G.R. No.
208424, February 14, 2018 demand letters, one dated March 23, 2010 and another dated May 6,
ARMANDO LAGON, Petitioner, v. HON. DENNIS A. VELASCO, IN HIS
CAPACITY AS PRESIDING JUDGE OF MUNICIPAL TRIAL COURT
IN CITIES OF KORONADAL, SOUTH COTABATO, AND GABRIEL
DIZON, Respondents.
DECISION
REYES, JR., J.:
This treats of the Petition for Certiorari1 under Rule 65 of the Revised
Rules of Court seeking the annulment of the Order2 dated June 6,
2013, issued by public respondent Hon. Dennis A. Velasco (Judge
Velasco), directing petitioner Armando Lagon (Lagon) to file the judicial
affidavits of his witnesses within five (5) days prior to the
commencement of the trial dates.
The Antecedent Facts
Sometime in December 2000, Lagon obtained a cash loan from private
respondent Gabriel Dizon (Dizon), in the amount of Three Hundred
Thousand Pesos (Php 300,000.00). In payment thereof, Lagon issued
PCIBank Check No. 0064914, postdated January 12, 2001, in an equal
amount. However, when Dizon presented the check for payment, it was
dishonored for being Drawn Against Insufficient Funds.3
Consequently, Dizon sent a Letter dated May 6, 2011 to Lagon,
demanding the payment Php 300,000.00. However, Lagon refused to
pay.4
On June 6, 2011, Dizon field a Complaint for Sum of Money, Damages
and Attorney's Fees against Lagon.5
On October 8, 2011, Lagon filed a Motion to Dismiss on the ground of
prescription.
In response, Dizon filed an Opposition with Motion to Amend
Complaint.6 In his Amended Complaint, Dizon averred that he sent two
2011. Both letters were sent through JRS Express.7
On February 29, 2012, Lagon filed his Answer asserting that he has
paid the loan.8
Meanwhile, during the preliminary conference, the parties were
directed to file their respective pre-trial briefs within five (5) days from
receipt of the trial court's order.
Thereafter, on August 9, 2012, Judge Velasco issued a Pre-Trial
Conference Order.9
At the initial trial on June 6, 2013, neither of the parties submitted their
judicial affidavits or those of their witnesses. Hence, Judge Velasco
issued the assailed Order10 requiring the parties to submit their
respective judicial affidavits five (5) days before the trial.11 The
essential portion of the Order dated June 6, 2013, reads:
In the interest of justice and equity, the plaintiff is hereby allowed to
submit his Judicial Affidavits. But for failure of the plaintiff to submit
Judicial Affidavits in due time, the Court imposed a fine of Three
Thousand pesos (Php 3,000.00) and to be reimbursed an amount of
Five Thousand pesos (Php 5,000.00) to the defendant's expenses in
coming to Court within five (5) days from today.
The parties are hereby directed to submit Judicial Affidavits of their
witnesses within five (5) days prior to the trial dates. Otherwise, the
Court will no longer admit the same.12
Lagon received a copy of the same Order on June 26, 2013.13
On June 27, 2013, Lagon filed a Motion for Partial Reconsideration.14
In his Motion, Lagon requested that he be allowed to submit the judicial
affidavit of his witnesses after the plaintiff shall have adduced his
evidence. Lagon claimed that Section 2 of the Judicial Affidavit Rule,
which mandates the submission by both parties of their judicial
affidavits before the pre-trial conference is violative of his right to due
process, hence unconstitutional.15
1
On July 10, 2013, Judge Velasco issued the assailed Order16 denying
Lagon's Motion for Partial Reconsideration.17 Judge Velasco opined
that "the requirement of the submission of judicial affidavits of
witnesses, not later than 5 days before the pre-trial or preliminary
conference or the scheduled hearing, under Section 2 of the Judicial
Affidavit Rule is not violative of Lagon's right to due process.18
Dissatisfied with the ruling, Lagon sought direct recourse to this Court
by filing the instant Petition for Certiorari19 under Rule 65 of the
Revised Rules of Court.
The Issue
The lone issue for this Court's resolution is whether or not Section 2 of
the Judicial Affidavit Rule, which requires a defendant to adduce his
testimony and that of his witnesses by judicial affidavits, and submit his
documentary evidence before the pre-trial or preliminary conference,
offends his right to due process of law.
In this regard, Lagon asserts that Judge Velasco committed grave
abuse of discretion, amounting to lack or excess of jurisdiction, by
compelling him (Lagon) to submit his evidence by judicial affidavits,
even before the plaintiff could have adduced his own evidence and
rested his case. According to Lagon, under the Judicial Affidavit Rule,
the defendant is forced to adduce evidence simultaneously with the
plaintiff. This conflicts with the rule on Demurrer to Evidence, which
grants a defendant the right to opt out of presenting evidence, and
instead move for the dismissal of the complaint upon the failure of the
plaintiff to show a right to relief. The defendant is thus stripped of his
"due process right not to be compelled to adduce evidence."20
Moreover, Lagon contends that the Judicial Affidavit Rule violates the
order of trial provided under the Rules of Civil Procedure.21
Additionally, it denies litigants of their right to present adverse, hostile
or unwilling witnesses, or to secure the testimonies of witnesses by
deposition upon oral examination or written interrogatories, because
the party cannot secure their judicial affidavits.22
On the other hand, Dizon counters that no grave abuse of discretion
may be ascribed against Judge Velasco for merely enforcing the rules
promulgated by this Court. Dizon maintains that the Judicial Affidavit
Rule was promoted precisely to address the problem of case
congestion and delays created by the voluminous cases filed every
year and the slow and cumbersome court proceedings. Likewise, Dizon
avers that contrary to Lagon's claim, the Judicial Affidavit Rule actually
preserves and respects litigants' procedural rights. Due process of law
contemplates notice to the party, and an opportunity to be heard before
judgment is rendered.23 Lagon was accorded notice and an
opportunity to be heard when Judge Velasco ordered the submission
of judicial affidavits prior to the pre-trial conference. It was Lagon, who
blatantly refused to comply with the order.24 Dizon points out that the
Judicial Affidavit Rule does not in any way prevent Lagon from filing a
demurrer to evidence if he feels that the same is truly warranted.25
Ruling of the Court
The instant petition is bereft of merit.
It must be noted at the outset that a petition for certiorari under Rule 65
of the Revised Rules of Court is a pleading limited to the correction of
errors of jurisdiction or grave abuse of discretion amounting to lack or
excess of jurisdiction.26 "Its principal office is to keep the inferior court
within the parameters of its jurisdiction or to prevent it from committing
such a grave abuse of discretion amounting to lack or excess of
jurisdiction."27
It is well-settled that a petition for certiorari against a court which has
jurisdiction over a case will prosper only if grave abuse of discretion is
manifested. The burden is on the part of the petitioner to prove not
merely reversible error, but grave abuse of discretion amounting to lack
or excess of jurisdiction on the part of the public respondent issuing the
impugned order. Mere abuse of discretion is not enough; it must be
grave. The term grave abuse of discretion pertains to a capricious and
whimsical exercise of judgment so patent and gross as to amount to an
evasion of a positive duty or a virtual refusal to perform a duty enjoined
by law, as where the power is exercised in an arbitrary and despotic
manner because of passion or hostility.28
In the case at bar, Lagon accuses Judge Velasco of having committed
grave abuse of discretion amounting to lack or excess of jurisdiction in
2
issuing the assailed order,29 requiring him (Lagon) to submit his
Judicial Affidavits before the commencement of the trial of the case.
The Court is not convinced.
In issuing the assailed order, Judge Velasco was actually enforcing the
Judicial Affidavit Rule, promulgated by the Court. Therefore, by no
stretch of the imagination may Judge Velasco's faithful observance of
the rules of procedure, be regarded as a capricious, whimsical or
arbitrary act.
Essentially, Article VIII, Section 5(5) of the 1987 Constitution bestows
upon the Court the power to "promulgate rules concerning the
protection and enforcement of constitutional rights, pleading, practice,
and procedure in all courts x x x."
Seeking to eradicate the scourge of long-drawn protracted litigations,
and address case congestion and delays in court,30 on September 4,
2012, the Court en banc promulgated A.M. No. 12-8-8-SC, or the
Judicial Affidavit Rule.
The Judicial Affidavit Rule was particularly created to solve the
following ills brought about by protracted litigations, such as, the
dismissal of criminal cases due to the frustration of complainants in
shuttling back and forth to court after repeated postponements; and the
dearth of foreign businessmen making long-term investments in the
Philippines because the courts are unable to provide ample and speedy
protection to their investments, thereby keeping the people poor.31 At
first, the Court approved the piloting by trial courts in Quezon City of
the compulsory use of judicial affidavits in place of the direct
testimonies of witnesses.32 Eventually, the success of the judicial
affidavit rule was unprecedented, and its implementation led to a
reduction of about two-thirds of the time used for presenting the
testimonies of witnesses. Indeed, the use of judicial affidavits greatly
hastened the hearing and adjudication of cases.33
Accordingly, the Court en banc directed the application of the Judicial
Affidavit Rule to all actions, proceedings, and incidents requiring the
reception of evidence34 before the following tribunals, such as,
(i) the Metropolitan Trial Courts, the Municipal Trial Courts in Cities, the
Municipal Trial Courts, the Municipal Circuit Trial Courts, and the
Shari'a Circuit Courts but shall not apply to small claims cases under
A.M. 08-8-7-SC; (ii) The Regional Trial Courts and the Shari'a District
Courts; (iii) The Sandiganbayan, the Court of Tax Appeals, the Court of
Appeals, and the Shari'a Appellate Courts; (iv) The investigating
officers and bodies authorized by the Supreme Court to receive
evidence, including the Integrated Bar of the Philippine (IBP); and (v)
The special courts and quasi-judicial bodies, whose rules of procedure
are subject to disapproval of the Supreme Court, insofar as their
existing rules of procedure contravene the provisions of this Rule.35
Thus, in all proceedings before the aforementioned tribunals, the
parties are required to file the Judicial Affidavits of their witnesses, in
lieu of their direct testimonies. Specifically, Section 2 of the Judicial
Affidavit Rule ordains that:
Section 2. Submission of Judicial Affidavits and Exhibits in lieu of direct
testimonies. - (a) The parties shall file with the court and serve on the
adverse party, personally or by licensed courier service, not later than
five days before pre-trial or preliminary conference or the scheduled
hearing with respect to motions and incidents, the following:
The judicial affidavits of their witnesses, which shall take the place of
such witnesses' direct testimonies; and
The parties' documentary or object evidence, if any, which shall be
attached to the judicial affidavits and marked as Exhibits A, B, C, and
so on in the case of the complainant or the plaintiff, and as Exhibits 1,
2, 3, and so on in the case of the respondent or the defendant.
(b) Should a party or a witness desire to keep the original document or
object evidence in his possession, he may, after the same has been
identified, marked as exhibit, and authenticated, warrant in his judicial
affidavit that the copy or reproduction attached to such affidavit is a
faithful copy or reproduction of that original. In addition, the party or
witness shall bring the original document or object evidence for
comparison during the preliminary conference with the attached copy,
reproduction, or pictures, failing which the latter shall not be admitted.
3
This is without prejudice to the introduction of secondary evidence in
place of the original when allowed by existing rules.
Incidentally, the failure to comply with Section 2 of the Judicial Affidavit
Rule shall result to a waiver of the submission of the required judicial
affidavits and exhibits. However, the court may, upon valid cause
shown, allow the late submission of the judicial affidavit, subject to
specific penalties, constituting a fine of not less than One Thousand
Pesos (Php 1,000.00), nor more than Five Thousand Pesos (Php
5,000.00), at the discretion of the court.36
Despite the noble purpose of the Judicial Affidavit Rule, Lagon comes
to this Court bewailing the same procedural regulation as violative of
his right to due process of law, in that it "forces" him to present evidence
even before the plaintiff has rested his case, apparently in violation of
the rule on demurrer to evidence.
Juxtaposing the Judicial Affidavit Rule with that of the rule on demurrer
to evidence, it becomes all too apparent that there exists no conflict
between them. Similar to the judicial affidavit, a demurrer to evidence
likewise abbreviates judicial proceedings, and serves as an instrument
for the expeditious termination of an action.37 It is as "an objection or
exception by one of the parties in an action at law, to the effect that the
evidence which his adversary produced is insufficient in point of law
(whether true or not) to make out his case or sustain the issue."38 All
that it grants is an option to a defendant, to seek the dismissal of the
case, should he believe that the plaintiff failed to establish his right to
relief. The demurrer challenges the sufficiency of the plaintiffs evidence
to sustain a verdict.39 Thus, in passing upon the sufficiency of the
evidence raised in a demurrer, the court is merely required to ascertain
whether there is competent or sufficient proof to sustain the plaintiff's
complaint.
Clearly, both the Judicial Affidavit Rule and Demurrer to Evidence can
co-exist harmoniously as tools for a more efficient and speedy
administration of trial procedures. On the one hand, the Judicial
Affidavit Rule simply dispenses with the direct testimony, thereby
reducing the time at which a case stands for trial, in the same way that
the Demurrer to Evidence abbreviates proceedings by allowing the
defendant to seek for an early resolution of the case should the plaintiff be
unable to sufficiently prove his complaint. These rules do not conflict, and
when used hand in hand will lead to an efficient administration of the trial.
Moreover, by no stretch of the imagination may it be concluded that Lagon was
deprived of due process of law. There is nothing in the provisions of the
Judicial Affidavit Rule, which prohibits a defendant from filing a demurrer to
evidence, if he truly believes that the evidence adduced by the plaintiff is
insufficient. Besides, in the resolution of the demurrer to evidence, only the
evidence presented by the plaintiff shall be considered and weighed by the
Court.
Furthermore, the fact that the defendant is mandated to submit his judicial
affidavit prior to the trial and before the plaintiff has rested his case is not a
cumbersome requirement or a circumvention of due process. On the contrary,
this Is necessary for the orderly administration of the proceeding before the
courts. It must be remembered that in as early as the pre-trial conference, the
defendant is already required to submit a pre-trial brief, where he is then
tasked to state the number and names of his witnesses, as well as the
substance of their testimonies; the issues to be tried and resolved; and the
documents or exhibits to be presented and the purpose thereof.40 Thus, the
defendant is already required in this early stage of the proceedings to
formulate his defense and plan his strategy to counter the plaintiffs complaint.
There is nothing too tedious or burdensome in requiring the submission of the
judicial affidavit. In fact, this would even help the defendant in preparing his
opposing arguments against the plaintiff.
All told, the Court has always emphasized that "procedural rules should be
treated with utmost respect and due regard, since they are designed to
facilitate the adjudication of cases to remedy the worsening problem of delay
in the resolution of rival claims and in the administration of justice."41 It cannot
be overemphasized that when the rules are clear, magistrates are mandated
to apply them. Judge Velasco honored this principle by issuing the assailed
order requiring the submission of judicial affidavits before the commencement
of the trial of the case. Accordingly, he cannot be deemed to have acted with
grave abuse of discretion amounting to lack or excess of jurisdiction by strictly
enforcing the Court's rules. Perforce, the Petition for Certiorari must be
dismissed.
WHEREFORE, premises considered, the instant Petition for Certiorari is
DENIED for lack of merit. The Order dated June 6, 2013 in Civil Case No.
2293, issued by Hon. Dennis A. Velasco, Presiding Judge, Municipal Trial
Court in Cities, Koronadal City, is AFFIRMED.
SO ORDERED.
4
G.R. No. 226130, February 19, 2018
LILIA S. DUQUE AND HEIRS OF MATEO DUQUE, NAMELY: LILIA S.
DUQUE, ALMA D. BALBONA, PERPETUA D. HATA, MARIA NENITA D.
DIENER, GINA D. YBAÑEZ, AND GERVACIO S. DUQUE, Petitioners, v.
SPOUSES BARTOLOME D. YU, JR. AND JULIET O. YU AND DELIA DUQUE
CAPACIO, Respondents.
DECISION
VELASCO JR., J.:
This Petition for Review on Certiorari under Rule 45 of the Rules of Court
assails the Decision1 and the Resolution2 dated September 30, 2014 and July
14, 2016, respectively, of the Court of Appeals (CA) in CA-G.R. CV No. 04197.
The facts are undisputed.
The herein petitioner Lilia S. Duque and her late husband, Mateo Duque
(Spouses Duque), were the lawful owners of a 7,000-square meter lot in
Lambug, Badian, Cebu, covered by Tax Declaration (TD) No. 05616 (subject
property). On August 28, 1995, Spouses Duque allegedly executed a Deed of
Donation over the subject property in favor of their daughter, herein
respondent Delia D. Capacio (Capacio), who, in turn, sold a portion thereof,
i.e., 2,745 square meters, to her herein co-respondents Spouses Bartolome
D. Yu, Jr. and Juliet O. Yu (Spouses Yu).3
With that, Spouses Duque lodged a Verified Complaint for Declaration of Non-
Existence and Nullity of a Deed of Donation and Deed of Absolute Sale and
Cancellation of TD (Complaint) against the respondents before the Regional
Trial Court (RTC) of Barili, Cebu, docketed as Civil Case No. CEB-BAR-469,
claiming that the signature in the Deed of Donation was forged. Spouses
Duque then prayed (1) to declare the Deeds of Donation and of Absolute Sale
null and void; (2) to cancel TD No. 01-07-05886 in the name of respondent
Juliet Yu (married to respondent Bartolome Yu); and (3) to revive TD No.
05616 in the name Mateo Duque (married to petitioner Lilia Duque).4
In her Answer, respondent Capacio admitted that the signature in the Deed of
Donation was, indeed, falsified but she did not know the author thereof.
Respondents Spouses Yu, for their part, refuted Spouses Duque's personality
to question the genuineness of the Deed of Absolute Sale for it was their
daughter who forged the Deed of Donation. They even averred that Spouses
Duque's action was already barred by prescription.5
On September 26, 2008, a Motion for Admission by Adverse Party under Rule
26 of the Rules of Court (Motion for Admission) was filed by respondents
Spouses Yu requesting the admission of these documents: (1) Real Estate
Mortgage (REM); (2) Deed of Donation; (3) Contract of Lease; (4) TD No. 07-
05616; (5) TD No. 14002-A; (6) Deed of Absolute Sale; and (7) TD No. 01-07-
05886. In an Order dated October 3, 2008,6 Spouses Duque were directed to
comment thereon but they failed to do so. By their silence, the trial court, in an
Order dated November 24, 2008,7 pronounced that they were deemed to have
admitted the same.8
Thus, during trial, instead of presenting their evidence, respondents Spouses
Yu moved for demurrer of evidence in view of the aforesaid pronouncement.
Spouses Duque vehemently opposed such motion. In an Order dated January
5, 2011,9 the trial court granted the demurrer to evidence and, thereby,
dismissed the Complaint. Spouses Duque sought reconsideration, which was
denied in an Order dated September 21, 2011.10
On appeal, the CA, in its now assailed Decision dated September 30, 2014,
affirmed in toto the aforesaid Orders. It agreed with the trial court that Spouses
Duque's non-compliance with the October 3, 2008 Order resulted in the
implied admission of the Deed of Donation's authenticity, among other
documents. Notably, Spouses Duque did not even seek reconsideration
thereof. With such admission, the trial court ruled that Spouses Duque have
nothing more to prove or disprove and their entire evidence has been rendered
worthless.11 Spouses Duque moved for reconsideration but was denied for
lack of merit in the questioned CA Resolution dated July 14, 2016. Meanwhile,
in view of Mateo Duque's demise, his heirs substituted for him as petitioners
in this case.
Hence, this petition imputing errors on the part of the CA (1) in holding that
petitioners' failure to reply to the request for admission is tantamount to an
implied admission of the authenticity and genuineness of the documents
subject thereof; and (2) in not ruling that the dismissal of the petitioners'
Complaint based on an improper application of the rule on implied admission
will result in unjust enrichment at the latter's expense.12
The petition is impressed with merit.
The scope of a request for admission under Rule 26 of the Rules of Court and
a party's failure to comply thereto are respectively detailed in Sections 1 and
2 thereof, which read:
SEC. 1. Request for admission. - At any time after issues have been joined, a
party may file and serve upon any other party a written request for the
5
admission by the latter of the genuineness of any material and relevant
document described in and exhibited with the request or of the truth of any
material and relevant matter of fact set forth in the request. Copies of the
documents shall be delivered with the request unless copies have already
been furnished.
SEC. 2. Implied admission. - Each of the matters of which an admission is
requested shall be deemed admitted unless, within a period designated in the
request, which shall not be less than fifteen (15) days after service thereof, or
within such further time as the court may allow on motion, the party to whom
the request is directed files and serves upon the party requesting the
admission a sworn statement either denying specifically the matters of which
an admission is requested or setting forth in detail the reasons why he cannot
truthfully either admit or deny those matters.
Objections to any request for admission shall be submitted to the court by the
party requested within the period for and prior to the filing of his sworn
statement as contemplated in the preceding paragraph and his compliance
therewith shall be deferred until such objections are resolved, which resolution
shall be made as early as practicable. (Emphases supplied.)
Clearly, once a party serves a request for admission as to the truth of any
material and relevant matter of fact, the party to whom such request is served
has 15 days within which to file a sworn statement answering it. In case of
failure to do so, each of the matters of which admission is requested shall be
deemed admitted. This rule, however, admits of an exception, that is, when
the party to whom such request for admission is served had already
controverted the matters subject of such request in an earlier pleading.
Otherwise stated, if the matters in a request for admission have already been
admitted or denied in previous pleadings by the requested party, the latter
cannot be compelled to admit or deny them anew. In turn, the requesting party
cannot reasonably expect a response to the request and, thereafter, assume
or even demand the application of the implied admission rule in Section 2, Rule
26.13 The rationale is that "admissions by an adverse party as a mode of
discovery contemplates of interrogatories that would clarify and tend to shed
light on the truth or falsity of the allegations in a pleading, and does not refer
to a mere reiteration of what has already been alleged in the pleadings; or else,
it constitutes an utter redundancy and will be a useless, pointless process
which petitioner should not be subjected to."14
Here, the respondents served the request for admission on the petitioners to
admit the genuineness and authenticity of the Deed of Donation, among other
documents. But as pointed out by petitioners, the matters and documents
being requested to be admitted have already been denied and controverted in
the previous pleading, that is, Verified Complaint for Declaration of Non-
Existence and Nullity of a Deed of Donation and Deed of Absolute Sale and
Cancellation of TD. In fact, the forgery committed in the Deed of Donation was
the very essence of that Complaint, where it was alleged that being a forged
document, the same is invalid and without force and legal effect. Petitioners,
therefore, need not reply to the request for admission. Consequently, they
cannot be deemed to have admitted the Deed of Donation's genuineness and
authenticity for their failure to respond thereto.
Moreover, in respondents Spouses Yu's criminal case for estafa15 against
respondent Capacio, which they filed immediately upon receipt of a summon
in relation to the Complaint of Spouses Duque, one of the allegations therein
was the forgery committed in the very same Deed of Donation, which
authenticity and genuineness they want petitioners to admit in their request for
admission. In support thereof, respondents Spouses Yu even utilized the
questioned document report of the Philippine National Police (PNP) Regional
Crime Laboratory Office certifying that the signature in the Deed of Donation
is a forgery. Thus, it is then safe to conclude that their request for admission
is a sham.
Having said that there was no implied admission of the genuineness and
authenticity of the Deed of Donation, this Court, thus, holds that it was also an
error for the trial court to grant the demurrer to evidence.
To recapitulate, the demurrer to evidence was anchored on the alleged implied
admission of the Deed of Donation's genuineness and authenticity. The trial
court granted the demurrer holding that with the said implied admission,
respondents Spouses Yu's claim became undisputed and Spouses Duque
have nothing more to prove or disprove. This is despite its own fmdings that
the opinion of the handwriting expert and the Answer of respondent Capacio,
both confirmed the fact of forgery. The trial court easily disregarded this on
account of the said implied admission. The CA, on appeal, affirmed the trial
court.
But in view of this Court's findings that there was no implied admission to speak
of, the demurrer to evidence must, therefore, be denied and the Orders
granting it shall be considered void.
Section 1, Rule 33 of the Rules of Court provides for the consequences of a
reversal on appeal of a demurrer to evidence, thus:
SECTION 1. Demurrer to evidence. After the plaintiff has completed the
presentation of his evidence, the defendant may move for dismissal on the
ground that upon the facts and the law the plaintiff has shown no right to relief
If his motion is denied, he shall have the right to present evidence. If the motion
6
is granted but on appeal the order of dismissal is reversed he shall be deemed
to have waived the right to present evidence.
Citing Generoso Villanueva Transit Co., Inc. v. Javellana,16 this Court in
Radiowealth Finance Company v. Spouses Del Rosario17 explained the
consequences of a demurrer to evidence in this wise:
The rationale behind the rule and doctrine is simple and logical. The defendant
is permitted, without waiving his right to offer evidence in the event that his
motion is not granted, to move for a dismissal (i.e., demur to the plaintiffs
evidence) on the ground that upon the facts as thus established and the
applicable law, the plaintiff has shown no right to relief. If the trial court denies
the dismissal motion, i.e., finds that plaintiffs evidence is sufficient for an award
of judgment in the absence of contrary evidence, the case still remains before
the trial court which should then proceed to hear and receive the defendants
evidence so that all the facts and evidence of the contending parties may be
properly placed before it for adjudication as well as before the appellate courts,
in case of appeal. Nothing is lost. The doctrine is but in line with the established
procedural precepts in the conduct of trials that the trial court liberally receive
all proffered evidence at the trial to enable it to render its decision with all
possibly relevant proofs in the record, thus assuring that the appellate courts
upon appeal have all the material before them necessary to make a correct
judgment, and avoiding the need of remanding the case for retrial or reception
of improperly excluded evidence, with the possibility thereafter of still another
appeal, with all the concomitant delays. The rule, however, imposes the
condition by the same token that if his demurrer is granted by the trial court,
and the order of dismissal is reversed on appeal, the movant loses his right to
present evidence in his behalf and he shall have been deemed to have elected
to stand on the insufficiency of plaintiffs case and evidence. In such event, the
appellate court which reverses the order of dismissal shall proceed to render
judgment on the merits on the basis of plaintiffs evidence. (Underscoring in the
original, italics partly in the original and partly supplied.)
In short, defendants who present a demurrer to the plaintiffs' evidence retain
the right to present their own evidence, if the trial court disagrees with them; if
it agrees with them, but on appeal, the appellate court disagrees and reverses
the dismissal order, the defendants lose the right to present their own
evidence. The appellate court shall, in addition, resolve the case and render
judgment on the merits, inasmuch as a demurrer aims to discourage prolonged
litigations.18
With this Court's denial of the demurrer to evidence, it will now proceed to rule
on the merits of the Complaint solely on the basis of the petitioners' evidence
on record.
Here, it would appear from the trial court's January 5, 2011 Order that the
evidence for the petitioners consists mainly of the testimony of the handwriting
expert witness and the Answer of respondent Capacio, which both confirmed
that the signature in the Deed of Donation was, indeed, falsified. With these
pieces of evidence and nothing more, this Court is inclined to grant the
petitioners' Complaint. Being a falsified document, the Deed of Donation is
void and inexistent. As such, it cannot be the source of respondent Capacio's
transferable right over a portion of the subject property. Being a patent nullity,
respondent Capacio could not validly transfer a portion of the subject property
in favor of respondents Spouses Yu under the principle of "Nemo dat quod non
habet," which means "one cannot give what one does not have."19 As a
consequence, the subsequent Deed of Absolute Sale executed by respondent
Capacio in favor of respondents Spouses Yu has no force and effect as the
former is not the owner of the property subject of the sale contract. In effect,
the tax declarations in the respective names of respondents Capacio and Juliet
O. Yu are hereby ordered cancelled and the tax declaration in the name of
Mateo Duque, et al. is ordered restored.
WHEREFORE, premises considered, the petition is GRANTED.
The CA Decision and Resolution dated September 30, 2014 and July 14, 2016,
respectively, in CA-G.R. CV No. 04197 are hereby REVERSED and SET
ASIDE and a new judgment is hereby rendered as follows: (1) the petitioners'
Complaint is hereby GRANTED; (2) both the Deeds of Donation and of
Absolute Sale are declared VOID; (3) Tax Declaration Nos. 14002-A and 01-
07-05886 in the names of respondents Capacio and Juliet O. Yu, respectively,
are hereby CANCELLED; and (4) Tax Declaration No. 05616 in the name of
Mateo Duque, et al. is hereby RESTORED.
SO ORDERED.
7
FIRST DIVISION
G.R. No. 194262, February 28, 2018 2. The [respondent] to pay the accrued rental arrearages from December 2003
BOBIE ROSE D. V. FRIAS, AS REPRESENTED BY MARIE REGINE F. up to the time he vacates the property in the amount of THIRTY THOUSAND
FUJITA, Petitioner, v.ROLANDO F. ALCAYDE, Respondent. PESOS (Php30,000.00) per month with twelve (12%) percent legal interest;
DECISION and
TIJAM, J.:
"Due process dictates that jurisdiction over the person of a defendant can only 3. The [respondent] to pay the [petitioner] the amount of TEN THOUSAND
be acquired by the courts after a strict compliance with the rules on the proper PESOS (Php10,000.00) as reasonable attorney's fees and to pay the cost of
service of summons."1 the suit.

Challenged in this appeal2 is the Decision3 dated May 27, 2010 and SO ORDERED.10
Resolution4 dated October 22, 2010 of the Court of Appeals (CA) in CA-G.R. On July 4, 2007, the MeTC issued an Order,11 granting petitioner's Motion to
SP No. 109824. execute the Decision dated July 26, 2006, and denying respondent's Omnibus
Motion thereto.
The facts are as follows:
On July 25, 2007, respondent filed a Petition for Annulment of Judgment with
On December 5, 2003, petitioner Bobie Rose D.V. Frias, as lessor and Prayer for Issuance of TRO and/or Injunction,12 with the Regional Trial Court
respondent Rolando Alcayde, as lessee, entered into a Contract of Lease (RTC), Muntinlupa City, Branch 203. Respondent averred that the MeTC's July
involving a residential house and lot (subject property) located at No. 589 26, 2006 Decision does not bind him since the court did not acquire jurisdiction
Batangas East, Ayala Alabang Village, Muntinlupa City, for a period of one over his person. Respondent likewise averred that the MeTC lacked
year, starting on December 5, 2003 up until December 4, 2004, with a monthly jurisdiction over the case for two reasons: (1) petitioners' complaint has no
rental of Thirty Thousand Pesos (P30,000). Respondent refused to perform cause of action for failure to make a prior demand to pay and to vacate; and
any of his contractual obligations, which had accumulated for 24 months in (2) petitioner's non-referral of the case before the barangay.13
rental arrearages as of December 2005.5
A copy of the petition for annulment of judgment was allegedly served to the
This prompted petitioner to file a Complaint for Unlawful Detainer,6 docketed petitioner. Based on the Officer's Return14 dated July 27, 2007, Sheriff IV
as CV Case No. 6040, with the Metropolitan Trial Court (MeTC), Muntinlupa Jocelyn S. Tolentino (Sheriff Tolentino) caused the "service of a Notice of
City, Branch 80, against the respondent.7 As per the Process Server's Raffle and Summons together with a copy of the complaints and its annexes"
Return8 dated February 14, 2006, the process server, Tobias N. Abellano (Mr. to the petitioner, through Sally Gonzales (Ms. Gonzales), the secretary of
Abellano) tried to personally serve the summons to respondent on January 14 petitioner's counsel, Atty. Daniel S. Frias (Atty. Frias).
and 22, 2006, but to no avail. Through substituted service, summons was
served upon respondent's caretaker, May Ann Fortiles (Ms. Fortiles). On September 7, 2007, the RTC, through Judge Pedro M. Sabundayo, Jr.
issued an Order,15 containing therein the manifestation of respondent that he
On July 26, 2006, the MeTC rendered a Decision,9 in favor of the petitioner is withdrawing his application for a TRO and is now pursuing the main case for
and ordered respondent to vacate the subject premises and to pay the annulment of judgment.
petitioner the accrued rentals at 12% legal interest, plus P10,000 in attorney's
fees. The dispositive portion reads, thus: On September 25, 2007, respondent filed an Ex-Parte Motion,16 to declare
WHEREFORE, judgment is hereby rendered in favor of the [petitioner] and petitioner in default, on the ground that despite her receipt of the summons,
against [respondent] ordering: she has yet to file any pleading.17

1. The [respondent] and all persons claiming right over him to immediately On October 3, 2007, the petitioner filed a Special Appearance/Submission
vacate the subject premises located at No. 589 Batangas East, Ayala Alabang (Jurisdictional Infirmity Raised),18 alleging among others, that respondent's
Village, Muntinlupa City and peacefully surrender possession thereof to the Motion to Revive Relief re: Issuance of a TRO merits neither judicial
[petitioner]; cognizance nor consideration.19
8
 Reconsider29 the RTC's December 3, 2007 Order, reiterating in substance the
On October 30, 2007 the MeTC issued a Writ of Execution, 20 for the purpose November 29, 2007 Preliminary Submission. Petitioner alleged, among others,
of implementing its July 26, 2006 Decision. that the RTC's December 3, 2007 Order violated the well-settled rule that a
writ of injunction is not proper where its purpose is to take property out of the
On November 5, 2007, Sheriff III Armando S. Camacho, sent a Notice to Pay possession or control of one person and place the same in the hands of
and to Vacate21 to respondent. Attached to the notice was the October 30, another where title has not been clearly established by law. 30
2007 Writ of Execution.
On August 22, 2008, the RTC issued an Order, 31 granting petitioner's
In the RTC's Order22dated November 15, 2007, the RTC issued a TRO November 29, 2007 Preliminary Submission. The RTC ruled that the summons
enjoining the MeTC from implementing its July 26, 2006 Decision, and setting and copies of the petition and its attachments were not duly served upon
the hearing for respondent's prayer for writ of preliminary injunction. 23 petitioner, either personally or through substituted service of summons strictly
in accordance with the Rules. The RTC continued that there is no proof that
On November 29, 2007, petitioner, through her representative, Marie Regine Ms. Gonzales or Atty. Frias was authorized by the petitioner to receive
F. Fujita (Ms. Fujita), filed a Preliminary Submission to Dismiss Petition - summons on her behalf. Since the face of the Officer's Return is patently
Special Appearance Raising Jurisdictional Issues (Preliminary. Submission), defective, the RTC ruled that the presumption of regularity of performance of
on the ground of lack of jurisdiction over her person.24 She pointed out that the duty under the Rules does not apply. The RTC, thus, ordered the dismissal of
defect in the service of summons is immediately apparent on the Officer's the petition for annulment of judgment.32The dispositive portion of which reads,
Return, since it did not indicate the impossibility of a personal service within a thus:
reasonable time; it did not specify the efforts exerted by Sheriff Tolentino to WHEREFORE, premises considered, the preliminary submission to dismiss
locate the petitioner; and it did not certify that the person in the office who petition and Omnibus Motion filed by [petitioner] Bobbie Rose DV Frias are
received the summons in petitioner's behalf was one with whom the petitioner granted and the petition for annulment of judgment filed by Rolando Alcayde
had a relation of confidence ensuring that the latter would receive or would be is DISMISSED. The Order of the court dated December 3, 2007 granting the
notified of the summons issued in her name.25 issuance of a preliminary injunction is recalled and set aside considering that
since the court has not acquired jurisdiction over the person of the [petitioner],
On December 3, 2007, the RTC issued an Order, 26 granting respondent's all the proceedings in this case are without any force and effect.
prayer for the issuance of a writ of preliminary injunction, to enjoin the MeTC's SO ORDERED.33
July 26, 2006 Decision. The RTC ruled that although Atty. Frias maintained On September 4, 2008, respondent filed a Manifestation and Motion,34 praying
his. special appearance, he actively participated in the proceedings by for the recall of the August 22, 2008 Order and/or to maintain the status quo.
attending the summary hearing in the prayer for the issuance of the TRO on
November 9, 2007 and November 20, 2007. The dispositive portion reads, On September 15, 2008, respondent filed a Motion for Reconsideration 35 of
thus: the August 22, 2008 Order.
WHEREFORE, premises considered, the Court grants [respondent's prayer
for the issuance of a preliminary injunction. Accordingly, the Court enjoins On October 6, 2008, petitioner filed a Consolidated Opposition,36 alleging that
respondent and the Court Sheriff of Metropolitan Trial Court, Branch 80, the RTC held in abeyance the resolution of her November 29, 2007 Preliminary
Muntinlupa City and or his deputy or duly authorized representative(s) from Submission, for eight (8) months until it issued its August 22, 2008 Order. She
implementing or enforcing the decision dated July 26, 2006 in Civil Case No. likewise alleged that there was nothing in the RTC's December 3, 2007 Order
6040 during the pendency of this action. that categorically denied the November 29, 2007 Preliminary Submission. 37

SO ORDERED.27 On November 3, 2008, the RTC, through Judge Juanita T. Guerrero, issued
On July 25, 2008, the law office of Real Brotarlo & Real entered its appearance an Order,38 granting respondent's Motion for Reconsideration, on the ground
as collaborating counsel for the petitioner.28 that he was not given an opportunity to file his Comment or Opposition to
petitioner's August 11, 2008 Manifestation and Omnibus Motion. The
On August 11, 2008, petitioner filed a Manifestation and Omnibus Motion to dispositive portion of the order reads, thus:
Dismiss Petition for Annulment of Judgment and to Set Aside and/or
9
IN VIEW THEREOF, the Motion for Reconsideration is hereby GRANTED. The
Order of the Court dated August 22, 2008 is recalled and set aside. The
[respondent] is given fifteen (15) days from receipt of this order to file his
Comment or Opposition or reiterates the one he filed, on the Manifestation and
Omnibus Motion (i.) to Dismiss Petition for Annulment of Judgment (ii.) to Set
Aside and/or Reconsider the Order dated December 3, 2007 and [petitioner]
Bobbie Rose D.V. Frias through his counsel is given fifteen (15) days
therefrom to file his Reply if necessary. Thereafter, said Manifestation and
Omnibus Motion is considered submitted for resolution.
SO ORDERED.39
On November 17, 2008, respondent filed a Manifestation (in compliance with
the Order dated November 3, 2008) and Supplement,40 substantially
reiterating his September 15, 2008 Motion for Reconsideration.
On November 28, 2008, petitioner filed a Manifestation and Reply (to
Alcayde's Comment dated August 19, 2008 and Supplement dated November
12, 2008).41
On February 2, 2009, the RTC issued an Order42 denying petitioner's. August
11, 2008 Manifestation and Omnibus Motion, the dispositive portion of which
reads, thus:
WHEREFORE, finding no reason to deviate from the Order of the Court dated
December 3, 2007, the same is hereby maintained with modification that the
Writ of Preliminary Injunction shall be issued upon filing of a bond in the
amount of Php500,000.00 by the [respondent]. For emphasis, the Motion to
Dismiss this petition for lack of jurisdiction is hereby DENIED.
The petitioner BOBIE ROSE D. FRIAS is directed to file his ANSWER within a
non-extendible period of ten (10) days from receipt of this Order.
SO ORDERED.43
On February 20, 2009, petitioner moved for the reconsideration44 of the RTC's
February 2, 2009 Order, but the same was denied in the RTC's Order 45 dated
June 5, 2009.
On July 15, 2009, respondent filed an Ex-Parte Motion for Default,46 to declare
petitioner in default for the latter's failure to comply with the RTC's February 2,
2009 order requiring her to file an answer to the Petition for Annulment of
Judgment.
Aggrieved, petitioner filed a Petition for Certiorari47 with the CA, to which
respondent answered by way of a Comment.48 After the filing of petitioner's
Reply,49 the CA on May 27, 2010 rendered a Decision,50denying the
petitioner's Petition for Certiorari for lack of merit.
The Motion for Reconsideration,51 having been denied by the CA in its
Resolution dated October 22, 2010,52 petitioner filed this Petition for Review
on Certiorari, raising the following issues:
I. WHETHER OR NOT THE PUBLIC RESPONDENT COURT OF AP[P]EALS
ERRED IN NOT HOLDING THAT THE PAIRING JUDGE OF RTC 203
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN NOT DISMISSING [RESPONDENT'S
PETITION FOR ANNULMENT OF JUDGMENT ON A GROUND THAT THE
RTC 203 DID NOT ACQUIRE JURISDICTION OVER THE PETITIONER.
II. WHETHER OR NOT THE PUBLIC RESPONDENT COURT OF APPEALS
GRAVELY ERRED IN HOLDING THAT THE RTC 203 NEED NOT ACQUIRE
JURISDICTION OVER THE PETITIONER AS LONG AS SAID RTC 203 HAS
ACQUIRED JURISDICTION OVER THE RES.
III. WHETHER OR NOT THE PUBLIC RESPONDENT COURT OF APPEALS
ERRED IN NOT HOLDING THAT THE PAIRING JUDGE OF RTC 203
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN NOT SETTING ASIDE THE ORDER DATED
DECEMBER 3, 2007 OF THE RTC ENJOINING PETITIONER AND SHERIFF
OF THE METROPOLITAN TRIAL COURT, BRANCH 80 OF MUNTINLUPA
CITY FROM IMPLEMENTING ITS FINAL AND EXECUTORY DECISION
DATED JULY 26, 2006.53
On the one hand, petitioner contends that the CA erred in not dismissing
respondent's petition for annulment of judgment on the ground of lack of
jurisdiction over her person. She maintains that since an annulment of
judgment is a personal action, it is necessary for the RTC to acquire jurisdiction
over her person. She likewise insists that the CA erred in not setting aside the
RTC's Decision dated December 3, 2007.
On the other hand, the CA ruled that a petition for annulment of judgment is
not an action in personam, thus, the court need not acquire jurisdiction over
the person of the petitioner, as long as it has acquired jurisdiction over the res,
which in this case was through the filing of the petition for annulment of
judgment with the RTC. This pronouncement was adopted by the respondent
in his comment to the instant petition.
The petition is meritorious.
It is elementary that courts acquire jurisdiction over the plaintiff or petitioner
10
once the complaint or petition is filed. On the other hand, there are two ways
through which jurisdiction over the defendant or respondent is acquired
through coercive process - either through the service of summons upon them
or through their voluntary appearance in court.
The function of summons in court actions
In the case of Guiguinto Credit Cooperative, Inc. (GUCCI) v. Torres,54 We
discussed the function of summons in court actions, in this wise —
Fundamentally, the service of summons is intended to give official notice to
the defendant or respondent that an action has been commenced against it.
The defendant or respondent is thus put on guard as to the demands of the
plaintiff as stated in the complaint. The service of summons upon the
defendant becomes an important element in the operation of a court's
jurisdiction upon a party to a suit, as service of summons upon the defendant
is the means by which the court acquires jurisdiction over his person. Without
service of summons, or when summons are improperly made, both the trial
and the judgment, being in violation of due process, are null and void, unless
the defendant waives the service of summons by voluntarily appearing and
answering the suit.
When a defendant voluntarily appears, he is deemed to have submitted
himself to the jurisdiction of the court. This is not, however, always the case.
Admittedly, and without subjecting himself to the court's jurisdiction, the
defendant in an action can, by special appearance object to the court's
assumption on the ground of lack of jurisdiction. If he so wishes to assert this
defense, he must do so seasonably by motion for the purpose of objecting to
the jurisdiction of the court, otherwise, he shall be deemed to have submitted
himself to that jurisdiction.55
Elsewhere, We declared that jurisdiction of the court over the person of the
defendant or respondent cannot be acquired notwithstanding his knowledge
of the pendency of a case against him unless he was validly served with
summons. Such is the important role a valid service of summons plays in court
actions.56
Nature of a petition for annulment of judgment for purposes of service of
summons
For a proper perspective, it is crucial to underscore the necessity of
determining first whether the action subject of this appeal is in personam, in
rem, or quasi in rem because the rules on service of summons under Rule 14
apply according to the nature of the action.57
An action in personam is a proceeding to enforce personal rights and
obligations brought against the person and is based on the jurisdiction of the
person, although it may involve his right to, or the exercise of ownership of,
specific property, or seek to compel him to control or dispose of it in
accordance with the mandate of the court. Its purpose is to impose, through
the judgment of a court, some responsibility or liability directly upon the person
of the defendant. Of this character are suits to compel a defendant to
specifically perform some act or actions to fasten a pecuniary liability on
him.58 The following are some of the examples of actions in personam: action
for collection of sum of money and damages; action for unlawful detainer or
forcible entry; action for specific performance; action to enforce a foreign
judgment in a complaint for a breach of contract.
Actions in rem are actions against the thing itself. They are binding upon the
whole world.59 The phrase, "against the thing," to describe in rem. actions is a
metaphor. It is not the "thing" that is the party to an in rem action; only legal or
natural persons may be parties even in in rem actions.60 The following are
some of the examples of actions in rem: petitions directed against the "thing"
itself or the res which concerns the status of a person, like a petition for
adoption, correction of entries in the birth certificate; or annulment of marriage;
nullity of marriage; petition to establish illegitimate filiation; registration of land
under the Torrens system; and forfeiture proceedings.
A proceeding quasi in rem is one brought against persons seeking to subject
the property of such persons to the discharge of the claims assailed. 61 In an
action quasi in rem, an individual is named as defendant and the purpose of
the proceeding is to subject his interests therein to the obligation or loan
burdening the property.62 In an action quasi in rem, an individual is named as
defendant. But, unlike suits in rem, a quasi in rem judgment is conclusive only
between the parties.63 The following are some of the examples of
actions quasi in rem: suits to quiet title; actions for foreclosure; and attachment
proceedings.
In actions in personam, the judgment is for or against a person directly.
Jurisdiction over the parties is required in actions in personam because they
seek to impose personal responsibility or liability upon a person. 64 "In a
proceeding in rem or quasi in rem, jurisdiction over the person of the defendant
is not a prerequisite to confer jurisdiction on the court, provided that the latter
has jurisdiction over the res. Jurisdiction over the res is acquired either (a) by
the seizure of the property under legal process, whereby it is brought into
actual custody of the law; or (b) as a result of the institution of legal
proceedings, in which the power of the court is recognized and made
effective. "65
Here, respondent filed a petition to annul the MeTC's July 26, 2006 Decision,
11
which ordered him to vacate the premises of the subject property and to pay
the petitioner the accrued rentals thereon, in violation of the parties' lease
contract.
Annulment of judgment, as provided for in Rule 47, is based only on the
grounds of extrinsic fraud and lack of jurisdiction. Jurisprudence, however,
recognizes lack ,of due process as an additional ground to annul a
judgment.66 It is a recourse that presupposes the filing of a separate and
original action for the purpose of annulling or avoiding a decision in another
case. Annulment is a remedy in law independent of the case where the
judgment sought to be annulled is rendered.67 It is unlike a motion for
reconsideration, appeal or even a petition for relief from judgment, because
annulment is not a continuation or progression of the same case, as in fact the
case it seeks to annul is already final and executory. Rather, it is an
extraordinary remedy that is equitable in character and is permitted only in
exceptional cases.68
Annulment of judgment involves the exercise of original jurisdiction, as
expressly conferred on the CA by Batas Pambansa Bilang (BP Blg.) 129,
Section 9(2). It also implies power by a superior court over a subordinate one,
as provided for in Rule 47, wherein the appellate court may annul a decision
of the regional trial court, or the latter court may annul a decision of the
municipal or metropolitan trial court.69
For purposes of summons, this Court holds that the nature of a petition for
annulment of judgment is in personam, on the basis of the following reasons:
First, a petition for annulment of judgment is an original action, which is
separate, distinct and independent of the case where the judgment sought to
be annulled is rendered. It is not a continuation or progression of the same
case. Thus, regardless of the nature of the original action in the decision
sought to be annulled, be it in personam, in rem or quasi in rein, the
respondent should be duly notified of the petition seeking to annul the court's
decision over which the respondent has a direct or indirect interest.
To consider a petition for annulment of judgment as either in rem or quasi-in-
rem, would create an absurdity wherein the petitioner would simply file the
petition in court, without informing the respondent of the same, through a valid
service of summons. This is exactly what the CA reasoned out in its decision.
The CA held that the court need only acquire jurisdiction over the res, which
was "through the institution of the petition for annulment of judgment" with the
RTC, conveniently invoking that "jurisdiction over the res x x x is x x x acquired
x x x as a result of the institution of legal proceedings with the court"70 If left
unchecked, this disposition would set a dangerous precedent that will sanction
a violation of due process. It will foil a respondent from taking steps to protect
his interest, merely because he was not previously informed of the pendency
of the petition for annulment of judgment filed in court.
Second, a petition for annulment of judgment and the court's subsequent
decision thereon will affect the parties alone. It will not be enforceable against
the whole world. Any judgment therein will eventually bind only the parties
properly impleaded.
Pursuant to Section 7, Rule 47,71 a judgment of annulment shall set aside the
questioned judgment or final order or resolution and render the same null and
void.
In this case, had the RTC granted the respondent's petition, the MeTC's July
26 2006 judgment would have been declared a nullity. This would have
resulted to the following consequences: as to the respondent, he would no
longer be required to pay the rentals and vacate the subject property; and, as
to the petitioner, she would be deprived of her right to demand the rentals and
to legally eject the respondent. Clearly, through the RTC's judgment on the
petition, only the parties' interests, i.e., rights and obligation, would have been
affected. Thus, a petition for annulment of judgment is one in personam. It is
neither an action in rem nor an action quasi in rem.
We disagree with the CA's disquisition that since jurisdiction over the res is
sufficient to confer jurisdiction on the RTC, the jurisdiction over the person of
herein petitioner may be dispensed with. Citing the case of Villanueva v.
Nite,72 the CA concluded that the petition is not an action in personam since it
can be filed by one who was not a party to the case. Suffice it to say that
in Villanueva, this Court did not give a categorical statement to the effect that
a petition for annulment of judgment is not an action in personam. Neither did
We make a remark that said petition is either an action in rem or a quasi in
rem. The issue in Villanueva was simply whether or not the CA erred in
annulling and setting aside the RTC's decision on the ground of extrinsic fraud.
Unlike in this case, there were no issues pertaining to the proper service of
summons, to the nature of a. petition for annulment of judgment or to the denial
of due process by reason of a defect in the service of summons.
We cannot likewise lend credence to the respondent's claim that a petition for
annulment of judgment is either an action in rem or quasi in rem. Suffice it to
say that the petition cannot be converted either to an action in rem or quasi in
rem since there was no showing that the respondent attached any of the
properties of the petitioner located within the Philippines.73
Assuming arguendo, that a petition for annulment of judgment is either an
12
action in rem or quasi in rem, still the observance of due process for purposes
of service of summons cannot be deliberately ignored. For courts, as
guardians of constitutional rights cannot be expected to deny persons their
due process rights while at the same time be considered as acting within their
jurisdiction.74
There was neither a valid service of summons in person nor a valid
substituted service of summons over the person of the petitioner
At any rate, regardless of the type of action - whether it is in personam, in
rem or quasi in rem — the proper service of summons is imperative.75
Where the action is in personam and the defendant is in the Philippines, as in
this case, the service of summons may be done by personal or substituted
service as laid out in Sections 676 and 777 of Rule 14. Indeed, the preferred
mode of service of summons is personal service.78 To warrant the substituted
service of the summons and copy of the complaint, (or, as in this case, the
petition for annulment of judgment), the serving officer must first attempt to
effect the same upon the defendant in person. Only after the attempt at
personal service has become impossible within a reasonable time may the
officer resort to substituted service. 79
This Court explained the nature and enumerated the requisites of substituted
service in Manotoc v. Court of Appeals, et al.,80 which We summarize and
paraphrase below:
(1) Impossibility of Prompt Personal Service - the Return to
The party relying on substituted service or the sheriff must show that defendant
cannot be served promptly or there is impossibility of prompt service.
"Reasonable time" under Section 8, Rule 14, is defined as "so much time as
is necessary under the circumstances for a reasonably prudent and diligent
man to do, conveniently, what the contract or duty requires that should be
done, having a regard for the rights and possibility of loss, if any, to the other
party."
To the plaintiff, "reasonable time" means no more than seven (7) days since
an expeditious processing of a complaint is what a plaintiff wants. To the
sheriff, "reasonable time" means 15 to 30 days because at the end of the
month, it is a practice for the branch clerk of court to require the sheriff to
submit a return of the summons assigned to the sheriff for service. Thus,
one (1) month from the issuance of summons can be considered "reasonable
time" with regard to personal service on the defendant.
Sheriffs are asked to discharge their duties on the service of summons with
due care, utmost diligence, and reasonable promptness and speed so as not
to prejudice the expeditious dispensation of justice. Thus, they are enjoined to
try their best efforts to accomplish personal service on defendant. On the other
hand, since the defendant is expected to try to avoid and evade service of
summons, the sheriff must be resourceful, persevering, canny, and diligent
in serving the process on the defendant.
For substituted service of summons to be available, there must be several
attempts by the sheriff to personally serve the summons within a reasonable
period of one (1) month which eventually resulted in failure to prove
impossibility of prompt service. "Several attempts" means at least three (3)
tries, preferably on at least two (2) different dates. In addition, the sheriff must
cite why such efforts were unsuccessful. It is only then that impossibility of
service can be confirmed or accepted.
(2) Specific Details in the Return -
The sheriff must describe in the Return of Summons the facts and
circumstances surrounding the attempted personal service. The efforts made
to find the defendant and the reasons behind the failure must be clearly
narrated in detail in the Return. The date and time of the attempts on personal
service, the inquiries made to locate the defendant, the name/s of the
occupants of the alleged residence or house of defendant and all other acts
done, though futile, to serve the summons on defendant must be specified in
justify substituted service.
(3) A Person of Suitable Age and Discretion -
If the substituted service will be effected at defendant's house or residence, it
should be left with a person of "suitable age and discretion then residing
therein." A person of suitable age and discretion is one who has attained
the age of full legal capacity (18 years old) and is considered to have enough
discernment to understand the importance of a summons. "Discretion" is
defined as "the ability to make decisions which represent a responsible choice
and for which an understanding of what is lawful, right or wise may be
presupposed." Thus, to be of sufficient discretion, such person must know how
to read and understand English to comprehend the import of the summons,
and fully realize the need to deliver the summons and complaint to the
defendant at the earliest possible time for the person to take appropriate
action. Thus, the person must have the "relation of confidence" to the
defendant, ensuring that the latter would receive or at least be notified of the
receipt of the summons. The sheriff must therefore determine if the person
found in the alleged dwelling or residence of defendant is of legal age, what
13
the recipient's relationship with the defendant is, and whether said person
comprehends the significance of the receipt of the summons and his duty to Muntinlupa City, July 27, 2007.82
immediately deliver it to the defendant or at least notify the defendant of said A perusal, however, of the Officer's Return discloses that the following
receipt of summons. These matters must be clearly and specifically described circumstances, as required in Manotoc, were not clearly-established: (a)
in the Return of Summons. personal service of summons within a reasonable time was impossible; (b)
efforts were exerted to locate the party; and (c) the summons was served upon
(4) A Competent Person in Charge - a person of sufficient age and discretion residing at the party's residence or
upon a competent person in charge of the party's office or place of business. 83
If the substituted service will be done at defendant's office or regular place of
business, then it should be served on a competent person in charge of the The Officer's Return likewise revealed that no diligent effort was exerted and
place. Thus, the person on whom the substituted service will be made must be no positive step was taken to locate and serve the summons personally on the
the one managing the office or business of defendant, such as the president petitioner. Upon having been satisfied that the petitioner was not present at
or manager; and such individual must have sufficient knowledge to understand her given address, Sheriff Tolentino immediately resorted to substituted
the obligation of the defendant in the summons, its importance, and the service of summons by proceeding to the office of Atty. Frias, petitioner's
prejudicial effects arising from inaction on the summons. Again, these counsel. Evidently, Sheriff Tolentino failed to show that she made several
details must be contained in the Return. [Emphasis and italics supplied].81 attempts to effect personal service for at least three times on at least two
A copy of Sheriff Tolentino's Return dated July 27, 2007 reads, thus: different dates. It is likewise evident that Sheriff Tolentino simply left the
OFFICER'S RETURN "Notice of Raffle and Summons" with Ms. Gonzales, the alleged secretary of
Atty. Frias. She did not even bother to ask her where the petitioner might be.
This is to certify the on the 27th day of July 2007, the undersigned caused the There were no details in the Officer's Return that would suggest that Sheriff
service of the Notice of Raffle and Summons together with a copy of the Tolentino inquired as to the identity of Ms. Gonzales. There was no showing
complaints and its annexes, to the following defendants, to wit: that Ms. Gonzales was the one managing the office or business of the
petitioner, such as the president or manager; and that she has sufficient
BOBBIE ROSE DV FRIAS — served thru Ms. Sally Gonzales, a secretary of knowledge to understand the obligation of the petitioner in the summons, its
her counsel Atty. Daniel S. Frias, a person employed thereat of suitable age importance, and the prejudicial effects arising from inaction on the summons.
and discretion to receive such court processes. Inspite of diligent efforts
exerted by the undersigned to effect personal service to the defendant, but still Indeed, without specifying the details of the attendant circumstances or of the
no one's around at her given address. efforts exerted to serve the summons, a general statement that such efforts
were made will not suffice for purposes of complying with the rules of
HON. PAULINO GALLEGOS, Presiding Judge - substituted service of summons.84 This is necessary because substituted
MTC Branch LXXX, Muntinlupa City and service is in derogation of the usual method of service. It is a method
Sheriff Armando Camacho of MTC - Br. 80, extraordinary in character and hence may be used only as prescribed and in
Muntinlupa City - the circumstances authorized by statute.85 Sheriff Tolentino, however, fell
short of these standards. For her failure to faithfully, strictly, and fully comply
served thru their authorized receiving clerk, Mr. Jay-R Honorica, a person with the requirements of substituted service, the same is rendered ineffective.
employed thereat of suitable age and discretion to receive such court As such, the presumption of regularity in the performance of official functions,
processes. which is generally accorded to a sheriffs return,86 does not obtain in this case.

As evidenced by their signature's and stamp received appearing on the original Special appearance to question a court's jurisdiction is not voluntary
copy of the Notice of Raffle and Summons. appearance

WHEREFORE, in view of the foregoing, I am now returning herewith the In Prudential Bank v. Magdam.it, Jr.87 We had the occasion to elucidate the
original copy of the Notice of Raffle and Summons to the Honorable Court of concept of voluntary or conditional appearance, such that a party who makes
origin, DULY SERVED, for its record's [sic] and information.
14
a special appearance to challenge, among others, the court's jurisdiction over
his person cannot be considered to have submitted to its authority, thus:
Preliminarily, jurisdiction over the defendant in a civil case is acquired either
by the coercive power of legal processes exerted over his person, or his
voluntary appearance in court. As a general proposition, one who seeks an
affirmative relief is deemed to have submitted to the jurisdiction of the court. It
is by reason of this rule that we have had occasion to declare that the filing
of motions to admit answer, for additional time to file answer: for
reconsideration of a default judgment, and to lift order of default with motion
for reconsideration, is considered voluntary submission to the court's
jurisdiction. This, however, is tempered by the concept of conditional
appearance, such that a party who makes a special appearance to challenge,
among others, the court's jurisdiction over his person cannot be considered to
have submitted to its authority.
Prescinding from the foregoing, it is thus clear that:
(1) Special appearance operates as an exception to the general rule on
voluntary appearance;
(2) Accordingly, objections to the jurisdiction of the court over the person of
the defendant must be explicitly made, i.e., set forth in an unequivocal manner;
and
(3) Failure to do so constitutes voluntary submission to the jurisdiction of the
court, especially' in instances where a pleading or motion seeking affirmative
relief is filed and submitted to the court for resolution.88
Measured against these standards, it is readily apparent that the petitioner did
not acquiesce to the jurisdiction of the trial court.
The records show that the petitioner never received any copy of the the
respondent's petition to annul the final and executory judgment of the MeTC
in the unlawful detainer case. As explained earlier, the copy of the said petition
which was served to Ms. Gonzales was defective under the Rules of Court.
Consequently, in order to question the trial court's jurisdiction, the petitioner
filed the following pleadings and motions: Special Appearance/Submission
(Jurisdictional Infirmity Raised); Preliminary Submission to Dismiss Petition
(Special Appearance Raising Jurisdictional Issues); Manifestation and
Omnibus Motion to Dismiss Petition for Annulment of Judgment and to Set
Aside and/or Reconsider89 the RTC's December 3, 2007 Order, Consolidated
Opposition, Manifestation and Reply (to Alcayde's Comment dated August 19,
2008 and Supplement dated November 12, 2008); and Motion for
Reconsideration against the RTC's February 2, 2009 Order.
In all these pleadings and motions, the petitioner never faltered in declaring
that the trial court did not acquire jurisdiction over her person, due to invalid
and improper service of summons. It is noteworthy that when the petitioner
filed those pleadings and motions, it was only in a "special" character,
conveying the fact that her appearance before the trial court was with a
qualification, i.e., to defy the RTC's lack of jurisdiction over her person.
This Court is of the view that the petitioner never abandoned her objections to
the trial court's jurisdiction even when she elevated the matter to the CA
through her petition for certiorari. The filing of her pleadings and motions,
including that of her subsequent posturings, were all in protest of the
respondent's insistence on holding her to answer the petition for annulment of
judgment in the RTC, which she believed she was not subject to. Indeed, to
continue the proceeding in such case would not only be useless and a waste
of time, but would violate her right to due process.
In its Order dated December 3, 2007, the RTC harped on the fact that
petitioner's counsel, Atty. Frias, attended the summary hearing on November
9, 2007 of the respondent's prayer for the issuance of a TRO. This, however,
can hardly be construed as voluntary appearance. There was no clear
intention on the part of Atty. Frias to be bound by the proceedings. Precisely,
his "special" appearance in the hearing was to challenge the RTC's lack of
jurisdiction over her client. This Court held in Ejercito, et al. v. M.R. Vargas
Construction, et al.90 that the presence or attendance at the hearing on the
application of a TRO should not be equated with voluntary appearance, thus:
Despite Agarao's not being a party-respondent, petitioners nevertheless
confuse his presence or attendance at the hearing on the application for TRO
with the notion of voluntary appearance, which interpretation has a legal
nuance as far as jurisdiction is concerned. While it is true that an
appearance in whatever form, without explicitly objecting to the
jurisdiction of the court over the person, is a submission to the
jurisdiction of the court over the person, the appearance must constitute
a positive act on the part of the litigant manifesting an intention to submit
to the court's jurisdiction. Thus, in the instances where the Court upheld the
jurisdiction of the trial court over the person of the defendant, the parties
showed the intention to participate or be bound by the proceedings through
the filing of a motion, a plea or an answer.
Neither is the service of the notice of hearing on the application for a TRO on
a certain Rona Adol binding on respondent enterprise. The records show that
Rona Adol received the notice of hearing on behalf of an entity named JCB.
More importantly, for purposes of acquiring jurisdiction over the person
of the defendant, the Rules require the service of summons and not of
any other court processes. [Emphasis and italics supplied].91
15
As we have consistently pronounced, if the appearance of a party in a suit is to vacate; and, that petitioner failed to refer the case before the barangay.
precisely to question the jurisdiction of the said tribunal over the person of the
defendant, then this appearance is not equivalent to service of summons, nor Resultantly, the implementation and execution of judgments that had attained
does it constitute an acquiescence to the court's jurisdiction.92 finality are already ministerial on the courts. Public policy also dictates that
once a judgment becomes final, executory, and unappealable, the prevailing
To recapitulate, the jurisdiction over the person of the petitioner was never party should not be denied the fruits of his victory by some subterfuge devised
vested with the RTC despite the mere filing of the petition for annulment of by the losing party.98 Unjustified delay in the enforcement of a judgment sets
judgment. The manner of substituted service by the process server was at naught the role of courts in disposing justiciable controversies with finality. 99
apparently invalid and ineffective. As such, there was a violation of due
process. In its classic formulation, due process means that any person with Verily, once a judgment becomes final, the prevailing party is entitled as a
interest to the thing in litigation, or the outcome of the judgment, as in this case, matter of right to a writ of execution, the issuance of which is the trial court's
must be notified and given an opportunity to defend that interest.93 Thus, as ministerial duty. So is it in this case.
the essence of due process lies in the reasonable opportunity to be heard and
to submit any evidence the defendant may have in support of her defense, the WHEREFORE, the Petition is GRANTED. The Decision dated May 27, 2010
petitioner must be properly served the summons of the court. In other words, and Resolution dated October 22, 2010 of the Court of Appeals in CA-G.R. SP
the service of summons is a vital and indispensable ingredient of due No. 109824, are hereby REVERSED and SET ASIDE, and a new judgment is
process94 and compliance with the rules regarding the service of the summons rendered ordering the DISMISSAL of the respondent Rolando F. Alcayde's
is as much an issue of due process as it is of jurisdiction.95 Regrettably, as had petition for annulment of judgment.
been discussed, the Constitutional right of the petitioner to be properly served
the summons and be notified has been utterly overloo SO ORDERED.

ked by the officers of the trial court.

Petition for annulment of judgment is an improper remedy

In any event, respondent's petition to annul the MeTC's July 26, 2006 judgment
cannot prosper for being the wrong remedy.

A principle almost repeated to satiety is that an action for annulment of

judgment cannot and is not a substitute for the lost remedy of appeal.96 Its
obvious rationale is to prevent the party from benefiting from his inaction or
negligence.97

In this case, it is evident that respondent failed to interpose an appeal, let alone
a motion for new trial or a petition for relief from the MeTC July 26, 2006
Decision rendering the same final and executory. Hence, the October 30, 2007
Order granting its execution was properly issued.

It is doctrinal that when a decision has acquired finality, the same becomes
immutable and unalterable. By this principle of immutability of judgments, the
RTC is now precluded from further examining the MeTC Decision and to
further dwell on petitioner's perceived errors therein, i.e., that petitioners'
complaint has no cause of action for failure to make a prior demand to pay and

16
G.R. No. 218390, February 28, 2018
HONGKONG BANK INDEPENDENT LABOR UNION
(HBILU), Petitioner, v. HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED, Respondent.
DECISION
VELASCO JR., J.:
The Case
For consideration is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court questioning the Decision1 and Resolution of the Court of
Appeals (CA), dated October 23, 2014 and May 21, 2015, respectively, in CA-
G.R. SP No. 130798. The challenged rulings sustained the validity of the
external credit check as a condition before respondent could grant the
application for salary loans of petitioner's members. This is notwithstanding
the non-mention of the said condition in the parties' Collective Bargaining
Agreement (CBA).
The Facts
In 2001, the Bangko Sentral ng Pilipinas (BSP) issued the Manual of
Regulations for Banks (MoRB). Relevant to the instant case is Section X338
thereof which reads:
Banks may provide financial assistance to their officers and employees, as
part of their fringe benefits program, to meet housing, transportation,
household and personal needs of their officers and employees. Financing
plans and amendments thereto shall be with prior approval of the
BSP. (emphasis added)
Pursuant to the above-cited provision, respondent Hongkong and Shanghai
Banking Corporation Limited (HSBC), on March 12, 2003, submitted its
Financial Assistance Plan (Plan) to the BSP for approval. The Plan allegedly
contained a credit checking proviso stating that "[r]epayment defaults on
existing loans and adverse information on outside loans will be considered in
the evaluation of loan applications." The BSP approved the Plan on May 5,
2003.2 Said Plan was later amended thrice,3 all of which amendments were
approved by the BSP.4
Meanwhile, petitioner Hongkong Bank Independent Labor Union (HBILU), the
incumbent bargaining agent of HSBC's rank-and-file employees, entered into
a CBA with the bank covering the period from April 1, 2010 to March 31, 2012.
Pertinent to the instant petition is Article XI thereof, which reads:
Article XI
Salary Loans
Section 1. Housing/house Improvement Loan. The BANK, or other financial
institution when appropriate, shall extend housing loan to qualified employees
with at least three (3) YEARS OF SERVICE, UP TO One Million Five Hundred
Thousand Pesos (P1,500,000.00) payable in twenty-five (25) years or up to
the retirement date of the employee, whichever comes first. Subject to BSP
approval, an additional Five Hundred Thousand Pesos (P500,000.00) can be
availed subject to the terms above with interest rate at the BLR less 3% but
not less than six percent (6%) per annum.
Section 2. Personal Loans. The BANK, or the Retirement Trust Fund Inc. or
other financial institutions, when appropriate, shall extend personal loan to
qualified employees, with at least 1 year service, up to six months basic pay
of the employees at six percent (6%) interest per annum, payable in three
years.
Section 3. Car Loans. The BANK, or the Retirement Trust Fund Inc. or other
financial institutions when appropriate, shall extend a car loan to qualified
employees with at least 3 years service up to Five Hundred Fifty Thousand
Pesos (PHP550,000.00) payable in seven (7) years. Interest rate shall be six
percent (6%) per annum.
Section 4. Credit Ratio. The availment of any of the foregoing loans shall be
subject to the BANK's credit ratio policy.
When the CBA was about to expire, the parties started negotiations for a new
one to cover the period from April 1, 2012 to March 31, 2017. During the said
negotiations, HSBC proposed amendments to the above quoted Article XI
allegedly to align the wordings of the CBA with its BSP approved Plan.
Particularly, HSBC proposed the deletion of Article XI, Section 4 (Credit Ratio)
of the CBA, and the amendment of Sections 1 to 3 of the same Article to read
as follows:
Article XI
Salary Loans
Section 1. Housing/house Improvement Loan. Based on the Financial
Assistance Plan duly approved by Bangko Sentral ng Pilipinas (BSP), the
BANK, or other financial institution when appropriate, shall extend housing
loan to qualified employees with at least three (3) YEARS OF SERVICE UP
TO One Million Five Hundred Thousand Pesos (P1,500,000.00) payable in
twenty-five (25) years or up to the retirement date of the employee, whichever
17
comes first, subject to employee's credit ratio. An additional Five hundred
thousand Pesos (P500,000.00) can be availed subject to the terms above with
interest rates at the BLR less 3% but not less than six percent (6%) per annum.
Section 2. Personal Loans. Based on the financial Assistance Plan duly
approved by Bangko Sentral ng Pilipinas (BSP), the BANK, or other
financial institutions when appropriate, shall extend personal loan to qualified
employees, with at least 1 year service, up to six months basic pay of the
employees at six percent (6%) interest per annum, payable in three (3)
years, subject to employee's credit ratio.
Section 3. Car loans. Based on the Financial Assistance Plan duly
approved by Bangko Sentral ng Pilipinas (BSP), the BANK, or other
financial institutions when appropriate, shall extend a car loan to qualified
employees with at least three years service, up to Five Hundred Fifty
Thousand Pesos (PHP550,000.00) payable in seven (7) years. Interest rate
shall be six percent (6%) per annum. (emphasis added)
HBILU vigorously objected to the proposed amendments, claiming that their
insertions would curtail its members' availment of salary loans. This, according
to the Union, violates the existing exceptions set forth in BSP Circular 423,
Series of 2004,[5 and Section X338.3[6 of the MoRB. In view of HBILU's
objection, HSBC withdrew its proposed amendments and, consequently,
Article XI remained unchanged.
Despite the withdrawal of the proposal, HSBC sent an e-mail to its employees
on April 20, 2012 concerning the enforcement of the Plan, including the Credit
Checking provisions thereof. The e-mail reads:
Dear All
We wish to reiterate the following provisions included in the Financial
Assistance Plan (FAP) as approved by Bangko Sentral ng Pilipinas (BSP).
Note that the FAP is the official guideline and policy governing Staff Loans and
Credit Cards.
>>>>CREDIT CHECKING
Below are the specific provisions included in the FAP regarding credit
checking.
Housing Loan, Car Loan, Personal Loan Repayment defaults on existing
& Computer/Club Membership/Medical loans and adverse information
Equipment Loan
considered in the evaluation of
loan applications.
Credit Card Repayment defaults on existing
loans and adverse information
considered in the evaluation of
loan applications.
With the strict implementation of these provisions, adverse credit findings may
result to disapproval of loan or credit card applications. These findings will
include the following:
(1) Frequency of confirmed ADA failure on staff/commercial loans and
credit cards (3 consecutive incidents within the past 6 months or 6
incidents within the past 12 months). Note that applications with
pending ADA for investigation will only be processed upon
confirmation of status (Confirmed or Reprieved);
(2) Adverse findings on HSBC cards; or
(3) Adverse findings from external credit checks.[7
Thereafter, in September 2012, HBILU member Vince Mananghaya
(Mananghaya) applied for a loan under the provisions of Article XI of the CBA.
His first loan application in March 2012 was approved, but adverse findings
from the external checks on his credit background resulted in the denial of his
September application.8 HBILU then raised the denial as a grievance issue
with the National Conciliation Mediation Board (NCMB). It argued that the
imposition of an additional requirement—the external credit checking prior to
approval of any loan application under Article XI of the CBA—is not sanctioned
under the CBA. The Union emphasized that under the terms of Article XI, there
is no such requirement and that it cannot, therefore, be unilaterally imposed
by HSBC.
Justifying its denial of the loan application, HSBC countered that the external
credit check conducted in line with Mananghaya's loan application was merely
an implementation of the BSP-approved Plan. The adoption of the Plan, HSBC
stressed, is a condition sine qua non for any loan grant under Section X338 of
the MoRB. Moreover, the Credit Check policy has been in place since 2003,
and is a sound practice in the banking industry to protect the interests of the
public and preserve confidence in banks.
18
 The Issues
The issue was then submitted for resolution by the NCMB Panel of Accredited
Voluntary Arbitrators (the Panel).9 In the interim, the parties, on September 29, HBILU presents the following grounds to warrant the reversal of the assailed
2012, inked a new CBA for the period covering April 1, 2012 up to March 31, Decision, viz:
2017.10 The decisions and resolutions of the Hon. Panel of Voluntary Arbitrators and
NCMB-PVA Decision the Hon. Court of Appeals are tainted with grave abuse of discretion and it
showed patent errors in the appreciation of facts which led to wrong
conclusions of law; or stated otherwise;
On May 17, 2013, the Panel rendered a Decision finding for HSBC. It held that
herein respondent, as an employer, has the right to issue and implement The Hon. Panel of Voluntary Arbitrators and Court of Appeals committed
guidelines for the availment of loan accommodations under the CBA as part of serious, reversible and gross error in law in ruling that the Bank's Financial
its management prerogative. The repeated use of the term "qualified Assistance Plan as not in violation of Article XI of the Parties' CBA revision on
employees" in Article XI of the CBA was deemed indicative of room for the Salary Loans (Article XII of the new and existing CBA)12
adoption of further guidelines in the availment of the benefits thereunder. The
Panel also agreed that HSBC's Plan is not a new policy as it has already been Simply put, the issue for Oui resolution is whether or not HSBC could validly
approved by the BSP as early as 2003. Thus, the Panel ruled that the salary enforce the credit-checking requirement under its BSP-approved Plan in
loan provisions under Article XI of the CBA must be read in conjunction with processing the salary loan applications of covered employees even when the
the provisions of the Plan. said requirement is not recognized under the CBA.

The Panel further discussed that HSBC's adoption of the Plan was not done Arguments of Petitioner
for any whimsical or arbitrary reason, but because the bank was constrained
to comply with Section X338 of the MoRB. As a banking institution, HSBC In support of its position, HBILU argues, among others, that HSBC failed to
cannot divorce itself from the regulatory powers of the BSP. Observance of present in court the Plan that was supposedly submitted to the BSP for
Section X338 of the MoRB was then necessary before the bank could have approval, and to show that the requirement of external credit checking had
been allowed to extend loan accommodations to its officers and employees. already been included therein.13 Too, said Plan is not a set of policies for
salary loans that came from the BSP, but was devised solely by HSBC.14
On the basis thereof, the Panel held that they are not ready to rule that HSBC's
Plan violates Article XI of the CBA. Furthermore, HBILU claims that it is not privy to the Plan and has not been
consulted, much less informed, of the impositions therein prior to its
Aggrieved, HBILU elevated the case to the CA. implementation. No proof was offered that the Plan had been disseminated to
CA Decision the employees prior to the April 20, 2012 e-mail blast.15

Lastly, the implementation of the Plan, according to HBILU, is tantamount to

The CA sustained the findings and conclusions of the NCMB-PVA in toto on diminution of benefits16 and a unilateral amendment of the existing
the ratiocination that HSBC was merely complying with Section X338 of the CBA,17 which are both proscribed under the Labor Code. Had the parties to
MoRB when it submitted the Plan to BSP. When BSP, in turn, approved the the CBA intended to include the external credit check as an additional
said Plan, HSBC became legally bound to enforce its provisions, including the condition to the availment of employee salary loans, then it should have been
conduct of external credit checks on its loan applicants. 11 The appellate court plainly provided in their agreement.18
further ruled that the Plan should be deemed incorporated in the CBA because
it is a regulatory requirement of BSP without which the salary loan provisions Arguments of Respondent
of the CBA are rendered inoperative.
In its Comment, HSBC claims that the Plan is neither new nor was it issued on
Petitioner's motion for reconsideration having been denied by the CA thru its a mere whim or caprice. On the contrary, the Plan was established as early as
May 21, 2015 Resolution, HBILU now seeks recourse from this Court. 2003, way before Mananghaya's application was denied, to conform to Section
19
X338 of the BSP MoRB. HSBC reminds the Court that the loan and credit well as to participate in policy and decision-making processes affecting their
accommodations could have only formed part of the employees' fringe benefit rights and benefits. Section 3, Article XIII of the 1987 Constitution provides:
program if they were extended through a financing scheme (i.e., the Plan) Section 3. The State shall afford full protection to labor, local and overseas,
approved by the BSP. organized and unorganized, and promote full employment and equality of
employment opportunities for all.
Moreover, HSBC argues that the dissemination of the Plan via e-mail blast on
April 20, 2012 was but a reiteration, as opposed to a first publication. It It shall guarantee the rights of all workers to self-organization, collective
contends that even prior to the establishment and approval of the Plan in 2003, bargaining and negotiations, and peaceful concerted activities, including the
the then-loan policy already included the requirement on external credit right to strike in accordance with law. They shall be entitled to security of
checking. According to the bank, there was already a provision that required tenure, humane conditions of work, and a living wage. They shall also
the conduct of credit checking in the processing and evaluation of loan participate in policy and decision-making processes affecting their rights and
applications in their General Policies on Loans, cascaded through the Intranet benefits as may be provided by law.
system to HSBC employees on October 24, 2002, viz:

Pursuant to said guarantee, Article 211 of the Labor Code, as amended,

CREDIT CHECKING declares it a policy of the State:
(a) To promote and emphasize the primacy of free collective bargaining
Repayment defaults on existing loans and and negotiations, including voluntary arbitration, mediation and conciliation,
adverse information on outside loans will be as modes of settling labor or industrial disputes;
considered in the evaluation of loan
applications. x x x x

The union members cannot then feign ignorance of the external credit (d) To promote the enlightenment of workers concerning their rights and
checking requirement in staff loan applications, according to HSBC. obligations as union members and as employees;
Consequently, petitioner's bare denial of any knowledge about it cannot be
given any credence. Considering too that the Plan reiterating the requirement x x x x
has been approved by the BSP in 2003, HBILU slept on its rights when it
questioned its strict imposition almost a decade after its issuance. (g) To ensure the participation of workers in decision and policy-making
processes affecting their rights, duties and welfare. (Emphasis ours)
Finally, HSBC postulates that the non-mention of the Plan in the CBA is no Corollary thereto, Article 255 of the same Code provides:
justification for the bank to disregard the same in processing employee loan
applications. Provisions of applicable laws, especially those relating to matters ART. 255. EXCLUSIVE BARGAINING REPRESENTATION AND WORKERS
affected with public policy, are deemed written into the contract. 19 PARTICIPATION IN POLICY AND DECISION-MAKING.
Our Ruling
x x x x

The petition is meritorious. Any provision of law to the contrary notwithstanding, workers shall have the
right,subject to such rules and regulations as the Secretary of Labor and
The constitutional right of employees Employment may promulgate, to participate in policy and decision-making
to participate in matters affecting process of the establishment where they are employed insofar as said
their benefits and the sanctity of the CBA processes will directly affect their rights, benefits and welfare. For this
purpose, workers and employers may form labor-management
Preliminarily, it is crucial to stress that no less than the basic law of the land councils: Provided, That the representatives of the workers in such labor
guarantees the rights of workers to collective bargaining and negotiations as
20
management councils shall be elected by at least the majority of all employees
in said establishment. (Emphasis and underscoring ours)
We deem it necessary to remind HSBC of the basic and well entrenched rule
that although jurisprudence recognizes the validity of the exercise by an
employer of its management prerogative and will ordinarily not interfere with
such, this prerogative is not absolute and is subject to limitations imposed by
law, collective bargaining agreement, and general principles of fair play and
justice.20
Indeed, being a product of said constitutionally-guaranteed right to participate,
the CBA is, therefore, the law between the parties and they are obliged to
comply with its provisions.
Unilateral amendments to the CBA
violate Article 253 of the Labor Code
A collective bargaining agreement or CBA is the negotiated contract between
a legitimate labor organization and the employer concerning wages, hours of
work and all other terms and conditions of employment in a bargaining unit. As
in all contracts, the parties in a CBA may establish such stipulations, clauses,
terms and conditions as they may deem convenient provided these are not
contrary to law, morals, good customs, public order or public policy. Thus,
where the CBA is clear and unambiguous, it becomes the law between the
parties and compliance therewith is mandated by the express policy of the
law.21
In Faculty Association of Mapua Institute of Technology (FAMJT) v. Court of
Appeals,22 this Court was emphatic in its pronouncement that the CBA during
its lifetime binds all the parties. The provisions of the CBA must be
respected since its terms and conditions constitute the law between the
parties. And until a new CBA is executed by and between the parties,
they are duty-bound to keep the status quo and to continue in full force
and effect the terms and conditions of the existing agreement.23 This
finds basis under Article 253 of the Labor Code, which states:
ARTICLE 253. Duty to bargain collectively when there exists a collective
bargaining agreement. – When there is a collective bargaining agreement,
the duty to bargain collectively shall also mean that neither party shall
terminate nor modify such agreement during its lifetime. x x x It shall be
the duty of both parties to keep the status quo and to continue in full
force and effect the terms and conditions of the existing
agreement during the 60-day period and/or until a new agreement is
reached by the parties. (emphasis added)
In the present controversy, it is clear from the arguments and evidence
submitted that the Plan was never made part of the CBA. As a matter of fact,
HBILU vehemently rejected the Plan's incorporation into the agreement. Due
to this lack of consensus, the bank withdrew its proposal and agreed to the
retention of the original provisions of the CBA. The subsequent implementation
of the Plan's external credit check provisions in relation to employee loan
applications under Article XI of the CBA was then an imposition solely by
HSBC.
In this respect, this Court is of the view that tolerating HSBC's conduct would
be tantamount to allowing a blatant circumvention of Article 253 of the Labor
Code. It would contravene the express prohibition against the unilateral
modification of a CBA during its subsistence and even thereafter until a new
agreement is reached. It would unduly license HSBC to add, modify, and
ultimately further restrict the grant of Salary Loans beyond the terms of
the CBA by simply adding stringent requirements in its Plan, and having
the said Plan approved by BSP in the guise of compliance with the MoRB.
HSBC's defense, that there was no modification of the CBA since the external
credit check has been a long-standing policy of the Bank applied to all of its
employees, is inconvincing. Noteworthy is that the bank failed to submit in
evidence the very Plan that was supposedly approved by the BSP in 2003.
Nevertheless, even if We were to rely on the later versions of the Plan
approved by the BSP, Our ruling will not change.
The only provision relative to the credit checking requirement under the 2006
and 2011 Plans is this and nothing else:
CREDIT CHECKING
Repayment defaults on existing loans and
adverse information on outside loans will be
considered m the evaluation of loan
applications.24
As for the manner in which said credit checking will be done, as well as any
additional requirements that will be imposed for the purpose, the 2006 Plan
and even its later 2011 version are silent thereon.25 Nowhere in these Plans
can We find the requirement for the submission of an "Authority to Conduct
Checks Form," as well as the details on adverse credit finding, specifically:
21
With the strict implementation of these provisions, adverse credit findings may
result to disapproval of loan or credit card applications. These findings will
include the following:
(1) Frequency of confirmed ADA failure on staff/commercial loans and
credit cards (3 consecutive incidents within the past 6 months or 6
incidents within the past 12 months). Note that applications with
pending ADA for investigation will only be processed upon
confirmation of status (Confirmed or Reprieved);
(2) Adverse findings on HSBC cards; or
(3) Adverse findings from external credit checks.[26
In fact, regrettably, HSBC's only documentary basis for proving that the credit
checking requirement and the manner of its enforcement have been set in
place much earlier is the use of the term "reiterate" in its April 20, 2012 e-mail.
Thus, we quote:
Dear All
We wish to reiterate the following provisions included in the Financial
Assistance Plan (FAP) as approved by Bangko Sentral ng Pilipinas (BSP).
x x x
20. Accordingly, the above email dated 20 April 2012 clearly indicates that
the dissemination therein of the FAP and its provisions is merely a
reiteration, and not a first publication as the Union now conveniently
claims.27 x x x (emphasis supplied)
What further convinces Us that the external credit check as well as the manner
of its enforcement is a new imposition by HSBC is the fact that the bank made
no attempt to rebut HBILU's evidence that the former's requirements for the
grant of salary loans changed only after the April 20, 2012 email
blast. HBILU sufficiently proved that prior to the April 20, 2012 email,
members of the bargaining unit were using only four (4) documents in
applying for a loan, to wit: 1) Application for Personal Loan Form; 2) Authority
to Deduct Form; 3) Set-Off of Retirement Fund Form; and 4) Promissory Note
Form.28 Thereafter, management imposed a new set of requirements, which
includes the "Authority to Conduct Checks Form."29 As testified to by
Mananghaya, he only signed the first four (4) requirements for his March 2012
loan. However, for the September 2012 loan, he was asked to complete a new
set of documents which included the Authority to Conduct Checks
Form.30 Too, even the email itself states that said credit checking
requirement, among others, is to be strictly enforced effective May
2012.31 Though HSBC claims that credit checking has been the bank's long-
standing policy, it failed to show that it indeed required such before its
covered employees could avail of a salary loan under the CBA prior to
April 20, 2012—the date of the email blast.
Thus, no other conclusion can be had in this factual milieu other than the fact
that HSBC's enforcement of credit checking on salary loans under the
CBA invalidly modified the latter's provisions thereon through the
imposition of additional requirements which cannot be found anywhere
in the CBA.
If it were true that said credit checking under the Plan covers salary loans
under the CBA, then the bank should have negotiated for its inclusion thereon
as early as the April 1, 2010 to March 31, 2012 CBA which it entered into with
HBILU. However, the express provisions of said CBA inked by the parties
clearly make no reference to the Plan. And even in the enforcement thereof,
credit checking was not included as one of its requirements. This leads Us to
conclude that HSBC originally never intended the credit checking requirement
under the Plan to apply to salary loans under the CBA. At most, its application
thereto is a mere afterthought, as evidenced by its sudden, belated, and
hurried enforcement on said salary loans via the disputed email blast.
In other words, it appears that, based on its actuations, HSBC never intended
to apply the credit checking item under the Plan to salary loans under the CBA.
Otherwise, it would have enforced such requirement from the moment the
salary loans provisions under the old CBA were implemented, which it did not.
It may be that said requirement was being applied to other types of loans under
the Plan, but based on the evidence presented, We cannot say the same for
salary loans under the CBA.
The minority argues that primacy is being accorded to the CBA over the Plan
approved by the BSP. Such, however, is not the case. We are not saying that
the Plan should yield to the CBA. The point that we are driving at in this lengthy
discussion is that on the basis of the evidence presented, We are convinced
that the credit checking provision of the Plan was never intended to cover
salary loans under the CBA. Otherwise, HSBC would have implemented such
the moment said salary loans under the previous CBA were made available to
its covered employees. Thus, HSBC cannot now insist on its imposition on
loan applications under the disputed CBA provision without violating its duty to
bargain collectively.
If We were to allow this practice of leaving to HSBC the determination,
formulation, and implementation of the guidelines, procedures, and
22
requirements for the availment of salary loans granted under the CBA, which the bank, shall be subject to the same terms and conditions imposed on
guidelines, procedures, and requirements unduly restrict the provisions of the the regular lending operations of the bank. Loans or other credit
CBA, this Court would in effect be permitting HSBC to repeatedly violate its accommodations granted to officers shall, in addition, be subject to the
duty to bargain collectively under the guise of enforcing the general terms of provisions of Section 36 of R.A. No. 8791 and Sections X326 to X336 but not
the Plan. to the individual ceilings where such loans or other credit accommodations are
obtained under the bank's fringe benefits program. (emphasis ours)
Salary loans subject of this case are
not covered by the credit checking
requirement under the MORB In specifying that "[a]ll loans or other credit accommodations to bank officers
and employees, except those granted under the fringe benefit program of the
In maintaining that the credit checking requirement under the MoRB should be bank, shall be subject to the same terms and conditions imposed on the
deemed written into the CBA, the minority makes reference to Sec. X304.1 of regular lending operations of the bank," Sec. X338.3 clearly excluded loans
the 2011 MoRB in maintaining that financial institutions must look into the and credit accommodations under the bank's fringe benefits program
obligor's repayment history, among other things, before approving a loan from the operation of Sec. X304.1. This fact is even recognized in the
application. Said provision reads: dissent. To ignore this clear exception and insist on interpreting the general
§ X304.1 General guidelines. Consistent with safe and sound banking guidelines under Section X304.1 would be to renege from Our duty to apply a
practices, a bank shall grant loans or other credit accommodations only in clear and unambiguous provision.32
amounts and for the periods of time essential for the effective completion of
the operation to be financed. Before granting loans or other credit It may also be argued that HSBC, being a bank, is statutorily required to
accommodations, a bank must ascertain that the borrower, co-maker, conduct a credit check on all of its borrowers, even though it be made under a
endorser, surety, and/or guarantor, if applicable, is/are financially capable of loan accommodation scheme, applying Section 40[33 of Republic Act No. (RA)
fulfilling his/their commitments to the bank. For this purpose, a bank shall 8791 (General Banking Law of 2000). A reading of RA 8791, however, reveals
obtain adequate information on his/their credit standing and financial that loan accommodations to employees are not covered by said statute.
capacities x x x. Nowhere in the law does it state that its provisions shall apply to loans
extended to bank employees which are granted under the latter's fringe
benefits program. Had the law intended otherwise, it could have easily
At this point it is well to draw attention to the fact that said provision is a general specified such, similar to what was done for directors, officers, stockholders
one as specifically indicated thereat. It is also equally important to emphasize and their related interests under Section 36 thereof. This conclusion is
that Sec. X304.1 must be interpreted in conjunction with Section X338.3, the supported by the very wording of Subsection X338.3 of the MORB. To
provision which specifically applies to salary loans under the fringe benefit reiterate:
program of the bank. Thus: Subsection X338.3 Other conditions/limitations
Subsection X338.3 Other conditions/limitations
The investment by a bank in equipment and other chattels under its fringe
The investment by a bank in equipment and other chattels under its fringe benefits program for officers and employees shall be included in determining
benefits program for officers and employees shall be included in determining the extent of the investment of the bank in real estate and equipment for
the extent of the investment of the bank in real estate and equipment for purposes of Section 51 of R.A. No. 8791.
purposes of Section 51 of R.A. No. 8791.
The investment by a bank in equipment and other chattels contemplated under
The investment by a bank in equipment and other chattels contemplated under these guidelines shall not be for the purpose of profits in the course of business
these guidelines shall not be for the purpose of profits in the course of business for the bank.
for the bank.
All loans or other credit accommodations to bank officers and employees,
All loans or other credit accommodations to bank officers and except those granted under the fringe benefit program of the bank, shall be
employees, EXCEPT those granted under the fringe benefit program of subject to the same terms and conditions imposed on the regular lending
23
operations of the bank. Loans or other credit accommodations granted
to officers shall, in addition, be subject to the provisions of Section 36 of
R.A. No. 8791 and Sections X326 to X336 but not to the individual ceilings
where Such loans or other credit accommodations are obtained under the
bank's fringe benefits program.
Notably, even though the provision covers loans extended to both bank
officers and employees, paragraph 3 thereof singled out loans and credit
accommodations granted to officers when it provided for the applicability of
RA 8791.
Additionally, both the BSP Circular 423, Series of 2004 and Section X338.3 of
the MoRB provide for a safeguard in order to protect the funds of the Bank's
depositors while allowing the Bank to extend such benefits to its employees,
in that both require that:
The aggregate outstanding loans and other credit accommodations
granted under the bank's fringe benefits program, inclusive of those
granted to officers in the nature of lease with option to purchase, shall
not exceed five percent (5%) of the bank's total loan portfolio.34

What the law does not include, it excludes. There are, therefore, sufficient safety nets consistent with the bank's fiduciary
duty to its depositors even without requiring the conduct of an external credit
These convince Us to conclude that RA 8791 only intended to cover loans by check in the availment of salary loans under the subject CBA. As a matter of
third persons and those extended to directors, officers, stockholders and their fact, there is no showing that the bank's finances suffered because it has been
related interests. Consequently, Section 40 thereof, which requires a bank to granting said salary loans under the CBA without the external credit check.
ascertain that the debtor is capable of fulfilling his commitments to it before
granting a loan or other credit accommodation, does not automatically apply Withal, We cannot subscribe to HSBC's position that its imposition of the credit
to the type of loan subject of the instant case. checking requirement on salary loans granted under the CBA is valid. The
evidence presented convinces Us to hold that the credit checking
Furthermore, it is inaccurate to state that credit checking is necessary, or even requirement imposed by HSBC under the questioned Plan which
indispensable, in the grant of salary loans to the bank's employees, since the effectively and undoubtedly modified the CBA provisions on salary loans
business of banking is imbued with public interest and there is a fiduciary was a unilateral imposition violative of HSBC's duty to bargain
relationship between the depositor and the bank. It is also incorrect to state collectively and, therefore, invalid. HSBC miserably failed to present even
that allowing bank employees to borrow funds from their employer via salary an iota of concrete documentary evidence that the credit checking requirement
loans without the prior conduct of a credit check is inconsistent with this has been imposed on salary loans even before the signing of the CBA subject
fiduciary obligation. This is so because there are other ways of securing of the instant dispute and that the Plan was sufficiently disseminated to all
payment of said salary loans other than ascertaining whether the borrowing concerned. In contrast, HBILU sufficiently proved that HSBC violated its duty
employee has the capacity to pay the loan. BSP Circular 423, Series of 2004 to bargain collectively under Article 253 of the Labor Code when it unilaterally
itself provides for such, thus: restricted the availment of salary loans under Article XI of the CA on the excuse
Subsection X338.1 Mechanics. The mechanics of such financing plan shall of enforcing the Plan approved by the BSP.
have the following minimum features:
As this Court emphasized in Philippine Airlines, Inc. v. NLRC, industrial peace
Participation shall be limited to full-time and permanent officers and employees cannot be achieved if the employees are denied their just participation in the
of the bank; discussion of matters affecting their rights,35more so in the case at bar where
the employees have been led to believe that they were given the chance
x x x x to participate in HSBC's policy-formulation with respect to the subject
benefit, only to find out later that they would be deprived of the fruits of
The bank shall adopt measures to protect itself from losses such as by said involvement.
incorporating in the plan or contract provisions requiring co-makers or
co-signor, chattel, or real estate mortgages, fire insurance, mortgage On interpretation of CBAs
redemption insurance, assignment of money value of leave credits,
pension or retirement benefits.(Emphasis ours) At this point, We deem it proper to recall the basics in resolving issues relating
24
to the provisions and enforcement of CBAs. In United Kimberly-Clark
Employees Union Philippine Transport General Workers Organization
(UKCEU-PTGWO) v. Kimberly-Clark Philippines, Inc., this Court emphasized Thus, in resolving issues concerning CBAs, We must not forget that the
that: foremost consideration therein is upholding the intention of both parties as
As a general proposition, an arbitrator is confined to the interpretation and stated in the agreement itself, or based on their negotiations. Should it appear
application of the collective bargaining agreement. He does not sit to dispense that a proposition or provision has clearly been rejected by one party, and said
his own brand of industrial justice: his award is legitimate only in so far as it provision was ultimately not included in the signed CBA, then We should not
draws its essence from the CBA, i.e., when there is a rational nexus between simply disregard this fact. We are duty-bound to resolve the question
the award and the CBA under consideration. It is said that an arbitral award presented, albeit on a different ground, so long as it is consistent with law and
does not draw its essence from the CBA; hence, there is an unauthorized jurisprudence and, more importantly, does not ignore the intention of both
amendment or alteration thereof, if: parties. Otherwise, We would be substituting Our judgment in place of the will
1. It is so unfounded in reason and fact; of the parties to the CBA.
2. It is so unconnected with the working and purpose of the agreement;
3. It is without factual support in view of its language, its context, With these, We find no need to resolve the other matters presented.
and any other indicia of the parties' intention;
4. It ignores or abandons the plain language of the contract; WHEREFORE, premises considered, the petition is GRANTED. The Decision
5. It is mistakenly based on a crucial assumption which concededly is a dated October 23, 2014 and Resolution dated May 21, 2015 of the Court of
nonfact; Appeals in CA-G.R. SP No. 130798 are hereby REVERSEDand SET ASIDE.
6. It is unlawful, arbitrary or capricious; and
7. It is contrary to public policy. Respondent Hongkong and Shanghai Banking Corporation's Financial
Assistance Plan, insofar as it unilaterally imposed a credit checking proviso on
xxxx the availment of Salary Loans by its employees under Article XI of the 2010-
2012 CBA, is hereby declared legally ineffective and invalid for being in
If the terms of a CBA are clear and [leave] no doubt upon the intention of the contravention of Article 253 of the Labor Code.
contracting parties, the literal meaning of its stipulation shall prevail. However,
if, in a CBA, the parties stipulate that the hirees must be presumed of SO ORDERED.
employment qualification standards but fail to state such qualification
standards in said CBA, the VA may resort to evidence extrinsic of the CBA
to determine the full agreement intended by the parties. When a CBA
may be expected to speak on a matter, but does not, its sentence imports
ambiguity on that subject. The VA is not merely to rely on the cold and
cryptic words on the face of the CBA but is mandated to discover the
intention of the parties. Recognizing the inability of the parties to anticipate
or address all future problems, gaps may be left to be filled in by reference to
the practices of the industry, and the step which is equally a part of the CBA
although not expressed in it. In order to ascertain the intention of the
contracting parties, their contemporaneous and subsequent acts shall
be principally considered The VA may also consider and rely upon
negotiating and contractual history of the parties, evidence of past
practices interpreting ambiguous provisions. The VA has to examine
such practices to determine the scope of their agreement, as where the
provision of the CBA has been loosely formulated. Moreover, the CBA
must be construed liberally rather than narrowly and technically and the Court
must place a practical and realistic construction upon it.36 (emphasis ours)
25
G.R. No. 196795, March 07, 2018 the existing lease contracts and stated the areas that may be occupied by
INTRAMUROS ADMINISTRATION, Petitioner, v. OFFSHORE Offshore Construction:
CONSTRUCTION DEVELOPMENT COMPANY, Respondent. FROM:
DECISION (1) Baluarte de San Andres
LEONEN, J.: TO:
The sole issue in ejectment proceedings is determining which of the parties
has the better right to physical possession of a piece of property. The (1) Only the stable house, the gun powder room and two (2) Chambers
defendant's claims and allegations in its answer or motion to dismiss do not with comfort rooms, will be utilized for restaurants. All other structures
oust a trial court's jurisdiction to resolve this issue. built and introduced including trellises shall be transferred/relocated
to:
This is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court,
assailing the April 14, 2011 Decision2 of Branch 173, Regional Trial Court,
Manila in Civil Case No. 10-124740. The Regional Trial Court affirmed in
toto the October 19, 2010 Order3 of Branch 24, Metropolitan Trial Court, (a) Two (2) restaurants as Asean Garden. Each will have an
Manila in Civil Case No. 186955-CV, dismissing Intramuros Administration's aggregate area of two hundred square meters (200 sq. mtrs.);
(Intramuros) Complaint for Ejectment against Offshore Construction and
Development Company (Offshore Construction) on the grounds of forum
shopping and lack of jurisdiction.
(b) One (1) kiosk at Puerta Isabel Garden fronting Terraza de la
Reyna with an aggregate area of twenty (20) square meters;
In 1998, Intramuros leased certain real properties of the national government,
which it administered to Offshore Construction. Three (3) properties were
subjects of Contracts of Lease: Baluarte De San Andres, with an area of 2,793
sq. m.;4 Baluarte De San Francisco De Dilao, with an area of 1,880 sq.
(c) Three (3) restaurants at the chambers of Puerta Isabel II with
m.;5 and Revellin De Recoletos, with an area of 1,036 sq. m.6 All three (3)
an aggregate area of 1,180.5 sq.m.;
properties were leased for five (5) years, from September 1, 1998 to August
31, 2003. All their lease contracts also made reference to an August 20, 1998
memorandum of stipulations, which included a provision for lease renewals
every five (5) years upon the parties' mutual agreement.7
(d) One (1) restaurant at Fort Santiago American Barracks. Subject
to IA Guidelines, the maximum floor area will be the perimeter
Offshore Construction occupied and introduced improvements in the leased
walls of the old existing building;
premises. However, Intramuros and the Department of Tourism halted the
projects due to Offshore Construction's non-conformity with Presidential
Decree No. 1616, which required 16th to 19th centuries' Philippine-Spanish FROM:
architecture in the area.8 Consequently, Offshore Construction filed a (2) Baluarte De San Francisco Dilao
complaint with prayer for preliminary injunction and temporary restraining TO:
order against Intramuros and the Department of Tourism before the Manila
Regional Trial Court,9 which was docketed as Civil Case No. 98-91587.10 (2) All seven (7) structures including the [Offshore Construction]
Administration Building and Trellises shall be transferred [t]o Cuartel
Eventually, the parties executed a Compromise Agreement on July 26, de Sta. Lucia, [O]therwise known as the PC Barracks[.]14
1999,11which the Manila Regional Trial Court approved on February 8,
2000.12 In the Compromise Agreement, the parties affirmed the validity of the
two (2) lease contracts but terminated the one over Revellin de During the lease period, Offshore Construction failed to pay its utility bills and
Recoletos.[13 The Compromise Agreement retained the five (5)-year period of rental fees, despite several demand letters.15 Intramuros tolerated the
continuing occupation, hoping that Offshore Construction would pay its
26
arrears. As of July 31, 2004, these arrears allegedly totaled P6,762,153.70. 16
To settle its arrears, Offshore Construction proposed to pay the Department of
Tourism's monthly operational expenses for lights and sound equipment,
electricity, and performers at the Baluarte Plano Luneta de Sta. Isabel.
Intramuros and the Department of Tourism accepted the offer, and the parties
executed a Memorandum of Agreement covering the period of August 15,
2004 to August 25, 2005.17
However, Offshore Construction continued to fail to pay its arrears, which
amounted to P13,448,867.45 as of December 31, 2009. On March 26, 2010,
Offshore Construction received Intramuros' latest demand letter.18
Intramuros filed a Complaint for Ejectment before the Manila Metropolitan Trial
Court on April 28, 2010.19Offshore Construction filed its Answer with Special
and Affirmative Defenses and Compulsory Counterclaim.20
On July 12, 2010, Offshore Construction filed a Very Urgent Motion,21 praying
that Intramuros' complaint be dismissed on the grounds of violation of the rule
on non-forum shopping, lack of jurisdiction over the case, and litis
pendentia. First, it claimed that Intramuros failed to inform the Metropolitan
Trial Court that there were two (2) pending cases with the Manila Regional
Trial Court over Puerta de Isabel II.22Second, it argued that the Metropolitan
Trial Court did not acquire jurisdiction over the case since the relationship
between the parties was not one of lessor-lessee but governed by a
concession agreement.23Finally, it contended that Intramuros' cause of action
was barred by litis pendentia, since the pending Regional Trial Court cases
were over the same rights, claims, and interests of the parties.24
In its October 19, 2010 Order,25 the Metropolitan Trial Court granted the motion
and dismissed the case. Preliminarily, it found that while a motion to dismiss
is a prohibited pleading under the Rule on Summary Procedure, Offshore
Construction's motion was grounded on the lack of jurisdiction over the subject
matter.26
The Metropolitan Trial Court found that Intramuros committed forum shopping
and that it had no jurisdiction over the case.27
First, it pointed out that there were two (2) pending cases at the time
Intramuros filed its complaint: Civil Case No. 08-119138 for specific
performance filed by Offshore Construction against Intramuros, and SP CA
No. 10-123257 for interpleader against Offshore Construction and Intramuros
filed by 4H Intramuros, Inc. (4H Intramuros),28 which claimed to be a group of
respondent's tenants.29
The Metropolitan Trial Court found that the specific performance case was
anchored on Offshore Construction's rights under the Compromise
Agreement. In that case, Offshore Construction claimed that it complied with
its undertakings, but Intramuros failed to perform its obligations when it refused
to offset Offshore Construction's expenses with the alleged unpaid rentals. The
interpleader case, on the other hand, dealt with Offshore Construction's threats
to evict the tenants of Puerta de Isabel II. 4H Intramuros prayed that the
Regional Trial Court determine which between Offshore Construction and
Intramuros was the rightful lessor of Puerta de Isabel II.30
The Metropolitan Trial Court found that the cause of action in Intramuros'
complaint was similar with those in the specific performance and interpleader
cases. Any judgment in any of those cases would affect the resolution or
outcome in the ejectment case, since they would involve Offshore
Construction's right to have its expenses offset from the rentals it owed
Intramuros, and the determination of the rightful lessor of Puerta de Isabel II.
The Metropolitan Trial Court pointed to the arrears in rentals that Intramuros
prayed for as part of its complaint. Further, Intramuros failed to disclose the
specific performance and interpleader cases in its certification against forum
shopping.31
Second, the Metropolitan Trial Court held that it had no jurisdiction over the
complaint. While there were lease contracts between the parties, the existence
of the other contracts between them made Intramuros and Offshore
Construction's relationship as one of concession. Under this concession
agreement, Offshore Construction undertook to develop several areas of the
Intramuros District, for which it incurred expenses. The trial court found that
the issues could not be mere possession and rentals only. 32
Intramuros appealed the October 19, 2010 Order with the Regional Trial Court.
On April 14, 2011, the Regional Trial Court affirmed the Municipal Trial Court
October 19, 2010 Order in toto.33
On May 25, 2011, Intramuros, through the Office of the Solicitor General, filed
a Motion for Extension of Time to File Petition for Review on Certiorari (Motion
for Extension) before this Court. It prayed for an additional 30 days, or until
June 16, 2011, within which to file its petition for review on solely on questions
of law.34
On June 16, 2011, Intramuros filed its Petition for Review on
Certiorari,35 assailing the April 14, 2011 Decision of the Regional Trial Court.
In its Petition for Review, Intramuros argues that the Regional Trial Court erred
27
in upholding the Metropolitan Trial Court findings that it had no jurisdiction over
Intramuros' ejectment complaint36 and that it committed forum shopping.37
First, Intramuros argues that Offshore Construction's Very Urgent Motion
should not have been entertained by the Metropolitan Trial Court as it was a
motion to dismiss, which was prohibited under the Rule on Summary
Procedure.38 It claims that the Metropolitan Trial Court could have determined
the issue of jurisdiction based on the allegations in its complaint. It points out
that "jurisdiction over the subject matter is determined by the allegations [in]
the complaint" and that the trial court's jurisdiction is not lost "just because the
defendant makes a contrary allegation" in its defense. 39 In ejectment cases,
courts do not lose jurisdiction by a defendant's mere allegation that it has
ownership over the litigated property. It holds that the Metropolitan Trial Court
did not lose jurisdiction when Offshore Construction alleged that its
relationship with Intramuros is one of concession, that the cause of action
accrued in 2003, and that there was litis pendentia and forum shopping. It
contends that the sole issue in an ejectment suit is the summary restoration of
possession of a piece of land or building to the party that was deprived of
it.40 Thus, the Metropolitan Trial Court gravely erred in granting Offshore
Construction's motion to dismiss despite having jurisdiction over the subject
matter of Intramuros' complaint.41
Second, Intramuros avers that it did not commit forum shopping as to warrant
the dismissal of its complaint. It claims that while there were pending specific
performance and interpleader cases related to the ejectment case, Intramuros
was not guilty of forum shopping since it instituted neither action and did not
seek a favorable ruling as a result of an earlier adverse opinion in these
cases.42 Intramuros points out that it was Offshore Construction and 4H
Intramuros which filed the specific performance and interpleader cases,
respectively.43 In both cases, Intramuros was the defendant and did not seek
possession of Puerta de Isabel II as a relief in its answers to the
complaints.44 Moreover, the issues raised in these earlier cases were different
from the issue of possession in the ejectment case. The issue in the specific
performance case was whether or not Intramuros should offset the rentals in
arrears from Offshore Construction's expenses in continuing the WOW
Philippines Project.45 Meanwhile, the issue in the interpleader case was to
determine which between Intramuros and Offshore Construction was the
rightful lessor of Puerta de Isabel II.46
Finally, Intramuros maintains that there is no concession agreement between
the parties, only lease contracts that have already expired and are not
renewed. It argues that there is no basis for alleging the existence of a
concession agreement. It points out that in the Contracts of Lease and
Memorandum of Agreement entered into by Intramuros and Offshore
Construction, the expiry of the leases would be on August 31, 2003.
Afterwards, Intramuros tolerated Offshore Construction's continued
occupation of its properties in hopes that it would pay its arrears in due
course.47
On July 20, 2011, this Court issued its Resolution 48 granting the Motion for
Extension and requiring Offshore Construction to comment on the Petition for
Review.
On October 10, 2011, Offshore Construction filed its Comment 49 to the Petition
for Review. In its Comment, Offshore Construction argues that the Petition for
Review should be dismissed because it violates the principle of hierarchy of
courts and raises questions of fact.50 It points out that Intramuros did not move
for the reconsideration of the Regional Trial Court April 14, 2011 Decision.
Instead of directly filing with this Court, Intramuros should have filed a Petition
for Review with the Court of Appeals, in accordance with Rule 42 of the Rules
of Court.51 It claims that Intramuros raises questions of fact in its Petition for
Review, namely, the expiration of the Contracts of Lease and the business
concession in favor of Offshore Construction.52
In its November 21, 2011 Resolution, this Court noted the Comment and
required Intramuros to file its Reply.53
On March 12, 2012, Intramuros filed its Reply54 to the Comment. It argues that
direct resort to this Court is proper because the issues it raises in its Petition
for Review do not require review of evidence to resolve, and the facts of the
case are undisputed.55 It claims that the nature of Intramuros and Offshore
Construction's relationship is never an tssue because all the documents
referenced and relied upon by the parties were lease agreements. 56
On August 23, 2012, this Court gave due course to the Petition for Review and
ordered both parties to submit their memoranda.57
On January 7, 2013, Intramuros filed its Memorandum,58 while Offshore
Construction filed its Memorandum 59 on August 16, 2013.
In its Memorandum, Offshore Construction claims that it occupies Puerta de
Isabel II by virtue of a legal concession based not only on the parties' contracts
but also on the contemporaneous and subsequent acts of Intramuros and
Offshore Construction. It argues that under the Contracts of Lease, Offshore
Construction was required to invest around P20,000,000.00 worth of
investments in the leased properties and that it lost its initial investments,
which were demolished due to adverse criticism by then- Intramuros
Administrator Anna Maria L. Harper. Under the Compromise Agreement,
28
Offshore Construction was again required to make new developments, again jurisdiction may file a verified petition for review with the Court of Appeals,
worth millions of pesos. Offshore Construction claims that these conditions paying at the same time to the clerk of said court the corresponding docket
make their relationship not one of mere lessor and lessee. 60 and other lawful fees, depositing the amount of P500.00 for costs, and
furnishing the Regional Trial Court and the adverse party with a copy of the
Further, it attests that Intramuros committed illegal and inhuman acts, and petition. The petition shall be filed and served within fifteen (15) days from
injustice against it and its sublessees, allegedly because the Contracts of notice of the decision sought to be reviewed or of the denial of petitioner's
Lease had expired.61 Moreover, it points out that Intramuros only filed the motion for new trial or reconsideration filed in due time after judgment. Upon
ejectment complaint in 2010, even though the Contracts of Lease expired on proper motion and the payment of the full amount of the docket and other
August 31, 2003. It argues that Intramuros was guilty of estoppel in pais, since lawful fees and the deposit for costs before the expiration of the reglementary
it continued to accept rental payments as late as July 10, 2009.62 Assuming period, the Court of Appeals may grant an additional period of fifteen (15) days
that the lease contracts had expired, these contracts were impliedly renewed only within which to file the petition for review. No further extension shall be
by the mutual and voluntary acts of the parties, in accordance with Article 1670 granted except for the most compelling reason and in no case to exceed fifteen
of the Civil Code.63 Offshore Construction claims that there is now novation of (15) days.
the Contracts of Lease, and the courts may fix a period for them, [64 pursuant
to Article 1687 of the Civil Code.65 It reiterates its prayer that the Petition for
Review be dismissed, due to questions of fact more properly cognizable by Petitioner puts in issue before this Court the findings of the Metropolitan Trial
the Court of Appeals.66 Court that it has no jurisdiction over the ejectment complaint and that petitioner
committed forum shopping when it failed to disclose two (2) pending cases,
The issues to be resolved by this Court are: one filed by respondent Offshore Construction and the other filed by
respondent's group of tenants, 4H Intramuros. Both of these cases raise
First, whether or not direct resort to this Court is proper; questions of law, which are cognizable by the Court of Appeals in a petition for
review under Rule 42.
Second, whether or not the Metropolitan Trial Court had jurisdiction over the
ejectment complaint filed by Intramuros Administration; "A question of law exists when the law applicable to a particular set of facts is
not settled, whereas a question of fact arises when the truth or falsehood of
Third, whether or not Intramuros Administration committed forum shopping alleged facts is in doubt."67 This Court has ruled that the jurisdiction of a court
when it filed its ejectment complaint despite the pending cases for specific over the subject matter of a complaint 68 and the existence of forum
performance and interpleader; and shopping69 are questions of law.

Finally, whether or not Intramuros Administration is entitled to possess the
leased premises and to collect unpaid rentals.
I to hear cases on appeal in which only questions of law are raised is not vested
At the outset, petitioner should have filed a petition for review under Rule 42
of the Rules of Court to assail the Regional Trial Court's ruling upholding the
Metropolitan Trial Court October 19, 2010 Order instead of filing a petition for
review on certiorari under Rule 45 with this Court.
Under Rule 42, Section 1 of the Rules of Court, the remedy from an adverse
decision rendered by a Regional Trial Court exercising its appellate jurisdiction
is to file a verified petition for review with the Court of Appeals:
Section 1. How appeal taken; time for filing. — A party desiring to appeal from
a decision of the Regional Trial Court rendered in the exercise of its appellate
A petition for review under Rule 42 may include questions of fact, of law, or
mixed questions of fact and law.70 This Court has recognized that the power
exclusively in this Court.71 As provided in Rule 42, Section 2, errors of fact or
law, or both, allegedly committed by the Regional Trial Court in its decision
must be specified in the petition for review:
Section 2. Form and Contents. — The petition shall be filed in seven (7) legible
copies, with the original copy intended for the court being indicated as such by
the petitioner, and shall (a) state the full names of the parties to the case,
without impleading the lower courts or judges thereof either as petitioners or
respondents; (b) indicate the specific material dates showing that it was filed
on time; (c) set forth concisely a statement of the matters involved, the issues
raised, the specification of errors of fact or law, or both, allegedly committed
by the Regional Trial Court, and the reasons or arguments relied upon for the
allowance of the appeal; (d) be accompanied by clearly legible duplicate
29
originals or true copies of the judgments or final orders of both lower courts,
certified correct by the clerk of court of the Regional Trial Court, the requisite
number of plain copies thereof and of the pleadings and other material portions
of the record as would support the allegations of the petition.
The petitioner shall also submit together with the petition a certification under
oath that he has not theretofore commenced any other action involving the
same issues in the Supreme Court, the Court of Appeals or different divisions
thereof, or any other tribunal or agency; if there is such other action or
proceeding, he must state the status of the same; and if he should thereafter
learn that a similar action or proceeding has been filed or is pending before
the Supreme Court, the Court of Appeals, or different divisions thereof, or any
other tribunal or agency, he undertakes to promptly inform the aforesaid courts
and other tribunal or agency thereof within five (5) days therefrom. (Emphasis
supplied)
Petitioner's direct resort to this Court, instead of to the Court of Appeals for
intermediate review as sanctioned by the rules, violates the principle of
hierarchy of courts.72 In Diocese of Bacolod v. Commission on Elections:73
The doctrine that requires respect for the hierarchy of courts was created by
this court to ensure that every level of the judiciary performs its designated
roles in an effective and efficient manner. Trial courts do not only determine
the facts from the evaluation of the evidence presented before them. They are
likewise competent to determine issues of law which may include the validity
of an ordinance, statute, or even an executive issuance in relation to the
Constitution. To effectively perform these functions, they are territorially
organized into regions and then into branches. Their writs generally reach
within those territorial boundaries. Necessarily, they mostly perform the all-
important task of inferring the facts from the evidence as these are physically
presented before them. In many instances, the facts occur within their territorial
jurisdiction, which properly present the 'actual case' that makes ripe a
determination of the constitutionality of such action. The consequences, of
course, would be national in scope. There are, however, some cases where
resort to courts at their level would not be practical considering their decisions
could still be appealed before the higher courts, such as the Court of
Appeals.74 (Citation omitted)
Nonetheless, the doctrine of hierarchy of courts is not inviolable, and this Court
has provided several exceptions to the doctrine. 75 One of these exceptions is
the exigency of the situation being litigated.76Here, the controversy between
the parties has been dragging on since 2010, which should not be the case
when the initial dispute—an ejectment case—is, by nature and design, a
summary procedure and should have been resolved with expediency.
Moreover, this Court's rules of procedure permit the direct resort to this Court
from a decision of the Regional Trial Court upon questions of law, such as
those which petitioner raises in this case. In Barcenas v. Spouses Tomas and
Caliboso:77
Nonetheless, a direct recourse to this Court can be taken for a review of the
decisions, final orders or resolutions of the RTC, but only on questions of law.
Under Section 5 of Article VIII of the Constitution, the Supreme Court has the
power to
(2) Review, revise, reverse, modify, or affirm on appeal or certiorari as the law
or the Rules of Court may provide, final judgments and orders of lower courts
in:
....
(e) All cases in which only an error or question of law is involved.
This kind of direct appeal to this Court of RTC judgments, final orders or
resolutions is provided for in Section 2(c) of Rule 41, which reads:
SEC. 2. Modes of appeal. —
....
(c) Appeal by certiorari. — In all cases where only questions of law are raised
or involved, the appeal shall be to the Supreme Court by petition for review on
certiorari in accordance with Rule 45.
Procedurally then, petitioners could have appealed the RTC Decision affirming
the MTC (1) to this Court on questions oflaw only; or (2) if there are factual
questions involved, to the CA — as they in fact did.78
Thus, petitioner's resort to this Court is proper and warranted under the
circumstances.
II
In dismissing the complaint, the Metropolitan Trial Court found that "[t]he
issues . . . between the parties cannot be limited to a simple determination of
who has the better right of possession of the subject premises or whether or
not [petitioner] is entitled [to] rentals in arrears."79 It held that the relationship
between the parties was a "more complicated situation where jurisdiction is
better lodged with the regional trial court," 80 upon a finding that there was a
concession, rather than a lease relationship between the parties. 81
30
It is settled that the only issue that must be settled in an ejectment proceeding
is physical possession of the property involved.82 Specifically, action for
unlawful detainer is brought against a possessor who unlawfully withholds
possession after the termination and expiration of the right to hold
possession.83
To determine the nature of the action and the jurisdiction of the court, the
allegations in the complaint must be examined. The jurisdictional facts must
be evident on the face of the complaint.84 There is a case for unlawful detainer
if the complaint states the following:
(1) initially, possession of property by the defendant was by contract with or by
tolerance of the plaintiff;
(2) eventually, such possession became illegal upon notice by plaintiff to
defendant of the termination of the latter's right of possession;
(3) thereafter, the defendant remained in possession of the property and
deprived the plaintiff of the enjoyment thereof; and
(4) within one year from the last demand on defendant to vacate the property,
the plaintiff instituted the complaint for ejectment.85 (Citation omitted)
A review of petitioner's Complaint for Ejectment shows that all of these
allegations were made.
First, petitioner alleges that respondent is its lessee by virtue of three (3)
Contracts of Lease. The validity of these contracts was later affirmed in a
Compromise Agreement, which modified certain provisions of the previous
leases but retained the original lease period. Respondent does not dispute
these contracts' existence or their validity.
Second, following respondent's failure to pay rentals, petitioner alleges that it
has demanded that respondent vacate the leased premises.
Third, respondent continues to occupy and possess the leased premises
despite petitioner's demand. This is admitted by respondent, which seeks to
retain possession and use of the properties to "recoup its multi-million pesos
worth of investment."86
Fourth, petitioner filed its Complaint for Ejectment on April 28, 2010, 87 within
one (1) year of its last written demand to respondent, made on March 18, 2010
and received by respondent on March 26, 2010. 88 Contrary to respondent's
claim, the one (1)-year period to file the complaint must be reckoned from the
date of last demand, in instances when there has been more than one (1)
demand to vacate.89
The Metropolitan Trial Court seriously erred in finding that it did not have
jurisdiction over petitioner's complaint because the parties' situation has
allegedly become "more complicated"90 than one of lease. Respondent's
defense that its relationship with petitioner is one of concession rather than
lease does not determine whether or not the Metropolitan Trial Court has
jurisdiction over petitioner's complaint. The pleas or theories set up by a
defendant in its answer or motion to dismiss do not affect the court's
jurisdiction.91 In Morta v. Occidental:92
It is axiomatic that what determines the nature of an action as well as which
court has jurisdiction over it, are the allegations in the complaint and the
character of the relief sought. "Jurisdiction over the subject matter is
determined upon the allegations made in the complaint, irrespective of
whether the plaintiff is entitled to recover upon a claim asserted therein — a
matter resolved only after and as a result of the trial. Neither can the jurisdiction
of the court be made to depend upon the defenses made by the defendant in
his answer or motion to dismiss. If such were the rule, the question of
jurisdiction would depend almost entirely upon the defendant." 93 (Citations
omitted)
Not even the claim that there is an implied new lease or tacita
reconduccion will remove the Metropolitan Trial Court's jurisdiction over the
complaint.94 To emphasize, physical possession, or de facto possession, is
the sole issue to be resolved in ejectment proceedings. Regardless of the
claims or defenses raised by a defendant, a Metropolitan Trial Court has
jurisdiction over an ejectment complaint once it has been shown that the
requisite jurisdictional facts have been alleged, such as in this case. Courts
are reminded not to abdicate their jurisdiction to resolve the issue of physical
possession, as there is a public need to prevent a breach of the peace by
requiring parties to resort to legal means to recover possession of real
property.95
III
In its October 19, 2010 Order, the Metropolitan Trial Court found that petitioner
committed forum shopping when it failed to disclose that there were two (2)
pending cases in other trial courts concerning the same parties and similar
causes of action. These two (2) cases were Civil Case No. 08-119138 for
specific performance filed by respondent against petitioner; and SP CA Case
No. 10-123257 for interpleader filed by 4H Intramuros. Both cases were
pending with the Manila Regional Trial Court. The Metropolitan Trial Court
31
found that if it decides petitioner's Complaint for Ejectment, its ruling would
conflict with any resolution in the specific performance and interpleader cases,
since the same contracts were involved in all three (3) cases. It found that the
parties were the same and the reliefs prayed for were the same.
Forum shopping is the practice of resorting to multiple fora for the same relief,
to increase the chances of obtaining a favorable judgment. 96 In Spouses
Reyes v. Spouses Chung:97
It has been jurisprudentially established that forum shopping exists when a
party avails himself of several judicial remedies in different courts,
simultaneously or successively, all substantially founded on the same
transactions and the same essential facts and circumstances, and all raising
substantially the same issues either pending in or already resolved adversely
by some other courts.
The test to determine whether a party violated the rule against forum shopping
is whether the elements of litis pendentia are present, or whether a final
judgment in one case will amount to res judicata in another. Simply put,
when litis pendentia or res judicata does not exist, neither can forum shopping
exist.
The requisites of litis pendentia are: (a) the identity of parties, or at least such
as representing the same interests 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. On the other
hand, the elements of res judicata, also known as bar by prior judgment, are:
(a) the former judgment must be final; (b) the court which rendered it had
jurisdiction over the subject matter and the parties; (c) it must be a judgment
on the merits; and (d) there must be, between the first and second actions,
identity of parties, subject matter, and causes of action.98 (Citation omitted)
As observed by the Metropolitan Trial Court, there is an identity of parties in
the specific performance and interpleader cases, and the Complaint for
Ejectment. However, there is no identity of asserted rights or reliefs prayed for,
and a judgment in any of the three (3) cases will not amount to res judicata in
the two others.
In respondent's amended complaint for specific performance, it prays that
petitioner be compelled to offset respondent's unpaid rentals, with the
expenses that respondent supposedly incurred due to the Department of
Tourism's WOW Philippines project,99 pursuant to a July 27, 2004
Memorandum of Agreement. Concededly, one of respondent's reliefs prayed
for is for petitioner to respect respondent's lease over Puerta de Isabel II,
Asean Garden and Revellin de Recoletos:
2. Order [Department of Tourism], [Intramuros Administration] and [Anna
Maria L. Harper] to perform their obligation under the "Memorandum of
Agreement" dated 27 July 2004 by OFFSETTING the rentals in arrears from
the expenses incurred by Offshore in the continuance of the Department of
Tourism's WOW Philippines Project and to allow Offshore to recover their
investment at Intramuros by respecting their lease over Puerta Isabel II, Asean
Garden and Revellin de Recoletos[.]100
Nevertheless, the Memorandum of Agreement expressly stated that its
purpose was for respondent to pay petitioner and the Department of Tourism
rentals in arrears as of July 31, 2004:
WHEREAS, [respondent] has been indebted to [petitioner] in the form of rental
and utility consumption arrears for the occupancy of Puerta Isabel Chambers,
Asean Gardens and Baluarte de San Andres (Stable House) in the amount of
Six Million Seven Hundred Sixty[-]Two Thousand One Hundred Fifty[-]Three
and 70/100 (P6,762,153.70) as of July 31, 2004 and as a way of settling said
arrears, [respondent] had proposed to pay its obligations with [petitioner] as
shown in the breakdown in "Annex A" hereof through [respondent's]
assumption of [Department of Tourism's] monthly operational expenses for
lights and sound equipment, electricity, and performers at the Baluarte Plano
Luneta de Sta. Isabel in Intramuros, Manila[.][101
This was affirmed in petitioner's May 29, 2005 letter to respondent, in which
petitioner stated:
During our meeting last May 5, 2005 with Mr. Rico Cordova, it was reiterated
that the subject of the [Memorandum of Agreement] for the lights and sound
at Plano Luneta de Sta. Isabel was your accumulated account as of July 2004.
Subsequent rentals have to be remitted to [Intramuros] as they become due
and demandable. We have emphasized this concern in our letter of November
12, 2004.102
A final judgment in the specific performance case will not affect the outcome
of the ejectment case. As pointed out by petitioner, respondent's right to
possess the leased premises is founded initially on the Contracts of Lease
and, upon their expiration, on petitioner's tolerance in hopes of payment of
outstanding arrears. The July 27, 2004 Memorandum of Agreement subject of
the specific performance case cannot be the source of respondent's continuing
right of possession, as it expressly stated there that the offsetting was only for
respondent's outstanding arrears as of July 31, 2004. Any favorable judgment
32
compelling petitioner to comply with its obligation under this agreement will not
give new life to the expired Contracts of Lease, such as would repel petitioner's
unlawful detainer complaint.
In its Amended Answer in the specific performance case, petitioner sets up the
counterclaim that "[respondent] be ordered to pay its arrears of
(P13,448,867.45) as of December 31, 2009 plus such rent and surcharges as
may be incurred until [respondent] has completely vacated the [leased]
premises."103This counterclaim is exactly the same as one of petitioner's
prayers in its ejectment complaint:
WHEREFORE, premises considered, it is most respectfully prayed that
JUDGMENT be rendered ORDERING:
....
(2) DEFENDANT [OFFSHORE CONSTRUCTION] TO PAY ITS ARREARS
OF THIRTEEN MILLION FOUR HUNDRED FORTY-EIGHT THOUSAND,
EIGHT HUNDRED SIXTY-SEVEN PESOS AND FORTY-FIVE CENTAVOS
(P13,448,867.45), PLUS INTEREST OF 1% PER MONTH AS STIPULATED
IN THE LEASE CONTRACTS[.]104
A compulsory counterclaim is a defendant's claim for money or other relief
which arises out of, or is necessarily connected with, the subject matter of the
complaint. In Spouses Ponciano v. Hon. Parentela, Jr.:105
A compulsory counterclaim is any claim for money or other relief which a
defending party may have against an opposing party, which at the time of suit
arises out of, or is necessarily connected with, the same transaction or
occurrence that is the subject matter of plaintiff's complaint. It is compulsory in
the sense that if it is within the jurisdiction of the court, and does not require
for its adjudication the presence of third parties over whom the court cannot
acquire jurisdiction, it must be set up therein, and will be barred in the future if
not set up.106 (Citation omitted)
In its complaint for specific performance, respondent claimed that petitioner
should offset its outstanding rentals and that it was petitioner which had an
outstanding debt to respondent:
16. In compliance with the Memorandum of Agreement, Offshore incurred
expenses amounting to Seven Million Eight Hundred Twenty[-]Five Thousand
Pesos (P7,825,000.00) by way of Expenses for Rentals of Lights & Sound
System, Electrical Bill and Performers Fees. This amount is excluding the
expenses incurred during the period Offshore supplied the Light & Sound
System, as well as Performers, aforementioned started in October 2004. A
copy of the Statement of Account is hereto appended as ANNEX "H" to "H-4";
17. Based on Offshore's records, upon re-computation of Actual Area used
during all these period[s] from July 2001 to March 30, 2008, copy of Statement
of Accounts has been sent to Intramuros Administration for reconciliation,
Offshore's total obligation by way of back and current rentals up to March 30,
2008 is only in the amount of Six Million Four Hundred Three Thousand Three
Hundred Sixty[-]Four Pesos (P6,403,364.00);
18. Obviously, when both accounts are offset, it will clearly show that
[Intramuros] still owes Offshore the amount of One Million Four Hundred
Twenty[-]One Thousand Six Hundred Thirty[-]Six Pesos (P1,421,636.00) as of
March 2008;
19. Unfortunately, despite this glaring fact that [Intramuros] owes Offshore,
Defendant [Anna Maria L.] Harper (who has already showed sour and adverse
treatment of Offshore in the past), being the new Administrator of Intramuros
Administration, sent a Letter dated 09 April 2008 demanding from Offshore to
pay [Intramuros] alleged rentals in arrears in the amount of P12,478[,]461.74,
within seven (7) days from receipt. A copy of the Letter is hereto attached and
marked as Annex "I" to "I-1";
20. It can be deduced from the attachment to the aforementioned letter that
[Intramuros] did not honor the obligations imposed in the Memorandum of
Agreement because the monthly expenses incurred by Offshore for the
payment of the Lights and Sound System, Electricity and Performers Fees for
the continuance of the Department of Tourism WOW Project at Baluarte Plano,
Luneta de Sta. Isabel which were duly furnished [Intramuros] in the amount of
Seven Million Eight Hundred Twenty[-]Five Thousand Pesos (P7,825,000.00)
as expressly agreed by [Department of Tourism], [Intramuros] and Offshore in
the Memorandum of Agreement were NOT deducted from the rentals due[.] 107
Petitioner's counterclaim in its Amended Answer was set up to defend itself
against such a claim:
26. [Offshore Construction] has not established its right, or the reality is,
[Offshore Constructioin] has been delinquent in the payment of its financial
obligations which are specifically provided in its contract with defendant
[Intramuros], such as rental fees.
27. [Offshore Construction] has to pay rent for being still in possession of
Puerta Isabel II and Asean Garden. Moreover, plaintiff has enjoyed the fruits
of subleasing these premises for years and yet it has continuously failed to
remit all rental fees and surcharges despite repeated demands from
defendants. It bears stressing that as of December 31, 2009, [Offshore
Construction's] arrears has already ballooned to thirteen million four hundred
33
and forty[-]eight thousand eight hundred and sixty[-]seven pesos and forty[-
]five centavos (P13,448,867.45).
28. Glaringly, [Offshore Construction] has been remiss in performing its
obligations stated in the Lease Contracts (Annexes A to A-15; B to B-14 and
C to C-14 of the Complaint), Compromise Agreement (Annexes E to E-17 of
the Complaint) and Memorandum of Agreement (Annexes F to F-16 of the
Complaint). [Intramuros and Anna Maria L. Harper] are therefore constrained
to demand payment from [Offshore Construction] for the latter's failure or
refusal to honor its just and valid obligations. Necessarily, [Intramuros and
Anna Maria L. Harper] will not hesitate to seek legal remedies if [Offshore
Construction] continues to be delinquent.
29. Essentially, [Offshore Construction] is protesting the computation of its
arrears (P12,478,461.74) in the demand letter sent by Administrator [Anna
Maria L.] Harper on April 9, 2008. [Offshore Construction] also asserts that it
only owes defendant [Intramuros] six million four hundred three thousand and
three hundred sixty[-]four pesos (P6,403,364.00).
30. [Offshore Construction] is misguided. The [Memorandum of Agreement]
dated July 27, 2004 was executed because [Offshore Construction], at that
time, had been indebted to defendant [Intramuros] in the form of rental and
utility consumption arrears for the occupancy of Puerta Isabel Chambers,
Asean Gardens and Baluarte de San Andres in the amount of six million seven
hundred sixty[-]two thousand one hundred fifty[-]three and seventy centavos
(P6,762,153.70)....
....
32. Even after July 27, 2004, and up to this time, [Offshore Construction]
remained in possession of, used and/or subleased the subject premises. As
such, [Offshore Construction] still has to pay rental fees, aside from the
aforesaid arrears. The rental fees continued to pile up and triggered the
imposition of surcharges as [Offshore Construction] again failed to remit
payments thereon. This explains the demandable amount of P13,448,867.45
(Annex I to I1 of Complaint). [Offshore Construction] is therefore mistaken in
believing that it only owes defendant [Intramuros] the arrears subject of the
[Memorandum of Agreement] of July 27, 2004 and nothing more.108
Clearly, petitioner's counterclaim is compulsory, arising as it did out of, and
being necessarily connected with, the parties' respective obligations under the
July 27, 2004 Memorandum of Agreement. Petitioner cannot be faulted for
raising the issue of unpaid rentals in the specific performance case or for raising
the same issue in the present ejectment case, since it appears that respondent's
alleged failure to pay the rent led to the non-renewal of the Contracts of Lease.
However, it must be emphasized that any recovery made by petitioner of unpaid rentals
in either its ejectment case or in the specific performance case must bar recovery in
the other, pursuant to the principle of unjust enrichment.109
A judgment in the Complaint for Interpleader will likewise not be res judicata against
the ejectment complaint. The plaintiff in the interpleader case, 4H Intramuros, allegedly
representing the tenants occupying Puerta de Isabel II, does not expressly disclose in
its Complaint110 for Interpleader the source of its right to occupy those premises.
However, it can be determined from petitioner's Answer 111 and from respondent's
Memorandum112 that the members of 4H Intramuros are respondent's sublessees.
A sublessee cannot invoke a superior right over that of the sublessor.113 A judgment of
eviction against respondent will affect its sublessees since the latter's right of
possession depends entirely on that of the former. 114 A complaint for interpleader by
sublessees cannot bar the recovery by the rightful possessor of physical possession of
the leased premises.
Since neither the specific performance case nor the interpleader case constituted forum
shopping by petitioner, the Metropolitan Trial Court erred in dismissing its Complaint
for Ejectment.
IV
Ordinarily, this case would now be remanded to the Metropolitan Trial Court for the
determination of the rightful possessor of the leased premises. However, this would
cause needless delay inconsistent with the summary nature of ejectment
proceedings.115 Given that there appears sufficient evidence on record to make this
determination, judicial economy dictates that this Court now resolve the issue of
possession.116
It is undisputed that respondent's occupation and use of Baluarte de San Andres,
Baluarte de San Francisco de Dilao, and Revellin de Recoletos started on September
1, 1998 by virtue of Contracts of Lease all dated August 20, 1998. 117 The Contracts of
Lease were modified through Addendums to the Contracts likewise dated August 20,
1998.118
Then, to amicably settle Civil Case No. 98-91587 entitled Offshore Construction and
Development Company v. Hon. Gemma Cruz-Araneta and Hon. Dominador Ferrer,
Jr., then pending before Branch 47, Regional Trial Court, Manila,119 the parties and the
Department of Tourism entered into a July 26, 1999 Compromise Agreement. In the
Compromise Agreement, the parties affirmed the validity of the lease contracts, but
agreed to transfer the areas to be occupied and used by respondent in Baluarte de San
Andres and Baluarte de San Francisco de Dilao due to improvements that it had
introduced to the leased premises.120 The lease over Revellin de Recoletos was
terminated.121 It appears that under this Compromise Agreement, the original five (5)-
year period of the Contracts of Lease were retained, 122such that the leases would
expire on August 31, 2003, and renewable for another five (5) years upon the parties'
mutual agreement.123
34

Thereafter, the Contracts of Lease expired. Respondent does not concede this, but
there is no proof that there has been any contract mutually agreed upon by the parties
for any extensions of the leases. Respondent can only argue that petitioner's continuing
tolerance of respondent's possession and acceptance of respondent's rental payments
impliedly renewed the Contracts of Lease.124
But petitioner's tolerance of respondent's occupation and use of the leased premises
after the end of the lease contracts does not give the latter a permanent and
indefeasible right of possession in its favor. When a demand to vacate has been made,
as what petitioner had done, respondent's possession became illegal and it should
have left the leased premises. In Cañiza v. Court of Appeals:125
The Estradas' first proffered defense derives from a literal construction of Section 1,
Rule 70 of the Rules of Court which inter alia authorizes the institution of an unlawful
detainer suit when "the possession of any land or building is unlawfully withheld after
the expiration or termination of the right to hold possession, by virtue of any contract,
express or implied." They contend that since they did not acquire possession of the
property in question "by virtue of any contract, express or implied" — they having been,
to repeat, "allowed to live temporarily ... (therein) for free, out of ... (Cañiza's) kindness"
— in no sense could there be an "expiration or termination of ... (their) right to hold
possession, by virtue of any contract, express or implied." Nor would an action for
forcible entry lie against them, since there is no claim that they had "deprived (Cañiza)
of the possession of ... (her property) by force, intimidation, threat, strategy, or stealth."
The argument is arrant sophistry. Cañiza's act of allowing the Estradas to occupy her
house, rent-free, did not create a permanent and indefeasible right of possession in the
latter's favor. Common sense, and the most rudimentary sense of fairness clearly
require that act of liberality be implicitly, but no less certainly, accompanied by the
necessary burden on the Estradas of returning the house to Cañiza upon her demand.
More than once has this Court adjudged that a person who occupies the land of another
at the latter's tolerance or permission without any contract between them is necessarily
bound by an implied promise that he will vacate upon demand, failing which a summary
action for ejectment is the proper remedy against him. The situation is not much
different from that of a tenant whose lease expires but who continues in occupancy by
tolerance of the owner, in which case there is deemed to be an unlawful deprivation or
withholding of possession as of the date of the demand to vacate. In other words, one
whose stay is merely tolerated becomes a deforciant illegally occupying the land or
property the moment he is required to leave. Thus, in Asset Privatization Trust vs. Court
of Appeals, where a company, having lawfully obtained possession of a plant upon its
undertaking to buy the same, refused to return it after failing to fulfill its promise of
payment despite demands, this Court held that "(a)fter demand and its repudiation, ...
(its) continuing possession ... became illegal and the complaint for unlawful detainer
filed by the ... (plant's owner) was its proper remedy."126 (Emphasis supplied, citations
omitted)
The existence of an alleged concession agreement between petitioner and respondent
is unsupported by the evidence on record. The Metropolitan Trial Court found that a
concession agreement existed due to the agreements entered into by the parties:
This Court agrees with the defendant. The various contracts of lease between the
parties notwithstanding, the existence of the other agreements involved herein cannot
escape the scrutiny of this Court. Although couched in such words as "contracts of
lease", the relationship between the parties has evolved into another kind – that of a
concession agreement whereby defendant [Offshore Construction] undertook to
develop several areas of the Intramuros District, defendant [Offshore Construction]
actually commenced the development of the subject premises and incurred expenses
for the said development, effectively making the relationship more than an ordinary
lessor-lessee but one governed by concession whereby both parties undertook other
obligations in addition to their basic obligations under the contracts of
lease. Consensus facit legem (The parties make their own law by their agreement). It
behooves this Court to respect the parties' contracts, including the memoranda of
agreement that ensued after it....127
Respondent claims that the parties' agreement was for it to operate the leased
premises to recover its investments and to make profits. However, a review of the
Contracts of Lease show that they are lease contracts, as defined in Article 1643 of the
Civil Code:
Article 1643. In the lease of things, one of the parties binds himself to give to another
the enjoyment or use of a thing for a price certain, and for a period which may be definite
or indefinite. However, no lease for more than ninety-nine years shall be valid.
The restrictions and limitations on respondent's use of the leased premises are
consistent with petitioner's right as lessor to stipulate the use of the properties being
leased.128 Neither the Contracts of Lease nor their respective Addendums to the
Contract contain any stipulation that respondent may occupy and use the leased
premises until it recovers the expenses it incurred for improvements it introduced there.
Instead, the lease period was fixed at five (5) years, renewable for another five (5) years
upon mutual agreement:
3. CONTRACT TERM. (Leased Period) This lease shall be for a period of FIVE
YEARS (5 YRS) commencing from September 1, 1998 to August 31, 2003,
renewable for another period of FIVE YEARS (5 YRS) under such terms and
condition that may be mutually agreed upon in writing by the parties[.]129
The subsequent contracts, namely, the July 26, 1999 Compromise Agreement and the
July 27, 2004 Memorandum of Agreement, also do not point to any creation of a
"concession" in favor of respondent. The Compromise Agreement affirms the validity
of the lease contracts, while the Memorandum of Agreement was for the payment of
respondent's arrears until July 2004.
However, this Court cannot award unpaid rentals to petitioner pursuant to the ejectment
proceeding, since the issue of rentals in Civil Case No. 08-119138 is currently pending
with Branch 37, Regional Trial Court, Manila, by virtue of petitioner's counterclaim. As
the parties dispute the amounts to be offset under the July 27, 2004 Memorandum of
Agreement and respondent's actual back and current rentals due, 130 the resolution of
that case is better left to the Regional Trial Court for trial on the merits.
WHEREFORE, the Petition for Review on Certiorari is GRANTED. The April 14, 2011
Decision of Branch 173, Regional Trial Court, Manila in Civil Case No. 10-124740
is REVERSED AND SET ASIDE, and a new decision is hereby rendered ordering
35
respondent Offshore Construction and Development Company and any and all its In a Decision4 dated February 13, 1998, the RTC Malolos (Br. 78) ruled in
sublessees and successors-in-interest to vacate the leased premises immediately. favor of the petitioners. The dispositive portion reads:
Branch 37, Regional Trial Court, Manila is DIRECTED to resolve Civil Case No. 08-
119138 with dispatch. WHEREFORE, the foregoing considered, this Court resolves the instant case
SO ORDERED.
in favor of plaintiffs Larry and Flora Davis and against defendants Florencio
THIRD DIVISION
and Lucresia Davis ordering the aforesaid defendants to:
G.R. No. 233489, March 07, 2018
1. Execute the Deed of Absolute Sale in favor of herein plaintiffs covering the
500-square meter land covered by Transfer Certificate of Title No. T-226201,
SPOUSES LARRY AND FLORA DAVIS, Petitioners, v. SPOUSES
and cause the necessary registration thereof to the Register of Deeds of
FLORENCIO AND LUCRESIA DAVIS, Respondents.
Meycauayan;
DECISION
2. Pay, jointly and severally, the plaintiffs the following amounts, to wit:
VELASCO JR., J.:
P50,000.00 as moral damages;
P30,000.00 as exemplary damages; and
Challenged in this Petition for Review on Certiorari under Rule 45 of the Rules
P40,000.00 as attorney's fees and litigation expenses;
of Court are the Court of Appeals (CA) Resolutions dated May 22, 20171 and
3. Pay, jointly and severally, the costs of suit.
August 10, 20172 in CA-G.R. SP No. 150626, which dismissed outright on
purely procedural grounds the Petition for Certiorari of the herein petitioners
SO ORDERED.5
Spouses Larry and Flora Davis and subsequently denied their motion for
reconsideration thereof.
On appeal, the CA affirmed in toto the aforesaid ruling in its Decision6 dated
August 31, 2004, which became final and executory on October 2, 2004.7
The antecedents are:
Accordingly, on May 11, 2005, the petitioners moved for the execution of the
On January 29, 1991, the petitioners, as vendees, and the herein respondents
February 13, 1998 Decision of the RTC Malolos (Br. 78), which was granted.
Spouses Florencio and Lucresia Davis, as vendors, entered into a Contract to
A writ of execution was subsequently issued.8 Unfortunately, this writ was not
Sell over a 500-square meter lot in Banga, Meycauayan, Bulacan, covered by
implemented primarily because the respondents already sold the subject
Transfer Certificate of Title (TCT) No. T-226201 (M) (subject property) for a
property to Carmina Erana, Spouses Hector and Maria Victoria Erana, Efren
consideration of P500,000. As agreed upon, the petitioners gave the
Erana, and Spouses Ma. Lourdes and Romie Aquino, who were issued new
respondents the sum of P200,000 as downpayment while the remaining
TCT No. 421671 (M). But the notice of lis pendens was still carried over to the
balance of P300,000 was made payable in 12 equal monthly installments. The
new title. The petitioners moved for the cancellation of TCT No. 421671 (M)
respondents agreed to execute the corresponding Deed of Absolute Sale upon
and for the Register of Deeds of Bulacan to issue a new certificate of title in
full payment of the purchase price. After full payment thereof and despite
their favor but this was denied on the ground that the new registered owners
repeated demands, however, the respondents failed and refused to execute
of the subject property were not privies to the case.9
the Deed of Absolute Sale to the petitioners. This prompted the latter to initiate
a Complaint for Specific Performance and Damages (with prayer for a writ of
The petitioners were, thus, compelled to file an action for annulment of title
preliminary injunction and temporary restraining order) against the former
and document against the new registered owners of the subject property
before Branch 78 (Br. 78) of the Regional Trial Court of Malolos, Bulacan (RTC
before Br. 15, RTC Malolos, docketed as Civil Case No. 768-M- 08. In a
Malolos), docketed as Civil Case No. 581-M-95. A notice of lis pendens was
Decision10dated March 18, 2011, the RTC Malolos (Br. 15) ruled in favor of
then annotated at the back of TCT No. T-226201 (M). In their Answer, the
the petitioners and declared TCT No. 421671 (M) as null and void and restored
respondents admitted receipt of the P200,000 downpayment but denied
TCT No. T-226201 (M). This Decision became final and executory on July 23,
receipt of the balance of P300,000. They also insisted that the petitioners have
2012;11 thus, the petitioners moved for its execution, which was granted. TCT
no cause of action against them.3
No. 421671 (M) in the names of Carmina Erana, Spouses Hector and Maria
36
Victoria Erana, Efren Erana, and Spouses Ma. Lourdes and Romie Aquino
was cancelled and TCT No. T-226201 (M) in the names of the respondents
was restored.12
With this in view, the petitioners filed an Urgent Ex-Parte Manifestation and
Motion on July 13, 201613 for the implementation of the February 13, 1998
Decision of the RTC Malolos (Br. 78) by issuing a writ of execution to direct
the respondents to execute a Deed of Absolute Sale in their favor, or in the
absence of the former, to appoint the clerk of court to execute the same
pursuant to Section 10 (a), Rule 39 of the Rules of Court. In their Comment,
the respondents opposed arguing that the said Decision cannot be enforced
by a mere motion or by an action for revival of judgment since 10 years had
already lapsed from the time it became final.14 In their Reply, the petitioners
insisted that the period within which to move for the execution of the aforesaid
Decision was deemed suspended with their filing of an action for annulment of
title and document involving the subject property before the RTC Malolos (Br.
15) to enable a complete and effective relief in their favor.15
In an Order16dated February 7, 2017, the RTC Malolos (Br. 78) denied the
petitioners' Urgent Ex-Parte Manifestation and Motion explaining that the
consequent filing of annulment of title involving the subject property before Br.
15 does not toll the running of the period. The writ of execution dated June 17,
2005 was not served on the respondents; thus, the February 13, 1998 Decision
of Br. 78 remained unimplemented/unexecuted. This is the reason why there
is a need for its revival unless barred by the statute of limitations.17
On certiorari to the CA, the latter, in its first assailed Resolution dated May 22,
2017, dismissed the petition outright as it suffered from serious infirmities, to
wit: (1) petitioners failed to file a Motion for Reconsideration of the RTC Order
dated February 7, 2017 pursuant to Section 1, Rule 65 of the Rules of Court;
and (2) except for RTC Order dated February 7, 2017, only photocopies of the
pertinent pleadings and documents accompanied the petition, as required by
the aforesaid rule. The CA held that a Motion for Reconsideration is a plain,
speedy, and adequate remedy available to the petitioners to assail the said
Order and it is a condition sine qua non before a Petition for Certiorari may be
given due course. The subsequent motion for reconsideration thereof was
denied for lack of merit in the second assailed Resolution dated August 10,
2017.
Aggrieved by the aforesaid rulings of the CA, the petitioners filed the present
Petition for Review on Certiorari with this Court, raising the allegation that the
appellate court committed a grave and reversible error in dismissing their
Petition for Certiorari notwithstanding that the presiding judge of the RTC
Malolos (Br. 78) was guilty of grave abuse of discretion amounting to lack or
excess of jurisdiction in issuing its Order dated February 7, 2017.18
There is merit in the instant petition.
Before delving into the merits of the case, it is imperative to first resolve a
procedural issue.
While it is true that a motion for reconsideration is a condition sine qua non for
the filing of a Petition for Certiorari, the purpose of which is to grant an
opportunity for the court to correct any actual or perceived error attributed to it
by re-examination of the legal and factual circumstances of the case,19 it is
not, however, an ironclad rule as it admits well-defined exceptions. One of
these exceptions is where the questions raised in the certiorari proceeding
have been duly raised and passed upon by the lower court, or are the same
as those raised and passed upon in the lower court.20 This exception is
applicable in the instant case.
To note, in the petitioners' Urgent Ex-Parte Manifestation and Motion for the
implementation of the February 13, 1998 Decision of the RTC Malolos (Br. 78),
as well as in their Reply, they vehemently insisted that the period within which
to file a motion for execution of the said Decision was deemed suspended with
their filing of an action for annulment of title and document involving the subject
property before Br. 15 to enable a complete and effective relief in their favor.
But Br. 78 denied the said Urgent Ex--Parte Manifestation and Motion
reasoning that the petitioners' filing of another case involving the subject
property before Br. 15 does not toll the running of the period to file a motion
for execution. It is clear therefrom that any motion for reconsideration would
then be superfluous, as Br. 78 had already passed upon and resolved the very
same issue raised in the Petition for Certiorari before the CA. It is, therefore, a
reversible error on the part of the CA to outrightly dismiss the petitioners'
petition based on that procedural ground.
Turning now to the merits of the present petition, this Court rules for the
petitioners.
Under Section 6, Rule 39 of the Rules of Court, a "judgment may be executed
within five (5) years from the date of its entry or from the date it becomes final
and executory. After the lapse of such time, and before it is barred by the
statute of limitations, a judgment may be enforced by action." Nonetheless,
this Court held that there had been many instances where it allowed execution
by motion even after the lapse of five years, upon meritorious grounds. These
exceptions have one common denominator, and that is: the delay is caused or
37
occasioned by actions of the judgment debtor and/or is incurred for his benefit
or advantage.21
Here, the decision sought to be enforced became final and executory on
October 2, 2004. Upon the petitioners' motion, a writ of execution was issued
in 2005, which was well within the said five-year period. The writ, however,
was repeatedly returned unserved and unimplemented. The petitioners later
discovered the reason therefor. The respondents had sold the subject property
to other parties. Worse, a new title has already been issued to the latter. As
such, the petitioners were compelled to file an action for annulment of title and
document against these new registered owners. Fortunately, the court ruled in
petitioners' favor, which ruling became final and executory on July 23, 2012.
Petitioners consequently moved for its execution resulting in the cancellation
of the title in the names of the new registered owners and the restoration of
the title in the names of the respondents. Chronologically speaking, the motion
for execution filed on July 13, 2016 was almost 12 years after the decision
became final and executory. Petitioners, however, maintain that the period
during which it was compelled to file another action involving the subject
property just to enable a complete and effective relief in their favor should not
be taken into account in the computation of the five-year period.
WHEREFORE, the present petition is GRANTED. The CA Resolutions dated
May 22, 2017 and August 10, 2017 in CA-G.R. SP No. 150626 and the Order
dated February 7, 2017 of the RTC Malolos, Branch 78 in Civil Case No. 581-
M-95 are, thus, REVERSED and SET ASIDE. The Urgent Ex-Parte
Manifestation and Motion filed by petitioners on July 13, 2016 in said civil case
is hereby GRANTED. The RTC Malolos, Branch 78 is ordered to immediately
issue a writ of execution in favor of petitioners- spouses Larry and Flora Davis
to execute and implement the Decision dated February 13, 1998, the fallo of
which reads:
WHEREFORE, the foregoing considered, this Court resolves the instant case
in favor of plaintiffs Larry and Flora Davis and against defendants Florencio
and Lucresia Davis ordering the aforesaid defendants to:
1. Execute the Deed of Absolute Sale in favor of herein plaintiffs covering the
500-square meter land covered by Transfer Certificate of Title No. T-226201,
and cause the necessary registration thereof to the Register of Deeds of
Meycauayan;
2. Pay, jointly and severally, the plaintiffs the following amounts, to wit:

This Court sustains the petitioners' position. Considering that the delay was d. P50,000.00 as moral damages;
not due to the fault of the petitioners but of the respondents, who deliberately e. P30,000.00 as exemplary damages; and
sold the subject property to another to avoid the outcome of the case filed f. P40,000.00 as attorney's fees and litigation expenses;
against them, and which delay incurred to their benefit/advantage, it is only
logical, just, and equitable that the period during which an action for annulment 3. Pay, jointly and severally, the costs of suit.
of title and document was being litigated upon shall be deemed to have
interrupted or tolled the running of the five-year period for enforcement of a SO ORDERED.
judgment by mere motion. Otherwise, the respondents were rewarded for
escaping the fulfilment of their obligation. Therefore, in computing the time
limited for suing out an execution, the time during which execution is stayed
should be excluded, and the time will be extended by any delay occasioned
by the debtor.22 It bears stressing that the purpose of the law in prescribing
time limitations for enforcing judgments or actions is to prevent obligors from
sleeping on their rights.23 Moreover, the statute of limitations has not been
devised against those who wish to act but cannot do so for causes beyond
their control.24 In the case under consideration, there has been no indication
that the petitioners had ever slept on their rights to have the judgment executed
by mere motions within the reglementary period.

With the foregoing, this Court holds that the CA, indeed, committed a
reversible error in dismissing outright the petitioners' petition despite its being
meritorious.

38

SECOND DIVISION
G.R. No. 213192, July 12, 2017
TERESA R. IGNACIO, Petitioner, v. RAMON REYES, FLORENCIO REYES,
JR., ROSARIO R. DU AND CARMELITA R. PASTOR, Respondents.
DECISION
PERALTA, J.:
Before this Court is a petition for review on certiorari filed by petitioner Teresa
R. Ignacio (Teresa) challenging the Decision1 and Resolution,2 dated March
27, 2014 and June 27, 2014, respectively, of the Court of Appeals (CA), which
annulled and set aside the Orders dated April 13, 2004 and June 14, 2012 of
the Regional Trial Court (RTC) of Pasig City, Branch 151.
The facts follow:
On July 11, 1967, Angel Reyes (Angel) and Oliva3 R. Arevalo (Oliva) filed
before the then Court of First Instance of Rizal (now RTC of Pasig City, Branch
151) (intestate court) a Petition4 for Letters of Administration of the Estate of
their father Florencio Reyes, Sr. (Florencio Sr.) who died on June 23, 1967,
and enumerated therein the surviving heirs, namely: Oliva, Francisca Vda. de
Justiniani (Francisca), Angel, Amparo R. Avecilla (Amparo), Ramon Reyes
(Ramon), Teresa, Rosario R. Du (Rosario), Jose Reyes (Reyes), Soledad
Reyes (Soledad), Carmelita5 R. Pastor (Carmelita), and Florencio Reyes, Jr.
(Florencio Jr.). On July 15, 1967, the intestate court appointed Oliva as the
special administratrix of the estate of Florencio Sr. (Florencio Sr. estate), and
then as the regular administratrix in an Order dated November 23, 1967.6
Florencio, Jr. replaced Oliva in 1982. Thereafter, Teresa became the
administratrix of the Florencio Sr. estate on August 8, 1994.7
On December 5, 1994, Teresa executed a lease contract over a 398 square
meters (sq. m.) parcel of land located at Magsaysay Avenue, Baguio City
covered by Transfer Certificate of Title (TCT) No. T-59201 (Magsaysay
property) in favor of Gonzalo Ong, Virginia Lim, Nino Yu, Francisco Lim and
Simona Go.8 In an Order9 dated July 15, 1996, the intestate court approved
the lease contract upon Teresa's motion dated June 4, 1996.
Likewise, on September 26, 1996, the intestate court allowed Teresa to enter
into a lease contract over the parcel of land located at Session Road, Baguio
City with a total area of 646 sq. m. covered by TCT No. T-26769 (Session
Road property) to Famous Realty Corporation (FRC).10 Thus, on October 29,
1996, Teresa leased the Session Road property to FRC for the period of July
1, 1996 to June 30, 2003, with a monthly rental of P135,000.00.11
Sometime in January 1997, Teresa also leased the properties located at
Loakan Road, Baguio City covered by TCT Nos. T-26770 and T-26772
(Loakan and Military Cut-off properties), in favor of ATC Wonderland, Inc. and,
subsequently, to Gloria de Guzman and Sonshine Pre-School for a period
often years, effective September 1, 1996 to August 31, 2006.12
On September 25, 2001, herein respondents Ramon, Florencio Jr., Rosario
and Carmelita, and the Heirs of Amparo, Intestate Estate of Soledad, Jose and
Intestate Estate of Angel (plaintiffs) filed before the RTC of Baguio City, Branch
3 (Baguio RTC), three complaints for partition, annulment of lease contract,
accounting and damages with prayer for the issuance of a writ of preliminary
injunction against Teresa and the lessees of the subject Baguio properties.13
The plaintiffs alleged in their Complaints14 that, with the exception of the
lessees, the parties and the Florencio Sr. estate own one-tenth (1/10) of each
of the Session Road, Loakan and Military Cut-off, and Magsaysay properties.
They claimed that Teresa misrepresented that the Florencio Sr. estate is the
sole owner of the properties and leased the same to the other parties without
their conformity. They also asserted in one of their complaints that the
Florencio Sr. estate is different from the Heirs of Florencio Sr. and Heirs of
Salud.
They averred that, as co-owners, they have not received their share in the
monthly rentals of the properties aforementioned due to Teresa's failure to duly
account for the same. Thus, they are asking for the partition of the properties,
for the accounting of all the rentals, income or profits derived, and deliver the
same to the plaintiffs, for the annulment of the lease contracts and order the
lessees to vacate the premises, and for the payment of damages.15
Thereafter, the Baguio RTC directed and commissioned a team of auditors
with Leticia Clemente as the head accountant to conduct an accounting of the
properties. Based on the Report,16 Teresa, as administratrix of the Florencio
Sr. estate, had a total cash accountability amounting to Fifteen Million Two
Hundred Thirty-Eight Thousand Sixty-Six Pesos and Fifty-One Centavos
(P15,238,066.51). In an Order17 dated August 27, 2003, the Baguio RTC
39
manifested that it shall await a Request Order from the intestate court
regarding the possible distribution of the subject properties.18
Subsequently, on January 19, 2004, respondents and the others filed a
motion19 before the intestate court praying for the issuance of an order
allowing the distribution of the heirs' aliquot shares in the co-owned properties'
net income, and the partition of the said properties by the Baguio RTC.
However, the intestate court denied the motion in an Order20 dated April 13,
2004, a portion of which reads:
x x x This Court cannot allow the Baguio Court to partition the property of the
estate because this Court already has jurisdiction over the matter. In fact, this
Court is wondering why actions for partition are being entertained in other
jurisdictions when such can be readily addressed by this Court as an estate
court.
WHEREFORE, finding no merit in the instant motion, the Court hereby
DENIES the same.
SO ORDERED.21
In an Order dated June 14, 2012, the intestate court denied respondents'
motion for reconsideration dated May 12, 2004, thus:
Thus finding no sufficient reasons to reverse and set aside this court's Order
dated April 13, 2004 considering the pendency before this court of the other
incidents involving the Baguio properties including the sale of Session Road
property covered by TCT No. 26769 and even the distribution of the proceeds
of the sale thereof with hearings conducted on the Financial Report (Re:
Proceeds of the Sale of the Property at Session Road in Baguio City), and
recently with the filing of the Proposed Project of Partition/ Amended Proposed
Project of Partition, as such, the Motion for Reconsideration dated May 12,
2004 is DENIED.
The continuation of presentation of evidence for the Heirs of Carmelita Clara
Pastor et. (sic) al. re: Removal of Adminstratix/ Motion to Liquidate and
Reimburse Cash Advances is previously set on August 15, 2012 at 1:30 in the
afternoon.
SO ORDERED.22
Thereafter, the respondents filed before the CA a petition for certiorari
assailing the Orders dated April 13, 2004 and June 14, 2012 of the intestate
court disallowing the partition of the Baguio properties.
In a Decision dated March 27, 2014, the CA granted the petition and annulled
and set aside the assailed Orders of the intestate court. The dispositive portion
of the Decision states:
WHEREFORE, the instant Petition is GRANTED. The Assailed Orders of the
Regional Trial Court of Pasig City, Branch 151, dated April 13, 2004 and June
14, 2012 are ANNULLED and SET ASIDE. Petitioners' motion to allow partition
and distribution of shares over properties Co-Owned by the Estate and the
Heirs [l]ocated in Baguio City, is GRANTED.
On the other hand, the Regional Trial Court of Baguio City, Branch 3, before
which court Special Civil Actions Nos. 5055-R, 5056-R, and 5057-R are
pending, is DIRECTED to partition the Baguio Properties among the registered
co-owners thereof.
SO ORDERED.23
Upon denial of her motion for reconsideration, Teresa filed before this Court
the instant petition raising the following issues:
THERE IS AN APPEAL OR OTHER PLAIN, SPEEDY AND [ADEQUATE]
REMEDY IN THE ORDINARY COURSE OF LAW [AVAILABLE] TO THE
RESPONDENTS.
RESPONDENTS ARE, IN EFFECT, ASKING THE TRIAL COURT TO
VIOLATE THE RULES OF COURT.
IN LEGAL CONTEMPLATION, THE CHALLENGED ORDERS WERE NOT
ISSUED WITH GRAVE ABUSE OF DISCRETION.
The Court finds the instant petition without merit.
Teresa argues that there is an appeal or other plain, speedy and adequate
remedy in the ordinary course of law available. She maintains that the intestate
court asserted its jurisdiction and authority over the subject properties and
proceeded to conduct hearings to resolve the issues of accounting, payment
of advances, and distribution of assets and the proceeds of the sale of the
estate properties. The Baguio RTC opted to defer and not to proceed with the
cases. Thus, it is logical and proper that the respondents ask the Baguio RTC
to proceed with the case and then appeal the same if denied.24 Teresa further
avers that it is not disputed that the obligations enumerated in Section 1,25
Rule 90 of the Rules of Court has not yet been fully paid. Thus, it would be
premature for the trial court to allow the advance distribution of the estate. A
partial and premature distribution of the estate may only be done upon posting
of a bond, conditioned upon the full payment of the obligations, which was not
done in the present case.
40

We note, however, that in her Partial Motion to Dismiss26 dated July 1, 2016
before this Court, Teresa now agrees with the findings of the CA that the
Magsaysay property is co-owned by the parties, and should not be covered by
the estate proceedings.27
As a rule, a petition for certiorari under Rule 65 of the Rules of Court is valid
only when the question involved is an error of jurisdiction, or when there is
grave abuse of discretion amounting to lack or excess of jurisdiction on the
part of the court or tribunals exercising quasi-judicial functions.28 In this case,
the propriety of the special civil action for certiorari as a remedy depended on
whether the assailed orders of the RTC were final or interlocutory in nature.29
This Court has distinguished the interlocutory and final orders, as follows:
A "final" judgment or order is one that finally disposes of a case, leaving
nothing more to be done by the Court in respect thereto, e.g., an adjudication
on the merits which, on the basis of the evidence presented at the trial,
declares categorically what the rights and obligations of the parties are and
which party is in the right; or a judgment or order that dismisses an action on
the ground, for instance, of res judicata or prescription. Once rendered, the
task of the Court is ended, as far as deciding the controversy or determining
the rights and liabilities of the litigants is concerned. Nothing more remains to
be done by the Court except to await the parties' next move (which among
others, may consist of the filing of a motion for new trial or reconsideration, or
the taking of an appeal) and ultimately, of course, to cause the execution of
the judgment once it becomes "final" or, to use the established and more
distinctive term, "final and executory."
xxx xxx xxx
Conversely, an order that does not finally dispose of the case, and does not
end the Court's task of adjudicating the parties' contentions and determining
their rights and liabilities as regards each other, but obviously indicates that
other things remain to be done by the Court, is "interlocutory" e.g., an order
denying a motion to dismiss under Rule 16 of the Rules, or granting a motion
for extension of time to file a pleading, or authorizing amendment thereof, or
granting or denying applications for postponement, or production or inspection
of documents or things, etc. Unlike a "final" judgment or order, which is
appealable, as above pointed out, an "interlocutory" order may not be
questioned on appeal except only as part of an appeal that may eventually be
taken from the final judgment rendered in the case.30
The assailed April 13, 2004 and June 14, 2012 Orders denying respondents'
motion to allow the distribution of the estate's and co-owners' shares in the
subject properties were interlocutory. This is because such denial was not a
final determination of their alleged co-ownership. In fact, the intestate court
merely asserted its jurisdiction over the properties which were allegedly co-
owned with the Florencio Sr. estate.
Jurisprudence teaches that jurisdiction of the trial court as an intestate court is
special and limited as it relates only to matters having to do with the probate
of the will and/or settlement of the estate of deceased persons, but does not
extend to the determination of questions of ownership that arise during the
proceedings. This is true whether or not the property is alleged to belong to
the estate.31
Furthermore, the doctrine that "in a special proceeding for the probate of a will,
the question of ownership is an extraneous matter which the probate court
cannot resolve with finality" applies with equal force to an intestate proceeding
as in the case at bar.32 Thus:
"[A] probate court or one in charge of proceedings whether testate or intestate
cannot adjudicate or determine title to properties claimed to be a part of the
estate and which are claimed to belong to outside parties. All that the said
court could do as regards said properties is to determine whether they should
or should not be included in the inventory or list of properties to be
administered by the administrator. If there is not dispute, well and good, but if
there is, then the parties, the administrator, and the opposing parties have to
resort to an ordinary action for a final determination of the conflicting claims of
title because the probate court cannot do so."33
Corollarily, in the case of Agtarap v. Agtarap, et al.34 the Court enumerated
the instances when the intestate court may pass upon the issue of ownership,
to wit:
However, this general rule is subject to exceptions as justified by expediency
and convenience.
First, the probate court may provisionally pass upon in an intestate or a testate
proceeding the question of inclusion in, or exclusion from, the inventory of a
piece of property without prejudice to the final determination of ownership in a
separate action. Second, if the interested parties are all heirs to the estate, or
the question is one of collation or advancement, or the parties consent to the
assumption of jurisdiction by the probate court and the rights of third parties
are not impaired, then the probate court is competent to resolve issues on
ownership. Verily, its jurisdiction extends to matters incidental or collateral to
the settlement and distribution of the estate, such as the determination of the
41
status of each heir and whether the property in the inventory is conjugal or
exclusive property of the deceased spouse.35
From the foregoing, this Court holds that the general rule on the limited
jurisdiction of the RTC as intestate court is applicable in Special Civil Action
Nos. 5055-R and 5056-R. As to the Magsaysay property in Special Civil Action
No. 5057-R, it is evident from the certificate of title that the rights of parties
other than the heirs of Florencio Sr. will be impaired should the intestate court
decide on the ownership of the property.
We note that respondents presented certificates of title of the properties
registered under their names and the Florencio Sr. estate, and their respective
shares.36 As pronounced in Bolisay v. Judge Alcid:37
In regard to such incident of inclusion or exclusion, We hold that if a property
covered by Torrens Title is involved, the presumptive conclusiveness of such
title should be given due weight, and in the absence of strong compelling
evidence to the contrary, the holder thereof should be considered as the owner
of the property in controversy until his title is nullified or modified in an
appropriate ordinary action, particularly, when as in the case at bar,
possession of the property itself is in the persons named in the title.38
As such, they are considered the owners of the properties until their title is
nullified or modified in an appropriate ordinary action. The co-ownership of the
said properties by virtue of the certificates of title is a common issue in the
complaints for partition filed before the Baguio RTC. Thus, the intestate court
committed grave abuse of discretion when it asserted jurisdiction over the
subject properties since its jurisdiction relates only to matters having to do with
the settlement of the estate of deceased persons. Any decision that the
intestate court would render on the title of the properties would at best be
merely provisional in character, and would yield to a final determination in a
separate action.
An action for partition under Rule 69 of the Rules of Court is typically brought
by a person claiming to be the owner of a specified property against a
defendant or defendants whom the plaintiff recognizes to be his co-owners,39
and is premised on the existence or non-existence of co-ownership between
the parties.40 As discussed in Lim De Mesa v. Court of Appeals,41 the
determination of the existence of co-ownership is the first stage to accord with
the remedy of judicial partition, thus:
The first stage of an action for judicial partition and/or accounting is concerned
with the determination of whether or not a co-ownership in fact exists and a
partition is proper, that is, it is not otherwise legally proscribed and may be
made by voluntary agreement of all the parties interested in the property. This
phase may end in a declaration that plaintiff is not entitled to the desired
partition either because a co-ownership does not exist or a partition is legally
prohibited. It may also end, on the other hand, with an adjudgment that a co-
ownership does in truth exist, that partition is proper in the premises, and that
an accounting of rents and profits received by the defendant from the real
estate in question is in order. In the latter case, "the parties may, if they are
able to agree, make partition among themselves by proper instruments of
conveyance, and the court shall confirm the partition so agreed upon by all the
parties." In either case, whether the action is dismissed or partition and/or
accounting is decreed, the order is a final one and may be appealed by any
party aggrieved thereby.
In this regard, the Baguio RTC shirked from its duty when it deferred the trial
to await a request order from the intestate court regarding the possible
distribution. In fact, it has not yet made a definite ruling on the existence of co-
ownership. There was no declaration of entitlement to the desired partition
either because a co-ownership exists or a partition is not legally prohibited. As
this Court is not a trier of facts, it is for the trial court to proceed and determine
once and for all if there is co-ownership and to partition the subject properties
if there is no legal prohibition. It is also best for the Baguio RTC to settle
whether the respondents are claiming ownership over the properties by virtue
of their title adverse to that of their late father and his estate and not by any
right of inheritance.
WHEREFORE, the petition for review on certiorari filed by petitioner Teresa R.
Ignacio is hereby DENIED. The Decision and Resolution, dated March 27,
2014 and June 27, 2014, respectively, of the Court of Appeals in CA-G.R. SP
No. 127151 are herebyAFFIRMED with MODIFICATION, such that the
Regional Trial Court of Baguio City, Branch 3 is DIRECTED to RESUME trial
on the merits in Special Civil Action Nos. 5055-R, 5056-R, and 5057-R to
determine the ownership of the subject properties and to partition as co-
owners, if proper.
SO ORDERED.
42
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