G.R. No.
197937 April 3, 2013 xxxx
FILM DEVELOPMENT COUNCIL OF THE PHILIPPINES, Petitioner,
vs.
SM PRIME HOLDINGS, INC., Respondent.
DECISION
VILLARAMA, JR., J.:
Petitioner appeals the Orders1 dated February 21, 2011 and July 25,
2011 of the Regional Trial Court (RTC) of Pasig City, Branch 166
which granted respondent's motion to dismiss on the ground of litis
pendentia.
The factual antecedents:
Respondent SM Prime Holdings, Inc. is the owner and operator of
cinema houses at SM Cebu in Cebu City. Under Republic Act (R.A.)
No. 7160 otherwise known as the Local Government Code of 1991,
owners, proprietors and lessees of theaters and cinema houses are
subject to amusement tax as provided in Section 140, Book II, Title
One, which reads:
SECTION 140. Amusement Tax-
(a) The province may levy an amusement tax to be collected from the
proprietors, lessees, or operators of theaters, cinemas, concert halls,
circuses, boxing stadia, and other places of amusement at a rate of not
more than thirty percent (30%) of the gross receipts from admission
fees.
(b) In the case of theaters or cinemas, the tax shall first be deducted
and withheld by their proprietors, lessees, or operators and paid to the
provincial treasurer before the gross receipts are divided between said
proprietors, lessees, or operators and the distributors of the
cinematographic films.
xxxx
(d) The sangguniang panlalawigan may prescribe the time, manner,
terms and conditions for the payment of tax. In case of fraud or failure
to pay the tax, the sangguniang panlalawigan may impose such
surcharges, interest and penalties as it may deem appropriate.
On June 21, 1993, the Sangguniang Panglunsod of Cebu City
approved City Tax Ordinance No. LXIX2 pursuant to Section 140, in
relation to Section 1513 of the Local Government Code of 1991.
Chapter XI of said ordinance provides:
CHAPTER XI
Amusement Tax
SECTION 42. Rate of Tax. – There shall be paid to the Office of the
City Treasurer by the proprietors, lessees, or operators of theaters,
cinemas, concert halls, circuses, boxing stadia and other places of
amusement an amusement tax at the rate of thirty percent (30%) of the
gross receipts from admission fees.
SECTION 43. Manner of Payment. – In the case of theaters or
cinemas, the tax shall first be deducted and withheld by their
proprietors, lessee, or operators and paid to the city treasurer before
the gross receipts are divided between said proprietors, lessee,
operators and the distributors of the cinematographic films.
SECTION 45. Time of Payment. – The tax shall be due and payable
within the first twenty (20) days of the succeeding month.
On June 7, 2002, Congress approved R.A. No. 91674 which created
the Film Development Council of the Philippines, herein petitioner.
Petitioner’s mandate includes the development and implementation of
"an incentive and reward system for the producers based on merit to
encourage the production of quality films."5 The Cinema Evaluation
Board (CEB) was established to review and grade films in accordance
with criteria and standards and procedures it shall formulate subject to
the approval of petitioner.
Films reviewed and graded favorably by the CEB are given the
following privileges:
Section 13. Privileges of Graded Films. - Films which have obtained an
"A" or "B" grading from the Council pursuant to Sections 11 and 12 of
this Act shall be entitled to the following privileges:
a. Amusement tax reward. - A grade "A" or "B" film shall entitle its
producer to an incentive equivalent to the amusement tax imposed and
collected on the graded films by cities and municipalities in Metro
Manila and other highly urbanized and independent component cities
in the Philippines pursuant to Sections 140 and 151 of Republic Act
No. 7160 at the following rates:
1. For grade "A" films - 100% of the amusement tax collected on such
films; and
2. For grade "B" films. - 65% of the amusement tax collected on such
films. The remaining thirty-five (35%) shall accrue to the funds of the
Council.
For the purpose of implementing the above incentive system, R.A. No.
9167 mandates the remittance of the proceeds of the amusement tax
collected by the local government units (LGUs) to petitioner.
Section 14. Amusement Tax Deduction and Remittances. - All revenue
from the amusement tax on the graded film which may otherwise
accrue to the cities and municipalities in Metropolitan Manila and highly
urbanized and independent component cities in the Philippines
pursuant to Section 140 of Republic Act. No. 7160 during the period
the graded film is exhibited, shall be deducted and withheld by the
proprietors, operators or lessees of theaters or cinemas and remitted
within thirty (30) days from the termination of the exhibition to the
Council which shall reward the corresponding amusement tax to the
producers of the graded film within fifteen (15) days from receipt
thereof.
Proprietors, operators and lessees of theaters or cinemas who fail to
remit the amusement tax proceeds within the prescribed period shall
be liable to a surcharge equivalent to five percent (5%) of the amount
due for each month of delinquency which shall be paid to the Council.
(Emphasis supplied.)
To ensure enforcement of the above provision, the law empowered
petitioner not only to impose administrative fines and penalties but also
to cause or initiate criminal or administrative prosecution to the
violators.6
On January 27, 2009, petitioner through the Office of the Solicitor
General (OSG) sent a demand letter to respondent for the payment of
the sum of ₱76,836,807.08 representing the amusement tax rewards
due to producers of 89 films graded "A" and "B" which were shown at
SM cinemas from September 11, 2003 to November 4, 2008.7
1
Sometime in May 2009, the City of Cebu filed in the RTC of Cebu City
(Cebu City RTC) a petition8 for declaratory relief with application for a
writ of preliminary injunction against the petitioner, docketed as Civil
Case No. CEB-35529. The City of Cebu sought to declare Section 14
of R.A. No. 9167 as invalid and unconstitutional on grounds that: (1) it
violates the basic policy on local autonomy; (2) it constitutes an undue
limitation of the taxing power of LGUs; (3) it unduly deprives LGUs of
the revenue from the amusement tax imposed on theatre owners and
operators; and (4) it amounts to technical malversation since revenue
from the collection of amusement taxes that would otherwise accrue to
and form part of the general fund of the LGU concerned would now be
directly awarded to a private entity – the producers of graded films –
bypassing the budget process of the LGU and without the proper
appropriation ordinance from the sanggunian.9
A temporary restraining order (TRO) was issued by the Cebu City RTC
enjoining petitioner and its duly constituted agents from collecting the
amusement tax incentive award from the owners, proprietors or
lessees of theaters and cinema houses within the City of Cebu;
imposing surcharge on the unpaid amount; filing any case or suit of
whatever kind or nature due to or arising from the failure to deduct,
withhold and remit the amusement tax incentives award on the graded
films of petitioner; and initiating administrative or criminal prosecution
against the said owners, proprietors or lessees.10
On October 16, 2009, petitioner sued the respondent for the payment
of ₱76,836,807.08 representing the unpaid amusement tax incentive
reward (with 5% surcharge for each month of delinquency) due to the
producers of 89 graded films which were shown at SM Cinemas in
Cebu City from September 11, 2003 to November 4, 2008, plus a 5%
surcharge for each month of delinquency until fully paid. Said collection
suit was docketed as Civil Case No. 72238 of the RTC of Pasig City
(Pasig City RTC), Branch 166.11
Petitioner filed a Comment (In Lieu of Answer)12 in Civil Case No. CEB-
35529 praying for the dismissal of the petition filed by the City of Cebu.
Meanwhile, respondent filed a Motion to Dismiss13 in Civil Case No.
72238 arguing that petitioner’s complaint merits outright dismissal
considering that its claim had already been extinguished by
respondent’s prior payment or remittance of the subject amusement
taxes to the City of Cebu. Respondent called attention to Section 26 of
the Implementing Rules and Regulations (IRR) of R.A. No. 9167 which
directed petitioner to execute a Memorandum of Agreement (MOA)
with proprietors, operators and lessees of theaters and cinemas as well
as movie producers, on the systems and procedures to be followed for
the collection, remittance and monitoring of the amusement taxes
withheld on graded films. In the apparent absence of such MOA and
the "general procedure/process" duly adopted by all proprietors,
operators and lessees of theaters or cinemas, respondent has been
withholding such taxes and remitting the same to the City of Cebu
pursuant to Cebu City Tax Ordinance No. LXIX, as shown by the
Certification14 dated February 5, 2009 issued by the Office of the
Treasurer of Cebu City stating that respondent "had religiously remitted
their monthly amusement taxes due to the Cebu City Government."
Respondent pointed out that even the Cebu City Government
recognizes that when it receives the amusement taxes collected or
withheld by the owners, operators and proprietors of theaters and
cinema houses on graded films, it is mandated to forward the said
taxes to petitioner.
In its Comment15 on the motion to dismiss, petitioner argued that
Section 14 of R.A. No. 9167 is valid and constitutional. As to
respondent’s defense of prior payment, petitioner asserted that the
execution of a MOA with the proprietors, owners and lessees of
theaters and cinema houses is not a condition sine qua non for a valid
enforcement of the provisions of R.A. No. 9167. The IRR cited by
respondent cannot prevail over the clear import of the law on which it is
based, and hence respondent cannot invoke it to excuse non-payment
of the amusement tax incentive rewards due to the producers of
graded films which should have been remitted to petitioner in
accordance with Section 14 of R.A. No. 9167. Petitioner pointed out
that from the time R.A. No. 9167 took effect up to the present, all the
cities and municipalities in Metropolitan Manila and highly urbanized
and independent component cities in the Philippines, with the sole
exception of Cebu City and a number of theater establishments
therein, have unanimously acceded to and have faithfully complied with
the mandate of said law notwithstanding the absence of a MOA.
Respondent filed its Reply16 to petitioner’s Comment maintaining that
its remittance of the amusement tax incentive reward to the City of
Cebu extinguished its obligation to petitioner, and arguing that the case
should be dismissed on the additional ground of litis pendentia.
On August 13, 2010, respondent filed in Civil Case No. CEB-35529 a
Motion for Leave to File and Admit Attached Comment-in-
Intervention.17 In its Comment-in-Intervention With Interpleader,
respondent prayed that the judgment on the validity and
constitutionality of Sections 13 and 14 of R.A. No. 9167 include a
pronouncement on its rights and duties as a consequence of such
judgment, as it clearly has a legal interest in the success of either party
in the case.18 On October 21, 2010, the Cebu City RTC granted
respondent’s motion for intervention.19
On February 21, 2011, the Pasig City RTC issued the assailed order
granting the motion to dismiss, holding that the action before the Cebu
City RTC (Civil Case No. CEB-35529) is the appropriate vehicle for
litigating the issues between the parties in Civil Case No. 72238.
Moreover, said court found all the elements of litis pendentia present
and accordingly dismissed the complaint. Petitioner’s motion for
reconsideration was likewise denied. In a direct recourse to this Court,
petitioner advances the following questions of law:
I
THE RTC, BRANCH 166, OF PASIG CITY UTTERLY IGNORED AND
DISREGARDED THE WELL-SETTLED RULE THAT UNLESS AND
UNTIL A SPECIFIC PROVISION OF LAW IS DECLARED INVALID
AND UNCONSTITUTIONAL, THE SAME IS ENTITLED TO
OBEDIENCE AND RESPECT.
II
THE RTC, BRANCH 166, OF PASIG CITY ERRED IN DISMISSING
THE COMPLAINT IN CIVIL CASE NO. 72238 ON THE GROUND OF
LITIS PENDENTIA.20
Petitioner reiterates that every law has in its favor the presumption of
constitutionality, and unless and until a specific provision of law is
declared invalid and unconstitutional, the same is valid and binding for
all intents and purposes. In dismissing the complaint, the Pasig City
RTC abdicated its solemn duty and jurisdiction to rule on the
constitutional issues raised by respondent in Civil Case No. 72238
upon the mistaken assumption that only the Cebu City RTC in Civil
Case No. CEB-35529 can directly determine the constitutionality of
Sections 13 and 14 of R.A. No. 9167 and the indispensability of a MOA
in the remittance to petitioner of amusement tax rewards due to the
producers of graded films. Petitioner further contends that, contrary to
the ruling of the Pasig City RTC, the principle of judicial courtesy is not
applicable because a judgment in Civil Case No. CEB-35529 will not
result in rendering moot the issues brought before the Pasig City RTC
in Civil Case No. 72238.
The petition has no merit.
We do not subscribe to petitioner’s view that the dismissal of the
complaint in Civil Case No. 72238 amounts to an abdication of the
Pasig City RTC’s concurrent jurisdiction to settle constitutional
questions involving a statute or its implementing rules. The 1997 Rules
of Civil Procedure, as amended, provides for specific grounds for the
dismissal of any complaint in civil cases including those where the trial
2
court has competence and authority to hear and decide the issues
raised and relief sought. One of these grounds is litis pendentia.
Litis pendentia, as a ground for the dismissal of a civil action, refers to
a situation where two actions are pending between the same parties
for the same cause of action, so that one of them becomes
unnecessary and vexatious.21It is based on the policy against
multiplicity of suits22 and authorizes a court to dismiss a case motu
proprio.23
Section 1(e), Rule 16 of the 1997 Rules of Civil Procedure, as
amended, thus provides:
SECTION 1. Grounds.Within the time for but before filing the answer
to the complaint or pleading asserting a claim, a motion to dismiss may
be made on any of the following grounds:
xxxx
(e) That there is another action pending between the same parties for
the same cause.
The requisites in order that an action may be dismissed on the ground
of litis pendentia are: (a) the identity of parties, or at least such as
representing the same interest in both actions; (b) the identity of rights
asserted and relief prayed for, the relief being founded on the same
facts, and (c) the identity of the two cases such that judgment in one,
regardless of which party is successful, would amount to res judicata in
the other.24
Petitioner submits that while there is identity of parties in Civil Case
Nos. CEB-35529 and 72238, the second and third requisites are
absent. It points out that in the former, it is not claiming any monetary
award but merely prayed for the dismissal of the declaratory relief
petition. Moreover, since the issues raised in the former case are
purely legal, petitioner is not necessarily called upon to present
testimonial or documentary evidence to prove factual matters.
Petitioner thus concludes that the judgment in former case would not
amount to res judicata in the latter case. Petitioner further notes that
when a judgment dismissing the former case is appealed and the
assailed provisions of R.A. No. 9167 are declared constitutional by this
Court, petitioner will not be automatically awarded the unpaid
amusement taxes it is claiming against respondent in Civil Case No.
72238.
Petitioner’s submissions fail to persuade.
The underlying principle of litis pendentia is the theory that a party is
not allowed to vex another more than once regarding the same subject
matter and for the same cause of action. This theory is founded on the
public policy that the same subject matter should not be the subject of
controversy in courts more than once, in order that possible conflicting
judgments may be avoided for the sake of the stability of the rights and
status of persons,25 and also to avoid the costs and expenses incident
to numerous suits.26
Among the several tests resorted to in ascertaining whether two suits
relate to a single or common cause of action are: (1) whether the same
evidence would support and sustain both the first and second causes
of action; and (2) whether the defenses in one case may be used to
substantiate the complaint in the other.27
The determination of whether there is an identity of causes of action for
purposes of litis pendentia is inextricably linked with that of res
judicata, each constituting an element of the other. In either case, both
relate to the sound practice of including, in a single litigation, the
disposition of all issues relating to a cause of action that is before a
court.28
In this case, what petitioner failed to take into account is that the Cebu
City RTC allowed respondent to intervene in Civil Case No. CEB-
35529 by way of an interpleader action as to which government entity –
whether petitioner or the Cebu City Government – should have
remitted the amusement taxes it collected from the admission fees of
graded films shown in respondent’s cinemas in Cebu City. It must be
noted that since 1993 when City Tax Ordinance No. LXIX was
enforced, respondent had been faithfully remitting amusement taxes to
the City of Cebu and because of the collection suit filed by petitioner,
such defense of prior payment and evidence to prove it which
respondent could have presented at the trial in Civil Case No. 72238
would be the same defense and evidence necessary to sustain
respondent’s interpleader action in Civil Case No. CEB-35529 before
the Cebu City RTC. Also, in both cases, respondent had raised the
matter of conflicting provisions of R.A. No. 9167 and Local Government
Code of 1991, while petitioner pleaded and argued the constitutionality
and validity of Sections 13 and 14 of R.A. No. 9167.
The interpleader action of respondent/intervenor, anchored on its
defense of prior payment, would be considered by the Cebu City RTC
in its final determination of the parties’ rights and interests as it
resolves the legal questions. The Pasig City RTC is likewise confronted
with the legal and constitutional issues in the collection suit, alongside
with respondent’s defense of prior payment. It is evident that
petitioner’s claim against the respondent hinges on the correct
interpretation of the conflicting provisions of the Local Government
Code of 1991 and R.A. No. 9167. There could be no doubt that a
judgment in either case would constitute res judicata to the other.
Sound practice thus dictates that the common factual and legal issues
be resolved in a single proceeding.
We also find no reversible error in the Pasig City RTC’s ruling that Civil
Case No. CEB-35529 is the appropriate vehicle for litigating the issues
raised by petitioner and respondent in Civil Case No. 72238.
Under the established jurisprudence on litis pendentia, the following
considerations predominate in the ascending order of importance in
determining which action should prevail: (1) the date of filing, with
preference generally given to the first action filed to be retained; (2)
whether the action sought to be dismissed was filed merely to preempt
the later action or to anticipate its filing and lay the basis for its
dismissal; and (3) whether the action is the appropriate vehicle for
litigating the issues between the parties.29
Moreover, considering the predicament of respondent, we also find
relevant the criterion of the consideration of the interest of justice we
enunciated in Roa v. Magsaysay.30 In applying this standard, what was
asked was which court would be "in a better position to serve the
interests of justice," taking into account (a) the nature of the
controversy, (b) the comparative accessibility of the court to the parties
and (c) other similar factors.31
In this case, all things considered, there can be no doubt Civil Case
No. CEB-35529 is the appropriate vehicle to determine the rights of
petitioner and respondent. In that declaratory relief case instituted by
the City of Cebu, to which respondent had been remitting the subject
amusement taxes being claimed by petitioner in Civil Case No. 72238,
the issue of validity or constitutionality of Sections 13 and 14 of R.A.
No. 9167 was directly pleaded and argued between petitioner and the
City of Cebu, with subsequent inclusion of respondent as intervenor.
Moreover, the presence of City of Cebu as party plaintiff would afford
proper relief to respondent in the event the Cebu City R TC renders
judgment sustaining the validity of the said provisions. Respondent had
vigorously asserted in both courts that it had remitted the amusement
taxes in good faith to the City of Cebu which had threatened sanctions
for non-compliance with City Tax Ordinance No. LXIX, and that it
should not be made to pay once again the same taxes to petitioner. As
equally dire consequences for non-compliance with the demand for
payment having been made by petitioner, such defense of good faith is
best ventilated in Civil Case No. CEB-35529 where the City of Cebu is
a party.
3
Petitioner's insistence that the Pasig City RTC proceed with trial
notwithstanding the pendency of Civil Case No. CEB-35529 before the
Cebu City RTC is thus untenable. To allow the parties to litigate the
same issues upon the same evidence and defenses will only defeat the
public policy reasons behind litis pendentia, which, like the rule on
forum shopping, aims to prevent the unnecessary burdening of our
courts and undue taxing of the manpower and financial resources of
the judiciary; to avoid the situation where co-equal courts issue
conflicting decisions over the same cause; and to preclude one party
from harassing the other party through the filing of an unnecessary or
vexatious suit.32

WHEREFORE, the petition for review on certiorari is DENIED. The

Orders dated February 21, 2011 and July 25, 2011 of the Regional
Trial Court of Pasig City, Branch 166 are hereby AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

4
G.R. No. 190814 October 9, 2013
MICHELLE LANA BROWN- ARANETA, for herself and
representing her minor daughters, ARABELLA MARGARITA B.
ARANET A and A V ANGELINAMYKAELA B.
ARANETA, Petitioners,
vs.
JUAN IGNACIO ARANETA, Respondent.
DECISION
VELASCO, J.:
The Case
Assailed and sought to be set aside in this Petition for Review on
Certiorari under Rule 45 are the May 11, 2009 Decision1 of the Court of
Appeals (CA) in CA-G .R. SP No. 105442 and its Resolution2 of
December28, 2009 denying petitioner's motion for reconsideration of
said decision.
The assailed decision ordered the dismissal of Civil Case No. 08-023
of the Regional Trial Court (RTC), Branch 207 in Muntinlupa City and
nullified all the issuances it made in that case, a petition for protection
order under Republic Act No. (RA) 9262, otherwise known as the Anti-
Violence Against Women and Their Children Act of 2004, commenced
by petitioner Michelle Lana Brown-Araneta (Michelle) against
respondent Juan Ignacio Araneta (Juan Ignacio) before that court.
The facts
On April 14, 2000, Juan Ignacio and Michelle were married in Las
Vegas, Nevada, USA. The union produced two (2) children, namely:
Arabella Margarita (Ara) and Avangelina Mykaela (Ava), born on
February 22, 2003 and April 15, 2005, respectively. After a little over
seven years of disharmonious relationship, husband and wife
separated. Since the couple’s estrangement and de facto separation,
Ara and Ava have remained in Michelle’s custody.
In November 2007 before the RTC of Makati City, Juan Ignacio filed,
pursuant to A.M. No. 03-04-04-SC3 or The Rule on Custody of Minors
and Writ of Habeas Corpus in Relation to Custody of Minors (Rule on
Custody of Minors), a Petition for the Custody of the Minors Arabella
Margarita Araneta and Avangelina Mykaela Araneta (Petition for
Custody), with prayer for visitation rights against Michelle and her
mother, Glenda B. Santos (Santos). Docketed as SP PROC. Case No.
M-6543, this petition was eventually raffled to Branch 60 of the Makati
City RTC (Makati RTC), presided over by Judge Marissa Macaraig-
Guillen (Judge Macaraig-Guillen).
1. Immediately issue a Provisional Order granting
[him]visitation rights with respect to the minors [Ava and Ara]
x x x during the pendency of these proceedings;
2. Immediately issue an ex parte Hold Departure Order
preventing the departure of [both] minors x x x from the
country; and
3. After appropriate proceedings, render judgment granting
him joint custody, or alternatively, granting him permanent
visitation rights, over both his legitimate children x x x.4
To facilitate service of summons, Juan Ignacio, via a Motion and
Urgent Manifestation of November 27, 2007, would inform the Makati
RTC that Michelle and Santos may have transferred to No. 408
Anonas Street, Ayala Alabang Village, Muntinlupa City (Anonas
residence), an address different from what he provided in his basic
petition, referring to the Molave Drive residence in the same village. In
her Officer’s Return dated December 10, 2007,5process server Linda
Fallorin stated the following: (1) she initially attempted to serve the
summons upon Michelle and Santos on December 7,2007 at the
Anonas residence, only to be told by one Roberto Anonas, who
refused to receive the summons, that both were out at that time; and
(2) on December 10, 2007, she was finally able to serve the summons
upon Michelle and Santos by substituted service through the driver of
Santos’ husband.
On December 18, 2007, Juan Ignacio moved for the issuance of
provisional visitorial order. After a hearing on this motion, the Makati
RTC issued on December 21, 2007 an Order7 allowing Juan Ignacio to
visit her daughters on Christmas Day and New Year’s Day. The visiting
grant came after the court, taking stock of the Officer’s Return,
declared that it has acquired jurisdiction over the person of Michelle,
but despite being given the opportunity to file a responsive pleading,
she has failed to do so.
Christmas and New Year’s Day 2008 came and went, but Juan Ignacio
was unable to see his little girls in those days for reasons of little
materiality to this narration.
On January 2, 2008, Michelle filed in SP PROC. Case No. M-6543 a
Motion to Admit Answer and an Answer (with Affirmative Defenses and
With Very Urgent Ex-Parte Motion for Issuance of Protection Order).8
In her Motion to Admit Answer, Michelle acknowledged learning from
her mother about the delivery of the summons and a copy of the
petition for custody to their Anonas Residence. She, however,
disregarded said summons thinking, so she claimed, that it was
improperly served upon her person. It was, she added, only upon
learning of the issuance of the provisional order of visitation rights that
she gathered enough courage to come out to present her side.9
In her Answer, on the other hand, Michelle owned up sole
responsibility for the decision not to allow her husband to see their
daughters. In support of her plea for the dismissal of his petition for
custody, the denial of visitation rights pendente lite, and in the
meanwhile the ex parte issuance in her favor of a temporary protection
order (TPO),10 she recounted in lurid details incidents characterizing
the painful life she and her children allegedly had to endure from her
husband whom she tagged as a drug user, sexual pervert, emotionally
unstable and temperamental, among other names. In her words, Juan
Ignacio’s "wild, decadent, irresponsible lifestyle makes him unfit to
exercise parental authority and even enjoy visitation rights."11
During the January 4, 2008 hearing on Michelle’s prayer for a TPO,
Judge Macaraig-Guillen expressed her bent to maintain her jurisdiction
over SP PROC. Case No. M-6543 and her disinclination to issue the
desired TPO. In her Order of even date, she directed that the ensuing
observations she earlier made be entered into the records:
1. She is not inclined to issue a [TPO] in favor of respondent
at this time because she initially questioned the jurisdiction of
this Court over her person and only resorted to this Urgent
Ex-Parte Motion for a Protective Order after she realized that
the Court had every intention of maintaining jurisdiction over
this case x x x. It was emphasized that the Court does not
issue Protective Orders over a person who has not bothered
to appear in Court x x x. Until the respondent herself shows
up in order to recognize the jurisdiction of this Court over her
and in order to substantiate the allegations in her Urgent
Motion, there is no basis for this Court to address the
matters contained in the said Urgent Ex-Parte Motion.
2. Secondly, x x x even assuming for the sake of argument
that the petitioner is, as respondent described him to be,
temperamental, violent, a habitual drug user and a
womanizer, these qualities cannot, per se, prevent him from
exercising visitation rights over his children because these
5
 are rights due to him inherently, he being their biological
father.12
During the same hearing, the Makati RTC granted Juan Ignacio
visitation rights on one (1) Saturday and Sunday in January 2008
considering that he was unable to see his children on the days granted
under the December 21, 2007 Order.
Subsequently, by its Order of January 21, 2008, as would later be
effectively reiterated by another Order 13 of March 7, 2008, the Makati
RTC resolved to deny admission of Michelle’s answer to the petition for
custody and declared her in default, pertinently disposing thusly:
WHEREFORE, in view of the foregoing, respondent Araneta’s Motion
to Admit Answer of January 2, 2008 is herein DENIED for lack of merit.
Because of respondent Araneta’s failure to file her responsive pleading
within the reglementary period, x x x respondent Araneta isherein
declared in DEFAULT in this proceedings.
As a consequence of this ruling, x x x the petitioner is allowed to
present evidence ex-parte to substantiate the allegation in his Petition
x x x.14
On January 21, 2008 also, Michelle interposed a Motion to Withdraw
Urgent Ex-Parte Motion for Protective Order, there pointing out that no
right of Juan Ignacio, if any, will be affected if the said urgent motion is
withdrawn or expunged from her answer. And obviously to sway the
Makati RTC’s mind of the resulting insignificance of such withdrawal, if
approved, Michelle cited the ensuing observation thus made by the
court during the hearing on January 4, 2008:
COURT:
Well, I agree, she should really appear but whether or not she should
really appear here and substantiate her allegations for the issuance of
a protective order as far as I am concerned is irrelevant insofar as the
enforcement of petitioner’s visitation rights are concerned, this case is
for custody, this is not a case for the issuance of protective orders that
is only a counter manifestation that she is seeking.15
It is upon the foregoing set of events and proceedings that Michelle, on
March 25, 2008, instituted, pursuant to RA 9262, a Petition For
Temporary and Permanent Protection Order16 (Petition for Protection
Order) before the RTC in Muntinlupa City, docketed as Civil Case No.
08-023.Thereat, Michelle claimed, among other things, that in the
course of their marriage, Juan Ignacio made her and their children
engage in sexual acts inimical to their emotional, physical and
psychological development and well-being; that he engaged in
perverted sexual acts with friends, victimizing her and the children; that
he has consistently failed and refused to support their family; and that
he has a violent temper and was consistently harassing and
threatening her to get sole custody of the children. Michelle
volunteered the information that, per her therapist, she is suffering from
Battered Woman’s Syndrome.17
In the verification portion of her petition for protection order, Michelle
stated that "there is x x x a pending petition for the custody of our
children in the [RTC] Br. 60, Makati City, x x x Civil Case No. M-
6543."18
The following events and proceedings then transpired:
1. On March 31, 2008, the Muntinlupa RTC granted
Michelle’s prayer for a TPO which, at its most basic, ordered
Juan Ignacio (1) to stay away at a specified distance from
Michelle and the children, inclusive of their present residence
and other places they frequent; and (2) to desist from calling
or otherwise communicating with Michelle.
(2) On April 14, 2008, Juan Ignacio filed in Civil Case No. M-
6543 a "Motion to Dismiss Petition with Prayer to Lift
[TPO]"19 anchored on several grounds, foremost of which are
the following: (a) litis pendentia, Juan Ignacio noting in this
regard that the Makati RTC is competent to grant in its SP
PROC. Case No. M-6543 the very same reliefs Michelle
seeks in Civil Case No. M-6543, pursuant to Sections 17 and
18 of the Rule on Custody of Minors;20 (b) in view of item (a)
above, the Makati RTC, having first assumed jurisdiction
over identical subject matters, issues and parties, does so to
the exclusion of the Muntinlupa RTC; and (c) Michelle’s act
of filing her petition for protection order before the
Muntinlupa RTC constitutes, under the premises, forum
shopping, a practice proscribed owing to the possibility of
different courts arriving at conflicting decisions. Juan Ignacio
would in fact stress that the TPO thus issued by the
Muntinlupa RTC directing him to stay at least a kilometer
away from his children already conflicted with the Makati
RTC-issued provisional orders granting him visitation rights
over them.
(3) By Order of May 12, 2008, the Muntinlupa RTC,
conceding the exclusionary effect of the assumption at the
first instance by the Makati RTC of jurisdiction on the issue
of custody on Ava and Ara and the likelihood of the issuance
by either court of clashing decisions, partially granted Juan
Ignacio’s motion to dismiss and accordingly modified the
TPO issued on March 31, 2008. As thus modified, the
protection order, or to be precise, the reliefs provided in favor
of Michelle in said TPO shall exclude from its coverage the
orders issued by the Makati RTC in the exercise of its
jurisdiction on the pending custody case.
In another Order of June 30, 2008, the Muntinlupa RTC
denied Juan Ignacio’s Motion for Reconsideration of the
earlier May 12, 2008 Order on the ground that such a motion
is a prohibited pleading.21
(4) Meanwhile, Michelle, in connection with certain orders of
the Makati RTC in the custody case, denying her motion to
admit answer and its jurisdictional issue pronouncements,
went to the CA on certiorari via a petition docketed as CA-
G.R. SP No. 103392.
On August 28, 2008, in CA-G.R. SP No. 103392, the CA rendered a
judgment finding partly for Michelle, as petitioner, it being the appellate
court’s determination that the substituted service of summons upon her
in the custody suit was defective and irregular. Accordingly, the period
within which Michelle was to file an answer, so the CA declared, did
not start to run and, hence, the denial by the Makati RTC of her motion
to admit answer in the custody case and corollarily, its holding that she
is in default, by virtue of its Orders dated January 21, 2008 and March
7, 2008, were unwarranted and ought to be nullified. Neither of the
parties appealed the foregoing Decision. The CA Decision, thus,
became final. The fallo of the said CA Decision reads:
WHEREFORE, the foregoing considered, the instant petition is hereby
PARTLY GRANTED. Accordingly, the assailed Orders of 21January
2008 and 7 March 2008 are REVERSED and SET ASIDE while the
Orders of 29 February 2008 and 31 March 2008, in so far as the denial
of petitioner’s Motion for Inhibition is concerned, are AFFIRMED. No
costs.
SO ORDERED.22
Partly, the CA wrote:
x x x The pivotal issue x x x is whether the Makati RTC had acquired
jurisdiction over the person of the petitioner, and if so, whether the
disposition of the respondent Makati RTC judge in declaring her in
default has factual and legal basis. Admittedly, the summons and the
6
copy of the petition were not personally served upon the petitioner as
explicitly required under Section 5 of A.M. No. 03-04-04-SC x x x.
Indeed, the records would show that the summons and the petition
were served upon the petitioner x x x by substituted service as they
were received by x x x a certain Nilo Santos at said Anonas residence,
an address belatedly supplied by private respondent himself. However,
x x x petitioner had actually been informed of such substituted service
sometime in the second week of December 2007 and that she had
opted to simply disregard the same since she had thought that such
service is invalid x x x.
Despite the fact that she had known of the existence of the petition a
quo and the fact that the service of summons had been made upon her
by substituted service, petitioner made a decision whether it be an
informed one or not, not to move for its dismissal on the ground of lack
of jurisdiction over her person x x x. It was only upon the issuance of
the Provisional Order that she had opted to participate in the
proceeding by filing her responsive pleading to the petition.
Unfortunately though, the respondent Makati RTC judge denied her
motion to admit and declared her in default on the basis of its
disquisition that the failure of the petitioner to file her responsive
pleading is not due to excusable negligence or other circumstances
beyond her control.
Still and all, it cannot be denied that the trial court, previous to or at the
time the petitioner had filed her responsive pleading, has yet to acquire
jurisdiction over the person of the latter. The Rule on Custody of
Minors specifically requires that service of summons be made
personally on the respondent and yet the trial court served the same
upon the person of the petitioner by substituted service without proof of
exhaustion of means to personally serve the same or the impossibility
thereof to warrant the extraordinary method of substituted service.
Surely, while the Rule on Custody of Minors provides that the Rules of
Court shall apply suppletorily in custody proceedings, the express
provision requiring personal service and the very nature of custody
cases should have caused the respondent judge x x x to adhere to the
evident intention of the rules, that is to have both parties in a custody
case participate therein.
Regrettably, the respondent judge, relying on the Officer’s Return x x x,
precipitately declared x x x that the trial court had already acquired
jurisdiction over the person of the petitioner. x x x
Sadly though, respondent judge, in grave abuse of discretion, assumed
jurisdiction over the person of the petitioner and proceeded to act on
the petition. Worse, x x x the respondent judge denied the motion to
admit filed by the petitioner and declared the latter in default. While the
petitioner had already submitted herself to the jurisdiction of the trial
court by way of her voluntary act of filing a responsive pleading to the
petition a quo, the period to file said responsive pleading, as already
stated, in so far as the petitioner is concerned has yet to commence,
and thus, the filing of her motion to admit answer cannot plausibly be
considered as to have been filed beyond the reglementary period. In
this light, the denial of said motion and the issuance of the default
order are unwarranted and are reversible errors of jurisdiction x x
x.23 (Emphasis added.)
(5) From the adverse May 12, 2008 and June 30, 2008 Orders of the
Muntinlupa RTC in Civil Case No. M-6543, Juan Ignacio also repaired
to the CA on a petition for certiorari. Docketed as CA-G.R. SP. No.
105442, the petition prayed that the Muntinlupa RTC be enjoined from
further taking cognizance of Michelle’s protection order petition as the
said case will infringe or intrude upon the Makati RTC’s disposition of
the custody case.24
Michelle opposed and sought the dismissal of the certiorari petition on
the ground that it is a prohibited pleading under Sec. 22(j) of RA 9262.
Eventually, the CA issued, on May 11, 2009, the assailed Decision
which, on one hand, found Michelle guilty of forum shopping, a
sufficient cause for summary dismissal of a case, but viewed, on the
other, Juan Ignacio’s petition for certiorari as a prohibited pleading
which, ordinarily, would then render it dismissible. In the veritable clash
under the premises of the effects of forum shopping and the rule on
prohibited pleading, the CA nonetheless ruled for Juan Ignacio, as
petitioner, pertinently disposing as follows:
ACCORDINGLY, the petition is GIVEN DUE COURSE. Civil Case No.
08-023 is ORDERED DISMISSED and all issuances made by RTC,
Branch 207, Muntinlupa City, are declared void. The RTC Branch 60,
Makati City is DIRECTED to proceed with the case with dispatch. 25
The CA extricated itself from the foregoing legal bind on the basis of
the following ratiocination and the plausible suppositions interjected
thereat:
In resolving the present petition, the Court had to consider two (2)
things. First, pursuant to Section 22 (j) of A.M. No. 04-10-11-SC, a
petition for certiorari against any interlocutory order issued by a family
court is a prohibited pleading. Accordingly, if this Court were to strictly
follow [said] Section 22 (j) x x x, then the present petition for certiorari
must be dismissed. Second, the Private Respondent had first moved
that the Makati RTC issue a TPO and that when her motion was
denied, she filed a petition before the Muntinlupa RTC asking that the
said court issue a TPO. In short, the Private Respondent committed
forum-shopping. And when forum-shopping is committed, the case(s)
must be dismissed with prejudice.
Thus, it falls upon this Court to balance the conflict.
This Court notes that the Muntinlupa RTC tried to balance out the
conflicting jurisdictional issues with the Makati RTC by stating in its first
assailed Order that the reliefs provided in favor of herein private
respondent in the TPO x x x are modified, to exclude from its coverage
those Orders issued by the Makati Court in the exercise of its
jurisdiction on the pending custody case. Be that as it may, the
Muntinlupa RTC itself recognized the jurisdiction of the Makati RTC
and that the case before it would, in fact, impinge upon the jurisdiction
of the latter court when it stated that the disposition on the matter by
this Court may result in the possibility of conflicting decisions/orders. In
short, the Muntinlupa RTC itself acknowledges the fact that any future
issuances, including its eventual decision on the petition before it,
would affect the custody case pending before the Makati RTC and
might even result to conflicting decisions.
Thus, in the interest of judicial stability, it is incumbent upon this Court
to ensure that this eventuality will not come to pass.
xxxx
To test the argument that a petition for certiorari is an absolutely
prohibited pleading, let us push the present case to its logical extreme.
What if a woman claiming to be a battered wife leaves one of her
children with her parents and another with a sibling of hers? She then
went to another place, transferred residency, and filed a petition for
TPO. Her parents and sibling, who reside in another locality, likewise
files a petition for TPO in behalf of the grandchild and nephew/niece
entrusted]in their custody. x x x What if the family courts refuse
consolidation? Is the man devoid of any remedy and would have to
spend his time shuttling between three (3) localities since a petition for
certiorari is a prohibited pleading?
What if the woman went to another locality purposely in order to find a
friendly venue x x x? Again, if we are to strictly construe Section22 (j)
of A.M. No. 04-10-11-SC that man would just have to bear the
consequences since he cannot seek the extraordinary writ of certiorari.
Or, what if both of the spouses do not reside within the court’s
7
jurisdiction, but the judge refuses to grant a motion to dismiss due to
his zeal? What remedy would a man have since he cannot resort to a
petition for certiorari?
The rules are not sacrosanct. If they go in the way of the smooth and
orderly administration of justice, then magistrates should apply their
best judgment. If not, courts would be so hideously bound or captives
to the stern and literal provisions of the law that they themselves
would, wittingly or otherwise, become administrators of injustice.
On the one hand, this Court hereby notes that Private Respondent
herself recognizes the jurisdiction of the Makati RTC to issue a TPO. It
was only after the Makati RTC denied her prayer for a TPO when she
filed a petition before the Muntinlupa RTC asking for the issuance of a
TPO. It is thus highly disturbing that the Private Respondent sought
another forum in order to try to obtain a favorable judgment. Thus, as
aptly pointed out by the Petitioner, some sort of forum-shopping was
committed.
On the other hand, if the Court were to dismiss the present petition on
the ground that a petition for certiorari is a prohibited pleading, it would
have to close its eyes to the fact that the Private Respondent willfully
committed forum-shopping. To dismiss the present petition would, in
effect, "reward" her for this negative act. This, the Court cannot
countenance.
xxxx
Accordingly, x x x Civil Case No. 08-023 must not be allowed to
proceed any further. Imperatively, to ensure that the jurisdiction of the
Makati RTC remains unshackled, all of the issuances of the Muntinlupa
RTC should, by all means, be nullified.26 (Emphasis added.)
The CA denied Michelle’s motion for reconsideration per its equally
assailed Resolution of December 28, 2009.
Aggrieved, Michelle, for herself and for her minor daughters, filed the
instant recourse, her submissions revolving on the twin issues of forum
shopping and the prohibition under Sec. 22 of the Rule on Violence
Against Women and Children27 against the filing of petitions for
certiorari to defeat TPOs issued to promote the protection of victims of
violence against women and their children.
Michelle presently argues that the assailed Decision of the CA is based
on an erroneous appreciation of the facts of the case. To her, there
was no forum shopping when she filed her Petition for Protection Order
in the Muntinlupa RTC while the custody case was pending in the
Makati RTC. Her stated reason: the absence in both cases of identity
of parties and rights asserted, on top of which the reliefs sought and
prayed for are different and not founded on the same set of facts.
To downplay the application of the litis pendentia principle, she argues
that it was impossible for her to apply for and secure a protective order
under RA 9262 in the custody case before the Makati RTC being, first,
a respondent, not a petitioner in the Makati case; and second, the
venue for an application for protection order is, under RA 9262, the
place where the woman or the offended party resides, which in her
case is Muntinlupa.28
Michelle would invite attention to her having withdrawn her motion for
protective order in the custody case before the Makati RTC before she
filed her Petition for Protective Order with the Muntinlupa RTC.
Additionally, she points to the CA’s Decision of August 28, 2008 in CA-
G.R. SP No. 103392 (2008 CA Decision), which held that the Makati
RTC did not acquire jurisdiction over her so that all issuances of the
Makati RTC were void. All these, Michelle claims, argue against the
existence of litis pendentia.
The Issue
The issue to be resolved in this case is whether or not petitioner, in
filing her Petition for Protection Order before the Muntinlupa RTC,
violated the rule on forum shopping, given the pendency of the
respondent’s Petition for Custody before the Makati RTC and
considering incidentally that she filed said petition for protection order
after the Makati RTC had denied her application for protection order in
the custody case.
The Court’s Ruling
Before anything else, however, the Court wishes to point out disturbing
developments in this proceeding which ought not to be swept under the
rug on the simplistic pretext that they may not be determinative of the
outcome of this case. But first, some basic premises on record.
First, as correctly stated in this petition, Michelle withdrew her Ex Parte
Motion for Issuance of Protective Order in the custody case prior to her
filing of her Petition for Protection Order with the Muntinlupa RTC. It
should be made clear, however, that she filed said motion to withdraw
on January 21, 2008, or after the Makati RTC, in its Order dated
January 4,2008, had, for all intents and purposes, denied the said ex
parte motion. To recapitulate, the Makati RTC judge made it of record
that she was not inclined to issue a protective order in favor of a
person, i.e., petitioner Michelle, who has not bothered to appear in
court, even assuming, she adds, that the person against whom the
protection order is directed, i.e., Juan Ignacio, is prone to violence, a
drug user and a womanizer.
Second, there is absolutely nothing in the 2008 CA Decision declaring
that all issuances of the Makati RTC were void. In order to bolster her
position that the rule against forum shopping was not breached in this
case, Michelle matter-of-factly alleged in this recourse that since in the
2008 CA Decision it was ruled that the Makati RTC did not acquire
jurisdiction over her person due to the irregularity in the service of
summons, then "all the issuances or orders of the Makati RTC in the
custody case were void;"29 and "therefore, there was no litis pendentia
to begin with since the RTC of Makati City Branch 60 had no
jurisdiction from the start."30
For perspective, the 2008 CA Decision did not rule that the Makati RTC
did not acquire jurisdiction over Michelle. Quite the contrary. As a
matter of record, the CA in that disposition found and thus declared
Michelle to have voluntarily submitted herself to the jurisdiction of the
Makati RTC when she filed her Answer in SP. PROC. Case No. 6543
on January 2, 2008.But to be precise about things, the CA in that 2008
Decision found, as having been tainted with of grave abuse of
discretion, only that part of the Makati RTC’s disposition denying
Michelle’s motion to admit answer for belated filing and the consequent
default order. Along this line, the CA merely nullified the Makati RTC’s
Orders dated January 21, 2008 and March 7, 2008 which declared
Michelle in default and denied her motion for reconsideration,
respectively. The ensuing excerpts of the 2008 CA Decision speak for
themselves:
Sadly though, respondent judge, in grave abuse of discretion, assumed
jurisdiction over the person of the petitioner and proceeded to act on
the petition. Worse, without due regard to the plain intention of the rule
in ensuring the adjudication of the controversy surrounding a custody
case based on its merits, the respondent judge denied the motion to
admit filed by the petitioner and declared the latter in default. While the
petitioner had already submitted herself to the jurisdiction of the trial
court by way of her voluntary act of filing a responsive pleading to the
petition a quo, the period to file said responsive pleading, as already
stated, in so far as the petitioner is concerned has yet to commence,
and thus, the filing of her motion to admit answer cannot plausibly be
considered as to have been filed beyond the reglementary period. In
this light, the denial of said motion and the issuance of the default
order are unwarranted and are reversible errors of jurisdiction,
therefore correctible by a writ of certiorari. (Emphasis supplied.)
xxxx
8
WHEREFORE, the foregoing considered, the instant petition is hereby
PARTLY GRANTED. Accordingly, the assailed Orders of 21January
2008 and 7 March 2008 are REVERSED and SET ASIDE while the
Orders of 29 February 2008 and 31 March 2008, in so far as the denial
of petitioner’s Motion for Inhibition is concerned, are AFFIRMED. No
costs.
SO ORDERED.31
Withal, the Court finds it downright offensive and utterly distasteful that
petitioner raised the following as one of the issues in this appellate
proceeding:
Whether or not the petitioners are guilty of forum-shopping when the
Petition for Custody of private respondent Araneta was dismissed by
the Court of Appeals on the ground that the RTC of Makati City
Branch60 did not acquire jurisdiction because the summons was not
served personally upon herein Petitioner Michelle Lana Brown
Araneta.32 (Emphasis supplied.)
Petitioner’s above posture smacks of bad faith, taken doubtless to
deceive and mislead the Court. Indeed, nothing in either the body or
the fallo of the 2008 CA Decision would yield the conclusion that the
petition for custody is being dismissed, as petitioner unabashedly
would have the Court believe.
Was there forum shopping? Did petitioner forum shop?
A circumstance of forum shopping occurs when, as a result or in
anticipation of an adverse decision in one forum, a party seeks a
favorable opinion in another forum through means other than appeal or
certiorari by raising identical causes of action, subject matter and
issues. Stated a bit differently, forum shopping is the institution of two
or more actions involving the same parties for the same cause of
action, either simultaneously or successively, on the supposition that
one or the other court would come out with a favorable
disposition.33 An indicium of the presence of, or the test for determining
whether a litigant violated the rule against, forum shopping is where the
elements of litis pendentia are present or where a final judgment in one
case will amount to res judicata in the other case.34
Litis pendentia,35 as a ground for the dismissal of a civil suit, refers to
that situation wherein another action is pending between the same
parties for the same cause of action, such that the second action
becomes vexatious and unnecessary.36 For the bar of litis pendentia to
be invoked, the concurring requisites must be present: (1) identity of
parties, or at least such parties as represent the same interests in both
actions; (2) identity of rights asserted and relief prayed for, the relief
being founded on the same facts; and (3) the identity of the two
preceding particulars is such that any judgment rendered in the
pending case, regardless of which party is successful would amount to
res judicata in the other.37
Thus, it has been held that there is forum shopping (1) whenever as a
result of an adverse decision in one forum, a party seeks a favorable
decision (other than by appeal or certiorari) in another; or (2) if, after he
has filed a petition before the Supreme Court, a party files another
before the CA since in such case said party deliberately splits appeals
"in the hope that even as one case in which a particular remedy is
sought is dismissed, another case(offering a similar remedy) would still
be open"; or (3) where a party attempts to obtain a preliminary
injunction in another court after failing to obtain it from the original
court.38
The evil sought to be avoided by the rule against forum shopping is the
rendition by two competent tribunals of two separate and contradictory
decisions. Unscrupulous party litigants, taking advantage of a variety of
competent tribunals, may repeatedly try their luck in several different
fora until a favorable result is reached. To avoid the resultant
confusion, the Court adheres to the rules against forum shopping, and
a breach of these rules results in the dismissal of the case. 39
Considering the above doctrinal pronouncements on forum shopping,
We find all the badges of this deplorable, docket-clogging practice
present in this case.
As a result or in anticipation of an adverse ruling of the Makati RTC,
petitioner sought the favorable opinion of the Muntinlupa RTC
As discussed above, the presiding judge of the Makati RTC, in the
custody case, made of record that she was not inclined to issue a
protection order in favor of Michelle because she did not bother to
appear in Court and that the allegations against Juan Ignacio cannot,
per se, prevent him from exercising visitation rights over his children.
After this adverse ruling, Michelle sought the favorable opinion of the
Muntinlupa RTC by filing an independent Petition for Protection Order.
The cases have identical parties
Clearly, the Petition for Custody and the Petition for Protection Order
have the same parties who represent the same interests. The fact that
Avaand Ara, who are parties in the Petition for Protection Order, are
not impleaded in the Petition for Custody is of no moment because
they are precisely the very subjects of the Petition for Custody and
their respective rights are represented by their mother, Michelle. In a
long line of cases on forum shopping, the Court has held that absolute
identity of the parties is not required, it being enough that there is
substantial identity of the parties40 or at least such parties represent the
same interests in both actions. It does not matter, as here, that in the
Petition for Custody, Juan Ignacio is the petitioner and Michelle is the
respondent while in the Petition for Protection Order, their roles are
reversed. That a party is the petitioner in one case and at the same
time, the respondent in the other case does not, without more, remove
the said cases from the ambit of the rules on forum shopping. So did
the Court hold, for example in First Philippine International Bank v.
Court of Appeals, that forum shopping exists even in cases like this
where petitioners or plaintiffs in one case were impleaded as
respondents or defendants in another.41Moreover, this Court has
constantly held that the fact that the positions of the parties are
reversed, i.e., the plaintiffs in the first case are the defendants in the
second case or vice versa, does not negate the identity of parties for
purposes of determining whether the case is dismissible on the ground
of litis pendentia.42
The rights asserted and reliefs prayed for are based on the same facts
Further, the rights asserted and reliefs prayed for in Civil Case No. 08-
023 are practically based on the same facts and are so intertwined with
that in SP. PROC. Case No. 6543, such that any judgment rendered in
the pending cases, regardless of which party is successful, will amount
to res judicata.
In the custody case, Juan Ignacio mainly asserted his right, as father,
to visit his children and enjoy joint custody over them. He prayed for a
judgment granting him joint custody, or alternatively, permanent
visitation rights over Ava and Ara.
In disposing of the custody case, the Makati RTC is expected, following
the rationale behind the issuance of the Rule on Custody of Minors, to
consider, among others, the best interest of the children,43 any threat
or danger of physical, mental, sexual or emotional violence which
endangers their safety and best interest, their health, safety and
welfare,44 any history of child or spousal abuse by the person seeking
custody,45 habitual use of alcohol, dangerous drugs or regulated
substances,46 marital misconduct,47 and the most suitable physical,
emotional, spiritual, psychological and educational environment for the
holistic development and growth of the minor.48
9
Michelle’s answer and motion for issuance of protection order in the x x x There is therefore, no conflict of jurisdiction in this case but since
custody case contained allegations of psychological, sexual, emotional the petitioner filed a Petition for Certiorari in the Court of Appeals,
and economic abuse she and her children suffered at the hands of which includes the issue of custody, we submit that the matter of
Juan Ignacio to defeat his asserted right to have joint custody over Ava custody pendente lite including visitation, should not and can not be
and Ara and as argument that the grant of visitation rights in his favor resolved by this Honorable Court without conflicting with the
will not be in the best interest of the children. These allegations of Temporary Protection Order of a co-equal court, the RTC of
abuse were in substance the very same ones she made in her Petition Muntinlupa City. x x xx
for Protection Order.
xxx
Juan Ignacio’s rights and reliefs prayed for are dependent on and, to
be sure, would be predicated on the question of whether or not
If the petitioner is granted visitation rights, the Honorable Court, with
granting him the desired custody or at least visitations rights over the
due respect would be allowing him to violate the TPO against him; the
children are in their best interest. In deciding this issue, the Makati
Honorable Court would then be rendering a conflicting
RTC will definitely have to reckon with and make a finding on
decision.50 (Emphasis supplied.)
Michelle’s allegations of psychological, sexual, emotional and
economic abuse.
No less than the Muntinlupa RTC itself recognized the resulting
aberration of its orders conflicting with that/those of the Makati RTC. As
Similarly, the Muntinlupa RTC must necessarily consider and make a
it were, the former, in its Order of May 12, 2008, resolving Juan
determination based on the very same facts and allegations on
Ignacio’s Motion to Dismiss with Prayer to Lift Temporary Protection
whether or not Michelle shall be entitled to the relief she prayed for in
Order, categorically stated that there may be orders in the protection
her own petition, in particular, a permanent protection order against
order case that would possibly conflict with the orders issued by the
Juan Ignacio.
Makati RTC in the custody case. So it was that to address these
possible conflicts, the Muntinlupa RTC partially granted Juan Ignacio’s
Elements of litis pendentia are present and any judgment Motion to Dismiss by modifying the reliefs provided under the TPO by
in the pending cases would amount to res judicata excluding from its coverage those orders issued by the Makati RTC in
the exercise of its jurisdiction over the custody case. Pursuant to the
foregoing Order of the Muntinlupa RTC, the December 21, 2007 and
Any judgment rendered in the pending cases, regardless of which party
January 4, 2008 Orders of the Makati RTC, granting Juan Ignacio
is successful, would amount to res judicata. Consider: If the Makati
visitation rights on Christmas Day and New Year’s Day and one (1)
RTC were to grant Juan Ignacio’s petition for custody, this would
Saturday and Sunday in January 2008, are not covered by the reliefs
necessarily mean that it would be in the best interest of the children if
under the TPO. Hence, despite the TPO directing Juan Ignacio to stay
he were allowed to visit and spend time with them and that granting
at least one (1) kilometer away from Ava and Ara, Juan Ignacio would
Juan Ignacio visitation rights would not pose any danger or threat to
still have the right to see his children by virtue of the orders issued by
the children.
the Makati RTC granting him temporary visitation rights. The said
Muntinlupa RTC Order reads:
On the other hand, a grant by the Muntinlupa RTC of Michelle’s prayer
for a permanent protection order would presuppose at the minimum
Based on the pleadings filed, this (Muntinlupa) Court holds that since
that it would be to the children’s best interest if Juan Ignacio is directed
the Makati Court first acquired jurisdiction over the issue of custody,
to keep away from them, necessary implying that he is unfit even to
the latter continues to exercise it, so that any disposition on the matter
visit Araand Ava. Conversely, if Juan Ignacio’s Petition for Custody
by this Court may result in the possibility of conflicting decisions/orders.
were denied, then it would mean that the Makati RTC gave weight and
credence to Michelle’s allegations of abuse and found them to be in the
best interest of the children to bar Juan Ignacio from visiting them. Wherefore, this Court partially grants respondent’s Motion to Dismiss
Thus, the Muntinlupa RTC should have no ground to deny Michelle’s insofar as those matters covered by A.M. No. 03-04-04-SC, Rule on
Petition for Protection Order pending before it. Custody of Minors and Writ of Habeas corpus in Relation to Custody of
Minors are concerned, which are within the jurisdiction of the Makati
Court, but continues to take cognizance on matters not included
The evil sought to be avoided by the rule against
therein (A.M. No. 03-04-04-SC) but within the protective mantle of R.A.
forum shopping is present in this case
No. 9262.

The grave mischief sought to be avoided by the rule against forum

Consequently, the reliefs provided in favor of the petitioner in the
shopping, i.e., the rendition by two competent tribunals of two separate
Temporary Protection Order dated March 31, 2008 are modified, to
and contradictory decisions, is well-nigh palpable in this case. If the
exclude from its coverage those Orders issued by the Makati Court in
Muntinlupa RTC were to rule that Michelle was entitled to a Protection
the exercise of its jurisdiction on the pending custody case.
Order, this would necessarily conflict with any order or decision from
the Makati RTC granting Juan Ignacio visitation rights over Ava and
Ara. As aptly pointed out by Juan Ignacio in his Comment such a The motions to lift the temporary protection order (except on those
conflict had already occurred, as the TPO issued by the Muntinlupa matter stated above) and to cite petitioner in contempt of court are
RTC actually conflicted with the Orders issued by the Makati RTC denied for lack of merit.51 (Emphasis supplied.)
granting Juan Ignacio temporary visitation rights over his children.
There now exists an Order from the Muntinlupa RTC which, among
Verily, the Muntinlupa RTC was aware that its issuances and its
others, directed Juan Ignacio to stay at least one (1) kilometer away
eventual final disposition on the Petition for Protection Order would
from Ava and Ara, even as the Makati RTC recognized, in two (2)
affect the custody case before the Makati RTC, if not totally clash with
separate Orders, that he had the right, albeit temporarily to see his
the latter court’s decision. We agree with the CA’s ensuing
children.49
observation:

In fact, Michelle was very much aware of the possible conflicts

This Court notes that the Muntinlupa RTC tried to balance out the
between the orders of Makati RTC and Muntinlupa RTC. In her
conflicting jurisdictional issues with the Makati RTC by stating in its first
Opposition (to Urgent Motion for Immediate Enforcement of Visitation
assailed Order that the reliefs provided in favor of herein private
Orders dated December 21, 2007 and January 4, 2008), she
respondent in the TPO dated March 31, 2008 are modified, to exclude
recognized that the granting of visitation rights in favor of Juan Ignacio
from its coverage those Orders issued by the Makati Court in the
would conflict the TPO and, therefore, the Makati Court would be
exercise of its jurisdiction on the pending custody case. Be that as it
rendering a conflicting decision with that of the Muntinlupa RTC, viz:
10
may, the Muntinlupa RTC itself recognized the jurisdiction of the Makati
RTC and that the case before it would, in fact, impinge upon the
jurisdiction of the latter court when it stated that the disposition on the
matter by this Court may result in the possibility of conflicting
decisions/orders. In short, the Muntinlupa RTC itself acknowledges the
fact that any future issuances, including its eventual decision on the
petition before it, would affect the custody case pending before the
Makati RTC and might even result to conflicting decisions. Thus, in the
interest of judicial stability, it is incumbent upon this Court to ensure
that this eventuality will not come to pass.52

Civil Case No. 08-023 should, thus, be dismissed with prejudice for
being a clear case of forum shopping.

WHEREFORE, premises considered, the appealed May 11,

2009Decision and the December 28, 2009 Resolution of the Court of
Appeals in C A-G.R. SP. No. 105442, particularly insofar as these
ordered the dismissal or subject Civil Case No. 08-023 and the
nullification of the orders made in that case, are hereby AFFIRMED.

11
G.R. No. 173331 December 11, 2013 WHEREFORE, in view of the foregoing premises, defendant is hereby
directed to pay plaintiff the following:
FLORPINA BENAVIDEZ, Petitioner,
vs. 1. The amount of ₱4,810,703.21, covering the period from
NESTOR SALVADOR, Respondent. June 11, 1998 to January 11, 2000, exclusive of interest and
penalty charges until the said amount is fully paid;
DECISION
2. The amount of ₱50,000.00 as exemplary damages;
MENDOZA, J.:
3. The sum of 25% of the total obligation as and by way of
attorney’s fees; and,
This is a petition for review on certiorari assailing the November 22,
2005 Decision1 and the June 8, 2006 Amended Decision2 of the Court
of Appeals (CA). in CA-G.R. CV No. 73487, which affirmed and 4. Cost of suit.
modified the June 1, 2001 Decision3 of the Regional Trial Court.
Branch 74, Anti polo City (RTC-Antipolo) in Civil Case No. 00-5660.
SO ORDERED.5

The Facts:
Benavidez filed a motion for reconsideration but unfortunately for her,
RTC-Antipolo, in its August 10, 2001 Order,6denied her motion for lack
Sometime in February 1998, pet1t1oner Florpina of merit.
Benavidez (Benavidez) approached and asked respondent Nestor
Salvador (Salvador) for a loan that she would use to repurchase her
Frustrated, Benavidez appealed the June 1, 2001 Decision and the
property in Tanay, Rizal which was foreclosed by the Farmers Savings
August 10, 2001 Order of RTC-Antipolo to the CA. She argued, in
and Loan Bank, Inc. (Farmers Savings). After inspecting the said
chief, that early on, the trial court should have dismissed the complaint
property, Salvador agreed to lend the money subject to certain
for collection of sum of money filed by Salvador on grounds of litis
conditions. To secure the loan, Benavidez was required to execute a
pendentia and erroneous certification against forum shopping. She
real estate mortgage, a promissory note and a deed of sale. She was
claimed that prior to the filing of the said complaint against her, she
also required to submit a special power of attorney (SPA) executed
had already filed a complaint for the annulment of the promissory note
and signed by Benavidez’s daughter, Florence B.
evidencing her obligation against Salvador. According to her, there was
Baning (Baning), whom she named as the vendee in the deed of
substantial identity in the causes of action and any result of her
absolute sale of the repurchased property. In the SPA, Baning would
complaint for annulment would necessarily affect the complaint for
authorize her mother to obtain a loan and to constitute the said
collection of sum of money filed against her. She added that Salvador
property as security of her indebtedness to Salvador.
never informed RTC-Antipolo about the pending case before RTC-
Morong, rendering his certification on forum shopping erroneous.7
Pursuant to the agreement, Salvador issued a manager’s check in
favor of Benavidez in the amount of One Million Pesos (₱1,000,000.00)
Benavidez also argued that RTC-Antipolo erred in refusing to re-open
and released Five Hundred Thousand Pesos (₱500,000.00) in cash.
the case for pre-trial conference and disallowing her to present
For the loan obtained, Benavidez executed a promissory note, dated
evidence. She added that the absence of her counsel on the scheduled
March 11, 1998.
pre-trial conference caused her substantial prejudice. Though she was
not unmindful of the general rule that a client was bound by the
Benavidez, however, failed to deliver the required SPA. She also mistake or negligence of her counsel, she insisted that since the
defaulted in her obligation under the promissory note. All the postdated incompetence or ignorance of her counsel was so great and the error
checks which she had issued to pay for the interests were dishonored. committed was so serious as it prejudiced her and denied her day in
This development prompted Salvador to send a demand letter with a court, the litigation should have been reopened to give her the
corresponding statement of account, dated January 11, 2000. opportunity to present her case.8
Unfortunately, the demand fell on deaf ears which constrained
Salvador to file a complaint for sum of money with damages with
The CA was not moved.
prayer for issuance of preliminary attachment.

The CA reasoned out that RTC-Antipolo did not err in allowing

On May 4, 2000, Benavidez filed a motion to dismiss on the ground
Salvador to present his evidence ex-parte in accordance with Section
of litis pendentia. She averred that prior to the filing of the case before
5, Rule 18 of the 1997 Rules of Court.9 Benavidez and her counsel
the RTC-Antipolo, she had filed a Complaint for Collection for Sum of
failed to show a valid reason for their non-appearance at the pre-trial
Money, Annulment of Contract and Checks with Prayer for Preliminary
and so their absence was not excusable. Her counsel’s negligence, as
Injunction and Temporary Restraining Order against Salvador; his
Benavidez cited, was not among the grounds for new trial or
counsel, Atty. Nepthalie Segarra; Almar Danguilan; and Cris Marcelino,
reconsideration as required under Section 1, Rule 37 of the Rules of
before the Regional Trial Court, Branch 80, Morong, Rizal (RTC-
Civil Procedure. The CA emphasized that well-entrenched was the rule
Morong). The motion to dismiss, however, was denied by RTC-
that negligence of counsel bound his client. She was bound by the
Antipolo on July 31, 2000. On September 15, 2000, Benavidez filed her
action of his counsel in the conduct of the trial. The appellate court also
answer with counterclaim. A pre-trial conference was scheduled on
took note that she herself was guilty of negligence because she was
May 2, 2001 but she and her counsel failed to appear despite due
also absent during the pre-trial despite due notice. Thus, Benavidez’s
notice. Resultantly, upon motion, Salvador was allowed by the trial
position that the trial court should have reopened the case was
court to present evidence ex parte.
untenable.10

On June 1, 2001, RTC-Antipolo decided the subject case for Salvador.

With regards to the grounds of litis pendentia and forum shopping cited
It found that indeed Benavidez obtained a loan from Salvador in the
by Benavidez, the CA wrote that there was no identity of the rights
amount of ₱1,500,000.00. It also noted that up to the time of the
asserted in the cases filed before RTC-Morong and RTC-Antipolo. The
rendition of the judgment, she had failed to settle her obligation despite
reliefs prayed for in those cases were different. One case was for the
having received oral and written demands from Salvador. Also, the trial
annulment of the promissory note while the other one was a complaint
court pointed out that the evidence had shown that as of January 11,
for sum of money. There could be identity of the parties, but all the
2000, Benavidez’s obligation had already reached the total amount of
other requisites to warrant the dismissal of the case on the ground
₱4,810,703.21.4 Thus, the fallo of the said decision reads:
12
of litis pendentia were wanting.11 Thus, on November 22, 2005, the CA
affirmed in toto the decision of RTC-Antipolo.12
Feeling aggrieved by the affirmance, Benavidez filed a motion for
reconsideration on the ground that the same was contrary to law and
jurisprudence; that litis pendentia existed which resultantly made his
certification on non-forum shopping untruthful; and, that her absence
during the pre-trial was justified.
On June 08, 2006, the CA issued the Amended Decision, holding that
the motion was partly meritorious. Accordingly, it modified its earlier
decision by deleting the award of exemplary damages and attorney’s
fees because the award thereof was not supported by any factual,
legal and equitable justification. Thus, the decretal portion of the
Amended Decision reads:
WHEREFORE, the motion for reconsideration is PARTIALLY
GRANTED. The Decision dated November 22, 2005
is MODIFIED by DELETING the award of exemplary damages and
attorney’s fees.
SO ORDERED. 13
Still unsatisfied, Benavidez comes before the Court via a petition for
review under Rule 45 of the Rules of Court, raising the following
issues:14
1. Whether or not the present case is barred by Civil
Case No. 00-05660 which is pending before the RTC-
Morong, Rizal.
2. Whether or not the case is dismissible because the
certification against forum shopping was defective.
3. Whether or not the executed promissory note is void
for being unconscionable and shocking to the
conscience.
4. Whether or not the CA erred in holding that the order
allowing respondent to present evidence ex-parte and
submitting the case for decision is valid despite the fact
that default judgment is looked upon with disfavor by
this Court.
In fine, the core issue is whether or not the present case should have
been dismissed on the ground of litis pendentia.
Benavidez argues that the outcome of the case, before RTC-Morong,
where the annulment of the promissory note was sought, would have
been determinative of the subject case before RTC-Antipolo where the
enforcement of the promissory note was sought. If RTC-Morong would
rule that the promissory note was null and void, then the case with
RTC-Antipolo would have no more leg to stand on. He concludes that
the requisites of litis pendentia were indeed present: first, both
Benavidez and Salvador were parties to both complaints; second, both
complaints were concerned with the promissory note; and third, the
judgment in either of the said complaints would have been
determinative of the other.15
Benavidez further claims that the case should have been dismissed
because the certification on forum shopping which accompanied
Salvador’s complaint was defective. He declared therein that he was
not aware of any pending case before any court similar to the one he
was filing, when in truth and in fact, there was one. This fact could not
be denied because summons in the case before RTC-Morong was
served on him and he even filed his answer to the said complaint. 16
Benavidez also pushes the argument that RTC-Antipolo committed an
error of law when it allowed Salvador to present evidence ex-parte and
eventually decided the case without waiting to hear her side. The trial
court should have been more lenient. If there was any one to be
blamed for her predicament, it should have been his counsel, Atty.
Rogelio Jakosalem (Jakosalem). His counsel was negligent in his
duties when he did not bother to file the necessary pre-trial brief and
did not even appear at the pre-trial conference. He did not assist her
either in filing a motion for reconsideration. Benavidez explains that
Atty. Jakosalem did not appear on the scheduled pre-trial conference
because he got mad at her when she refused to heed his advice to
settle when the trial court granted Salvador’s motion for issuance of
preliminary attachment. Under the circumstances, she should have
been exempted from the rule that the negligence of counsel binds the
client.17
For her part, she failed to appear because she was then suffering from
illness. Contrary to the finding of the CA, her medical certificate was
not belatedly submitted. She submitted it within a reasonable period
after she received the order allowing Salvador to present evidence ex-
parte and considering the case for resolution thereafter.18
The Court’s Ruling
In litis pendentia, there is no
hard and fast rule in
determining which of the two
actions should be abated
Litis pendentia is a Latin term, which literally means "a pending suit"
and is variously referred to in some decisions as lis pendens and auter
action pendant. As a ground for the dismissal of a civil action, it refers
to the situation where two actions are pending between the same
parties for the same cause of action, so that one of them becomes
unnecessary and vexatious. It is based on the policy against multiplicity
of suits.19
Litis pendentia exists when the following requisites are present: identity
of the parties in the two actions; substantial identity in the causes of
action and in the reliefs sought by the parties; and the identity between
the two actions should be such that any judgment that may be
rendered in one case, regardless of which party is successful, would
amount to res judicata in the other.20
On the other hand, forum shopping exists when, as a result of an
adverse decision in one forum, or in anticipation thereof, a party seeks
a favorable opinion in another forum through means other than appeal
or certiorari.21
There is forum shopping when the elements of litis pendentia are
present or where a final judgment in one case will amount to res
judicata in another.22
In the present controversy, the Court is of the view that litis
pendentia exists. All the elements are present: first, both Benavidez
and Salvador are parties in both cases; second, both complaints are
concerned with the same promissory note; and third, the judgment in
either case would be determinative of the other.
With the foregoing, which case then should be dismissed? At first
glance, it would seem that Civil Case No. 00-5660 or the complaint
filed with RTC-Antipolo should have been dismissed applying the
"priority-in-time rule." This rule, however, is not ironclad. The rule is not
applied if the first case was filed merely to pre-empt the later action or
to anticipate its filing and lay the basis for its dismissal. A crucial
consideration is the good faith of the parties. In recent rulings, the more
appropriate case is preferred and survives. In Spouses Abines v.
BPI,23 it was written:
There is no hard and fast rule in determining which of the actions
should be abated on the ground of litis pendentia, but through time, the
13
Supreme Court has endeavored to lay down certain criteria to guide
lower courts faced with this legal dilemma. As a rule, preference is
given to the first action filed to be retained. This is in accordance with
the maxim Qui prior est tempore, potior est jure. There are, however,
limitations to this rule. Hence, the first action may be abated if it was
filed merely to pre-empt the later action or to anticipate its filing and lay
the basis for its dismissal. Thus, the bona fides or good faith of the
parties is a crucial element. A later case shall not be abated if not
brought to harass or vex; and the first case can be abated if it is merely
an anticipatory action or, more appropriately, an anticipatory defense
against an expected suit – a clever move to steal the march from the
aggrieved party.
Another exception to the priority in time rule is the criterion of the more
appropriate action. Thus, an action, although filed later, shall not be
dismissed if it is the more appropriate vehicle for litigating the issues
between the parties. [Underscoring supplied]
In the relatively recent case of Dotmatrix Trading v. Legaspi,24 the
Court had the occasion to extensively discuss the various rules and
consideration in determining which case to dismiss in such situations. It
included its analysis of Abines. Thus:
Early on, we applied the principle of Qui prior est tempore, potior est
jure (literally, he who is before in time is better in right) in dismissing a
case on the ground of litis pendentia. This was exemplified in the
relatively early case of Del Rosario v. Jacinto where two complaints for
reconveyance and/or recovery of the same parcel of land were filed by
substantially the same parties, with the second case only impleading
more party-plaintiffs. The Court held that "parties who base their
contention upon the same rights as the litigants in a previous suit are
bound by the judgment in the latter case." Without expressly saying so
in litis pendentia terms, the Court gave priority to the suit filed earlier.
In Pampanga Bus Company, Inc. v. Ocfemia, complaints for damages
arising from a collision of a cargo truck and a bus were separately filed
by the owners of the colliding vehicles. The complaint of the owners of
the cargo truck prevailed and the complaint of the owners of the bus
had to yield, as the cargo truck owners first filed their complaint.
Notably, the first and prevailing case was far advanced in
development, with an answer with counterclaim and an answer to the
counterclaim having been already filed, thus fully joining the issues.
In Lamis Ents. v. Lagamon, the first case was a complaint for specific
performance of obligations under a Memorandum of Agreement, while
the second case was a complaint for sums of money arising from
obligations under a promissory note and a chattel mortgage, and
damages. We dismissed the second case because the claims for sums
of money therein arose from the Memorandum of Agreement sued
upon in the first case.
Ago Timber Corporation v. Ruiz offered an insightful reason after both
parties had each pleaded the pendency of another action between the
same parties for the same cause. The Court ruled that the second
action should be dismissed, "not only as a matter of comity with a
coordinate and co-equal court (Laureta & Nolledo, Commentaries &
Jurisprudence on Injunction, p. 79, citing Harrison v. Littlefield, 57 Tex.
Div. A. 617, 619, 124 SW 212), but also to prevent confusion that might
seriously hinder the administration of justice. (Cabigao, et al. v. Del
Rosario, et al., 44 Phil. 182)."
In all these cases, we gave preference to the first action filed to be
retained. The "priority-in-time rule," however, is not absolute.
In the 1956 case of Teodoro v. Mirasol, we deviated from the "priority-
in-time rule" and applied the "more appropriate action test" and
the "anticipatory test."
The "more appropriate action test" considers the real issue raised
by the pleadings and the ultimate objective of the parties; the
more appropriate action is the one where the real issues raised
can be fully and completely settled. In Teodoro, the lessee filed an
action for declaratory relief to fix the period of the lease, but the lessor
moved for its dismissal because he had subsequently filed an action
for ejectment against the lessee. We noted that the unlawful detainer
suit was the more appropriate action to resolve the real issue between
the parties - whether or not the lessee should be allowed to continue
occupying the land under the terms of the lease contract; this was the
subject matter of the second suit for unlawful detainer, and was also
the main or principal purpose of the first suit for declaratory relief.
In the "anticipatory test," the bona fides or good faith of the parties is
the critical element.1âwphi1 If the first suit is filed merely to
preempt the later action or to anticipate its filing and lay the basis
for its dismissal, then the first suit should be
dismissed. In Teodoro, we noted that the first action, declaratory
relief, was filed by the lessee to anticipate the filing of the second
action, unlawful detainer, considering the lessor's letter informing the
lessee that the lease contract had expired.
We also applied the "more appropriate action test" in Ramos v.
Peralta. In this case, the lessee filed an action for consignation of lease
rentals against the new owner of the property, but the new owner
moved to dismiss the consignation case because of the quieting of title
case he had also filed against the lessee. Finding that the real issue
between the parties involved the right to occupy/possess the subject
property, we ordered the dismissal of the consignation case, noting
that the quieting of title case is the more appropriate vehicle for the
ventilation of the issues between them; the consignation case raised
the issue of the right to possession of the lessee under the lease
contract, an issue that was effectively covered by the quieting of title
case which raised the issue of the validity and effectivity of the same
lease contract.
In University Physician Services, Inc. v. Court of Appeals, we applied
both the "more appropriate action test" and "anticipatory test." In this
case, the new owner of an apartment sent a demand letter to the
lessee to vacate the leased apartment unit. When the lessee filed an
action for damages and injunction against the new owner, the new
owner moved for the dismissal of the action for damages on account of
the action for ejectment it had also filed. We noted that ejectment suit
is the more appropriate action to resolve the issue of whether the
lessee had the right to occupy the apartment unit, where the question
of possession is likewise the primary issue for resolution. We also
noted that the lessee, after her unjustified refusal to vacate the
premises, was aware that an ejectment case against her was
forthcoming; the lessee's filing of the complaint for damages and
injunction was but a canny and preemptive maneuver intended to block
the new owner's action for ejectment.
We also applied the "more appropriate action test" in the 2003
case Panganiban v. Pilipinas Shell Petroleum Corp., where the lessee
filed a petition for declaratory relief on the issue of renewal of the lease
of a gasoline service station, while the lessor filed an unlawful detainer
case against the lessee. On the question of which action should be
dismissed, we noted that the interpretation of a provision in the lease
contract as to when the lease would expire is the key issue that would
determine the lessee's right to possess the gasoline service station.
The primary issue – the physical possession of the gasoline station - is
best settled in the ejectment suit that directly confronted the physical
possession issue, and not in any other case such as an action for
declaratory relief.
A more recent case - Abines v. Bank of the Philippine Islands in 2006 -
saw the application of both the "priority-in-time rule" and the "more
appropriate action test." In this case, the respondent filed a complaint
for collection of sum of money against the petitioners to enforce its
rights under the promissory notes and real estate mortgages, while the
petitioners subsequently filed a complaint for reformation of the
promissory notes and real estate mortgages. We held that the first
case, the collection case, should subsist because it is the first action
filed and the more appropriate vehicle for litigating all the issues in the
14
controversy. We noted that in the second case, the reformation case,
the petitioners acknowledged their indebtedness to the respondent;
they merely contested the amounts of the principal, interest and the
remaining balance. We observed, too, that the petitioners' claims in the
reformation case were in the nature of defenses to the collection case
and should be asserted in this latter case.
Under this established jurisprudence on litis pendentia, the following
considerations predominate in the ascending order of importance in
determining which action should prevail: (1) the date of filing, with
preference generally given to the first action filed to be
retained; (2) whether the action sought to be dismissed was filed
merely to preempt the later action or to anticipate its filing and lay the
basis for its dismissal; and (3) whether the action is the appropriate
vehicle for litigating the issues between the parties.25 [Underscoring
supplied]
In the complaint filed before RTC-Morong, Benavidez alleged, among
others, that it was defendant Atty. Nepthalie Segarra (Atty.
Segarra) who arranged the loan in the amount of ₱1,500,000.00 for her
at his own initiative; that he was the one who received the amount for
her on or about March 10, 1998 from defendant Salvador; that he paid
Farmers Bank the amount of ₱1,049,266.12 leaving a balance of more
than ₱450,000.00 in his possession; and that he made her sign a
promissory note. Benavidez prayed, among others, that Atty. Segarra
be ordered to give her the balance of the amount loaned and that the
promissory note that Salvador allegedly executed be declared null and
void because she was just duped into signing the said document
through machinations and that the stipulated interest therein was
shocking to the conscience. Salvador, on the other hand, filed the
subject case for the collection of a sum of money before RTC-Antipolo
to enforce his rights under the promissory note.
Considering the nature of the transaction between the parties, the
Court believes that the case for collection of sum of money filed before
RTC-Antipolo should be upheld as the more appropriate case because
the judgment therein would eventually settle the issue in the
controversy - whether or not Benavidez should be made accountable
for the subject loan. In the complaint that she filed with RTC- Morong,
Benavidez never denied that she contracted a loan with Salvador.
Under her second cause of action, she alleged:
SECOND CAUSE OF ACTION
11. Defendant Atty. Nepthalie Segarra arranged a loan in the
amount of ONE MILLION AND FIVE HUNDRED
THOUSAND (₱1,500,000.00) PESOS for plaintiff at his own
initiative;
12. Defendant Atty. Nepthalie Segarra received the
₱1,500,000.00 on or about March 10, 1998 from defendant
Nestor Salvador in behalf of and for delivery to plaintiff;
13. Defendant Atty. Nepthalie Segarra paid Farmers Bank
the amount of ₱1,049,266.12 leaving a balance of more than
₱450,000.00 in his possession. A copy of the receipt
evidencing payment is herewith attached as Annex "A" and
made an integral part hereof;
14. Defendant Atty. Nepthalie Segarra made plaintiff sign a
Promissory Note evidencing the loan of ₱1,500,000.00. A
copy of said Promissory Note is herewith attached as Annex
"B" and made an integral part hereof; 26 [Underscoring
supplied]
From the foregoing, it is clear that there was an amount of money
borrowed from Salvador which was used in the repurchase of her
foreclosed property. Whether or not it was Atty. Segarra who arranged
the loan is immaterial. The fact stands that she borrowed from
Salvador and she benefited from it. Her insistence that the remaining
balance of ₱450,000.00 of the money loaned was never handed to her
by Atty. Segarra is a matter between the two of them. As far as she
and Salvador are concerned, there is admittedly an obligation. Whether
the promissory note was void or not could have been proven by her
during the trial but she forfeited her right to do so when she and her
lawyer failed to submit a pre-trial brief and to appear at the pre-trial as
will be discussed hereafter.
At this point, to dismiss Civil Case No. 00-5660 would only result in
needless delay in the resolution of the parties' dispute and bring them
back to square one. This consequence will defeat the public policy
reasons behind litis pendentia which, like the rule on forum shopping,
aim to prevent the unnecessary burdening of our courts and undue
taxing of the manpower and financial resources of the Judiciary; to
avoid the situation where co-equal courts issue conflicting decisions
over the same cause; and to preclude one party from harassing the
other party through the filing of an unnecessary or vexatious suit.27
The failure of a party to file a
pre-trial brief or to appear at a
pre-trial conference shall be
cause to allow the other party
to present evidence ex parte.
Benavidez basically contends that she should not be made to suffer
the irresponsibility of her former counsel, Atty. Jakosalem, and that the
trial court should have relaxed the application of the Rules of Court,
reopened the case and allowed her to present evidence in her favor.
The Court is not moved.
Section 4, Rule 18 of the Rules of Court provides that it is the duty of
the parties and their counsel to appear at the pre-trial conference. The
effect of their failure to appear is provided by Section 5 of the same
rule where it states:
Sec. 5. Effect of failure to appear.- The failure of the plaintiff to
appear when so required pursuant to the next preceding section shall
be cause for dismissal of the action. The dismissal shall be with
prejudice, unless otherwise ordered by the court. A similar failure on
the part of the defendant shall be cause to allow the plaintiff to
present his evidence ex parte and the court to render judgment on
the basis thereof. [Emphasis supplied]
Furthermore, Section 6 thereof provides:
Sec. 6. Pre-trial brief.-The parties shall file with the court and serve on
the adverse party, in such manner as shall ensure their receipt thereof
at least three (3) days before the date of the pre-trial, their respective
pre-trial briefs which shall contain, among others:
xxx
Failure to file the pre-trial brief shall have the same effect as failure to
appear at the pre-trial.
From the foregoing, it is clear that the failure of a party to appear at the
pre-trial has adverse consequences. If the absent party is the plaintiff,
then his case shall be dismissed. If it is the defendant who fails to
appear, then the plaintiff is allowed to present his evidence ex
parte and the court shall render judgment on the basis thereof. Thus,
the plaintiff is given the privilege to present his evidence without
objection from the defendant, the likelihood being that the court will
decide in favor of the plaintiff, the defendant having forfeited the
opportunity to rebut or present its own evidence.28
RTC-Antipolo then had the legal basis to allow Salvador to present
evidence ex parte upon motion. Benavidez and her counsel were not
present at the scheduled pre-trial conference despite due notice. They
15
did not file the required pre-trial brief despite receipt of the Order. The
rule explicitly provides that both parties and their counsel are
mandated to appear thereat except for: (1) a valid excuse; and (2)
appearance of a representative on behalf of a party who is fully
authorized in writing to enter into an amicable settlement, to submit to
alternative modes of dispute resolution, and to enter into stipulations or
admissions of facts and documents.29 In this case, Benavidez’s lawyer
was already negligent, but she compounded this by being negligent
herself. She was aware of the scheduled pre-trial conference, but she
did not make any move to prevent the prejudicial consequences of her
absence or that of her counsel. If she knew that her lawyer would not
appear and could not because she was ill, she should have sent a
representative in court to inform the judge of her predicament.

Also, her failure to file the pre-trial brief warranted the same effect
because the rules dictate that failure to file a pre-trial brief shall have
the same effect as failure to appear at the pre-trial. Settled is the rule
that the negligence of a counsel binds his clients. 30 Neither Benavidez
nor her counsel can now evade the effects of their misfeasance.

Stipulated interest should be

reduced for being iniquitous
and unconscionable.

This Court is not unmindful of the fact that parties to a loan contract
have wide latitude to stipulate on any interest rate in view of the
Central Bank Circular No. 905 s. 1982 which suspended the Usury Law
ceiling on interest effective January I, 1983. It is, however, worth
stressing that interest rates whenever unconscionable may still be
declared illegal. There is nothing in said circular which grants
lenders carte blanche authority to raise interest rates to levels which
will either enslave their borrowers or lead to a hemorrhaging of their
assets.31 In Menchavez v. Bermudez,32 the interest rate of 5% per
month, which when summed up would reach 60% per annum, is null
and void for being excessive, iniquitous, unconscionable and
exorbitant, contrary to morals, and the law.33

Accordingly, in this case, the Court considers the compounded interest

rate of 5% per month as iniquitous and unconscionable and void and
inexistent from the beginning. The debt is to be considered without the
stipulation of the iniquitous and unconscionable interest rate.34 In line
with the ruling in the recent case of Nacar v. Gallery Frames,35 the
legal interest of 6% per annum must be imposed in lieu of the
excessive interest stipulated in the agreement.

WHEREFORE, the petition is DENIED. The November 22, 2005

Decision and the June 8, 2006 Amended Decision of the Court of
Appeals are AFFIRMED with MODIFICATION. The interest rate of 5%
per month which was the basis in computing Benavidez's obligation is
reduced to 6% per annum.

16
G.R. No. 104019 January 25, 1993
VICTRONICS COMPUTERS, INC., petitioner,
vs.
REGIONAL TRIAL COURT, BRANCH 63, MAKATI, presided by
JUDGE JULIO R. LOGARTA, PANORAMA ENTERPRISES, INC.,
PASIG TOURIST DEVELOPMENT CORP., GALACTIC SPACE
DEVELOPMENT CORP., MALATE TOURIST DEVELOPMENT
CORP., CALOOCAN TOURIST DEVELOPMENT CORP.,
BARRIENTOS & CO., INC., KARL C. VELHAGEN and
ARCHIMEDES R. KING, who operate business under the names
VICTORIA COURT, GMT CONSOLIDATED COMPANY and
VICTORIA GROUP OF COMPANIES, respondents.
Paras & Reynes Law Office for petitioner.
Ernest S. Ang for respondents.
DAVIDE, JR., J.:
This is a petition for review on certiorari under Rule 45 of the Rules of
Court. Petitioner seeks to set aside, for being inconsistent with law and
jurisprudence, the 22 January 1992 Order of respondent Branch 63 of
the Regional Trial Court (RTC) of Makati, Metro Manila which, among
others, denied a motion for reconsideration of its earlier dismissal, on
the ground of lis pendens, of a collection suit docketed as Civil Case
No. 91-2069 filed against private respondents Karl C. Velhagen and
Archimedes R. King, alleged operators of a business under the names
VICTORIA COURT, GMT CONSOLIDATED COMPANY and
VICTORIA GROUP OF COMPANIES. Petitioner further asks this
Court, in the exercise of its supervisory power over lower courts, to
direct the respondent Court to issue alias summonses to the
respondent corporations which were impleaded as additional
defendants in the amended complaint filed in said Civil Case No. 91-
2069, and to order the consolidation of this case in Branch 63 with Civil
Case No. 91-2192 pending before Branch 150 of the said court.
The records disclose the following antecedents:
Petitioner Victronics Computers, Inc., a domestic corporation engaged
in the sale of computer systems and peripherals, submitted a quotation
for office systems to service the networking requirements of various
Victoria Court branches.
Satisfied with the said quotations, private respondents Velhagen and
King placed an order with the petitioner in a Purchase Order1 form on
which is written "GMT CONSOLIDATED" above the printed word
COMPANY, and the address 2129 Pasong Tamo St., Makati, Metro
Manila below it. The private respondents ordered six (6) sets of 80
DATA 386 computer system with peripherals for the net consideration,
after deducting a P7,000.00 discount, of P767,000.00, subject to the
following terms:
a) Payment — 50% down, 50% COD upon
completion of delivery.
b) Delivery — within 30 calendar days upon
receipt of P.O. and 50% down payment.
c) Penalty — 1% of total P.O. amount per day of
delay.
These systems were to be delivered to the parties therein indicated,
namely: VCAD, VCCU, VCHI, VCNE, VCMA and VCES. Per the
delivery receipts, these acronyms stand for Victoria Court drive-in
motels located in different places.
The fifty per cent (50%) downpayment agreed upon was duly paid.
Thereupon, petitioner delivered on 22 May 1991 three (3)of the six (6)
sets to Victoria Court/North EDSA, Victoria Court/Adriatico and Victoria
Court/Cuneta.2 The remaining sets were delivered on 20 June 1991 to
Victoria Court/Hillcrest, Victoria Court/Panorama and Victoria
Court/McArthur.3
As revealed in the complaint in Civil Case No. 91-2192, each of the
aforementioned establishments is owned by the herein six (6)
respondent corporations which, however, decided sometime in 1986
"to band together for their mutual interest and benefit, under the trade
name and style of the Victoria Court Group of Companies."4
As further revealed in the Comment of these corporations, they operate
under a common management team wherein respondents Velhagen
and King are the General Manager and Chief Executive Officer,
respectively.5
Only fifty per cent (50%) of the purchase price of each of the sets
delivered to the different establishments was paid by the said
corporations.6 The outstanding balance not having been paid within
and even after the period stipulated in the Purchase Order despite
demands for its payment made on Velhagen and King, the petitioner
filed, on 26 July 1991, with the RTC of Makati a Complaint 7 for a sum
of money and damages against:
KARL C. VELHAGEN and ARCHIE R. KING, who
operate business under the names VICTORIA
COURT, GMT CONSOLIDATED COMPANY, and
VICTORIA GROUP OF COMPANIES.
The case was docketed as Civil Case No. 91-2069 and was
raffled off to Branch 63 of the said court, presided over by
herein respondent Judge Julio R. Logarta.
Defendants Velhagen and King, herein private respondents,
were each served with a summons and a copy of the
complaint on 8 August 1991.8
The following day, 9 August 1991, the six (6) respondent
corporations9 filed with the RTC of Makati a Complaint, dated 7 August
1991, 10 for the nullification of the abovementioned Purchase Order
and for damages against the herein petitioner and one Teodorico B.
Kabigting. It is prayed for in the complaint that:
. . . judgment be rendered for the plaintiffs and
against the defendants declaring the contract to
purchase the aforementioned computer equipment
null and void for fraud and undue influence, and
ordering defendants, jointly or severally, to pay
plaintiffs:
1. The sum of P383,500.00 plus reasonable
interest of at least 2% per month from the month of
May 1991 until the amount is actually paid, as
compensary (sic) or actual damages;
2. The sum of P500,000.00 as exemplary
damages;
3. The sum of P100,000.00 and a per appearance
fee of P1,000.00 as and by way of attorney's fees;
4. The cost of the suit.
The case was docketed as Civil Case No. 91-2192 and was
raffled off to Branch 150 of the said court.
17
Four (4) causes of action are alleged in this complaint. In the
first, the corporations claim that defendant Kabigting, then
the Manager of the Management Information Services of the
Victoria Court Group of Companies who was instructed to
canvass or conduct a price survey of computer equipment
supplied by different companies, connived with Victor
Mariano, the petitioner's General Manager and the latter's
old and close friend, in consideration of an alleged promise
of a substantial commission, to falsify the price survey report
and recommend the purchase of the computer equipment
from the petitioner corporation. A routine check of the
transaction likewise disclosed an overpricing of the
equipment by at least P200,000.00 while an audit revealed
that the equipment sold was among the surplus stock of the
petitioner. In the second cause of action, they allege that
they forthwith informed the petitioner's Mr. Mariano about the
fraud and sought an audience with him for an amicable
solution to the controversy, but that the petitioner failed to
respond and instead referred the matter to its attorney who
in turn wrote a letter of demand for the payment of the
balance of the purchase price. Reacting, they also referred
the matter to their lawyer who wrote the petitioner a letter
informing it that the contract was being voided due to fraud
and undue influence and demanding that the fifty per cent
(50%) downpayment be returned with a reasonable interest
at the rate of two per cent (2%) per month in exchange for
the return of "all computer equipment purchased from
defendant (herein petitioner) in the same condition as they
were received." 11 Upon the petitioner's failure to respond
positively to this offer, they filed the complaint. In the third
cause of action, they allege bad faith and a fraudulent intent
on the part of the defendants and ask for P500,000.00 as
exemplary damages. The fourth cause of action is for
attorney's and appearance fees.
No copy of any document whatsoever is attached to the
complaint in said Civil Case No. 91-2192.
On 22 August 1991, private respondents Velhagen and King,
represented by counsel of record for the six (6) corporations
in Civil Case No. 91-2192 — the law firm of ANG, CADIZ
and ASSOCIATES — filed in Civil Case No.
91-2069 a Motion To Dismiss and/or To Suspend
Proceedings based on the following grounds: (a) plaintiff
(petitioner herein) failed to verify the complaint. (b) plaintiff
failed to sue the proper parties and (c) there is a prejudicial
question or a pending incident before another court. In
support of these grounds, they allege that (a) verification is a
formal requirement under Section 6, Rule 7 of the Rules of
Court; (b) the transaction in question was not entered into by
them in their personal capacities — they acted for and on
behalf of the corporations they represent; hence, the latter,
who chose not to honor the contract, are the real parties in
interest; moreover, "Victoria Court, GMT Consolidated
Company and Victoria Group of Companies . . . are mere
tradenames" 12 — none of these named companies really
exist; and (c) Civil Case No. 91-2192 (erroneously written as
91-2191) for the nullification of the subject purchase order
has been filed against the petitioner and is pending before
Branch 150 of the trial court; accordingly, "[A]t the very least,
the Honorable Court (Branch 63) should suspend all
proceedings in this case because of the existence of a
prejudicial question or a pending incident before another
court." Elaborating thereon, said movants state:
There is a situation wherein two suits were filed for
different causes of action but involving the same
transaction or contract. One case, the one pending
before this Honorable Court, is for the enforcement
of the contract, or more specifically, for the
collection of the balance or sum of money as
provided for in the contract. In the other case
before another court, what is being sought is the
nullification or the voiding of the same contract for
alleged fraud and undue influence. There is no
debate that the more basic question is before the
other court, as the very validity of the contract
sought to be enforced is at issue there.
It is clear therefore that the second case is
prejudicial to the determination of the first case.
Whether or not the suit pending before this
Honorable Court will prosper depends entirely on
how the case in the other court will fare. If for
example the other court should determine that
there is (sic) sufficient grounds to nullify the
contract, then the collection suit before this
Honorable Court must necessarily fail. It is only
after the other court should determined (sic) that
the questioned contract is valid can this Honorable
Court proceed with the collection case.
Suspension of the proceedings before this
Honorable Court is therefore the prudent thing to
do. This will avoid the absurd situation wherein
one court will find for one party in one case, and
the other court will find for the adverse party in the
second case. It is also an act of courtesy to a co-
equal branch of the same court. 13
They then end with an alternative prayer, thus:
WHEREFORE, premises considered, it is
respectfully prayed that the instant Complaint be
dismissed for all or any of the grounds aforecited.
On the alternative, it is prayed that the
proceedings before the Honorable Court be at
least suspended until the final resolution of the
other case before Branch 150 of the Regional Trial
Court of Makati. 14
Meanwhile, on 5 September 1991, the herein petitioner filed in Civil
Case No. 91-2192 a Special Appearance and Motion To
Dismiss 15 asking the trial court to dismiss the said case on grounds of
improper service of summons and lack of jurisdiction over it as
defendant therein.
On 16 September 1991, Branch 63 of the Makati RTC, through
respondent Judge Julio Logarta, issued an order dismissing Civil Case
No.
91-2069 because of litis pendentia. 16 The court gave the following
reasons, quoted verbatim, in support of its ruling:
. . . Clearly, the elements of litis pendentia, as a
ground for a motion to dismiss is present, to wit:
1. Identity of parties or at least
such as representing the
same interests in both actions;
2. Identity of rights asserted
and prayed for, the reliefs
being founded on the same
facts;
3. The identity of the presiding
particulars should be such
that any judgment which may
be rendered on the other
action will regardless of which
party is successful amount
to res judicata in the action
under consideration (FEU —
18
 Dr. Nicanor Reyes Medical
Foundation vs. Trajano 152
SCRA 453 (1987); Lopez vs.
Villaruel, G.R. No. 54323,
1988).
Further, it was held that "the Rule does not require
as a ground for dismissal of a complaint that there
is a prior action, but only pending action (Teodoro
vs. Mirasol 53 O.G., 8088 99 Phil. 150)." Thus, the
contention of plaintiff that the case before this
Branch is 123 days older than Civil Case No. 91-
2192 before Branch 150, hence, the one lodged
with Branch 150 should be the one dismissed
by litis pendentia is untenable. Moreover,
"inclusion of additional parties in second case is no
obstacle to its dismissal on the ground of litis
pendentia" (Investors Finance Corp. vs. Judge
Ebarle, G.R. No. 70640, June 29, 1988). 17
On 19 September 1991, petitioner filed in Civil Case No. 91-2069 a
contempt charge against respondents Velhagen and King for forum-
shopping, 18 claiming that after having respectively received the
summons and a copy of the complaint, both respondents did not file an
answer with compulsory counterclaim. Instead, "using the names of
certain corporations that represent the same interests they advance,
[they] filed a separate action one day later — before Branch 150 of the
Makati Regional Trial Court in Civil Case No.
91-2192" 19 — which arose from the same transaction or occurrence as
that obtaining in Civil Case No. 91-2069; as a matter of fact, the
complaint in the former reads like an answer with compulsory
counterclaim to the complaint in the latter. Hence, both are guilty of
forum-shopping, double dealing, trifling with the court and abusing its
processes. 20
Meanwhile, acting on the petitioner's motion to dismiss Civil Case No.
91-2192, Branch 150 of the court below, per Judge Zeus Abrogar,
handed down an order, on 25 September 1991, directing — in order to
remove any doubt on the propriety of the service of summons — the
re-service of summons on the petitioner." 21
On 4 October 1991, after allegedly accidentally learning of the 16
September 1991 Order of dismissal of Civil Case No. 91-2069,
petitioner requested, and thereafter obtained, a photocopy of the said
order which was not, unfortunately, served on the petitioner's counsel
until then. 22
On 9 October 1991, petitioner filed in Civil Case No. 91-2069 an Ex
Abundante Cautela Motion To Refer Forum-Shopping Charge to
Executive Judge.23 On the same date, petitioner filed a Motion For
Reconsideration24 of the said order of dismissal.
On 14 October 1991, after proper service of summons to it, petitioner
filed a Motion To Dismiss25 Civil Case No. 91-2192 on the grounds
of litis pendentia and forum shopping.
Thereupon, on 11 December 1991, petitioner filed in Civil Case No.
91-2069 a motion for the consolidation 26 of the two (2) cases before
Branch 63 where the prior case was filed; on 6 January 1992, it also
filed in the same case a Manifestation Pro Hac Vice27 wherein it stated
that "there was technically no pending action before" Branch 150 as it
had not yet acquired jurisdiction over the person of the petitioner (due
to improper service of summons) as evidenced by the 25 September
1991 Order of Judge Abrogar himself.
In the meantime, however, petitioner filed in Civil Case No. 91-2192 an
Answer with Compulsory Counterclaim 28dated 20 January 1992. One
of the Special and Affirmative Defenses averred therein is the
pendency in Branch 63 of Civil Case No. 91-2069. Also on 20 January
1992, petitioner filed in Civil Case No. 91-2069 an Amended Complaint
impleading therein, as additional defendants, the six (6) corporations
which sued as plaintiffs in Civil Case No. 91-2192. 29
On 7 February 1992, the Clerk of Court of Branch 63 sent the
petitioner, by registered mail,30 a copy of the 22 January 1992 Order in
Civil Case No.
91-206931 which resolved the various motions filed by the latter. The
said order reads:
Consequently, the Motion for Consolidation filed
by plaintiff on December 11, 1991, perforce,
should also be DENIED for being moot and
academic.
WHEREFORE, premises considered, the Motion
for Reconsideration dated October 7, 1991; the
Contempt Charge for Forum-Shopping; the Motion
to Refer the Contempt Charge to the Executive
Judge; the Motion for Consolidation; and,
Manifestation Pro Hac Vice are hereby DENIED,
and the order dated September 16, 1991,
dismissing the
above-entitled case is hereby REITERATED.
Anent the particular issue of forum shopping, the lower court held that
the same "is negated by the move of defendants (private respondents
Velhagen and King) to dismiss the case filed before this court [Civil
Case No. 91-2069], to give way to that which pends before Branch 150
[Civil Case No. 91-2192]." And, on the matter of litis pendentia, it
reiterated its ruling that the filing of one action ahead of another is not
decisive on the issue of which of the two (2) identical actions in two (2)
separate courts of concurrent jurisdiction should be dismissed.
As a consequence of this 22 January 1992 Order, respondent Court, in
Civil Case No. 91-2069, issued on 20 February 1992 an order denying
the petitioner's motion for the issuance of an alias summons.32
Hence, the instant petition wherein the petitioner claims that the
respondent Court erred:
(1) in equating respondents' ground of "pending
incident before another court" to ask for
suspension of proceedings with litis
pendentia under Rule 16 when respondents'
grounds to ask for dismissal were only (a) lack of
verification: and (b) not having initially impleaded
respondent corporations as proper parties —
grounds not found in Rule 16;
(2) in ruling, with precipitate haste, and in insisting,
despite a chance to reconsider, that there was
another pending action at the time of dismissal
when technically there was none since Branch 150
was still trying to acquire jurisdiction over
petitioner's person and to notify petitioner by new
summons some 2 weeks later about the filing of
the second;
(3) in preferring to maintain the second action over
the first, which (a) was 123 cases (sic) older than
the second; (b) was the one pending when the
second one was just filed; and (c) was meant to
collect the unpaid balance of close to half a million
pesos that respondents still owe and which in
substantial justice was entitled to be heard if not
preferentially over the second, at least jointly with
the second upon consolidation;
(4) in disregarding the Supreme Court's rulings in
vda. de Tolentino v. de Guzman, Pambusco v.
19
 Ocfemia, Ramos v. CIR, and other applicable
decisions;
(5) in not finding, by itself or through the executive
judge, that the institution of the second action was
a specie of forum shopping, in the light of DBP v.
IAC, given that (a) the second action came 2
weeks later after the first complaint; (b) the second
complaint was filed after respondents had already
received a copy of the first; c) respondents'
complaint reads like an answer with compulsory
counterclaim to petitioner's complaint; and (d) the
second action arose from the same transaction,
facts, and circumstances identical to those in an
already pending proceeding;
(6) in totally ignoring the existence of the amended
complaint; and
(7) in releasing an order on February 7, 1992 that
did not conform with the prevailing state of affairs
of the action as of that time and with applicable
Supreme Court decisions since (a) the amended
complaint had already rendered the first
complaint functus oficio along with resolutions that
attached to it; (b) the motion for alias summons
should have been granted as a matter of course;
and (c) consolidation should have afterwards been
granted to promote the Supreme Court's avowed
preference for consolidation as expressed in
Active Wood Products v. CA because it is a
"beneficial and desirable" practice. 33
On 10 June 1992,34 after the private respondents filed their
Comment35 to the petition (on 20 April 1992) and the petitioner filed its
Reply 36 thereto (on 28 May 1992), We resolved to give due course to
the petition and required the parties to submit their respective
Memoranda, which they subsequently complied with.
The pivotal issues raised in the instant petition are: (1) whether or not
the respondent Court erred in dismissing, on the ground of litis
pendentia, Civil Case No. 91-2069 which has priority with respect to
the time of filing, and (2) whether or not the private respondents are
guilty of forum-shopping.
It is a rule that for litis pendentia to be invoked as a ground for the
abatement or dismissal of an action, the concurrence of the following
requisites is necessary: (a) identity of parties, or at least such as
representing the same interest in both actions; (b) identity of rights
asserted and relief prayed for, the relief being founded on the same
facts; and (c) the identity in the two (2) cases should be such that the
judgment that may be rendered in the pending case would, regardless
of which party is successful, amount to res judicata in the other.37
The presence of all the foregoing requisites with respect to Civil Case
No. 91-2069 and Civil Case No. 91-2192 is not controverted by the
parties. As a matter of fact, both invoked these identities in their
respective motions to dismiss.
As to the first requirement, it is quite evident that the petitioner is a
party in both cases. There is, however, an initial confusion as to the
personalities of the defendants in Civil Case No. 91-2069 and the
plaintiffs in Civil Case No. 91-2192, who are claimed to be natural
persons doing business under the names of "Victoria Court, GMT
Consolidated Company and Victoria Group of Companies" and juridical
persons (the six (6) corporations), respectively. In the light of the
admission by the six (6) corporations that they banded together for
their mutual interest and benefit under the trade name and style of the
Victoria Group of Companies; that they put up a common management
team with respondents Velhagen and King as General Manager and
Chief Executive Officer, respectively; that the purchase order in
question is the official act of the said officers; and that the computer
sets were in fact received by them for which they each paid a
downpayment of fifty per cent (50%) of the purchase price thereof,
there can be no doubt that the defendants in the first case and the
plaintiffs in the second case represent the same interests.
As regards the second element, a careful reading of the allegations in
the parties' respective complaints and motions to dismiss in the two (2)
civil actions below reveals that both assert rights founded on an
identical set of facts which give rise to one basic issue — the validity of
the contract in question, the purchase order for the computer
equipment. Civil Case No. 91-2069 actually involves an action for
specific performance; it thus upholds the contract and assumes its
validity. Civil Case No. 91-2192, on the other hand, is for the
nullification of the contract on the grounds of fraud and vitiated
consent. While ostensibly the cause of action in one is opposite to that
in the other, in the final analysis, what is being determined is the
validity of the contract. It would not have been unlikely that in its
answer filed in Civil Case No. 91-2192, the petitioner would merely
reiterate its allegations in the complaint in Civil Case No. 91-2069
sustaining and invoking the validity of the purchase order and setting
up lis pendens as a defense. This is what it exactly did. It would not
have been likewise unlikely that the defense of the private respondents
in Civil Case No. 91-2069 would be one in pursuit of their theory, as
plaintiffs, in Civil Case No. 91-2192. Thus, the identity of rights
asserted cannot be disputed.
Howsoever viewed, it is beyond cavil that regardless of the decision
that would be promulgated in Civil Case No. 91-2069, the same would
constitute res judicata on Civil Case No. 91-2192 and vice-versa. But
which case should be abated? Squarely put, should it be the second,
which was filed fourteen (14) days after the filing of the first, or should it
be the first?
Like res judicata as a doctrine, litis pendentia as a principle is a
sanction of public policy against multiplicity of suits. 38 Differently put,
"[T]he principle upon which a 'plea of another action pending' is
sustained is that the latter action is deemed unnecessary and
vexatious." 39
There is no hard and fast rule that governs the determination of which
of the actions should be abated. A review of relevant cases decided by
this Court discloses that generally, it is the second case which is
abated. Indeed, it seems that the maxim Qui prior est tempore, potior
est jure 40 controls.
To be sure, there are limitations to this rule. At common law, if it
appears to the court that the second action was not brought to harass
or vex the defendant, and is not in fact vexatious, it may refuse to
abate the second action, allow it to stand, and order the first one to be
discontinued on proper terms. The court may also permit the plaintiff to
discontinue the first suit and thereby defeat the plea in abatement
where the second suit is necessary in order to protect and secure the
plaintiff's full rights, or where the abatement of the second suit is
necessary in order to protect and secure the plaintiff's full rights, or
where the abatement of the second would result impossible loss of
substantial rights on the part of the plaintiff. 41
In our jurisdiction, the law itself 42 does not specifically require that the
pending action which would hold in abatement the other must be a
pending prior action. Thus, in Teodoro vs. Mirasol, 43 this Court
observed:
It is to be noted that the Rules do not require as a
ground for dismissal of a complaint that there is
aprior pending action. They provide that there is a
pending action, not a pending prior action. The fact
that the unlawful detainer suit was of a later date is
no bar to the dismissal of the present action. We
find, therefore, no error in the ruling of the court a
quo that plaintiff's action should be dismissed on
the ground of the pendency of another more
20
 appropriate action between the same parties and
for the same cause.
In Roa-Magsaysay vs. Magsaysay, 44 wherein it was the first case
which was abated, this Court ruled:
In any event, since We are not really dealing with
jurisdiction but mainly with venue, considering both
courts concerned do have jurisdiction over the
causes of action of the parties herein against each
other, the better rule in the event of conflict
between two courts of concurrent jurisdiction as in
the present case, is to allow the litigation to be
tried and decided by the court which, under the
circumstances obtaining in the controversy, would,
in the mind of this Court, be in a better position to
serve the interests of justice, considering the
nature of the controversy, the comparative
accessibility of the court to the parties, having in
view their peculiar positions and capabilities, and
other similar factors. Without in any manner
casting doubt as to the capacity of the Court of
First Instance of Zambales to adjudicate properly
cases involving domestic relations, it is easy to
see that the Juvenile and Domestic Relations
Court of Quezon City which was created in order
to give specialized attention to family problems,
armed as it is with adequate and corresponding
facilities not available to ordinary courts of first
instance, would be able to attend to the matters
here in dispute with a little more degree of
expertise and experience, resulting in better
service to the interests of justice. A reading of the
causes of action alleged by the contending
spouses and a consideration of their nature,
cannot but convince Us that, since anyway, there
is an available Domestic Court that can legally
take cognizance of such family issues, it is better
that said Domestic Court be the one chosen to
settle the same as the facts and the law may
warrant.
We made the same pronouncement in Ramos vs. Peralta:45
Finally, the rule on litis pendentia does not require
that the later case should yield to the earlier case.
What is required merely is that there be another
pending action, not a prior pending action.
Considering the broader scope of inquiry involved
in Civil Case No. 4102 and the location of the
property involved, no error was committed by the
lower court in deferring to the Bataan court's
jurisdiction.
An analysis of these cases unravels the ratio for the rejection of the
priority-in-time rule and establishes the criteria to determine which
action should be upheld and which is to be abated. In Teodoro, this
Court used the criterion of the more appropriate action. We ruled
therein that the unlawful detainer case, which was filed later, was the
more appropriate action because the earlier
case — for specific performance or declaratory relief — filed by the
lessee (Teodoro) in the Court of First Instance (CFI) to seek the
extension of the lease for another two (2) years or the fixing of a longer
term for it, was "prompted by a desire on plaintiff's part to anticipate the
action for unlawful detainer, the probability of which was apparent from
the letter of the defendant to the plaintiff advising the latter that the
contract of lease expired on October 1, 1954."46The real issue between
the parties therein was whether or not the lessee should be allowed to
continue occupying the leased premises under a contract the terms of
which were also the subject matter of the unlawful detainer case.
Consonant with the doctrine laid down in Pue vs. Gonzales 47 and Lim
Si vs. Lim, 48 the right of the lessee to occupy the land leased against
the lessor should be decided under Rule 70 of the Rules of Court; the
fact that the unlawful detainer case was filed later then of no moment.
Thus, the latter was the more appropriate action.
The "more appropriate action" criterion was also applied in Ramos vs.
Peralta,49 Ramos, the lessee of a fishpond located in Pilar, Bataan,
sought to consign with the CFI of Manila the advance rentals for the
fishpond for 15 March 1976 and 15 June 1976 after its tender was
refused by the lessors (Ortañez spouses) 50 and after he was informed
by the vendee of the property, P.R. Roman Inc. — in its letter of 1 May
1976 — that it had acquired the property and would take possession
thereof on 16 May 1976. Ramos filed the consignation case, docketed
as Civil Case No. 103647, with the lower court on 2 August 1976.
Meanwhile on 13 August 1976, P.R. Roman Inc. filed with the CFI of
Bataan a complaint for quieting of title against Ramos; this case was
docketed as Civil Case No. 4102. Consequently, P.R. Roman, Inc. filed
a motion to dismiss Civil Case No. 103647 on the ground of, inter
alia, lis pendens. The motion was granted. On appeal, this Court
affirmed the lower court's decision considering the "broader scope of
inquiry involved in Civil Case No. 4102 and the location of the property
involved."
In Roa-Magsaysay, the criterion used was the consideration of
the interest of justice. In applying this standard, what was asked was
which court would be "in a better position to serve the interests of
justice,"51 taking into account (a) the nature of the controversy, (b) the
comparative accessibility of the court to the parties and (c) other similar
factors. While such a test was enunciated therein, this Court relied on
its constitutional authority to change venue to avoid a miscarriage of
justice.
It is interesting to note that in common law, as earlier adverted to, and
pursuant to the Teodoro vs. Mirasol52 case, the bona fides or good faith
of the parties is a crucial element. In the former, the second case shall
not be abated if not brought to harass or vex; in the latter, the first case
shall be abated if it is merely an anticipatory action or, more
appropriately, an anticipatory defense against an expected suit — a
clever move to steal the march from the aggrieved party.
In the case at bar, We do not hesitate to rule that the second case,
Civil Case No. 91-2192, was filed not so much upon the inspiration of
unadulterated good faith to seek redress for a genuine wrong
committed but more to vex or harass in another forum the plaintiff in
the first case, the herein petitioner. What cannot escape Our attention
is the undue, if not indecent, haste in the preparation of the complaint
in Civil Case No. 91-2192 by the counsel for the defendants in Civil
Case No. 91-2069. Civil Case No. 91-2192 is for the nullification of a
contract — the purchase order signed by no less than the authorized
officers of the six (6) respondent corporations. It is, therefore, based
upon a written document. Section 7, Rule 8 of the Rules of Court
expressly provides that:
Sec. 7. Action or defense based on document. —
Whenever an action or defense is based upon a
written instrument or document, the substance of
such instrument or document shall be set forth in
the pleading, and the original or a copy thereof
shall be attached to the pleading as an exhibit,
which shall be deemed to be a part of the
pleading, or said copy may with like effect be set
forth in the pleading. (Emphasis supplied).
There was absolutely no compliance with this requisite as no copy of
the purchase order was set forth in the body of the complaint or
attached to the complaint itself. The non-observance of this simple yet
basic rule cannot be attributed to the ignorance of the lawyers who,
measured by their pleadings in this case, appear to be experienced
and well-versed in the law, but to the frenzied efforts to file the
complaint at the earliest possible time. To make it appear that the
complaint was prepared before service of summons on the defendants
in Civil Case No. 91-2069, it was dated 7 August 1991.53 It was,
however, filed only on 9 August 1991 although the office of the
21
abovementioned lawyers is located at 2129 Pasong Tamo said rule has been formalized in Section 17 of the Interim Rules and
St., 54 Makati, Metro Manila, within the same municipality wherein the Guidelines issued by this Court on 11 January 1983 in connection with
court sits. Moreover, all six (6) corporations likewise have their the implementation of the Judiciary Reorganization Act (Batas
principal office at the same Pasong Tamo address. 55 The private Pambansa Blg. 129). A review of the cases on forum-shopping reveals,
respondents' claim in their Comment that: however, that they involve parties filing two (2) or more suits in different
forums. 63 The rule has not been extended to a defendant who, for
reasons known only to him, commences a new action against the
. . . when undersigned counsel filed Civil Case No.
plaintiff — instead of filing a responsive pleading in the other case —
91-2192, neither he nor his clients had actual
setting forth therein, as causes of action, specific denials, special and
notice of the earlier suit filed by petitioner. Civil
affirmative defenses or even counterclaims. Thus, Velhagen's and
Case No. 91-2192 was filed in good faith.56
King's motion to dismiss Civil Case No. 91-2069 by no means negates
the charge of forum-shopping as such did not exist in the first place.
is clearly self-serving. Besides, counsel is careful enough to use
"actual notice" thereby admitting, in effect, that some other form of
IN VIEW OF THE FOREGOING, the instant petition is hereby
notice was received.
GRANTED. The Order of respondent Court of 16 September 1991
dismissing Civil Case No. 91-2069 is SET ASIDE and a new one is
Being merely vexatious, Civil Case No. 91-2192 is the abatable case. entered DISMISSING instead, on ground of lis pendens, Civil Case No.
91-2192 of Branch 150 of the Regional Trial Court of Makati, with costs
against the defendants therein. The Order of respondent Court of 22
Independently of the element of bona fides, the fact remains that
January 1992 in Civil Case No. 91-2069 is hereby MODIFIED by
under the peculiar circumstances attending the transaction in question, setting aside that portion thereof denying the motion to reconsider its
the first case — for specific performance — is the more appropriate Order of 16 September 1991 and declaring that portion denying the
action. In the first place, petitioner, the unpaid seller in the amount of
motion for consolidation as moot and academic.
fifty per cent (50%) of the purchase price, had completely delivered the
six (6) computer sets to the establishments of the six (6) respondent
corporations within the period stipulated in the purchase order. Despite Cost against private respondents.
their assertion in the complaint in Civil Case No. 91-2192 that the
equipment was "outmoded and obsolete," 57 they neither claim the
inability to use the computer sets nor insinuate that they had, at any
time, called upon the petitioner to account under its warranty against
hidden
defects. 58 They did not even offer to return the computer equipment.
Thus, in reality, it is the petitioner who has been aggrieved; in availing
of the remedy of specific performance allowed under Article 1191 of
the Civil Code, it was acting well within its rights. The subsequent
action for the annulment of the contract on grounds of fraud and
vitiated consent is nothing but a mere defense thereto.

Respondents Velhagen and King very well acknowledged the

weakness of the defense of lis pendens. In their Motion to Dismiss
and/or Suspend Proceedings, 59 they did not categorically refer to Civil
Case No. 91-2192 as a pending action. In lieu thereof, they chose the
phrase "prejudicial question or a pending incident before another
court;" in consonance therewith, they even prayed that if Civil Case No.
91-2069 may not be dismissed for any of the grounds therein invoked,
it should be suspended until the final resolution of Civil Case No. 91-
2192. Fortunately for them, respondent Court read the phrase
"prejudicial question or a pending incident" as lis pendens and
thereafter decreed the dismissal of said Civil Case No. 91-2069. This
clearly amounted to grave abuse of discretion.

And now on the issue of forum-shopping.

In its Order of 22 January 1992, respondent Court held:

Likewise, the Court finds no basis to cite

defendant in contempt of court, allegedly for
engaging in forum-shopping as this allegation is
negated by the move of defendants to dismiss the
case filed before this Court, to give way to that
which pends before Branch 150. 60

Respondent Court does not seem to have a full grasp of the

underpinnings of forum-shopping. In People vs. Court of
Appeals, 61 We noted that
forum-shopping has its roots in the rule that a party should not be
allowed to pursue simultaneous remedies in two (2) different forums for
it does havoc to the rule on orderly procedure. Later, in E. Razon Inc.
vs. Philippine Port Authority,62 We specifically declared that forum-
shopping is an act of malpractice that is proscribed and condemned as
trifling with the courts and abusing their processes; it is improper
conduct that tends to degrade the administration of justice. Thus, the

22
G.R. No. L-43706 November 14, 1986
NATIONAL POWER CORPORATION, petitioner,
vs.
COURT OF APPEALS and PHILIPPINE AMERICAN GENERAL
INSURANCE CO., INC., respondents.
Conrado Q. Crucillo for petitioner.
Gregorio D. David for private respondent.
PARAS, J.:
This is a petition for review on certiorari seeking to set aside: (a) the
judgment of respondent Court of Appeals dated March 25, 1976 in CA-
G.R. No. 50112-R, entitled National Power Corporation, Plaintiff-
Appellee vs. The Philippine American Insurance Company, Inc.
Defendant-Appellant, which reversed the decision of the Court of First
Instance of Manila in Civil Case No. 70811 entitled "National Power
Corporation v. Far Eastern Electric, Inc., et al." and (b) respondent's
Court's resolution dated April 19, 1976 denying petitioner National
Power Corporation's Motion for Reconsideration (Petition, p. 13, Rollo).
The undisputed facts of this case are as follows:
The National Power Corporation (NPC) entered into a contract with the
Far Eastern Electric, Inc. (FFEI) on December 26, 1962 for the erection
of the Angat Balintawak 115-KW-3-Phase transmission lines for the
Angat Hydroelectric Project. FEEI agreed to complete the work within
120 days from the signing of the contract, otherwise it would pay NPC
P200.00 per calendar day as liquidated damages, while NPC agreed to
pay the sum of P97,829.00 as consideration. On the other hand,
Philippine American General Insurance Co., Inc. (Philamgen) issued a
surety bond in the amount of P30,672.00 for the faithful performance of
the undertaking by FEEI, as required.
The condition of the bond reads:
The liability of the PHILIPPINE AMERICAN
GENERAL INSURANCE COMPANY, INC. under
this bond will expire One (1) year from final
Completion and Acceptance and said bond will be
cancelled 30 days after its expiration, unless
surety is notified of any existing obligation
thereunder. (Exhibit 1-a)
in correlation with the provisions of the construction contract between
Petitioner and Far Eastern Electric, Inc. particularly the following
provisions of the Specifications. to wit:
1. Par. 1B-2l Release of Bond
1B-21 Release of Bond
The Contractor's performance bond will be
released by the National Power Corporation at the
expiration of one (1) year from the completion and
final acceptance of the work, pursuant to the
provisions of Act No. 3959, and subject to the
General Conditions of this contract. (Page 49,
Printed Record on Appeal); and
2. GP-19 of Specifications, which reads:
(a) Should the Contractor fail to complete the
construction of the work as herein specified and
agreed upon, or if the work is abandoned, ... the
Corporation shall have the power to take over the
work by giving notice in writing to that effect to the
Contractor and his sureties of its intention to take
over the construction work.
(b) ... It is expressly agreed that in the event the
corporation takes over the work from the
Contractor, the latter and his bondsmen shall
continue to be liable under this contract for any
expense in the completion of the work in excess of
the contract price and the bond filed by the
Contractor shall be answerable for the same and
for any and all damages that the Corporation may
suffer as a result thereof. (pp. 76-78, Printed
Record on Appeal)
FEEI started construction on December 26, 1962 but on May 30, 1963,
both FEEI and Philamgen wrote NPC requesting the assistance of the
latter to complete the project due to unavailability of the equipment of
FEEI. The work was abandoned on June 26, 1963, leaving the
construction unfinished. On July 19, 1963, in a joint letter, Philamgen
and FEEI informed NPC that FEEI was giving up the construction due
to financial difficulties. On the same date, NPC wrote Philamgen
informing it of the withdrawal of FEEI from the work and formally
holding both FEEI and Philamgen liable for the cost of the work to be
completed as of July 20, 1962 plus damages.
The work was completed by NPC on September 30, 1963. On January
30, 1967 NPC notified Philamgen that FEEI had an outstanding
obligation in the amount of P75,019.85, exclusive of interest and
damages, and demanded the remittance of the amount of the surety
bond the answer for the cost of completion of the work. In reply,
Philamgen requested for a detailed statement of account, but after
receipt of the same, Philamgen did not pay as demanded but
contended instead that its liability under the bond has expired on
September 20, 1964 and claimed that no notice of any obligation of the
surety was made within 30 days after its expiration. (Record on Appeal,
pp. 191-194; Rollo, pp. 62-64).
NPC filed Civil Case No. 70811 for collection of the amount of
P75,019.89 spent to complete the work abandoned; P144,000.00 as
liquidated damages and P20,000.00 as attorney's fees. Only
Philamgen answered while FEEI was declared in default.
The trial court rendered judgment in favor of NPC, the dispositive
portion of which reads:
WHEREFORE, the defendant Far Eastern Electric,
Inc., is ordered to pay the plaintiff the sum of
P75,019.86 plus interest at the legal rate from
September 21, 1967 until fully paid. Out of said
amount, both defendants, Far Eastern Electric,
Inc., and the Philippine American Insurance
Company, Inc., are ordered to pay, jointly and
severally, the amount of P30,672.00 covered by
Surety Bond No. 26268, dated December 26,
1962, plus interest at the legal rate from
September 21, 1967 until fully paid,
Both defendants are also ordered to pay plaintiff
the sum of P3,000.00 as attorney's fees and costs.
On appeal by Philamgen, the Court of Appeals reversed the lower
court's decision and dismissed the complaint.
Hence this petition.
23
Respondent Philamgen filed its comment on the petition on August 6,
1978 (Rollo, p. 62) in compliance with the resolution dated June 16,
1976 of the First Division of this Court (Rollo, p. 52) while petitioner
NPC filed its Reply to the comment of respondent (Rollo, p. 76) as
required in the resolution of this Court of August 16, 1976, (Rollo, p.
70). In the resolution of September 20, 1976, the petition for certiorari
was given due course (Rollo, p. 85). Petitioner's brief was filed on
November 27, 1976 (Rollo, p. 97) while Philamgen failed to file brief
within the required period and this case was submitted for decision
without respondent's brief in the resolution of this Court of February 25.
1977) Rollo, p. 103).
In its brief, petitioner raised the following assignment of errors:
I construction job, the latter forthwith informed Philamgen of the fact on
RESPONDENT COURT OF APPEALS ERRED IN
HOLDING THAT PETITIONER SHOULD HAVE
GIVEN NOTICE TO PRIVATE RESPONDENT
PHILAMGEN OF ANY EXISTING OBLIGATION
WITHIN 30 DAYS FROM EXPIRATION OF THE
BOND TO HOLD SAID SURETY LIABLE
THEREUNDER, DESPITE PETITIONER'S
TAKING OVER OF THE WORK ABANDONED BY
THE CONTRACTOR BEFORE ITS
COMPLETION.
II
ASSUMING ARGUENDO THAT PETITIONER
SHOULD STILL NOTIFY PRIVATE
RESPONDENT PHILAMGEN OF ANY EXISTING
OBLIGATION UNDER THE BOND DESPITE THE
TAKE-OVER OF WORK BY PETITIONER,
RESPONDENT COURT OF APPEALS
NONETHELESS ERRED IN HOLDING THAT
PETITIONER'S LETTER DATED JULY 19, 1963
(EXH. E) TO PRIVATE RESPONDENT WAS NOT
SUFFICIENT COMPLIANCE WITH THE
CONDITION OF THE BOND.
III
On the other hand, private respondent insists that petitioner's notice
dated July 19, 1983 is not sufficient despite previous events that it had
knowledge of FEEI's failure to comply with the contract and claims that
it cannot be held liable under the bond without notice within thirty days
from the expiration of the bond, that there is a subsisting obligation.
Private respondent's contention is sustained by the Court of Appeals.
The petition is impressed with merit.
As correctly assessed by the trial court, the evidence on record shows
that as early as May 30, 1963, Philamgen was duly informed of the
failure of its principal to comply with its undertaking. In fact, said notice
of failure was also signed by its Assistant Vice President. On July 19,
1963, when FEEI informed NPC that it was abandoning the
the same date. Moreover, on August 1, 1963, the fact that Philamgen
was seasonably notified, was even bolstered by its request from NPC
for information of the percentage completed by the bond principal prior
to the relinquishment of the job to the latter and the reason for said
relinquishment. (Record on Appeal, pp. 193-195). The 30-day notice
adverted to in the surety bond applies to the completion of the work by
the contractor. This completion by the contractor never materialized.
The surety bond must be read in its entirety and together with the
contract between NPC and the contractors. The provisions must be
construed together to arrive at their true meaning. Certain stipulations
cannot be segregated and then made to control.
Furthermore, it is well settled that contracts of insurance are to be
construed liberally in favor of the insured and strictly against the
insurer. Thus ambiguity in the words of an insurance contract should
be interpreted in favor of its beneficiary. (Serrano v. Court of Appeals,
130 SCRA 327, July 16, 1984).
In the case at bar, it cannot be denied that the breach of contract in this
case, that is, the abandonment of the unfinished work of the
transmission line of the petitioner by the contractor Far Eastern
Electric, Inc. was within the effective date of the contract and the surety
bond. Such abandonment gave rise to the continuing liability of the
bond as provided for in the contract which is deemed incorporated in
the surety bond executed for its completion. To rule therefore that
private respondent was not properly notified would be gross error.

PREMISES CONSIDERED, the decision dated March 25, 1976 and

RESPONDENT COURT OF APPEALS ERRED IN
the resolution dated April 19, 1976 of the Court of Appeals are hereby
ABSOLVING PRIVATE RESPONDENT
SET ASIDE, and a new one is hereby rendered reinstating the decision
PHILAMGEN FROM ITS LIABILITY UNDER THE
of the Court of First Instance of Manila in Civil Case No. 70811 entitled
BOND.
"National Power Corporation v. Far Eastern Electric, Inc., et al."

The decisive issue in this case is the correct interpretation and/or

SO ORDERED.
application of the condition of the bond relative to its expiration, in
correlation with the provisions of the construction contract, the faithful
performance of which, said bond was issued to secure.

The bone of contention in this case is the compliance with the notice
requirement as a condition in order to hold the surety liable under the
bond.

Petitioner claims that it has already complied with such requirement by

virtue of its notice dated July 19, 1963 of abandonment of work by
FEEI and of its takeover to finish the construction, at the same time
formally holding both FEEI and Philamgen liable for the uncompleted
work and damages. It further argued that the notice required in the
bond within 30 days after its expiration of any existing obligation, is
applicable only in case the contractor itself had completed the contract
and not when the contractor failed to complete the work, from which
arises the continued liability of the surety under its bond as expressly
provided for in the contract. Petitioner's contention was sustained by
the trial court.

24
G.R. No. L-45107 November 11, 1991
BENEDICTO RAMOS, petitioner,
vs.
HON. ELVIRO L. PERALTA, Presiding Judge, Branch XVII, Court
of First Instance of Manila, SPOUSES JUVENCIO ORTANEZ and
JULIANA S. ORTANEZ, MINDANAO INSURANCE CO., INC. and P.
R. ROMAN, INC.,respondents.
Angel Suntay, Jr. and Renato M. Coronado for petitioner.
Tolentino, Garcia, Cruz & Reyes for respondents Ortanez.
FERNAN, C.J.:
Put in issue in this petition for review on certiorari is the propriety of the
dismissal by the then Court of First Instance of (CFI) of Manila, Branch
XVII of petitioner's action for consignation of the sum of P70,000.00
representing advance rentals for the 101-hectare Salgado fishpond
located in Bo. Balut, Pilar, Bataan.
Petitioner started occupying the Salgado fishpond in 1964 by virtue of
a lease contract executed in his favor by private respondents spouses
Juvencio and Juliana Ortanez. The original lease for a term of five (5)
years from January 1, 1964 to January 1, 1990, was renewed several
times, the last renewal being on June 28, 1974 under a "Kasunduan sa
Pag-upa" for a period of three (3) years starting January 1, 1975 to
December 31, 1977.
Unknown to petitioner, title 1 to said property was in the name of
Philippine International Surety Co., Inc., a corporation founded,
organized and 99.5%-owned by the Salgado spouses. Later renamed
Mindanao Insurance Co., Inc., 2 said corporation was placed under
receivership and liquidation on June 20, 1968 in Civil Case No. Q-
10664 of the then CFI of Rizal, Branch IV, Quezon City, upon
application of Insurance Commissioner Gregoria Cruz-Ansaldo who
was appointed receiver.
Thereafter on February 23, 1976, respondent P. R. Roman, Inc.
purchased from Mindanao Insurance the Salgado fishpond for
P950,000.00. The deed of sale was signed by the receiver and duly
approved by the liquidation court.
Apparently due to this development, the spouses Ortanez refused to
accept from petitioner the advance rentals on the fishpond due on
March 15, 1976 in the amount of P30,000.00.
On or about May 1, 1976, petitioner received a letter from Don Pablo
R. Roman informing him of the latter's acquisition of the fishpond and
intention to take possession thereof on May 16, 1976. In his letter-
reply, petitioner reminded Mr. Roman of his lease contract over the
fishpond and refused to consent to the intended take over.
Notwithstanding petitioner's objection, P. R. Roman, Inc. took over
possession of the fishpond.
On August 2, 1976, petitioner filed before the CFI of Manila the
aforesaid complaint, docketed as Civil Case No. 103647, 3 against
private respondents Juvencio and Juliana Ortanez, Mindanao
Insurance and P. R. Roman, Inc. for consignation of the sum of
P70,000.00 representing advance rentals on the fishpond in the
amounts of P30,000.00 and P40,000.00 respectively due on March 15,
1976 and June 15, 1976, which he had previously tendered to, but
refused by the spouses Ortanez and Pablo Roman.
P. R. Roman, Inc. filed a motion to dismiss on the grounds that venue
was improperly laid, the complaint states no cause of action and the
court has no jurisdiction over the subject of the action or suit. In its
motion to dismiss, P. R. Roman, Inc. cited the pendency before the
then CFI of Bataan of Civil Case No 4102 instituted by P.R. Roman,
Inc. against petitioner Benedicto Ramos on August 13, 1976 to quiet its
title over the Salgado fishpond.
On August 27, 1976, respondent CFI of Manila issued an
order 4 dismissing Civil Case No. 103647, stating in part:
Without discussing in detail the grounds mentioned above,
the Court really sees that this case should be dismissed not
only insofar as against P. R. Roman, Inc. but also as against
the other defendants mentioned above for the reason,
principally, that there is already a case pending between the
same parties and for the same cause in Civil Case No. 4102
of Branch II of the Court of First Instance of Bataan,
entitled P. R. Roman, Inc. vs. Benedicto Roman, which is
precisely for the ownership of the subject matter of the
property allegedly leased to the plaintiff herein (Exhibit "A"-
Motion). In the said case, the defendant therein, Benedicto
Ramos, who is the plaintiff in the case at bar, filed a motion
for leave to file a third-party complaint against the spouses
surnamed Ortanez and the Mindanao Insurance Company
Inc. All the issues respecting the fishpond, including the
lease contract, are necessarily involved in the case pending
now in Bataan. Aside from the above, the Court cannot
decide this case because it cannot pre-empt the Court of
Bataan on whether or nor the P. R. Roman, Inc. is already
the owner because if it finds that the said defendant P. R.
Roman, Inc. is really the owner of the fishpond, there is no
more lease for which rentals are to be paid.
Petitioner moved for reconsideration, but was unsuccessful, the court a
quo, standing "pat on its previous order and reiterat(ing) its dismissal of
the case, without costs." 5
hence this petition anchored on the following ascribed errors of law: 6
1. The respondent court erred in not holding that the only issue in consignation of funds is
whether the defendant is willing to accept the proffered payment or not.
2. The respondent court erred in not holding that the prerogative of choosing the proper venue
belongs to the plaintiff.
3. The respondent court erred in holding that the subsequent filing of civil case no. 4102 before
the court of first instance of bataan is a bar to the prosecution of civil case no. 103647 before it.
Petitioner contends that the bataan quieting-of-title civil case no. 4102 cannot serve as a bar to his manila
consignation civil case no. 103647 because they involve different issues. Civil case no. 4102 deals with the
question of ownership while the only issue involved in his consignation case is whether or not the defendant is
willing to accept the proffered payment. In fact, petitioner posits, the action to quiet title is a useless futile exercise
as he does not question p. R. Roman inc.'s ownership of the fishpond under consideration, but merely wishes to
assert his leasehold and possessory rights over said property under the "kasunduan sa pag-upa." he further
contends that compelling him to litigate before the bataan court would render nugatory his right as a plaintiff to
choose the venue of his action. Besides, civil case no. 103647 was filed on august 2, 1976, ahead of civil case no.
4102 which was filed on a much later date, august 13, 1976, after the manila cfi had already acquired jurisdiction
over civil case no. 103647.
Private respondents counter that the view taken by petitioner of the manila consignation case is quite limited and
bookish, because while it may be true that theoretically, the main issue involved in a consignation case is whether
or not the defendant is willing to accept the proffered payment, in the consignation case brought by petitioner,
other issues were pleaded by petitioner himself, such as the validity and binding effect of the lease contract and
the existence of the supposed obligor-obligee relationship. They further contend that a plaintiffs right of choice of
venue is not absolute, but must invariably how to the dismissal of the case because of litis pendentia which, in
25
refutation of petitioner's argument, does not require that there is a prior pending action, merely that there is a fishpond in favor of P. R. Roman, Inc., the Ortanezes should be condemned to reimburse him the
pending action. rentals he has already paid for the unexpired portion of the lease. The issue of whether or not the
lease subsists even as regards P. R. Roman, Inc., for it is the view of Ramos that it bought the
property with knowledge of the lease, is squarely planted in the case before the Court of First
We find for respondents.
Instance of Bataan, and, consequently, the more appropriate court with which rents are to be
consignated. . . .

Under the rules and jurisprudence, for litis pendentia to be invoked as a ground for the dismissal of an action, the
concurrence of the following requisites is necessary: (a) Identity of parties or at least such as represent the same
interest in both actions; (b) Identity of rights asserted and relief prayed for, the relief being founded on the same
facts; and (c) The identity in the two cases should be such that the judgment that may be rendered in one would,
regardless of which party is successful, amount to res judicata in the other. 7
That whatever decision may be handed down in Civil Case No. 4102 would constitute res judicata in Civil Case
No. 103647 is beyond cavil. Should the Bataan court rule that the lease contract is valid and effective against P.
R. Roman, Inc., the petitioner can compel it to accept his proffered payment of rentals; otherwise, he may not do
so.

These requisites are present in the case at bar. It is worthwhile mentioning that in his basic petition for review, one
of the assigned errors of petitioner is that the respondent court erred in not holding that the parties in Civil Case
No. 4102 are not the same as the parties in Civil Case No. 103647. 8
However, in his brief, no
further mention of this assigned error was made; a clear indication of
petitioner's admission of the identity of parties in Civil Case No. 4102
and Civil Case No. 103647, particularly as he filed a third party
complaint in Civil Case No. 4102 against the spouses Ortanez and
Mindanao Insurance.
Anent the second element, we agree with private respondents'
observation that petitioner's approach to his consignation case is quite
constricted. His contention that the only issue in a consignation case is
whether or not the defendant is willing to accept the proffered payment
is true only where there is no controversy with respect to the obligation
sought to be discharged by such payment. His consignation case,
however, is not as simple. While ostensibly, the immediate relief
sought for in his consignation case is to compel therein defendants to
accept his advance rentals, the ultimate purpose of such action is to
compel the new owner of the fishpond to recognize his leasehold rights
and right of occupation. In the last analysis, therefore, the issue
involved in Civil Case No. 103647 is the right of possession over the
fishpond intertwined with the validity and effectivity of the lease
contract.
Petitioner next contends that the dismissal of Civil Case No. 103647 deprived him of his right to choose the venue
of his action. Verily, the rules on the venue of personal actions are laid down generally for the convenience of the
plaintiff and his witnesses. But, as observed by private respondents, this right given to the plaintiff is not
immutable. It must yield to the greater interest of the orderly administration of justice, which as in this case, may
call for the dismissal of an action on the basis of litis pendentia to obviate the possibility of conflicting decisions
being rendered by two different courts. 12
As private respondents would put it, "(T)he Rules of Court are not perfect. It does not pretend to be able to make
everyone happy simultaneously or consecutively or all the time. Even the Rules of Court has hierarchy of values;
thus, the choice of venue may bow to dismissal of the case because of litis pendentia. 13
At any rate,
petitioner cannot complain of any inconvenience arising from the
dismissal of Civil Case No. 103647. Being the defendant in Civil Case
No. 4102, he cannot but litigate before the Bataan court, and bringing
his consignation case before the same court would actually save him
time, effort and litigation expenses.
Finally, the rule on litis pendentia does not require that the later case
should yield to the earlier case. What is required merely is that there be
another pending action, not a prior pending action. Considering the
broader scope of inquiry involved in Civil Case No. 4102 and the
location of the property involved, no error was committed by the lower
court in deferring to the Bataan court's jurisdiction.

This is the same issue involved in Civil Case No. 4102. Although an WHEREFORE, the assailed decision dated August 27, 1976 of the
action for quieting of title refers to ownership, P. R. Roman, Inc. in its then Court of First Instance of Manila, Branch XVII, is AFFIRMED in
complaint 9 in Civil Case No. 4102 alleged: toto. This decision is immediately executory, with costs against
petitioner.
5. There is a cloud on the aforesaid titles of plaintiff on the
said agricultural land, marked Annexes "A", "B" and "C"
hereof, as well as on its right of possession over that real
property by reason of a certain "Kasunduan sa
Pagupa" (Contract of Lease) dated June 28, 1974 executed
by and between the spouses Jovencio Ortanez and Juliana
S. Ortanez purportedly as "may-ari/Nagpapaupa"
(owner/lessor) and the defendant as lessee, which
instrument is apparently valid or effective but in truth and in
fact invalid, ineffective, voidable or unenforceable, and is
prejudicial to the said titles of plaintiff as well as to its right of
possession over the same fishpond/agricultural land in Barrio
Balut, Pilar, Bataan.

Thus, while the respondent court in the assailed order of dismissal

dated August 27, 1976 described Civil Case No. 4102 as "precisely for
the ownership of the subject matter of the property allegedly leased to
the plaintiff herein," 10its order dated October 22, 1976 denying
petitioner's motion for reconsideration, more perceptively stated: 11

In Civil Case No. 4102 of the Court of First Instance of Bataan, entitled P. R. Roman, Inc. vs.
Benedicto Ramos one of the principal issues is the possession of the fishpond subject matter of
the lease supposed rents of which are supposed to be consignated in the instant case, plaintiff P.
R. Roman, Inc. there, claiming to be entitled to the possession of said property as owner under a
certificate of title and defendant Benedicto Ramos, plaintiff here, anchoring his claim of
possession upon his lease with the Ortanez spouses against whom, on his motion, he filed a third
party complaint in which he prayed in the alternative, that should he lose possession of the

26
G.R. No. L-58671 November 22, 1985
EDUVIGIS J. CRUZ, petitioner,
vs.
COURT OF APPEALS, ET AL., respondents.
PLANA, J.:
This a petition for review of the decision of the defunct Court of
Appeals dated August 20, 1981 in CA-G.R. No. 65338-H reversing that
of the Court of First Instance of Rizal. and dismissing petitioner's
complaint for revocation of donation against herein private respondents
Teresita, Lydia and all surnamed De Leon.
In Eduvigis J. Cruz, a childless widow, donated a 235.5 sq.m
residential lot in San Isidro, Taytay Rizal together with the two-door
apartment erected thereon to her grandnieces private respondents
herein, in a deed of donation entitled "Kasulatan Sa Kaloobpala". The
property was accordingly transferred to the names of private
respondents.
In 1974, Eduvigis Cruz judicially adopted Cresencia Ocreto, a minor,
after which she extrajudicially tried to revoke the donation, but the
donees resisted, alleging that—
(a) the property in question was co-owned by
Eduvigis Cruz and her brother. the late Maximo
Cruz, grandfather of the donees, hence the latter
own 1/2 of the property by inheritance; and
(b) Eduvigis Cruz owns another property, an
agricultural land of more than two hectares
situated in Barrio Dolores, Taytay, Rizal, hence the
donation did not impair the presumptive legitime of
the adopted child.
In 1975, petitioner filed a complaint against the donees for revocation
of donation in the Court of First Instance of Rizal (Civil Case No.
21049) invoking Article 760, paragraph 3 of the New Civil Code, which
reads:
Art. 760, Ever donation inter vivos made by a person having no
children or descendants, legitimate or legitimated by subsequent
marriage, or illegitimate, may be revoked or reduced as provided in the
next article, by the happening of any of these events:
xxx xxx xxx
(3) If the donor should subsequently adopt a minor child.
After trial, the trial court rendered a decision revoking the donation. It
did not find merit in defendants' claim that the lot, by donor and her
deceased brother, Maximo Cruz, because the donor's ownership was
deemed admitted by the donees by accepting the deed of donation. It
also rejected defendants' argument that the donation did not impair the
legitime, saying that claim was "beside the point" and did not limit
plaintiff's right under Art. 760 of the Civil Code.
On appeal, the Court of Appeals reversed the trial court and dismissed
the complaint. It found that.—
a) the trial court took into consideration only Article 760 of the Civil
Code and ignored Article 761 which states: " In the cases referred to in
the preceding article, the donation shall be revoked or reduced insofar
as it exceeds the portion that may be freely disposed of by will, taking
into account the whole estate of the donor of by will, taking into
account the whole estate of the donor at the time of the birth,
appearance or adoption of a child.
(b) Eduvigis Cruz owns another lot in Dolores Taytay Rizal, although
the subject of a pending litigation valued at P273,420.00 in 1977.
(c) The donated lot did not belong entirely to Eduvigis as ½ thereof
belonged to her brother Maximo Cruz, grandfather of defendants. 1974
it had a total market value of P17,000. One-half thereof was P8,500.
Adding thereto a P50,000 value of the apartment house constructed
thereon, the total value of the donation would still be within the free
portion of donor's estate and therefore would not impair the legitime of
the adopted child.
(d) In an action for revocation of donation, the donor has the burden to
show that the donation has impaired the legitime of the subsequent
child; but in this case, Eduvigis did not even allege it in her complaint.
In the instant petition for review, petitioner imputes to the appellate
court alleged errors which boil down to the question as to whether
under the facts as established and the law, the decision under review
correctly dismissed the complaint to annul the subject donation. We
hold that it did.
In the case of the subsequent adoption of a minor by one who had
previously donated some or all of his properties to another, the donor
may sue for the annulment or reduction of the donation within four
years from the date of adoption, if the donation impairs the legitime of
the adopted, taking into account the whole estate of the donor at the
time of the adoption of the child. (Civil Code, Articles 760, 761 and
763). Of course, the burden of proof is on the plaintiff-donor, who must
allege and establish the requirements prescribed by law, on the basis
of which annulment or reduction of the donation can be adjudged.
Unfortunately, in the case at bar, the complaint for annulment does not
allege that the subject donation impairs the legitime of the adopted
child. Indeed it contains no indication at all of the total assets of the
donor.
Nor is there proof of impairment of legitime. On the contrary, there is
unrebutted evidence that the donor has another piece of land (27,342
sq. m.) situated in Dolores, Taytay, Rizal worth P273,420.00 in 1977,
although then subject to litigation.
The legal situation of petitioner-donor, as plaintiff, is made worse by
the factual finding of the Court of Appeals that the grandfather of the
donees was the owner pro indiviso of one-half of the donated land, the
effect of which is to reduce the value of the donation which can then
more easily be taken from the portion of the estate within the free
disposal of petitioner.
WHEREFORE, the decision under review is affirmed.
27
 [G.R. No. 103476. November 18, 1999]
CODIDI MATA, CELESTINO, LUCIA, INGRACIO, PIO, MARCELO,
MELETON, RICARDA, PAGAKAN, and CARING, all
surnamed MATA, and duly represented by their attorney-
in-fact ISIDRO SEMBRANO, petitioners, vs. COURT OF
APPEALS and HEIRS OF CLARO L.
LAURETA, respondents.
DECISION
KAPUNAN, J.:
The instant case is the fourth case that reached this Court
involving the same parties and property.
In this case, the heirs of Marcos Mata (petitioners) seek the
reversal of the decision, dated 31 July 1991, of the Court of Appeals in
CA-G.R. SP No. 24434, permanently enjoining the Regional Trial Court,
Branch 1, Tagum, Davao City, from proceeding with Civil Case No.
2468, an action to enforce petitioners' right to repurchase the subject lot
under Section 119 of the Public Land Act (Commonwealth Act No. 141,
as amended).
The antecedent facts are as follows:
Sometime in 1940, spouses Marcos and Codidi Mata, members
of a non-christian cultural minority in Davao and predecessors-in-
interest of petitioners, were granted a homestead patent over a parcel
of land situated in Tagum, Davao del Norte containing an area of 4.5777
hectares. Original Certificate of Title No. 3019 covering the subject lot
was issued in their favor.
On 10 June 1945, Marcos Mata (Mata) executed a Deed of
Absolute Sale conveying the ownership of the subject lot in favor of Claro
L. Laureta the predecessor-in-interest of private respondents. On 10
May 1947, Mata executed another document selling the same property
to Fermin Caram, Jr. (Caram), who caused the cancellation of OCT No.
3019. In lieu thereof, Transfer Certificate of Title No. 140 was issued in
Caram's name.
On 25 June 1956, Laureta filed before the Court of First Instance
of Tagum (now RTC) an action, docketed as Civil Case No. 3083, to
declare the first sale of the subject lot in his favor valid and the second
sale thereof to Caram void.
On 29 February 1964, the CFI of Tagum rendered judgment as
follows:
"WHEREFORE, judgment is hereby rendered:
1. Declaring that the deed of sale, Exhibit A, executed by
Marcos Mata in favor of Claro L. Laureta stands and prevails
over the deed of sale, Exhibit F, in favor of Fermin Caram,
Jr.;
2. Declaring as null and void the deed of sale, Exhibit F, in
favor of Fermin Caram, Jr.;
3. Directing Marcos Mata to acknowledge the deed of sale,
Exhibit A, in favor of Claro L. Laureta;
4. Directing Claro L. Laureta to secure the approval of the
Secretary of Agriculture and Natural Resources on the deed,
Exhibit A, after Marcos Mata shall have acknowledge the
same before a notary public;
5. Directing Claro L. Laureta to surrender to the Register of
Deeds for the City and Province of Davao the
Owner's Duplicate of Original Certificate of Title No. 3019
and the latter to cancel the same;
6. Ordering the Register of Deeds for the City and Province
of Davao to cancel Transfer Certificate of Title No. T-140 in
the name of Fermin Caram, Jr.;
7. Directing the Register of Deeds for the City and Province
of Davao to issue a title in favor of Claro L. Laureta, Filipino,
resident of Quezon City, upon presentation of the deed
executed by Marcos Mata in his favor, Exhibit A, duly
acknowledge by him and approved by the Secretary of
Agriculture and Natural Resources; and
8. Dismissing the counterclaim and crossclaim of Marcos
Mata and Codidi Mata, the counterclaim of Caram, Jr., the
answer in intervention, counterclaim and crossclaim of the
Mansacas."[1]
On appeal by the spouses Mata and Caram, the CA affirmed the
aforesaid decision of the CFI. Two (2) separate petitions for review were
then filed by the Matas and Caram with this Court. The petition filed by
the spouses Mata, docketed as G.R. No. L-29147, was dismissed by the
Court for lack of merit on 20 June 1968. Said decision became final and
executory on 26 July 1968. Upon the other hand, the petition filed by
Caram, docketed as G.R. No. L-28740, was dismissed by the Court on
24 February 1981.[2] Said decision became final and executory on 12
February 1982.
Meanwhile, on 23 February 1979, spouses Mata filed with the
Court of First Instance (now RTC), Branch 1 of Tagum, Davao del Norte,
Civil Case No. 1071 against the Lauretas for recovery of ownership and
possession of the subject lot. The spouses Mata alleged that the deed
of sale executed between Mata and Laureta involving the subject lot is
null and void and/or unenforceable because the same had not been
approved by the Secretary of Agriculture and Natural Resources as
required by law and as directed by the CFI of Davao in its decision of 29
February 1964 in Civil Case No. 3083, and that said decision could no
longer be executed as the same had already prescribed.
On 12 February 1983, an alias writ of execution was issued by the
CFI enforcing its decision in Civil Case No. 3083. By then, Mata was
already dead while his heirs (petitioners) refused to acknowledge the
deed of sale in accordance with the said decision. In lieu of the requisite
acknowledgement, the officer-in-charge of the court (now RTC, Branch
VIII, Davao City) certified and affirmed the due execution of the deed of
sale executed between Mata and Laureta. Thereafter, on 21 February
1984, the deed of absolute sale in favor of Laureta was duly approved
by the Minister of Natural Resources. Finally, on 9 May 1985, TCT No.
T-46346 covering the subject lot was issued in the name of Laureta.
On 20 April 1983, the RTC rendered judgment in Civil Case No.
1071 declaring, among others, that the decision in Civil Case No. 3083
in favor of private respondents had "become stale and unenforceable
due to prescription." It ordered the return of the ownership of the subject
lot to petitioners.
On appeal by private respondents, the CA affirmed in toto the CFI
decision in Civil Case No. 1071. The case was then elevated to the
Supreme Court which reversed and set aside the decision of the
CA. Speaking through Justice Regalado, the Court, in its decision[3] in
G.R. No. 72194 promulgated on 5 April 1990, ruled that the execution of
the judgment in Civil Case No. 3083 was not time-barred because the
ten-year period for the execution of the judgment in Civil Case No. 3083
commenced to run only on 12 February 1982 when the decision denying
Caram's petition became final and executory .
Upon the belief that they could still exercise their right to
repurchase the subject lot under the Public Land Act, on 22 November
1990, petitioners filed with the RTC, Branch 1 of Tagum, Davao City, an
action against private respondents for legal redemption, reconveyance
and consignation, docketed as Civil Case No. 2468.
Maintaining that Civil Case No. 2468 would render nugatory and
ineffectual the decision of the court in G.R. No. 72194, private
respondents instituted with this Court a petition for injunction and
prohibition seeking, among others, to restrain the trial court from
proceeding with said case. On 11 March 1991, this Court referred the
same to the CA for resolution.
28
 The CA ruled in favor of private respondents and permanently
enjoined the RTC from further proceeding with Civil Case No. 2468. The
CA categorically declared that petitioners' right to repurchase the
subject lot under the Public Land Act had already
prescribed.[4] Petitioners filed a motion for reconsideration but it was
denied by the CA in its resolution, dated 12 November 1991.
Aggrieved, the petitioners filed the instant Petition for review
alleging in the main that respondent CA erred in holding that petitioners
right to repurchase the subject property under Section 119 of the Public
Land Act had already prescribed.
After the parties have submitted their respective pleadings, this
Court issued a resolution, dated 5 September 1994, denying the petition
for review for failure of the petitioners to sufficiently show that
respondent court committed any reversible error in rendering the
assailed decision.
Upon petitioners motion for reconsideration, dated 27 September
1994, however, this Court, in its resolution, dated 24 October 1994,
reinstated the instant petition, gave due course to the same and directed
the parties to file their respective memoranda.
In their petition, the fundamental issue raised by petitioners is
whether or not they could still exercise their right to repurchase the
subject lot under the Public Land Act. In their motion for reconsideration
and memorandum, however, petitioners question the validity of the sale
of the subject lot to Laureta. They contend that said sale was void
because the document evidencing the same was written in English, a
language not understood by the vendor, and that it was not approved by
the Office for the Southern Cultural Communities (OSCC) in violation of
Section 4(n), Republic Act No. 1888, as amended, in relation to Section
120 of the Public Land Act.
Subsequently, the various pleadings separately filed by petitioners
themselves, on one hand, and Atty. Rodolfo U. Jimenez, their counsel,
and Isidro Sembrano, their purported attorney-in-fact, on the other hand,
have left this Court baffled as to petitioners real stand on the
matter. Thus:
1. In a Manifestation with Motion, dated 23 November 1995, filed by
petitioners themselves without the assistance of their counsel, the
informed the Court that they have agreed to an amicable settlement of
the case with private respondents. In view thereof, they prayed that
they be allowed to withdraw their petition. Attached to the said
Manifestation with Motion were petitioners letters, dated 23 November
1995, addressed to their attorney-in-fact (Isidro Sembrano) and to their
counsel-on-record (Attys. Winston F. Garcia and Rodolfo U. Jimenez),
informing them of the termination of their services. The amicable
settlement, of even date, purportedly signed by all the petitioners and
private respondents attorney-in-fact, was also attached to the said
Manifestation with Motion.
2. On 15 January 1996, Celestino Mata and Andres Basaca filed with
the Court their respective affidavits, dated 30 December
1995. Celestino Mata, one of petitioners, claimed that he is the same
person referred to as Lucino Mata who was made to sign the
Manifestation with Motion, the letters terminating the services of the
attorney-in-fact and the lawyers, and the amicable settlement, all dated
23 November 1995. Celestino Mata averred that he did not understand
the contents of these documents and that his signatures thereon were
obtained by fraud.
3. For his part, Alfredo Basaca assailed the authority of Arcadio Mata
Pasindo to sign the amicable settlement on behalf of the heirs of
Marcos and Codidi Mata. While Alfredo Basaca asserted that he is one
of the heirs of the spouses Mata, however, the records show that he is
not named as one of the petitioners in this case.
4. The Court, in its Resolution, dated 26 February 1996, directed the
petitioners and Atty. Jimenez to comment on and/or confirm the
Manifestation with Motion of 23 November 1995. In compliance
therewith, Atty. Jimenez filed his Comment, dated 29 March 1996,
informing the Court that he was not consulted by petitioners when they
filed said Manifestation with Motion. He urged the Court to decide the
case on the merits.
5. Upon the other hand, most of the petitioners, namely Calrita Mata
Pasindo, Julieta Mata Abundo, Engracio Mata, Dagakan Mata vda. de
Cuanas, Marcelo Mata, Severino Antolihao, Arcadio Mata Pasindo,
Lucia Mata Antolihao and Meliton Mata, filed their Manifestation with
Motion (to Comment and/or Confirm), dated 27 March 1996. They
affirmed their respective signatures on the Manifestation with Motion of
23 November 1995 and the attachments thereto and averred that they
understood the contents thereof as these were fully explained to them
in the presence of the Provincial Officer of the OSCC in Tagum,
Davao. They reiterated their prayer that they be allowed to withdraw
their petition.
6. On 5 September 1996, Isidro Sembrano submitted to this Court a
Joint Affidavit of petitioners Ceelstino Mata and Ricarda Mata, dated 21
February 1996, claiming, among others, that they were deceived into
signing the amicable settlement. On 10 January 1997, Isidro Sembrano
submitted a Joint Affidavit of Rosendo Mata-Pasindo, Carmelita Mata-
Pasindo, Wlfredo Mata and Julieta Mata-Abundio, dated 9 January
1997, again claiming that they were deceived into signing the amicable
settlement. Curiously, however, except for Julieta Mata-Abundio, the
three (3) other affiants, namely, Rosendo Mata-Pasindo, Carmelita
Mata-Pasindo and Wilfredo Mata, were not signatories to the amicable
settlement.
7. On 23 June 1997, petitioners filed with the Court their Joint Affidavit,
dated 26 May 1997, reiterating their Manifestation with Motion of 23
November 1995. They manifested in the Joint Affidavit that they
voluntarily signed the amicable settlement and reiterated their prayer
that they be allowed to withdraw their petition. In support of said Joint
Affidavit, petitioners attached thereto the report of Mr. Romero A.
Maing, the Provincial Officer of the OSCC in Tagum, Davao, dated 10
February, regarding an investigation he conducted on 3 February 1997
attended by petitioners. Mr. Maing attested that petitioners
categorically denied having been coerced, forced or intimidated into
signing the amicable settlement. Upon Mr. Maing's query, petitioners
expressed their desire to proceed with the amicable settlement of the
case.
8. Thereafter, Atty. Jimenez filed a motion, dated 25 August 1997,
urging this Court to resolve the petition. He also filed a Motion to
Require Personal Appearance of Petitioners before the OSCC to Verify
their Final Stand on the Petition, dated 29 September 1997. In said
motion, Atty. Jimenez admitted that he had only been in contact with
the attorney-in-fact of petitioners and never with petitioners
themselves.
9. Private respondents then filed a Motion to Dismiss Petition, dated 10
September 1997. Petitioners likewise filed an Opposition to Motion to
Resolve Petition Filed by attorney Rodolfo U. Jimenez as Counsel for
Petitioners, dated 1 October 1997. In said opposition, signed by all the
petitioners themselves, they reiterated that the amicable settlement of
23 November 1995 was their own free and voluntary act. They
explained that although it was written in English, the contents thereof
were translated and fully explained to them in the dialect known to and
understood by them. With regard to their relationship to Attorney
Jimenez, petitioners denied that they personally engaged him to
represent them in this case. It was allegedly only Isidro Sembrano,
acting on his own, who engaged Atty. Jimenez legal services. At any
rate, having terminated the same on 23 November 1995, petitioners
claimed that Atty. Jimenez no longer had any authority to represent
them in the case. Petitioners reiterated their prayer that they be
allowed to withdraw their petition. The Provincial Officer of the OSCC
in Tagum, Davao issued a Certification, dated 3 October 1997,
attesting that the contents of said opposition were fully explained to
petitioners in their dialect.
10. In a resolution, dated 10 December 1997, the Court required Atty.
Jimenez to file his comment on said opposition. In compliance
therewith, Atty. Jimenez averred in his comment, dated 5 February
29
1998, that he is merely protecting the interests of petitioners and urged
this Court to resolve the case on the merits. A few months later, said
counsel filed the Motion for Leave to File Attached Joint Affidavit of
Some of the Petitioners, dated 1 June 1998. The Joint Affidavit, dated
20 March 1998, purportedly executed by six (6) affiants, namely,
Arcadio M. Pasindo, Julieta M. Abundio, Celestino Mata, Clarita M.
Pasindo, Marcelo Mata and Ricarda vda. de Ayonan, averred that they
are retracting their statements contained in the Manifestation with
Motion, dated 23 November 1995, and its attachments, and in the
Opposition to Motion to Resolve Petition Filed by Atty. Rodolfo
Jimenez as counsel for petitioners, dated 1 October 1997.
11. The affiants in said Joint Affidavit claimed that they were deceived
into signing and/or affixing their thumbmarks on the said pleadings and
documents. They stated that they are no longer withdrawing their
petition and urged the Court to resolve it on the merits. A careful
perusal of the said Joint Affidavit shows that petitioners Marcelo Mata
and Ricarda vda. de Ayonan did not personally affix their respective
signatures thereon.Rather, two (2) other persons signed above their
names although it does not appear that they had been duly authorized
by petitioners Marcelo Mata and Ricarda vda. de Ayonan to do so.
12. Petitioners thereafter filed their Opposition, dated 4 November
1998, to Atty. Jimenez Motion to Resolve petition. Attached to the said
opposition is a Clarificatory Affidavit, dated 26 August 1998, executed
by the petitioners except Celestino Mata and Clarita Mata Pasindo,
who did not affix their respective signatures thereon. In said affidavit,
affiants accused Isidro Sembrano and Atty. Manuel Iral, Chief of the
Legal Division of the Central Office of the OSCC of having conspired
with each other and deceived some of the petitioners into signing the
Joint Affidavit, dated 20 March 1998, and retracting their statements in
the Manifestation with Motion, dated 23 November 1995. Affiants
affirmed that they voluntarily signed said Manifestation with Motion and
its attached documents including the amicable settlement. They
likewise maintained that Isidro Sembrano is no longer authorized to act
on their behalf and that Atty. Jimenez no longer had any authority to
represent them in this case. Petitioners once again sought this
Court's approval of their amicable settlement.
13. On 1 March 1999, Atty. Jimenez submitted to this Court an
Investigation Report, dated 14 January 1999, purportedly prepared by
Atty. Iral in his capacity as Chief of the Legal Division of the present
National Commission on Indigenous People. Attached to the report
were the Panunumpa, both dated 11 January 1999, of petitioners
Celestino Mata and Clarita Mata-Pasindo. These affiants affirmed the
retraction of their signatures on the Manifestation with Motion, dated 23
November 1995, claiming that they did not understand its
contents. They likewise affirmed the appointment of Isidro Sembrano
and Atty. Jimenez as their attorney-in-fact and counsel, respectively.
Given the dizzying and seeemingly interminable equivocation in
the stance of the petitioners vis--vis the proposed amicable settlement
of 23 November 1995, we are constrained to disregard the same and
proceed with the resolution of the case on the merits.
I "[A] fact or question which was in issue in a former suit and
As stated earlier, in their Motion for Reconsideration and
Memorandum, petitioners harp on the alleged nullity of the deed of sale
executed between Mata and Laureta in 1945 on the ground that it was
written in English, a language not understood by the former, and that it
was not approved by the OSCC in violation of Section 4(n), Republic Act
No. 1888, as amended, in relation to Section 120 of the Public Land
Act. The issue of the validity or nullity of the aforesaid deed of sale,
however, had already been passed upon by this Court in the case
of Caram, Jr. vs. Laureta,[5] the first case decided at length by this Court
involving the subject property. Previously, another petition filed by Mata
questioning the decision of the CA which upheld the sale of the subject
property to Laureta was dismissed by this Court on 24 February 1981.
In the Caram case, the issue raised was which sale was valid
considering that Mata sold the same property twice: first to Laureta and
later on to Caram. We upheld therein the validity of the sale in favor of
Laureta as we affirmed the findings of the lower court to the effect that
while the sale to Laureta was voidable, as it was procured by force, the
same "was cured when, after the lapse of four years from the time the
intimidation ceased, Marcos Mata lost both his rights to file an action for
annulment or set up the nullity of the contract as a defense in an action
to enforce the same."[6] We stated therein that "the first sale in favor of
Laureta prevails over the sale in favor of Caram."[7] This pronouncement
cannot be construed in any other way but that the Court affirmed the
validity of the sale of the subject property in favor of Laureta as against
the sale of the same to Caram, which we categorically declared as void.
Then again, in the case of Heirs of Claro L. Laureta vs.
Intermediate Appellate Court,[8] this Court ordered the dismissal of Civil
Case No. 1071 filed by petitioners. It must be noted that in their
complaint therein, petitioners also raised the issue of the nullity of the
deed of sale executed between Mata and Laureta on the ground that,
among others, it had not been approved by the then Secretary of
Agriculture and Natural Resources as required by law. Thus, by ordering
the dismissal of Civil Case No. 1071, we, in effect, upheld anew the
validity of the sale of the subject property in favor of Laureta. In the said
decision, we likewise allowed private respondents to proceed with the
execution of the judgment in Civil Case No. 3083 as the same was not
yet time-barred.
The foregoing rulings in the earlier related cases, which had long
attained finality, upholding the validity of the sale of the subject property
in favor of Laureta effectively foreclose any further inquiry as to its
validity. This is in consonance with the doctrine of res judicata as
embodied in Rule 39, Section 47 of the Rules of Court:
"Sec. 47. Effect of judgments or final orders. The effect of a
judgment or final order rendered by a court of the
Philippines, having jurisdiction to pronounce the judgment or
final order, may be as follows:
(a) x x x
(b) In other cases, the judgment or final order is, with respect
to the matter directly adjudged or as to any other matter that
could have been raised in relation thereto, conclusive
between the parties and their successors in interest by title
subsequent to the commencement of the action or special
proceeding, litigating for the same thing and under the same
title and in the same capacity: and
(c) In any other litigation between the same parties or their
successors in interest, that only is deemed to have been
adjudged in a former judgment or final order which appears
upon its face to have been so adjudged , or which was
actually and necessarily included therein or necessary
thereto."
The doctrine of res judicata actually embraces two (2)
concepts: the first is "bar by prior judgment" under paragraph (b) of Rule
39, Section 47, and the second is "conclusiveness of judgment" under
paragraph (c) thereof.[9] In the present case, the second concept
conclusiveness of judgment applies. The said concept is explained in
this manner:
was there judicially passed upon and determined by a court
of competent jurisdiction, is conclusively settled by the
judgment therein as far as the parties to that action and
persons in privity with them are concerned and cannot be
again litigated in any future action between such parties or
their privies, in the same court or any other court of
concurrent jurisdiction on either the same or different cause
of action, while the judgment remains unreversed by proper
authority. It has been held that in order that a judgment in
one action can be conclusion as to a particular matter in
another action between the same parties or their privies, it is
essential that the issue be identical. If a particular point or
question is in issue in the second action, and the judgment
will depend on the determination of that particular point or
question, a former judgment between the same parties or
their privies will be final and conclusive in the second if that
30
 same point or question was in issue and adjudicated in the
first suit. x x x."[10]
Although the action instituted by petitioners in the lower court in
this case (action for reconveyance) is different from the actions they
instituted in the earlier cases, the concept of conclusiveness of judgment
still applies because under this principle "the identity of causes of action
is not required but merely identity of issues."[11]
Simply put, conclusiveness of judgment bars the relitigation of
particular facts or issues in another litigation between the same parties
on a different claim or cause of action. In Lopez vs.
Reyes,[12] we expounded on the concept of conclusiveness of judgment
as follows:
"The general rule precluding the relitigation of material
facts or questions which were in issue and adjudicated
in former action are commonly applied to all matters
essentially connected with the subject matter of
litigation. Thus it extends to questions necessarily
involved in an issue, and necessarily adjudicated, or
necessarily implied in the final judgment, although no
specific finding may have been made in reference
thereto, and although such matters were directly referred to
in the pleadings and were not actually or formally
presented. Under this rule, if the record of the former trial
shows that the judgment could not have been rendered
without deciding the particular matter, it will be
considered as having settled that matter as to all future
actions between the parties, and if a judgment
necessarily presupposes certain premises, they are as
conclusive as the judgment itself. Reasons for the rule are
that a judgment is an adjudication on all the matters which
are essential to support it, and that every proposition
assumed or decided by the court leading up to the final
conclusion and upon which such conclusion is based is as
effectually passed upon as the ultimate question which is
solved."[13]
There is no question that the issue of the validity or nullity of the
sale of the subject property in favor of Laureta had already been passed
upon by this Court in Caram, where we categorically pronounced that
the sale in favor of Laureta prevails over that of Caram, which we
declared void, and in Laureta, where we stated that private respondents
may still validly proceed with the execution of the decision in Civil Case
No. 3083.Caram became final and executory on 12 February 1982
while Laureta on 5 July 1990. Applying the rule on conclusiveness of
judgment, the matter may no longer be relitigated in this case.
As held in Legarda vs. Savellano[14]
"It is a general rule common to all civilized system of
jurisprudence, that the solemn and deliberate sentence of
the law, pronounced by its appointed organs, upon a
disputed fact or a state of facts, should be regarded as a
final and conclusive determination of the question litigated,
and should forever set the controversy at rest. Indeed, it has
been well said that this maxim is more than a mere rule of
law, more than an important principle of public policy: and
that it is not too much to say that it is a fundamental concept
in the organization of the jural sytem. Public policy and
sound practice demand that, at the risk of occasional errors,
judgments of courts should become final at some definite
date fixed by law. The very object for which courts were
constituted was to put an end to controversies."[15]
II
The next issue is whether or not petitioners can still validly
exercise their right to repurchase the subject property pursuant to
Section 119 of the Public Land Act:
"Sec. 119. Every conveyance of land acquired under the free patent or
homestead provisions, when proper, shall be subject to repurchase by
the applicant, his widow, or legal heirs, within a period of five (5) years
from date of conveyance,"
The term "conveyance" imports the transfer of legal title from one
person to another. It usually takes place upon the execution of the deed
purporting to transfer the ownership of the land as the same is already
valid and binding against the parties thereto even without the act of
registration. The registration is intended to protect the buyer against
claims of third parties against subsequent alienations by the vendor, and
is certainly not necessary to give effect, as between the parties, to their
deed of sale. Thus, for the purpose of reckoning the five-year period to
exercise the right to repurchase, the date of conveyance is construed to
refer to the date of the execution of the deed transferring the ownership
of the land to the buyer.[16]
In this case, Mata conveyed the ownership of the subject property
to Laureta by virtue of a Deed of Absolute Sale, dated 10 June
1945. Petitioners, as heirs of Marcos Mata, filed the action for
reconveyance (Civil Case No. 2468) on 24 November 1990. From this
date up to the time of the filing of the action for reconveyance, more than
forty-five (45) years had lapsed. Clearly, petitioners right to redeem the
subject property had already prescribed by the time they went to
court. As correctly pointed out by the CA, if the five-year period to
repurchase were to be reckoned from 12 February 1982, the date of
finality of our decision in the Caramcase[17] where we declared that the
sale in favor of Laureta prevails over that in favor of Caram, prescription
of the right to repurchase had set in.
The same conclusion would obtain even if the running of the five-
year period were to start from 9 May 1985, when Transfer Certificate of
Title No. T-46346 covering the subject property was issued in favor
Laureta after the sale in his favor was approved by the Minister of
Natural Resources in accordance with the decision in Civil Case No.
3083, petitioners action to repurchase the subject property would still be
time-barred, as more than five (5) years had already lapsed.
Petitioners further argue that the five-year period should be
reckoned from September 1990, when the decision of this Court
in Laureta[18] allegedly became final and executory. Petitioners maintain
that prior to the said date, they could not exercise their right to
repurchase since the issue of its ownership was still then under
litigation. This contention is without merit. As earlier discussed, the act
of conveyance within the meaning of the Section 119 of the Public Land
Act had already been made long before the finality of our decision
in Laureta. At any rate, said case resolved an entirely different
issue, i.e., whether or not private respondents motion for execution of
the judgment in Civil Case No. 3083 was time-barred. Accordingly, the
CA correctly ordered the dismissal of petitioners action for reconveyance
on ground of prescription.
III
With respect to the procedural issue raised by petitioners, i.e.,
whether the CA erred in granting private respondents petition for
injunction as it had allegedly the effect of disposing the case without trial
on the merits, suffice it to say that since private respondents right to
injunctive relief was clear, the CA properly granted the same. The CA,
likewise, correctly ordered the dismissal of Civil Case No. 2468 as the
records of the case clearly showed that petitioners right to repurchase
had already prescribed. A trial on the merits thereon would serve no
other purpose and would only result in needless delay.
Indeed, this controversy has already dragged on for more than
half a century, it is, thus, high time that we write finis to it.
"x x x (L)itigations must end and terminate sometime and somewhere,
it being essential to the effective administration of justice that once
judgment has become final, the winning party be not, through a mere
subterfuge, deprived of the fruits of the verdict. Hence, courts must
guard themselves against any scheme to bring about that result, for
constituted a they are to put an end to controversies, they should frown
upon any attempt to prolong it. Public policy and sound practice
demand that at the risk of occasional errors, judgments of courts
should become final and irrevocable at some definite date fixed by
law. Interes rei publicae ut finis sit litium.xxx."[19]
WHEREFORE, premises considered, the petition is hereby DENIED and
the assailed decision of the respondent Court of Appeals is AFFIRMED.
31
G.R. Nos. 129377 & 129399 February 22, 2007
HEIRS OF WENCESLAO TABIA, SPOUSES ERLINDO MAMONONG
and VIRGINIA DE LUMBAN, HEIRS OF MANUEL SOMO and
FELICIDAD SOCORRO, SPOUSES NICANOR OSORIO and
MARIETTA DE LEON, SPOUSES MAXIMINO PEREZ and JOVITA
LADUB, HEIRS OF THE SPOUSES JUAN RABACA CRISTINA
BADIOLA, JULIANA ANSAY, MACRA BADILLO, ROSALIA RABIE
and HEIRS OF PEPING MERCADO and CONCORDIA
ABAYARI, Petitioners,
vs.
COURT OF APPEALS, ABRAHAM DELA CRUZ and DIRECTOR OF
LANDS ABELARDO PALAD, JR.,Respondents.
DECISION
TINGA, J.:
1 dismiss.15 Meanwhile, dela Cruz filed a Reply16 to petitioner’s
Before this Court are two Petitions for Review both filed under Rule 45
of the Revised Rules of Court assailing the 29 November 1996
Decision,2 as well as the 4 June 1997 Resolution3 of the 8th Division of
the Court of Appeals in CA-G.R. CV No. 39205, which affirmed the 31
August 1992 Order4 of the Regional Trial Court of Sta. Cruz, Laguna in
Civil Case No. SC-2852 and denied reconsideration thereof,
respectively.
On 16 April 1991, Francisco, Amparo, Rosita, Araceli and Teresita, all
surnamed Tabia; Yolanda, Roynilo, Tomas, Jr., Domingo, Carlito and
Augustus, all surnamed Añonuevo; Susan, Jojo, and Wilma, all
surnamed Cacalda; and Danilo, Moises, Jr., Ramon and Roberto, all
surnamed Paraiso (herein petitioners) filed a complaint, docketed as
Civil Case No. SC-2852, for Annulment of Free Patent No. DENR IV-
FP No. 00002P and Damages and/or Reconveyance of Title with the
Regional Trial Court (RTC) of Laguna against Abraham dela Cruz (dela
Cruz), representing the heirs of Antonina Rabie, and Abelardo G.
Palad, Jr., Director of Lands.
The case arose from a Decision5 rendered by the Director of Lands on
1 February 1989 in B.L. Claim No. 288(n), the dispositive portion of
which reads:
WHEREFORE, the claim of the Heirs of Wenceslao Tabia represented
by Narciso Tabia, et al[.] is hereby dismissed and this case, dropped
from the records. Within the period of sixty (60) days from finality
hereof, the [petitioners] shall remove their improvements from the land
and shall vacate the premises thereof. The Free Patent Application
(Unnumbered) of Antonina Rabie, represented by Abraham dela Cruz,
is hereby amended to exclude therefrom the portions occupied by the
Provincial Road and Lumban Elementary School. As thus amended the
same shall be given further due course.
SO ORDERED.6
The subject matter of B.L. Claim No. 288(n) was Lot No. 1430 situated
at Lumban, Laguna. It appears that on 21 October 1984, dela Cruz, in
behalf of the heirs of the deceased Antonina Rabie, applied for a free
patent with the Bureau of Lands (now Lands Management Bureau)
covering said lot.7 Petitioners filed their respective protests and/or
oppositions to said application, alleging ownership and possession for
over 50 years, and lack of jurisdiction by the Bureau of Lands
inasmuch as the subject property had become private land.8 An ocular
inspection was conducted by the Bureau of Lands in the presence of
all the parties claimants. Thereafter, the Director of the Bureau of
Lands rendered the Decision quoted above.
Petitioners filed a motion for reconsideration but the same was denied
by the Director of Lands in his Order, dated 27 June 1989.9 The matter
was brought by petitioners to the Secretary of Agriculture and Natural
Resources. The appeal, however, was dismissed by the Secretary in
his Order of 27 December 1989, for failure of petitioners to file an
appeal memorandum.10 Accordingly, Free Patent No. DENR IV-FP No.
00002P and Original Certificate of Title No. P-9927 were issued in
favor of and in the name of dela Cruz on 26 October 1990.11
In Civil Case No. SC-2852, petitioners accused the Director of Lands of
unlawful conspiracy with dela Cruz and gross ignorance of the law in
issuing the 1 February 1989 decision. They claimed that the decision
was obtained through misrepresentation of facts and pursuant to a
conspiracy for some unlawful and illegal consideration. They further
claimed damages, attorneys’ fees and litigation expenses.
Dela Cruz filed a Motion to Dismiss12 Civil Case No. SC-2852 on the
following grounds: (1) lack of jurisdiction, and (2) bar by prior judgment.
On the other hand, the Director of Lands, through the Office of the
Solicitor General, filed an Answer.13 Petitioners filed a Motion for
Admission of/and Opposition to Motion to Dismiss.14
On 19 August 1991, the trial court resolved to deny the motion to
Opposition to the Motion to Dismiss.
On 7 May 1992, dela Cruz filed a Motion for Reconsideration of the 19
August 1991 Order of the trial court.17 On 31 August 1992, the trial
court granted reconsideration and dismissed the complaint.18
The trial court noted the Director of Lands’ exhaustive findings of fact
and conclusions of law. It held that petitioners’ failure to exploit the
available administrative remedy of appeal to the Secretary of
Agriculture and Natural Resources rendered the decision of the
Director of Lands final and executory. Consequently, the filing of Civil
Case No. SC-2852 was deemed premature for failure to exhaust
administrative remedies. Further, the decision of the Director of Lands
having become final, res judicata operated to preclude the trial court
from assuming jurisdiction. The trial court further found that petitioners
were precluded from questioning the jurisdiction of the Director of
Lands because they voluntarily submitted themselves to said
jurisdiction by actively participating in B.L. Claim No. 288(n). Finally, it
held that the decision of the Director of Lands was supported by
substantial evidence.
On 11 September 1992, petitioners filed with the trial court a Notice of
Appeal to the Court of Appeals of the Order dated 31 August
1992.19 On 16 September 1992, the records of the case were ordered
forwarded to the Court of Appeals.20
On 29 November 1996, the Court of Appeals rendered a Decision
affirming the Order of the trial court.21 The appellate court stressed the
fact that the matters raised by petitioner in Civil Case No. SC-2852
were the same matters raised in their protests filed in B.L. Claim No.
288(n).
Petitioners filed a motion for reconsideration of the 29 November 1996
Decision of the Court of Appeals but the same was denied on 4 June
1997.22 Hence, petitioners filed the instant Petitions for Review.
The grounds relied upon by the trial court and the Court of Appeals in
granting the Motion to Dismiss filed by dela Cruz in Civil Case No. SC-
2852 were the following: (1) finality of the Director of Lands’ findings of
facts; (2) failure of petitioners to exhaust administrative remedies; and
(3) res judicata. All the grounds relied upon by the trial court and the
Court of Appeals are all meritorious.
Petitioners’ foremost contention is anchored on the Director of Lands’
alleged disregard of a supposedly undisputed factual matter, which is
that Wenceslao Tabia and the predecessors-in-interest of petitioners,
had been in open, continuous, exclusive, and notorious possession
and occupation of Lot No. 1430 for a period of more than fifty (50)
years, and by virtue of this possession, they are the owners of the said
lot, to the exclusion of dela Cruz. It is on this basis that they seek the
annulment of Free Patent No. DENR IV-FP No. 00002P which, it was
32
alleged, was fraudulently issued to dela Cruz who misrepresented
himself as the actual possessor of the land.
A determination of the validity of petitioners’ claim necessitates a
review of the factual findings of the Director of Lands. However, in
petitions such as the one in the case at bar, pure questions of fact may
not be the proper subject of appeal by certiorari under Rule 45 of the
Revised Rules of Court as this mode of appeal is generally confined
only to questions of law.23 Further, findings of the Director of Lands as
to questions of fact shall be conclusive when approved by the
Secretary of Agriculture and Natural Resources. 24 In this case, the
dismissal of petitioners’ appeal with the Secretary of Agriculture and
Natural Resources had the effect of rendering the decision of the
Director of Lands final and executory.
The factual findings of the Director of Lands assume an even more
conclusive character because they were affirmed by both the Regional
Trial Court and the Court of Appeals. Their reliance on the factual
findings of the Director of Lands is not without reason. By reason of his
special knowledge and expertise over matters falling under his
jurisdiction, he is in a better position to pass judgment thereon. Thus,
his factual findings in that regard are generally accorded great respect,
if not finality, by the courts, as long as they are supported by
substantial evidence, even if such evidence might not be overwhelming
or even preponderant. It is not the task of an appellate court to weigh
once more the evidence submitted before the administrative body and
to substitute its own judgment for that of the administrative agency in
respect of sufficiency of evidence.25
Petitioners cannot fault the Director of Lands for not appreciating the
Deeds of Sale26 allegedly executed by and between Glicerio Tabia (the
immediate heir of Wenceslao Tabia) and the parents of dela Cruz for
the reason that said documents were not presented in B.L. Claim No.
288(n). They presented said documents only in Civil Case No. SC-
2852. Thus, the Director of Lands, in his Answer to the Complaint,
denied petitioners’ allegation to the effect that the parents of dela Cruz
bought portions of Lot No. 1430 from Glicerio Tabia.27 Further,
considering that the Deeds of Sale were allegedly dated 1951, there
was no reason for their non-production or presentation in B.L. Claim
No. 288(n). Failure to submit evidence could only mean that if
produced, it would have been adverse to petitioners’ case. 28 If the
inability to produce it was due to their counsel’s negligence or
omission, the same would bind petitioners.
It is worth mentioning that the bulk of the evidence presented in
support of their protest to dela Cruz’s application for free patent
consisted mainly of the following documents: (1) tax declarations, the
earliest of which is for the year 1945; (2) Deeds of Sale; (3) Deeds of
Partition; and (4) Payment Receipts. The transactions evidenced by
the Deeds of Sale, the earliest of which is dated 1958, show the chain
of transfer from Glicerio Tabia to the predecessors-in-interest of
petitioners. On this score, the Director of Lands ruled:
Wenceslao Tabia is neither a survey-claimant nor owner of the
land in question and the same cannot form part of his estate
which could be validly transmitted to his heirs by succession. The
extra-judicial partition of the land, confirmatory deed of sale and deed
of sale executed by the Heirs of Wenceslao Tabia are, therefore, null
and void because they have not acquired any right to the land in
question.
xxx
[Petitioners] anchored their right to, and interest in, the land by virtue of
the sale executed by the heirs of Wenceslao Tabia and alleged
continuous possession of their respective portions. As earlier
mentioned, Tabia was not the owner of the land in question and as
such, he has nothing to transmit to his heirs. Corrorarily,[sic] his
heirs has [sic] nothing to sell in favor of the
[petitioners].29 [Emphasis supplied.]
On the other hand, the conclusions of the Director of Lands were
drawn from affidavits, public documents and records,30 as well as the
results of the ocular inspection conducted.
On petitioners’ failure to exhaust administrative remedies, the trial court
aptly held that petitioners were, in effect, seeking a review of the
decision of the Director of Lands which was the basis for the issuance
of the free patent. Since what is being disputed is an action of an
administrative agency, in consonance with the principle of exhaustion
of administrative remedy, the concerned agency should be given the
opportunity to correct itself before the intervention of the court is
sought. There is a further requirement that the party with an
administrative remedy must not merely initiate the prescribed
administrative procedure to obtain relief, but must also pursue it to its
appropriate conclusion before seeking judicial
intervention.31 1awphi1.net
Petitioners in the instant case did not fully exploit the administrative
remedies available to them. In fact, they were responsible for the
dismissal of their appeal before the Secretary of Agriculture and
Natural Resource. It should be remembered that their failure to file an
appeal memorandum was the cause for the dismissal of their appeal.
They did not even question the dismissal by the Secretary of
Agriculture and Natural Resource. Indeed, by their own neglect and
grave omission they allowed the Decision of the Director of Lands to
become final and executory, a matter that they could no longer
question in Civil Case No. SC-2852.
While the rule on exhaustion of administrative remedies has
recognized exceptions, 32 none of them obtains in the case at bar.
On the third ground relied upon for granting the Motion to Dismiss, we
agree with the trial court that the doctrine of res judicata operates to
bar the filing of Civil Case No. SC-2852.
We have held that the rule of res judicata which forbids the reopening
of a matter once judicially determined by competent authority applies
as well to the judicial and quasi-judicial acts of public, executive or
administrative officers and boards acting within their jurisdiction as to
the judgments of courts having general judicial powers.33The Director
of Lands is a quasi-judicial officer.34 As such officer, his decisions and
orders rendered pursuant to his quasi-judicial authority, have upon
their finality, the force and binding effect of a final judgment within the
purview of the doctrine of res judicata.35
Res judicata comprehends two distinct concepts: (1) bar by former
judgment and (2) conclusiveness of judgment. In the case at bar,
where there is no identity of causes of action, but only an identity of
issues, there exists res judicata in the concept of conclusiveness of
judgment. Thus, the issues in B.L. Claim No. 288(n) of prior
possession of Lot No. 1430 as well as the sufficiency of the evidence
supporting the Director of Lands’ conclusion may no longer be
relitigated.
The issues now remaining for the Court to resolve do not detract from
the conclusion that the dismissal of Civil Case No. SC-2852 is proper.
The issues are: (1) whether petitioners have the legal personality to
institute the action for annulment of the free patent and/or
reconveyance; (2) whether the Director of Lands had jurisdiction to
award the free patent to dela Cruz; and (3) whether a constructive trust
was created in favor of petitioners when the free patent was awarded
to dela Cruz.
The first issue is the personality of petitioners to bring the action for
annulment of Free Patent No. DENR IV-FP No. 00002P. Suffice it to
say that since the land in this case was public land prior to the
issuance of the free patent, the only party who could question that
grant is the government, represented by the Solicitor General. The free
patent is a grant by the government, acting through the Director of
Lands. Thus, the cancellation thereof is a matter between the grantor
and the grantee.36
33
On the issue of jurisdiction, there is no question that the Director of
Lands had jurisdiction over B.L. Claim No. 288(n). Under
Commonwealth Act (C.A.) No. 141, or the Public Land Law, the
Director of Lands has jurisdiction, authority and control over public
lands.37 Section 4 of C.A. No. 141 states:

Sec. 4. Subject to said control, the Director of Lands shall have

direct executive control of the survey, classification, lease, sale or
any other form of concession or disposition and management of
the lands of the public domain, and his decisions as to questions of
fact shall be conclusive when approved by the Secretary of Agriculture
and Natural Resources. [Emphasis supplied.]

The alleged pendency of a cadastral case involving Lot No. 1430 is not
at all inconsistent with the Director of Lands’ exercise of jurisdiction in
B.L. Claim No. 288(n). In fact, the assumption underlying the initiation
of cadastral registration proceedings is that the parcels of land covered
by the cadastral proceedings are public lands and it is up to the
claimants as oppositors to plead and prove otherwise. Precisely, the
cadastral proceedings is an innovation which was conceived to hasten
and accelerate registration of lands with the Director of Lands, not the
claimants, initiating the proceedings.38 Since there is no showing that
the cadastral case adjudicated Lot No. 1430 in favor of one of the
claimants therein, it may still be presumed to be land of the public
domain under the jurisdiction of the Director of Lands.

If public purpose is to encourage land registration for lands to be

covered by the Torrens System and considering further that the
cadastral proceedings has remained pending and unresolved since
1930, the Director of Lands properly entertained dela Cruz’s
application for free patent.

Furthermore, the effect of registration of a homestead or any similar

patent and the issuance of a duplicate certificate of title to the patentee
is to vest in him an incontestable title to the land, in the same manner
as if ownership had been determined by final decree of the
court.39 Thus, in the case at bar, the issuance of Original Certificate of
Title No. P-9927 operates to take Lot No. 1430 out of that mass of
public land that could be the proper subject of cadastral registration
proceedings.

Petitioners’ alternative prayer for reconveyance of Lot No. 1430 based

on the principle of constructive trust40 must likewise fail considering
that their claimed ownership of Lot No. 1430 was found to be without
basis. Under this principle, registration of property by one person in his
name, whether by mistake or fraud, the real owner being another
person, impresses upon the title so acquired the character of a
constructive trust for the real owner, which would justify an action for
reconveyance.41 The essence of an action for reconveyance is that the
decree of registration is respected as incontrovertible but what is
sought instead is the transfer of the property which has been
wrongfully or erroneously registered in another person’s name, to its
rightful owner or to one with a better right.42Clearly, not being the
owners of Lot No. 1430, petitioners cannot ask for reconveyance of the
property to them under the principle of constructive trust.

WHEREFORE, premises considered, the petition are hereby DENIED.

The 29 November 1996 Decision and the 4 June 1997 Resolution of
the Court of Appeals in CA-G.R. CV No. 39205 are hereby AFFIRMED.

34
 ALEJANDRO MORAGA, represented by ENRIQUE G.R. No. 166781
predecessor-in-interest, Victoriano Ipapo, was 9.2986 hectares, when in
MORAGA, truth and in fact, it was only 6.3197 hectares, (2) that the CLT was issued
Petitioner, in violation of respondents and/or Victoriano Ipapos retention rights, 3)
Present: that the tenants, the Moragas violated their obligations as tenants.
PANGANIBAN, C.J.
Chairperson, Finding that the EP was issued not in accordance with
- versus - YNARES-SANTIAGO,
Presidential Decree No. 27 and that the Moragas violated their
AUSTRIA-MARTINEZ,
obligations as tenants of the subject landholding, the Provincial
CALLEJO, SR.,Adjudicator,
and in a decision dated 30 June 1994, rendered a judgment in
CHICO-NAZARIO,
favor of
JJ.respondents. The dispositive portion of the decision reads:
SPS. JULIAN AND FELICIDAD SOMO, SPS. REYNALDO
AND CARMELITA FERNANDEZ, and GIL AND WHEREFORE, premises considered
HERMINIGILDA SAN DIEGO, Promulgated: judgment is hereby rendered as follows:
Respondents.
1. Finding the landholding of
September 5, 2006 the
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - late Victoriano Ipapo not
x covered by P.D.
27. Accordingly, EP No.
496453 issued in favor of
DECISION Alejandro Moraga is
hereby recalled and
cancelled.
CHICO-NAZARIO, J.:
2. Ordering defendant
Alejandro Moraga and all
This Petition for Review under Rule 45 of the Rules of Court, other persons acting in his
filed by petitioner Enrique Moraga, seeks to nullify and set aside the 23 behalf to vacate the
April 2004 Decision[1] and 11 January 2005 Resolution of the Court of premises in question for
Appeals in CA-G.R. SP No. 70051 which reversed and set aside the the peaceful possession of
Decision of the Department of Agrarian Reform Adjudication Board the plaintiff.[2]
(DARAB) in DARAB Case No. 5086 dated 11 January 2001.

The property in dispute is a parcel of agricultural land
consisting of 1.7467 hectares which is located
in Pandayan, Meycauayan, Bulacan, and covered under Transfer
Certificate of Title (TCT) No. T-5926 in the name
of Victoriano Ipapo who died on 6 June 1976. This property was
tenanted by Alejandro Moraga, the deceased father of petitioner Enrique
Moraga.
On 7 March 1973, Victoriano Ipapo sold the landholding to his
daughters Felicidad, Carmelita, and Herminigilda, and their respective
spouses, Julian Somo, Reynaldo Fernandez and Gil San Diego
(respondents) for P10,000.00 per Bilihan Tuluyan of even date.
Inasmuch as an affidavit of consent of the tenant is required
by the agrarian laws in the transfer of title, Alejandro Moraga on 19
November 1979 executed a Sinumpaang Salaysayadmitting that he had
knowledge and consent of the sale. Thus, on 19 November 1979, a new
certificate of title over the disputed land, TCT No. T-29031 (M), was
issued in favor of the respondents.
Unknown to respondents, on 22 July 1981, a Certificate of
Land Transfer (CLT) No. 0-042737 was issued in favor of Alejandro
Moraga for the same parcel of agricultural land. On the basis of such
CLT, Alejandro Moraga, on 3 November 1993, filed an application for
the issuance of Emancipation Patent (EP) over the land in question
before the Provincial Assessor of Bulacan. Apparently, respondents
belatedly filed a written protest of the application since on 16 September
1993, EP No. 496453 was granted to Alejandro Moraga, and pursuant
to which TCT No. EP-108(M) was likewise issued in his favor.
On 11 October 1993, respondents filed with the DARAB a
complaint for Cancellation of the Certificate of Land Transfer and the
Emancipation Patent and for Ejectment against Enrique and Mercedes
Moraga (Moragas), the surviving heirs of the late Alejandro Moraga who
died on 25 August 1993. Mercedes Moraga is the surviving spouse of
the deceased Alejandro Moraga. The case was docketed as DARAB
Case No. 567-Bul 93.
Respondents alleged in their complaint, among other things,
the following: (1) that the proceedings leading to the issuance of the CLT
in favor of Alejandro Moraga were irregular, i.e., the issuance of such
CLT was based on a fraudulent or false certification of the Provincial
Assessor of Bulacan stating that the total landholding of their
The Moragas filed a motion for reconsideration which was
denied for lack of merit.
The Moragas then appealed to the Court of Appeals.
In the meantime, respondents filed an application for retention
with the Department of Agrarian Reform (DAR) which was opposed by
petitioner Enrique Moraga. In an Order dated 22 February 1994, the
Regional Director of DAR Region III granted the application for retention
by respondents.
Petitioner appealed to the Secretary of Agrarian Reform who
affirmed the decision of the Regional Director in an Order dated 14
October 1994.
Unfazed, petitioner appealed the ruling of the Secretary of
Agrarian Reform to the Court of Appeals. Said appealed ruling of the
Secretary of Agrarian Reform was consolidated by the Court of Appeals
with the appealed decision of the DARAB in Case No. 567-Bul 93. The
consolidated cases were docketed as CA-G.R. No. SP No. 38445.
In a Decision dated 28 September 1995, the Court of Appeals
dismissed the two appeals in CA-G.R. SP No. 38445, thus affirming the
rulings of the DARAB and the Secretary of Agrarian Reform. The
decision became final and executory since no either motion for
reconsideration nor appeal from the same were ever filed by any party.
While the CA-G.R. SP No. 38445 was still pending before the
Court of Appeals, petitioner and Mercedes Moraga, on 6 April 1995,
filed before the Provincial Adjudicator of Malolos, Bulacan, a complaint
for Redemption against respondents which was docketed as DARAB
Case No. 927-Bul 95. The complaint alleged that upon Alejandro
Moragas death, the Moragas succeeded Alejandro Moraga as tenants
over the parcel of land that is the subject of the controversy. It was
likewise averred that the sale entered into between Victoriano Ipapoand
respondents on 7 March 1973, involving the said property, was made
without the written notice given to Alejandro Moraga and the DAR, in
violation of Section 2 of Republic Act No. 3844, as amended by Republic
Act No. 6389. Within the purview of the said provisions of law,
the Moragas were exercising their right of redemption over the said
landholding.
35
 In a Decision dated 23 November 1995, the Provincial
Adjudicator, taking into consideration the earlier ruling of the Court of
Appeals in CA-G.R. SP No. 38445, which affirmed the judgment of the
DARAB ordering Alejandro Moraga to vacate the premises of land in
question and the order of the Secretary of Agrarian Reform granting
respondents application for retention, opined that the case for
redemption has been rendered moot and academic inasmuch as
respondents, by virtue of the said ruling of the Court of Appeals, had
acquired vested rights over the subject property. Accordingly, such
vested rights entitled respondents to exercise all the attributes of
ownership, hence, said property is beyond the reach of redemption. The
Provincial Adjudicator further argued that even if the action for
redemption may be availed of, the same is still barred by prescription
considering that the Moragas exercised the said right only after 22 years
had lapsed.
On appeal, the DARAB in Case No. 927-Bul 95 affirmed with
modification the decision of the Provincial Adjudicator. The DARAB,
while sustaining the Provincial Adjudicators ruling that the Moragas right
to redeem has prescribed, stated that the heirs of Alejandro Moraga shall
remain as tenants and are entitled to security of tenure, to wit:
WHEREFORE, premises considered, the
appealed decision is hereby MODIFIED declaring
the heirs of the late Alejandro Moraga, herein
plaintiffs, are not entitled to redeem the subject
property. However, they shall remain as tenants
thereof entitled to security of tenure.[3]
The Moragas filed a motion for reconsideration of the
foregoing decision denying their claim for redemption.
Respondents likewise filed a motion for reconsideration of the
said decision insofar as it decreed that Alejandro Moragas heirs shall
remain tenants entitled to security of tenure.
Both motions were denied by the DARAB.
Hence, both parties appealed to the Court of Appeals.
The appeal of the Moragas which assailed the DARAB
decision denying their claim for redemption was docketed as CA-G.R.
SP No. 63895, while the appeal of respondents questioning the DARAB
decision ordering the heirs of Alejandro Moraga to remain as tenants
entitled to security of tenure was docketed as CA-G.R. SP No. 70051.
In a decision dated 29 January 2003, the Special Third
Division of the Court of Appeals rendered a judgment in CA-G.R. SP No.
63895 affirming in toto the decision of the DARAB. Since no appeal was
filed by either party, this decision became final and executory.
On the other hand, the Sixth Division of the Court of Appeals,
in resolving the sole issue in CA-G.R. SP No. 70051 on whether or not
the DARAB is correct in ordering that the heirs of Alejandro Moraga
remain as tenants in the subject landholding, ruled for the
respondents. It ratiocinated that the DARAB committed palpable error in
decreeing that Alejandro Moragas heir shall remain as tenants entitled
to security of tenure considering that the said ruling alters the already
final and executory decision of the Court of Appeals in CA-G.R. SP No.
38445, enunciating that the Moragas are not entitled to security of
tenure for violating their obligations as tenants.
Undeterred, petitioner filed a motion for reconsideration of the
above decision. The Court of Appeals did not budge from its stand and
denied the motion in a Resolution dated 11 January 2005.
Hence, the instant petition.
Petitioner submitted the following issues:
A aspects. The first aspect is the effect of a judgment
WHETHER OR NOT PETITIONER HAS A RIGHT
OF REDEMPTION OVER THE LANDHOLDING
SUBJECT OF THE INSTANT CASE;
B
IF IN THE NEGATIVE, WHETHER OR NOT
PETITIONER SHALL REMAIN AS TENANT OF
THE LANDHOLDING ENTITLED TO SECURITY
OF TENURE;
C
WHETHER OR NOT RESPONDENTS HAVE A
LEGAL RIGHT TO EJECT PETITIONER FROM
THE LANDHOLDING IN QUESTION;
D
IF IN THE AFFIRMATIVE, WHETHER OR NOT
PETITIONER IS ENTITLED TO DISTURBANCE
COMPENSATION.[4]
As gleaned from the issues presented by petitioner, it is quite
evident that petitioner would want this Court to revisit the final
and executory decisions of the Court of Appeals in CA-G.R. SP No.
38445, where petitioners claim of security of tenure was settled, and in
CA-G.R. SP No. 63895 which resolved petitioners complaint for
redemption. However, this cannot be done by this Court without violating
the doctrine of res judicata.
In Spouses Barretto v. Court of Appeals,[5] this Court
elucidated the doctrine of res judicata in this fashion:
Section 47, Rule 39 of the Rules of Court,
provides:
Sec. 47. Effect of judgments or final
orders. The effect of a judgment or final order
rendered by a court of the Philippines, having
jurisdiction to pronounce the judgment or final
order, may be as follows:
xxxx
(b) In other cases, the judgment or final
order is, with respect to the matter directly adjudged
or as to any other matter that could have been
raised in relation thereto, conclusive between the
parties and their successors in interest by title
subsequent to the commencement of the action or
special proceeding, litigating for the same thing and
under the same title and in the same capacity; and
(c) In any other litigation between the
same parties or their successors in interest, that
only is deemed to have been adjudged in a former
judgment or final order which appears upon its face
to have been so adjudged, or which was actually
and necessarily included therein or necessary
thereto.
The aforecited rule in point embodies the
fundamental principles of res judicata, finality of
judgment and estoppel by judgment, which means
that once a judgment has become final
and executory, the issues therein litigated upon are
laid to rest.
The doctrine of res judicata is of two
as a bar to the prosecution of a second action upon
the same claim, damand or cause of action. The
second aspect precludes the relitigation of a
36
 particular fact or issue in another action between
the same parties or their successors in interest, on
a different claim or cause of action.
Calalang v. Register of Deeds of Quezon City[6] further
explained:
The doctrine res judicata actually
embraces two different concepts: (1) bar by former
judgment and (b) conclusiveness of judgment.
The second concept conclusiveness of
judgment - states that a fact or question which was
in issue in a former suit and was there judicially
passed upon and determined by a court of
competent jurisdiction, is conclusively settled by the
judgment therein as far as the parties to that action
and persons in privity with them are concerned and
cannot be again litigated in any future action
between such parties or their privies, in the same
court or any other court of concurrent jurisdiction on
either the same or different cause of action, while
the judgment remains unreversed by proper
authority. It has been held that in order that a
judgment in one action can be conclusive as to a
particular matter in another action between the
same parties or their privies, it is essential that the
issue be identical. If a particular point or question is
in issue in the second action, and the judgment will
depend on the determination of that particular point
or question, a former judgment between the same
parties or their privies will be final and conclusive in
the second if that same point or question was in
issue and adjudicated in the first suit. x x x.
Res judicata is grounded on fundamental considerations of
public and sound practice that at the risk of occasional error, the
judgments of courts must become final at some definite date set by
law.[7] After the judgment has become final, nothing can be done
therewith; otherwise there can be no end to litigation, thus setting at
naught the main role of courts, which is to assist in the enforcement of
the rule of law and the maintenance of peace and order, by
settling justiciable controversies with finality.[8]
In the case under consideration, it bears stressing that the
Court of Appeals came out with its Decision, dated 28 September 1995,
in CA-G.R. SP No. 38445, where the issue of security of tenure was
resolved and was laid to rest. The pertinent decision of the DARAB
which was affirmed by the Court of Appeals reads:
On the second issue, evidences adduced
reveal that defendant Alejandro Moraga failed to
pay rentals from 1990 up to the present. Under
Presidential Decree 816, a tenant who deliberately
refuses to pay rentals for two consecutive years can
be ejected. Section 2 thereof provides:
Any agricultural
lessee of a rice or corn land
under PD 27 who deliberately
refuses and/or continues to
refuse to pay rental or
amortization payments when
they fail due for a period of two
years, shall [upon] hearing and
[final] judgment, forfeit the
certificate of land transfer
issued in his favor, if his
landholding is already covered
by such certificate of land
transfer.
Thirdly, tenant Alejandro Moraga aside
from being remiss in paying his rental has allowed
third person to occupy portions of his landholding
without informing the landowners. These to the
mind of the Board are acts inimical to the right and
obligation of the tenant to pursue and protect his
landholding from any trespassers or would be
occupant without the knowledge and consent of the
landowners. In this regard, the Board finds,
defendant Alejandro Moraga to have violated his
obligations as a tenant to warrant
his ejectment therefore.
WHEREFORE, premises considered
judgment is hereby rendered as follows:
xxxx
2. Ordering defendant Alejandro Moraga
and all other persons acting in his behalf to vacate
the premises in question for the peaceful
possession of the plaintiff.[9]
Petitioner, however, insinuated that in the same decision
for ejectment in CA-G.R. SP No. 38445, the Court of Appeals made a
pronouncement that petitioner remains as tenant of the landholding, viz:
Finally, with the finding that the
Emancipation Patent issued to Alejandro Moraga
was void, petitioners status will revert back to being
tenants and thus are liable for the payment of the
corresponding rentals, including the unpaid rentals
which, from the evidence adduced, was from
1990.[10]
Contrary to what petitioner believed, the said portion of the
body of the decision is merely an obiter dictum. In fact,
the dispositive portion of the decision categorically upholds the eviction
of petitioner. If indeed, it was pronounced in the said decision that
petitioner were to remain as tenant, then the dispositive portion of the
same would not have upheld petitioners eviction. It should be
remembered that while the body of a decision, order or resolution might
create some ambiguity regarding which way the courts
reasoning propenderates, it is the dispositive portion thereof that finally
invests rights upon the parties, sets conditions for the exercise of those
rights, and imposes the corresponding duties and obligations. [11]
Since CA-G.R. SP No. 38445 resolved the issue of security of
tenure and ordered petitioners eviction, this Court can no longer
entertain petitioners attempt to re-litigate the same on the ground
of res judicata.
In a zealous attempt to salvage his case for redemption,
petitioner insisted that the late Victoriano Ipapo failed to inform
petitioners deceased father in writing and the DAR of the sale of the land
in question in violation of Section 12 of Republic Act No. 6389, amending
Sections 11 and 12 of Republic Act No. 3844, to wit:
Sec. 12. Lessees Right to
Redemption. In case the landholding is sold to a
third person without the knowledge of the
agricultural lessee, the latter shall have the right to
redeem the same at a reasonable price and
consideration; Provided, that where there are two
or more agricultural lessees, each shall be entitled
to said right of redemption only to [the] extent of the
area actually cultivated by him. The right of
redemption under this Section may be exercised
within one hundred eighty days from notice in
writing which shall be served by the vendee on all
lessees affected and the Department of Agrarian
Reform upon the registration of the sale, and shall
have priority over any other right of legal
37
 redemption. The redemption price shall be the
reasonable price of the land at the time of the sale.
By raising this issue, petitioner is trying to resuscitate the
decision of the Court of Appeals in CA-G.R. SP No. 63895, dated 29
January 2003, which has already attained finality. It must be recalled
that said decision declared that petitioner lost his right to redeem the
property on the grounds of prescription and that petitioners father has
waived his right to redeem said property. Relevant portion of the
decision states:
It must be noted that the purpose of the
written notice required by law is to remove all
uncertainties as to the sale, its terms and its validity,
and to quiet any doubts that the alienation is not
definitive. The law however, does not prescribe any
particular form of notice, nor any distinctive method
for notifying the redemptioner. So long as
the redemptioner is informed in writing of the sale
and the particulars thereof, the period for
redemption will start running. x x x A copy of the
deed of sale, in an authentic form, will satisfy the
requirement of the law and serve the purpose
thereof.
It is worthy to note that the petitioners
have secured a copy of the said Deed of Sale and
attached the same in their Answer dated October
20, 1993 in DARAB Case No. 567-Bul 93. Thus, it
is proper to reckon the period of redemption
on October 20, 1993. The complaint filed on April 6,
1995 is clearly beyond the redemption period of one
hundred eighty (180) days.
an unraised question, i.e., the issue of security of tenure. This actuation
of the DARAB prompted respondents to appeal to the Court of Appeals,
docketed as CA-G.R. SP No. 70051, questioning the DARAB decision
that ordered the heirs of Alejandro Moraga to remain as tenants entitled
to security of tenure.
On the other hand, petitioner appealed the same decision of
the DARAB denying him the right to redeem the property. Petitioners
appeal was docketed as CA-G.R. SP No. 63895.
While the Court of Appeals in CA-G.R. SP No. 70051, limited
itself to the issue presented by petitioner, the contrary happened in CA-
G.R. SP No. 63895, when the Court of Appeals fell into the same pitfall
as the DARAB in fiddling with the issue of security of tenure. This
conduct of the DARAB and the Court of Appeals in CA-G.R. SP No.
63895 cannot be countenanced. First, it goes against the tenet that
courts of justice have no jurisdiction or power to decide a question not in
issue.[14] A judgment that goes outside the issues and purports to
adjudicate something on which the court did not hear the parties, is not
only irregular but also extra-judicial and invalid.[15] This norm does not
only apply to courts but also to quasi-judicial bodies such as the
DARAB.[16] Prescinding from this rule, the DARAB ruling on security of
tenure, which was affirmed by the Court of Appeals in CA-G.R. SP No.
63895, is therefore irrregular and invalid. From this disquisition, it is
readily clear that the decision in CA-G.R. SP No. 63895 is valid only
insofar as it ruled that petitioner can no longer exercise his right to
redeem the said property. Res judicata is not applicable because CA-
G.R. SP No. 63895, in effect, has no ruling on the issue of security of
tenure which CA-G.R. SP No. 70051 could have modified.
Anent petitioners claim of disturbance compensation, suffice
it to state that since this matter is brought up for the first time in this
Petition for Review, this Court cannot take cognizance of the same. The
settled rule is that matters or issues not raised below cannot be raised
before this Court for the first time.[17]

Even assuming that their right to redeem

the property has not prescribed, however, by virtue WHEREFORE, the petition is DENIED. The Decision of the
of the Sinumpaang Salaysay executed by Court of Appeals dated 23 April 2004, and its Resolution dated 11
Alejandro Moraga on November 19, 1979, the latter January 2005, in CA-G.R. SP No. 70051 are AFFIRMED. Costs against
is deemed to have waived his right to redeem the petitioner.
same. x x x.[12]

Said issue on redemption having attained finality, petitioners effort to

modify the same is barred by res judicata.

Petitioner, likewise, assails the 23 April 2004 Decision of the

Sixth Division of the Court of Appeals in CA-G.R. SP No. 70051 as
having effectively nullified the 29 January 2003Decision of the Special
Third Division of the Court of Appeals in CA-G.R. SP No. 63895, thereby
ditching the principle of res judicata. According to petitioner, CA-G.R.
SP No. 63895 affirmed the DARAB decision decreeing, among other
things, that petitioner and his mother shall remain as tenants of the land
in dispute and are entitled to security of tenure. Said ruling was allegedly
reversed by CA-G.R. SP No. 70051 when the latter ruled in this manner:

In fine, the DARAB committed a palpable

error in decreeing that Alejandros heirs shall remain
as tenants (of the landholding) entitled to security of
tenure.[13]

A scrutiny of the genesis of CA-G.R. SP No. 63895 and CA-

G.R. SP No. 70051 is enlightening. As already mentioned, these two
cases originated from a single complaint for redemption filed by
petitioner and his mother before the Provincial Adjudicator
of Malolos, Bulacan on 6 April 1995, docketed as DARAB Case No. 927-
Bul 95. In the pleadings filed by petitioner before the Provincial
Adjudicator, he did not raise the issue of security of tenure. Thus, the
Provincial Adjudicator, in resolving the case confined his decision on the
sole issue of whether petitioner and his mother can redeem the subject
property. He ruled they cannot. When DARAB Case No. 927-Bul 95 was
elevated to the DARAB, security of tenure was also a non-issue in the
pleadings of the parties. However, the DARAB, instead of confining itself
to the sole issue at hand, veered away and ventured into the realm of
38
FELS ENERGY, INC., G.R. No. 168557
Petitioner,
-versus-
THE PROVINCE OF BATANGAS and
THE OFFICE OF THE PROVINCIAL
ASSESSOR OF BATANGAS,
Respondents.
x----------------------------------------------------x
NATIONAL POWER CORPORATION, G.R. No. 170628
Petitioner,
YNARES-SANTIAGO, J.,
- versus - Chairperson,
AUSTRIA-MARTINEZ,
CALLEJO, SR. and
LOCAL BOARD OF ASSESSMENT CHICO-NAZARIO, JJ.
APPEALS OF BATANGAS, LAURO C.
DECISION
CALLEJO, SR., J.:
Before us are two consolidated cases docketed as G.R. No. 168557 and
G.R. No. 170628, which were filed by petitioners FELS Energy, Inc.
(FELS) and National Power Corporation (NPC), respectively. The first is
a petition for review on certiorari assailing the August 25, 2004
Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 67490 and
its Resolution[2]dated June 20, 2005; the second, also a petition for
review on certiorari, challenges the February 9, 2005
Decision[3] and November 23, 2005 Resolution[4] of the CA in CA-G.R.
SP No. 67491. Both petitions were dismissed on the ground of
prescription.
The pertinent facts are as follows:
On January 18, 1993, NPC entered into a lease contract with Polar
Energy, Inc. over 3x30 MW diesel engine power barges moored
at Balayan Bay in Calaca, Batangas. The contract, denominated as an
Energy Conversion Agreement[5] (Agreement), was for a period of five
years. Article 10 reads:
10.1 RESPONSIBILITY. NAPOCOR shall be
responsible for the payment of (a) all taxes, import
duties, fees, charges and other levies imposed by
the National Government of the Republic of the
Philippines or any agency or instrumentality thereof
to which POLAR may be or become subject to or in
relation to the performance of their obligations
under this agreement (other than (i) taxes imposed
or calculated on the basis of the net income
of POLAR and Personal Income Taxes of its
employees and (ii) construction permit fees,
environmental permit fees and other similar fees
and charges) and (b) all real estate taxes and
assessments, rates and other charges in respect of
the Power Barges.[6]
Subsequently, Polar Energy, Inc. assigned its rights under the
Agreement to FELS. The NPC initially opposed the assignment of rights,
citing paragraph 17.2 of Article 17 of the Agreement.
On August 7, 1995, FELS received an assessment of real
property taxes on the power barges from Provincial Assessor Lauro C.
Andaya of Batangas City. The assessed tax, which likewise covered
those due for 1994, amounted to P56,184,088.40 per annum. FELS
referred the matter to NPC, reminding it of its obligation under the
Agreement to pay all real estate taxes. It then gave NPC the full power
and authority to represent it in any conference regarding the real
property assessment of the Provincial Assessor.
In a letter[7] dated September 7, 1995, NPC sought reconsideration of
the Provincial Assessors decision to assess real property taxes on the
power barges. However, the motion was denied on September 22, 1995,
and the Provincial Assessor advised NPC to pay the assessment.[8] This
prompted NPC to file a petition with the Local Board of Assessment
Appeals (LBAA) for the setting aside of the assessment and the
declaration of the barges as non-taxable items; it also prayed that should
LBAA find the barges to be taxable, the Provincial Assessor be directed
to make the necessary corrections.[9]
In its Answer to the petition, the Provincial Assessor averred that the
barges were real property for purposes of taxation under Section 199(c)
of Republic Act (R.A.) No. 7160.
Before the case was decided by the LBAA, NPC filed a
Manifestation, informing the LBAA that the Department of Finance
(DOF) had rendered an opinion[10] dated May 20, 1996, where it is
clearly stated that power barges are not real property subject to real
property assessment.
On August 26, 1996, the LBAA rendered a
Resolution[11] denying the petition. The fallo reads:
WHEREFORE, the Petition is DENIED.
FELS is hereby ordered to pay the real estate tax in
the amount of P56,184,088.40, for the year 1994.
SO ORDERED.[12]
The LBAA ruled that the power plant facilities, while they may be
classified as movable or personal property, are nevertheless considered
real property for taxation purposes because they are installed at a
specific location with a character of permanency. The LBAA also pointed
out that the owner of the bargesFELS, a private corporationis the one
being taxed, not NPC. A mere agreement making NPC responsible for
the payment of all real estate taxes and assessments will not justify the
exemption of FELS; such a privilege can only be granted to NPC and
cannot be extended to FELS. Finally, the LBAA also ruled that the
petition was filed out of time.
Aggrieved, FELS appealed the LBAAs ruling to the Central Board of
Assessment Appeals (CBAA).
On August 28, 1996, the Provincial Treasurer of Batangas City issued a
Notice of Levy and Warrant by Distraint[13] over the power barges,
seeking to collect real property taxes amounting to P232,602,125.91 as
of July 31, 1996. The notice and warrant was officially served to FELS
on November 8, 1996. It then filed a Motion to Lift Levy dated November
14, 1996, praying that the Provincial Assessor be further restrained by
the CBAA from enforcing the disputed assessment during the pendency
of the appeal.
On November 15, 1996, the CBAA issued an Order[14] lifting the levy and
distraint on the properties of FELS in order not to preempt and render
ineffectual, nugatory and illusory any resolution or judgment which the
Board would issue.
Meantime, the NPC filed a Motion for Intervention[15] dated August 7,
1998 in the proceedings before the CBAA. This was approved by the
CBAA in an Order[16] dated September 22, 1998.
During the pendency of the case, both FELS and NPC filed several
motions to admit bond to guarantee the payment of real property taxes
assessed by the Provincial Assessor (in the event that the judgment be
unfavorable to them). The bonds were duly approved by the CBAA.
39
On April 6, 2000, the CBAA rendered a Decision[17] finding the power
barges exempt from real property tax. The dispositive portion reads:
WHEREFORE, the Resolution of the Local Board
of Assessment Appeals of
the Province of Batangas is hereby
reversed. Respondent-appellee Provincial
Assessor of the Province of Batangas is hereby
ordered to drop subject property under ARP/Tax
Declaration No. 018-00958 from the List of Taxable
Properties in the Assessment Roll. The Provincial
Treasurer of Batangas is hereby directed to act
accordingly.
SO ORDERED.[18]
Ruling in favor of FELS and NPC, the CBAA reasoned that the power
barges belong to NPC; since they are actually, directly and exclusively
used by it, the power barges are covered by the exemptions under
Section 234(c) of R.A. No. 7160.[19] As to the other jurisdictional issue,
the CBAA ruled that prescription did not preclude the NPC from pursuing
its claim for tax exemption in accordance with Section 206 of R.A. No.
7160. The Provincial Assessor filed a motion for reconsideration, which
was opposed by FELS and NPC.
In a complete volte face, the CBAA issued a
Resolution[20] on July 31, 2001 reversing its earlier decision. The fallo of
the resolution reads:
WHEREFORE, premises considered, it
is the resolution of this Board that:
(a) The decision of the Board dated 6
April 2000 is hereby reversed.
(b) The petition of FELS, as well as the
intervention of NPC, is dismissed.
(c) The resolution of the Local Board of
Assessment Appeals of Batangas is
hereby affirmed,
(d) The real property tax assessment on
FELS by the Provincial Assessor of
Batangas is likewise hereby affirmed.
SO ORDERED.[21]
FELS and NPC filed separate motions for reconsideration,
which were timely opposed by the Provincial Assessor. The CBAA
denied the said motions in a Resolution[22] dated October 19, 2001.
Dissatisfied, FELS filed a petition for review before the CA
docketed as CA-G.R. SP No. 67490. Meanwhile, NPC filed a separate
petition, docketed as CA-G.R. SP No. 67491.
On January 17, 2002, NPC filed a Manifestation/Motion for
Consolidation in CA-G.R. SP No. 67490 praying for the consolidation of
its petition with CA-G.R. SP No. 67491. In a properties.
Resolution[23] dated February 12, 2002, the appellate court directed NPC
to re-file its motion for consolidation with CA-G.R. SP No. 67491, since
it is the ponente of the latter petition who should resolve the request for
reconsideration.
NPC failed to comply with the aforesaid resolution. On August
25, 2004, the Twelfth Division of the appellate court rendered judgment
in CA-G.R. SP No. 67490 denying the petition on the ground of
prescription. The decretal portion of the decision reads:
WHEREFORE, the petition for review
is DENIED for lack of merit and the assailed
Resolutions dated July 31, 2001 and October 19,
2001 of the Central Board of Assessment Appeals
are AFFIRMED.
SO ORDERED.[24]
On September 20, 2004, FELS timely filed a motion for reconsideration
seeking the reversal of the appellate courts decision in CA-G.R. SP No.
67490.
Thereafter, NPC filed a petition for review dated October 19,
2004 before this Court, docketed as G.R. No. 165113, assailing the
appellate courts decision in CA-G.R. SP No. 67490. The petition was,
however, denied in this Courts Resolution[25] of November 8, 2004, for
NPCs failure to sufficiently show that the CA committed any reversible
error in the challenged decision. NPC filed a motion for reconsideration,
which the Court denied with finality in a Resolution[26] dated January 19,
2005.
Meantime, the appellate court dismissed the petition in CA-G.R. SP No.
67491. It held that the right to question the assessment of the Provincial
Assessor had already prescribed upon the failure of FELS to appeal the
disputed assessment to the LBAA within the period prescribed by law.
Since FELS had lost the right to question the assessment, the right of
the Provincial Government to collect the tax was already absolute.
NPC filed a motion for reconsideration dated March 8, 2005, seeking
reconsideration of the February 5, 2005 ruling of the CA in CA-G.R. SP
No. 67491. The motion was denied in a Resolution[27] dated November
23, 2005.
The motion for reconsideration filed by FELS in CA-G.R. SP No. 67490
had been earlier denied for lack of merit in a Resolution[28] dated June
20, 2005.
On August 3, 2005, FELS filed the petition docketed as
G.R. No. 168557 before this Court, raising the following issues:
A.
Whether power barges, which are floating and
movable, are personal properties and therefore, not
subject to real property tax.
B.
Assuming that the subject power barges are real
properties, whether they are exempt from real
estate tax under Section 234 of the Local
Government Code (LGC).
C.
Assuming arguendo that the subject power barges
are subject to real estate tax, whether or not it
should be NPC which should be made to pay the
same under the law.
D.
Assuming arguendo that the subject power barges
are real properties, whether or not the same is
subject to depreciation just like any other personal
E.
Whether the right of the petitioner to question the
patently null and void real property tax assessment
on the petitioners personal properties is
imprescriptible.[29]
On January 13, 2006, NPC filed its own petition for review
before this Court (G.R. No. 170628), indicating the following errors
committed by the CA:
I
40
 THE COURT OF APPEALS GRAVELY ERRED IN
HOLDING THAT THE APPEAL TO THE LBAA
WAS FILED OUT OF TIME.
II
THE COURT OF APPEALS GRAVELY ERRED IN
NOT HOLDING THAT THE POWER BARGES ARE
NOT SUBJECT TO REAL PROPERTY TAXES.
III
THE COURT OF APPEALS GRAVELY ERRED IN
NOT HOLDING THAT THE ASSESSMENT ON
THE POWER BARGES WAS NOT MADE IN
ACCORDANCE WITH LAW.[30]
Considering that the factual antecedents of both cases are similar, the
Court ordered the consolidation of the two cases in a
Resolution[31] dated March 8, 2006.
In an earlier Resolution dated February 1, 2006, the Court had required
the parties to submit their respective Memoranda within 30 days from
notice. Almost a year passed but the parties had not submitted their
respective memoranda. Considering that taxesthe lifeblood of our
economyare involved in the present controversy, the Court was
prompted to dispense with the said pleadings, with the end view of
advancing the interests of justice and avoiding further delay.
In both petitions, FELS and NPC maintain that the appeal before the
LBAA was not time-barred. FELS argues that when NPC moved to have
the assessment reconsidered on September 7, 1995, the running of the
period to file an appeal with the LBAA was tolled. For its part, NPC posits
that the 60-day period for appealing to the LBAA should be reckoned
from its receipt of the denial of its motion for reconsideration.
Petitioners contentions are bereft of merit.
Section 226 of R.A. No. 7160, otherwise known as the Local
Government Code of 1991, provides:
SECTION 226. Local Board of
Assessment Appeals. Any owner or person
having legal interest in the property who is not
satisfied with the action of the provincial, city or
municipal assessor in the assessment of his
property may, within sixty (60) days from the date
of receipt of the written notice of assessment,
appeal to the Board of Assessment Appeals of the
province or city by filing a petition under oath in the
form prescribed for the purpose, together with
copies of the tax declarations and such affidavits or
documents submitted in support of the appeal.
We note that the notice of assessment which the Provincial Assessor
sent to FELS on August 7, 1995, contained the following statement:
If you are not satisfied with this assessment, you
may, within sixty (60) days from the date of receipt
hereof, appeal to the Board of Assessment
Appeals of the province by filing a petition under
oath on the form prescribed for the purpose,
together with copies of ARP/Tax Declaration and
such affidavits or documents submitted in support
of the appeal.[32]
Instead of appealing to the Board of Assessment Appeals (as
stated in the notice), NPC opted to file a motion for reconsideration of
the Provincial Assessors decision, a remedy not sanctioned by law.
The remedy of appeal to the LBAA is available from an
adverse ruling or action of the provincial, city or municipal assessor in
the assessment of the property. It follows then that the determination
made by the respondent Provincial Assessor with regard to the taxability
of the subject real properties falls within its power to assess properties
for taxation purposes subject to appeal before the LBAA.[33]
We fully agree with the rationalization of the CA in both CA-
G.R. SP No. 67490 and CA-G.R. SP No. 67491. The two divisions of the
appellate court cited the case of Callanta v. Office of the
Ombudsman,[34] where we ruled that under Section 226 of R.A. No
7160,[35] the last action of the local assessor on a particular assessment
shall be the notice of assessment; it is this last action which gives the
owner of the property the right to appeal to the LBAA. The procedure
likewise does not permit the property owner the remedy of filing a motion
for reconsideration before the local assessor. The pertinent holding of
the Court in Callanta is as follows:
x x x [T]he same Code is equally clear
that the aggrieved owners should have brought
their appeals before the LBAA. Unfortunately,
despite the advice to this effect contained in their
respective notices of assessment, the owners
chose to bring their requests for a
review/readjustment before the city assessor, a
remedy not sanctioned by the law. To allow this
procedure would indeed invite corruption in the
system of appraisal and assessment. It
conveniently courts a graft-prone situation where
values of real property may be initially set
unreasonably high, and then subsequently reduced
upon the request of a property owner. In the latter
instance, allusions of a possible covert, illicit trade-
off cannot be avoided, and in fact can conveniently
take place. Such occasion for mischief must be
prevented and excised from our system.[36]
For its part, the appellate court declared in CA-G.R. SP No.
67491:
x x x. The Court announces: Henceforth,
whenever the local assessor sends a notice to the
owner or lawful possessor of real property of its
revised assessed value, the former shall no longer
have any jurisdiction to entertain any request for a
review or readjustment. The appropriate forum
where the aggrieved party may bring his appeal is
the LBAA as provided by law. It follows ineluctably
that the 60-day period for making the appeal to the
LBAA runs without interruption. This is what We
held in SP 67490 and reaffirm today in SP 67491.[37]
To reiterate, if the taxpayer fails to appeal in due course, the
right of
the local government to collect the taxes due with respect to the
taxpayers property becomes absolute upon the expiration of the period
to appeal.[38] It also bears stressing that the taxpayers failure to question
the assessment in the LBAA renders the assessment of the local
assessor final, executory and demandable, thus, precluding the
taxpayer from questioning the correctness of the assessment, or from
invoking any defense that would reopen the question of its liability on the
merits.[39]
In fine, the LBAA acted correctly when it dismissed the
petitioners appeal for having been filed out of time; the CBAA and the
appellate court were likewise correct in affirming the dismissal.
Elementary is the rule that the perfection of an appeal within the period
therefor is both mandatory and jurisdictional, and failure in this regard
renders the decision final and executory.[40]
In the Comment filed by the Provincial Assessor, it is asserted
that the instant petition is barred by res judicata; that the final and
executory judgment in G.R. No. 165113 (where there was a final
determination on the issue of prescription), effectively precludes the
41
claims herein; and that the filing of the instant petition after an adverse
judgment in G.R. No. 165113 constitutes forum shopping.
FELS maintains that the argument of the Provincial Assessor
is completely misplaced since it was not a party to the erroneous petition
which the NPC filed in G.R. No. 165113. It avers that it did not participate
in the aforesaid proceeding, and the Supreme Court never acquired
jurisdiction over it. As to the issue of forum shopping, petitioner claims
that no forum shopping could have been committed since the elements
of litis pendentia or res judicata are not present.
We do not agree.
Res judicata pervades every organized system of
jurisprudence and is founded upon two grounds embodied in various
maxims of common law, namely: (1) public policy and necessity, which
makes it to the interest of the
State that there should be an end to litigation republicae ut sit litium; and
(2) the hardship on the individual of being vexed twice for the same
cause nemo debet bis vexari et eadem causa. A conflicting doctrine
would subject the public peace and quiet to the will and dereliction of
individuals and prefer the regalement of the litigious disposition on the
part of suitors to the preservation of the public tranquility and
happiness.[41] As we ruled in Heirs of Trinidad De Leon Vda. de Roxas
v. Court of Appeals:[42]
x x x An existing final
judgment or decree rendered
upon the merits, without fraud
or collusion, by a court of
competent jurisdiction acting
upon a matter within its
authority is conclusive on the
rights of the parties and their
privies. This ruling holds in all
other actions or suits, in the
same or any other judicial
tribunal of concurrent
jurisdiction, touching on the
points or matters in issue in the
first suit.
xxx
Courts will simply refuse to reopen what
has been decided. They will not allow the same
parties or their privies to litigate anew a question
once it has been considered and decided with
finality. Litigations must end and terminate
sometime and somewhere. The effective and
efficient administration of justice requires that once
a judgment has become final, the prevailing party
should not be deprived of the fruits of the verdict by
subsequent suits on the same issues filed by the
same parties.
This is in accordance with the doctrine
of res judicata which has the following elements: (1)
the former judgment must be final; (2) the court
which rendered it had jurisdiction over the subject
matter and the parties; (3) the judgment must be on
the merits; and (4) there must be between the first
and the second actions, identity of parties, subject
matter and causes of action. The application of
the doctrine of res judicata does not require
absolute identity of parties but merely
substantial identity of parties. There is
substantial identity of parties when there is
community of interest or privity of interest
between a party in the first and a party in the
second case even if the first case did not
implead the latter.[43]
To recall, FELS gave NPC the full power and authority to
represent it in any proceeding regarding real property assessment.
Therefore, when petitioner NPC filed its petition for review docketed as
G.R. No. 165113, it did so not only on its behalf but also on behalf of
FELS. Moreover, the assailed decision in the earlier petition for review
filed in this Court was the decision of the appellate court in CA-G.R. SP
No. 67490, in which FELS was the petitioner. Thus, the decision in G.R.
No. 165116 is binding on petitioner FELS under the principle of privity of
interest. In fine, FELS and NPC are substantially identical parties as to
warrant the application of res judicata. FELSs argument that it is not
bound by the erroneous petition filed by NPC is thus unavailing.
On the issue of forum shopping, we rule for the Provincial
Assessor. Forum shopping exists when, as a result of an adverse
judgment in one forum, a party seeks another and possibly favorable
judgment in another forum other than by appeal or special civil action
or certiorari. There is also forum shopping when a party institutes two or
more actions or proceedings grounded on the same cause, on the
gamble that one or the other court would make a favorable disposition.[44]
Petitioner FELS alleges that there is no forum shopping since
the elements of res judicata are not present in the cases at bar; however,
as already discussed, res judicata may be properly applied herein.
Petitioners engaged in forum shopping when they filed G.R. Nos.
168557 and 170628 after the petition for review in G.R. No. 165116.
Indeed, petitioners went from one court to another trying to get a
favorable decision from one of the tribunals which allowed them to
pursue their cases.
It must be stressed that an important factor in determining the
existence of forum shopping is the vexation caused to the courts and the
parties-litigants by the filing of similar cases to claim substantially the
same reliefs.[45] The rationale against forum shopping is that a party
should not be allowed to pursue simultaneous remedies in two
different fora. Filing multiple petitions or complaints constitutes abuse of
court processes, which tends to degrade the administration of justice,
wreaks havoc upon orderly judicial procedure, and adds to the
congestion of the heavily burdened dockets of the courts.[46]
Thus, there is forum shopping when there exist: (a) identity of
parties, or at least such parties as represent the same interests in both
actions, (b) identity of rights asserted and relief prayed for, the relief
being founded on the same facts, and (c) the identity of the two
preceding particulars is such that any judgment rendered in the pending
case, regardless of which party is successful, would amount to res
judicata in the other.[47]
Having found that the elements of res judicata and forum
shopping are present in the consolidated cases, a discussion of the other
issues is no longer necessary. Nevertheless, for the peace and
contentment of petitioners, we shall shed light on the merits of the case.
As found by the appellate court, the CBAA and LBAA power
barges are real property and are thus subject to real property tax. This
is also the inevitable conclusion, considering that G.R. No. 165113 was
dismissed for failure to sufficiently show any reversible error. Tax
assessments by tax examiners are presumed correct and made in good
faith, with the taxpayer having the burden of proving
otherwise.[48] Besides, factual findings of administrative bodies, which
have acquired expertise in their field, are generally binding and
conclusive upon the Court; we will not assume to interfere with the
sensible exercise of the judgment of men especially trained in appraising
property. Where the judicial mind is left in doubt, it is a sound policy to
leave the assessment undisturbed.[49] We find no reason to depart from
this rule in this case.
In Consolidated Edison Company of New York, Inc., et al. v.
The City of New York, et al.,[50] a power company brought an action to
review property tax assessment. On the citys motion to dismiss, the
Supreme Court of New
York held that the barges on which were mounted gas turbine power
42
plants designated to generate electrical power, the fuel oil barges which
supplied fuel oil to the power plant barges, and the accessory equipment
mounted on the barges were subject to real property taxation.
Moreover, Article 415 (9) of the New Civil Code provides that
[d]ocks and structures which, though floating, are intended by their
nature and object to remain at a fixed place on a river, lake, or coast are
considered immovable property. Thus, power barges are categorized
as immovable property by destination, being in the nature of machinery
and other implements intended by the owner for an industry or work
which may be carried on in a building or on a piece of land and which
tend directly to meet the needs of said industry or work.[51]
Petitioners maintain nevertheless that the power barges are
exempt from real estate tax under Section 234 (c) of R.A. No. 7160
because they are actually, directly and exclusively used by petitioner
NPC, a government- owned and controlled corporation engaged in the
supply, generation, and transmission of electric power.
We affirm the findings of the LBAA and CBAA that the owner
of the taxable properties is petitioner FELS, which in fine, is the entity
being taxed by the local government. As stipulated under Section 2.11,
Article 2 of the Agreement:
OWNERSHIP OF POWER
BARGES. POLAR shall own the Power Barges and
all the fixtures, fittings, machinery and equipment
on the Site used in connection with the Power
Barges which have been supplied by it at its own
cost. POLAR shall operate, manage and maintain
the Power Barges for the purpose of converting
Fuel of NAPOCOR into electricity.[52]
Time and again, the Supreme Court has stated that taxation
is the rule and exemption is the exception.[55] The law does not look with
favor on tax exemptions and the entity that would seek to be thus
privileged must justify it by words too plain to be mistaken and too
categorical to be misinterpreted.[56] Thus, applying the rule of strict
construction of laws granting tax exemptions, and the rule that doubts
should be resolved in favor of provincial corporations, we hold that FELS
is considered a taxable entity.
The mere undertaking of petitioner NPC under Section 10.1
of the Agreement, that it shall be responsible for the payment of all real
estate taxes and assessments, does not justify the exemption. The
privilege granted to petitioner NPC cannot be extended to FELS. The
covenant is between FELS and NPC and does not bind a third person
not privy thereto, in this case, the Province of Batangas.
It must be pointed out that the protracted and circuitous
litigation has seriously resulted in the local governments deprivation of
revenues. The power to tax is an incident of sovereignty and is unlimited
in its magnitude, acknowledging in its very nature no perimeter so that
security against its abuse is to be found only in the responsibility of the
legislature which imposes the tax on the constituency who are to pay for
it.[57] The right of local government units to collect taxes due must always
be upheld to avoid severe tax erosion. This consideration is consistent
with the State policy to guarantee the autonomy of local
governments[58] and the objective of the Local Government Code that
they enjoy genuine and meaningful local autonomy to empower them to
achieve their fullest development as self-reliant communities and make
them effective partners in the attainment of national goals. [59]
In conclusion, we reiterate that the power to tax is the most
potent instrument to raise the needed revenues to finance and support
myriad activities of the local government units for the delivery of basic
services essential to the promotion of the general welfare and the
enhancement of peace, progress, and prosperity of the people.[60]

WHEREFORE, the Petitions are DENIED and the assailed

Decisions and Resolutions AFFIRMED.
It follows then that FELS cannot escape liability from the
payment of realty taxes by invoking its exemption in Section 234 (c) of
R.A. No. 7160, which reads:

SECTION 234. Exemptions from Real

Property Tax. The following are exempted from
payment of the real property tax:

xxx

(c) All machineries and equipment that

are actually, directly and exclusively used
by local water districts and government-
owned or controlled corporations
engaged in the supply and distribution of
water and/or generation and
transmission of electric power; x x x

Indeed, the law states that the machinery must be actually,

directly and exclusively used by the government owned or controlled
corporation; nevertheless, petitioner FELS still cannot find solace in this
provision because Section 5.5, Article 5 of the Agreement provides:

OPERATION. POLAR undertakes that

until the end of the Lease Period, subject to the
supply of the necessary Fuel pursuant to Article 6
and to the other provisions hereof, it will operate
the Power Barges to convert such Fuel into
electricity in accordance with Part A of Article 7.[53]

It is a basic rule that obligations arising from a contract have

the force of law between the parties. Not being contrary to law, morals,
good customs, public order or public policy, the parties to the contract
are bound by its terms and conditions.[54]

43
G.R. No. 167426 January 12, 2009 related to petitioner’s main business. Thus, the union members may be
considered part of the bargaining unit of petitioner’s rank-and-file
employees. However, she held that the petition could not be
CHRIS GARMENTS CORPORATION, petitioner,
entertained except during the 60-day freedom period. She also found
vs.
no reason to split petitioner’s bargaining unit.
HON. PATRICIA A. STO. TOMAS and CHRIS GARMENTS
WORKERS UNION-PTGWO LOCAL CHAPTER No.
832, respondents. On May 16, 2003, the union filed a second petition for certification
election.The Med-Arbiter dismissed the petition on the ground that it
was barred by a prior judgment. On appeal, the Secretary of Labor and
Employment affirmed the decision of the Med-Arbiter.11
QUISUMBING, J.:

On June 4, 2004, the union filed a third petition for certification

Petitioner assails the Resolutions dated February 22, 20051 and March
election.12 The Med-Arbiter dismissed the petition on the grounds that
16, 20052 of the Court of Appeals in CA-G.R. SP No. 88444, which
no employer-employee relationship exists between the parties and that
dismissed its petition for certiorari due to its failure to file a motion for
the case was barred by a prior judgment. On appeal, the Secretary of
reconsideration from the Decision3 of the Secretary of the Department
Labor and Employment granted the petition in a Decision13 dated
of Labor and Employment before filing the petition.
January 18, 2005. Thus:

The relevant facts are as follows:

WHEREFORE, the appeal filed by Chris Garment[s] Workers Union–
PTGWO is hereby GRANTED. The 7 July 2004 Order of Med-Arbiter
Petitioner Chris Garments Corporation is engaged in the manufacture Tranquilino B. Reyes is hereby REVERSED and SET ASIDE.
and export of quality garments and apparel. Accordingly, let the entire records of the case be remanded to the
Regional Office of origin for the immediate conduct of a certification
election, subject to the usual pre-election conference, among the
On February 8, 2002, respondent Chris Garments Workers Union– regular rank-and-file employees of Chris Garments Corporation, with
PTGWO, Local Chapter No. 832, filed a petition for certification
the following choices:
election with the Med-Arbiter. The union sought to represent
petitioner’s rank-and-file employees not covered by its Collective
Bargaining Agreement (CBA) with the Samahan Ng Mga Manggagawa 1. Chris Garments Workers Union – PTGWO
sa Chris Garments Corporation–Solidarity of Union in the Philippines Local Chapter No. 832;
for Empowerment and Reforms (SMCGC-SUPER), the certified
bargaining agent of the rank-and-file employees. The union alleged
2. Samahan ng Manggagawa sa Chris Garments
that it is a legitimate labor organization with a Certificate of Creation of
Corp. – SUPER; and
Local/Chapter No. PTGWO-8324 dated January 31, 2002 issued by the
Bureau of Labor Relations.5
3. No Union.
Petitioner moved to dismiss the petition. It argued that it has an
existing CBA from July 1, 1999 to June 30, 2004 with SMCGC-SUPER Pursuant to Section 13(e), Rule VIII of Department Order No. 40-03,
which bars any petition for certification election prior to the 60-day the employer is hereby directed to submit to the office of origin, within
freedom period. It also contended that the union members are not its ten (10) days from receipt hereof, the certified list of its employees in
regular employees since they are direct employees of qualified and the bargaining unit or when necessary a copy of its payroll covering the
independent contractors.6 same employees for the last three (3) months preceding the issuance
of this Decision.
The union countered that its members are regular employees of
petitioner since: (1) they are engaged in activities necessary and SO DECIDED.14
desirable to its main business although they are called agency
employees; (2) their length of service have spanned an average of four
Petitioner received a copy of the decision on January 25, 2005. On
years; (3) petitioner controlled their work attitude and performance; and
February 4, 2005, petitioner filed a petition for certiorari with the Court
(4) petitioner paid their salaries. The union added that while there is an
of Appeals which was dismissed due to its failure to file a motion for
existing CBA between petitioner and SMCGC-SUPER, there are other
reconsideration of the decision before filing the petition.
rank-and-file employees not covered by the CBA who seek
representation for collective bargaining purposes. It also contended
that the contract bar rule does not apply.7 Incidentally, a certification election was conducted on June 21, 2005
among petitioner’s rank-and-file employees where SMCGC-SUPER
emerged as the winning union. On January 20, 2006, the Med-Arbiter
The Med-Arbiter dismissed the petition. The Med-Arbiter ruled that
certified SMCGC-SUPER as the sole and exclusive bargaining agent
there was no employer-employee relationship between the parties
of all the rank-and-file employees of petitioner.15
since the union itself admitted that its members are agency employees.
The Med-Arbiter also held that even if the union members are
considered direct employees of petitioner, the petition for certification Petitioner now comes before us arguing that:
election will still fail due to the contract bar rule under Article 2328 of
the Labor Code. Hence, a petition could only be filed during the 60-day
freedom period of the CBA or from May 1, 2004 to June 30, 2004. I.
Nevertheless, the Med-Arbiter ruled that the union may avail of the
CBA benefits by paying agency fees to SMCGC-SUPER.9 THE COURT OF APPEALS SERIOUSLY ERRED AND COMMITTED
GRAVE ABUSE OF DISCRETION IN DISMISSING THE PETITION
[FOR CERTIORARI] ON THE SOLE GROUND THAT THE COMPANY
In a Resolution10 dated December 27, 2002, the Secretary of Labor
and Employment affirmed the decision of the Med-Arbiter. She ruled DID NOT FILE A MOTION FOR RECONSIDERATION DESPITE
that petitioner failed to prove that the union members are employees of SECTION 21, RULE VIII OF DEPARTMENT ORDER NO. 43-03, . . .
SERIES OF 2003, [WHICH] PROHIBITS THE FILING OF A MOTION
qualified and independent contractors with substantial capital or
investment and added that petitioner had the right to control the FOR RECONSIDERATION FROM A DECISION OF THE
performance of the work of such employees. She also noted that the SECRETARY OF LABOR.
union members are garment workers who performed activities directly
44
 II.
THE COURT OF APPEALS SERIOUSLY ERRED AND COMMITTED
GRAVE ABUSE OF DISCRETION IN REFUSING TO RESOLVE THE
MERITS OF THE PETITION AS IT DISMISSED THE SAME BY
MERE, ALBEIT, BASELESS TECHNICALITY WHICH ONLY
FRUSTRATED RATHER THAN PROMOTED SUBSTANTIAL
JUSTICE . . .
III.
PUBLIC RESPONDENT SERIOUSLY ERRED AND COMMITTED
GRAVE ABUSE OF DISCRETION IN REVERSING THE DECISION
OF THE MED-ARBITER AND GIVING [DUE] COURSE TO THE
PETITION FOR CERTIFICATION ELECTION FILED BY PRIVATE
RESPONDENT CGWU-PTGWO DESPITE THE ABSENCE OF ANY
EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE
COMPANY AND ITS MEMBERS.
IV.
PUBLIC RESPONDENT SERIOUSLY ERRED AND COMMITTED
GRAVE ABUSE OF DISCRETION IN REVERSING THE FINDINGS
OF THE MED-ARBITER THAT THE PETITION FOR CERTIFICATION
ELECTION WAS BARRED BY RES JUDICATA AND/OR THE
PRINCIPLE OF CONCLUSIVENESS OF JUDGMENT.
V.
PUBLIC RESPONDENT SERIOUSLY ERRED AND COMMITTED
GRAVE ABUSE OF DISCRETION IN NOT DISMISSING OUTRIGHT
THE APPEAL OF PRIVATE RESPONDENT FOR FAILURE TO
SUBMIT A CERTIFICATION AGAINST FORUM SHOPPING.16
The principal issues are: (1) Is a motion for reconsideration necessary
before a party can file a petition for certiorari from the decision of the
Secretary of Labor and Employment? (2) Is the case barred by res
judicata or conclusiveness of judgment? and (3) Is there an employer-
employee relationship between petitioner and the union members?
First. It is settled that the filing of a motion for reconsideration is a
prerequisite to the filing of a special civil action for certiorari to give the
lower court the opportunity to correct itself.17 This rule, however, admits
of exceptions, such as when a motion for reconsideration would be
useless under the circumstances.18
Under Department Order No. 40-03, Series of 2003,19 the decision of
the Secretary of Labor and Employment shall be final and executory
after ten days from receipt thereof by the parties and that it shall not be
subject of a motion for reconsideration.
In this case, the Decision dated January 18, 2005 of the Secretary of
Labor and Employment was received by petitioner on January 25,
2005. It would have become final and executory on February 4, 2005,
the tenth day from petitioner’s receipt of the decision. However,
petitioner filed a petition for certiorari with the Court of Appeals on even
date. Clearly, petitioner availed of the proper remedy since Department
Order No. 40-03 explicitly prohibits the filing of a motion for
reconsideration. Such motion becomes dispensable and not at all
necessary.
Second. The doctrine of res judicata provides that a final judgment or
decree on the merits by a court of competent jurisdiction is conclusive
of the rights of the parties or their privies in all later suits on points and
matters determined in the former suit.20 The elements of res
judicata are: (1) the judgment sought to bar the new action must be
final; (2) the decision must have been rendered by a court having
jurisdiction over the subject matter and the parties; (3) the disposition
of the case must be a judgment on the merits; and (4) there must be as
between the first and second action, identity of parties, subject matter,
and causes of action.21
Res judicata has a dual aspect: first, "bar by prior judgment" which is
provided in Rule 39, Section 47(b)22 of the 1997 Rules of Civil
Procedure and second, "conclusiveness of judgment" which is
provided in Section 47(c)23 of the same Rule.
There is "bar by prior judgment" when, as between the first case where
the judgment was rendered, and the second case that is sought to be
barred, there is identity of parties, subject matter, and causes of
action.24 In this instance, the judgment in the first case constitutes an
absolute bar to the second action. Otherwise put, the judgment or
decree of the court of competent jurisdiction on the merits concludes
the litigation between the parties, as well as their privies, and
constitutes a bar to a new action or suit involving the same cause of
action before the same or any other tribunal.25
On the other hand, the doctrine of "conclusiveness of judgment"
provides that issues actually and directly resolved in a former suit
cannot again be raised in any future case between the same parties
involving a different cause of action. Under this doctrine, identity of
causes of action is not required but merely identity of issues. Otherwise
stated, conclusiveness of judgment bars the relitigation of particular
facts or issues in another litigation between the same parties on a
different claim or cause of action.26
In the instant case, there is no dispute as to the presence of the first
three elements of res judicata. The Resolution dated December 27,
2002 of the Secretary of Labor and Employment on the first petition for
certification election became final and executory. It was rendered on
the merits and the Secretary of Labor and Employment had jurisdiction
over the case. Now, is the fourth element – identity of parties, subject
matter, and causes of action between the first and third petitions for
certification election – present? We hold in the negative.
The Secretary of Labor and Employment dismissed the first petition as
it was filed outside the 60-day freedom period. At that time therefore,
the union has no cause of action since they are not yet legally allowed
to challenge openly and formally the status of SMCGC-SUPER as the
exclusive bargaining representative of the bargaining unit. Such
dismissal, however, has no bearing in the instant case since the third
petition for certification election was filed well within the 60-day
freedom period. Otherwise stated, there is no identity of causes of
action to speak of since in the first petition, the union has no cause of
action while in the third, a cause of action already exists for the union
as they are now legally allowed to challenge the status of SMCGC-
SUPER as exclusive bargaining representative.
Third. The matter of employer-employee relationship has been
resolved with finality by the Secretary of Labor and Employment in the
Resolution dated December 27, 2002. Since petitioner did not appeal
this factual finding, then, it may be considered as the final resolution of
such issue. To reiterate, "conclusiveness of judgment" has the effect of
preclusion of issues.27
WHEREFORE, the instant petition is DENIED for lack of merit.
45
 of the Labor Code while the instant case is for
violation of the SS[S] Law.
SOCIAL SECURITY G.R. No. 167050
COMMISSION, Moreover, the respondents arguments
Petitioner, raising the absence of employer-employee
Present: relationship as a defense already traverse the very
issues of the case at bar, i.e., the petitioners fact of
CORONA, C.J., employment and entitlement to SS[S]
Chairperson coverage. Generally, factual matters should not
VELASCO, JR., weigh in resolving a motion to dismiss when it is
-versus- LEONARDO-DE CASTRO, based on the ground of failure to state a cause of
PERALTA,* and action, but rather, merely the sufficiency or
PEREZ, JJ. insufficienciy of the allegations in the complaint. x x
x. In this respect, it must be observed that the
petitioner very categorically set forth in his Petition,
that he was employed by the respondent(s) from
RIZAL POULTRY and LIVESTOCK 1985 to 1997.[8]
ASSOCIATION, INC., BSD AGRO
INDUSTRIAL DEVELOPMENT A subsequent motion for reconsideration filed by respondents
CORPORATION and BENJAMIN Promulgated: was likewise denied on 11 June 2002. The SSC reiterated that the
SAN DIEGO, principle of res judicata does not apply in this case because of the
Respondents. June 1, 2011 absence of the indispensable element of identity of cause of action.[9]
x ----------------------------------------------------------------------------------------x
DECISION Unfazed, respondents sought recourse before the Court of
Appeals by way of a petition for certiorari. The Court of Appeals
PEREZ, J.: reversed the rulings of the SSC and held that there is a common issue
between the cases before the SSC and in the NLRC; and it is whether
This petition for certiorari challenges the Decision[1] dated 20 there existed an employer-employee relationship between Angeles and
September 2004 and Resolution[2] dated 9 February 2005 of the Court respondents. Thus, the case falls squarely under the principle of res
of Appeals. The instant case stemmed from a petition filed by Alberto judicata, particularly under the rule on conclusiveness of judgment, as
Angeles (Angeles) before the Social Security Commission (SSC) to enunciated in Smith Bell and Co. v. Court of Appeals.[10]
compel respondents Rizal Poultry and Livestock Association, Inc. (Rizal
Poultry) or BSD Agro Industrial Development Corporation (BSD Agro) to The Court of Appeals disposed, thus:
remit to the Social Security System (SSS) all contributions due for and
in his behalf. Respondents countered with a Motion to Dismiss[3] citing WHEREFORE, the petition
rulings of the National Labor Relations Commission (NLRC) and Court is GRANTED. The Order dated February 19, 2000
of Appeals regarding the absence of employer-employee relationship and the Resolution dated June 11, 2002 rendered
between Angeles and the respondents. by public respondent Social Security Commissoin
in SSC Case No. 9-15225-01 are
As a brief backgrounder, Angeles had earlier filed a complaint hereby REVERSED and SET ASIDE and the
for illegal dismissal against BSD Agro and/or its owner, Benjamin San respondent commission is ordered
Diego (San Diego). The Labor Arbiter initially found that Angeles was an to DISMISS Social Security Commission Case No.
employee and that he was illegally dismissed. On appeal, however, the 9-15225-01.[11]
NLRC reversed the Labor Arbiters Decision and held that no employer-
employee relationship existed between Angeles and respondents. The After the denial of their motion for reconsideration in a
ruling was anchored on the finding that the duties performed by Angeles, Resolution[12] dated 9 February 2005, petitioner filed the instant petition.
such as carpentry, plumbing, painting and electrical works, were not
independent and integral steps in the essential operations of the For our consideration are the issues raised by petitioner, to
company, which is engaged in the poultry business.[4] Angeles elevated wit:
the case to the Court of Appeals via petition for certiorari. The appellate
court affirmed the NLRC ruling and upheld the absence of employer- WHETHER OR NOT THE DECISION OF THE
employee relationship.[5] Angeles moved for reconsideration but it was NLRC AND THE COURT OF APPEALS, FINDING
denied by the Court of Appeals.[6] No further appeal was undertaken, NO EMPLOYER-EMPLOYEE RELATIONSHIP,
hence, an entry of judgment was made on 26 May 2001.[7] CONSTITUTES RES JUDICATA AS A RULE ON
CONCLUSIVENESS OF JUDGMENT AS TO
At any rate, the SSC did not take into consideration the PRECLUDE THE RELITIGATION OF THE ISSUE
decision of the NLRC. It denied respondents motion to dismiss in an OF EMPLOYER-EMPLOYEE RELATIONSHIP IN
Order dated 19 February 2002. The SSC ratiocinated, thus: A SUBSEQUENT CASE FILED BEFORE THE
PETITIONER.
Decisions of the NLRC and other
tribunals on the issue of existence of employer- WHETHER OR NOT RESPONDENT COURT OF
employee relationship between parties are not APPEALS MAY ORDER OUTRIGHT THE
binding on the Commission. At most, such finding DISMISSAL OF THE SSC CASE IN THE
has only a persuasive effect and does not CERTIORARI PROCEEDINGS BEFORE IT.[13]
constitute res judicata as a ground for dismissal of SSC maintains that the prior judgment rendered by the NLRC
an action pending before Us. While it is true that the and Court of Appeals, that no employer-employee relationship existed
parties before the NLRC and in this case are the between the parties, does not have the force of res judicata by prior
same, the issues and subject matter are entirely judgment or as a rule on the conclusiveness of judgment. It contends
different. The labor case is for illegal dismissal with that the labor dispute and the SSC claim do not proceed from the same
demand for backwages and other monetary claims, cause of action in that the action before SSC is for non-remittance of
while the present action is for remittance of unpaid SSS contributions while the NLRC case was for illegal dismissal. The
SS[S] contributions.In other words, although in both element of identity of parties is likewise unavailing in this case, according
suits the respondents invoke lack of employer- to SSC. Aside from SSS intervening, another employer, Rizal Poultry,
employee relationship, the same does not proceed was added as respondent in the case lodged before the SSC. There is
from identical causes of action as one is for violation no showing that BSD Agro and Rizal Poultry refer to the same juridical
46
entity. Thus, the finding of absence of employer-employee relationship
between BSD Agro and Angeles could not automatically extend to Rizal
Poultry.Consequently, SSC assails the order of dismissal of the case
lodged before it.
SSC also claims that the evidence submitted in the SSC case
is different from that adduced in the NLRC case. Rather than ordering
the dismissal of the SSC case, the Court of Appeals should have allowed
SSC to resolve the case on its merits by applying the Social Security Act
of 1997.
Respondents assert that the findings of the NLRC are
conclusive upon the SSC under the principle of res judicata and in line
with the ruling in Smith Bell v. Court of Appeals.Respondents argue that
there is substantially an identity of parties in the NLRC and SSC cases
because Angeles himself, in his Petition, treated Rizal Poultry, BSD Agro
and San Diego as one and the same entity.
Respondents oppose the view proffered by SSC that the
evidence to prove the existence of employer-employee relationship
obtaining before the NLRC and SSS are entirely different. Respondents
opine that the definition of an employee always proceeds from the
existence of an employer-employee relationship.
In essence, the main issue to be resolved is whether res
judicata applies so as to preclude the SSC from resolving anew the
existence of employer-employee relationship, which issue was
previously determined in the NLRC case.
Res judicata embraces two concepts: (1) bar by prior
judgment as enunciated in Rule 39, Section 47(b) of the Rules of Civil
Procedure; and (2) conclusiveness of judgment in Rule 39, Section
47(c).[14]
There is bar by prior judgment when, as between the first case
where the judgment was rendered and the second case that is sought
to be barred, there is identity of parties, subject matter, and causes of
action. In this instance, the judgment in the first case constitutes an
absolute bar to the second action.[15]
But where there is identity of parties in the first and second
cases, but no identity of causes of action, the first judgment is conclusive
only as to those matters actually and directly controverted and
determined and not as to matters merely involved therein. This is the
concept of res judicata known as conclusiveness of judgment. Stated
differently, any right, fact or matter in issue directly adjudicated or
necessarily involved in the determination of an action before a
competent court in which judgment is rendered on the merits is
conclusively settled by the judgment therein and cannot again be
litigated between the parties and their privies, whether or not the claim,
demand, purpose, or subject matter of the two actions is the same.[16]
Thus, if a particular point or question is in issue in the second
action, and the judgment will depend on the determination of that
particular point or question, a former judgment between the same parties
or their privies will be final and conclusive in the second if that same
point or question was in issue and adjudicated in the first suit. Identity of
cause of action is not required but merely identity of issue.[17]
The elements of res judicata are: (1) the judgment sought to
bar the new action must be final; (2) the decision must have been
rendered by a court having jurisdiction over the subject matter and the
parties; (3) the disposition of the case must be a judgment on the merits;
and (4) there must be as between the first and second action, identity of
parties, subject matter, and causes of action. Should identity of parties,
subject matter, and causes of action be shown in the two cases, then res
judicata in its aspect as a bar by prior judgment would apply. If as
between the two cases, only identity of parties can be shown, but not
identical causes of action, then res judicata as conclusiveness of
judgment applies.[18]
Verily, the principle of res judicata in the mode of
conclusiveness of judgment applies in this case. The first element is
present in this case. The NLRC ruling was affirmed by the Court of
Appeals. It was a judicial affirmation through a decision duly
promulgated and rendered final and executory when no appeal was
undertaken within the reglementary period. The jurisdiction of the NLRC,
which is a quasi-judicial body, was undisputed. Neither can the
jurisdiction of the Court of Appeals over the NLRC decision be the
subject of a dispute. The NLRC case was clearly decided on its merits;
likewise on the merits was the affirmance of the NLRC by the Court of
Appeals.
With respect to the fourth element of identity of parties, we
hold that there is substantial compliance.
The parties in SSC and NLRC cases are not strictly
identical. Rizal Poultry was impleaded as additional respondent in the
SSC case. Jurisprudence however does not dictate absolute identity but
only substantial identity.[19] There is substantial identity of parties when
there is a community of interest between a party in the first case and a
party in the second case, even if the latter was not impleaded in the first
case.[20]
BSD Agro, Rizal Poultry and San Diego were litigating under
one and the same entity both before the NLRC and the SSC. Although
Rizal Poultry is not a party in the NLRC case, there are numerous
indications that all the while, Rizal Poultry was also an employer of
Angeles together with BSD Agro and San Diego. Angeles admitted
before the NLRC that he was employed by BSD Agro and San Diego
from 1985 until 1997.[21] He made a similar claim in his Petition before
the SSC including as employer Rizal Poultry as respondent.[22] Angeles
presented as evidence before the SSC his Identification Card and a Job
Order to prove his employment in Rizal Poultry. He clarified in his
Opposition to the Motion to Dismiss[23] filed before SSC that he failed to
adduce these as evidence before the NLRC even if it would have proven
his employment with BSD Agro. Most significantly, the three
respondents, BSD Agro, Rizal Poultry and San Diego, litigated as one
entity before the SSC. They were represented by one counsel and they
submitted their pleadings as such one entity. Certainly, and at the very
least, a community of interest exists among them. We therefore rule that
there is substantial if not actual identity of parties both in the NLRC and
SSC cases.
As previously stated, an identity in the cause of action need not obtain
in order to apply res judicata by conclusiveness of judgment. An identity
of issues would suffice.
The remittance of SSS contributions is mandated by Section
22(a) of the Social Security Act of 1997, viz:
SEC. 22. Remittance of Contributions.
- (a) The contributions imposed in the preceding
Section shall be remitted to the SSS within the first
ten (10) days of each calendar month following the
month for which they are applicable or within such
time as the Commission may prescribe. Every
employer required to deduct and to remit such
contributions shall be liable for their payment and if
any contribution is not paid to the SSS as herein
prescribed, he shall pay besides the contribution a
penalty thereon of three percent (3%) per month
from the date the contribution falls due until paid. x
x x.
The mandatory coverage under the Social Security Act is
premised on the existence of an employer-employee
relationship.[24] This is evident from Section 9(a) which provides:
SEC. 9. Coverage. - (a) Coverage in the
SSS shall be compulsory upon all employees not
over sixty (60) years of age and their
employers: Provided, That in the case of domestic
helpers, their monthly income shall not be less than
One thousand pesos (P1,000.00) a month x x x.
Section 8(d) of the same law defines an employee as any
person who performs services for an employer in which either or both
mental or physical efforts are used and who receives compensation for
such services, where there is an employer-employee relationship. The
47
illegal dismissal case before the NLRC involved an inquiry into the
existence or non-existence of an employer-employee relationship. The
very same inquiry is needed in the SSC case. And there was no
indication therein that there is an essential conceptual difference
between the definition of employee under the Labor Code and the Social
Security Act.
In the instant case, therefore, res judicata in the concept of
conclusiveness of judgment applies. The judgment in the NLRC case
pertaining to a finding of an absence of employer-employee relationship
between Angeles and respondents is conclusive on the SSC case.
A case in point is Smith Bell and Co. v. Court of Appeals[25] which,
contrary to SSC, is apt and proper reference. Smith Bell availed of the
services of private respondents to transport cargoes from the pier to the
company's warehouse. Cases were filed against Smith Bell, one for
illegal dismissal before the NLRC and the other one with the SSC, to
direct Smith Bell to report all private respondents to the SSS for
coverage. While the SSC case was pending before the Court of
Appeals, Smith Bell presented the resolution of the Supreme Court in
G.R. No. L-44620, which affirmed the NLRC, Secretary of Labor, and
Court of Appeals finding that no employer-employee relationship existed
between the parties, to constitute as bar to the SSC case. We granted
the petition of Smith Bell and ordered the dismissal of the case. We held
that the controversy is squarely covered by the principle of res judicata,
particularly under the rule on conclusiveness of judgment. Therefore, the
judgment in G.R. No. L-44620 bars the SSC case, as the relief sought
in the latter case is inextricably related to the ruling in G.R. No. L-44620
to the effect that private respondents are not employees of Smith Bell.
27, 2000 which has long attained finality. Our
affirmation of the NLRC decision of May 18, 1999
was an adjudication on the merits of the case.
Considering the foregoing
circumstances, the instant case falls squarely under
the umbrage of res judicata, particularly, under the
rule on conclusiveness of judgment. Following this
rule, as enunciated in Smith Bell and Co. and
Carriaga, Jr. cases, We hold that the relief sought
in SSC Case No. 9-15225-01 is inextricably related
to Our ruling in CA GR SP No. 55383 to the effect
that private respondent was not an employee of
petitioners.[28]
The NLRC decision on the absence of employer-employee
relationship being binding in the SSC case, we affirm the dismissal by
Court of Appeals of the SSC case.
WHEREFORE, premises considered, the petition is DENIED.
The Court of Appeals Decision dated 20 September 2004, as well as its
Resolution dated 9 February 2005, isAFFIRMED.

The fairly recent case of Co v. People,[26] likewise applies to the present

case. An information was filed against Co by private respondent
spouses who claim to be employees of the former for violation of the
Social Security Act, specifically for non-remittance of SSS
contributions. Earlier, respondent spouses had filed a labor case for
illegal dismissal. The NLRC finally ruled that there was no employer-
employee relationship between her and respondent spouses. Co then
filed a motion to quash the information, arguing that the facts alleged in
the Information did not constitute an offense because respondent
spouses were not her employees. In support of her motion, she cited the
NLRC ruling. This Court applied Smith Bell and declared that the final
and executory NLRC decision to the effect that respondent spouses
were not the employees of petitioner is a ruling binding in the case for
violation of the Social Security Act. The Court further stated that the
doctrine of conclusiveness of judgment also applies in criminal cases. [27]

Applying the rule on res judicata by conclusiveness of

judgment in conjunction with the aforecited cases, the Court of Appeals
aptly ruled, thus:

In SSC Case No. 9-15225-01, private

respondent Angeles is seeking to compel herein
petitioners to remit to the Social Security System
(SSS) all contributions due for and in his behalf,
whereas in NLRC NCR CA 018066-99 (NLRC RAB-
IV-5-9028-97 RI) private respondent prayed for the
declaration of his dismissal illegal. In SSC No. 9-
15225-01, private respondent, in seeking to enforce
his alleged right to compulsory SSS coverage,
alleged that he had been an employee of
petitioners; whereas to support his position in the
labor case that he was illegally dismissed by
petitioners BSD Agro and/or Benjamin San Diego,
he asserted that there was an employer-employee
relationship existing between him and petitioners at
the time of his dismissal in 1997. Simply stated, the
issue common to both cases is whether there
existed an employer-employee relationship
between private respondent and petitioners at the
time of the acts complaint of were committed both
in SSC Case No. 9-15225-01 and NLRC NCR CA
018066-99 (NLRC RAB-IV-5-9028-977-RI).

The issue of employer-employee

relationship was laid to rest in CA GR. SP. No.
55383, through this Courts Decision dated October
48
G.R. No. 217930
SPOUSES JORGE NAVARRA and CARMELITA
NAVARRA, Petitioners,
vs.
YOLANDA LIONGSON, Respondent.
DECISION
MENDOZA, J:
This is a petition for review on certiorari under Rule 45 of the Rules of
Court assailing the August 28, 2014 Amended Decision 1 and the April
16, 2015 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No.
105568, which reversed its December 8, 2011 Decision3 and recalled
and set aside the entry of judgment issued on January 6, 2012.
The Antecedents:
On September 23, 1993, Jose Liongson (Jose), the deceased husband
of respondent Yolanda Liongson (Yolanda), filed a complaint for
damages based on malicious prosecution against spouses Jorge and
Carmelita Navarra (Spouses Navarra) and spouses Ruben and
Cresencia Bernardo (Spouses Bernardo) [collectively referred as
defendant spouses], before the Regional Trial Court, Branch 255, Las
Piñas City (RTC).
After the presentation and formal offer of their respective evidence, the
parties were required to file their respective memoranda.
On January 4, 2001, Atty. Salvador B. Aguas (Atty. Aguas), counsel of
Jose, filed the Motion for Time to Submit Motion for Substitution of
Plaintiff with Motion For Suspension/Commencement of Counting of
Period in Filing Pleadings4 informing the RTC of the death of Jose and
praying for time to submit a motion for substitution pending receipt of
the death certificate.
On May 2, 2001, a Decision5 was rendered in favor of Jose ordering
defendant spouses to pay P500,000.00 for moral damages;
P200,000.00 for exemplary damages; P20,000.00 for reimbursement
of expenses; P35,000.00 for substantial number of appearance,
P50,000.00 for attorney’s fees; and the costs of suit.
On July 13, 2001, defendant spouses filed their Motion for Declaration
of Nullity of the Decision and/or Notice of Appeal6 based on the
absence of a valid substitution of Jose.
Consequently, Atty. Aguas filed the Motion for Substitution,7 dated July
30, 2001, praying that Jose be substituted by his surviving wife,
Yolanda.
In its Order,8 dated May 13, 2002, the RTC denied the motion for
declaration of nullity of the May 2, 2001 decision. Defendant spouses
then elevated the matter before the CA, docketed as CA-G.R. CV No.
74988. In a Resolution[[,9]] dated July 30, 2004, the CA dismissed the
petition for want of appellant’s brief. On August 30, 2004, an entry of
judgment10 was issued.
Thereafter, Atty. Aguas filed a motion for execution,11 but it was
opposed by defendant spouses on the ground that no valid substitution
had been made, and that the continued appearance of Atty. Aguas
was ultra vires.12
In the Order,13 dated October 28, 2005, the motion for execution was
deemed withdrawn upon motion of Atty. Aguas.
On November 20, 2005, Atty. Aguas filed a pleading denominated
as Motions to Resolve Motion for Substitution of Parties, dated July 31,
2001 or Considered it Deemed Admitted, and Thereafter Issue Writ of
Execution of the Judgment, dated May 2, 2001, in the name of Yolanda
Liongson as Substituting Party for Plaintiff Jose Liongson.14In the said
motion, it was prayed that Yolanda be allowed to substitute her
deceased husband and that a writ of execution be issued in her favor.
Attached to the motion was a copy of the death certificate15 of Jose
indicating that the latter died on November 28, 2000.
In the Order,16 dated March 17, 2006, the RTC denied the motion to
resolve the motion for substitution of parties and the motion for
issuance of a writ of execution for lack of merit.
In the meantime, Yolanda filed a petition for issuance of letters of
administration of the estate of Jose, her deceased husband, before the
Regional Trial Court, Branch 274, Parañaque City. In the December
29, 2006 Order, the Letter of Administration was issued appointing
Yolanda as administratix of the estate of Jose.
Thus, acting as the administratix of the estate of Jose, Yolanda filed a
motion for execution of the May 2, 2001 decision.[[ 17]] It was,
however, denied in an Order,18 dated September 14, 2007, on the
ground that no proper substitution had been made yet.
Unperturbed, Yolanda, thru her new counsel, Atty. Bonifacio G.
Caboboy (Atty. Caboboy), filed her Motion to Substitute the Plaintiff
Jose Liongson19 which was finally granted by the RTC in the
Order,20 dated January 25, 2008.
Defendant spouses then filed a motion for reconsideration of the
January 25, 2008 Order.21 On May 22, 2008, the RTC denied the said
motion.22
Defendant spouses then filed a petition for certiorari before the CA,
docketed as CA-G.R. SP No. 104667, assailing the January 25, 2008
and May 22, 2008 orders of the RTC. They insisted that the issue of
substitution had been laid to rest by the RTC on three (3) occasions
and Yolanda did not question the propriety of its denial. Hence, she
was forever barred from effecting the substitution.
Meanwhile, Yolanda filed her Motion for Execution of
Judgment23 which was granted by the RTC in its Order,24 dated July
25, 2008. On August 1, 2008, a writ of execution25 was issued and the
Notice to Pay,26 dated August 5, 2008, was served upon defendant
spouses. The latter then filed a motion to recall or hold in abeyance the
implementation of the writ of execution and the sheriff’s notice to pay.
Without waiting for the RTC to rule on the said motion, defendant
spouses filed another petition for certiorari under Rule 65 of the Rules
of Court before the CA, docketed as CA-G.R. SP No. 105568, this time
questioning the July 25, 2008 Order and the August 1, 2008 Writ of
Execution issued by the RTC. Defendant spouses insisted that the
RTC gravely abused its discretion when it allowed the substitution and
then issued the writ of execution.
In its January 16, 2009 Order,27 the RTC denied the motion to recall or
hold in abeyance the implementation of the August 1, 2008 writ of
execution and the August 5, 2008 sheriff’s notice to pay for lack of
merit. Thereafter, the notice of garnishment and the notice of levy were
issued. Spouses Navarra’s property, covered by TCT No. 103473, was
levied and subsequently sold in a public auction pursuant to the writ of
execution.28
Meanwhile, on October 28, 2009, the CA rendered a Decision,29 in CA-
G.R. SP No. 104667, dismissing the petition for certiorari and declaring
the substitution of plaintiff in order. The CA held that the rule on
substitution was not a matter of jurisdiction but a requirement of due
process; and that considering that both parties had already completed
the presentation of their evidence in chief before Jose died, neither of
49
them was denied due process of law. Thus, the CA stated that the
belated substitution of Jose as plaintiff to the case did not affect the
validity of the final and executory judgment.
On December 8, 2011, a decision30 was rendered in CA-G.R. SP No.
105568, in favor of defendant spouses. The CA reversed and set
aside the questioned RTC order granting the motion for execution and
the issuance of the writ of execution. The CA held that the complaint
for damages, arising from malicious prosecution filed by Jose against
defendant spouses was a purely personal action that did not survive
upon his death; and because the action was deemed abated upon his
death, the RTC was found to have gravely abused its discretion when it
allowed the substitution of Jose and issued the writ of execution. The
CA further stated that upon the death of Jose, the RTC lost jurisdiction
over the case and the decision rendered therein was a void judgment;
hence, all acts performed pursuant thereto and all claims emanating
therefrom had no legal effect.
On January 6, 2012, the December 8, 2011 decision of the CA in CAG.
R. SP No. 105568 became final and executory and the entry of
judgment31 was issued.
On December 16, 2013, almost two years later, Yolanda filed her
Urgent Omnibus Motion 32 praying for the recall/lifting of the entry of
judgment and for the admission of the attached motion for
reconsideration. Yolanda contended that she was totally unaware of
this petition for certiorari filed before the CA and docketed as CA-G.R.
SP No. 105568; that although notices were sent to her counsel, Atty.
Caboboy, the latter did not inform or furnish her with copies of the
notices and the petition; that Atty. Caboboy did not file any comment
on the petition or a motion for reconsideration; and that Atty.
Caboboy’s gross negligence and mistake should not bind her because
the said negligence and mistake would amount to deprivation of her
property without due process of law.
On August 28, 2014, the CA promulgated an amended decision in CA-
G.R. SP No. 105568. While the CA took note that no comment was
filed by defendant spouses despite notice, it granted the omnibus
motion and the motion for reconsideration filed by Yolanda. The
appellate court recalled and set aside the entry of judgment and
reversed its December 8, 2011 decision in the interest of substantial
justice. The CA discovered that the appellate court rendered two
conflicting decisions in CA-G.R. SP No. 104667 and CA-G.R. SP No.
105568. In CA-G.R. SP No. 104667, earlier filed by defendant
spouses, the appellate court arrived at a decision allowing the
substitution of Jose. The same issue of substitution was debunked in
the December 8, 2011 CA decision in CA-G.R. SP No. 105568.
In its amended decision, the CA did not apply the general rule that the
negligence of counsel would bind the client so as not to deprive
Yolanda of her right to due process of law. On the merits, the CA ruled
that the action filed by Jose before the RTC was not extinguished upon
his death as it was one for recovery of damages for injury to his person
caused by defendant spouses’ tortuous conduct of maliciously filing an
unfounded suit.
Spouses Navarra (petitioners) filed their separate motions for
reconsideration, but both were denied by the CA in a
Resolution,33 dated April 16, 2015.
Hence, this petition anchored on the following –
GROUNDS FOR THE PETITION
THE COURT OF APPEALS DECIDED THE INSTANT CASE IN A
WAY NOT IN ACCORD WITH LAW AND WITH THE APPLICABLE
DECISIONS OF THE SUPREME COURT.
A. THE COURT OF APPEALS BREACHED THE
WELLSETTLED RULE THAT A FINAL AND EXECUTORY
JUDGMENT MAY NO LONGER BE MODIFIED IN ANY
RESPECT, EVEN IF THE MODIFICATION IS MEANT TO
CORRECT WHAT IS PERCEIVED TO BE AN
ERRONEOUS CONCLUSION OF LAW OR FACT.
B. THE COURT OF APPEALS ERRED WHEN IT
AMENDED A FINAL AND EXECUTORY DECISION UPON
PRIVATE RESPONDENT’S MERE MOTION FOR
RECONSIDERATION.
C. THE COURT OF APPEALS LEGALLY ERRED IN
EXCEPTING THE INSTANT CASE FROM THE RULE
THAT THE MISTAKE OR NEGLIGENCE OF COUNSEL
BINDS THE CLIENT.
D. AT ALL EVENTS, THE COURT OF APPEALS
LEGALLY ERRED IN DISMISSING THE PETITION IN CA-
G.R. SP NO.105568.[[34]]
Petitioners argue that it is beyond the power of the CA to amend its
original decision in this case, dated December 8, 2011, for it violates
the principle of finality of judgment and its immutability. They point out
that the said CA decision had acquired finality, hence, it could no
longer be modified in any respect even if the modification was meant to
correct erroneous conclusions of fact or law, or it would be made by
the court that rendered it or by the highest court of the land.
Petitioners also aver that there was no conflict in the decisions
rendered by the CA in CA-G.R. SP No. 104667 and in the present case
as the two cases involved different issues. The former case ruled on
the validity of the January 25, 2008 Order of the RTC which granted
the substitution of Jose by Yolanda, while the present case questioned
the July 25, 2008 Order of the RTC which granted the motion
for execution of judgment filed by Yolanda.
Finally, petitioners assert that the CA erred when it granted the motion
for reconsideration filed by Yolanda after almost two years from the
time the decision was rendered. They point out that Yolanda did not
even indicate in
her motion for reconsideration the exact date of her receipt of the copy
of the December 8, 2011 decision and that it could not be presumed
that she learned of it only two (2) years after its issuance. They
contend that the respondent was negligent because she waited for two
long years before she filed a motion for reconsideration. They added
that she should have made efforts to ascertain the status of the case
considering that she was appointed administratix of the estate of Jose.
Respondent Yolanda counters that the CA was correct when it
reversed and set aside its December 8, 2011 decision and dismissed
the petition for certiorari as the issues therein had already been laid to
rest in the October 28, 2009 CA decision in CA- G.R. SP No. 104667.
She argues that because the petitions in both CA- G.R. SP No. 104667
and CA- G.R. SP No. 105568, involved the same issues and parties
under similar factual and legal settings, the decision rendered in the
first case became final and could no longer be changed, revised or
reversed.
All the arguments by both parties boil down to the lone issue of
whether or not the CA erred and violated the principle of immunity of
judgment when it amended its December 8, 2011 decision.
The Court’s Ruling
The petition is not meritorious.
Well-settled is the rule that a judgment that has acquired finality
"becomes immutable and unalterable, and may no longer be modified
in any respect, even if the modification is meant to correct erroneous
50
conclusions of fact and law, and whether it be made by the court that
rendered it or by the Highest Court of the land."35 The rationale of this
doctrine is to avoid delay in the administration of justice and in order to
put an end to judicial controversies. In the case of Manotok Realty, Inc.
v. CLT Realty Development Corp.,36 the Court explained the principle
of immunity of judgment in this wise:
The doctrine of finality of judgment is grounded on fundamental
considerations of public policy and sound practice,
and that, at the risk of occasional errors, the judgments or orders of
courts must become final at some definite time fixed by law; otherwise,
there would be no end to litigations, thus setting to naught the main
role of courts of justice which is to assist in the enforcement of the rule
of law and the maintenance of peace and order by settling justiciable
controversies with finality.37
Nonetheless, this doctrine may be relaxed in order to serve substantial
justice in case compelling circumstances that clearly warrant the
exercise of the Court’s equity jurisdiction are extant. 38 Thus, like any
other rule, it has exceptions, such as: (1) the correction of clerical
errors; (2) the so-called nunc pro tunc entries which cause no prejudice
to any party; (3) void judgments; and (4) whenever circumstances
transpire after the finality of the decision rendering its execution unjust
and inequitable.39 After all, the rules of procedure intend to promote the
ends of justice, thus, their strict and rigid application must always be
eschewed when it would subvert its primary objective. 40
The issue posed before the Court is not of first impression. It involves
three conflicting final and executory judgments rendered by the RTC
and the CA. The first is the May 2, 2001 RTC decision which granted
the complaint
for damages. The second is the October 28, 2009 CA decision in CA-
G.R. SP No. 104667 which granted the motion for substitution and the
motion for execution. The third, which is obviously in conflict with the
first and second judgment, is the December 8, 2011 CA decision in
CA-G.R. SP No. 105568 which not only reversed and set aside the
motion for execution but also declared the May 2, 2001 RTC decision a
void judgment.
Where a certain case comprises two or more conflicting judgments
which are final and executory, the Court, in the case of Collantes v.
Court of Appeals41 (Collantes), offered three (3) options in resolving the
same. First, the court may opt to require the parties to assert their
claims anew; second, to determine which judgment came first; and
third, to determine which of the judgments had been rendered by a
court of last resort.
In the case of Heirs of Maura So v. Obliosco,42 the Court stated that it
was more equitable to apply the second and third options mentioned
in Collantes. It, thus, sustained the earlier decisions over the current
ones, as they already had vested rights over the winning party, and
accorded more respect to the decisions of this Court than those made
by the lower courts.
The Court, in Government Service Insurance System v. Group
Management Corporation,43 also resorted to the second and third
options and affirmed the finality of the earlier decisions rendered by the
Court. The Court held that:
In Collantes, this Court applied the first option and resolved the
conflicting issues anew. However, resorting to the first solution in the
case at bar would entail disregarding not only the final and executory
decisions of the Lapu-Lapu RTC and the Manila RTC, but also the final
and executory decisions of the Court of Appeals and this Court.
Moreover, it would negate two decades worth of litigating. Thus, we
find it more equitable and practicable to apply
the second and third options consequently maintaining the finality of
one of the conflicting judgments. The primary criterion under the
second option is the time when the decision was rendered and became
final and executory, such that earlier decisions should prevail over the
current ones since final and executory decisions vest rights in the
winning party. In the third solution, the main criterion is the
determination of which court or tribunal rendered the decision.
Decisions of this Court should be accorded more respect than those
made by the lower courts.44
Guided by these jurisprudence, the Court agrees with the CA that it
would be more equitable to make use of the second option mentioned
in Collantes and sustain the finality of the earlier decisions rendered by
the RTC and the CA in CA-G.R. SP No. 104667. To recall, the RTC
decision in the complaint for damages was promulgated as early as
May 2, 2001 and became final and executory on August 30,
2004.45 The only reason why the said decision was not immediately
executed was the petitioners’ insistence on the improper substitution of
plaintiff. This issue, however, was laid to rest on October 8, 2009 by
the CA when it rendered its decision in CA-G.R. SP
No. 104667. The CA declared that the decision and the proceedings in
the said case were not rendered nugatory notwithstanding the belated
compliance with the rules on substitution as none of the parties was
denied
due process. The appellate court further stated that the rule on the
substitution by heirs was not a matter of jurisdiction, but a requirement
of due process. It follows therefore, that when due process is not
violated as when the right of the representative or heir is recognized
and protected, noncompliance or belated formal compliance with the
rules cannot affect the validity of a promulgated decision. 46 Moreover,
the Court notes that petitioners did not question the propriety of the
May 2, 2001 decision in their petition in CA-G.R. SP No. 104667 but
even admitted the finality and executory nature of the said decision and
their only concern was how the said decision would be executed
without a valid substitution of the plaintiff.
Clearly, the October 28, 2009 decision of the CA in CA-G.R. SP No.
104667 constituted res judicata with respect to the latter case in CA-
G.R. SP No. 105568.1âwphi1 "Res judicata is defined as ‘a matter
adjudged; a thing judicially acted upon or decided; a thing or matter
settled by judgment.’47" Based on this principle, a final judgment or
order on the merits, rendered by a competent court on any matter
within its jurisdiction, "is conclusive in a subsequent case between the
same parties and their successor-in-interest by title subsequent to the
commencement of the action or special proceeding, litigating for the
same thing and under the same title and in the same
capacity."48 Simply put, "a final judgment on the merits rendered by a
court of competent jurisdiction, is conclusive as to the rights of the
parties and their privies and constitutes an absolute bar to subsequent
actions involving the same claim, demand, or cause of action."49
For res judicata to serve as an absolute bar to a subsequent action, the
following requisites must concur: (a) the former judgment is final; (b) it
was rendered by a court having jurisdiction over the subject matter and
the parties; (c) it is a judgment on the merits; and, (d) there is, between
the first and second actions, identity of parties, of subject matter and of
cause of action.50
In the present case, there is no quibble that all the elements adverted
to above obtain in this case. There is no dispute that the December 2,
2001 RTC decision had become final and executory and the entry of
judgment was issued on August 30, 2004. There is no question either
that the RTC had jurisdiction over the subject matter and the parties,
and that the decision was a judgment on the merits.
The controversy arose when petitioners questioned the propriety of the
substitution of Jose before the CA in CA-G.R. SP No. 104667 and
subsequently the July 25, 2008 RTC order and its August 1, 2008 writ
of execution in CA-G.R. SP No. 105568, which was raffled to a
51
different division of the CA. Although petitioners would like to impress
to this Court that the issues raised in two cases before the CA were
anchored on different causes of action, the Court rules otherwise.
Under the doctrine of conclusiveness of judgment, facts and issues
actually and directly resolved in a former suit can never again be raised
in any future case between the same parties even involving a different
cause of action.51 The CA decision in CA-G.R. SP No. 104667
concerning the validity of plaintiffs substitution became conclusive on
the parties. Thus, petitioners cannot again seek refuge by filing their
second petition (CA-G.R. SP No. 105568) in the guise of questioning
the order of execution but actually invoking the alleged nullity of the
substitution of plaintiff. Petitioners cannot evade or avoid the
application of res judicata by· simply varying· the form of his action or
adopting a different method of presenting their case.52

Indeed, it is time to put an end to this litigation as the enforcement of

the final judgment has long been delayed. In the interest of justice,
petitioners are ordered to respect and comply with the final and
executor judgment of the Court. As stated in the case of Selga v. Sony
Entierro Brar :53

It must be remembered that it is to the interest of the public thatthere

should be an end to litigation by the parties over a subject fully and
fairly adjudicated. The doctrine of res judicata is a rule that pervades
every well-regulated system of jurisprudence and is founded upon two
grounds ·embodied in various maxims of the common law, namely: (1)
public policy and necessity, which dictates that it would be in the
interest of the State that there should be an end to litigation republicae
ut sit litium; and (2) the hardship on the individual that he should be
vexed twice for the same cause nemo debet bis vexari pro una et
eadem causa. A contrary doctrine would subject public peace and
quiet to the will and neglect of individuals and prefer the gratification of
the litigious disposition on the part of suitors to the preservation of
public tranquility and happiness.54

WHEREFORE, the petition is DENIED. The August 28, 2014 Amended

Decision and the April 16, 2015 Resolution of the· Court of Appeals in
CA-G.R. SP No. 105568 are AFFIRMED.

52
 G.R. No. 202531, August 17, 2016
GOMECO METAL CORPORATION, Petitioner, v. THE COURT OF
APPEALS, AND *PAMANA ISLAND RESORT HOTEL AND MARINA
CLUB, INCORPORATED, Respondents.
DECISION
PEREZ, J.:
This is a petition for certiorari,1 assailing the Decision2 dated 28
December 2011 and Resolution3 dated 28 June 2012 of the Court of
Appeals (CA) in CA-G.R. SP No. 119053.
The facts:
chanRoblesvirtualLawlibrary
Parties and Civil Case No. 4349-V-94
Petitioner Gomeco Metal Corporation (Gomeco) is a domestic
corporation engaged in the business of selling steel and metal
products. Respondent Pamana Island Resort Hotel and Marina Club,
Inc. (Pamana), on the other hand, is a domestic-corporation engaged
in the business of operating leisure resorts.
In 1994, Gomeco filed a Complaint for Collection of Sum of Money
(Complaint) against Pamana before the Regional Trial Court (RTC) of
Valenzuela City. In the Complaint, Gomeco sought to collect payment
for the stainless steel products4 it sold to Pamana in 1991. The
Complaint was raffled to Branch 75 and was docketed as Civil Case
No. 4349-V-94.
In 1997, Gomeco and Pamana entered into a Compromise
Agreement5 to end litigation in Civil Case No. 4349-V-94. The
compromise agreement, which required Pamana to pay Gomeco
P1,800,000.00, was consequently approved by the RTC in an Order
dated 16 January 1997.6chanrobleslaw
Writ of Execution and First Notice of Levy
Of the P1,800,000.00 that was due Gomeco under the compromise
agreement, however, Pamana was actually able to pay only
P450,000.00. This eventually led the RTC, on 2 March 1998, to issue
an order directing Pamana, within twenty (20) days from its receipt
thereof, to pay Gomeco P1,350,000.00 or the remaining balance under
the compromise agreement. Such order, however, was unheeded by
Pamana.
Thus, the RTC, upon application therefor by Gomeco, issued a Writ of
Execution7 on 7 May 1998 commanding the court's sheriff, then one
Jaime T. Montes (Sheriff Montes), to enforce the court-approved
compromise agreement against Pamana.
Pursuant to the writ of execution, Sheriff Montes first garnished
Pamana's bank accounts by sending notices of garnishment with the
Philippine National Bank, Metropolitan Bank and Trust Company,
Westmont Bank, Union Bank and Prudential Bank. The garnishment of
Pamana's accounts with the aforementioned banks yielded futile
results, however, as the same failed to satisfy, whether fully or in part,
Pamana's indebtedness.
Hence, on 22 May 1998, Sheriff Montes issued a Notice of
Levy8 placing under levy on execution one of Pamana's real estate
properties—the 53,285 square meter Pequeña Island in Subic,
Zambales. On the belief that the Pequeña Island is property not
registered under the Torrens System, such island was identified in the
notice of levy by Tax Declaration No. 007-0001 with Property Index No.
016-13-007-01-001.9chanrobleslaw
Notable, moreover, are the following entries in the notice of levy:
1. The amount of the levy on the Pequeña Island was fixed at
"P2,065,500.00."
2. The property being levied, i.e., Pequeña Island, was referred
to as "personal properties" of Pamana.
Notice of Sheriff's Sale, Execution Sale and CA-G.R. SP No. 62391
On 11 December 2000, with Pamana's indebtedness still unsatisfied,
Sheriff Montes issued a Notice of Sheriff Sale10 on the Pequeña Island.
Like the notice of levy, the notice of sheriffs sale identified the Pequeña
Island through Tax Declaration No. 007-0001 with Property Index No.
016-13-007-01-001. It set the public auction of the Pequeña Island on
10 January 2001.
The notice of sheriff s sale bears the following entries:
1. The amount of levy on the Pequeña Island was fixed at
"P2,065,00[0].00."
2. The property levied and the subject of public auction, i.e., the
Pequeña Island, was referred to as the "personal/real
properties" of Pamana.
The notice of sheriffs sale was duly posted and published in a
newspaper of general circulation in the manner required by Section
15(c) of Rule 39 of the Rules of Court.
On 28 December 2000, Pamana filed a Petition for Prohibition (with
prayer for the issuance of a temporary restraining order) before the CA,
seeking to nullify the notice of sheriff s sale and enjoin the public
auction of the Pequeña Island scheduled thereunder. The Petition was
docketed in the CA as CA-G.R. SP No. 62391 and impleaded Gomeco
and Sheriff Montes as respondents. On 9 January 2001, i.e., a day
before the public auction of the Pequeña Island was scheduled to take
place pursuant to the notice of sheriffs sale, the CA issued a temporary
restraining order (TRO) against holding such public auction.
Despite the TRO issued by the CA, however, the public auction of the
Pequeña Island still pushed through, as scheduled, on 10 January
2001. As it happened, the TRO was not served upon Gomeco and
Sheriff Montes until moments after the public auction was already
concluded.
At the 10 January 2001 public auction, Gomeco became the winning
bidder for the Pequeña Island at the price of P2,065,000.00.
Aggrieved by the turn of events, Pamana filed a Supplementary
Petition in CA-G.R. SP No. 62391 asking the CA to strike down as null
and void the 10 January 2001 public auction of the Pequeña Island.
On 22 March 2001, a Sheriff's Certificate of Sale covering the Pequeña
Island was issued in favor of Gomeco. On 28 March 2001, the said
certificate was registered11 with the Register of Deeds (RD) of Iba,
Zambales, under the Registry of Unregistered Properties pursuant to
Section 194 of Republic Act No. 2711 or the Revised Administrative
Code of 1917, as amended by Republic Act No. 3344.12chanrobleslaw
Decision of the CA in CA-G.R. SP No. 62391
On 19 February 2002, the CA rendered a Decision13 in CA-G.R. SP
No. 62391 declaring as null and void the Notice of Sheriff s Sale and
the 10 January 2001 public auction of the Pequeña Island. Underlying
such declaration is the CA's finding that the Notice of Levy and the
Notice of Sheriffs Sale were fatally defective due to their erroneous
indication that the levy thereunder was enforceable up to the amount of
P2,065,000.00, instead of only up to the P1,350,000.00 remaining
indebtedness of Pamana under the compromise agreement plus other
lawful fees.14chanrobleslaw
Gomeco filed a Motion for Reconsideration.
53
Acting on Gomeco's Motion for Reconsideration, the CA issued a
Resolution15 dated 9 July 2002. In the said Resolution, the CA modified
its earlier Decision and declared the levy and the ensuing 10 January
2001 public auction to be valid but only to the extent of the
P1,350,000.00 remaining indebtedness of Pamana plus 12% legal
interest thereon and other lawful fees in the implementation of such
levy and auction.16chanrobleslaw
Pamana, in turn, filed a Motion for Reconsideration.
On 16 January 2003, the CA issued a Resolution17 wherein it affirmed
in all respects its 9 July 2002 Resolution except only to the inclusion of
the "12% legal interest" as a component of the entire amount
satisfiable by the levy and execution sale.
The 16 January 2003 Resolution of the CA became final and executory
on 10 February 2003.18chanrobleslaw
Motion for Clarification in CA-G.R. SP No. 62391
After the finality of the 16 January 2003 Resolution, Pamana filed with
the CA a Motion for Clarification in CA-G.R. SP No. 62391. In the said
motion, Pamana asked the CA to require disclosure of the list of
properties in the Pequeña Island that were levied upon and sold during
the 10 January 2001 public auction, and their corresponding values.
Pamana's Motion for Clarification rests on the following key
assumptions:ChanRoblesVirtualawlibrary
1. The object of the Notice of Levy is not actually the
Pequeña Island itself but only the "personal
properties" in the said island;
2. The 10 January 2001 public auction resulted in the
sale not of the Pequeña Island but only of certain
properties therein;
3. The notice of levy, the Minutes of Auction Sale and
the Sheriffs Return, however, did not specify which
personal properties in the Pequeña Island were
actually levied and sold during the 10 January
2001 public auction; and cralawlawlibrary
4. The Minutes of Auction Sale and the Sheriffs
Return did not reveal for how much Pamana's
properties in the Pequeña Island had been sold
during the 10 January 2001 public auction.
The CA, at first, denied Pamana's Motion for Clarification. However, on
17 September 2004, the CA issued a Resolution19 directing Deputy
Sheriff Montes to "point out which of petitioner's specific properties [in
the Pequeña Island] had been levied and sold in public auction and to
determine the exact value of said properties if sufficient to satisfy in full
the judgment debt of [P]1,350,000.00 and other lawful expenses" and
to "return to [Pamana] such amount, if any, in excess of the judgment
debt."20chanrobleslaw
TCT No. T-38774
Meanwhile, on 29 January 2003, Gomeco was issued a Sheriff's Final
Deed of Sale21 over the Pequeña Island. The Sheriffs Final Deed of
Sale attested that Pamana had failed to exercise his right of
redemption on the Pequeña Island within the period allowed by law
and that, as a consequence thereof, Gomeco was now absolute owner
of the said island. Like the Sheriffs Certificate of Sale, the Sheriffs Final
Deed of Sale was registered22 with the RD of Iba, Zambales, under the
Registry of Unregistered Properties pursuant to Section 194 of the
Revised Administrative Code of 1917, as amended.
Sometime in March 2003, however, Gomeco discovered that the
Pequeña Island was not, as it formerly believed, unregistered property
but was in fact registered land under Transfer Certificate of Title (TCT)
No. T-38774 in the name of Pamana. This discovery prompted
Gomeco to file, before the RTC in Civil Case No. 4349-V-94, a Motion
for the Cancellation of Pamana's Title and the issuance of a new title in
its (Gomeco) name (Motion for Cancellation of Title).
On 5 January 2005, the RTC issued an Order23 granting Gomeco's
Motion for Cancellation of Title and directing the RD of Iba, Zambales,
to cancel Pamana's title over Pequeña Island and to issue a new title in
lieu thereof in the name of Gomeco. In the body, as well as the
dispositive portion of the said Order, however, the RTC mistakenly
identified Pamana's title as TCT No. T-38744 instead of TCT No. T-
38774.
Against the foregoing Order of the RTC, Pamana filed an Urgent
Motion for Reconsideration and a Motion for Correction of the Order
dated 5 January 2005 (Motion for Correction).
In its Urgent Motion for Reconsideration, Pamana assails the 5
January 2005 Order of the RTC primarily for being contrary to the
resolutions of the CA in CA-G.R. SP No. 62391. Pamana alleged that it
was erroneous for the RTG to recognize Gomeco's absolute ownership
over the Pequeña Island since the CA, in CA-G.R. SP No. 62391,
already substantially nullified the levy and public auction on the said
island. Pamana also contended that the Sheriffs Final Deed of Sale
was still premature in light of the 17 September 2004 Resolution of the
CA that required an accounting of the properties sold and the proceeds
realized from the 10 January 2001 public auction. For Pamana, no
such final deed of sale can be issued in favor of Gomeco unless the 17
September 2004 Resolution is first complied with to the letter.
In its Motion for Correction, on the other hand, Pamana asked that its
title over Pequeña Island, as stated in the 5 January 2005 Order, be
changed from TCT No. T-38744 to TCT No. T-38774.
On 20 April 2005, Gomeco, for its part, filed a Motion to Order the
Appointed Sheriff to Annotate the Notice of Levy, Deed of Sale and
Sheriffs Final Deed "of Sale [in] TCT No. T-38774 (Motion to Order
Annotation). In the said motion, Gomeco prayed that the RTC, pending
the possible cancellation of TCT No. T-38774 and the issuance of a
new title in its name, order the annotation of the Notice of Levy,
Certificate of Sheriff s Sale and the Sheriffs Final Deed of Sale in TCT
No. T-38774.
On 3 March 2011, the RTC issued an Order:24
1. Denying Pamana's Urgent Motion for
Reconsideration;
2. Granting Pamana's Motion for Correction;
3. Granting Gomeco's Motion to Order Annotation;
and cralawlawlibrary
4. Directing its incumbent sheriff, for the purpose
ascertaining the total amount of money for which
the levy and sale of the Pequeña Island were
meant to satisfy, to compute the actual amount of
the lawful fees and expenses incurred in
connection with the enforcement of the writ of
execution.
In compliance with the directive regarding the computation of the actual
amount of lawful fees and expenses in the enforcement of the writ of
execution, Sheriff Louie C. Dela Cruz (Sheriff Dela Cruz) submitted to
the RTC its Report25cralawred dated 16 March 2011. In the said report,
the lawful fees and expenses for the enforcement of the writ of
execution were pegged at P111,767.75.
On 25 March 2011, the RD of Iba, Zambales cancelled TCT No. T-
38774 in the name of Pamana and,1 in lieu thereof, issued TCT No.
044-2011000502 in favor of Gomeco.
CA-G.R. SP No. 119053
54

On 18 April 2011, Pamana filed with the CA a Petition
for Certiorari assailing the 5 January 2005 and 3 March 2011 Orders of
the RTC. This Petition was docketed as CA-G.R. SP No. 119053.
During the pendency of the CA-G.R. SP No. 119053, on 6 June 2011,
Pamana filed with the CA an Urgent Motion to Approve Tender of
Payment and Consignation accompanied with checks in the aggregate
amount of P1,500,000.00. In the said motion, Pamana prayed that the
CA approve the checks so submitted as a valid tender of payment and
consignation as against all of its outstanding indebtedness (i.e., the
P1,350,000.00 remaining balance under the compromise agreement
plus the P111,767.75 lawful fees and expenses in the enforcement of
the writ of execution).
Decision of the CA in CA-G.R. SP No. 119053
On 28 December 2011, the CA rendered a Decision26 in CA-G.R. SP
No. 119053, setting aside the 5 January 2005 and 3 March 2011
Orders of the RTC in Civil Case No. 4349-V-94. The CA also directed
therein the Registrar of Deeds of Iba, Zambales, to cancel TCT No.
044-2011000502 in the name of Gomeco and to reinstate TCT No. T-
38774 in favor of Pamana.
Siding with Pamana, the CA held that it was grave abuse of discretion
on the part of the RTC to have recognized Gomeco's absolute
ownership over the Pequeña Island. In support, the CA gives the
following ratiocinations:
1. There was no valid levy on the Pequeña Island.27
a. The Resolutions in CA-G.R. SP No.
62391 already substantially nullified the
levy and public auction on the Pequeña
Island.
b. The Notice of Levy and the Notice of
Sheriffs Sale issued by Sheriff Montes
cannot be considered as a valid levy on
the Pequeña Island. The two notices
confuse as to what properties are being
subjected to levy; the Notice of Levy
says "personal properties" but the
Notice of Sheriffs Sale says
"personal/realproperties."
c. Neither Notice of Levy nor the Notice of
Sheriffs Sale was registered with the
RD.
d. Any levy on Pequeña Island must be
preceded by a levy on Pamana's
personal properties as is required by
Rule 39 of the Rules of Court. In this
case, Sheriff Montes did not bother to
levy on Pamana's other personal
properties but instead levied the entire
Pequeña Island at the very first
instance.
2. Even assuming that the Pequeña Island had been validly
levied upon and sold in execution, the period of redemption
in favor of Pamana was not yet fully exhausted by the time a
Sheriffs Final Deed of Sale was issued in favor of Gomeco.
Indeed, the period of redemption in favor of Pamana could
not be considered to have even begun since the Sheriffs
Certificate of Sale covering the Pequeña Island was not
registered in the correct registry. It is to be pointed out that
Sheriffs Certificate of Sale had been erroneously registered
in the Registry of Unregistered Properties, despite the fact
that the Pequeña Island is property titled under the Torrens
system. Hence, even though the levy and auction on the
Pequeña may be valid, Gomeco still could not acquire
absolute ownership of the disputed island.28
Moreover, in the same Decision, the CA granted and approved
Pamana's Urgent Motion to Approve Tender of Payment and
Consignation. The CA considered Pamana's submission of checks as
a valid tender of payment and consignation and declared all of the
latter's indebtedness thereby extinguished.
Gomeco moved for reconsideration but the CA, in its
Resolution29 dated 28 June 2012, remained steadfast.
This Petition
Aggrieved, Gomeco filed the instant Petition for Certiorari before this
Court.
In this Petition, Gomeco claims that the CA gravely abused its
discretion when it ruled: (a) to reinstate Pamana's title to the Pequeña
Island and (b) to consider the Pamana's submission of checks as a
valid tender of payment and consignation for all of its outstanding
indebtedness. Gomeco argues that such rulings rest on findings that
were patently erroneous.
Gomeco thus prays for the nullification of the Decision of the CA in CA-
G.R. SP No. 119053, as well as for the restoration of the 5 January
2005 and 3 March 2011 Orders of the RTC in Civil Case No. 4349-V-
94.
OUR RULING
I
The Decision of the CA in CA-G.R. SP No. 119053 is underpinned,
primarily, by two findings: first, that there was no valid levy upon the
Pequeña Island and second, that—even assuming that there was such
a valid levy—the redemption period in favor of Pamana was not yet
fully exhausted by the time a Sheriffs Final Deed of Sale was issued in
favor of Gomeco. We have examined both findings in light of the facts
and the applicable law. And we found that Gomeco is right; both
findings were patently erroneous.
The erroneous findings—most especially the first—were of such gross
nature that they indicate that the CA, in making them, had at the least
committed grave abuse of discretion, if not acted wholly beyond its
jurisdiction.
We are therefore compelled to GRANT the instant Petition.
A. The First Finding: Levy on Pequeña Island
The finding by the CA that there was no valid levy on the Pequeña
Island is erroneous for one essential reason—it directly contradicts
what the appellate court itself already finally settled through its 16
January 2003 Resolution in CA-G.R. SP No. 62391. Such finding, in
other words, was a blatant violation of the principle of res judicata.
Principle of Res Judicata and its Applications
Res judicata30 is a legal principle that regards a final judgment on the
merits of a case as conclusive between the parties to such case and
their privies.31 The principle, at least in our jurisdiction, has two (2)
recognized applications.
The first application pertains to a scenario where the parties to a case,
whose merits had already been finally adjudicated by a court with
jurisdiction, (or their privies) become parties to a subsequent case that
involves the same claim, demand or cause of action as that of the
previous case. In this scenario, the principle of res judicata applies in
such a way that the judgment in the previous case stands as an
absolute and complete bar to the subsequent case itself.32 This
application of res judicata is also known as the "bar by former
judgment rule"33 and is sanctioned under Section 47(b) of Rule 39 of
the Rules of Court.34chanrobleslaw
For convenience and ease of understanding, we dissect hereunder the
55
circumstances that must concur in order for the bar by former judgment
rule to apply:35
1. There is a judgment in a case that:
chanRoblesvirtualLawlibrary a. disposed of such
case on the merits,
b. was issued by a court of competent
jurisdiction,
c. has attained final and executory status;
2. There is another case subsequently filed in court;
3. Between the previous case and the subsequent
case, there is an identity of parties;
and cralawlawlibrary
4. The previous case and the subsequent case are
based on the same claim, demand or cause of
action.
The second application of the principle of res judicata, on the other
hand, contemplates of a scenario that is almost similar to that of the
first: the parties to a case, whose merits had already been finally
adjudicated by a court with jurisdiction, (or their privies) also become
parties to a subsequent case. However, unlike in the first application,
the subsequent case herein does not involve the same claim,
demand or cause of action as the previous case. In this scenario, the
principle of res judicata applies, not to wholly bar the subsequent case,
but only to preclude the relitigation or redermination therein of any
matter actually or deemed36settled by the judgment in the
previous case.37 This application of res judicata is known as the
"conclusiveness of judgment rule" and is sanctioned under Section
47(c) of Rule 39 of the Rules of Court.38chanrobleslaw
The circumstances that must concur in order for the conclusiveness of
judgment rule to apply arelthe same as those needed for the bar by
judgment rule to set in, except for the last circumstance. In the
application of the conclusiveness of judgmerit rule, the previous case
and the subsequent case must notbe based on the Isame claim,
demand or cause of action but only pass upon the same matters or
issues.
Guided by the foregoing precepts, we shall now address the issue at
hand.
Conclusiveness of Judgment Rule Applies; Issue of the Validity of
the; Levy On and Auction Sale of Pequeña Island Precluded by
the 16 January 2003 Resolution in CA-G.R. SP No. 62391
In this case, we find that the CA in CA-G.R. SP No. 119053 grossly
erred when it made a finding concerning the validity of the levy on the
Pequeña Island that is diametrically opposed to what was already
finally settled in the earlier case- of CA-G.R. SP No. 62391. By ignoring
and contradicting the final settlement in CA-G.R. SP No. 62391, the CA
evidently went beyond its jurisdiction and violated the principle of res
judicata, particularly the conclusiveness of judgment rule.
A review of the facts clearly reveal the existence of circumstances that
should have warranted the application of the conclusiveness of
judgment rule in CA-G.R. SP No. 119053, insofar as the matter of
validity of the levy on the Pequeña Island is
concerned:ChanRoblesVirtualawlibrary
1. The 16 January 2003 Resolution in CA-G.R. SP
No. 62391 satisfies the first circumstance. Such
resolution, in effect, brought the merits of CA-G.R.
SP No. 62391 to a close.39 It essentially held that
there was a valid levy and auction on the
Pequeña Island. The resolution, moreover, already
became final and executory on 10 February
2003.40chanrobleslaw
2. CA-G.R. SP No. 119053 fits the second
circumstance. It is a case filed subsequent to CA-
G.R. SP No. 62391. In fact, CA-G.R. SP No.
119053 was only filed on 18 April 2011—or more
than eight years after CA-G.R. SP No. 62391 was
finally decided on the merits.
3. Both CA-G.R. SP No. 62391 and CA-G.R. SP No.
119053 featured Pamana and Gomeco as parties.
Though technically based on distinct causes of
action,41 both CA-G.R. SP No. 62391 and CA-G.R.
SP No. 119053 nonetheless passed upon the
issue of the validity of the levy on and auction sale
of Pequeña Island. Such facts satisfy the third
circumstance.
Verily, the collusiveness of judgment rule ought to have applied. The
16 January 2003 Resolution in CA-G.R. SP No. 62391 should have
had a preclusive effect on the subsequent case, CA-G.R. SP No.
119053, as to all matters settled in the said resolution—including the
validity of the levy on the Pequeña Island.
The CA, therefore, cannot pass upon, and should not have passed
upon, the issue pertaining to the validity of the levy on the Pequeña
Island. That issue was already settled in the final ruling of CA-G.R. SP
No. 62391 and such settlement is conclusive upon both Pamana and
Gomeco. It cannot be relitigated or be redetermined, much less be
overturned, in any subsequent case between them. Res judicata has
already set in.
By disregarding the final ruling in CA-G.R. SP No. 62391, the CA
evidently went beyond its jurisdiction and violated the principle of res
judicata, particularly the collusiveness of judgment rule. Accordingly,
the finding that there was no valid levy on the Pequeña Island—the
very fruit of such disregard—must be stricken down.
The 17 September 2004 Resolution in CA-G.R. SP No. 62391 is
Void Under the Doctrine of Immutability of Judgment
In disregarding the 16 January 2003 Resolution in CA-G.R. SP No.
62391, the CA seems to have harbored the belief that the foregoing
resolution had somehow been supplanted by a later resolution in the
same case—the 17 September 2004 Resolution in CA-G.R. SP No.
62391.
To facilitate recollection of the 17 September 2004 Resolution in CA-
G.R. SP No. 62391, as well as the circumstances surrounding its
issuance, we reproduce hereunder the following portion in our
narration of facts:ChanRoblesVirtualawlibrary
Motion for Clarification in CA-G.R. SP No. 62391
After the finality of the 16 January 2003 Resolution, Pamana filed with
the CA a Motion for Clarification in CA-G.R. SP No. 62391. In the said
motion, Pamana asked the CA to require disclosure of the list of
properties in the Pequeña Island that were levied upon and sold during
the 10 January 2001 public auction, and their corresponding values.
Pamana's Motion for Clarification rests on the following key
assumptions:ChanRoblesVirtualawlibrary
1. The object of the Notice of Levy is not
actually the Pequeña Island itself but
only the "personal properties" in the said
island;
2. The 10 January 2001 public auction
resulted in the sale not of the Pequeña
Island but only of certain properties
therein;
56
 3. The Notice of Levy, the Minutes of
Auction Sale and the Sheriffs Return,
however, did not specify which personal
properties in the Pequeña Island were
actually .levied and sold during the 10
January 2001 public auction;
and cralawlawlibrary
4. The Minutes of Auction Sale and the
Sheriffs Return did not reveal for how
much Pamana's properties in the
Pequeña Island had been sold during
the 10 January 2001 public auction.
The CA, at first, denied Pamana's Motion for Clarification. However, on
17 September 2004, the CA issued a Resolution directing Sheriff
Montes to "point out which of [Pamana's] specific properties [in the
Pequeña Island] had been levied and sold in public auction and to
determine the exact value of said properties if sufficient to satisfy in full
the judgment debt of [P]1,350,000.00 and other lawful expenses" and
to "return to [Pamana] such amount, if any, in excess of the judgment
debt."
The 17 September 2004 Resolution in CA-G.R. SP No. 62391 was a
virtual acceptance of Pamana's assumptions in its Motion for
Clarification.42 The resolution—with its distinct directive for the sheriff to
"point out which of [Pamana's] specific properties had been levied and
sold in public auction"43—indubitably proceeds from the same
proposition that the object of the levy in the case was never the
Pequeña Island itself but only the properties therein.
Though it fashioned itself as affirmative of the 16 January 2003
Resolution in CA-G.R. SP No. 62391,44the 17 September 2004
Resolution in actuality and in effect varied a very significant import of
the former resolution and of all other resolutions in CA-G.R. SP No.
62391—that the levy, whose validity was sustained under the said
case, had for its object no other property but the Pequeña Island
itself.45chanrobleslaw
Thereupon lies the reason why the CA's apparent reliance on the 17
September 2004 Resolution in CA-G.R. SP No. 62391 is mistaken.
The said Resolution could never have validly altered, amended or
modified the import of the 16 January 2003 Resolution in CA-G.R. SP
No. 62391 in light of the doctrine of immutability of judgment.
The doctrine of immutability of judgment maintains that once a
judgment has attained finality, the same can no longer be changed or
modified in any respect, either by the court that rendered it or by any
other court.46 In FGU Insurance v. Regional Trial Court,47 we explained
the full breadth of such doctrine, including the few recognized
exceptions thereto, as follows:ChanRoblesVirtualawlibrary
Under the doctrine of finality of judgment or immutability of judgment, a
decision that has acquired finality becomes immutable and unalterable,
and may no longer be modified in any respect, even if the modification
is meant to correct erroneous conclusions of fact and law, and whether
it be made by the court that rendered it or by the Highest Court of the
land. Any act which violates this principle must immediately be struck
down.
But like any other rule, it has exceptions, namely: (1) the correction of
clerical errors; (2) the so-called nunc pro tune entries which cause no
prejudice to any party; (3) void judgments; and (4) whenever
circumstances transpire after the finality of the decision rendering its
execution unjust and inequitable.
In this case, the doctrine of immutability of judgment applies to
preserve the final ruling in CA-G.R. SP No. 62391, as embodied under
16 January 2003 Resolution, from any alteration or modification. Such
resolution, as stated beforehand, had already become final and
executory as of 10 February 2003.48 As of that date, the 16 January
2003 Resolution—and its holding that there was a valid levy on the
Pequeña Island itself—was vested the quality of immutability.
The 17 September 2004 Resolution, on the other hand, is neither a
clerical correction nor a nunc pro tuncorder. Neither does the said
resolution aim to address any injustice or inequity that may result from
the implementation of the 16 January 2003 Resolution. With none of
the exceptions to the application of the doctrine of immutability of
judgment existing in its favor, the 17 September 2004 Resolution in
CA-G.R. SP No. 62391—with its confused attempt to alter a final and
executory ruling in the same case—must then be stricken down as a
nullity.
Having thus settled the folly of the first finding, we shall now proceed to
an exposition of the second finding.
B. The Second Finding: Redemption Period of Pamana
To enable its Decision to stand in the event that the first finding fails,
the CA made its second finding under the context that the levy and
auction on the Pequeña Island were valid.
Under such context, the CA found that the period of redemption in
favor of Pamana was not yet fully exhausted by the time a Sheriffs
Final Deed of Sale was issued in favor of Gomeco. According to the
CA, the said period could not be" considered to have even begun in
view of the registration of the Sheriffs Certificate of Sale of the
Pequeña Island at a "wrong" registry.
We do not agree.
Despite the error in the registration of the Sheriffs Certificate of Sale,
we hold that Pamana ought to be held bound, nonetheless, by such
registration. As shall be discussed below, there are circumstances
peculiar to this case that warrants us to adopt such a holding. Hence,
we find that the period of redemption of Pamana would have been fully
exhausted by the time a Sheriffs Final Deed of Sale was issued in
favor of Gomeco.
Redemption in Execution Sales; Commencement of Redemption
Period; Registration with the Register of Deeds
When real property is levied and sold on execution pursuant to a final
judgment, our rules of procedure allows the judgment debtor49 or a
"redemptioner"50 to redeem such property within one (1) year from the
"date of the registration of the certificate of
sale" viz:ChanRoblesVirtualawlibrary
RULE 39
Section 28. Time and manner of, and amounts payable on, successive
redemptions; notice to be given and filed.—The judgment obligor, or
redemptioner, may redeem the property from the purchaser, at any
time within one (1) year from the date of the registration of the
certificate of sale, by paying the purchaser the amount of his
purchase, with the per centum per month interest thereon in addition,
up to the time of redemption, together with the amount of any
assessments or taxes which the purchaser may have paid thereon
after purchase, and interest on such last named amount at the same
rate; and if the purchaser be also a creditor having a prior lien to that of
the redemptioner, other than the judgment under which such purchase
was made, the amount of such other lien, with interest.
x x x. (Emphasis supplied)
The commencement of the one-year redemption period is of critical
importance, not only to the judgment debtor or a redemptioner, but
even more so to the successful purchaser in the execution sale. This is
because, under the rules, it is only after the lapse of such one-year
period with no valid redemption having been effected, that a
successful purchaser acquires absolute ownership over the real
property he purchased in the execution sale and becomes entitled to a
final deed of sale.51chanrobleslaw
As can be gleaned above, commencement of the one-year redemption
period is reckoned from "the date of registration of the certificate of
sale."52 The phrase "registration of certificate of sale" means
registration of such certificate with the RD.
The RD is the official public repository of records or instruments
affecting lands.53 As presently constituted though, the RD maintains
57
separate registries for real properties registered under the Torrens
system and for "unregistered" real properties i.e., real properties not
registered under the Torrens system.54 Each registry has its own set of
day book and registration book.55chanrobleslaw
Logically, and under normal circumstances, a certificate of sale ought
to be registered with the RD at the particular registry corresponding to
the status of the real property it covers. Thus, a certificate of sale
covering property registered under the Torrens system ought to be
registered with the RD under its registry for properties registered under
the Torrens system. Likewise, a certificate of sale covering
property not registered under the Torrens system ought to be
registered with the RD under its registry for unregistered real
properties.
There is no doubt that, when a certificate of sale is so registered, the
period of redemption would by then start to run.
The question, however, is what would be the effect of a "wrong"
registration (i.e., the registration of a certificate of sale with the RD
albeit under a registry that does not correspond to the status of the real
property it covers) upon the commencement of the period of
redemption in execution sales?
Effect of Wrong Registration; The Two Situations
We must qualify our answer.
To answer the question before us, we must first familiarize ourselves
with the process of levy prior to an execution sale. Our familiarization
with such process will, in turn, enable us to identify the two (2) general
situations that can ultimately lead to wrong registrations. It is between
such situations that our qualification lies.
It is basic that before any property is sold in execution, and a certificate
of sale issued therefor, such property must first be the subject of a
levy.56 A levy on execution refers to the essential act by which a
property of the judgment debtor is taken into the custody of the law and
set apart for the satisfaction of the judgment debt.57 In our jurisdiction,
a levy on execution" is effected by the sheriff of the court.
When the property sought to be levied is realty, the sheriff must first
prepare a Notice of Levy that contains, among others, an adequate
description of the real property sought to be
levied.58Significantly, the notice of levy is also required to ascertain
whether the particular realty sought to be levied is registered
under the Torrens system or not, such that if it is, the notice must
contain "a reference to the number of the certificate of title, the
volume and page in the registration book where the certificate is
registered, and the registered owner or owners
thereof."59chanrobleslaw
To actually effect the levy upon a real property, however, the sheriff is
required to do two (2) specific things: (1) file with the RD a copy of the
Notice of Levy, and (2) leave with the occupant of the property a copy
of the same notice.60chanrobleslaw
Verily, since it is the duty of the sheriff preparing the Notice of Levy to
ascertain whether the particular realty sought to be levied is registered
under Torrens system or not, then there can be two (2) possible
situations that can lead to a wrong registration:
chanRoblesvirtualLawlibraryFirst. The sheriff who prepared the Notice
of Levy correctly ascertained the status of the real property (i.e.,
whether the same is registered under the Torrens system or not) but
the ensuing certificate of sale issued during the execution sale was still
registered under the wrong registry of the RD.
Second. The sheriff who prepared the Notice of
Levy incorrectly ascertained the status of the real property leading to
the registration of the certificate of sale under the wrong registry of the
RD.
As just said, it is between such situations that our qualification lies.
Under the first situation, the effect of the wrong registration must be to
prevent the commencement of the redemption period altogether. In this
case, the sheriff performs his duty correctly and the wrong registration
is actually the fault of the successful purchaser. Such type of wrong
registration is deemed non-compliant with the requirement of
registration under Section 28 of Rule 39 of the Rules of Court.
A different treatment, however, is certainly warranted under the second
situation. In this case, the sheriff failed to perform his duties correctly
and such failure directly contributed to the fact of wrong registration.
Under this situation, it is actually both unfair and inequitable to allow
the judgment debtor to be benefited and for the successful purchaser
to be prejudiced.
The judgment debtor, for one, ought not to be benefited since it is in
the position to correct the mistake of the sheriff but it did not do so.
Hence, in this situation, the judgment debtor could be considered to be
in bad faith and a contributor to the wrong registration.
On the other hand, the successful purchaser ought not to be prejudiced
since it only relied on the representations of the sheriff who, as a public
officer, may be presumed to have performed his duties
regularly.61chanrobleslaw
Thus, for the sake of fairness and equality, a wrong registration
committed under the second situation should be considered
substantially compliant with the requirement of registration under
Section 28 of Rule 39 of the Rules of Court and is, therefore, sufficient
to commence the redemption period.
Application
In the case at bench, the wrong registration was committed under the
second situation. Hence, the wrong registration in this case is
considered to be substantially compliant with the requirement of
registration under Section 28 of Rule 39 of the Rules of Court and
sufficient to commence the redemption period.
The facts are clear that the Notice of Levy and the Notice of Sheriff's
Sale prepared by Sheriff Montes incorrectly depicted the Pequeña
Island as unregistered property; both having only identified the said
island via Tax Declaration No. 007-0001 with Property Index No. 016-
13-007-01-001.62 On the other hand, it is also crystal that Pamana—
who admitted to owning the Pequeña Island and was furnished with the
said notices—knowingly allowed the incorrect depiction of the status of
the island to prevail by doing nothing to correct it. The incorrect
depiction of Sheriff Montes, coupled by the bad faith of Pamana, were
thus joint contributors to the registration of the ensuing certificate sale
covering the Pequeña Island under the wrong registry in the RD. Verily,
all points of the second situation are present in this case.
Since the wrong registration in this case was committed under the
second situation, the same is considered to be substantially compliant
with the requirement of registration.under Section 28 of Rule 39 of the
Rules of Court and sufficient to commence the redemption period.
These, in turn, produce the following specific effects:
1. The redemption period of Pamana is deemed to have begun
on 28 March 2001, i.e., the date when the Sheriff's
Certificate of Sale covering the Pequeña Island was
registered with the RD under the Registry of Unregistered
Properties;
2. The redemption period of Pamana is slated to end exactly
one year from 28 March 2001;
3. Since Pamana never exercised its right of redemption within
one year from 28 March 2001, the issuance of a Sheriff's
Final Deed of Sale63 over the Pequeña Island in favor of
Gomeco on 29 January 2003 is, therefore, valid.
All in all, Gomeco should now be considered the rightful absolute
owner of the Pequeña Island. The Orders dated 5 January 2005 and 3
58
March 2011 of the RTC in Civil Case No. 4349-V-94 were just correct
in recognizing such fact.

Having thus exposed the Decision in CA-G.R. SP No. 119053 as being

supported by patently erroneous findings, we feel compelled to
exercise our certiorari jurisdiction. For law and justice to prevail, we
must set aside and nullify the Decision of the CA in CA-G.R. SP No.
119053.

II

The final point that we need to address is the procedural challenge

posed against the instant Petition by Pamana.

In its Comment,64 Pamana questioned the propriety of Gomeco's resort

to a special civil action for certiorari in assailing the Decision of the CA
in CA-G.R. SP No. 119053. For Pamana, the filing of the
instant certiorari petition was not proper since another remedy—an
appeal to this Court, in particular—was available and could have been
filed by Gomeco under the circumstances. Pamana postulated that the
availability of an appeal is fatal to the instant petition in light of the
procedural norm that proscribes the use of certiorari as substitute for a
lost appeal.65chanrobleslaw

We reject the procedural challenge.

The procedural norm referred to is not absolute. In Sanchez v. Court of

Appeals,66 we enumerated the instances when a Petition
for Certiorari may be resorted to despite the existence of or prior
availability of an appeal—one of which is when the court a quo had
"patently acted in excess of or outside its
jurisdiction":ChanRoblesVirtualawlibrary
Doctrinally entrenched is the general rule that certiorari is not a
substitute for a lost appeal. However, Justice Florenz D. Regalado lists
several exceptions to this rule, viz.: (1) where the appeal does not
constitute a speedy and adequate remedy (Salvadades vs. Pajarillo, et
al., 78 Phil. 77), as where 33 appeals were involved from orders issued
in a single proceeding which will inevitably result in a proliferation of
more appeals (PCIB vs. Escolin, et al., L-27860 and 27896, Mar. 29,
1974); (2) where the orders were also issued either in excess of or
without jurisdiction (Aguilar vs. Tan, L-23600, Jun 30, 1970, Cf.
Bautista, et al. vs. Sarmiento, et al., L-45137, Sept. 231985); (3) for
certain special consideration, as public welfare or public policy
(See Jose vs. Zulueta, et al. -16598, May 31, 1961 and the cases cited
therein); (4) where in criminal actions, the court rejects rebuttal
evidence for the prosecution as, in case of acquittal, there could be no
remedy (People vs. Abalos, L029039, Nov. 28, 1968); (5) where the
order is a patent nullity (Marcelo vs. De Guzman, et al., L-29077, June
29, 1982); and (6) where the decision in the certiorari case will avoid
future litigations (St. Peter Memorial Park, Inc. vs. Campos, et al., L-
38280, Mar. 21, 1975). Even in a case where the remedy of appeal
was lost, the Court has issued the writ of certiorari where the
lower court patently acted in excess of or outside its jurisdiction,
as in the present case. (Emphasis supplied)
We believe that our discussion in the preceding section had amply
demonstrated that the CA, through its grossly erroneous decision in
CA-G.R SP No. 119053, had patently acted in excess of or outside its
jurisdiction. The erroneous findings of the CA were of such gross
nature and so contemptuous of basic legal doctrines that they indicate
that the CA, in making them, had committed grave abuse of discretion,
if not acted wholly beyond its jurisdiction. Under such scenario,
jurisprudence allows a Petition for Certiorari to be resorted to by the
aggrieved party.

Hence, we uphold the propriety of Gomeco's resort to the

instant certiorari petition.

WHEREFORE, premises considered, the instant Petition

is GRANTED. The Decision dated 28 December 2011 and Resolution
dated 28 June 2012 of the Court of Appeals in CA-G.R. SP No. 119053
are hereby ANNULLED and SET ASIDE. The Orders dated 5 January
2005 and 3 March 2011 of the Regional Trial Court, Branch 75 of
Valenzuela City in Civil Case No. 4349-V-94 are REINSTATED.

59