion, her heirs, Cipriano and respondent Rodillo succeeded to the
entire estate as co-heirs, the latter inheriting by right of representation; (c) Inasmuch as
respondent Rodillo was a minor at the time of the death of Asuncion, Cipriano acted as her
trustee who administered her interests in the estate; (d) Cipriano executed a document entitled
"Paglilipat sa Sarili ng Pag-aari ng Namatay," falsely stating therein that he was the only heir of
Asuncion and adjudicating to himself the entire estate left by the deceased; and (e) On June 16,
1978, Cipriano and his wife, Victoria dela Cruz, donated the other half portion of the land to
petitioner spouses, Luis Ilasco and Rosario dela Cruz.
Respondent Rodillo prayed that the document entitled "Paglilipat sa Sarili ng Pag-aari ng
Namatay" and the donation made in favor of petitioner Luis Ilasco and Rosario dela Cruz be
declared null and void; and that the donated property be reconveyed to her.
Finding difficulty in serving the summonses on petitioners Ilasco and dela Cruz, who were
residents of the United States, respondent Rodillo filed a Motion for Leave to Archive Case
dated August 6, 1980. The Court of First Instance of Valenzuela, Bulacan, issued an order dated
August 8, 1980 approving the motion.
On October 2, 1981, respondent Rodillo filed an Ex-Parte Motion to Revive Case which was
granted by the trial court on October 13, 1981. As no further action was taken by respondent
Maria Clara Rodillo, petitioners Ilasco and dela Cruz filed a Motion to Dismiss and for
Cancellation of Notice of Lis Pendens. The motion was granted in an order dated March 27,
1982, which reads:
Acting on the "Motion to Dismiss and for, Cancellation of Notices
of Lis Pendens" filed by Atty. Juan B. Bañez, Jr., counsel for the defendant,
and it appearing that despite the order of revival granted by the Court in its
Order of October 13, 1981, plaintiff has not done anything in this case and as
a matter of fact, the lawyer who filed the motion for revival, Atty. Eli
Natividad, withdrew as counsel for the plaintiff with the conformity of the
plaintiff, for lack of interest, this case is hereby DISMISSED and
the notices of lis pendens on defendants' Transfer Certificate of Title Nos. T-
30-384(M) and T-30-386(M) arising from this case are hereby ordered
CANCELLED (Rollo, p. 48).
Respondent Rodillo filed a Motion for Reconsideration, which was denied on April 29, 1982.
No appeal was taken from the Orders dated March 27, 1982 and
April 29, 1982. Instead, on March 9, 1983, respondent Rodillo commenced in the Regional Trial
Court, Bulacan, Civil Case No. 6779-M (entitled: "Maria Clara Rodillo versus Spouses Luis
Ilasco, Jr. and Rosario dela Cruz and Spouses Eusebio Mutya and Estelita Rodillo).
Petitioners Ilasco and dela Cruz moved for the dismissal of the case against them on the ground
of res judicata. In granting the motion, the trial court reasoned out:
. . . It was shown that Civil Case No. 1120-V-80 was filed at the then Court
of First Instance of Bulacan (Valenzuela) by plaintiff Maria Clara Rodillo
against movants in this instant case. Eusebio Mutya and Estelita Rodillo were
however added as defendants in this instant case. Although the civil case
filed at Valenzuela was for "Action to Declare the Donation Null and Void"
and this instant case is for "Annulment of Document and Reconveyance," the
prayers in both cases are identical: to declare as nullity (sic) the donation
executed by Sps. Cipriano Rodillo and Victoria dela Cruz in favor of the
movants and the reconveyance of one-half portion of the same to the
plaintiff. The Civil Case filed with the Valenzuela Court was ordered
terminated in the order of Judge Eduardo Caguioa dated March 27, 1982 and
the order of dismissal is now final (Rollo, p. 27).
The Court of Appeals reversed the decision of the trial court and reinstated the complaint,
holding that while all the elements of res judicata were present such principle was inapplicable
to the case considering the "environmental circumstances" thereof. By "environmental
circumstances," the Court of Appeals meant the utter dependence of respondent Rodillo on her
counsel and the failure to prosecute the case due to the failure to summon the defendants, who
were residing abroad.
In pertinent part, the decision of the Court of Appeals states:
 xxx xxx xxx
Res judicata is to be disregarded if its application would involve the sacrifice
of justice to technicality (Republic, et al. v. Judge de Los Angeles, G.R. No.
30240, 23 March 88). While procedurally speaking since the dismissal was
unqualified, it had the effect of an adjudication on the merits, given the
equities of the case it would be more in keeping with substantial justice if the
controversy between the parties were resolved on the merits rather than on a
procedural technicality in light of the express mandate of the rules that they
be liberally construed in order to promote their object and to assist the parties
in obtaining just, speedy and inexpensive determination of every action and
proceeding. (Olivares v. Gonzales, et al., G.R. No. 34500, 18 March 88).
The dismissal of the actions is based on sound judicial discretion and such
discretion must be exercised wisely and prudently with a view to substantial
justice (supra). While the first case was pending for almost two years, the
inability to prosecute was not really due to an unwillingness of the plaintiff to
proceed with the case but the difficulty in serving defendants with summons
for being non-residents. While this could not have been a legal obstacle to its
prosecution given the nature of the case, as aptly stated in Tandoc v.
Tensuan, 93 SCRA 880, "it is not fair to visit this error of counsel on the
poor petitioner-litigant (who depended only on her counsel's advice and
judgment) and inflict upon her just suit the capital penalty of dismissal." Rule
17, Section 3 permits such dismissal which has "the effect of an adjudication
on the merits" only if plaintiff "fails to prosecute (her) action for an
unreasonable length of time" and under the environmental circumstances of
this case, as duly explained by counsel, petitioner could not be adjudged
guilty of failure to prosecute for an unreasonable length of time (p. 883,
supra)(Rollo, p. 29)
Petitioners assail the decision of the Court of Appeals, assigning the following errors:
1) The respondent court erred in not applying the doctrine of res
judicata despite its own finding that all the elements of said doctrine are
present in the instant case;
2) The respondent court erred in denying the Motion for Reconsideration
without stating the legal basis therefore in violation of
Sec. 14, Art. VIII of the 1986 Constitution.
We agree with petitioners.
Compresent in the case at bench are the elements of res judicata, which are the following:
1. There must be a final judgment or order;
2. The court rendering the judgment must have jurisdiction over the subject
matter;
3. The former judgment is a judgment on the merits;
4. There is between the first and second actions identity of the parties, subject
matter and of causes of action (Ipekdjian Merchandising Co. Inc. v. Court of
Tax Appeals, 9 SCRA 72 [1963]; Abes v. Rodil, 17 SCRA 822 [1966] ).
The judgment in Civil Case No. 1120-V-80 is a final judgment, since plaintiff failed to appeal
therefrom within the reglementary period.
The trial court which rendered the judgment had jurisdiction over the subject matter.
The dismissal of Civil Case No. 1120-V-80 on the ground of lack of interest or failure to
prosecute on the part of the plaintiff has the effect of judgment on the merits (Revised Rules of
Court, Rule 17, Sec. 3). It has the force of res judicata against the revival of substantially the
same action originally filed in another court (Insular Veneer, Inc. v. Plan, 73 SCRA 1 [1976];
De La Cruz v. Paras, 69 SCRA 556 [1976] ).
The trial court and the Court of Appeals agreed that the prayers in both cases are identical.
There was no showing that the additional defendants could not have been impleaded in the first
case or that their interests in the subject of the case were derived from parties other than the
original defendants, there was, therefore, only a change in the form and name of the action and
nothing less.
A party, by varying the form of the action or by bringing forward in a second action additional
parties or arguments, cannot escape the effects of the principle of res judicata when the facts
remain the same or at least where such new parties or matter could have been impleaded or
pleaded in the prior action (Sangalang v. Caparas, 151 SCRA 53 [1987]; Filinvest Credit
Corporation v. Intermediate Appellate Court, 207 SCRA 59 [1992] ).
The Court of Appeals fell into error because of its wrong appreciation of the issue before it. The
issue was whether the Order dated March 27, 1982 of the Court of First Instance of Valenzuela,
Bulacan in Civil Case No. 1120-V-80 operated as res judicata to Civil Case No. 6779-M. What
the Court of Appeals resolved was the question of whether the trial court erred in dismissing
Civil Case No. 1120-V-80 without stating that the dismissal was "without prejudice." Invoking
the rule that justice should not be sacrificed to technicality, the Court of Appeals set aside the
Order of the dismissal dated March 27, 1982 and the Order dated April 27, 1982, denying the
motion for reconsideration in Civil Case No. 1120-V-80.
The Court of Appeals would have been correct if the plaintiff (private respondent herein) in
Civil Case No. 1120-V-80 had timely appealed the Order of dismissal dated March 27, 1982
and raised the issue that the trial court had gravely abused its discretion in dismissing the case
with prejudice in view of the "environmental circumstances" of the case.
Private respondent has only herself to blame for her present predicament. Instead of appealing
from the order of dismissal in Civil Case No. 1120-V-80, she filed another case (Civil Case No.
6779-M) almost one year later.

Before procedural rules can be relaxed to give way to substantive justice, it is implicit that such
liberality be applied in a proper case.

Private respondent is bound by the negligence and mistakes in procedural matters of her counsel
(B.R. Sebastian Enterprises, Inc. v. Court of Appeals, 206 SCRA 28 [1992]; Mobil Oil
Philippines, Inc. v. Court of First Instance, 208 SCRA 523 [1992].

It is a principle of public policy that at the risk of occasional errors, judgments of court should
become final at some definite time fixed by law. The very object of which the courts were
constituted was to put an end to controversies (Vda. de Kilayko v. Tengco, 207 SCRA 600
[1992] ).

WHEREFORE, the decision of the Court of Appeals appealed from is SET ASIDE. A new
judgment is rendered REINSTATING and AFFIRMING the Orders dated March 27, 1982 and
April 29, 1982 of the Regional Trial Court, Branch XVI, Malolos, Bulacan in civil Case No.
6779-M.

SO ORDERED.
When appeal not adequate, or equally beneficial, speedy or adequate
Jaca v Davao Lumber
FERNANDEZ, J.:
This is a petition for certiorari with a prayer for a writ of preliminary injunction filed by Urbano
Jaca and Bonifacio Jaca against the Davao Lumber Company and Honorable Manases Reyes as
Judge of the Court of First Instance of Davao seeking the following relief:
WHEREFORE, petitioners pray —
1. That a writ of Preliminary Injunction be immediately issued restraining the
respondent Judge from carrying out or enforcing the Orders (Annexes "Z"
and "FF") complained of pending the hearing of the merits of the instant
petition;
2. After due hearing, that this Honorable Court annuls and sets aside the
complained Orders (Annexes "Z" and "FF");
Petitioners further pray for all other reliefs which are just and equitable in the
premises.
Davao City, Philippines, February 5, 1966. 1
In November, 1963, Urbano Jaca and Bonifacio Jaca filed with the Court of First Instance of
Davao a complaint for Accounting, Return of Price Differentials and Damages against the
Davao Lumber Company. The case was docketed as Civil Case No. 4189.
The complaint alleges that the plaintiff Urbano Jaca has been, and still is, a licensee of a logging
concession located in the City of Davao, and together with his co-plaintiff, Bonifacio Jaca,
engaged in the logging business of producing timber and logs for export and/or domestic
purposes; that the defendant is a business corporation with which plaintiffs had business
dealings covering the sale and/or exportation of their logs; that sometime in 1954, the herein
parties-litigants entered into an agreement whereby plaintiffs may secure, by way of advances,
either cash or materials, foodstuffs, and/or equipment's from the defendant corporation; that the
payment of such account was to be made either in cash and/or by plaintiff's turning over all the
logs that they produce in the aforesaid concession to the defendant, and in the latter case, the
current prices, either export or domestic, of the logs at the time of their delivery was to be
considered; that while the aforesaid business relationship between the parties was subsisting,
defendant made plaintiff Urbano Jaca execute in its favor a chattel mortgage, a copy of which
instrument. however, plaintiffs were never furnished but that as far as they can recollect the
primary conditions of such chattel mortgage were that plaintiffs would turn over to defendant
corporation all the logs they may produce from the aforesaid concession the same to be priced
either as export or domestic and their value to be applied by defendant to, and be credited for,
the account of plaintiff's indebtedness, and further that in case of need, plaintiffs may secure, by
way of advances, either cash, foodstuffs, materials or equipment's, under an "open credit
account"; that under the aforementioned "open credit account" relationship between the
plaintiffs and defendant, orders were secured by plaintiffs, by way of advances, from the
defendant, this to be paid by them with plaintiffs' production from their concession, liquidating
those old accounts and keeping all accounts current; that in pursuance to the agreement, as
aforestated, plaintiff Urbano Jaca executed assignments of letters of credit in favor of the
defendant, in order that the latter may be able to use, as defendant corporation did in fact use,
the said letters of credit for bank negotiations of the former in the exportation of logs; that the
plaintiffs and the defendant had this business relationship, as aforementioned, from 1954 up to
sometime in August, 1963; that during this whole period of time, the plaintiffs had been
faithfully delivering all their log production to the defendant for export or domestic purposes;
that before the filing of this complaint, the plaintiff made repeated demands on the defendant for
a formal accounting of their business relationship from 1954 up to August, 1963, but that the
defendant failed and refused, and still fails and refuses, to effect such formal accounting,
asserting that it had no time as yet to examine into all the details of the accounting; that
sometime on October 30, 1963, much to their surprise, plaintiffs received letters of demand
from the defendant in which they were requested to pay their accounts in favor of defendant,
which according to the latter had long been overdue; (Copies of such letters are hereto attached
marked as Annexes "A" and "B", and made integral parts of this complaint) that plaintiffs are no
longer indebted to the defendant, and as a matter of act it is their belief that, if a formal
accounting be made, there would still appear a claim in their favor in the amount of
P250,000.00 more or less, representing the price differentials of logs which they delivered to the
defendant from 1954 up to August, 1963; and that further, there was a deliberate fraud practiced
by the defendant on them, especially in defendant's under grading and/or reclassification of logs
delivered to it by plaintiffs; that further, there were many errors committed in the monthly
statements submitted to the plaintiffs, arising from the fact that there were charges of cash,
equipment's, materials and foodstuffs in said statements never ordered and/or received by the
plaintiffs; and still further that the proceeds of the letter of credit were not fully applied and/or
credited to the account of plaintiffs; that defendant has up to the present denied the plaintiffs the
benefits of a formal accounting and inasmuch as the invoices, receipts, vouchers, requisition
slips and other pertinent papers and document of their business transactions are in the
possession of defendant, it is difficult for plaintiffs to ascertain with accuracy the ledger balance
between the parties, unless a detailed examination of the matter is had; that plaintiffs have
thereby been constrained to file this case in Court in order to compel defendant to have a formal
accounting between them, and that it is the desire of plaintiffs that pending the formal hearing of
this case, three commissioners, constituting accountants be judicially appointed for the purpose
of examining all the books, pertinent papers and documents and all other data in relation with
their business transaction; that in order to protect their interest and to litigate this case, the
plaintiffs were compelled to secure and retain the services of attorneys, and that they have
thereby suffered damages in the sum of Twenty Thousand Pesos (P20,000.00) by way of
attorney's fees. 2
In December, 1963, the Davao Lumber Company filed its Answer with Affirmative Defenses
and Counterclaim. 3
In its counterclaim, the Davao Lumber Company alleged that Plaintiffs Urbano Jaca and
Bonifacio Jaca are the ones indebted to the defendant in the sum of P756,236.52 and
P91,651.97, respectively; that on January 24, 1961, the plaintiff Urbano Jaca executed a chattel
mortgage in favor of the defendant to secure the payment of any and all obligations contracted
by him in favor of the defendant covering several chattels valued at P532,000.00; that said
obligation of Urbano Jaca totalling P756,236.52 is overdue and unpaid despite repeated formal
demands for settlement thereof made by defendant; that the action brought by the plaintiffs is
purely baseless and malicious for which the plaintiffs should be required to pay defendant
damages and attorney's fees amounting to at least P20.000.00. 4
In June, 1965, the respondent Judge rendered a decision the dispositive portion of which reads:
CONSIDERING THE FOREGOING, judgment is hereby rendered in favor
of defendant and against the plaintiff, ordering that:
1. The complaint for accounting, return of price differentials and damages
filed by plaintiffs Urbano Jaca and Bonifacio Jaca versus defendant Davao
Lumber Company is dismissed, as it is hereby dismissed;
2. Ordering Urbano Jaca to pay defendant the amount of P756,236.52 with
legal interest from the date of the filing of the counterclaim;
3. Ordering plaintiff Bonifacio Jaca to pay defendant the amount of
P91,651.00 with legal interest;
4. Ordering that the chattel mortgage executed by Urbano Jaca in favor of
defendant Exhibit "3", be foreclosed as it is hereby foreclosed;
5. Ordering plaintiffs to pay jointly and severally P20,000.00 as attorney's
fees in favor of defendant.
6. With cost against plaintiffs.
SO ORDERED.
Given at Davao City, on this 11th day of June, 1965. 5
In September, 1965, the Davao Lumber Company filed a motion for execution pending appeal
on the following grounds:
3. There are good reasons to authorize an order of execution pending appeal
pursuant to Rule 39, Section 2 of the Rules of Court, which provides:
SEC. 2. Execution pending appeal. — On motion of the prevailing party with
notice to the adverse party the court may, in its discretion, order execution to
issue before the expiration of the. time to appeal, upon good reasons to be
stated in a special order. If a record on appeal is filed thereafter the motion
and the special order shall be included therein.
(a) In this same civil case,, the court issued an Order dated November 17,
1964 directing the plaintiffs 'to deliver to the receiver all the properties,
chattels and equipment covered by the Chattel Mortgage, the delivery to be
made within thirty (30) days', but plaintiffs did not, comply with said Order
of November 17, 1964.
(b) Defendant's counsel filed a 'Motion to Implement Order ordering Urbano
Jaca to deliver Chattels to Receiver' dated July 28, 1965, but up this date,
plaintiffs have not complied with said Order.
(c) That there are various reports from the receiver, one of them dated April
19, 1965, stating that the Receiver has not taken custody of the mortgaged
chattels due to the refusal or inability to mortgagor Urbano Jaca to deliver the
same to him.
(d) Despite the long lapse of time from the Order of November 17, 1964, the
court in its Order of September 1, 1965, directed said mortgagor Urbano Jaca
to comply forthwith with the Order dated November 17, 1964 'fifteen (15)
days upon receipt of this Order', but up to this date there has been consistent
refusal or failure to comply with said order of delivery.
(2) Another good reason for execution pending appeal (Rule 39, Section 2) is
the fact that plaintiff Urbano Jaca the mortgagor in the deed of chattel
mortgage dated January 24, 1961, has violated Article 319 of the Revised
Penal Code, for he has sold some of the mortgaged properties to third
persons, particularly, a wrecker, to Teodoro M. Alagon of Davao City on
February 12, 1962 for P10,000.00. A copy of the letter-complaint addressed
by defendant's counsel to the City Fiscal of Davao, dated February 5, 1964 is
attached hereto and made an integral part of this Motion as Annex "A".
(3) Moreover, plaintiffs have not only failed to comply with the Order of the
Honorable Court for the delivery of the properties under receivership to the
Receiver (par. 3 of this Motion) and in fact has violated the Chattel Mortgage
contract (Par. 4 of this Motion); but plaintiffs have no properties or assets
with which to satisfy the judgment of this Honorable Court, which amounts
 to principal items of P756,326.52, P91,651.00 and P20,000.00, or a total of
P867,887.52.
(4) Obviously, the appeal interposed by the plaintiffs is to delay the
enforcement and/or execution of the decision rendered by this Honorable
Court, so that when the Decision correctly rendered by this Honorable Court
should be affirmed on appeal the judgment will become nugatory. 6
The respondent judge granted the motion for execution pending appeal in an order dated
November 29, 1965. 7
Urbano Jaca and Bonifacio Jaca filed a motion for reconsideration of the order granting
execution pending appeal in December, 1965, 8 but the same was denied in an order dated
January 10, 1966. 9
Petitioners Urbano Jaca and Bonifacio Jaca contend that the respondent Judge acted in excess of
jurisdiction and/or with grave abuse of discretion in issuing the order granting execution
pending appeal and the order denying the motion for reconsideration of the order granting
execution pending appeal because said orders were issued in complete disregard of the
applicable provisions of the Rules of Court, the laws, and the settled decisions of the Honorable
Supreme Court.
Petitioners assail the order granting execution pending appeal and the order denying the motion
for execution pending appeal on the following grounds:
1) granting that execution pending appeal win issue in a foreclosure
proceedings —
the respondent Judge acted in excess of jurisdiction when he considered, over
the objection of petitioners, in the motion for reconsideration of the Order
granting premature execution (Annex "AA") the alleged sale by Florentina
Perez, wife of petitioner, Urbano Jaca of the two (2) chevrolet trucks which
were not part of the mortgaged chattels to Atty. Raul Nengasca as a reason
for execution pending appeal in his Order (Annex "FF") denying the motion
for reconsideration, since this matter is not among the grounds stated in the
motion for execution pending appeal (Annex "X") neither has it been brought
out during the hearing of said motion, nor is it one of the reasons stated in the
Order of execution pending appeal (Annex "Z") which is the Order sought to
be reconsidered and it is a cardinal rule in pleadings that a motion should
state the grounds upon which it is based (Section 3, Rule 15 of the Rules of
Court) and the order sought to be obtained and that no other grounds can be
entertained, passed upon and considered by the court over the objection of
the adverse party;
2) the respondent judge acted with grave abuse of discretion equivalent to
lack of jurisdiction in finding that there exists special or good reasons for
execution pending appeal because discretionary execution under Section 2,
Rule 39 of the Rules of Court will only issue if there are superior
circumstances demanding urgency which outweigh the injury or damage that
the losing party may suffer upon securing a reversal of the judgment on
appeal considering the merits of his appeal (Moran, Com. on the Rules of
Court Vol. 2, Part II, 1963 ed., p. 239 and p. 242, citing Aguilos vs. Barrios,
et al. 72 Phil. 285: Ledesma vs. Teodoro, 52 O.G. 784; De Leon, et al. vs.
Soriano, et al., L-7684, Sept. 17, 1954; City of Bacolod vs. Enriquez, 55
O.G. p. 10545), and in the instant case, the reasons ultimately relied upon by
the respondent Judge in granting execution pending appeal as stated in the
Order (Annex "FF"), denying petitioners motion for reconsideration of the
Order granting execution, are not such superior circumstances demanding
urgency of execution because:
(a) the first reason that petitioner Urbano Jaca sold a wrecker to Teodoro M.
Alagon is alleged to have been made yet on February 12, 1962, or about over
one and half years prior to the filing of the instant case on November 22,
1963, and such sale would not show a fraudulent design on the part of
petitioner Urbano Jaca to defeat the judgment against him by disposing of the
mortgaged chattels and thus would demand urgency of execution of the
judgment;
(b) the second reason regarding the sale of the two chevrolet trucks (not
alleged to be a part of the mortgaged chattels to the respondent Davao
Lumber Company) to Atty. Raul Nengasca does not refer to the property of
either of the petitioners, neither does it refer to a sale made by anyone of
them; rather, it refers to a sale made by Florentina Perez (wife of petitioner
Urbano Jaca), who is not a party to the action, regarding her own property;
(c) the third and last reason that the orders of the court directing petitioner
Urbano Jaca to deliver all the mortgaged chattels to the receiver are valid and
must be complied with could not even be considered any reason at all for
immediate execution, as it does not supply at all any element of a superior
circumstance requiring urgency of execution for there is, in fact, no legal
connection whatsoever in the validity of such Orders and their compliance
with the propriety of an immediate execution of the judgment pending
appeal;
furthermore, the appeal of petitioners are based on good grounds and could
never be said to be intended merely for delay, and that the amount involved
in the judgment is huge;
3) That there are, in fact, good reasons for not allowing execution pending
appeal considering —
 (1) that the amount involved in the judgment is huge;
execution, petitioners should have filed a supersedeas bond in accordance with Sec. 3 of Rule 3.
(2) that the petitioners have challenged the Counterclaim, under which the
judgment sought to be executed is rendered, for lack of cause of action;
(3) that the petitioners have challenged the chattel mortgage, under which the
judgment of foreclosure has been rendered, as null and void ab initio and that
no cause of action can arise therefrom;
(4) that the petitioners have challenged the Commissioner's Report to be null
and void which is the primary, if not in fact the sole, evidence of said
respondent on its Counterclaim and upon which the judgment sought to be
executed is based;
4) no execution pending appeal, in fact, can issue on foreclosure proceedings
because the ninety-day period provided in Section 2, Rule 68 of the Rules of
Court is a substantive right granted to the mortgagor-debtor which may not
be omitted and that upon taking an appeal, said period is suspended and is
not revived until the judgment is affirmed by the appellate court and the case
returned to the trial court, and in the instant case, the respondent judge acted
in excess of jurisdiction in allowing execution pending appeal when the
Counterclaim under which the judgment sought to be executed is rendered, is
for a foreclosure of chattel mortgage and that petitioners have taken an
appeal to the judgment rendered against them ...;
5) granting arguendo, that the foreclosure proceedings is only against
petitioner Urbano Jaca as mortgagor, but the action against petitioner
Bonifacio Jaca is for a collection of a sum of money, the respondent Judge
acted with grave abuse of discretion equivalent to lack of jurisdiction in
allowing execution pending appeal as against said petitioner Bonifacio Jaca
because in so far as said petitioner is concerned there is no showing of any
special or good reasons, in fact, there is no showing of any reason at all
anywhere in the records of the case, including the Orders complained of, as a
basis for which discretionary execution may be issued against him. 10
The private respondent maintains that the respondent judge acted in full compliance with the
Rules of Court, the law and applicable decisions of this Honorable Court because:
1) The present case is an action for accounting and not a foreclosure proceeding. Therefore,
execution pending appeal can be issued pursuant to Sec. 2 of Rule 39, Rules of Court. This
provision of the Rules of Court applies in the present case for there are good and valid reasons
for the issuance of a writ of execution pending appeal as stated in respondents' Motion (Annex
"X"). Moreover, petitioners have no properties or assets with which to satisfy the judgment of
P867,887.52 plus other items stated in the Decision. The respondent Judge, therefore, was
correct in ordering the issuance of a writ of execution (Annex "1"). Furthermore, to stay
a) Respondent denies the erroneous and gratuitous conclusion of alleged
'excess of jurisdiction' as alleged in par. 44(a) of the Petition. It further denies
the other misleading statements alleged therein, the truth of the matter being
the grounds enumerated in the Motion for Execution Pending Appeal (Annex
"X") and the reasons mentioned in the Order (Annex "Z") granting said
motion.
b) Respondent denies the erroneous conclusion that the respondent Judge
acted with grave abuse of discretion, equivalent to lack of jurisdiction' as
alleged in par. 44(b) of the Petition, and states that the respondent Judge
correctly acted in accordance with Sec. 2, Rule 39 of the Rules of Court. It
further denies the misleading statement therein that the reasons ultimately
relied upon by the respondent Judge are those stated in the Order (Annex
"FF"), which is false, because the good and valid reasons relied upon by the
respondent Judge are those stated in his Order (Annex "Z") granting the
Motion for Execution Pending Appeal (Annex "X").
(1) Respondent admits the allegation that petitioner Urbano Jaca sold a
wrecker to Teodoro M. Alagon on February 12, 1962 for P10,000.00; and
denies the statement that such sale would not show a fraudulent design on his
part to defeat the judgment against him. It further alleges that it is one of the
good and valid reasons for execution pending appeal (Rule 39, Sec. 2),
because said petitioner, the mortgagor in the deed of chattel mortgage dated
January 24, 1961, has violated Article 319 of the Revised Penal Code in
selling the said mortgaged property;
(2) The misleading allegations contained in subparagraphs 2 and 3 of par.
44(b) of the Petition are false, for they are matters that arose in the
petitioners' Motion for Reconsideration of the Order granting execution
pending appeal. Respondent further states that they are not the original and
valid reasons given by the respondent Judge in his Order (Annex "Z");
c) There are goods reasons for allowing execution pending appeal
considering that —
(1) the amount involved in the judgment in favor of respondent Davao
Lumber Company is P867,887.52 plus attorney's fees of P20,000.00, and the
petitioners admitted at the hearing of the Motion for Execution Pending
Appeal that they are insolvent (See Order, Annex "Z" );
(2) the petitioners have never challenged the Counterclaim of respondent
Davao Lumber Company during the hearing on the merits;
 (3) the petitioners failed to present any evidence challenging the chattel
mortgage under which the counterclaim for foreclosure has been rendered;
(4) the petitioners have not disproved the Commissioner's Report (Annex
"K"). In fact, they failed to present their own evidence before the
Commissioner which might tend to controvert the undisputed documentary
evidence of respondent Davao Lumber Company;
(5.) execution pending appeal was properly issued in the present case, which
is an ordinary civil action for accounting and not primarily a foreclosure of
chattel mortgage the respondent Judge, therefore, acted in full compliance
with the law and jurisprudence in allowing execution pending appeal;
(6) the judgment sought to be executed pending appeal sentences petitioner
Urbano Jaca to pay respondent Davao Lumber Company the amount of
P756,236.52 with legal interest; sentences petitioner Bonifacio Jaca to pay
said respondent the amount of P91,651.00 with legal interest; orders the
Chattel Mortgage executed by Urbano Jaca in favor of said respondent
foreclosed; orders petitioners to pay, jointly and severally, the amount of
P20,000.00 as attorney's fees and costs; the said judgment was rendered after
hearing on the merits of its action for accounting, which is not a proceeding
for foreclosure of chattel mortgage; the provisions of the Rules of Court on
foreclosure proceeding invoked by petitioners do not find any application in
the case at bar; the respondent Judge, therefore, in allowing execution
pending appeal, precisely acted in full compliance with Sec. 2 of Rule 39;
(7) as above pointed out, the judgment rendered in this case is joint and
several, and consequently, the respondent Judge was correct in ordering the
execution thereof as against both petitioners who have no properties or assets
to satisfy the judgment in favor of respondent company. 11
The basic issue in this case is whether or not there are good reasons justifying the issuance of an
order granting premature execution.
Section 2, Rule 39 of the Rules of Court provides that on motion of the prevailing party with
notice to the adverse party the court may, in its discretion, order execution to issue even before
the expiration of the time to appeal, upon good reasons to be stated in a special order. If a record
on appeal is filed thereafter, the motion and the special order shall be included therein. The
discretionary power of the Court of First Instance to grant or deny a motion for execution before
the expiration of the time to appeal will not be interfered with by the appellate court, unless it be
shown that there has been an abuse thereof or a subsequent change of conditions. 12
As provided in Sec. 2, Rule 39 of the New Rules of Court, the existence of good reasons is what
confers discretionary power on a court of first instance to issue a writ of execution pending
appeal. 13 The reasons allowing execution must constitute superior circumstances demanding
urgency which will outweigh the injury or damage should the losing party secure a reversal of
the judgment on appeal. 14
The decision in Civil Case No. 4189 requires petitioners to pay the enormous amount of
P867,887.52. Clearly, premature execution of said decision wig result in irreparable damage to
petitioners as the collection of said amount may be enforced through the seizure of money
and/or sale of properties used in the logging business of petitioners. In other words, execution of
the decision in Civil Case No. 4189 may result in the termination of petitioner's business. Thus,
any damage to the petitioners brought about by the premature execution of the decision will be
justified only upon a finding that the appeal is being taken only for the purpose of delay and of
rendering the judgment nugatory.
The facts of record show that the petitioner's appeal is not frivolous and not intended for delay.
The findings of the respondent judge that the petitioners are indebted to the respondent Davao
Lumber Company are based solely on the report submitted by Estanislao R. Lagman, the
commissioner appointed by the court. This report was assailed by the petitioners as null and
void in a motion to strike out the report from the records of the case. According to petitioners,
the report is null and void because:
... the so-called 'findings of the Commissioner in his report filed before this
Honorable Court is the result of the exercise of certain highly irregular
function not contemplated by the Rules of Court and therefore deprived
Plaintiffs' their constitutional right to their day in court.
ARGUMENTS:
1. That among other things, Section 3, Rule 33 of Rules of Court, provides:
Section 3: ... Subject to the specifications and limitations stated in the order
the commissioner has and shall exercise the power to regulate the
proceedings in every hearing before him and to do all act and take measures
necessary or proper for the efficient performance of his duties under the
order, ... The trial or hearing before him shall proceed in all respect as
though the same had been had before the Court.
2. That on August 22, 1964, without the proper notice to their respective
counsels, the Plaintiffs received the following letter from the Commissioner,
pertinent portions of which reads as follows: and, copy of which letter is
attached hereto, forming an integral part in this Opposition, marked Annex
"A" — In compliance to the above order, I am now to proceed, as ordered by
the Court, to examine your books of accounts and other records for the year
1962 and 1963.
I will be dropping at your office on August 25, 1964. Kindly have our records
ready.
 3. That on August 25, 1964, the Commissioner went to Plaintiff's' office and
asked to see the Books, and if possible to bring the same with him to his
office; that, the plaintiffs' counsel refused to have said records examined in
such manner;
4. That the Counsel for the Plaintiffs reminded the Commissioner on many
occasions that, the examination of books and records of Accounts should be
done in a manner provided for under the Rules of Court and, that in
pursuance of said mandate, a hearing and/or proceedings be conducted in the
presence of all parties, their witnesses and, their counsels and, the hearing be
conducted as if it were taken before the court of justice, as said accounts
being one controversial and contested in issues;
5. That said commissioner refused to conduct said hearing in accordance to
law;
6. That report is void in law. 15
In an order dated November 17, 1964, the respondent judge approved the commissioners'
report in toto As to the allegation of the plaintiff that they were denied their day in court, the
respondent judge stated that "plaintiffs deliberately ignored to comply with the lawful order of
the court directing them to present the pertinent books of accounts on the 12th day of October,
1964, at 2:00 P.M. Sala of Branch 11, and therefore, their position that they are denied their day
in court is clearly untenable." 16
Petitioners filed their motion for reconsideration of the order approving the commissioner's
report in November, 1964, explaining that their failure to appear was due to the fact that they
received the order requiring them to appear on October 12, 1964 already after said date when it
was too late for them to comply with the order of appearance. 17 Notwithstanding the reasonable
explanation of their absence in the hearing of October 12, 1964, the respondent judge denied the
motion for reconsideration in an order dated December 4, 1964. 18
It is obvious that the refusal of the respondent judge to order a hearing before the commissioner
was in clear violation of Section 3, Rule 33, Revised Rules of Court, which specifically
provides "... that the trial or hearing before a commissioner shall proceed in all respects as
though the same had been had before the court." For this purpose Section 5 of the same Rule
provides that "upon receipt of the order of reference, unless otherwise provided therein, the
commissioner shall forthwith set a time and place for the first meeting of the parties or their
attorneys to be held within ten (10) days after the date of reference ..." Pertinent also is Section
10 of Rule 33 which provides that "... Objections to the report based upon grounds which were
available to the parties during the proceedings before the commissioner, other than objections to
the findings and conclusions therein set forth, shall not be considered by the court unless they
were made before the commissioner."
The respondent judge's refusal to order the commissioner to conduct a hearing in accordance
with Section 5, Rule 33 was fatal to the cause of the petitioners. Under Section 10 of Rule 33,
objections to the report based upon grounds which were available to the parties during the
proceedings before the commissioner other than objections to the findings and conclusions
therein set forth shall not be considered by the court, unless they were made before the
commissioner. Objections to the report which were available to the parties during the
proceedings refer to objections to the admissibility or non-admissibility of evidence to be
considered by the commissioner. Since no meeting was held before the commissioner,
petitioners never had the opportunity to object to the admissibility of evidence of cash,
equipment, materials and foodstuff, which they alleged in their complaint, were never received
by them. Also, they failed to question the failure of the commissioner to include in his
examination the price quotations of the logs which, as claimed in the complaint, were under
classified and undergraded.
The records show that respondent Davao Lumber Company was able to prove its claim against
petitioners because respondent judge refused to order the commissioner to hold a hearing as
required by the rules. Thus, objections which petitioners may have against the claims of
respondent were never considered. In the same manner, the claim of petitioner that respondent
Davao Lumber Company is indebted to them was not also considered. The Commissioner
limited his examination to the following:
MR. URBANO LACAS ACCOUNTS:
(a) From Feb. 17, 1961 to Oct. 31, 1962, Urbano Jaca purchased on account
from the Merchandise Dept. of Davao Lumber Co. per statement attached,
marked schedule 1......................................................................................
P190:010.41
(b) From July 2, 1960 to Oct. 31, 1962, Urbano Jaca purchased on account
from the Sawmill Dept. of Davao Lumber Co. per statement hereto attached,
marked schedule 2.......................................................................................
P75,075.73
(c) Old vales or cash advances prior to July 25, 1963 which Urbano Jaca
replaced with four (4) BPI Checks Nos. D-236619 to D-236622 P50,000.00
each as alleged by DLC
........................................................................................... P200,000.00
(d) From Nov. 3, 1962 to Aug. 30, 1963, Urbano Jaca purchased on accounts
from the Sawmill Dept. various goods, per attached statement, marked
Schedule 3 ...................................................................................................
P57,459.27
 (e) From Nov. 3, 1962 to Aug. 30, 1963, Urbano Jaca purchased from the
Mds. Dept. of DLC various goods, per attached statement, marked Scheduled
4 ................................................................................................ P68,857.07
(f) From July 25, 1963 to Sept. 16, 1963 Urbano Jaca obtained cash advances
or vales per attached statement, marked schedule 5............ P164,844.45
(g) Purchase of gasoline made by Urbano Jaca from Shell Co., under Davao
Lumber Co.'s guaranty ......................................................................
P2,523.60
Total amount due Davao Lumber Co. from Urbano Jaca .......... P758,770.53
The amount of P2,523.60 due Shell Co. may be deducted from the total
amount if Urbano Jaca can show proof that the account has been paid.
MR. BONIFACIO JACAS ACCOUNTS:
(a) From Nov. 3, 1962 to Aug. 8, 1963 Bonifacio Jaca purchased on account
various goods from the Sawmill Dept. of DLC per attached statement,.
marked schedule
6.................................................................................................. P39,999.69
(b) From Feb. 4, 1963 to Aug. 8, 1963 Bonifacio Jaca purchased on account
from the Mdse. Dept. various goods, per attached statement marked schedule
7...................................................................................................................
P48,319.08
(c) Purchases of gasoline from Shell Co. guaranteed by Davao Lumber Co.
................................................................................................................
P5,252.12.
(d) From Aug. 6, 1963 to Aug. 23, 1963, Bonifacio Jaca obtained cash
advances or vales, per attached statement marked schedule 8...........
P3,333.20
Total amount due Davao Lumber Co. from Mr. Bonifacio Jaca P96,904.09. 19
Clearly, the examination was only made on advances made to petitioners. There was not even
an attempt to examine receipts of payments made by petitioners. It is hard to believe that the
petitioners had not paid any amount for the advances made to them. In fact, the respondents
stated in paragraph 4 of its answer to the complaint that the plaintiffs stopped delivering logs in
August, 1963, 20 indicating that from 1962 to 1963, the years included in the report of the
commissioner, the petitioners had delivered logs to the Davao Lumber Company.
There is doubt that petitioners are really indebted to respondent Davao Lumber Company in
such a big amount as found by the trial court. The appeal of the petitioner appears to be
meritorious. The fear of respondent that the judgment of the trial court might not be satisfied if
not executed at once is not well founded. If the judgment is executed now, and on appeal the
same is reversed, although there are provisions for restitution, damages incurred by petitioners
can not be fully compensated. 21
The reasons stated in the order of execution pending appeal are not well founded.
The first reason stated in the order was the consistent refusal of petitioner to deliver the
mortgaged chattels to the receiver. 22 The records disclose that respondent Davao Lumber
Company is not even entitled to the appointment of a receiver. It is an established rule that the
applicant for receivership must have an actual and existing interest in the property for which a
receiver is sought to be appointed. 23 The Davao Lumber Company's proof of interest in the
property is the deed of chattel mortgage executed by Urbano Jaca in favor of the Davao Lumber
Company on January 24, 1961. This deed of chattel mortgage is void because it provides that
the security stated therein is for the payment of any and all obligations herein before contracted
and which may hereafter be contracted by the Mortgagor in favor of the Mortgagee. 24 In the
case of Belgian Catholic Missionaries vs. Magallanes Press this Court held:
A mortgage that contains a stipulation in regard to future advances in the
credit will take effect only from the date the same are made and not from the
date of the mortgage (11 CJ, 448; 5 RCL 420-421). ... Where the statute
provides that the parties to a chattel mortgage must make oath that the debt is
a just debt, honestly due and owing from the mortgagor to the mortgagee, it
is obvious that a valid mortgage cannot be made to secure a debt to be
thereafter contracted. (11 CJ. 448) 25
The second reason stated was the fact that petitioner Urbano Jaca violated Article 319 of the
Revised Penal Code by selling to a certain Teodoro Alagon some of the mortgaged
properties. 26 As already discussed, the deed of chattel mortgage executed by Urbano Jaca in
favor of the Davao Lumber Company is void. Hence, petitioner Urbano Jaca could not have
violated Article 319 of the Revised Penal Code. Moreover, the respondent Davao Lumber
Company has not successfully refuted the allegation of the petitioners that the sale of the
wrecker to Teodoro Alagon was exclusively negotiated by the lumber company's managing
partner, Tian Se, and that the latter caused Urbano Jaca to sign the deed of sale because he was
the owner of the wrecker.
The third reason stated is the fact that petitioners have no properties and assets to satisfy the
judgment. 27 The basis of respondent judge's conclusion that petitioners do not have sufficient
assets is an unsubstantiated allegation in the motion for execution pending appeal of respondent
lumber company. 28 To rectify this omission, respondent lumber company, in its opposition to
the motion for reconsideration of the order of execution pending appeal, tried to point out that
the sale of two chevrolet trucks by Urbano Jaca and their failure to file a counterbond indicate
that they are without sufficient assets. 29 This later attempt to substantiate a baseless allegation
in the motion for execution pending appeal is futile. The trucks alleged to be sold are not
properties of petitioner Urbano Jaca They are paraphernalia properties of his wife, Florentina
Perez, and the same trucks were in fact sold by her. And even if said trucks were owned by
Urbano Jaca their sale to Atty. Raul Nengasca does not totally indicate insolvency. As has been
repeatedly observed, petitioner Urbano Jaca is engaged in business. Sale of property used in
business does not establish insolvency. The sale may have been prompted by the need for more
modern equipment on account of obsolescence, or the need of to be directed to more profitable
endeavor. The same reason applies to their failure to file a counterbound. The cash needed for
the counterbound may be utilized for the continuance of the business or to increase business
profits. In short, the acts of petitioner can not be always be interpreted as signs of insolvency but
may also indicate sound business judgment prompted by the need to have liquid reserve of cash.

In its answer to the petition, 30 respondent lumber company contends that petitioners, having
availed of the remedy of appeal are barred form filling a petition for certiorari. Although
Section 1, Rule 65 of the Rules of Court provides that the special civil action of certiorari may
only be invoked when "there is no appeal, nor any plain speedy and adequate remedy in the
course of law," this rule is not without exception. The availability of the ordinary course of
appeal does not constitute sufficient ground to prevent a party from making use of the
extraordinary remedy of certiorari where the appeal is not an adequate remedy or equally
beneficial, speedy and sufficient. 31 It is the inadequacy — not the mere absence — of all other
legal remedies and the danger of failure of justice without the writ, that must usually determine
the propriety of certiorari.

In the case at bar, the remedy of appeal is inadequate. It will not immediately relieve petitioners
from the injurious effect of the order granting execution. The slow and inexpensive remedy of
appeal will not prevent respondent judge from executing his decision requiring petitioners to
pay the huge amount of P867,887.52. Moreover, to dismiss the petition on the ground that
petitioner has already availed of the remedy of appeal will only aggravate the patent injustice
already inflicted on petitioners.

The reasons stated in the order granting execution pending appeal are not sufficient.

WHEREFORE, the petition for writ of certiorari is granted and the orders granting execution
pending appeal dated November 29, 1965 and the order denying the motion for reconsideration
of the order granting execution pending appeal dated January 10, 1966 are nullified and set
aside, without pronouncement as to costs.

SO ORDERED.
Motion for reconsideration required; exceptions
Tan v CA
FRANCISCO, J.:
Petitioner Antonio P. Tan was the lessee of a piece of property located at 3658 Ramon
Magsaysay Boulevard, Sampaloc, Manila when on April 21, 1986, respondent DPG
Developmentand Management Corporation (DPG for brevity) acquired ownership thereof by
purchase from one Manuel J. Gonzales. Subsequently, DPG filed with the Metropolitan Trial
Court of Manila on April 13, 1989 an ejectment suit for nonpayment of rentals against Vermont
Packaging, Inc. which was managed by petitioner.
During the pendency of said suit, petitioner, on January 24, 1990, filed Civil Case No. 90-
51767 against the Register of Deeds of Manila and DPG for cancellation/annulment of TCT No.
169146 issued in the name of DPG. In a nutshell, this complaint challenges the validity of TCT
No. 169146 which, according to petitioner, emanated from TCT No. 165501 that covered parcels
of land outside of Manila.
DPG received summons and the copy of the complaint on February 6, 1990. More than a
month later or on March 22, 1990, DPGs then counsel, Atty. Abundio Bello, filed a motion for
extension of time to file its answer to the complaint. The motion was granted. However, instead
of filing the answer within the extended period, Atty. Bello filed a second motion for more time
to file answer. The court granted the motion but only for fifteen (15) days from April 25, 1990.
As DPG still failed to file its answer, petitioner filed a motion to declare the former in
default. On May 22, 1990, the trial court granted the motion and accordingly declared DPG in
default. Petitioner thereafter presented evidence.
On October 5, 1990, the trial court rendered a decision in Civil Case No. 90-51767 favoring
petitioner, the dispositive portion of which reads:
WHEREFORE, it is hereby ordered that TCT No. 169146 registered in the name of defendant
DPG Development & Management Corporation be cancelled with the consequential effect that
the land reverts to the government disposable to qualified applicants. It is further ordered that
the Bureau of Lands consider the application of the plaintiff for the purchase of the area
occupied by him pursuant to the recommendation of the land investigator on the matter.
Attorneys fees in the amount of P5,000.00.
[1]
Cost of suit.
DPG received a copy of the trial courts decision on October 25, 1990. Nine (9) days later or
on November 3, 1990, Atty. Benjamin S. Formoso filed a notice of appearance as new counsel
for DPG. On the same day, said counsel filed a motion for new trial and to admit answer with
counterclaim.
Petitioner filed a comment thereon with an omnibus motion to strike out DPGs motion for
new trial, coupled with a prayer for the issuance of a writ of execution.
On November 23, 1990, the trial court issued an Order denying, in effect, the motion for
new trial, the entirety of which reads:
ORDER
Today is the consideration of the Motion for New Trial and Motion to Admit Answer of DPG
Dev. & Mgt. Corp. filed by Atty. Benjamin Formoso. The plaintiff opposed the Motion for New
Trial on the following grounds:
1) Defendant is represented by counsel of record in the person of Atty. Abundio Bello and that
there is no substitution of counsel by the mere filing of Notice of Appearance by Atty. Benjamin
Formoso;
2) Defendant did not even file the requisite motion to lift order of default to regain its standing
or personality before the Court and that the mere filing of motion by the alleged new counsel
did not automatically suspend the running of the period; and
3) That the decision in the above-entitled case had not become final and executory.
The records will show that Atty. Abundio Bello filed a Withdrawal of Apperance (sic) on
November 5, 1990 after the defendant DPG Dev. & Mgt. Corp. had already been furnished with
a copy of the decision by this Court, and that the Notice of Appearance of Atty. Benjamin
Formoso on November 2, 1990 was actually ahead of the withdrawal of appearance by Atty.
Abundio Bello on November 5, 1990. Such being the case, the appearance of new counsel Atty.
Benjamin Formoso, granting that he is the authorized counsel for the defendant, did not actually
stop the running of the period within which to appeal the adverse decision of the court.
The Decision of the Court dated October 5, 1990 had already become final and executory, and
the Motion for New Trial need not be acted upon by the Court.
WHEREFORE, let there be issued a Writ og (sic) Execution in the above-entitled case, the same
to be implemented by Branch Sheriff Ramon G. Enriquez of this Court.
SO ORDERED.
DPG questioned this Order through a petition for certiorari before public respondent Court
of Appeals (CA) claiming that the trial court gravely abused its discretion and exceeded its
jurisdiction in failing to take action on and/or in denying its motion for new trial and to admit
answer, and in granting petitioners omnibus motion to strike out said motion for new trial and
prayer for the issuance of a writ of execution.
 In its Decision of October 23, 1992 disposing of DPGs petition for certiorari,[2] the CA
ruled for DPG, the dispositive portion of which reads:
WHEREFORE, the petition is hereby GRANTED. As prayed for, the ORDER of the respondent
judge issued on November 23, 1990, is hereby ANNULLED and SET ASIDE.
As a consequence,
(1) The writ of execution and alias writ of execution that have been issued are likewise declared
null and void;
(2) Petitioners motion for new trial and for admission of answer that the order of November 23,
1990 has, in effect, denied is considered GRANTED;
(3) Petitioners Answer to the private respondents complaint in Civil Case No. 90-51767 is,
accordingly, considered ADMITTED; and
(4) The DECISION of respondent judge in said case is hereby VACATED, and respondent
judge is hereby ordered to conduct a new trial in said civil case. Conformably to Section 5 of
Rule 37 however, the recorded evidence taken upon the former trial so far as the same is
material and competent to establish the issues, shall be used at the new trial without retaking the
same.
SO ORDERED.
Hence, this petition, with the following principal arguments raised by petitioner in support
thereof:
1) the CA should not have entertained DPGs petition for certiorari considering that no motion
for reconsideration of the trial courts October 5, 1990 Decision was first filed by DPG and that
the proper remedy is an appeal;
2) the filing of the motion for new trial did not interrupt the finality of the trial courts Decision
inasmuch as there was no valid substitution between DPGs previous counsel on record Atty.
Bello and new counsel Atty. Formoso who filed the said motion for new trial.
The petition must fail.
On the first argument, as a rule, the special civil action of certiorari will not lie unless a
motion for reconsideration is first filed before the respondent court to allow it an opportunity to
correct its errors.[3] However, this rule admits of certain recognized exceptions such as (a) where
the order is a patent nullity,[4] as where the Court a quo had no jurisdiction;[5] (b) where the
questions raised in the certiorari proceeding have been duly raised and passed upon by the lower
court,[6] or are the same as those raised and passed upon in the lower court;[7] (c) where there is an
urgent necessity for the resolution of the question and any further delay would prejudice the
interests of the Government[8] or of the petitioner[9] or the subject matter of the action is
perishable;[10] (d) where, under the circumstances, a motion for reconsideration would be
useless;[11] (e) where petitioner was deprived of due process and there is extreme urgency for
relief;[12] (f) where, in a criminal case, relief from an order of arrest is urgent and the granting of
such relief by the trial Court is improbable;[13] (g) where the proceedings in the lower court are a
nullity for lack of due process;[14] (h) where the proceedings was ex parte or in which the
petitioner had no opportunity to object;[15] and (i) where the issue raised is one purely of law or
where public interest is involved.[16] It is exceptive circumstance (b) that justified DPGs non-filing
of a motion for reconsideration, inasmuch as DPGs petition for certiorari before the CA involved
a similar issue or question passed upon by the trial court in its November 23, 1990 Order, i.e., the
propriety of the motion for new trial filed by DPGs new counsel (Atty. Formoso).
It must also be stressed that what is determinative of the propriety of certiorari is the danger
of failure of justice without the writ, not the mere absence of all other legal remedies.[17]Thus,
even when appeal is available and is the proper remedy, a writ of certiorari has been allowed
when the orders of the lower court were issued either in excess of or without
jurisdiction.[18] Certiorari may also be availed of where an appeal would be slow, inadequate and
insufficient[19] and that to strictly observe the general rule would result in a miscarriage of
justice.[20]This is especially true when the petition, such as DPGs certiorari petition before the
CA, appears to be meritorious and the trial judge indeed seems to have committed grave abuse of
discretion.
This brings us to the second argument which touches on the heart of the matter. There is no
question that the remedy against a judgment by default is a motion for new trial under Rule 37 of
the Rules of Court which should be filed within the period for perfecting an appeal, and that the
timely filing thereof interrupts the 15-day reglementary period. The CA has thus correctly
observed that:
It is settled in Our jurisprudence that a motion for new trial is the appropriate remedy when the
defendant discovers that he has been declared in default and that a judgment has already been
rendered, which has not, however, become final and executory as yet. (Leyte vs. Cusi, Jr., 152
SCRA 496; Tiburcio vs. Castro, 161 SCRA 583; Dolos vs. Court of Appeals, 188 SCRA 413;
Circle Finance Corp vs. Court of Appeals, 196 SCRA 166). It is not required that the defendant
file first a motion to life the order of default to regain his standing.
The filing of a motion for new trial suspends the reglementary period for the attainment by the
decision of finality. (Rule 41, Section 3; PCIBank vs. Ortiz, 150 SCRA 383) for
If a new trial be granted, x x x the judgment shall be vacated, and the action shall stand for
trial de novo, x x x. (Rule 37, Section 5)[21]
There is also no dispute that a motion for new trial (and to admit answer with counterclaim)
was filed on behalf of DPG within the 15-day appeal period, i.e., on November 3, 1990 or just
nine (9) days from DPGs receipt (on October 25, 1990) of a copy of the trial courts October 5,
1990 Decision. Petitioner insists on the correctness of the trial courts finding (contained in its
November 23, 1990 Order earlier quoted in this Decision) that the motion for new trial filed by
DPGs new counsel Atty. Formoso did not interrupt the finality of the trial courts October 5, 1990
Decision since there was no proper substitution of DPGs original counsel of record Atty. Bello
by Atty. Formoso, it appearing that Atty. Formosos notice of appearance did not contain Atty.
Bellos written consent to the substitution and that said notice of appearance even preceded Atty.
Bellos notice of withdrawal as DPGs counsel. And so petitioner argues that the CA erred in
reversing the trial court and in allowing a new trial to be conducted.
Petitioners and the trial courts position, indeed, cannot be sustained. Atty. Formosos
appearance as second attorney, which bears the conformity of DPG, does not authorize the
presumption that the authority of the first attorney (Atty. Bello) has been withdrawn, because a
party may have two or more lawyers working in collaboration as his counsel in a given
litigation.[22] Certainly, DPG cannot be denied the prerogative to employ additional counsel to
protect his rights. Even granting that Atty. Formosos appearance was really intended to be a
substitution and that there was lack of strict observance of the requisites thereof, to wit:
a) upon written application;
b) with written consent of the client;
c) upon written consent of the attorney to be substituted; and
d) in case the consent of attorney to be substituted cannot be obtained, there must be at least a
proof of notice that the motion for substitution has been served upon him in the manner
prescribed by the rules (Section 26, Rule 138, Rules of Court), [23]
the attendant circumstances here are compelling enough to validate the substitution.
Note that DPG was declared in default (and was thus denied opportunity to present evidence
and participate in the trial) by reason of Atty. Bellos negligence. Said counsel failed to file an
answer despite being given by the trial court two (2) extensions of time to file it. True, the general
rule is that the client is bound by the mistakes of counsel. But this is not a hard and fast rule. In De
Guzman v. Sandiganbayan[24] for instance, this Court, ever mindful of the supremacy of
substantive rights over technicalities and invoking its power to suspend the rules, relieved
petitioner De Guzman from the costly importunings of his previous lawyers who filed a demurrer
to evidence despite leave for that purpose having been denied by the trial court. We thus said:
x x x. Under the circumstances, higher interests of justice and equity demand that petitioner be
not penalized for the costly importunings of his previous lawyers based on the same principles
why this Court had, on many occasions where it granted new trial, excused parties from the
negligence or mistakes of counsel. To cling to the general rule in this case is only to condone
rather than rectify a serious injustice to petitioners whose only fault was to repose his faith and
entrust his innocence to his previous lawyers.
xxx xxx xxx
Let us not forget that the rules of procedure should be viewed as mere tools designed to
facilitate the attainment of justice. Their strict and rigid application, which would result in
technicalities that tend to frustrate rather than promote substantial justice, must always be
avoided. Even the Rules of Court envision this liberality.
xxx xxx xxx
The Rules of Court was conceived and promulgated to set forth guidelines in the dispensation of
justice but not to bind and chain the hand that dispenses it, for otherwise, courts will be mere
slaves to or robots of technical rules, shorn of judicial discretion. That is precisely why courts in
rendering real justice have always been, as they in fact ought to be, conscientiously guided by
the norm that when on the balance, technicalities take a backseat against substantive rights, and
not the other way around. Truly then, technicalities, in the appropriate language of Justice
Makalintal, should give way to the realities of the situation.[25] (Underscoring ours)
Being similarly situated, DPG should also benefit from the liberal application of the rules
specifically pertaining to substitution of counsels.
Of course, it would have been different if the appearance of a new counsel was, for instance,
occasioned by the death of the original counsel of record. In which case, all the requirements of
a proper substitution must be met, one of which is a verified proof of the death of such
attorney. The party seeking substitution, therefore, cannot escape the effects of new counsels error
in failing to furnish the required proof of death, as such negligence does not result in deprivation
of due process to said party.
Finally, and as correctly ruled by the CA, DPG is entitled to a new trial it prays for inasmuch
as negligence or incompetency of counsel is a well-recognized ground for new trial.[26] This would
rectify the serious error committed by DPGs former counsel Atty. Bello, give the DPG the
opportunity to present its evidence with the assistance of a hopefully more vigilant counsel (Atty.
Formoso), and thus level the playing field.
WHEREFORE, premises considered, the instant petition is hereby DENIED. The assailed
Decision of the Court of Appeals dated October 23, 1992 is AFFIRMED in toto. Let this case be
REMANDED to the court of origin for further proceedings.
SO ORDERED.