G.R. No.

207970, January 20, 2016

FERNANDO MEDICAL ENTERPRISES, INC., Petitioner, v. WESLEYAN UNIVERSITY

PHILIPPINES, INC., Respondent.

DECISION

BERSAMIN, J.:

The trial court may render a judgment on the pleadings upon motion of the claiming party when
the defending party's answer fails to tender an issue, or otherwise admits the material allegations
of the adverse party's pleading. For that purpose, only the pleadings of the parties in the action
are considered. It is error for the trial court to deny the motion for judgment on the pleadings
because the defending party's pleading in another case supposedly tendered an issue of
fact.chanRoblesvirtualLawlibrary

The Case

The petitioner appeals the decision promulgated on July 2, 2013,1 whereby the Court of Appeals
(CA) affirmed the order issued on November 23, 2011 by the Regional Trial Court (RTC),
Branch 1, in Manila, denying its motion for judgment on the pleadings in Civil Case No. 09-
122116 entitled Fernando Medical Enterprises, Inc. v. Wesleyan University-
Philippines.2chanRoblesvirtualLawlibrary

Antecedents

From January 9, 2006 until February 2, 2007, the petitioner, a domestic corporation dealing with
medical equipment and supplies, delivered to and installed medical equipment and supplies at the
respondent's hospital under the following contracts:

a. Memorandum of Agreement dated January 9, 2006 for the supply ol' medical equipment
in the total amount of P18,625,000.00;3chanroblesvirtuallawlibrary

b. Deed of Undertaking dated July 5, 2006 for the installation of medical gas pipeline
system valued at P8,500,000.00;4chanroblesvirtuallawlibrary

c. Deed of Undertaking dated July 27, 2006 for the supply of one unit of Diamond Select
Slice CT and one unit of Diamond Select CV-P costing P65,000,000.00;5 and

d. Deed of Undertaking dated February 2, 2007 for the supply of furnishings and equipment
worth P32,926,650.00.6

According to the petitioner, the respondent paid only P67,3 57,683.23 of its total obligation of
P123,901,650.00, leaving unpaid the sum of P54,654,195.54.7 However, on February 11, 2009,
the petitioner and the respondent, respectively represented by Rafael P. Fernando and Guillermo
T. Maglaya, Sr., entered into an agreement,8 whereby the former agreed to reduce its claim to
only P50,400,000.00, and allowed the latter to pay the adjusted obligation on installment basis
within 36 months.9chanroblesvirtuallawlibrary

In the letter dated May 27, 2009,10 the respondent notified the petitioner that its new
administration had reviewed their contracts and had found the contracts defective and rescissible
due to economic prejudice or lesion; and that it was consequently declining to recognize the
February 11, 2009 agreement because of the lack of approval by its Board of Trustees and for
having been signed by Maglaya whose term of office had expired.

On June 24, 2009, the petitioner sent a demand letter to the

respondent.11chanroblesvirtuallawlibrary

Due to the respondent's failure to pay as demanded, the petitioner filed its complaint for sum of
money in the RTC,12 averring as follows:

xxxx

2. On January 9, 2006, plaintiff supplied defendant with hospital medical equipment for an in
consideration of P18,625,000.00 payable in the following manner: (2.1) For nos. 1 to 9 of items
to be sourced from Fernando Medical Equipment, Inc. (FMEI) - 30% down payment of
P17,475,000 or P5,242,500 with the balance of PI2,232,500 or 70% payable in 24 equal monthly
instalments of P509,687.50 and (2.2.) cash transaction amounting to P1,150,000.00 (2.3) or an
initial cash payment of P6,392,500.00 with the remaining balance payable in 24 equal monthly
installments every 20th day of each month until paid, as stated in the Memorandum of
Agreement, copy of which is hereto attached as Annex "A";

3. On July 5, 2006, plaintiff installed defendants medical gas pipeline system in the latter's
hospital building complex for and in consideration of P8,500,000.00 payable upon installation
thereof under a Deed of Undertaking, copy of which is hereto attached as Annex "B";

4. On July 27, 2006, plaintiff supplied defendant one (1) unit Diamond Select Slice CT and one
(1) unit Diamond Select CV-9 for and in consideration of P65,000,000.00 thirty percent (30%) of
which shall be paid as down payment and the balance in 30 equal monthly instalments as
provided in that Deed of Undertaking, copy of which is hereto attached as Annex "C";

5. On February 2, 2007, plaintiff supplied defendants hospital furnishings and equipment for an
in consideration of P32,926,650.00 twenty percent (20%) of which was to be paid as
downpayment and the balance in 30 months under a Deed of Undertaking, copy of which is
hereto attached as Annex "D";

6. Defendant's total obligation to plaintiff was P123,901,650.00 as of February 15, 2009, but
defendant was able to pay plaintiff the sum of P67,357,683.23 thus leaving a balance
P54,654,195.54 which has become overdue and demandable;

7. On February 11, 2009, plaintiff agreed to reduce its claim to only P50,400,000.00 and
extended its payment for 36 months provided defendants shall pay the same within 36 months
and to issue 36 postdated checks therefor in the amount of P1,400,000.00 each to which
defendant agreed under an Agreement, copy of which is hereto attached as Annex "E";

8. Accordingly, defendant issued in favor of plaintiff 36 postdated checks each in the [a]mount
of P1,400,000.00 but after four (4) of the said checks in the sum of P5,600,000.00 were honored
defendant stopped their payment thus making the entire obligation of defendant due and
demandable under the February 11, 2009 agreement;

9. In a letter dated May 27, 2009, defendant claimed that all of the first four (4) agreements may
be rescissible and one of them is unenforceable while the Agreement dated February 11, 2009
was without the requisite board approval as it was signed by an agent whose term of office
already expired, copy of which letter is hereto attached as Annex "F";

10. Consequently, plaintiff told defendant that if it does not want to honor the February 11, 2009
contract then plaintiff will insists [sic] on its original claim which is P54,654,195.54 and made a
demand for the payment thereof within 10 days from receipt of its letter copy of which is hereto
attached as Annex "G";

11. Defendant received the aforesaid letter on July 6, 2009 but to date it has not paid plaintiff any
amount, either in the first four contracts nor in the February 11, 2009 agreement, hence, the latter
was constrained to institute the instant suit and thus incurred attorney's fee equivalent to 10% of
the overdue account but only after endeavouring to resolve the dispute amicable and in a spirit of
friendship[;]

12. Under the February 11, 2009 agreement the parties agreed to bring all actions or proceedings
thereunder or characterized therewith in the City of Manila to the exclusion of other courts and
for defendant to pay plaintiff 3% per months of delay without need of
demand;13chanroblesvirtuallawlibrary

xxxx

The respondent moved to dismiss the complaint upon the following grounds,14 namely: (a) lack
of jurisdiction over the person of the defendant; (b) improper venue; (c) litis pendentia; and (d)
forum shopping. In support of the ground of litis pendentia, it stated that it had earlier filed a
complaint for the rescission of the four contracts and of the February 11, 2009 agreement in the
RTC in Cabanatuan City; and that the resolution of that case would be determinative of the
petitioner's action for collection.15chanroblesvirtuallawlibrary

After the RTC denied the motion to dismiss on July 19, 2009,16 the respondent filed its answer
(ad cautelam),17 averring thusly:

xxxx

2. The allegations in Paragraphs Nos. 2, 3, 4, and 5 of the complaint are ADMITTED subject to
the special and affirmative defenses hereafter pleaded;

3. The allegations in Paragraphs Nos. 6, 7 and 8 of the complaint are DENIED for lack of
knowledge or information sufficient to form a belief as to the truth or falsity thereof, inasmuch as
the alleged transactions were undertaken during the term of office of the past officers of
defendant Wesleyan University-Philippines. At any rate, these allegations are subject to the
special and affirmative defenses hereafter pleaded;

4. The allegations in Paragraphs Nos. 9 and 10 of the complaint are ADMITTED subject to the
special and affirmative defenses hereafter pleaded;

5. The allegations in Paragraphs Nos. 11 and 12 of the complaint are DENIED for being
conclusions of law.18chanroblesvirtuallawlibrary

xxxx

The petitioner filed its reply to the answer.19chanroblesvirtuallawlibrary

On September 28, 2011, the petitioner filed its Motion for Judgment Based on the
Pleadings,20 stating that the respondent had admitted the material allegations of its complaint and
thus did not tender any issue as to such allegations.

The respondent opposed the Motion for Judgment Based on the Pleadings, arguing that it had
specifically denied the material allegations in the complaint, particularly paragraphs 6, 7, 8, 11
and 12.21chanroblesvirtuallawlibrary

On November 23, 2011, the RTC issued the order denying the Motion for Judgment Based on
the Pleadings of the petitioner, to wit:

At the hearing of the "Motion for Judgment Based on the Pleadings" filed by the plaintiff thru
counsel, Atty. Jose Mañacop on September 28, 2011, the court issued an Order dated October 27,
2011 which read in part as follows:

xxxx

Considering that the allegations stated on the Motion for Judgment Based on the Pleadings, are
evidentiary in nature, the Court, instead of acting on the same, hereby sets this case for pre-trial,
considering that with the Answer and the Reply, issues have been joined.

xxxx

In view therefore of the Order of the Court dated October 27, 2011. let the Motion for Judgment
Based on the Pleadings be hereby ordered DENIED on reasons as abovestated and hereto
reiterated.

xxxx

SO ORDERED.22chanroblesvirtuallawlibrary

The petitioner moved for reconsideration,23 but its motion was denied on December 29,
2011.24chanroblesvirtuallawlibrary
The petitioner assailed the denial in the CA on certiorari.25cralawred

Judgment of the CA

On July 2, 2013, the CA promulgated its decision. Although observing that the respondent had
admitted the contracts as well as the February 11, 2009 agreement, viz.:

It must be remembered that Private Respondent admitted the existence of the subject contracts,
including Petitioner's fulfilment of its obligations under the same, but subjected the said
admission to the "special and affirmative defenses" earlier raised in its Motion to Dismiss.

xxxx

Obviously, Private Respondent's special and affirmative defenses are not of such character as to
avoid Petitioner's claim. The same special and affirmative defenses have been passed upon by
the RTC in its Order dated July 19, 2010 when it denied Private Respondent's Motion to
Dismiss. As correctly found by the RTC, Private Respondent's special and affirmative defences
of lack of jurisdiction over its person, improper venue, litis pendentia and wilful and deliberate
forum shopping are not meritorious and cannot operate to dismiss Petitioner's Complaint. Hence,
when Private Respondent subjected its admission to the said defenses, it is as though it raised no
defense at all.

Not even is Private Respondent's contention that the rescission case must take precedence over
Petitioner's Complaint for Sum of Money tenable. To begin with. Private Respondent had not yet
proven that the subject contracts are rescissible. And even if the subject contracts are indeed
rescissible, it is well-settled that rescissible contracts are valid contracts until they are rescinded.
Since the subject contracts have not yet been rescinded, they are deemed valid contracts which
may be enforced in legal contemplation.

In effect, Private Respondent admitted that it entered into the subject contracts and that Petitioner
had performed its obligations under the same.

As regards Private Respondent's denial by disavowal of knowledge of the Agreement dated

February 11, 2009, We agree with Petitioner that such denial was made in bad faith because such
allegations are plainly and necessarily within its knowledge.

In its letter dated May 27, 2009, Private Respondent made reference to the Agreement dated
February 11, 2009, viz.:ChanRoblesVirtualawlibrary
"The Agreement dated 11 February 2009, in particular, was entered into by an Agent of the
University without the requisite authority from the Board of Trustees, and executed when said
agent's term of office had already expired. Consequently, such contract is, being an
unenforceable contract."
Also, Private Respondent averred in page 5 of its Complaint for Rescission, which it attached to
its Motion to Dismiss, that:
"13. On 6 February 2009, when the terms of office of plaintiffs Board of Trustess chaired by
Dominador Cabasal, as well as of Atty. Guillermo C. Maglaya as President, had already expired,
thereby rendering them on a hold-over capacity, the said Board once again authorized Atty.
Maglaya to enter into another contract with defendant FMEI, whereby the plaintiff was obligated
to pay and deliver to defendant FMEI the amount of Fifty Million Four Hundred Thousand Pesos
(Php50,400,000.00) in thirty five (35) monthly instalments of One Million Four Hundred
Thousand Pesos (Phpl,400,000.00), representing the balance of the payment for the medical
equipment supplied under the afore-cited rescissible contracts. This side agreement, executed
five (5) days later, or on 11 February 2009, and denominated as "AGREEMENT", had no object
as a contract, but was entered into solely for the purpose of getting the plaintiff locked-in to the
payment of the balance price under the rescissible contracts; x x x"
From the above averments, Private Respondent cannot deny knowledge of the Agreement dated
February 11, 2009. In one case, it was held that when a respondent makes a "specific denial" of a
material allegation of the petition without setting forth the substance of the matters relied upon to
support its general denial, when such matters where plainly within its knowledge and the
defendant could not logically pretend ignorance as to the same, said defendant fails to properly
tender an issue."26chanroblesvirtuallawlibrary

the CA ruled that a judgment on the pleadings would be improper because the outstanding
balance due to the petitioner remained to be an issue in the face of the allegations of the
respondent in its complaint for rescission in the RTC in Cabanatuan City, to wit:

However, Private Respondent's disavowal of knowledge of its outstanding balance is well-taken.

Paragraph 6 of Petitioner's Complaint states that Private Respondent was able to pay only the
amount of P67,357,683.23. Taken together with paragraph 8, which states that Private
Respondent was only able to make good four (4) check payments worth P1,400,000.00 or a total
of P5,600,000.00, Private Respondent's total payments would be, in Petitioner's
view, P72,957,683.23. However, in its Complaint for Rescission, attached to its Motion to
Dismiss Petitioner's Complaint for Sum of Money, Private Respondent alleged
that:ChanRoblesVirtualawlibrary
"16. To date, plaintiff had already paid defendant the amount of Seventy Eight Million Four
Hundred One Thousand Six Hundred Fifty Pesos (P78,401,650.00)"
It is apparent that Private Respondent's computation and Petitioner's computation of the total
payments made by Private Respondent are different. Thus, Private Respondent tendered an issue
as to the amount of the balance due to Petitioner under the subject contracts.27chanrobleslaw

Hence, this appeal.chanRoblesvirtualLawlibrary

Issue

The petitioner posits that the CA erred in going outside of the respondent's answer by relying on
the allegations contained in the latter's complaint for rescission; and insists that the CA should
have confined itself to the respondent's answer in the action in order to resolve the petitioner's
motion for judgment based on the pleadings.

In contrast, the respondent contends that it had specifically denied the material allegations of the
petitioner's complaint, including the amount claimed; and that the CA only affirmed the previous
ruling of the RTC that the pleadings submitted by the parties tendered an issue as to the balance
owing to the petitioner.

Did the CA commit reversible error in affirming the RTC's denial of the petitioner's motion for
judgment on the pleadings?chanRoblesvirtualLawlibrary

Ruling of the Court

The appeal is meritorious.

The rule on judgment based on the pleadings is Section 1, Rule 34 of the Rules of Court, which
provides thus:

Section 1. Judgment on the pleadings. - Where an answer fails to tender an issue, or otherwise
admits the material allegations of the adverse party's pleading, the court may, on motion of that
party, direct judgment on such pleading, x x x

The essential query in resolving a motion for judgment on the pleadings is whether or not there
are issues of fact generated by the pleadings.28 Whether issues of fact exist in a case or not
depends on how the defending party's answer has dealt with the ultimate facts alleged in the
complaint. The defending party's answer either admits or denies the allegations of ultimate facts
in the complaint or other initiatory pleading. The allegations of ultimate facts the answer admit,
being undisputed, will not require evidence to establish the truth of such facts, but the allegations
of ultimate facts the answer properly denies, being disputed, will require evidence.

The answer admits the material allegations of ultimate facts of the adverse party's pleadings not
only when it expressly confesses the truth of such allegations but also when it omits to deal with
them at all.29 The controversion of the ultimate facts must only be by specific denial. Section 10,
Rule 8 of the Rules of Court recognizes only three modes by which the denial in the answer
raises an issue of fact. The first is by the defending party specifying each material allegation of
fact the truth of which he does not admit and, whenever practicable, setting forth the substance of
the matters upon which he relies to support his denial. The second applies to the defending party
who desires to deny only a part of an averment, and the denial is done by the defending party
specifying so much of the material allegation of ultimate facts as is true and material and denying
only the remainder. The third is done by the defending party who is without knowledge or
information sufficient to form a belief as to the truth of a material averment made in the
complaint by stating so in the answer. Any material averment in the complaint not so specifically
denied are deemed admitted except an averment of the amount of unliquidated
damages.30chanroblesvirtuallawlibrary

In the case of a written instrument or document upon which an action or defense is based, which
is also known as the actionable document, the pleader of such document is required either to set
forth the substance of such instrument or document in the pleading, and to attach the original or a
copy thereof to the pleading as an exhibit, which shall then be deemed to be a part of the
pleading, or to set forth a copy in the pleading.31 The adverse party is deemed to admit the
genuineness and due execution of the actionable document unless he specifically denies them
under oath, and sets forth what he claims to be the facts, but the requirement of an oath does not
apply when the adverse party does not appear to be a party to the instrument or when compliance
with an order for an inspection of the original instrument is refused.32chanroblesvirtuallawlibrary

In Civil Case No. 09-122116, the respondent expressly admitted paragraphs no. 2, 3, 4, 5, 9 and
10 of the complaint. The admission related to the petitioner's allegations on: (a) the four
transactions for the delivery and installation of various hospital equipment; (b) the total liability
of the respondent; (c) the payments made by the respondents; (d) the balance still due to the
petitioner; and (e) the execution of the February 11, 2009 agreement. The admission of the
various agreements, especially the February 11, 2009 agreement, significantly admitted the
petitioner's complaint. To recall, the petitioner's cause of action was based on the February 1 1,
2009 agreement, which was the actionable document in the case. The complaint properly alleged
the substance of the February 11, 2009 agreement, and contained a copy thereof as an annex.
Upon the express admission of the genuineness and due execution of the February 11, 2009
agreement, judgment on the pleadings became proper.33 As held in Santos v.
Alcazar:34chanroblesvirtuallawlibrary

There is no need for proof of execution and authenticity with respect to documents the
genuineness and due execution of which are admitted by the adverse party. With the consequent
admission engendered by petitioners' failure to properly deny the Acknowledgment in their
Answer, coupled with its proper authentication, identification and offer by the respondent, not to
mention petitioners' admissions in paragraphs 4 to 6 of their Answer that they are indeed
indebted to respondent, the Court believes that judgment may be had solely on the document,
and there is no need to present receipts and other documents to prove the claimed indebtedness.
The Acknowledgment, just as an ordinary acknowledgment receipt, is valid and binding between
the parties who executed it, as a document evidencing the loan agreement they had entered into.
The absence of rebutting evidence occasioned by petitioners' waiver of their right to present
evidence renders the Acknowledgment as the best evidence of the transactions between the
parties and the consequential indebtedness incurred. Indeed, the effect of the admission is such
that a prima facie case is made for the plaintiff which dispenses with the necessity of evidence
on his part and entitled him to a judgment on the pleadings unless a special defense of new
matter, such as payment, is interposed by the defendant.35 (citations omitted)

The respondent denied paragraphs no. 6, 7 and 8 of the complaint "for lack of knowledge or

information sufficient to form a belief as to the truth or falsity thereof, inasmuch as the alleged
transactions were undertaken during the term of office of the past officers of defendant Wesleyan
University-Philippines." Was the manner of denial effective as a specific denial?

We answer the query in the negative. Paragraph no. 6 alleged that the respondent's total
obligation as of February 15, 2009 was P123,901,650.00, but its balance thereafter became only
P54,654,195.54 because it had since then paid P67,357,683.23 to the petitioner. Paragraph no. 7
stated that the petitioner had agreed with the respondent on February 11, 2009 to reduce the
balance to only P50,400,000.00, which the respondent would pay in 36 months through 36
postdated checks of P1,400,000.00 each, which the respondent then issued for the purpose.
Paragraph no. 8 averred that after four of the checks totalling P5,600,000.00 were paid the
respondent stopped payment of the rest, rendering the entire obligation due and demandable
pursuant to the February 11, 2009 agreement. Considering that paragraphs no. 6, 7 and 8 of the
complaint averred matters that the respondent ought to know or could have easily known, the
answer did not specifically deny such material averments. It is settled that denials based on lack
of knowledge or information of matters clearly known to the pleader, or ought to be known to it,
or could have easily been known by it are insufficient, and constitute ineffective36 or sham
denials.37chanroblesvirtuallawlibrary

That the respondent qualified its admissions and denials by subjecting them to its special and
affirmative defenses of lack of jurisdiction over its person, improper venue, litis pendentia and
forum shopping was of no consequence because the affirmative defenses, by their nature,
involved matters extrinsic to the merits of the petitioner's claim, and thus did not negate the
material averments of the complaint.

Lastly, we should emphasize that in order to resolve the petitioner's Motion for Judgment Based
on the Pleadings, the trial court could rely only on the answer of the respondent filed in Civil
Case No. 09-122116. Under Section 1, Rule 34 of the Rules of Court, the answer was the sole
basis for ascertaining whether the complaint's material allegations were admitted or properly
denied. As such, the respondent's averment of payment of the total of P78,401,650.00 to the
petitioner made in its complaint for rescission had no relevance to the resolution of the Motion
for Judgment Based on the Pleadings. The CA thus wrongly held that a factual issue on the total
liability of the respondent remained to be settled through trial on the merits. It should have
openly wondered why the respondent's answer in Civil Case No. 09-122116 did not allege the
supposed payment of the P78,401,650.00, if the payment was true, if only to buttress the specific
denial of its alleged liability. The omission exposed the respondent's denial of liability as
insincere.

WHEREFORE, the Court REVERSES and SETS ASIDE the decision promulgated on July 2,

2013; DIRECTS the Regional Trial Court, Branch 1, in Manila to resume its proceedings in Civil
Case No. 09-122116 entitled Fernando Medical Enterprises, Inc. v. Wesleyan University-
Philippines, and to forthwith act on and grant the Motion for Judgment Based on the Pleadings
by rendering the proper judgment on the pleadings; and ORDERS the respondent to pay the
costs of suit.

SO ORDERED.cralawlawlibrary

G.R. No. 187487, June 29, 2015

GO TONG ELECTRICAL SUPPLY CO., INC. AND GEORGE C. GO, Petitioners, v. BPI

FAMILY SAVINGS BANK, INC., SUBSTITUTED BY PHILIPPINE INVESTMENT
ONE [SPV-AMC], INC.,* Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated February 17, 2009 and
the Resolution3 dated April 13, 2009 of the Court of Appeals (CA) in CA-G.R. CV No. 86749
which affirmed the Decision4 dated September 6, 2005 of the Regional Trial Court of Makati
City, Branch 143 (RTC) in Civil Case No. 02-1203, an action for collection of sum of money,
rendered in favor of respondent BPI Family Savings Bank, Inc. (respondent).

The Facts

On October 4, 2002, respondent filed a complaint5 against petitioners Go Tong Electrical Supply

Co., Inc. (Go Tong Electrical) and its President, George C. Go (Go; collectively petitioners),
docketed as Civil Case No. 02-1203, seeking that the latter be held jointly and severally liable to
it for the payment of their loan obligation in the aggregate amount of P87,086,398.71, inclusive
of the principal sum, interests, and penalties as of May 28, 2002, as well as attorney's fees,
litigation expenses, and costs of suit.6 As alleged by respondent, as early as 1996, Go Tong
Electrical had applied for and was granted financial assistance by the then Bank of South East
Asia (BSA). Subsequently, DBS7 Bank of the Philippines, Inc. (DBS) became the successor-in-
interest of BSA. The application for financial assistance was renewed on January 6, 1999
through a Credit Agreement.8 On even date, Go Tong Electrical, represented by Go, among
others, obtained a loan from DBS in the principal amount of P40,491,051.65, for which Go Tong
Electrical executed Promissory Note No. 82-91 -00176-79 (PN) for the same amount in favor of
DBS, maturing on February 5, 2000.10 Under the PN's terms, Go Tong Electrical bound itself to
pay a default penalty interest at the rate of one percent (1%) per month in addition to the current
interest rate,11 as well as attorney's fees equivalent to twenty-five percent (25%) of the amount
sought to be recovered.12 As additional security, Go executed a Comprehensive Surety
Agreement13 (CSA) covering any and all obligations undertaken by Go Tong Electrical,
including the aforesaid loan.14 Upon default of petitioners, DBS - and later, its successor-in-
interest, herein respondent15 - demanded payment from petitioners,16 but to no avail,17 hence, the
aforesaid complaint.

In their Answer with Counterclaim18 (Answer), petitioners merely stated that they "specifically
deny"19 the allegations under the complaint. Of particular note is their denial of the execution of
the loan agreement, the PN, and the CSA "for being self-serving and pure conclusions intended
to suit [respondent's] purposes."20 By way of special and affirmative defenses, petitioners argued,
among others, that: (a) the real party-in-interest should be DBS and not respondent; (b) no
demand was made upon them; and (c) Go cannot be held liable under the CSA since there was
supposedly no solidarity of debtors.21 Petitioners further interposed counterclaims for the
payment of moral and exemplary damages, as well as litigation and attorney's fees in the total
amount of P1,250,000.00.22ChanRoblesVirtualawlibrary

During trial, respondent presented Ricardo O. Suñio23 (Suñio), the Account Officer handling
petitioners' loan accounts, as its witness. Suñio attested to the existence of petitioners' loan
obligation in favor of respondent,24 and identified a Statement of Account25 which shows the
amount due as of June 16, 2004 as follows:
SUMMARY    
PRINCIPAL P 40,491,051.65 
PAST DUE
P 31,437,800.28 
INTEREST
PENALTY P 47,473,042.27 
SUB-TOTAL P119,401,894.20 
PLUS  
UNPAID
P 1,805,507.21 
INTEREST
UNPAID
P 1,776,022.80 
PENALTY
SUB-TOTAL P122,983,424.21 
LESS:
- 1,877,286.08 
PAYMENTS
  P121,106.138.1326 
On cross-examination, Suñio nonetheless admitted that he had no knowledge of how the PN was
prepared, executed, and signed, nor did he witness its signing.27ChanRoblesVirtualawlibrary

For their part, petitioners presented Go Tong Electrical's Finance Officer, Jocelyn Antonette
Lim, who testified that Go Tong Electrical was able to pay its loan, albeit partially. However, she
admitted that she does not know how much payments were made, nor does she have a rough
estimate thereof, as these were allegedly paid for in dollars.28ChanRoblesVirtualawlibrary

The RTC Ruling

In a Decision29 dated September 6, 2005, the RTC ruled in favor of respondent, thereby ordering
petitioners to jointly and severally pay the former: (a) the principal sum of P40,491,051.65, with
legal interest to be reckoned from the filing of the Complaint; (b) penalty interest of one percent
(1%) per month until the obligation is fully paid; and (c) attorney's fees in the sum of
P50,000.00.30ChanRoblesVirtualawlibrary

It found that respondent had amply demonstrated by competent evidence that it was entitled to
the reliefs it prayed for. Particularly, respondent's documentary evidence - the authenticity of
which the RTC observed to be undisputed - showed the existence of petitioners' valid and
demandable obligation. On the other hand, petitioners failed to discharge the burden of proving
that they had already paid the same, even partially.31 Further, the RTC debunked petitioners'
denial of the demands made by respondent since, ultimately, the Credit Agreement, PN, and
CSA clearly stated that no demand was needed to render them in default.32 Likewise, the
argument that Go could not be held solidarity liable was not sustained since he bound himself as
a surety under the CSA, which was executed precisely to induce respondent's predecessor-in-
interest, DBS, to grant the loan.33 Separately, the RTC found the penalty interest at three percent
(3%) per month sought by respondent to be patently iniquitous and unconscionable and thus, was
reduced to twelve percent (12%) per annum, or one percent (1%) per month. Attorney's fees
were also tempered to the reasonable amount of P50,000.00.34ChanRoblesVirtualawlibrary

Unconvinced, petitioners appealed35 to the CA.

The CA Ruling

In a Decision36 dated February 17, 2009, the CA sustained the RTC's ruling in toto, finding the
following facts to be beyond cavil: (a) that Go Tong Electrical applied for and was granted a
loan accommodation from DBS in the amount of P40,491,051.65 after the execution of the
Credit Agreement and the PN dated January 6, 1999, maturing on February 5, 2000; (b) that as
additional security, Go executed the CSA binding himself jointly and severally to pay the
obligation of Go Tong Electrical; and (c) that petitioners failed to pay the loan obligation upon
maturity, despite written demands from then DBS, now, herein respondent.37 In this relation, the
CA discredited petitioners' argument that respondent's sole witness, Sufiio, was incompetent to
testify on the documentary evidence presented as he had no personal knowledge of the loan
documents' execution,38 given that petitioners, in their Answer, did not deny under oath the
genuineness and due execution of the PN and CSA and, hence, are deemed admitted under
Section 8, Rule 8 of the Rules of Court (Rules).39 Besides, the CA observed that, despite the
aforesaid admission, respondent still presented the testimony of Suñio who, having informed the
court that the loan documents were in his legal custody as the designated Account Officer when
DBS merged with herein respondent, had personal knowledge of the existence of the loan
documents.40 It added that, although he was not privy to the execution of the same, it does not
significantly matter as their genuineness and due execution were already
admitted.41ChanRoblesVirtualawlibrary

Petitioners filed a motion for reconsideration,42 which was, however, denied in a

Resolution43 dated April 13, 2009, hence, this petition.

The Issue Before The Court

The issue for the Court's resolution is whether or not the CA erred in upholding the RTC's ruling.

The Court's Ruling

The petition lacks merit.

The Court concurs with the CA Decision holding that the genuineness and due execution of the
loan documents in this case were deemed admitted by petitioners under the parameters of Section
8, Rule 8 of the Rules which provides:
chanRoblesvirtualLawlibrary
SEC. 8. How to contest such documents. — When an action or defense is founded upon a written
instrument, copied in or attached to the corresponding pleading as provided in the preceding
Section, the genuineness and due execution of the instrument shall be deemed admitted unless
the adverse party, under oath, specifically denies them, and sets forth what he claims to be
the facts; but the requirement of an oath does not apply when the adverse party does not appear
to be a party to the instrument or when compliance with an order for an inspection of the original
instrument is refused. (Emphasis supplied)
chanroblesvirtuallawlibrary
A reading of the Answer shows that petitioners failed to specifically deny the execution of the
Credit Agreement, PN, and CSA under the auspices of the above-quoted rule. The mere
statement in paragraph 4 of their Answer, i.e., that they "specifically deny" the pertinent
allegations of the Complaint "for being self-serving and pure conclusions intended to suit
plaintiffs purposes,"44 does not constitute an effective specific denial as contemplated by
law.45 Verily, a denial is not specific simply because it is so qualified by the defendant. Stated
otherwise, a general denial does not become specific by the use of the word
"specifically."46 Neither does it become so by the simple expedient of coupling the same with a
broad conclusion of law that the allegations contested are "self-serving" or are intended "to suit
plaintiffs purposes."
In Permanent Savings & Loan Bank v. Velarde47 (Permanent Savings & Loan Bank), citing the
earlier case of Songco v. Sellner,48 the Court expounded on how to deny the genuineness and due
execution of an actionable document, viz.:
chanRoblesvirtualLawlibrary
This means that the defendant must declare under oath that he did not sign the document or
that it is otherwise false or fabricated. Neither does the statement of the answer to the effect
that the instrument was procured by fraudulent representation raise any issue as to its
genuineness or due execution. On the contrary such a plea is an admission both of the
genuineness and due execution thereof, since it seeks to avoid the instrument upon a ground not
affecting either.49 (Emphasis supplied)
chanroblesvirtuallawlibrary
To add, Section 8, Rule 8 of the Rules further requires that the defendant "sets forth what he
claims to be the facts," which requirement, likewise, remains absent from the Answer in this
case.

Thus, with said pleading failing to comply with the "specific denial under oath" requirement
under Section 8, Rule 8 of the Rules, the proper conclusion, as arrived at by the CA, is that
petitioners had impliedly admitted the due execution and genuineness of the documents
evidencing their loan obligation to respondent.

To this, case law enlightens that "[t]he admission of the genuineness and due execution of a
document means that the party whose signature it bears admits that he voluntarily signed the
document or it was signed by another for him and with his authority; that at the time it was
signed it was in words and figures exactly as set out in the pleading of the party relying upon it;
that the document was delivered; and that any formalities required by law, such as a seal, an
acknowledgment, or revenue stamp, which it lacks, are waived by him. Also, it effectively
eliminated any defense relating to the authenticity and due execution of the document, e.g.,
that the document was spurious, counterfeit, or of different import on its face as the one executed
by the parties; or that the signatures appearing thereon were forgeries; or that the signatures were
unauthorized."50ChanRoblesVirtualawlibrary

Accordingly, with petitioners' admission of the genuineness and due execution of the loan
documents as above-discussed, the competence of respondent's witness Suñio to testify in order
to authenticate the same is therefore of no moment. As the Court similarly pointed out
in Permanent Savings & Loan Bank, "[w]hile Section [20],51 Rule 132 of the [Rules] requires
that private documents be proved of their due execution and authenticity before they can be
received in evidence, i.e., presentation and examination of witnesses to testify on this fact; in the
present case, there is no need for proof of execution and authenticity with respect to the loan
documents because of respondent's implied admission
thereof."52ChanRoblesVirtualawlibrary

The Court clarifies that while the "[f]ailure to deny the genuineness and due execution of an
actionable document does not preclude a party from arguing against it by evidence of fraud,
mistake, compromise, payment, statute of limitations, estoppel and want of consideration [nor]
bar a party from raising the defense in his answer or reply and prove at the trial that there is a
mistake or imperfection in the writing, or that it does not express the true agreement of the
parties, or that the agreement is invalid or that there is an intrinsic ambiguity in the
writing,"53 none of these defenses were adequately argued or proven during the proceedings of
this case.

Of particular note is the affirmative defense of payment raised during the proceedings a quo.
While petitioners insisted that they had paid, albeit partially, their loan obligation to respondent,
the fact of such payment was never established by petitioners in this case. Jurisprudence abounds
that, in civil cases, one who pleads payment has the burden of proving it; the burden rests on the
defendant, i.e., petitioners, to prove payment, rather than on the plaintiff, i.e., respondent, to
prove non-payment. When the creditor is in possession of the document of credit, proof of non-
payment is not needed for it is presumed.54 Here, respondent's possession of the Credit
Agreement, PN, and CSA, especially with their genuineness and due execution already having
been admitted, cements its claim that the obligation of petitioners has not been extinguished.
Instructive too is the Court's disquisition in Jison v. CA55 on the evidentiary burdens attendant in
a civil proceeding, to wit:
chanRoblesvirtualLawlibrary
Simply put, he who alleges the affirmative of the issue has the burden of proof, and upon the
plaintiff in a civil case, the burden of proof never parts. However, in the course of trial in a civil
case, once plaintiff makes out a prima facie case in his favor, the duty or the burden of evidence
shifts to defendant to controvert plaintiffs prima facie case, otherwise, a verdict must be returned
in favor of plaintiff. Moreover, in civil cases, the party having the burden of proof must produce
a preponderance of evidence thereon, with plaintiff having to rely on the strength of his own
evidence and not upon the weakness of the defendant's. The concept of "preponderance of
evidence" refers to evidence which is of greater weight, or more convincing, that which is
offered in opposition to it; at bottom, it means probability of truth.56
chanroblesvirtuallawlibrary
Finally, the Court finds as untenable petitioners' theory on Go's supposed non-liability. As
established through the CSA, Go had clearly bound himself as a surety to Go Tong Electrical's
loan obligation. Thus, there is no question that Go's liability thereto is solidary with the former.
As provided in Article 204757 of the Civil Code, "the surety undertakes to be bound solidarity
with the principal obligor. That undertaking makes a surety agreement an ancillary contract as it
presupposes the existence of a principal contract. Although the contract of a surety is in essence
secondary only to a valid principal obligation, the surety becomes liable for the debt or duty of
another although it possesses no direct or personal interest over the obligations nor does it
receive any benefit therefrom. Let it be stressed that notwithstanding the fact that the surety
contract is secondary to the principal obligation, the surety assumes liability as a regular party to
the undertaking,"58 as Go in this case.

However, while petitioners' liability has been upheld in this case, the Court finds it proper to
modify the RTC's ruling, as affirmed by the CA, with respect to the following:

First, the partial payment made by Go Tong Electrical on June 16, 2004 in the amount of
P1,877,286.08, as admitted by respondent through a Statement of Account,59 formally offered as
Exhibit "G" and duly identified by Suñio during trial, should be deducted from the principal
amount of P40,491,051.65 due respondent.
Second, with respect to the interests and penalties:

(a) petitioners should be held liable for the twenty percent (20%) per annum stipulated interest
rate reckoned 31 days from January 6, 1999, as agreed upon in the PN,60 until its maturity date on
February 5, 2000, which period is regarded as the initial period in said PN. Said interest rate
should be upheld as this was stipulated by the parties, and the rate cannot be considered
unconscionable.61 The same shall be computed based on the entire principal amount due, i.e.,
P40,491,051.65, since the records disclose that the admitted partial payment of P1,877,286.08
was still unpaid before the complaint was filed on October 4, 2002,62 or before the February 5,
2000 maturity date; and

(b) the reduced interest rate of one percent (1%) per month and penalty rate of one percent (1%)
per month are upheld,63 but should accrue from the PN's February 5, 2000 maturity date64 until
June 16, 2004, or the date when the partial payment of P1,877,286.08 has been made by Go
Tong Electrical, and computed based on the entire principal amount of P40,491,051.65. Interest
and penalty, at the same reduced rate, due thereafter (i.e., from June 17, 2004 until full payment)
shall be computed based on the net amount of P38,613,765.57 (i.e., the amount arrived at after
deducting the partial payment of P1,877,286.08 from the principal amount of P40,491,051.65).

WHEREFORE, the petition is DENIED. The Decision dated February 17, 2009 and the
Resolution dated April 13, 2009 of the Court of Appeals in CA-G.R. CV No. 86749 are
hereby AFFIRMED with the above-stated MODIFICATIONS.

SO ORDERED.cral

ECOND DIVISION

[G.R. NO. 160242 : May 17, 2005]

ASIAN CONSTRUCTION AND DEVELOPMENT

CORPORATION, Petitioner, v. COURT OF APPEALS and MONARK EQUIPMENT
CORPORATION, Respondents.

DECISION

CALLEJO, SR., J.:

On March 13, 2001, Monark Equipment Corporation (MEC) filed a Complaint1 for a sum of
money with damages against the Asian Construction and Development Corporation (ACDC)
with the Regional Trial Court (RTC) of Quezon City. The complaint alleged the following:
ACDC leased Caterpillar generator sets and Amida mobile floodlighting systems from MEC
during the period of March 13 to July 15, 1998 but failed, despite demands, to pay the rentals
therefor in the total amount of P4,313,935.00; from July 14 to August 25, 1998, various
equipments from MEC were, likewise, leased by ACDC for the latter's power plant in Mauban,
Quezon, and that there was still a balance of P456,666.67; and ACDC also purchased and took
custody of various equipment parts from MEC for the agreed price of P237,336.20 which,
despite demands, ACDC failed to pay.

MEC prayed that judgment be rendered in its favor, thus:

1. Ordering defendant to pay the plaintiff the total amount of FIVE MILLION SEVENTY-ONE
THOUSAND THREE HUNDRED THIRTY-FIVE [PESOS] & 86/100 (P5,071,335.86);

2. Ordering defendant to pay the plaintiff legal interest of 12% per annum on the principal
obligations in the total amount of FIVE MILLION SEVENTY-ONE THOUSAND THREE
HUNDRED THIRTY-FIVE [PESOS] & 86/100 (P5,071,335.86) computed from the date the
obligations became due until fully paid;

3. Ordering defendant to pay attorney's fees in the amount equivalent to 15% of the amount of
claim;

4. Ordering defendant to pay all costs of litigation.

Plaintiff prays for such other reliefs as may be just and equitable under the premises.2

ACDC filed a motion to file and admit answer with third-party complaint against Becthel
Overseas Corporation (Becthel). In its answer, ACDC admitted its indebtedness to MEC in the
amount of P5,071,335.86 but alleged the following special and affirmative defenses:

5. Defendant has incurred an obligation with plaintiff, in the amount of P5,071,335.86. But third-
party defendant fails and refuses to pay its overdue obligation in connection with the leased
equipment used by defendant to comply with its contracted services;

6. The equipment covered by the lease were all used in the construction project of Becthel in
Mauban, Quezon, and Expo in Pampanga and defendant was not yet paid of its services that
resulted to the non-payment of rentals on the leased equipment.3

And by way of third-party complaint against Becthel as third-party defendant, ACDC alleged
that:

7. Third-party plaintiff repleads the foregoing allegations in the preceding paragraphs as may be
material and pertinent hereto;
8. Third-party BECTHEL OVERSEAS CORPORATION (herein called "Becthel") is a
corporation duly organized and existing under the laws of the United States of America but may
be served with summons at Barangay Cagsiay I, Mauban, Quezon 4330, Philippines;

9. Third-party defendant Becthel contracted the services of third-party plaintiff to do

construction work at its Mauban, Quezon project using the leased equipment of plaintiff Monark;

10. With the contracted work, third-party plaintiff rented the equipment of the plaintiff Monark;

11. Third-party plaintiff rendered and complied with its contracted works with third-party
defendant using plaintiff's (Monark) rented equipment. But, third-party defendant BECTHEL did
not pay for the services of third-party plaintiff ASIAKONSTRUKT that resulted to the non-
payment of plaintiff Monark's claim;

12. Despite repeated demands, third-party defendant failed and refused to pay its overdue
obligation to third-party plaintiff ASIAKONSTRUKT, and third-party defendant needs to be
impleaded in this case for contribution, indemnity, subrogation or other reliefs to off-set or to
pay the amount of money claim of plaintiff Monark on the leased equipment used in the Mauban,
Quezon project in the total amount of P456,666.67;

13. By reason thereof, third-party plaintiff was compelled to prosecute its claim against third-
party defendant and hired the services of undersigned counsel for an attorney's fees
of P500,000.00.4

ACDC prayed that judgment be rendered in its favor dismissing the complaint and ordering the
third-party defendant (Becthel) to pay P456,666.67 plus interest thereon and attorney's fees.5

MEC opposed the motion of ACDC to file a third-party complaint against Becthel on the ground
that the defendant had already admitted its principal obligation to MEC in the amount
of P5,071,335.86; the transaction between it and ACDC, on the one hand, and between ACDC
and Becthel, on the other, were independent transactions. Furthermore, the allowance of the
third-party complaint would result in undue delays in the disposition of the case.6

MEC then filed a motion for summary judgment, alleging therein that there was no genuine issue
as to the obligation of ACDC to MEC in the total amount of P5,071,335.86, the only issue for the
trial court's resolution being the amount of attorney's fees and costs of litigation.7

ACDC opposed the motion for summary judgment, alleging that there was a genuine issue with
respect to the amount of P5,071,335.86 being claimed by MEC, and that it had a third-party
complaint against Becthel in connection with the reliefs sought against it which had to be
litigated.8
In its reply, MEC alleged that the demand of ACDC in its special and affirmative defenses
partook of the nature of a negative pregnant, and that there was a need for a hearing on its claim
for damages.

On August 2, 2001, the trial court issued a Resolution denying the motion of ACDC for leave to
file a third-party complaint and granting the motion of MEC, which the trial court considered as
a motion for a judgment on the pleadings. The fallo of the resolution reads:

ACCORDINGLY, this Court finds defendant Asian Construction and Development Corporation
liable to pay plaintiff Monark Equipment Corporation and is hereby ordered to pay plaintiff the
amount of FIVE MILLION SEVENTY-ONE THOUSAND AND THREE HUNDRED
THIRTY-FIVE & 86/100 PESOS (P5,071,335.86) plus 12% interest from the filing of the
complaint until fully paid.

SO ORDERED.9

ACDC appealed the resolution to the Court of Appeals (CA), alleging that '

I. THE LOWER COURT ERRED IN DENYING THE MOTION TO FILE AND ADMIT
ANSWER WITH THIRD-PARTY COMPLAINT;

II. THE LOWER COURT ERRED IN GRANTING THE MOTION FOR SUMMARY
JUDGMENT;

III. THE LOWER COURT ERRED WHEN IT DENIED THE THIRD-PARTY COMPLAINT
AND ORDERED DEFENDANT TO PAY THE AMOUNT OF P5,071,335.86 PLUS
INTEREST OF 12% PER ANNUM.10

On July 18, 2001, the CA rendered judgment dismissing the appeal and affirming the assailed
decision. The appellate court ruled that since MEC had prayed for judgment on the pleadings, it
thereby waived its claim for damages other than the amount of P5,071,335.86; hence, there was
no longer a genuine issue to be resolved by the court which necessitated trial. The appellate court
sustained the disallowance of the third-party complaint of ACDC against Becthel on the ground
that the transaction between the said parties did not arise out of the same transaction on which
MEC's claim was based.

Its motion for reconsideration of the decision having been denied, ACDC, now the petitioner,
filed the present Petition for Review on Certiorari, and raises the following issues:

I. WHETHER OR NOT A THIRD-PARTY COMPLAINT IS PROPER; AND

II. WHETHER OR NOT JUDGMENT ON THE PLEADINGS IS PROPER.11

Citing the rulings of this Court in Allied Banking Corporation v. Court of Appeals12 and British
Airways v. Court of Appeals,13 the petitioner avers that the CA erred in ruling that in denying its
motion for leave to file a third-party complaint, the RTC acted in accordance with the Rules of
Court and case law. The petitioner maintains that it raised genuine issues in its answer; hence, it
was improper for the trial court to render judgment on the pleadings:

With due respect, the judgment on the pleadings affirmed by the Court of Appeals is not,
likewise, proper considering that the Answer with Third-Party Complaint, although it admitted
the obligation to respondent, tendered an issue of whether the respondent's claim is connected
with the third-party claim.

As alleged in the Answer with Third-Party Complaint, it is admitted then by respondent, for
purposes of judgment on the pleadings, that failure to pay respondent was in connection of
Becthel Overseas Corporation's failure to pay its obligation to petitioner and that the equipment
leased was used in connection with the Becthel Overseas Corporation project.

This tendered issue could not just be disregarded in the light of the third-party complaint filed by
herein petitioner and third-party plaintiff which, as argued in the first discussion/argument, is
proper and should have been given due course.14

The petition is denied for lack of merit.

Section 11, Rule 6 of the Rules of Court provides:

Sec. 11. Third (fourth, etc.)-party complaint. - A third (fourth, etc.) - party complaint is a claim
that a defending party may, with leave of court, file against a person not a party to the action,
called the third (fourth, etc.) - party defendant, for contribution, indemnity, subrogation or any
other relief, in respect of his opponent's claim.

Furthermore, Section 1, Rule 34 of the Rules of Court provides that the Court may render
judgment on the pleadings, as follows:

Section 1. Judgment on the pleadings. - Where an answer fails to tender an issue, or, otherwise,
admits the material allegations of the adverse party's pleading, the court may, on motion of that
party, direct judgment on such pleading. However, in actions for declaration of nullity or
annulment of marriage or for legal separation, the material facts alleged in the complaint shall
always be proved.

The purpose of Section 11, Rule 6 of the Rules of Court is to permit a defendant to assert an
independent claim against a third-party which he, otherwise, would assert in another action, thus
preventing multiplicity of suits. All the rights of the parties concerned would then be adjudicated
in one proceeding. This is a rule of procedure and does not create a substantial right. Neither
does it abridge, enlarge, or nullify the substantial rights of any litigant.15 This right to file a third-
party complaint against a third-party rests in the discretion of the trial court. The third-party
complaint is actually independent of, separate and distinct from the plaintiff's complaint, such
that were it not for the rule, it would have to be filed separately from the original complaint.16

A prerequisite to the exercise of such right is that some substantive basis for a third-party claim
be found to exist, whether the basis be one of indemnity, subrogation, contribution or other
substantive right.17 The bringing of a third-party defendant is proper if he would be liable to the
plaintiff or to the defendant or both for all or part of the plaintiff's claim against the original
defendant, although the third-party defendant's liability arises out of another transaction.18 The
defendant may implead another as third-party defendant (a) on an allegation of liability of the
latter to the defendant for contribution, indemnity, subrogation or any other relief; (b) on the
ground of direct liability of the third-party defendant to the plaintiff; or (c) the liability of the
third-party defendant to both the plaintiff and the defendant.19 There must be a causal connection
between the claim of the plaintiff in his complaint and a claim for contribution, indemnity or
other relief of the defendant against the third-party defendant. In Capayas v. Court of First
Instance,20 the Court made out the following tests: (1) whether it arises out of the same
transaction on which the plaintiff's claim is based; or whether the third-party claim, although
arising out of another or different contract or transaction, is connected with the plaintiff's claim;
(2) whether the third-party defendant would be liable to the plaintiff or to the defendant for all or
part of the plaintiff's claim against the original defendant, although the third-party defendant's
liability arises out of another transaction; and (3) whether the third-party defendant may assert
any defenses which the third-party plaintiff has or may have to the plaintiff's claim.

The third-party complaint does not have to show with certainty that there will be recovery
against the third-party defendant, and it is sufficient that pleadings show possibility of
recovery.21 In determining the sufficiency of the third-party complaint, the allegations in the
original complaint and the third-party complaint must be examined.22 A third-party complaint
must allege facts which prima facie show that the defendant is entitled to contribution,
indemnity, subrogation or other relief from the third-party defendant.23

It bears stressing that common liability is the very essence for contribution. Contribution is a
payment made by each, or by any of several having a common liability of his share in the
damage suffered or in the money necessarily paid by one of the parties in behalf of the other or
others.24 The rule on common liability is fundamental in the action for contribution.25 The test to
determine whether the claim for indemnity in a third-party complaint is, whether it arises out of
the same transaction on which the plaintiff's claim is based, or the third-party plaintiff's claim,
although arising out of another or different contract or transaction, is connected with the
plaintiff's claim.26

In this case, the claims of the respondent, as plaintiff in the RTC, against the petitioner as
defendant therein, arose out of the contracts of lease and sale; such transactions are different and
separate from those between Becthel and the petitioner as third-party plaintiff for the
construction of the latter's project in Mauban, Quezon, where the equipment leased from the
respondent was used by the petitioner. The controversy between the respondent and the
petitioner, on one hand, and that between the petitioner and Becthel, on the other, are thus
entirely distinct from each other. There is no showing in the proposed third-party complaint that
the respondent knew or approved the use of the leased equipment by the petitioner for the said
project in Quezon. Becthel cannot invoke any defense the petitioner had or may have against the
claims of the respondent in its complaint, because the petitioner admitted its liabilities to the
respondent for the amount of P5,075,335.86. The barefaced fact that the petitioner used the
equipment it leased from the respondent in connection with its project with Becthel does not
provide a substantive basis for the filing of a third-party complaint against the latter. There is no
causal connection between the claim of the respondent for the rental and the balance of the
purchase price of the equipment and parts sold and leased to the petitioner, and the failure of
Becthel to pay the balance of its account to the petitioner after the completion of the project in
Quezon.27

We note that in its third-party complaint, the petitioner alleged that Becthel should be ordered to
pay the balance of its account of P456,666.67, so that the petitioner could pay the same to the
respondent. However, contrary to its earlier plea for the admission of its third-party complaint
against Becthel, the petitioner also sought the dismissal of the respondent's complaint. The
amount of P456,666.67 it sought to collect from Becthel would not be remitted to the respondent
after all.

The rulings of this Court in Allied Banking Corporation and British Airways are not applicable in
this case since the factual backdrops in the said cases are different.

In Allied Banking Corporation, Joselito Yujuico obtained a loan from General Bank and Trust
Company. The Central Bank of the Philippines ordered the liquidation of the Bank. In a
Memorandum Agreement between the liquidation of the Bank and Allied Banking Corporation,
the latter acquired the receivables from Yujuico. Allied Banking Corporation then sued Yujuico
for the collection of his loan, and the latter filed a third-party complaint against the Central Bank,
alleging that by reason of its tortious interference with the affairs of the General Bank and Trust
Company, he was prevented from performing his obligation under the loan. This Court allowed
the third-party complaint based on the claim of the defendant therein, thus:

'In the words of private respondent, he "[s]eeks to transfer liability for the default imputed
against him by the petitioner to the proposed third-party defendants because of their tortious acts
which prevented him from performing his obligations." Thus, if at the outset the issue appeared
to be a simple maker's liability on a promissory note, it became complex by the rendition of the
aforestated decision.28

In British Airways, the Court allowed the third-party complaint of British Airways against its
agent, the Philippine Airlines, on the plaintiff's complaint regarding his luggage, considering that
a contract of carriage was involved. The Court ruled, thus:

Undeniably, for the loss of his luggage, Mahtani is entitled to damages from BA, in view of their
contract of carriage. Yet, BA adamantly disclaimed its liability and instead imputed it to PAL
which the latter naturally denies. In other words, BA and PAL are blaming each other for the
incident.

In resolving this issue, it is worth observing that the contract of air transportation was exclusively
between Mahtani and BA, the latter merely endorsing the Manila to Hongkong leg of the
former's journey to PAL, as its subcontractor or agent. In fact, the fourth paragraph of the
"Conditions of Contracts" of the ticket issued by BA to Mahtani confirms that the contract was
one of continuous air transportation from Manila to Bombay.

"4. xxx carriage to be performed hereunder by several successive carriers is regarded as a single
operation."

Prescinding from the above discussion, it is undisputed that PAL, in transporting Mahtani from
Manila to Hongkong acted as the agent of BA.

Parenthetically, the Court of Appeals should have been cognizant of the well-settled rule that an
agent is also responsible for any negligence in the performance of its function and is liable for
damages which the principal may suffer by reason of its negligent act. Hence, the Court of
Appeals erred when it opined that BA, being the principal, had no cause of action against PAL,
its agent or sub-contractor.

Also, it is worth mentioning that both BA and PAL are members of the International Air
Transport Association (IATA), wherein member airlines are regarded as agents of each other in
the issuance of the tickets and other matters pertaining to their relationship. Therefore, in the
instant case, the contractual relationship between BA and PAL is one of agency, the former
being the principal, since it was the one which issued the confirmed ticket, and the latter the
agent.29

It goes without saying that the denial of the petitioner's motion with leave to file a third-party
complaint against Becthel is without prejudice to its right to file a separate complaint against the
latter.

Considering that the petitioner admitted its liability for the principal claim of the respondent in
its Answer with Third-Party Complaint, the trial court did not err in rendering judgment on the
pleadings against it.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. Costs
against the petitioner.
SO ORDERED.

G.R. No. 117434. February 9, 2001

BENGUET EXPLORATION, INC.,, Petitioner, v. COURT OF APPEALS, SWITZERLAND

GENERAL INSURANCE, CO., LTD., and SEAWOOD SHIPPING, INC., Respondents.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari of the decision, dated June 30, 1994, and resolution,
dated September 29, 1994, of the Court of Appeals 1 which affirmed the decision of the Regional
Trial Court, Branch 149, Makati, dismissing the complaints filed by petitioner against herein
private respondents, and denied petitioners motion for reconsideration, respectively.

The background of this case is as follows:

On November 29, 1985, petitioner Benguet Exploration, Inc. (Benguet) filed a complaint for
damages against Seawood Shipping, Inc. (Seawood Shipping) with the Regional Trial Court of
Makati, which was docketed as Civil Case No. 12394 and assigned to Branch 149. 2 On March 4,
1986, petitioner Benguet filed another complaint for damages against respondent Switzerland
General Insurance, Co., Ltd. (Switzerland Insurance), which was docketed as Civil Case No.
13085 3 and assigned to Branch 148 of the court.

The two cases were consolidated. Switzerland Insurance filed a third-party complaint against
Seawood Shipping, praying that the latter be ordered to indemnify it for whatever might be
adjudged against it in favor of petitioner. 4 Thereafter, the cases were jointly tried, during which
petitioner Benguet presented its employees, Rogelio Lumibao and Ernesto Cayabyab, as
witnesses.

Rogelio Lumibao, marketing assistant of Benguet, was in charge of exportation. His

responsibilities included the documentation of export products, presentations with banks, and
other duties connected with the export of products. He explained that private respondent
Seawood Shipping was chartered by petitioner Benguet to transport copper concentrates. The bill
of lading (Exh. A) stated that the cargo, consisting of 2,243.496 wet metric tons of copper
concentrates, was loaded on board Sangkulirang No. 3 at Poro Point, San Fernando, La Union. It
was insured by Switzerland Insurance (marine insurance policy was marked Exh. C). When the
cargo was unloaded in Japan, however, Rogelio Lumibao received a report (Exh. B), dated
August 19, 1985, from a surveyor in Japan stating that the cargo was 355 metric tons short of the
amount stated in the bill of lading. For this reason, petitioner Benguet made a claim of the loss to
Seawood Shipping and Switzerland Insurance. In its letter, dated August 21, 1985 (Exh. D),
petitioner Benguet made a formal demand for the value of the alleged shortage. As both
Seawood Shipping and Switzerland Insurance refused the demand, petitioner Benguet brought
these cases against Seawood Shipping and Switzerland Insurance. 5cräläwvirtualibräry
On cross-examination, Lumibao admitted that he did not see the actual loading of the cargo at
Poro Point and that his knowledge was limited to what was contained in the bill of lading which
he received about two days after the loading. Lumibao testified that at Camp 6, Kennon Road,
Baguio, the copper concentrates were weighed prior to being transported to Poro Point, where
they were once more weighed before being loaded on the vessel. But again he admitted that he
had not seen the actual weighing and loading of the copper concentrates because he was not the
one in charge of the operation. Nor was he in Japan when the cargo was unloaded. He also did
not know how to perform the procedure for weighing cargo. Thus, he could not determine the
truth or falsity of the contents of the draft survey. He only knew that there was in fact a shortage
based on his reading of the draft report. 6 Further, Lumibao testified that, although he prepared
the export declaration, he did not prepare the bill of lading. The bill of lading was made on the
basis of the draft survey conducted by the Overseas Merchandise Inspection Co., Ltd. or
OMIC. 7 Some other person undertook the weighing of the cargo, and Lumibao was only
informed by telephone of the cargos weight during its loading and unloading.

Lumibao had nothing to do with the preparation of the bill of lading, the weighing of the copper
concentrates, and the shipment of the cargo. He did not accompany the trucks which transferred
the cargo from Baguio to Poro Point. He was not on the ship when the cargo was loaded at Poro
Point. Nor did he know if spillage occurred during the loading or unloading of the copper
concentrates.

Lumibao said that the buyer of the copper concentrates was the Brandeis Intsel Co., Inc. Upon
receipt of the cargo, Brandeis Intsel Co., Inc. paid for the cargo based on its weight in dry metric
tons, or 90 percent more or less of the price of 2,243.496 tons, the weight of the cargo in wet
metric tons. With regard to the insurance policy, he testified that petitioner Benguet made no
objection to any of the terms stated on the face of the policy. 8cräläwvirtualibräry

Ernesto Cayabyab next testified for petitioner. He had been with Benguet for 13 years and, at the
time of his testimony, he was secretary of Nil Alejandre, manager of Benguet. According to
Cayabyab, on July 28, 1985, he was sent to the warehouse (bodega) at Poro Point, La Union to
assist in the loading of the copper concentrates. These copper concentrates were to be loaded on
the ship Sangkulirang No. 3. Cayabyab said he was present when the cargo was loaded on the
ship, as evidenced by the Certificate of Loading (Exh. E), Certificate of Weight (Exh. F), and the
Mates Receipt (Exh. G), all dated July 28, 1985. According to Cayabyab, the Marine Surveyor
and the Chief Mate would go around the boat to determine how much was loaded on the ship.
Cayabyab stated that he saw petitioner Benguets representative and his immediate superior, Mr.
Alejandre, and the Inspector of Customs, Mr. Cardenas, sign the Certificate of Weight. Cayabyab
also witnessed the ship captain sign the Certificate of Weight, 9 which stated therein that
2,243.496 wet metric tons of copper concentrates were loaded on the ship. 10 Cayabyab likewise
confirmed the authenticity of the Mates Receipt, saying that he witnessed the Chief Mate sign the
document. 11cräläwvirtualibräry

When cross-examined, Cayabyab said that, as a secretary, his duties included computing the
companys daily main production in the mine site and accompanying his superior, Mr. Alejandre,
during shipments. He explained that the copper concentrates were transported by dump trucks
from the mining site to Poro Point for over a month, possibly even three to six months. Cayabyab
went to Poro Point on July 27, 1985 to witness the loading of the copper concentrates on the
vessel Sangkulirang No. 3. But the copper concentrates had already been delivered and stored in
a bodega  when he arrived. These concentrates were placed on the cemented ground inside
the bodega after their weight was recorded. Describing the procedure for weighing, he said that
the trucks, without the copper concentrates, were weighed. Then, after they had been loaded with
copper concentrates, the trucks were placed in the bodega and weighed again. To determine the
weight of the copper concentrates, the weight of the trucks was deducted from the weight of the
trucks loaded with copper concentrates. The copper concentrates were then loaded on the ship by
means of a conveyor at the average rate of 400 tons an hour. Cayabyab did not know, however,
how many trucks were used to load the entire cargo of the copper concentrates nor did he know
exactly how many hours were spent loading the copper concentrates to the ship. He could only
remember that he reported for work in the morning and that he worked overtime because he had
to wait until the loading of the cargo was finished before he could leave. During the loading, he
moved from place to place, and his attention was sometimes distracted. Thus, he could not tell
with certainty that no spillage took place during the loading. The figure of 2,243.496 wet metric
tons was computed by the Marine Surveyor and the Chief Mate. 12cräläwvirtualibräry

Respondent Switzerland Insurance then presented its evidence. Three witnesses, Eduardo
Pantoja, Anastacio Fabian, and Edgardo Dio, testified for it.

Eduardo Pantoja, assistant branch manager of respondent Switzerland Insurance in the

Philippines, testified that he prepared the data and conditions of the marine insurance policy of
petitioner Benguet using information furnished by the latter, although some of the conditions
attached to the policy were conditions Switzerland Insurance attached to all the marine policies
issued by it. Pantoja stated that the figure of 2,243.496 wet metric tons contained in the policy of
Benguet was taken from the latters declaration. Switzerland Insurance relied on the value of the
cargo declared by the insured on the basis of the principle of uberrimae fidei, i.e., the insured
must act in the utmost good faith. 13 One of the conditions set forth in the marine policy (Exh. 8)
was that the [w]arranted vessel is equipped with steel centerline bulk head. According to Pantoja,
this condition was specifically included in the policy because the nature of the cargo warranted
the same, and Switzerland Insurance would not have accepted the policy had such condition not
been attached. The purpose of the centerline bulkhead was to prevent the copper concentrates
from shifting while being transported on the ship. Upon verification by Certified Adjusters, Inc.,
adjusters of Switzerland Insurance, it was found that the vessel Sangkulirang No. 3 did not have
a steel centerline bulkhead. Pantoja identified a letter, dated February 13, 1986, sent by his
company to petitioner Benguet canceling its insurance contract because the carrying vessel was
not equipped with a steel centerline bulkhead as warranted under the policy (Exh. 7-a). Enclosed
was Check No. HSBC 419463 for P98,174.43 representing the refund by Switzerland Insurance
of the premium payments, documentary stamps, and premium taxes paid by petitioner Benguet
(Exh. 7). He testified that Switzerland Insurance paid its legal counsel P40,000.00 as attorneys
fees plus appearance fees. 14cräläwvirtualibräry

On cross-examination, Pantoja explained that the company had its own system of determining
various rates of insurance. Several factors were taken into consideration, such as the nature of the
goods, the manner by which they were packed, and the destination of the cargo. For example,
Switzerland Insurance would anticipate pilferages if the cargo involved household goods or, in
the case of chemicals, it would consider the possibility of spillage. Pantoja, however, stated that
he did not make any investigation in this case but used only his previous experience and project
knowledge in dealing with similar cases. He admitted that Switzerland Insurance checked
whether the ship had a steel centerline bulkhead only after a claim had been made by petitioner
Benguet. He explained, however, that it was impossible for them to make the investigation
before the execution of the marine policy because they had only one day to check whether the
ship had a steel centerline bulkhead and the ship at that time was not in Manila but in Poro Point.
He reiterated that good faith dealing with the insured included relying on the truth of the latters
representations. There was little risk involved in relying on the insureds representations because
the company would not have accepted the risk if it found that the conditions in the policy had not
been complied with. Switzerland Insurance refused Benguets demand because non-compliance
with the condition that the ship be equipped with a steel centerline bulkhead rendered the marine
insurance policy null and void from the beginning. This is why Switzerland Insurance refunded
the premium paid by petitioner Benguet. Pantoja stated that petitioner Benguet did not claim that
the loss was caused by the shipping of the cargo because it did not know the cause of the
shortage. 15cräläwvirtualibräry

Another witness for Switzerland Insurance was Anastacio Fabian, the marine manager of
Certified Adjusters, Inc. He testified that he went to Poro Point where the shipment was loaded
for transport to Japan. It took him almost two months to finish his investigation and to come up
with a written report (Exh. 12). He prepared a letter, dated January 31, 1986, seeking a
certification from Capt. Jae Jang of Sangkulirang No. 3 on whether the ship was equipped with a
steel centerline bulkhead (Exh. 5). In response thereto, respondent Seawood Shipping sent a
letter, dated February 1, 1986, stating therein that the vessel was not equipped with a steel
centerline bulkhead (Exh. 6). This steel centerline bulkhead was a steel separation of a vessel for
the purpose of preventing the vessel from sinking, especially in heavy weather. Pictures of the
ship were taken by Wise Insurance showing that the vessel did not have a steel centerline
bulkhead (Exhs. 15 to 15-H).

Fabian also identified petitioner Benguets export declaration (Exh. 11) which provides therein
that the cargo loaded on the ship weighed 2,050 wet metric tons or 1,845 dry metric tons. 16 On
further direct examination, he testified that Certified Adjusters, Inc.s president, Mr. Edgardo Dio,
wrote a letter, dated January 13, 1986, to the shipping company inquiring as to the circumstances
surrounding the loss of the cargo (Exh. 17). Seawood Shipping responded to Certified Adjusters,
Inc. in a letter, dated January 16, 1986, explaining that the weight of the cargo might have been
increased by the rains which occurred during the loading, and that the shortage upon unloading
might be due to the moisture which evaporated during the voyage from the Philippines to Japan.
Fabian testified that the moisture on the copper concentrates increased the weight of the cargo.

Fabian said that during his investigation he asked how and when the shipment was loaded in the
vessel and where it was loaded. He also checked records of the loading of the cargo. Although he
admitted that the records show that a shortage of the copper concentrates had occurred when
these reached Japan, he attributed it to the rains which occurred during the loading of the copper
concentrates which increased their weight, although he conceded that it was not possible that the
rains would cause a shortage of around 300 metric tons. He did not know what could have
caused the shortage. 17cräläwvirtualibräry
The last witness to testify for the defense was Edgardo Dio, president and general manager of
Certified Adjusters, Inc. He testified that his company conducted an investigation and found that
the vessel Sangkulirang No. 3 was not equipped with a steel centerline bulkhead. The main
function of the steel centerline bulkhead was to prevent shifting of the copper concentrates
during transport. If there was no steel centerline bulkhead, the vessel was liable to sink. He stated
that the ship had two holds, one of which was loaded with petitioner Benguets copper
concentrates and the other with a Lepanto shipment. Dio identified photographs showing that
only a wooden partition separated the two cargoes on both holds (Exhs. 15-A to 15-G). He
testified that his company wrote a letter to the shipping company inquiring about the shortage
which occurred on petitioner Benguets copper concentrates. He expressed doubt that the loss of
moisture of the copper concentrates caused the shortage because these were actually mixed with
some water to keep them from heating up or to prevent spontaneous combustion. According to
Dio, it was possible that some shifting of the cargo occurred as indicated by the photographs of
the ship. 18cräläwvirtualibräry

Based on the evidence presented, the trial court rendered its decision on July 2, 1990 dismissing
petitioners complaint as well as Switzerland Insurances third-party complaint against Seawood
Shipping.

On appeal, its decision was affirmed by the Court of Appeals. 19 Petitioner Benguet moved for
reconsideration, but its motion was denied. 20 Hence this petition.

Petitioner Benguet contends that the Court of Appeals gravely erred in ruling that it failed to
establish the loss or shortage of the subject cargo because such loss was sufficiently established
by documentary and testimonial evidence, as well as the admissions of private
respondents. 21 Petitioner argues that documents regarding the tonnage of the copper concentrates
have been properly identified and that the bill of lading (Exh. A), the Certificate of Weight (Exh.
F), and the Mates Receipt (Exh. G), all of which stated that 2,243.496 wet metric tons of copper
concentrates were loaded on the ship, create a prima facie presumption that such amount was
indeed what was loaded on the vessel. Petitioner asserts that the Draft Survey Report of OMIC
(Exh. B) was sufficient evidence to prove that the cargo which arrived in Japan had a shortage of
355 wet metric tons.

We find petitioners contentions to be without merit.

First. It is settled that only questions of law may be raised on appeal by certiorari under Rule 45.
The trial court, having heard the witnesses and observed their demeanor and manner of
testifying, is in a better position to decide the question of their credibility. Hence, unless the
factual findings complained of are not supported by the evidence on record or the assailed
judgment is based on a misapprehension of facts, the findings of the trial court must be accorded
the highest respect, even finality, by this Court. 22 It is noteworthy that the Court of Appeals
made the same factual findings as did the trial court. 23cräläwvirtualibräry

Contrary to this rule, petitioner is raising questions of facts as it seeks an evaluation of the
evidence presented by the parties. However, we find no basis for concluding that both the trial
court and the Court of Appeals misappreciated the evidence in this case. To the contrary, we find
that petitioner failed to present evidence to prove that the weight of the copper concentrates
actually loaded on the ship Sangkulirang No. 3 was 2,243.496 wet metric tons and that there was
a shortage of 355 metric tons when the cargo was discharged in Japan.

Petitioners own witness, Rogelio Lumibao, admitted that he was not present at the actual loading
of the cargo at Poro Point, his information being limited to what was contained in the bill of
lading. As he was not in charge of the operation, he did not see the actual weighing and loading
of the copper concentrates. Nor did he prepare the bill of lading. He only verified the weight of
the cargo, from the time it was loaded on the ship to the time it was unloaded in Japan, through
the telephone. Neither was he present when the cargo was discharged in Japan. 24 Thus, Lumibao
testified:

Q Now Exhibit A is a bill of lading which you identified?

A Yes, sir.

Q Do you have anything to do in the preparation of this bill of lading?

A None, sir.

Q In other words, you did not verify if the weight stated in the bill of lading was the actual
weight of the copper concentrate loaded in the ship of the defendant Seawood Shipping Inc.?

....

A The bill of lading is prepared on the basis of the draft survey. That is the procedure.

Q And who undertakes the draft survey?

A For that particular shipment we required or hired the services of OMIC.

Q In other words, your draft survey is from the point of origin to Poro Point up to the point of
destination, Onahama, Japan, was done by OMIC?

A Yes, sir.

Q And you have nothing to do with OMIC?

A None, sir.

Q You are not an employee of OMIC?

A No, sir.

Q Are you connected with it in any way?

A No, sir.

Q In the Bill of Lading, you identified this document a xerox copy of the supposed original Bill
of Lading and marked as Exh. A, are the wordings and figures copper concentrate 2,243.496
WMT this means weight per metric ton?

A Yes, sir.

Q Did you have it [verified] if this was the actual weight loaded on the ship of the defendant
Seawood, Shipping, Inc.?

A We were advised by the OMIC surveyor that the weight was loaded.

Q Did you personally verify if these figures are true?

A Yes, by phone.

Q Did you participate in weighing?

A No, sir. Just by phone.

Q In other words somebody else made the weighing not you?

A Yes, sir.

Q Did you personally do the verification of the actual weight loaded in the ship?

....

A Yes, sir by phone.

Q So you are informed [of] the weight actually loaded by phone?

A Yes, sir.

Q Do you always verify by phone?

A That is only preliminary, while waiting what is the concluding things. (sic) That is after the
surveyor has submitted the report to us.

Q So in other words, all the time you have been basing your testimony on reports prepared by
other person?

A Yes, sir.

Q In fact, you have nothing to do with the preparation of the Bill of Lading?
A Yes, sir.

Q You have nothing to do with the weighing of the copper concentrate? . . . . You have nothing
to do [with] the transport of the copper concentrate from Camp 6, Baguio to Poro Point?

A None, sir.

Q You did not even accompany the truck?

A No, sir.

Q You were not at the shipside when this copper concentrate was loaded?

A No, sir.

Q You did not know whether there was spillage when or while loading copper concentrates?

A Yes, sir.

Q Neither were you on the ship on its way to Japan, were you?

A No, sir.

Q You were not at Onahama, Japan, the port of destination?

A No, sir.25cräläwvirtualibräry

On the other hand, Ernesto Cayabyab testified that he was at Poro Point when the copper
concentrates were being loaded on the ship. Although he was present when the Certificate of
Loading (Exh. E), Certificate of Weight (Exh. F), and the Mates Receipt (Exh. G) were signed at
the loading site, 26 he admitted that he could not say for certain that no spillage occurred during
the loading of the cargo on the ship because his attention was not on the cargo at all
times. 27cräläwvirtualibräry

It is evident that petitioners witnesses had no personal knowledge of the actual weight of copper
concentrates loaded on the vessel and discharged in Japan. Lumibao had no part in the
preparation of the bill of lading (Exh. A) and the Draft Survey Report prepared by OMIC (Exh.
B). Nor was he present when the copper concentrates were loaded on the vessel or when the
cargo was unloaded in Japan. He merely relied on the declarations made by other persons that
2,243.496 wet metric tons were indeed loaded on Sangkulirang No. 3 and that the cargo was
short by 355 metric tons when unloaded in Japan. The same may be said of witness Cayabyab.
While present at the loading site and familiar with the procedure followed in loading the cargo,
he admitted that he could not state for certain that no spillage occurred as his attention was not at
all times focused on the loading operation. Moreover, none of the documents he identified, i.e.,
Certificate of Loading, Certificate of Weight, and Mates Receipt, were signed by him. He only
witnessed the signing of these documents by other people. Hence, he was in no position to testify
as to the truth or falsity of the figures contained therein. The testimonies of these witnesses were
thus hearsay. It has been held:

Any evidence, whether oral or documentary, is hearsay if its probative value is not based on the
personal knowledge of the witness but on the knowledge of another person who is not on the
witness stand. Hearsay evidence, whether objected to or not, has no probative value unless the
proponent can show that the evidence falls within the exceptions to the hearsay evidence
rule.28cräläwvirtualibräry

Second. Petitioner contends that the genuineness and due execution of the documents
presented, i.e., Bill of Lading, Certificate of Loading, Certificate of Weight, Mates Receipt, were
properly established by the testimony of its witness, Ernesto Cayabyab, and that as a result, there
is a prima facie presumption that their contents are true.

This contention has no merit. The admission of the due execution and genuineness of a document
simply means that the party whose signature it bears admits that he signed it or that it was signed
by another for him with his authority; that at the time it was signed it was in words and figures
exactly as set out in the pleading of the party relying upon it; that the document was delivered;
and that any formal requisites required by law, such as a seal, an acknowledgment, or revenue
stamp, which it lacks, are waived by him. 29 In another case, we held that When the law makes
use of the phrase genuineness and due execution of the instrument it means nothing more than
that the instrument is not spurious, counterfeit, or of different import on its face from the one
executed. 30 It is equally true, however, that

Execution can only refer to the actual making and delivery, but it cannot involve other matters
without enlarging its meaning beyond reason. The only object of the rule was to enable a
plaintiff to make out a prima facie, not a conclusive case, and it cannot preclude a defendant
from introducing any defense on the merits which does not contradict the execution of the
instrument introduced in evidence.31cräläwvirtualibräry

In this case, respondents presented evidence which casts doubt on the veracity of these
documents. Respondent Switzerland Insurance presented Export Declaration No. 1131/85 (Exh.
11) 32 which petitioners own witness, Rogelio Lumibao, prepared, 33 in which it was stated that
the copper concentrates to be transported to Japan had a gross weight of only 2,050 wet metric
tons or 1,845 dry metric tons, 10 percent more or less. 34 On the other hand, Certified Adjusters,
Inc., to which Switzerland Insurance had referred petitioners claim, prepared a report which
showed that a total of 2,451.630 wet metric tons of copper concentrates were delivered at Poro
Point. 35 As the report stated:

It is to be pointed out that there were no actual weighing made at Benguet Exploration, Inc.s site.
The procedure done was that after weighing the trucks before and after unloading at Philex Poro
Point Installation, the weight of the load was determined and entered on Philex Trip Ticket
which was later on copied and entered by the truck driver on Benguet Exploration, Inc.s Transfer
Slip.36cräläwvirtualibräry
Considering the discrepancies in the various documents showing the actual amount of copper
concentrates transported to Poro Point and loaded in the vessel, there is no evidence of the exact
amount of copper concentrates shipped. Thus, whatever presumption of regularity in the
transactions might have risen from the genuineness and due execution of the Bill of Lading,
Certificate of Weight, Certificate of Loading, and Mates Receipt was successfully rebutted by
the evidence presented by respondent Switzerland Insurance which showed disparities in the
actual weight of the cargo transported to Poro Point and loaded on the vessel. This fact is
compounded by the admissions made by Lumibao and Cayabyab that they had no personal
knowledge of the actual amount of copper concentrates loaded on the vessel. Correctly did the
Court of Appeals rule:

In the face of these admissions, appellants claim of loss or shortage is placed in serious doubt,
there being no other way of verifying the accuracy of the figures indicated in appellants
documentary evidence that could confirm the alleged loss of 355.736 MT. Notwithstanding the
figure stated in Bill of Lading No. PP/0-1 (Exhibit A) that 2,243.496 WMT of copper
concentrates was loaded by appellant at the port of origin, it should be stressed that this is merely
prima facie evidence of the receipt by the carrier of said cargo as described in the bill of lading.
Thus, it has been held that recitals in the bill of lading as to the goods shipped raise only a
rebuttable presumption that such goods were delivered for shipment and as between the
consignor and a receiving carrier, the fact must outweigh the recital (Saludo vs. Court of
Appeals, 207 SCRA 498, 509 [1992]). Resultingly, the admissions elicited from appellants
witnesses that they could not confirm the accuracy of the figures indicated in their documentary
evidence with regard to the actual weight of the cargo loaded at the port of origin and that
unloaded at the port of destination, in effect rebuts the presumption in favor of the figure
indicated in the bill of lading.37cräläwvirtualibräry

WHEREFORE , the decision of the Court of Appeals is AFFIRMED.

SO ORDERED.

G.R. No. 181235               July 22, 2009

BANCO DE ORO-EPCI, INC. (formerly Equitable PCI Bank), Petitioner,

vs.
JOHN TANSIPEK, Respondent.

DECISION

CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari assailing the Decision1 of the Court of Appeals
in CA-G.R. CV No. 69130 dated 18 August 2006 and the Resolution of the same court dated 9
January 2008.

The facts of the case are as follows:

J. O. Construction, Inc. (JOCI), a domestic corporation engaged in the construction business in
Cebu City, filed a complaint against Philippine Commercial and Industrial Bank (PCIB) in the
Regional Trial Court (RTC) of Makati City docketed as Civil Case No. 97-508. The Complaint
alleges that JOCI entered into a contract with Duty Free Philippines, Inc. for the construction of a
Duty Free Shop in Mandaue City. As actual construction went on, progress billings were made.
Payments were received by JOCI directly or through herein respondent John Tansipek, its
authorized collector. Payments received by respondent Tansipek were initially remitted to JOCI.
However, payment through PNB Check No. 0000302572 in the amount of ₱4,050,136.51 was
not turned over to JOCI. Instead, respondent Tansipek endorsed said check and deposited the
same to his account in PCIB, Wilson Branch, Wilson Street, Greenhills, San Juan, Metro Manila.
PCIB allowed the said deposit, despite the fact that the check was crossed for the deposit to
payee’s account only, and despite the alleged lack of authority of respondent Tansipek to endorse
said check. PCIB refused to pay JOCI the full amount of the check despite demands made by the
latter. JOCI prayed for the payment of the amount of the check (₱4,050,136.51), ₱500,000.00 in
attorney’s fees, ₱100,000.00 in expenses, ₱50,000.00 for costs of suit, and ₱500,000.00 in
exemplary damages.

PCIB filed a Motion to Dismiss the Complaint on the grounds that (1) an indispensable party was
not impleaded, and (2) therein plaintiff JOCI had no cause of action against PCIB. The RTC
denied PCIB’s Motion to Dismiss.

PCIB filed its answer alleging as defenses that (1) JOCI had clothed Tansipek with authority to
act as its agent, and was therefore estopped from denying the same; (2) JOCI had no cause of
action against PCIB ; (3) failure to implead Tansipek rendered the proceedings taken after the
filing of the complaint void; (4) PCIB’s act of accepting the deposit was fully justified by
established bank practices; (5) JOCI’s claim was barred by laches; and (6) the damages alleged
by JOCI were hypothetical and speculative. PCIB incorporated in said Answer its counterclaims
for exemplary damages in the amount of ₱400,000.00, and litigation expenses and attorney’s fees
in the amount of ₱400,000.00.

PCIB likewise moved for leave for the court to admit the former’s third-party complaint against
respondent Tansipek. The third-party complaint alleged that respondent Tansipek was a
depositor at its Wilson Branch, San Juan, Metro Manila, where he maintained Account No.
5703-03538-3 in his name and/or that of his wife, Anita. Respondent Tansipek had presented to
PCIB a signed copy of the Minutes of the meeting of the Board of Directors of JOCI stating the
resolution that –

Checks payable to J.O. Construction, Inc. may be deposited to Account No. 5703-03538-3 under
the name of John and/or Anita Tansipek, maintained at PCIB, Wilson Branch.2

Respondent Tansipek had also presented a copy of the Articles of Incorporation of JOCI showing
that he and his wife, Anita, were incorporators of JOCI, with Anita as Treasurer. In the third-
party complaint, PCIB prayed for subrogation and payment of attorney’s fees in the sum of
₱400,000.00.
PCIB filed a Motion to Admit Amended Third-Party Complaint. The amendment consisted in the
correction of the caption, so that PCIB appeared as Third-Party Plaintiff and Tansipek as Third-
Party Defendant.

Upon Motion, respondent Tansipek was granted time to file his Answer to the Third-Party
Complaint. He was, however, declared in default for failure to do so. The Motion to Reconsider
the Default Order was denied.

Respondent Tansipek filed a Petition for Certiorari with the Court of Appeals assailing the
Default Order and the denial of the Motion for Reconsideration. The Petition was docketed as
CA-G.R. SP No. 47727. On 29 May 1998, the Court of Appeals dismissed the Petition for failure
to attach the assailed Orders. On 28 September 1998, the Court of Appeals denied respondent
Tansipek’s Motion for Reconsideration for having been filed out of time.

Pre-trial on the main case ensued, wherein JOCI and PCIB limited the issues as follows:

1. Whether or not the defendant bank erred in allowing the deposit of Check No. 0302572
(Exh. "A") in the amount of ₱4,050,136.51 drawn in favor of plaintiff JO Construction,
Inc. in John Tansipek’s account when such check was crossed and clearly marked for
payee’s account only.

2. Whether the alleged board resolution and the articles of Incorporation are genuine and
a valid defense against plaintiff’s effort to collect the amount of ₱4,050,136.51.

On 14 July 2000, the RTC promulgated its Decision in Civil Case No. 97-508, the dispositive
portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff [JOCI] and against the
defendant bank [PCIB] ordering the latter to pay to the plaintiff the sum of ₱4,050,136.51 with
interest at the rate of twelve percent (12%) per annum from the filing of this complaint until fully
paid plus costs of suit. The other damages claimed by the plaintiff are denied for being
speculative.

On the third party complaint, third-party defendant John Tansipek is ordered to pay the third-
party plaintiff Philippine Commercial and Industrial Bank all amounts said defendant/third-party
plaintiff shall have to pay to the plaintiff on account of this case.3

Respondent Tansipek appealed the Decision to the Court of Appeals. The case was docketed as
CA-G.R. CV No. 69130. Respondent Tansipek assigned the following alleged errors:

a) The trial court’s decision upholding the order of default and the consequent ex-parte
reception of appellee’s evidence was anchored on erroneous and baseless conclusion that:

1) The original reglementary period to plead has already expired.

2) The ten day extended period to answer has likewise expired.

 3) There is no need to pass upon a second motion to plead much less, any need for
a new motion for extended period to plead.

b) The trial court erred in utterly depriving the appellant of his day in court and in
depriving constitutional, substantive and procedural due process premised solely on pure
and simple technicality which never existed and are imaginary and illusory.

c) The trial court erred in ordering the third-party defendant-appellant John Tansipek to
pay the third party plaintiff-appellee PCIBank all amounts said bank shall have to pay to
the plaintiff-appellee by way of subrogation since appellant if allowed to litigate in the
trial court, would have obtained a favorable judgment as he has good, valid and
meritorious defenses.4

On 18 August 2006, the Court of Appeals issued the assailed Decision finding that it was an
error for the trial court to have acted on PCIB’s motion to declare respondent Tansipek in
default. The Court of Appeals thus remanded the case to the RTC for further proceedings, to wit:

WHEREFORE, premises considered, the appeal is GRANTED. The decision relative to the third
party complaint is REVERSED and SET ASIDE. The case is ordered REMANDED to the trial
court for further proceedings on the third party complaint.5

The Court of Appeals denied the Motion for Reconsideration of PCIB in a Resolution dated 9
January 2008.

Petitioner Banco de Oro-EPCI, Inc., as successor-in-interest to PCIB, filed the instant Petition
for Review on Certiorari, assailing the above Decision and Resolution of the Court of Appeals,
and laying down a lone issue for this Court’s consideration:

WHETHER OR NOT THE COURT OF APPEALS CAN REVERSE ITS DECISION HANDED
DOWN EIGHT YEARS BEFORE.6

To recapitulate, upon being declared in default, respondent Tansipek filed a Motion for
Reconsideration of the Default Order. Upon denial thereof, Tansipek filed a Petition for
Certiorari with the Court of Appeals, which was dismissed for failure to attach the assailed
Orders. Respondent Tansipek’s Motion for Reconsideration with the Court of Appeals was
denied for having been filed out of time. Respondent Tansipek did not appeal said denial to this
Court.

Respondent Tansipek’s remedy against the Order of Default was erroneous from the very
beginning. Respondent Tansipek should have filed a Motion to Lift Order of Default, and not a
Motion for Reconsideration, pursuant to Section 3(b), Rule 9 of the Rules of Court:

(b) Relief from order of default.—A party declared in default may at any time after notice thereof
and before judgment file a motion under oath to set aside the order of default upon proper
showing that his failure to answer was due to fraud, accident, mistake or excusable negligence
and that he has a meritorious defense. In such case, the order of default may be set aside on such
terms and conditions as the judge may impose in the interest of justice.

A Motion to Lift Order of Default is different from an ordinary motion in that the Motion should
be verified; and must show fraud, accident, mistake or excusable neglect, and meritorious
defenses.7 The allegations of (1) fraud, accident, mistake or excusable neglect, and (2) of
meritorious defenses must concur.8

Assuming for the sake of argument, however, that respondent Tansipek’s Motion for
Reconsideration may be treated as a Motion to Lift Order of Default, his Petition for Certiorari
on the denial thereof has already been dismissed with finality by the Court of Appeals.
Respondent Tansipek did not appeal said ruling of the Court of Appeals to this Court. The
dismissal of the Petition for Certiorari assailing the denial of respondent Tansipek’s Motion
constitutes a bar to the retrial of the same issue of default under the doctrine of the law of the
case.

In People v. Pinuila,9 we held that:

"Law of the case" has been defined as the opinion delivered on a former appeal. More
specifically, it means that whatever is once irrevocably established as the controlling legal rule of
decision between the same parties in the same case continues to be the law of the case, whether
correct on general principles or not, so long as the facts on which such decision was predicated
continue to be the facts of the case before the court.

It may be stated as a rule of general application that, where the evidence on a second or
succeeding appeal is substantially the same as that on the first or preceding appeal, all matters,
questions, points, or issues adjudicated on the prior appeal are the law of the case on all
subsequent appeals and will not be considered or readjudicated therein.

xxxx

As a general rule a decision on a prior appeal of the same case is held to be the law of the case
whether that decision is right or wrong, the remedy of the party deeming himself aggrieved being
to seek a rehearing.

Questions necessarily involved in the decision on a former appeal will be regarded as the law of
the case on a subsequent appeal, although the questions are not expressly treated in the opinion
of the court, as the presumption is that all the facts in the case bearing on the point decided have
received due consideration whether all or none of them are mentioned in the opinion. (Emphasis
supplied.)

The issue of the propriety of the Order of Default had already been adjudicated in Tansipek’s
Petition for Certiorari with the Court of Appeals. As such, this issue cannot be readjudicated in
Tansipek’s appeal of the Decision of the RTC on the main case. Once a decision attains finality,
it becomes the law of the case, whether or not said decision is erroneous.10 Having been rendered
by a court of competent jurisdiction acting within its authority, the judgment may no longer be
altered even at the risk of legal infirmities and errors it may contain.11

Respondent Tansipek counters that the doctrine of the law of the case is not applicable, inasmuch
as a Petition for Certiorari is not an appeal. Respondent Tansipek further argues that the Doctrine
of the Law of the Case applies only when the appellate court renders a decision on the merits,
and not when such appeal was denied due to technicalities.

We are not persuaded.

In Buenviaje v. Court of Appeals,12 therein respondent Cottonway Marketing Corporation filed a

Petition for Certiorari with this Court assailing the Decision of the National Labor Relations
Commission (NLRC) ordering, inter alia, the reinstatement of therein petitioners and the
payment of backwages from the time their salaries were withheld up to the time of actual
reinstatement. The Petition for Certiorari was dismissed by this Court. The subsequent Motion
for Reconsideration was likewise denied. However, the Labor Arbiter then issued an Order
limiting the amount of backwages that was due to petitioners. The NLRC reversed this Order,
but the Court of Appeals reinstated the same. This Court, applying the Doctrine of the Law of the
Case, held:

The decision of the NLRC dated March 26, 1996 has become final and executory upon the
dismissal by this Court of Cottonway’s petition for certiorari assailing said decision and the
denial of its motion for reconsideration. Said judgment may no longer be disturbed or modified
by any court or tribunal. It is a fundamental rule that when a judgment becomes final and
executory, it becomes immutable and unalterable, and any amendment or alteration which
substantially affects a final and executory judgment is void, including the entire proceedings held
for that purpose. Once a judgment becomes final and executory, the prevailing party can have it
executed as a matter of right, and the issuance of a writ of execution becomes a ministerial duty
of the court. A decision that has attained finality becomes the law of the case regardless of any
claim that it is erroneous. The writ of execution must therefore conform to the judgment to be
executed and adhere strictly to the very essential particulars.13 (Emphases supplied.)1avvphil

Furthermore, there is no substantial distinction between an appeal and a Petition for Certiorari
when it comes to the application of the Doctrine of the Law of the Case. The doctrine is founded
on the policy of ending litigation. The doctrine is necessary to enable the appellate court to
perform its duties satisfactorily and efficiently, which would be impossible if a question once
considered and decided by it were to be litigated anew in the same case upon any and every
subsequent appeal.14

Likewise, to say that the Doctrine of the Law the Case applies only when the appellate court
renders a decision on the merits would be putting a premium on the fault or negligence of the
party losing the previous appeal. In the case at bar, respondent Tansipek would be awarded (1)
for his failure to attach the necessary requirements to his Petition for Certiorari with the Court of
Appeals; (2) for his failure to file a Motion for Reconsideration in time; and (3) for his failure to
appeal the Decision of the Court of Appeals with this Court. The absurdity of such a situation is
clearly apparent.
It is important to note that a party declared in default – respondent Tansipek in this case – is not
barred from appealing from the judgment on the main case, whether or not he had previously
filed a Motion to Set Aside Order of Default, and regardless of the result of the latter and the
appeals therefrom. However, the appeal should be based on the Decision’s being contrary to law
or the evidence already presented, and not on the alleged invalidity of the default order.15

WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 69130 dated 18
August 2006 and the Resolution of the same court dated 9 January 2008 are hereby REVERSED
and SET ASIDE. The Decision of the Regional Trial Court of Makati City in Civil Case No. 97-
508 dated 14 July 2000 is hereby REINSTATED. No pronouncement as to costs.

SO ORDERED.

G.R. No. 199990               February 4, 2015

SPOUSES ROLANDO and HERMINIA SALVADOR, Petitioners,

vs.
SPOUSES ROGELIO AND ELIZABETH RABAJA and ROSARIO
GONZALES, Respondents.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari seeking to reverse and set aside the August 22, 2011
Decision1 and the January 5, 2012 Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No.
90296 which affirmed with modification the March 29, 2007 Decision of the Regional Trial
Court Branch 214 (RTC-Branch 214), Mandaluyong City in Civil Case No. MC-03-2175, for
rescission of a contract (rescission case).

The Facts

This case stemmed from a dispute involving the sellers, petitioner spouses Rolando and
Herminia Salvador (Spouses Salvador); the sellers' agent, Rosario Gonzales (Gonzales),· and the
buyers, respondent Spouses Rogelio and Elizabeth Rabaja (Spouses Rabaja), over a parcel of
land situated at No. 25, Merryland Village, 375 Jose Rizal Street, Mandaluyong City (subject
property),covered by Transfer Certificate of Title (TCT) No. 13426 and registered in the names
of Spouses Salvador. From 1994 until 2002, Spouses Rabaja were leasing an apartment in the
subject lot.

Sometime in July 1998, Spouses Rabaja learned that Spouses Salvador were looking for a buyer
of the subject property. Petitioner Herminia Salvador (Herminia)personally introduced Gonzales
to them as the administrator of the said property. Spouses Salvador even handed to Gonzales the
owner’s duplicate certificate of title over the subject property. On July, 3, 1998, Spouses Rabaja
made an initial payment of ₱48,000.00 to Gonzales in the presence of Herminia. Gonzales then
presented the Special Power of Attorney3 (SPA),executed by Rolando Salvador (Rolando) and
dated July 24, 1998. On the same day, the parties executed the Contract to Sell4 which stipulated
that for a consideration of ₱5,000,000.00, Spouses Salvador sold, transferred and conveyed in
favor of Spouses Rabaja the subject property. Spouses Rabaja made several payments totalling
₱950,000.00, which were received by Gonzales pursuant to the SPA provided earlier as
evidenced by the check vouchers signed by Gonzales and the improvised receiptssigned by
Herminia.

Sometime in June 1999, however, Spouses Salvador complained to Spouses Rabaja that they did
not receive any payment from Gonzales. This prompted Spouses Rabaja to suspend further
payment of the purchase price; and as a consequence, they received a notice to vacate the subject
property from Spouses Salvador for non-payment of rentals.

Thereafter, Spouses Salvador instituted an action for ejectment against Spouses Rabaja. In turn,
Spouses Rabaja filed an action for rescission of contract against Spouses Salvador and Gonzales,
the subject matter of the present petition.

In the action for ejectment, the complaint was filed before the Metropolitan Trial Court of
Mandaluyong City, Branch 60 (MeTC),where it was docketed as Civil Case No. 17344. In its
August 14, 2002 Decision,5 the MeTC ruled in favor of Spouses Salvador finding that valid
grounds existed for the eviction of Spouses Rabaja from the subject property and ordering them
to pay back rentals. Spouses Salvador were able to garnish the amount of ₱593,400.006 from
Spouses Rabaja’s time deposit account pursuant to a writ of execution issued by the
MeTC.7 Spouses Rabaja appealed to the Regional Trial Court, Branch 212, Mandaluyong City
(RTC-Br. 212)which reversed the MeTC ruling in its March 1, 2005 decision.8 The RTC-Br. 212
found that no lease agreement existed between the parties. Thereafter, Spouses Salvador filed an
appeal with the CA which was docketed as CAG.R. SP No. 89259. On March 31, 2006, the CA
ruled in favor of Spouses Salvador and reinstated the MeTC ruling ejecting Spouses Rabaja.9 Not
having been appealed, the CA decision in CA-G.R. SP No. 89259 became final and executory on
May 12, 2006.10

Meanwhile, the rescission case filed by Spouses Rabaja against Spouses Salvador and Gonzales
and docketed as Civil Case No. MC No. 03-2175 was also raffled to RTC-Br. 212. In their
complaint,11 dated July 7, 2003, Spouses Rabaja demanded the rescission of the contract to sell
praying that the amount of ₱950,000.00 they previously paid to Spouses Salvador be returned to
them. They likewise prayed that damages be awarded due to the contractual breach committed
by Spouses Salvador.

Spouses Salvador filed their answer with counterclaim and cross-claim12 contending that there
was no meeting of the minds between the parties and that the SPA in favor of Gonzales was
falsified. In fact, they filed a case for falsification against Gonzales, but it was dismissed because
the original of the alleged falsified SPAcould not be produced. They further averred that they did
not receive any payment from Spouses Rabaja through Gonzales. In her defense, Gonzales filed
her answer13 stating that the SPA was not falsified and that the payments of Spouses Rabaja
amounting to ₱950,000.00 were all handed over to Spouses Salvador.
The pre-trial conference began but attempts to amicably settle the case were unsuccessful. It was
formally reset to February 4, 2005, but Spouses Salvador and their counsel failed to attend.
Consequently, the RTC issued the pre-trial order14 declaring Spouses Salvador in default and
allowing Spouses Rabaja to present their evidence ex parte against Spouses Salvador and
Gonzales to present evidence in her favor.

A motion for reconsideration,15 dated March 28, 2005, was filed by Spouses Salvador on the said
pre-trial order beseeching the liberality of the court. The rescission case was then re-raffled to
RTC-Br. 214 after the Presiding Judge of RTC-Br. 212 inhibited herself. In the Order,16 dated
October 24, 2005, the RTC-Br. 214 denied the motion for reconsideration because Spouses
Salvador provided a flimsy excuse for their non-appearance in the pre-trial conference.
Thereafter, trial proceeded and Spouses Rabaja and Gonzales presented their respective
testimonial and documentary evidence.

RTC Ruling

On March 29, 2007, the RTC-Br. 214 rendered a decision17 in favor of Spouses Rabaja. It held
that the signature of Spouses Salvador affixed in the contract to sell appeared to be authentic. It
also held that the contract, although denominated as "contract to sell," was actually a contract of
sale because Spouses Salvador, as vendors, did not reserve their title to the property until the
vendees had fully paid the purchase price. Since the contract entered into was a reciprocal
contract, it could bevalidly rescinded by Spouses Rabaja, and in the process, they could recover
the amount of ₱950,000.00 jointly and severally from Spouses Salvador and Gonzales. The RTC
stated that Gonzales was undoubtedly the attorney-in-fact of Spouses Salvador absent any taint
of irregularity. Spouses Rabaja could not be faulted in dealing with Gonzales who was duly
equipped with the SPA from Spouses Salvador.

The RTC-Br. 214 then ruled that the amount of ₱593,400.00 garnished from the time deposit
account of Spouses Rabaja, representing the award of rental arrearages in the separate ejectment
suit, should be returned by Spouses Salvador.18 The court viewed that such amount was part of
the purchase price of the subject property which must be returned. It also awarded moral and
exemplary damages in favor of Spouses Rabaja and attorney’s fees in favor of Gonzales. The
dispositive portion of the said decision reads:

WHEREFORE, this court renders judgment as follows:

a. Ordering the "Contract to Sell" entered into by the plaintiff and defendant spouses
Rolando and Herminia Salvador on July 24, 1998 as RESCINDED;

b. Ordering defendant spouses Rolando and Herminia Salvador and defendant Rosario S.
Gonzales jointly and severally liable to pay plaintiffs:

1. the amount of NINE HUNDRED FIFTY THOUSAND PESOS (₱950,000.00),

representing the payments made by the latter for the purchase of subject property;
 2. the amount of TWENTY THOUSAND PESOS (₱20,000.00), as moral
damages;

3. the amount of TWENTY THOUSAND PESOS (₱20,000.00), as exemplary

damages;

4. the amount of ONE HUNDRED THOUSAND PESOS (₱100,000.00), as

attorney’s fees;

5. the cost of suit.

c. Ordering defendant Spouses Rolando and Herminia Salvador to pay plaintiffs the
amount of FIVE HUNDRED NINETY THREE THOUSAND PESOS (₱593,000.00)
(sic), representing the amount garnished from the Metrobank deposit of plaintiffs as
payment for their alleged back rentals;

d. Ordering the defendant Spouses Rolando and Herminia Salvador to pay defendant
Rosario Gonzales on her cross-claim in the amount of ONE HUNDRED THOUSAND
PESOS (₱100,000.00);

e. Dismissing the counterclaims of the defendants against the plaintiff.

SO ORDERED.19

Gonzales filed a motion for partial reconsideration, but it was denied by the RTC-Br. 114 in its
Order,20 dated September 12, 2007. Undaunted, Spouses Salvador and Gonzales filed an appeal
before the CA.

CA Ruling

On March 29, 2007, the CA affirmed the decision of the RTC-Br. 114 with modifications. It
ruled that the "contract to sell" was indeed a contract of sale and that Gonzales was armed with
an SPA and was, in fact, introduced to Spouses Rabaja by Spouses Salvador as the administrator
of the property. Spouses Rabaja could not be blamed if they had transacted with Gonzales. The
CA then held that Spouses Salvador should return the amount of ₱593,400.00 pursuant to a
separate ejectment case, reasoning that Spouses Salvador misled the court because an
examination of CA-G.R. SP No. 89260showed that Spouses Rabaja were not involved in that
case. CA-G.R. SP No. 59260 was an action between Spouses Salvador and Gonzales only and
involved a completely different residential apartment located at 302-C Jupiter Street, Dreamland
Subdivision, Mandaluyong City.

The CA, however, ruled that Gonzales was not solidarily liable with Spouses Salvador. The
agent must expressly bind himself or exceed the limit of his authority in order to be solidarily
liable. It was not shown that Gonzales as agent of Spouses Salvador exceeded her authority or
expressly bound herself to be solidarily liable. The decretal portion of the CA decision reads:
WHEREFORE, the appeal is PARTLY GRANTED. The assailed Decision dated March 29,
2007 and the Order dated September 12, 2007, of the Regional Trial Court, Branch 214,
Mandaluyong City, in Civil Case No. MC-03-2175, are AFFIRMED with MODIFICATION in
that Rosario Gonzalez is not jointly and severally liable to pay Spouses Rabaja the amounts
enumerated in paragraph (b) of the Decision dated March 29, 2007.

SO ORDERED.21

Spouses Salvador filed a motion for reconsideration but it was denied by the CA in its January 5,
2012 Resolution.

Hence, this petition.

ASSIGNMENT OF ERRORS

THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE LOWER COURT
GRAVELY ABUSED ITS DISCRETION IN DECLARING PETITIONERS IN DEFAULT
AND IN DEPRIVING THEM OF THE OPPORTUNITY TO CROSS-EXAMINE
RESPONDENTS SPS. RABAJA AS WELL AS TO PRESENT EVIDENCE FOR AND IN
THEIR BEHALF, GIVEN THE MERITORIOUS DEFENSES RAISED IN THEIR ANSWER
THAT CATEGORICALLY AND DIRECTLY DISPUTE RESPONDENTS SPS. RABAJA’S
CAUSE OF ACTION.

II

THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE TRIAL COURT
GRAVELY ERRED IN GIVING CREDENCE TO THE TESTIMONY OF RESPONDENT
GONZALES THAT PAYMENTS WERE INDEED REMITTED TO AND RECEIVED BY
PETITIONER HERMINIA SALVADOR EVEN AS THE IMPROVISED RECEIPTS
WEREEVIDENTLY MADE UP AND FALSIFIED BY RESPONDENT GONZALES.

III

THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE TRIAL COURT
GRAVELY ERRED IN RESCINDING THE CONTRACT TO SELL WHENTHERE IS
NOTHING TO RESCIND AS NO VALID CONTRACT TO SELL WAS ENTERED INTO,
AND IN DIRECTING THE REFUND OF THE AMOUNT OF ₱950,000.00 WHEN THE
EVIDENCECLEARLY SHOWS THAT SAID AMOUNT WAS PAIDTO AND RECEIVED
BY RESPONDENT GONZALES ALONE WHO MISAPPROPRIATED THE SAME.

IV

THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURT’S DECISION

FOR PETITIONERS TO RETURN THE AMOUNT OF ₱543,400.00 REPRESENTING
RENTALS IN ARREARS GARNISHED OR WITHDRAWN BY VIRTUE OF A WRIT OF
EXECUTION ISSUED IN AN EJECTMENT CASE WHICH WAS TRIED AND DECIDED
BY ANOTHER COURT.

THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE LOWER COURT
GRAVELY ERRED IN AWARDING DAMAGES TO RESPONDENTS SPS. RABAJA,
THERE BEING NO FACTUAL AND LEGAL BASES FOR SUCH AWARD. VI THE COURT
OF APPEALS ERRED IN NOT HOLDING THAT THE TRIAL COURT GRAVELY ERRED
IN AWARDING ₱100,000.00 TO RESPONDENT GONZALES AS ATTORNEY’S FEES
WHEN RESPONDENT GONZALES, IN FACT, COMMITTED FORGERY AND
FALSIFICATION IN DEALING WITH THE PROPERTY OF PETITIONERS AND
MISAPPROPRIATED THE MONIES PAID TO HER BY RESPONDENTS SPS. RABAJA,
THUS GIVING PREMIUM TO HER FRAUDULENT ACTS.22

The foregoing can be synthesized into three main issues. First, Spouses Salvador contend that the
order of default must be lifted because reasonable grounds exist to justify their failure to attend
the pre-trial conference on February 4, 2005. Second, Spouses Salvador raise in issue the
veracity of the receipts given by Gonzales, the SPA and the validity of the contract to sell. They
claim that the improvised receipts should not be given credence because these were crude and
suspicious, measuring only by 2 x 2 inches which showed that Gonzales misappropriated the
payments of Spouses Rabaja for herself and did not remit the amount of ₱950,000.00 to them. As
there was no consideration, then no valid contract to sell existed. Third, Spouses Salvador argue
that the ejectment case, from which the amount of ₱593,400.00 was garnished, already became
final and executory and could not anymore be disturbed. Lastly, the award of damages in favor
of Spouses Rabaja and Gonzales was improper absent any legal and factual bases.

On January 21, 2013, Spouses Salvador filed their supplemental petition23 informing the Court
that RTC-Br. 213 had rendered a decision in Civil Case No. MC00-1082, an action for rescission
of the SPA. The said decision held that Spouses Salvador properly revoked the SPA in favor of
Gonzales due to loss of trust and confidence. On September 11, 2013, Gonzales filed her
comment to the supplemental petition,24 contending that the RTC-Branch 213 decision had no
bearing because it had not yet attained finality. On even date, Spouses Rabaja filed their
Comment,25 asserting that the present petition is a mere rehash of the previous arguments of
Spouses Salvador before the CA. On November 15, 2013, Spouses Salvador replied that they
merely wanted to show that the findings by the RTC-Br. 213 should be given weight as a full-
blown trial was conducted therein.26

The Court’s Ruling

As a general rule, the Court’s jurisdiction in a Rule 45 petition is limited to the review of pure
questions of law. A question of law arises when the doubt or difference exists as to what the law
is on a certain state of facts. Negatively put, Rule 45 does not allow the review of questions of
fact. A question of fact exists when the doubt or difference arises as to the truth or falsity of the
allegations.27
The present petition presents questions of fact because it requires the Court to examine the
veracity of the evidence presented during the trial, such as the improvised receipts, the SPA
given to Gonzales and the contract to sell. Even the petitioner spouses themselves concede and
ask the Court to consider questions of fact,28 but the Court finds no reason to disturb the findings
of fact of the lower courts absent any compelling reason to the contrary.

The failure of Spouses Salvador

to attend pre-trial conference
warrants the presentation of
evidence ex parte by Spouses
Rabaja

On the procedural aspect, the Court reiterates the rule that the failure to attend the pre-trial
conference does not result in the default of an absent party. Under the 1997 Rules of Civil
Procedure, a defendant is only declared in default if he fails to file his Answer within the
reglementary period.29 On the other hand, if a defendant fails to attend the pre-trial conference,
the plaintiff can present his evidence ex parte. Sections 4 and 5, Rule 18 of the Rules of Court
provide:

Sec. 4. Appearance of parties.

It shall be the duty of the parties and their counsel to appear at the pre-trial. The non-appearance
of a party may be excused only if a valid cause is shown therefor or if a representative shall
appear in his behalf fully authorized in writing to enter into an amicable settlement, to submit to
alternative modes of dispute resolution, and to enter into stipulations or admissions of facts and
of documents.

Sec. 5. Effect of failure to appear.

The failure of the plaintiff to appear when so required pursuant to the next preceding section
shall be cause for dismissal of the action. The dismissal shall be with prejudice, unless otherwise
ordered by the court. A similar failure on the part of the defendant shall be cause to allow the
plaintiff to present his evidence ex parteand the court to render judgment on the basis thereof.

[Emphasis supplied]

The case of Philippine American Life & General Insurance Company v. Joseph
Enario30 discussed the difference between the non-appearance of a defendant in a pre-trial
conference and the declaration of a defendant in default in the present Rules of Civil Procedure.
The decision instructs:

Prior to the 1997 Revised Rules of Civil Procedure, the phrase "as in default" was initially
included in Rule 20 of the old rules, and which read as follows:

Sec. 2. A party who fails to appear at a pre-trial conference may be non-suited or considered as
in default.
It was, however, amended in the 1997 Revised Rules of Civil Procedure. Justice Regalado, in his
book, REMEDIAL LAW COMPENDIUM, explained the rationale for the deletion of the phrase
"as in default" in the amended provision, to wit:

1. This is a substantial reproduction of Section 2 of the former Rule 20 with the change that,
instead of defendant being declared "as in default" by reason of his non-appearance, this section
now spells out that the procedure will be to allow the ex parte presentation of plaintiff’s evidence
and the rendition of judgment on the basis thereof. While actually the procedure remains the
same, the purpose is one of semantical propriety or terminological accuracy as there were
criticisms on the use of the word "default" in the former provision since that term is identified
with the failure to file a required answer, not appearance in court.

Still, in the same book, Justice Regalado clarified that while the order of default no longer
obtained, its effects were retained, thus:

Failure to file a responsive pleading within the reglementary period, and not failure to appear at
the hearing, is the sole ground for an order of default, except the failure to appear at a pre-trial
conference wherein the effects of a default on the part of the defendant are followed, that is, the
plaintiff shall be allowed to present evidence ex parte and a judgment based thereon may be
rendered against defendant.

From the foregoing, the failure of a party to appear at the pre-trial has indeed adverse
consequences. If the absent party is the plaintiff, then his case shall be dismissed. If it is the
defendant who fails to appear, then the plaintiff is allowed to present his evidence ex parte and
the court shall render judgment based on the evidence presented. Thus, the plaintiff is given the
privilege to present his evidence without objection from the defendant, the likelihood being that
the court will decide in favor of the plaintiff, the defendant having forfeited the opportunity to
rebut or present its own evidence.31 The stringent application of the rules on pre-trial is
necessitated from the significant role of the pre-trial stage in the litigation process. Pretrial is an
answer to the clarion call for the speedy disposition of cases. Although it was discretionary under
the 1940 Rules of Court, it was made mandatory under the 1964 Rules and the subsequent
amendments in 1997.32 "The importance of pre-trial in civil actions cannot be overemphasized."33

There is no dispute that Spouses Salvador and their counsel failed to attend the pre-trial
conference set on February 4, 2005 despite proper notice. Spouses Salvador aver that their non-
attendance was due to the fault of their counsel as he forgot to update his calendar.34 This excuse
smacks of carelessness, and indifference to the pre-trial stage. It simply cannot be considered as
a justifiable excuse by the Court. As a result of their inattentiveness, Spouses Salvador could no
longer present any evidence in their favor. Spouses Rabaja, as plaintiffs, were properly allowed
by the RTC to present evidence ex parte against Spouses Salvador as defendants. Considering
that Gonzales as co-defendant was able to attend the pre-trial conference, she was allowed to
present her evidence. The RTC could only render judgment based on the evidence presented
during the trial.

Gonzales, as agent of Spouses

Salvador, could validly receive
the payments of Spouses
Rabaja

Even on the substantial aspect, the petition does not warrant consideration. The Court agrees
with the courts below in finding that the contract entered into by the parties was essentially a
contract of sale which could be validly rescinded. Spouses Salvador insist that they did not
receive the payments made by Spouses Rabaja from Gonzales which totalled ₱950,000.00 and
that Gonzales was not their duly authorized agent. These contentions, however, must fail in light
of the applicable provisions of the New Civil Code which state:

Art. 1900. So far as third persons are concerned, an act is deemed to have been performed within
the scope of the agent's authority, if such act is within the terms of the power of attorney, as
written, even if the agent has in fact exceeded the limits of his authority according to an
understanding between the principal and the agent.

xxxx

Art. 1902. A third person with whom the agent wishes to contract on behalf of the principal may
require the presentation of the power of attorney, or the instructions as regards the agency.
Private or secret orders and instructions of the principal do not prejudice third persons who have
relied upon the power of attorney or instructions shown them.

xxxx

Art. 1910. The principal must comply with all the obligations which the agent may have
contracted within the scope of his authority.

Persons dealing with an agent must ascertain not only the fact of agency, but also the nature and
extent of the agent’s authority. A third person with whom the agent wishes to contract on behalf
of the principal may require the presentation of the power of attorney, or the instructions as
regards the agency. The basis for agency is representation and a person dealing with an agent is
put upon inquiry and must discover on his own peril the authority of the agent.35

According to Article 1990 of the New Civil Code, insofar as third persons are concerned, an act
is deemed to have been performed within the scope of the agent's authority, if such act is within
the terms of the power of attorney, as written. In this case, Spouses Rabaja did not recklessly
enter into a contract to sell with Gonzales. They required her presentation of the power of
attorney before they transacted with her principal. And when Gonzales presented the SPA to
Spouses Rabaja, the latter had no reason not to rely on it.

The law mandates an agent to act within the scope of his authority which what appears in the
written terms of the power of attorney granted upon him.36 The Court holds that, indeed,
Gonzales acted within the scope of her authority. The SPA precisely stated that she could
administer the property, negotiate the sale and collect any document and all payments related to
the subject property.37 As the agent acted within the scope of his authority, the principal must
comply with all the obligations.38 As correctly held by the CA, considering that it was not shown
that Gonzales exceeded her authority or that she expressly bound herself to be liable, then she
could not be considered personally and solidarily liable with the principal, Spouses Salvador.39

Perhaps the most significant point which defeats the petition would be the fact that it was
Herminia herself who personally introduced Gonzalez to Spouses Rabaja as the administrator of
the subject property. By their own ostensible acts, Spouses Salvador made third persons believe
that Gonzales was duly authorized to administer, negotiate and sell the subject property. This fact
was even affirmed by Spouses Salvador themselves in their petition where they stated that they
had authorized Gonzales to look for a buyer of their property.40 It is already too late in the day
for Spouses Salvador to retract the representation to unjustifiably escape their principal
obligation.

As correctly held by the CA and the RTC, considering that there was a valid SPA, then Spouses
Rabaja properly made payments to Gonzales, as agent of Spouses Salvador; and it was as if they
paid to Spouses Salvador. It is of no moment, insofar as Spouses Rabaja are concerned, whether
or not the payments were actually remitted to Spouses Salvador. Any internal matter,
arrangement, grievance or strife between the principal and the agent is theirs alone and should
not affect third persons. If Spouses Salvador did not receive the payments or they wish to
specifically revoke the SPA, then their recourse is to institute a separate action against Gonzales.
Such action, however, is not any more covered by the present proceeding.

The amount of ₱593,400.00

should not be returned by
Spouses Salvador

Nevertheless, the assailed decision of the CA must be modified with respect to the amount of
₱593,400.00 garnished by Spouses Salvador and ordered returned to Spouses Rabaja. The RTC
ordered the return of the amount garnished holding that it constituted a part of the purchase price.
The CA ruled that Spouses Salvador misled the Court when they improperly cited CA-G.R. SP
No. 89260 to prove their entitlement to the said amount. Both courts erred in their ruling. First,
the garnishment of the amount of ₱593,400.00 against Spouses Rabaja was pursuant to the CA
decision in CA-G.R. SP No. 89259, an entirely different case involving an action for ejectment,
and it does not concern the rescission case which is on appeal before this Court. Moreover, the
decision on the ejectment case is final and executory and an entry of judgment has already been
made.41 Nothing is more settled in law than that when a final judgment is executory, it thereby
becomes immutable and unalterable. The judgment may no longer be modified in any respect,
even if the modification is meant to correct what is perceived to be an erroneous conclusion of
fact or law, and regardless of whether the modification is attempted to be made by the court
which rendered it or by the highest Court of the land. The doctrine is founded on consideration of
public policy and sound practice that, at the risk of occasional errors, judgments must become
final at some definite point in time.42

The March 31, 2006 CA decision43 in CA-G.R. SP No. 89259has long been final and executory
and cannot any more be disturbed by the Court. Public policy dictates that once a judgment
becomes final, executory and unappealable, the prevailing party should not be denied the fruits
of his victory by some subterfuge devised by the losing party. Unjustified delay in the
enforcement of a judgment sets at naught the role and purpose of the courts to resolve justiciable
controversies with finality.44

Meanwhile, in ruling that the garnishment was improper and thus ordering the return of the
garnished amount, the CA referred to its decision in CA-G.R. SP No. 89260. Spouses Salvador,
however, clarified in its motion for reconsideration45 before the CA and in the present
petition46 that the garnishment was pursuant to CA-G.R. SP No. 89259, and not CA-G.R. SP No.
89260, another ejectment case involving another property. A perusal of the records reveals that
indeed the garnishment was pursuant to the ejectment case in the MeTC, docketed as Civil Case
No. 17344,47 where Spouses Rabaja were the defendants. The MeTC decision was then reinstated
by the CA in CA-G.R. SP No. 89259, not CA-G.R. SP No. 89260. There, a writ of
execution48 and notice of pay49 were issued against Spouses Rabaja in the amount of
₱591,900.00.

Second, Spouses Rabaja’s appeal with the RTC never sought relief in returning the garnished
amount.50 Such issue simply emerged in the RTC decision. This is highly improper because the
court’s grant of relief is limited only to what has been prayed for in the complaint or related
thereto, supported by evidence, and covered by the party’s cause of action.51

If Spouses Rabaja would have any objection on the manner and propriety of the execution, then
they must institute their opposition to the execution proceeding a separate case. Spouses Rabaja
can invoke the Civil Code provisions on legal compensation or set-off under Articles 1278, 1279
and 1270.52 The two obligations appear to have respectively offset each other, compensation
having taken effectby operation of law pursuant to the said provisions of the Civil Code, since all
the requisites provided in Art. 1279 of the said Code for automatic compensation are duly
present.

No award of actual, moral and

exemplary damages

The award of damages to Spouses Rabaja cannot be sustained by this Court. The filing alone of a
civil action should not be a ground for an award of moral damages in the same way that a clearly
unfounded civil action is not among the grounds for moral damages.53 Article 2220 of the New
Civil Code provides that to award moral damages in a breach of contract, the defendant must act
fraudulently or in bad faith. In this case, Spouses Rabaja failed to sufficiently show that Spouses
Salvador acted in a fraudulent manner or with bad faith when it breached the contract of sale.
Thus, the award of moral damages cannot be warranted.

As to the award of exemplary damages, Article 2229 of the New Civil Code provides that
exemplary damages may be imposed by way of example or correction for the public good, in
addition to the moral, temperate, liquidated or compensatory damages.54 The claimant must first
establish his right to moral, temperate, liquidated or compensatory damages. In this case,
considering that Spouses Rabaja failed to prove moral or compensatory damages, then there
could be no award of exemplary damages.
With regard to attorney’s fees, neither Spouses Rabaja nor Gonzales is entitled to the
award.1âwphi1 The settled rule is that no premium should be placed on the right to litigate and
that not every winning party is entitled to an automatic grant of attorney’s fees.55 The RTC
reasoned that Gonzales was forced to litigate due to the acts of Spouses Salvador. The Court
does not agree. Gonzales, as agent of Spouses Salvador, should have expected that she would be
called to litigation in connection with her fiduciary duties to the principal.

In view of all the foregoing, the CA decision should be affirmed with the following
modifications:

1. The order requiring defendant Spouses Rolando and Herminia Salvador to pay
plaintiffs the amount of Five Hundred Ninety Three Thousand (₱593,000.00) Pesos,
representing the amount garnished from the Metrobank deposit of plaintiffs as for their
back rentals should be deleted;

2. The award of moral damages in the amount of Twenty Thousand (₱20,000.00) Pesos;
exemplary damages in the amount of Twenty Thousand (₱20,000.00) Pesos, and
attorney’s fees in the amount of One Hundred Thousand (₱100,000.00) Pesos in favor of
Spouses Rabaja should be deleted; and

3. The award of attorney’s fees in amount of One Hundred Thousand (₱100,000.00)

Pesos in favor of Gonzales should be deleted.

The other amounts awarded are subject to interest at the legal rate of 6% per annum, to be
reckoned from the date of finality of this judgment until fully paid.

WHEREFORE, the petition is PARTLY GRANTED. The March 29, 2007 Decision of the
Regional Trial Court, Branch 214, Mandaluyong City, in Civil Case No. MC-03-2175, is
MODIFIED to read as follows:

"WHEREFORE, this Court renders judgment as follows:

a. Ordering the "Contract to Sell" entered into by Spouses Rogelio and Elizabeth Rabaja
and Spouses Rolando and Herminia Salvador on July 24, 1998 as RESCINDED;

b. Ordering Spouses Rolando and Herminia Salvador to pay Spouses Rogelio and
Elizabeth Rabaja:

1. The amount of Nine Hundred Fifty Thousand (₱950,000.00) Pesos,

representing the payments made by the latter for the purchase of the subject
property; and

2. The cost of suit;

c. Dismissing the counterclaims of Spouses Rolando and Herminia Salvador and Rosario
Gonzales against Spouses Rogelio and Elizabeth Rabaja.
The amounts awarded are subject to interest at the legal rate of 6% per annum to be reckoned
from the date of finality of this judgment until fully paid."

As aforestated, this is without prejudice to the invocation by either party of the Civil Code
provisions on legal compensation or set-off under Articles 1278, 1279 and 1270.

SO ORDERED.

MENDOZA, J.:
In this petition for review on certiorari[1] under Rule 45 of the Rules of Court, the petitioners,
Farida Yap Bitte and Heirs of Benjamin Bitte (the petitioners), seek the review of the September
26, 2013 Decision[2] and February 26, 2014 Resolution[3] of the Court of Appeals (CA) in CA-
G.R. CV No. 01596-MIN, which reversed the January 18, 2007 Joint Decision[4] of the Regional
Trial Court, Branch 13, Davao (RTC-Branch 13), arrived at in favor of respondents, Spouses
Fred and Rosa Elsa Serrano Jonas (Spouses Jonas).

Factual Antecedents

This controversy stemmed from two civil cases filed by the parties against each other relative to
a purported contract of sale involving a piece of property situated at 820 corner Jacinto Street
and Quezon Boulevard, Davao City (subject property). It was initially covered by TCT No. T-
112717 in the name of Rosa Elsa Serrano Jonas (Rosa Elsa) and presently by TCT No. T-315273
under the name of Ganzon Yap, married to Haima Yap (Spouses Yap).

On July 19, 1985, before Rosa Elsa went to Australia, she had executed a Special Power of
Attorney (SPA) authorizing her mother, Andrea C. Serrano (Andrea), to sell the property.

Sometime in May 1996, Cipriano Serrano (Cipriano), son of Andrea and brother of Rosa Elsa,
offered the property for sale to Spouses Benjamin and Farida Yap Bitte (Spouses Bitte) showing
them the authority of Andrea. On September 3, 1996, Cipriano received from Spouses Bitte the
amount of P200,000.00 as advance payment for the property. Later on, on September 10, 1996,
he received the additional amount of P400,000.00.

Spouses Bitte sought a meeting for final negotiation with Rosa Elsa, the registered owner of the
subject property. At that time, Rosa Elsa was in Australia and had no funds to spare for her travel
to the Philippines. To enable her to come to the country, Spouses Bitte paid for her round trip
ticket.

On October 10, 1996, shortly after her arrival here in the Philippines, Rosa Elsa revoked the
SPA, through an instrument of even date, and handed a copy thereof to Andrea.

The next day, on October 11, 1996, the parties met at Farida Bitte's office, but no final agreement
was reached. The next day, Rosa Elsa withdrew from the transaction.

On October 17, 1996, Spouses Bitte filed before the RTC a Complaint for Specific Performance
with Damages seeking to compel Rosa Elsa, Andrea and Cipriano to transfer to their names the
title over the subject property. The case was docketed as Civil Case No. 24,771-96 and raffled to
RTC-Branch 13.

While the case was pending, Andrea sold the subject property to Spouses Bitte, through a deed of
absolute sale, dated February 25, 1997, and notarized by one Atty. Bernardino Bolcan, Jr.

Immediately thereafter, Rosa Elsa asked Andrea about the sale. Her questions about the sale,
however, were ignored and her pleas for the cancellation of the sale and restoration of the
property to her possession were disregarded.

Undisputed by the parties is the fact that Rosa Elsa earlier mortgaged the subject property to
Mindanao Development Bank. Upon failure to pay the loan on maturity, the mortgage was
foreclosed and sold at a public auction on December 14, 1998 as evidenced by the annotation on
the title, Entry No. 1173153.[5]

Armed with the deed of absolute sale executed by Andrea, Spouses Bitte were able to redeem the
property on September 14, 1998 from the highest bidder, Thelma Jean Salvana, for P1.6 Million
Pesos.

Thereafter, Spouses Bitte sold the property to Ganzon Yap (Ganzon), married to Haima Yap.[6]

Civi Case No. 24,771-96

(Spouses Bitte v. Rosa Elsa Serrano Jonas, Andrea C. Serrano and Cipriano Serrano, Jr.)

As earlier recited, on October 17, 1996, Spouses Bitte filed before the RTC Civil Case No.
24,771-96, a Complaint for Specific Performance with Damages seeking to compel Rosa Elsa,
Andrea and Cipriano to transfer the title of the subject property to their names.

In their Complaint, Spouses Bitte alleged that sometime in May 1996, the property was offered
to them for sale by Cipriano, who showed them the SPA in favor of Andrea; that on September
3, 1996 and September 10, 1996, Cipriano received from them the respective amounts of
P200,000.00 and then P400,000.00 as advance payments for the property; that they sought a
meeting for final negotiation with Rosa Elsa, then the registered owner of the subject property;
that at that time, Rosa Elsa was in Australia and had no funds to spare in order to return to the
Philippines; that to enable her to come to the country, they paid for her round trip ticket; that on
October 11, 1996, they and Rosa Elsa met at Farida Bitte's office; that an agreement of sale of
the subject property for the total purchase price of P6.2 Million Pesos was reached; that P5
Million thereof would be paid on October 18, 1996 and the balance, thirty (30) days thereafter;
that on the following day, Rosa Elsa withdrew from the transaction; and that on the same date,
they demanded, through a letter, the execution of the necessary documents to effect the transfer
of the property to their names, but to no avail.
On October 18, 1996, RTC-Branch 13 granted the prayer for the issuance of a Temporary
Restraining Order (TRO) preventing Rosa Elsa and her agents from disposing the subject
property. Subsequently, on November 8, 1996, a Writ of Preliminary Injunction (WPI) was
issued in favor of Spouses Bitte.

In response, Rosa Elsa countered that despite her appointment of her mother, Andrea, as her
attorney-in-fact/agent, she later gave her instructions not to sell the property; that her revocation
barred the consummation of the contract to sell; that it was her belief that her return to the
Philippines was in connection with the sale of another property situated in Cawag, San Isidro,
Davao Oriental; that it was a surprise to her when she learned that Cipriano was still negotiating
for the sale of the subject property; that for said reason, she asked for a meeting with Spouses
Bitte to discuss the issue; that in the meeting, upon learning of the source of her air fare, she
offered to refund it and to return the unused ticket for her return trip, but Spouses Bitte refused
her offer; that no authority was given to Cipriano to receive any advance payment for the
property; and that Andrea's authority was revoked through a Deed of Revocation of the Special
Power of Attorney (SPA), dated October 10, 1996.

During the pre-trial conference held on July 30, 1999, Spouses Bitte failed to appear.
Consequently, RTC-Branch 13 dismissed their complaint and set the reception of Rosa Elsa's
counterclaim for hearing.

Later on, Benjamin Bitte manifested the withdrawal of their counsel. RTC-Branch 13 then
cancelled the reception of Rosa Elsa's evidence without reconsidering the dismissal of the
complaint.

Civil Case No. 27,667-99

(Spouses Fred Jonas and Rosa Elsa Serrano Jonas v. Sps. Benjamin Bitte and Farida Yap Bitte,
Andrea C. Serrano, Reg. of Deeds and the Clerk of Court, RTC, Davao City)

On November 16, 1999, Spouses Jonas filed before the RTC Civil Case No. 27,667-99, a
complaint for Annulment of Deed of Absolute Sale, Cancellation of TCT and Recovery of
Possession, Injunction, and Damages against Spouses Bitte.

In the Complaint, Spouses Jonas alleged that Rosa Elsa acquired the property before marriage;
that on July 19, 1985, when she decided to leave for Australia to reside there, she executed an
SPA of even date, granting her mother, Andrea, the authority to sell the subject property; that
while in Australia, she decided that she would no longer sell the property; that she instructed her
mother to stop offering the property to prospective buyers; that upon arrival here in the
Philippines in 1996, she revoked the SPA, through an instrument, dated October 10, 1996, and
handed a copy thereof to Andrea; that later, she received information that the property was
subsequently sold to Spouses Bitte, through a Deed of Absolute Sale, dated February 25, 1997,
signed by her mother, Andrea; and that she then pleaded for the return of the property, but
Andrea repeatedly ignored her.

Spouses Jonas eventually sought judicial recourse through the filing of a complaint for the
Annulment of the Deed of Absolute Sale and Reconveyance of the Property which was raffled to
RTC-Branch 9.

On November 17, 1999, Branch 9 issued a 20-day TRO restraining Spouses Bitte from selling or
disposing the subject property. On December 6, 1999, after hearing, it issued a WPI for the same
purpose.

On July 11, 2000, Rosa Elsa moved for the admission of an Amended Complaint in order to
implead Spouses Yap because the title over the subject property had been subsequently
registered in their names.

Consolidation of the Two Cases

As earlier recited, RTC-Branch 13 dismissed the complaint of Spouses Bitte and set the
reception of Rosa Elsa's counterclaim for hearing.

Later on, RTC-Branch 13 cancelled the reception of Rosa Elsa's evidence without reconsidering
the dismissal of the complaint.

Nonetheless, on May 26, 2000, RTC-Branch 13 reconsidered its earlier ruling after seeing the
need to consolidate Civil Case No. 27,667-99 with Civil Case No. 24,771-99 pending before the
RTC, Branch 9, Davao (RTC-Branch 99). In the October 4, 2001 Order, the cases were
ordered consolidated and were thereafter scheduled to be jointly heard before Branch 13.

On April 17, 2002, Spouses Bitte were again declared in default by RTC- Branch 13 for their
failure to attend the pre-trial.

On January 4, 2003, the counsel of Spouses Bitte withdrew and a new one entered his
appearance and then filed a verified motion for reconsideration.

On August 21, 2003, Spouses Bitte once again failed to appear in the pre-trial and were, thus,
declared non-suited. Rosa Elsa then presented her evidence ex parte.

Joint Decision of the RTC-Branch 13

On January 18, 2007, RTC-Branch 13 rendered a Joint Decision,[7] confirming the dismissal of

Civil Case No. 24,771-96 and directing Spouses Bitte to pay Rosa Elsa the amount of
PI,546,752.80, representing the balance of the sale of the subject. The dispositive portion of the
Joint Decision reads:

WHEREFORE, judgment is hereby rendered in these cases as follows:

a. Reiterating the dismissal of Civil Case No. 24,771-96;

b. Directing spouses Benjamin and Farida Bitte to pay Rosa Elsa Serrano Jonas the amount
of P1,546,752.80 (one million five hundred forty-thousand seven hundred fifty two and
80/100 pesos) representing the balance of the sale of the property subject of this case to
 them;

c. Directing spouses Benjamin and Farida Bitte to pay interest on the balance at the rate of
12% per annum from the date of this decision until fully paid.

SO ORDERED.[8]
Ruling of the CA

Aggrieved, Spouses Jonas appealed to the CA. On September 26, 2013, the CA reversed the
RTC-Branch 13 Joint Decision. In so ruling, the CA focused on the validity and enforceability of
the deed of absolute sale executed by Andrea in the name of Rosa Elsa. The CA explained:

1. Andrea's execution on behalf of Rosa Elsa of the deed of absolute sale in favor of Spouses
Bitte was void and unenforceable as the authority to represent Rosa Elsa had already been
revoked as early as October 10, 1996. Without the authority to effect the conveyance, the
contract was without effect to Rosa Elsa, who was a stranger to the conveyance in favor of
Spouses Bitte. Rosa Elsa did not consent to the transaction either.

2. Considering that no valid conveyance was effected, Spouses Bitte had no right to redeem the
foreclosed property because they were not among those persons who could redeem a property
under Sec. 6 of Act. No. 3135 and Section 27 of Rule 39 of the Rules of Court. They could not
be considered successors-in-interest or transferees because no right was conveyed by Rosa Elsa
on account of the revocation of the authority given to Andrea.

3. Ganzon, the one who subsequently purchased the property from Spouses Bitte, was not an
innocent purchaser of the property as the conveyance was attended with circumstances which
should have alerted him of the fallibility of the title over the property. Ganzon transacted with
Spouses Bitte, who were then not yet the registered owners of the property. He should have made
inquiries first as to how Spouses Bitte acquired the rights over the property.

Thus, the CA disposed as follows:

WHEREFORE, premises considered, the instant appeal is hereby GRANTED and the Joint

Decision, dated 18 January 2007 of the RTC, Eleventh Judicial Region, Branch 13, Davao City,
insofar as it pertains to Civil Case No. 27,667-99 is hereby REVERSED and SET ASIDE.
Accordingly,

a) The Deed of Absolute Sale dated 25 February 1997 is hereby declared NULL and VOID.

Transfer Certificate of Title (TCT) No. T-315273 in the name of Ganzon Yap, married to
Haima Yap, is declared NULL and VOID, and the Registry of Deeds of Davao City is
b)
hereby DIRECTED to cancel TCT No. T-315273, and to issue a new title reinstating TCT
No. T-112717 in the name of Rosa Elsa S. Serrano; and
Ganzon and Haima Yap and/or whoever is in possession of the subject property, or their
agents and those acting for in their behalf are hereby DIRECTED to VACATE the subject
c)
property and surrender the possession of the same to plaintiff-appellant Rosa Elsa Serrano-
Jonas.
SO ORDERED.[9]
Aggrieved, Spouses Bitte moved for reconsideration, but their motion was denied by the CA on
February 26, 2014.[10]

Hence, this petition by the petitioners, Farida Yap Bitte and the Heirs of Benjamin Bitte.[11]

ISSUES

WHETHER OR NOT THE COURT OF APPEALS-MINDANAO STATION DEPARTED

FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS
WHEN IT ALLOWED THE APPELLANTS BRIEF FILED BY RESPONDENTS IN
VIOLATION OF SECTION 7, RULE 44 OF THE RULES OF COURT.

II

WHETHER OR NOT THE RULING OF THE COURT OF APPEALS FINDING THE

REVOCATION OF THE SPA, DESPITE LACK OF BASIS, ENFORCEABLE AGAINST
THIRD PERSONS IS IN ACCORD WITH LAW.

III

WHETHER OR NOT THE RULING OF THE COURT OF APPEALS FINDING THE

DEED OF SALE INVALID IS SUPPORTED BY STRONG AND CONCLUSIVE
EVIDENCE AS REQUIRED BY LAW.

IV

WHETHER OR NOT THE RULING OF THE COURT OF APPEALS DISREGARDING

THE LEGAL EFFECTS OF THE FORECLOSURE SALE IS A DEPARTURE FROM
THE ESTABLISHED JURIDICIAL PRONOUNCEMENTS.

VI

WHETHER OR NOT THE RULING OF THE COURT OF APPEALS NOT FINDING

GANZON YAP AS INNOCENT PURCHASER FOR VALUE IS CONSISTENT WITH
THE PRINCIPLE OF INDEFEASIBLITY OF TITLE.[12]
In advocacy of their positions, the petitioners submit the following arguments:

1. The deed of absolute sale executed by Andrea was valid and legal because the SPA was
not validly revoked as the revocation was not registered in the Office of the Register of
 Deeds of Davao City. Thus, Andrea's authority to transact with them on behalf of Rosa
Elsa subsisted.

2. The CA decision, declaring the deed of absolute sale null and void, directing the
cancellation of TCT No. T-315273, and reinstating TCT No. T-112717, without attacking
the auction sale and redemption made by Spouses Bitte was a highly questionable act.

3. Considering that the deed of absolute sale was valid, they could redeem the property
pursuant to Act. No. 3135, as amended, and Sec. 27 of Rule 39 of the Rules of Court.

4. No evidence was presented showing that Ganzon indeed bought the property in bad faith
considering that the TCT No. T-112717 did not bear any annotation that should have
alarmed him before buying the property. Ganzon could not have been expected to go
beyond the title and look for vices or defects that could have rendered him not a
purchaser in good faith and for value.

In their Comment,[13] Spouses Jonas called the attention of the Court to the fact that Spouses Bitte
had been declared in default by the RTC. Spouses Jonas contended that, being in default,
Spouses already lost the legal personality to resort to this petition. They also averred that the
questions presented in this petition are one of facts and not of law. Not being a trier of facts, this
Court must deny the petition.

On the merits, they argued that the SPA was not enforceable; that the deed of absolute sale
executed by Andrea was a nullity because it was made with knowledge on the part of Spouses
Bitte of the revocation of Andrea's authority; and that Spouses Yap could not be considered
purchasers in good faith as they failed to verify the authority of the vendors, Spouses Bitte,
considering that the certificate of title was still under Rosa Elsa's name.

In their Reply,[14] Spouses Bitte reiterated their positions as set out in their petition.

Ruling of the Court

The Court denies the petition.

Procedural Issues

Before tackling the substantive issues, a few procedural matters must first be threshed out.

The first is on the issue of the personality of the petitioners to file this petition. Spouses Jonas
claim that the door to any reliefs for Spouses Bitte, be it through a motion for reconsideration or
this subject petition, was closed by the finality and immutability of the RTC declaration of their
default. In other words, it is their stand that the petitioners do not have the right to obtain
recourse from this Court.

Spouses Jonas are mistaken.

The rule is that "right to appeal from the judgment by default is not lost and can be done on
grounds that the amount of the judgment is excessive or is different in kind from that prayed for,
or that the plaintiff failed to prove the material allegations of his complaint, or that the decision is
contrary to law."[15] If a party who has been declared in default has in his arsenal the remedy of
appeal from the judgment of default on the basis of the decision having been issued against the
evidence or the law, that person cannot be denied the remedy and opportunity to assail the
judgment in the appellate court. Despite being burdened by the circumstances of default, the
petitioners may still use all other remedies available to question not only the judgment of default
but also the judgment on appeal before this Court. Those remedies necessarily include an appeal
by certiorari under Rule 45 of the Rules of Court.

The second is on the propriety of the questions raised in the petition. Spouses Jonas claims that
that the issues raised here, being factual, are inappropriate for being beyond the inquiry of this
Court; that the factual findings of the CA could no longer be modified or even reviewed citing
the long standing rule that they are final and conclusive. Although the rule admits of exceptions,
they insist that none of them obtains in this case.

Indeed, the questions forwarded by Spouses Bitte are without doubt factual issues. This Court,
being not a trier of facts, has no recourse but to give credence to the findings of the CA.
Although it is true that there are exceptions as enumerated in Development Bank of the
Philippines v. Traders Royal Bank,[16] none of these were invoked or cited in the petition.

On that score alone, this petition should be denied outright.

Substantive Issues

The Genuineness and Due Execution of the Deed of Sale in favor of Spouses Bitte were not
proven

The Court agrees with the CA that the genuineness and due execution of the deed of sale in favor
Spouses Bitte were not established. Indeed, a notarized document has in its favor the
presumption of regularity. Nonetheless, it can be impugned by strong, complete and conclusive
proof of its falsity or nullity on account of some flaws or defects on the document.[17]

In the case at bench, it is on record that the National Archives, Records Management and
Archives Office, Regional Archives Division, Davao City, certified that it had no copy on file of
the Deed of Absolute Sale, dated February 25, 1997, sworn before Atty. Bernardino N. Bolcan,
Jr., denominated as Doc. No. 988, Page No. 198, Book No. 30, Series of 1997. Their record
shows that, instead, the document executed on said date with exactly the same notarial entries
pertained to a Deed of Assignment of Foreign Letter of Credit in favor of Allied Banking
Corporation.[18] Such irrefutable fact rendered doubtful that the subject deed of absolute sale was
notarized.

Article 1358 of the New Civil Code requires that the form of a contract transmitting or
extinguishing real rights over immovable property should be in a public document. Pertinently,
Section 19, Rule 132 of the Rules of Court reads:

Section 19 Classes of documents. - For the purposes of their presentation in evidence, documents
are either public or private.

Public documents are:

The written official acts, or records of the official acts of the sovereign authority, official
(a)
bodies and tribunals, and public officers, whether of the Philippines, or of a foreign country;
(b) Documents acknowledged before a notary public except last wills and testaments; and
Public records, kept in the Philippines, of private documents required by law to be entered
(c)
therein.
All other writings are private.
Not having been properly and validly notarized, the deed of sale cannot be considered a public
document. It is an accepted rule, however, that the failure to observe the proper form does not
render the transaction invalid. It has been settled that a sale of real property, though not
consigned in a public instrument or formal writing is, nevertheless, valid and binding among the
parties, for the time-honored rule is that even a verbal contract of sale or real estate produces
legal effects between the parties.[19]

Not being considered a public document, the deed is subject to the requirement of proof under
Section 20, Rule 132, which reads:

Section 20. Proof of private document. - Before any private document offered as authentic is
received in evidence its due execution and authenticity must be proved either:

(a) By anyone who saw the document executed or written; or

(b) By evidence of the genuineness of the signature or handwriting of the maker.

Any other private document need only be identified as that which it is claimed to be.
Accordingly, the party invoking the validity of the deed of absolute sale had the burden of
proving its authenticity and due execution. Unfortunately, Spouses Bitte were declared as in
default and, for said reason, they failed to discharge such burden in the court below. Thus, the
Court agrees with the CA that the RTC erred in applying the presumption of regularity that
attaches only to duly notarized documents as distinguished from private documents.

Without the presumption of regularity accorded to the deed coupled with the default of the party
relying much on the same, the purported sale cannot be considered. It is as if there was no deed
of sale between Spouses Bitte and Spouses Jonas.

The genuineness and due execution of the deed of sale in favor of Spouses Bitte not having been
established, the said deed can be considered non-existent.

Spouses Bitte, however, are questioning the "non-existent" deed of sale.

Granting that its genuineness and due of execution were proven, the deed of sale is still
unenforceable; Doctrine of Apparent Authority
Granting arguendo that the deed of sale may still be considered, the transaction is, nevertheless,
unenforceable.

In this regard, petitioners posit that the deed must be recognized and enforced for the reason that,
despite the revocation of the authority of Andrea prior to the execution of the deed, they should
not be bound by that revocation for lack of notice. Consequently, they contend that as far as they
are concerned, the contract of sale should be given effect for having been executed by someone
appearing to them as authorized to sell.

They further argue that the failure of Rosa Elsa to register, file and enter the deed of revocation
in the Registry of Deeds did not bind Spouses Bitte under Section 52 of the Property Registration
Decree. Said section provides that "[e]very conveyance, mortgage, lease, lien, attachment,
order, judgment, instrument or entry affecting registered land shall, if registered, filed or
entered in the Office of the Register of Deeds for the province or city where the land to which it
relates lies, be constructive notice to all persons from the time of such registering, filing or
entering." It is their position that without the registration of the revocation, they cannot be bound
by it and the Court must respect the sale executed by her agent, Andrea.

The Court is not persuaded.

Basic is the rule that the revocation of an agency becomes operative, as to the agent, from the
time it is made known to him. Third parties dealing bona fide with one who has been accredited
to them as an agent, however, are not affected by the revocation of the agency, unless notified of
such revocation.[20] This refers to the doctrine of apparent authority. Under the said doctrine, acts
and contracts of the agent within the apparent scope of the authority conferred on him, although
no actual authority to do such acts or has been beforehand withdrawn, revoked or terminated,
bind the principal.[21] Thus, as to a third person, "apparent authority, when present, trumps
restrictions that the principal has privately imposed on the agent. The relevant appearance is that
the principal has conferred authority on an agent. An actor may continue to possess apparent
authority although the principal has terminated the actor's actual authority or the agency
relationship between them. This is so because a third party may reasonably believe that the actor
continues to act as an agent and within the scope of actual authority on the basis of
manifestations previously made by the principal. Such a manifestation, once made, remains
operative until the third party has notice of circumstances that make it unreasonable to believe
that the actor continues to have actual authority."[22] Hence, apparent authority may survive the
termination of actual authority or of an agency relationship.[23]

To persons who relied in good faith on the appearance of authority, no prejudice must be had by
virtue of such reliance on what appeared to them as perfectly in accordance with the observable
authority of an agent. It must not be disturbed unless it can be shown that they had been notified
or became aware of the termination of the agency. Stated differently, a third party cannot be
bound by a revocation unless he had notice or knowledge of such revocation.

The notice or knowledge may be actual or implied. In either case, there is no apparent authority
to speak of and all contracts entered into by the former agent with a third person cannot bind the
principal. The reason behind this is that a third person cannot feign ignorance of facts which
should have put him on guard and which he had a means of knowing. "Apparent authority ends
when it is no longer reasonable for the third party with whom an agent deals to believe that the
agent continues to act with actual authority."[24] In Cervantes v. Court of Appeals[25] the Court
wrote that "when the third person, knows that the agent was acting beyond his power or
authority, the principal cannot be held liable for the acts of the agent."

Generally, implied notice, also known as constructive notice, is attributed to third persons
through the registration of the termination in the Registry of Deeds.

Under Article 1924 of the New Civil Code, "an agency is revoked if the principal directly
manages the business entrusted to the agent, dealing directly with third persons." Logic dictates
that when a principal disregards or bypasses the agent and directly deals with such person in an
incompatible or exclusionary manner, said third person is deemed to have knowledge of the
revocation of the agency. They are expected to know circumstances that should have put them on
guard as to the continuing authority of that agent. The mere fact of the principal dealing directly
with the third person, after the latter had dealt with an agent, should be enough to excite the third
person's inquiring mind on the continuation of his authority.

In the case at bench, records show that Spouses Bitte initially transacted with Andrea as Rosa
Elsa's agent on the basis of the SPA, dated July 19, 1985. Thereafter, however, Rosa Elsa
returned to the Philippines and directly negotiated with them on October 11, 1996. Rosa Elsa's
act of taking over in the actual negotiation for the sale of the property only shows that Andrea's
authority to act has been revoked pursuant to Article 1924. At that point, Spouses Bitte had
information sufficient enough to make them believe that Andrea was no longer an agent or
should have compelled them to make further inquiries. No attempt was shown that Spouses Bitte
took the necessary steps to inquire if Andrea was still authorized to act at that time. Despite their
direct negotiation with Rosa Elsa, they still entered into a contract with Andrea on February 25,
1997.

Persons dealing with an agent are bound at their peril, if they would hold the principal liable, to
ascertain not only the fact of agency but also the nature and extent of the agents authority, and in
case either is controverted, the burden of proof is upon them to establish it.[26]
Legal Consequence

"It is a basic axiom in civil law embodied in our Civil Code that no one may contract in the name
of another without being authorized by the latter, or unless he has by law a right to represent him.
A contract entered into in the name of another by one who has no authority or legal
representation, or who has acted beyond his powers, shall be unenforceable, unless it is ratified,
expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked
by the other contracting party."[27] Considering that the sale was executed by an agent whose
authority, be it actual or apparent, had been revoked, the transaction is unenforceable pursuant
to Article 1317 and 1403(1) of the Civil Code which read:

Article 1317. No one may contract in the name of another without being authorized by the latter,
or unless he has by law a right to represent him.
A contract entered into in the name of another by one who has no authority or legal
representation, or who has acted beyond his powers, shall be unenforceable, unless it is ratified,
expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked
by the other contracting party. (1259a)

ART. 1403. The following contracts are unenforceable, unless they are ratified:

(1) Those entered into the name of another person by one who has been given no authority or
legal representation, or who has acted beyond his powers;

xxx. [Emphases Supplied]

Considering that the deed of absolute sale was executed at a time when Spouses Bitte were
deemed notified of the termination of the agency, the sale must be treated as having been entered
into by Andrea in her personal capacity. One can sell only what one owns or is authorized to sell,
and the buyer can acquire no more right than what the seller can transfer legally.[28] Accordingly,
Spouses Bitte acquired no better title than what Andrea had over the property, which was nil.

In sum, the deed of absolute sale executed by Andrea in favor of Spouses Bitte is unenforceable
against Rosa Elsa because of their notice of the revocation of the agency.

Spouses Bitte did not possess the required personality to redeem the subject property

Obviously, Spouses Bitte acquired no interest in the subject property because the deed that they
were anchoring their claims on did not bind Rosa Elsa. Hence, they did not have the personality
to redeem the foreclosed property as provided under Act No. 3135, as amended by Act No. 4118,
and of Section 27, Rule 39 of the Rules of Court.

Act No. 3135, as amended, provides:

SEC. 6. In all cases in which an extrajudicial sale is made under the special power hereinbefore
referred to, the debtor, his successors in interest or any judicial creditor or judgment creditor
of said debtor, or any person having a lien on the property subsequent to the mortgage or deed
of trust under which the property is sold, may redeem the same at any time within the term of
one year from and after the date of the sale; and such redemption shall be governed by the
provisions of sections four hundred and sixty-four to four hundred and sixty-six, inclusive, of the
Code of Civil Procedure, in so far as these are not inconsistent with the provisions of this Act.

[Emphases Supplied]
Section 27 of Rule 39 of the Rules of Court enumerates the persons who may exercise the right
of redemption of a foreclosed property:

Section 27. Who may redeem real property so sold. — Real property sold as provided in the last
preceding section, or any part thereof sold separately, may be redeemed in the manner
hereinafter provided, by the following persons:

The judgment obligor; or his successor in interest in the whole or any part of the property;
(a)
and
 A creditor having a lien by virtue of an attachment, judgment or mortgage on the property
(c) sold, or on some part thereof, subsequent to the lien under which the property was sold.
Such redeeming creditor is termed a redemptioner.
In Castro v. IAC,[29] as correctly cited by the CA, "only such persons as are authorized to do so
by statute can redeem from an execution sale." Spouses Bitte were not so authorized considering
that they were not among those enumerated in Act No. 3135 and Section 27 of Rule 39.

Spouses Yap were also not Purchasers in Good Faith and For Value

After the purported "transfer" to Spouses Yap, the subject property was registered and a new title
was issued in their names. Despite being impleaded in the case, however, they were silent
and did not even join Spouses Bitte in the subject petition. It is Spouses Bitte who have been
taking the cudgels for them.

On the issue, Spouses Bitte contend that Spouses Yap were purchasers in good faith and for
value, and, for that reason, should have been recognized to have good title over the subject
property.

Settled is the rule that the burden of proving the status of a purchaser in good faith and for value
lies upon one who asserts that status.[30] This onus probandi cannot be discharged by mere
invocation of the ordinary presumption of good faith.[31] Considering that the title was still
registered in the name of Rosa Elsa when Spouses Yap bought it from Spouses Bitte, the burden
was on them to prove that they were purchasers in good faith. In this regard, they failed. Not an
iota of evidence was adduced by them to prove their ignorance of the true situation.

Through Spouses Bitte, Spouses Yap are invoking good faith for want of notice on their part that
Andrea's authority had already been revoked. They point out that Ganzon, being a layman, could
not have been expected to know the intricacies of the law for which reason that he could not
attribute any fault in the deed of sale executed by a person with a SPA.

The Court is not persuaded.

Spouses Yap were not purchasers in good faith and for value. Significantly, Ganzon transacted
with someone who was not even the registered owner of the property. At the time of the transfer,
the property was still registered in the name of Rosa Elsa.

The rule is that a person who buys from one who is not the registered owner is expected to
examine not only the certificate of title but all factual circumstances necessary for [one] to
determine if there are any flaws in the title of the transferor, or in [the] capacity to transfer the
land. A higher degree of prudence is thus expected from that person even if the land object of the
transaction is registered.[32]

Here, no evidence was presented to show that Spouses Yap exerted that required diligence in
determining the factual circumstances relating to the title and authority of Spouses Bitte as
sellers of the property. The records are bereft of any proof that Spouses Yap showed eagerness to
air their side despite being impleaded.
Hence, the protection the law accords to purchasers in good faith and for value cannot be
extended to them. They have failed to show the required diligence needed in protecting their
rights as buyers of property despite knowledge of facts that should have led them to inquire and
investigate the possible defects in the title of the seller. Thus, in the same way that Spouses Bitte
cannot claim valid title over the property, Spouses Yap cannot also do the same.

A purchaser cannot close his eyes to facts which should put a reasonable man upon his guard,
and then claim that he acted in good faith under the belief that there was no defect in the title of
the vendor.[33]
In sum, the transfer to Spouses Yap was null and void as Spouses Bitte had nothing to sell or
transfer to them.

WHEREFORE, the petition is DENIED.

SO ORDERED.

G.R. No. 211113, June 29, 2015

ADERITO Z. YUJUICO, Petitioner, v. UNITED RESOURCES ASSET MANAGEMENT,

INC., ATTY. RICHARD J. NETHERCOTT AND ATTY. HONORATO R.
MATABAN, Respondents.

DECISION

PEREZ, J.:

This case is an appeal1 from the Decision2 dated 12 August 2013 and Resolution3 dated 29

January 2014 of the Court of Appeals in CA-G.R. SP No. 117431.

The antecedents:

Prelude

The Strategic Alliance Development Corporation (STRADEC) is a domestic corporation

operating as a business development and investment company.

In 2000, several stockholders4 of STRADEC executed Pledge Agreements5 whereby they

pledged a certain amount of their stocks6 in the said company in favor of the respondent United
Resources Asset Management, Inc. (URAMI). These pledges were meant to secure the loan
obligations of STRADEC to URAMI under their Loan Agreement7 of 28 December 2000.

One of the stockholders of STRADEC who so pledged his shares in STRADEC was petitioner
Aderito Z. Yujuico.

The Notice and Civil Case No. 70027

Apparently, STRADEC had not been able to comply with its payment obligations under
the Loan Agreement.

On 18 June 2004, STRADEC and its stockholders received a notice8 informing them about an
impending auction sale of the stocks pledged under the Pledge Agreements in order to satisfy
STRADEC's outstanding obligations9 under the Loan Agreement. The notice was sent and signed
by respondent Atty. Richard J. Nethercott (Atty. Nethercott), who claimed to be the attorney-in-
fact of URAMI.

The notice stated that, pursuant to the request10 earlier filed by Atty. Nethercott before "the
notary public of Bayambang, Pangasinan" the public auction of the pledged STRADEC stocks
had been set at 8:30 in the morning of 23 June 2004 in front of the municipal building of
Bayambang, Pangasinan.11ChanRoblesVirtualawlibrary

On 21 June 2004, petitioner filed before the Regional Trial Court (RTC) of Pasig City an
injunction complaint12 seeking to enjoin the sale at public auction mentioned in Atty.
Nethercott's notice. Impleaded as defendants in such complaint were URAMI, Atty. Nethercott
and herein respondent Atty. Honorato R. Mataban (Atty. Mataban)—the notary public referred to
in the notice as the one requested by Atty. Nethercott to conduct the auction of the pledged
stocks.

In the complaint, petitioner argued that the planned auction sale of the stocks pledged under
the Pledge Agreements is void as the same suffers from a multitude of fatal defects; one of which
is the supposed lack of authority of Atty. Nethercott to initiate such a sale on behalf of URAMI.
As petitioner elaborated:
chanRoblesvirtualLawlibrary
(k) [Atty. Nethercott] has no valid authority to represent URAMI for any purpose, xxx. He is
neither the counsel nor the agent of URAMI, whose authorized representative under Section 9,
paragraph 10 of the Loan Agreement is its Chief Operating Officer, Ms. Lorna P. Feliciano.
There has been no modification of this provision in accordance with paragraph 9.04 of the same
provision.13
chanroblesvirtuallawlibrary
The injunction complaint, which also contained prayers for the issuance of a temporary
restraining order and of a writ of preliminary injunction, was docketed in the RTC as Civil Case
No. 70027.

The Sale and URAMI's Answer with Counterclaim

As the RTC did not issue a temporary restraining order in Civil Case No. 70027, the public
auction of the pledged STRADEC stocks pushed through, as scheduled, on 23 June 2004. In that
auction, URAMI emerged as the winning bidder for all of the stocks pledged under the Pledge
Agreements.

On 5 July 2004, however, the RTC issued a writ of preliminary injunction, which effectively
prevented URAMI from appropriating the stocks it had purchased during the auction sale. On the
same day, Atty. Nethercott filed his answer denying the material allegations of the injunction
complaint.

More than a year later, or on 21 April 2006, URAMI—which until then was still not able to file
an answer of its own—filed with the RTC a motion for leave to file an answer. Attached to the
motion was a copy of URAMFs answer.14 On 5 September 2006, the RTC granted URAMI's
motion and allowed the admission of its answer.

In its answer, URAMI agreed with the petitioner that the 23 June 2004 auction sale was void;
URAMI admitted that it never authorized Atty. Nethercott to cause the sale of the stocks pledged
under the Pledge Agreements. URAMI, however, pointed out that, since it never sanctioned the
23 June 2004 auction sale, it similarly cannot be held liable to the petitioner for any prejudice
that may be caused by the conduct of such auction sale, viz.:
chanRoblesvirtualLawlibrary
4.1 The [injunction complaint] dated 28 June 2004 fails to state a cause of action only insofar as
it seeks judgment ordering URAMI to pay [petitioner] the amounts of Five Hundred Thousand
Pesos (Php 500,000.00) as attorney's fees and One Hundred Thousand Pesos (Php 100,000.00) as
legal expenses.

4.1.1. It bears emphasizing that the extra-judicial foreclosure of the pledged shares conducted by
[Atty. Nethercott] was without valid authority from URAMI. Consequently, it cannot be made
liable for the acts of another.

4.1.2. URAMI never sanctioned or directed the questioned auction sale. Neither did URAMI
give its consent, explicit or otherwise, to said foreclosure or any subsequent acts of [Atty.
Nethercott] pursuant thereto. Hence, no liability whatsoever may be imputed to URAMI.

4.1.3. If at all, the recourse of the plaintiff is solely against [Atty. Nethercott].15
Hence, overall, URAMI prayed for the dismissal of the injunction complaint against it.

Petitioner's Motion for Summary Judgment and the Suspension of Civil Case No. 70027

On 29 May 2007, petitioner filed with the RTC a motion for summary judgment16 arguing that,
in view of the admissions made by URAMI in its answer regarding Atty. Nethercott's lack of
authority to cause the auction sale of pledged stocks, there was no longer any genuine issue left
to be resolved in trial.

URAMI and Atty. Nethercott both filed comments on petitioner's motion for summary judgment.

The resolution of petitioner's motion for summary judgment, however, was deferred when, on 25
July 2007, this Court issued in G.R. No. 17706817 a temporary restraining order18 calling to a halt
the conduct of further proceedings in Civil Case No. 70027. This temporary restraining order
remained in effect for more than a year until it was finally lifted by this Court on 13 October
2008.19ChanRoblesVirtualawlibrary

Thereafter, proceedings in Civil Case No. 70027 resumed.

 URAMI's Change of Counsel and Amended Answer

On 26 January 2009, URAMI changed its counsel of record for Civil Case No. 70027. The law
firm Villlanueva, Gabionza & De Santos (VGD law firm), which hitherto had been URAMI's
counsel of record, was thus replaced by Atty. Edward P. Chico (Atty. Chico).

Under the counsel of Atty. Chico, URAMI filed with the RTC an amended answer with
compulsory counterclaim (amended answer)20 on 23 February 2009. The amended answer was
meant to supplant URAMI's original answer, which had been prepared by the VGD law firm.

In its amended answer, URAMI still vouched for the dismissal of the injunction
complaint but reneged from its previous admissions under the original answer. This time,
URAMI claimed that the 23 June 2004 auction sale was valid and that it duly authorized Atty.
Nethercott to initiate such sale on its behalf.21ChanRoblesVirtualawlibrary

On 12 March 2009, petitioner filed with the RTC a motion to strike out URAMI's amended
answer on the grounds that: (1) it was not timely filed; (2) it was filed without leave of court; and
(3) its admission would prejudice petitioner's rights. In an order of even date, however, the RTC
denied petitioner's motion and allowed admission of URAMI's amended answer.

On 27 March 2009, petitioner filed with the RTC a motion for reconsideration of the order
allowing admission of URAMI's amended answer.

On 18 August 2009, the RTC issued an order granting petitioner's motion for reconsideration and
setting aside its earlier order allowing admission of URAMI's amended answer. In the said order,
the RTC explained that the amended answer could not be admitted just yet as the same had been
filed by URAMI without first securing leave of court.

Thus, on 21 September 2009, URAMI filed with the RTC a motion for leave to file an amended
answer (motion for leave).22 In the said motion, URAMI formally asked permission from the
RTC to allow it to file the amended answer explaining that the original answer filed by its
previous counsel "does not bear truthful factual allegations and is indubitably not supported by
evidence on record."23ChanRoblesVirtualawlibrary

On 10 November 2009, the RTC issued an Order24 granting URAMI's motion for leave.

Petitioner filed a motion for reconsideration against the 10 November 2009 Order, but the same
was denied by the RTC in its Order25 of 27 September 2010.

CA-G.R. SP No. 117431 and the Present Appeal

Defeated but undeterred, petitioner next challenged the Orders dated 10 November 2009 and 27
September 2010 of the RTC through a certiorari petition before the Court of Appeals.
This certiorari petition was docketed in the Court of Appeals as CA-G.R. SP No. 117431.

On 12 August 2013, the Court of Appeals rendered a Decision26 sustaining the challenged orders
of the RTC and dismissing petitioner's certiorari petition. Petitioner moved for reconsideration,
but the Court of Appeals remained steadfast.27ChanRoblesVirtualawlibrary

Hence, the present appeal.

In the present appeal, petitioner argues that the Court of Appeals erred in sustaining the orders of
the RTC allowing URAMI to file its amended answer. Petitioner argues that URAMI should not
have been so allowed for the following reasons:28

1. URAMI had not shown that the admissions it made under the original answer were made
through "palpable mistake" Hence, pursuant to Section 4 of Rule 129 of the Rules of
Court,29 URAMI is barred from contradicting such admissions through the filing of its
amended answer.

2. The amended answer is merely a ploy of URAMI to further delay the proceedings in
Civil Case No. 70027.

Thus, petitioner prays that we set aside the decision of the Court of Appeals, disallow
URAMI's amended answer and direct the RTC in Civil Case No. 70027 to resolve his motion for
summary judgment with dispatch.30ChanRoblesVirtualawlibrary

OUR RULING

Our rules of procedure allow a party in a civil action to amend his pleading as a matter of right,
so long as the pleading is amended only once and before a responsive pleading is served (or, if
the pleading sought to be amended is a reply, within ten days after it is served).31 Otherwise, a
party can only amend his pleading upon prior leave of court.32ChanRoblesVirtualawlibrary

As a matter of judicial policy, courts are impelled to treat motions for leave to file amended
pleadings with liberality.33 This is especially true when a motion for leave is filed during the
early stages of proceedings or, at least, before trial.34 Our case law had long taught that bona
fide amendments to pleadings should be allowed in the interest of justice so that every case may,
so far as possible, be determined on its real facts and the multiplicity of suits thus be
prevented.35 Hence, as long as it does not appear that the motion for leave was made with bad
faith or with intent to delay the proceedings,36 courts are justified to grant leave and allow the
filing of an amended pleading. Once a court grants leave to file an amended pleading, the same
becomes binding and will not be disturbed on appeal unless it appears that the court had abused
its discretion.37ChanRoblesVirtualawlibrary

In this case, URAMI filed its motion for leave seeking the admission of its amended
answer more than two (2) years after it filed its original answer. Despite the considerable lapse
of time between the filing of the original answer and the motion for leave, the RTC still granted
the said motion. Such grant was later affirmed on appeal by the Court of Appeals.

Petitioner, however, opposes the grant of leave arguing that URAMI is precluded from filing an
amended answer by Section 4 of Rule 129 of the Rules of Court and claiming that
URAMI's amended answer was only interposed for the purpose of delaying the proceedings in
Civil Case No. 70027.
We rule in favor of allowing URAMI's amended answer. Hence, we deny the present appeal.

First. We cannot subscribe to petitioner's argument that Section 4 of Rule 129 of the Rules of
Court precludes URAMI from filing its amended answer. To begin with, the said provision does
not set the be-all and end-all standard upon which amendments to pleadings may or may not be
allowed. Matters involving the amendment of pleadings are primarily governed by the pertinent
provisions of Rule 10 and not by Section 4 of Rule 129 of the Rule of Court. Hence, allegations
(and admissions) in a pleading—even if not shown to be made through "palpable mistake"—can
still be corrected or amended provided that the amendment is sanctioned under Rule 10 of the
Rules of Court.

Nevertheless, even if we are to apply Section 4 of Rule 129 to the present case, we still find the
allowance of URAMI's amended answer to be in order. To our mind, a consideration of the
evidence that URAMI plans to present during trial indubitably reveals that the admissions made
by URAMI under its original answer were a product of clear and patent mistake.

One of the key documents that URAMI plans to present during trial, which it also attached in
its amended answer as "Annex 8" thereof, is URAMI's Board Resolution38 dated 21 June 2004
that evinces Atty. Nethercott's authority to cause the foreclosure on the pledged stocks on behalf
of URAMI. With the existence of such board resolution, the statement in URAMI's original
answer pertaining to the lack of authority of Atty. Nethercott to initiate the 23 June 2004 auction
sale thus appears mistaken, if not entirely baseless and unfounded. Hence, we find it only right
and fair, that URAMI should be given a chance to file its amended answer in order to rectify
such mistakes in its original answer.

Second. We also cannot agree with the petitioner's accusation that the amended answer was only
interposed to further delay the proceedings in Civil Case No. 70027. As the previous discussion
reveal, the amended answer aims to correct certain allegations of fact in the original answer
which, needless to state, are crucial to a full and proper disposition of Civil Case No. 70027. It
is, therefore, in the best interest of justice and equity that URAMI should be allowed to file
the amended answer.

Third. The mere fact that URAMI filed its motion for leave years after the original answer is also
not reason enough in itself to discredit the amended answer as a sheer dilatory measure. Readily
observable from the established facts is that the perceived delay between the filing of the motion
for leave and the filing of the original answer is not purely attributable to URAMI. It must be
remembered that some time after the original answer was filed, we issued a temporary
restraining order in G.R. No. 177068 that effectively suspended the proceedings in Civil Case
No. 70027 for more than a year. Thus, even if it wanted to, URAMI really could not have filed a
motion for leave to file amended answer sooner than it already had. On this score, we note that it
only took URAMI a little over three months after the lifting of the temporary restraining order to
replace its previous counsel of record in Civil Case No. 70027 and to file its amended answer.

Fourth. All in all, we find absolutely no cause to overrule the grant of leave granted to URAMI
to file its amended answer. The said grant is consistent with our time-honored judicial policy of
affording liberal treatment to amendments to pleadings, especially those made before the conduct
of trial.

We should always remember that our rules of procedure are mere tools designed to facilitate the
attainment of justice. Their application should never be allowed to frustrate the truth and the
promotion of substantial justice.39 Were we to succumb to petitioner's arguments today, however,
we would have sanctioned an outcome totally inconsistent with the underlying purpose of our
procedural laws. That, we simply cannot countenance.

WHEREFORE, premises considered, the petition is hereby DENIED. The Decision dated 12

August 2013 and Resolution dated 29 January 2014 of the Court of Appeals in CA-G.R. SP No.
117431 are hereby AFFIRMED.

SO ORDERED.cralawlawlibrary

G.R. No. 143264               April 23, 2012

LISAM ENTERPRISES, INC. represented by LOLITA A. SORIANO, and LOLITA A.

SORIANO, Petitioners,
vs.
BANCO DE ORO UNIBANK, INC. (formerly PHILIPPINE COMMERCIAL
INTERNATIONAL BANK),* LILIAN S. SORIANO, ESTATE OF LEANDRO A.
SORIANO, JR., REGISTER OF DEEDS OF LEGASPI CITY, and JESUS L.
SARTE, Respondents.

DECISION

PERALTA, J.:

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying
that the Resolution1 of the Regional Trial Court of Legaspi City (RTC), dated November 11,
1999, dismissing petitioners’ complaint, and its Order2 dated May 15, 2000, denying herein
petitioners’ Motion for Reconsideration and Motion to Admit Amended Complaint, be reversed
and set aside.

The records reveal the following antecedent facts.

On August 13, 1999, petitioners filed a Complaint against respondents for Annulment of
Mortgage with Prayer for Temporary Restraining Order & Preliminary Injunction with Damages
with the RTC of Legaspi City. Petitioner Lolita A. Soriano alleged that she is a stockholder of
petitioner Lisam Enterprises, Inc. (LEI) and a member of its Board of Directors, designated as its
Corporate Secretary. The Complaint also alleged the following:

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

xxxx

5. On or about 28 March 1996, defendant Lilian S. Soriano and the late Leandro A.
Soriano, Jr., as husband and wife (hereafter "Spouses Soriano"), in their personal capacity
and for their own use and benefit, obtained a loan from defendant PCIB (Legaspi Branch)
(now known as Banco de Oro Unibank, Inc.) in the total amount of ₱20 Million;

6. That as security for the payment of the aforesaid credit accommodation, the late
Leandro A. Soriano, Jr. and defendant Lilian S. Soriano, as president and treasurer,
respectively of plaintiff LEI, but without authority and consent of the board of said
plaintiff and with the use of a falsified board resolution, executed a real estate mortgage
on 28 March 1996, over the above-described property of plaintiff LEI in favor of
defendant PCIB, and had the same registered with the Office of the Registry of Deeds,
Legaspi City, copy of the Real Estate Mortgage is hereto attached and marked as Annex
"B," and made part hereof, to the prejudice of plaintiffs;

7. That specifically, the Spouses Soriano, with intent to defraud and prejudice plaintiff
LEI and its stockholders, falsified the signatures of plaintiff Lolita A. Soriano as
corporate secretary and director of plaintiff LEI, in a document denominated as board
resolution purportedly issued by the board of plaintiff LEI on 6 November 1995, making
it appear that plaintiff LEI's Board met and passed a board resolution on said date
authorizing the Spouses Soriano to mortgage or encumber all or substantially all of the
properties of plaintiff LEI, when in fact and in truth, no resolution of that nature was ever
issued by the board of plaintiff LEI, nor a meeting was called to that effect, copy of the
resolution in question is hereto attached and marked as Annex "C," and made part hereof;

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

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

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

11. Worst, sometime in August 1998, in order to remedy the defects in the mortgage
transaction entered by the Spouses Soriano and defendant PCIB, the former, with the
unlawful instigation of the latter, signed a document denominated as "Deed of
Assumption of Loans and Mortgage Obligations and Amendment of Mortgage"; wherein
in said document, plaintiff LEI was made to assume the ₱20 Million personal
indebtedness of the Spouses Soriano with defendant PCIB, when in fact and in truth it
never so assumed the same as no board resolution duly certified to by plaintiff Lolita A.
Soriano as corporate secretary was ever issued to that effect, copy of said Deed is hereto
attached and marked as Annex "D," and made part hereof;

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

13. That said irregular transactions of defendant Lilian S. Soriano and her husband
Leandro A. Soriano, Jr., on one hand, and defendant PCIB, on the other, were discovered
by plaintiff Lolita A. Soriano sometime in April 1999. That immediately upon discovery,
said plaintiff, for herself and on behalf and for the benefit of plaintiff LEI, made demands
upon defendants Lilian S. Soriano and the Estate of Leandro A. Soriano, Jr., to free
subject property of plaintiff LEI from such mortgage lien, by paying in full their personal
indebtedness to defendant PCIB in the principal sum of ₱20 Million. However, said
defendants, for reason only known to them, continued and still continue to ignore said
demands, to the damage and prejudice of plaintiffs;

14. Hence, on 25 June 1999, plaintiffs commenced a derivative suit against defendants
Lilian S. Soriano and the Estate of Leandro A. Soriano, Jr., before the Securities and
Exchange Commission, docketed as SEC Case No. 06-99-6339 for "Fraudulent Scheme
 and Unlawful Machination with Damages" in order to protect and preserve the rights of
plaintiffs, copy of said complaint is hereto attached as Annex"F";

15. That plaintiffs, in order to seek complete relief from the unauthorized mortgage
transaction between the Spouses Soriano and defendant PCIB, were further compelled to
institute this instant case to seek the nullification of the real estate mortgage dated 28
March 1999. Consequently, plaintiffs were forced to retain the services of a lawyer with
whom they contracted to pay ₱100,000.00 as and for attorney's fee;

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

17. That by reason of the fraudulent and surreptitious schemes perpetrated by defendant
Lilian S. Soriano and her husband, the late Leandro A. Soriano, Jr., in unlawful
connivance and through the gross negligence of defendant PCIB, plaintiff Lolita A.
Soriano, as stockholder, suffered sleepless nights, moral shock, wounded feeling, hurt
pride and similar injuries, hence, should be awarded moral damages in the amount of
₱200,000.00.

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

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

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

On November 11, 1999, the RTC issued the first assailed Resolution dismissing petitioners'
Complaint. Petitioners then filed a Motion for Reconsideration of said Resolution. While
awaiting resolution of the motion for reconsideration, petitioners also filed, on January 4, 2000, a
Motion to Admit Amended Complaint, amending paragraph 13 of the original complaint to read
as follows:
13. That said irregular transactions of defendant Lilian S. Soriano and her husband Leandro A.
Soriano, Jr., on one hand, and defendant PCIB, on the other, were discovered by plaintiff Lolita
A. Soriano sometime in April 1999. That immediately upon discovery, said plaintiff, for herself
and on behalf and for the benefit of plaintiff LEI, made demands upon defendant Lilian S.
Soriano and the Estate of Leandro A. Soriano, Jr., to free subject property of plaintiff LEI from
such mortgage lien, by paying in full their personal indebtedness to defendant PCIB in the
principal sum of ₱20 Million. However, said defendants, for reason only known to them,
continued and still continue to ignore said demands, to the damage and prejudice of
plaintiffs; that plaintiff Lolita A. Soriano likewise made demands upon the Board of Directors of
Lisam Enterprises, Inc., to make legal steps to protect the interest of the corporation from said
fraudulent transaction, but unfortunately, until now, no such legal step was ever taken by the
Board, hence, this action for the benefit and in behalf of the corporation;

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

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

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

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

SECOND, WHETHER OR NOT THE COURT COMMITTED A REVERSIBLE ERROR

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

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

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

FOURTH, WHETHER OR NOT THE COURT COMMITTED A REVERSIBLE ERROR

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

FIFTH, WHETHER OR NOT THE COURT ERRED IN DISMISSING THE ACTION,

INSTEAD OF MERELY SUSPENDING THE SAME FOLLOWING THE DOCTRINE LAID
DOWN IN UNION GLASS.  3
The petition is impressed with merit.

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

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

Sec. 3. Amendments by leave of court. − Except as provided in the next preceding section,
substantial amendments may be made only upon leave of court. But such leave may be refused if
it appears to the court that the motion was made with intent to delay. x x x

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

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

SECTION 3. Amendments by leave of court. - Except as provided in the next preceding section,
substantial amendments may be made only upon leave of court. But such leave may be refused if
it appears to the court that the motion was made with intent to delay. Orders of the court upon the
matters provided in this section shall be made upon motion filed in court, and after notice to the
adverse party, and an opportunity to be heard.

This Court has emphasized the import of Section 3, Rule 10 of the 1997 Rules of Civil Procedure
in Valenzuela v. Court of Appeals, thus:

Interestingly, Section 3, Rule 10 of the 1997 Rules of Civil Procedure amended the former rule
in such manner that the phrase "or that the cause of action or defense is substantially altered" was
stricken-off and not retained in the new rules. The clear import of such amendment in Section 3,
Rule 10 is that under the new rules, "the amendment may (now) substantially alter the cause of
action or defense." This should only be true, however, when despite a substantial change or
alteration in the cause of action or defense, the amendments sought to be made shall serve the
higher interests of substantial justice, and prevent delay and equally promote the laudable
objective of the rules which is to secure a "just, speedy and inexpensive disposition of every
action and proceeding."

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

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

suits and in order that the real controversies between the parties are presented, their rights
determined, and the case decided on the merits without unnecessary delay. This liberality is
greatest in the early stages of a lawsuit, especially in this case where the amendment was
made before the trial of the case, thereby giving the petitioners all the time allowed by law
to answer and to prepare for trial.1âwphi1

Furthermore, amendments to pleadings are generally favored and should be liberally allowed in
furtherance of justice in order that every case, may so far as possible, be determined on its real
facts and in order to speed up the trial of the case or prevent the circuitry of action and
unnecessary expense. That is, unless there are circumstances such as inexcusable delay or the
taking of the adverse party by surprise or the like, which might justify a refusal of permission to
amend.5

Since, as explained above, amendments are generally favored, it would have been more fitting
for the trial court to extend such liberality towards petitioners by admitting the amended
complaint which was filed before the order dismissing the original complaint became final and
executory. It is quite apparent that since trial proper had not yet even begun, allowing the
amendment would not have caused any delay. Moreover, doing

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

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

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

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

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

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

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

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

The foregoing pronouncements of the Court are exactly in point with the issues in the present
case.1âwphi1 Here, the complaint is for annulment of mortgage with the mortgagee bank as one
of the defendants, thus, as held in Saura,10 jurisdiction over said complaint is lodged with the
regular courts because the mortgagee bank has no intra-corporate relationship with the
stockholders. There can also be no forum shopping, because there is no identity of issues. The
issue being threshed out in the SEC case is the due execution, authenticity or validity of board
resolutions and other documents used to facilitate the execution of the mortgage, while the issue
in the case filed by petitioners with the RTC is the validity of the mortgage itself executed
between the bank and the corporation, purportedly represented by the spouses Leandro and
Lilian Soriano, the President and Treasurer of petitioner LEI, respectively. Thus, there is no
reason to dismiss the complaint in this case.
IN VIEW OF THE FOREGOING, the Resolution of the Regional Trial Court of Legaspi City,
Branch 4, dated November 11, 1999, dismissing petitioners’ complaint in Civil Case No. 9729,
and its Order dated May 15, 2000, denying herein petitioners’ Motion for Reconsideration and
Motion to Admit Amended Complaint, are hereby REVERSED and SET ASIDE. The Regional
Trial Court of Legaspi City, Branch 4, is hereby DIRECTED to ADMIT the Amended
Complaint.

Considering further, that this case has been pending for some time and, under R.A. No. 8799, it
is now the regular courts which have jurisdiction over intra-corporate disputes, the Regional
Trial Court of Legaspi City, Branch 4 is hereby DIRECTED to PROCEED with dispatch in
trying Civil Case No. 9729.

SO ORDERED.

[G.R. NO. 151932 : August 19, 2009]

HENRY CHING TIU, CHRISTOPHER HALIN GO, and GEORGE

CO, Petitioners, v. PHILIPPINE BANK OF COMMUNICATIONS, Respondent.

DECISION

PERALTA, J.:

This is a Petition for Review on Certiorari, under Rule 45 of the Rules of Court, seeking to annul
and set aside the Decision1 dated September 28, 2001, rendered by the Court of Appeals (CA) in
CA-G.R. SP No. 57732, dismissing the petition and affirming the assailed Orders of the Regional
Trial Court (RTC) of Cagayan de Oro City, Branch 21 in Civil Case No. 99-352, dated
December 14, 1999 and January 11, 2000.

The factual and procedural antecedents are as follows:

In June 1993, Asian Water Resources, Inc. (AWRI), represented by herein petitioners, applied
for a real estate loan with the Philippine Bank of Communications (PBCOM) to fund its purified
water distribution business. In support of the loan application, petitioners submitted a Board
Resolution2 dated June 7, 1993. The loan was guaranteed by collateral over the property covered
by Transfer Certificate of Title No. T-13020.3 The loan was eventually approved.4

In August 1996, AWRI applied for a bigger loan from PBCOM for additional capitalization
using the same Board Resolution, but without any additional real estate collateral. Considering
that the proposed additional loan was unsecured, PBCOM required all the members of the Board
of Directors of AWRI to become sureties. Thus, on August 16, 1996, a Surety Agreement5 was
executed by its Directors and acknowledged by a notary public on the same date. All copies of
the Surety Agreement, except two, were kept by PBCOM. Of the two copies kept by the notary
public, one copy was retained for his notarial file and the other was sent to the Records
Management and Archives Office, through the Office of the RTC Clerk of Court.6
Thereafter, on December 16, 1998, AWRI informed the bank of its desire to surrender and/or
assign in its favor, all the present properties of the former to apply as dacion en pago for AWRI's
existing loan obligation to the bank.7 On January 11, 1999, PBCOM sent a reply denying the
request. On May 12, 1999, PBCOM sent a letter to petitioners demanding full payment of its
obligation to the bank.8

Its demands having remained unheeded, PBCOM instructed its counsel to file a complaint for
collection against petitioners. The case was docketed as Civil Case No. 99-352.

On July 3, 1999, petitioners filed their Answer. It alleged, among other things, that they were not
personally liable on the promissory notes, because they signed the Surety Agreement in their
capacities as officers of AWRI. They claimed that the Surety Agreement attached to the
complaint as Annexes "A" to "A-2"9 were falsified, considering that when they signed the same,
the words "In his personal capacity" did not yet appear in the document and were merely
intercalated thereon without their knowledge and consent.10

In support of their allegations, petitioners attached to their Answer a certified photocopy of the
Surety Agreement issued on March 25, 1999 by the Records Management and Archives Office
in Davao City,11 showing that the words "In his personal capacity" were not found at the foot of
page two of the document where their signatures appeared.12

Because of this development, PBCOM's counsel searched for and retrieved the file copy of the
Surety Agreement. The notarial copy showed that the words "In his personal capacity" did not
appear on page two of the Surety Agreement.13

Petitioners' counsel then asked PBCOM to explain the alteration appearing on the agreement.
PBCOM subsequently discovered that the insertion was ordered by the bank auditor. It alleged
that when the Surety Agreement was inspected by the bank auditor, he called the attention of the
loans clerk, Kenneth Cabahug, as to why the words "In his personal capacity" were not indicated
under the signature of each surety, in accordance with bank standard operating procedures. The
auditor then ordered Mr. Cabahug to type the words "In his personal capacity" below the second
signatures of petitioners. However, the notary public was never informed of the insertion.14 Mr.
Cabahug subsequently executed an affidavit15 attesting to the circumstances why the insertion
was made.

PBCOM then filed a Reply and Answer to Counterclaim with Motion for Leave of Court to
Substitute Annex "A" of the Complaint,16 wherein it attached the duplicate original copy
retrieved from the file of the notary public. PBCOM also admitted its mistake in making the
insertion and explained that it was made without the knowledge and consent of the notary public.
PBCOM maintained that the insertion was not a falsification, but was made only to speak the
truth of the parties' intentions. PBCOM also contended that petitioners were already primarily
liable on the Surety Agreement whether or not the insertion was made, having admitted in their
pleadings that they voluntarily executed and signed the Surety Agreement in the original form.
PBCOM, invoking a liberal application of the Rules, emphasized that the motion incorporated in
the pleading can be treated as a motion for leave of court to amend and admit the amended
complaint pursuant to Section 3, Rule 10 of the Rules of Court.
On December 14, 1999, the RTC issued an Order17 allowing the substitution of the altered
document with the original Surety Agreement, the pertinent portion of which reads:

August 16, 1996 attached as Annexes "A" to "A-2" of the reply and answer Resolving the
Motion to Substitute Annexes "A" to "A-2" of the complaint and the opposition thereto by the
defendant, this Court, in the interest of justice, hereby allows the substitution of said Annexes
"A" to "A-2" of the complaint with the duplicate original of notarial copy of the Agreement
dated to counter-claim.

SO ORDERED.

Petitioners filed a motion for reconsideration,18 but it was denied in the Order19 dated January 11,
2000, to wit:

Resolving the motion for reconsideration and the opposition thereto, the Court finds the motion
substantially a reiteration of the opposition to plaintiff's motion.

Additionally, the instant motion for reconsideration treats on evidentiary matter which can be
properly ventilated in the trial proper, hence, there is no cogent reason to disturb the Court's
order of December 14, 1999.

SO ORDERED.

Aggrieved, petitioners sought recourse before the CA via a petition for certiorari under Rule 65
of the Rules of Court, docketed as CA-G.R. SP No. 57732.

Petitioners claimed that the RTC acted without or in excess of jurisdiction, or with grave abuse
of discretion amounting to lack or excess of jurisdiction in denying their motion for
reconsideration and in allowing PBCOM to substitute the altered copy of the Surety Agreement
with the duplicate original notarial copy thereof considering that the latter's cause of action was
solely and principally founded on the falsified document marked as Annexes "A" to "A-2."20

On September 28, 2001, the CA rendered a Decision dismissing the petition for lack of merit, the
decretal portion of which reads:

WHEREFORE, foregoing considered, the instant petition is hereby DENIED DUE COURSE
and, accordingly, DISMISSED for lack of merit. The assailed Orders dated December 14, 1999
and January 11, 2000 of the Regional Trial Court of Cagayan de Oro City, Branch 21, are hereby
AFFIRMED in toto.

SO ORDERED.21

Hence, the petition assigning the following errors:

I
The COURT committed a reversible error in affirming in toto the order of the lower court
allowing the substitution of the falsified document by relying on the provision of section 3, rule
10 of the rules of Court.

II

Acting as the court on the petition for certiorari, the court committed a reversible error having
no jurisdiction to rule on the obligation of the petitioners based on the falsified document

III

The court erred in giving credence to the allegation of respondent bank that from August 15 to
December 9, 1997 asian water resources inc. obtained several availments of new bigger and
additional loans totalLing p2,030,000.00 evidenced by 4 promissory notes marked as annexes
"B," "B-1," "B-2" and "B-3."

IV

The court failed to consider the misapplication of the principle of equity committed by the lower
court in ordering the substitution of the falsified document.22

Petitioners argue that the CA committed a reversible error in affirming the Order of the RTC
allowing the substitution of the document by relying on Section 3, Rule 10 of the Rules of Court.
Petitioners assert that the Rules do not allow the withdrawal and substitution of a "falsified
document" once discovered by the opposing party.

Petitioners maintain that PBCOM's cause of action was solely and principally founded on the
alleged "falsified document" originally marked as

Annexes "A" to "A-2." Thus, the "withdrawal" of the document results in the automatic
withdrawal of the whole complaint on the ground that there is no more cause of action to be
maintained or enforced by plaintiff against petitioners. Also, petitioners argue that if the
substitution will be allowed, their defenses that were anchored on Annexes "A" to "A-2" would
be gravely affected. Moreover, considering that the said document was already removed,
withdrawn, and disregarded by the RTC, the withdrawal and substitution of the document would
prevent petitioners from introducing the falsified documents during the trial as part of their
evidence.23

Petitioners submit that the RTC misapplied the principle of equity when it allowed PBCOM to
substitute the document with the original agreement. Petitioners also claim that the remedy of
appeal after the termination of the case in the RTC would become ineffective and inadequate if
the Order of the RTC allowing the "withdrawal" and "substitution" of the document would not be
nullified, because the falsified document would no longer be found in the records of the case
during the appeal.24
Petitioners contend that the CA went beyond the issue raised before it when it interpreted the
provisions of the Surety Agreement, particularly paragraph 4 thereof, and then ruled on the
obligations of the parties based on

the document. Petitioners posit that the CA prematurely ruled on petitioners' obligations,
considering that their obligations should be determined during trial on the merits, after the parties
have been given the opportunity to present their evidence in support of their respective claims.
Petitioners stress that the CA went into the merit of the case when it gave credence to the
statement of fact of PBCOM that "From August 15 to December 9, 1997, Asian Water
Resources, Inc. obtained several availments on its additional loans totalling P2,030,000.00 as
evidenced by 4 promissory notes marked as Annexes B, B-1, B-2, and B-3. Thus, the conclusion
of the CA in declaring the petitioners liable as sureties violated their right to due process.25

For its part, PBCOM argues that since the complaint is based on an actionable document, i.e., the
surety agreement, the original or a copy thereof should be attached to the pleading as an exhibit,
which shall be deemed part of the pleading. Considering that the surety agreement is annexed to
the complaint, it is an integral part thereof and its substitution with another copy is in the nature
of a substantial amendment, which is allowed by the Rules, but with prior leave of court.

Moreover, PBCOM alleges that since the Rules provides that substantial amendments may be
made upon leave of court, the authority of the RTC to allow the amendment is discretionary.
Thus, the CA correctly held that the act of granting the said substitution was within the clear and
proper discretion of the RTC.

The petition is without merit.

As to the substitution of the earlier surety agreement that was annexed to the complaint with the
original thereof, this Court finds that the RTC did not err in allowing the substitution.

The pertinent rule on actionable documents is found in Section 7, Rule 8 of the Rules of Court,
which provides that when the cause of action is anchored on a document, its substance must be
set forth, and the original or a copy thereof "shall" be attached to the pleading as an exhibit and
deemed a part thereof, to wit:

Section 7. Action or defense based on document. - Whenever an action or defense is based upon
a written instrument or document, the substance of such instrument or document shall be set
forth in the pleading, and the original or a copy thereof shall be attached to the pleading as an
exhibit, which shall be deemed to be a part of the pleading, or said copy may with like effect be
set forth in the pleading.

With respect to PBCOM's right to amend its complaint, including the documents annexed
thereto, after petitioners have filed their answer, Section 3, Rule 10 of the Rules of Court
specifically allows amendment by leave of court. The said Section states:

SECTION 3. Amendments by leave of court. Except as provided in the next preceding section,
substantial amendments may be made only upon leave of court. But such leave may be refused if
it appears to the court that the motion was made with intent to delay. Orders of the court upon the
matters provided in this section shall be made upon motion filed in court, and after notice to the
adverse party, and an opportunity to be heard.

This Court has emphasized the import of Section 3, Rule 10 of the 1997 Rules of Civil Procedure
in Valenzuela v. Court of Appeals,26 thus:

Interestingly, Section 3, Rule 10 of the 1997 Rules of Civil Procedure amended the former rule
in such manner that the phrase "or that the cause of action or defense is substantially altered" was
stricken-off and not retained in the new rules. The clear import of such amendment in Section 3,
Rule 10 is that under the new rules, "the amendment may (now) substantially alter the cause of
action or defense." This should only be true, however, when despite a substantial change or
alteration in the cause of action or defense, the amendments sought to be made shall serve the
higher interests of substantial justice, and prevent delay and equally promote the laudable
objective of the rules which is to secure a "just, speedy and inexpensive disposition of every
action and proceeding."27

The granting of leave to file amended pleading is a matter particularly addressed to the sound
discretion of the trial court; and that discretion is broad, subject only to the limitations that the
amendments should not substantially change the cause of action or alter the theory of the case, or
that it was not made to delay the action.28 Nevertheless, as enunciated in Valenzuela, even if the
amendment substantially alters the cause of action or defense, such amendment could still be
allowed when it is sought to serve the higher interest of substantial justice; prevent delay; and
secure a just, speedy and inexpensive disposition of actions and proceedings.

The courts should be liberal in allowing amendments to pleadings to avoid a multiplicity of suits
and in order that the real controversies between the parties are presented, their rights determined,
and the case decided on the merits without unnecessary delay. This liberality is greatest in the
early stages of a lawsuit, especially in this case where the amendment was made before the trial
of the case, thereby giving the petitioners all the time allowed by law to answer and to prepare
for trial.29

Furthermore, amendments to pleadings are generally favored and should be liberally allowed in
furtherance of justice in order that every case, may so far as possible, be determined on its real
facts and in order to speed up the trial of the case or prevent the circuity of action and
unnecessary expense. That is, unless there are circumstances such as inexcusable delay or the
taking of the adverse party by surprise or the like, which might justify a refusal of permission to
amend.30

In the present case, there was no fraudulent intent on the part of PBCOM in submitting the
altered surety agreement. In fact, the bank admitted that it was a mistake on their part to have
submitted it in the first place instead of the original agreement. It also admitted that, through
inadvertence, the copy that was attached to the complaint was the copy wherein the words "IN
HIS PERSONAL CAPACITY" were inserted to conform to the bank's standard practice. This
alteration was made without the knowledge of the notary public. PBCOM's counsel had no idea
that what it submitted was the altered document, thereby necessitating the substitution of the
surety agreement with the original thereof, in order that the case would be judiciously resolved.

Verily, it is a cardinal rule of evidence, not just one of technicality but of substance, that the
written document is the best evidence of its own contents. It is also a matter of both principle and
policy that when the written contract is established as the repository of the parties' stipulations,
any other evidence is excluded, and the same cannot be used to substitute for such contract, or
even to alter or contradict the latter.31 The original surety agreement is the best evidence that
could establish the parties' respective rights and obligations. In effect, the RTC merely allowed
the amendment of the complaint, which consequently included the substitution of the altered
surety agreement with a copy of the original.

It is well to remember at this point that rules of procedure are but mere tools designed to
facilitate the attainment of justice. Their strict and rigid application that would result in
technicalities that tend to frustrate rather than promote substantial justice must always be
avoided.32 Applied to the instant case, this not only assures that it would be resolved based on
real facts, but would also aid in the speedy disposition of the case by utilizing the best evidence
possible to determine the rights and obligations of the party - litigants.

Moreover, contrary to petitioners' contention, they could not be prejudiced by the substitution
since they can still present the substituted documents, Annexes "A" to A-2," as part of the
evidence of their affirmative defenses. The substitution did not prejudice petitioners or delay the
action. On the contrary, it tended to expedite the determination of the controversy. Besides, the
petitioners are not precluded from filing the appropriate criminal action against PBCOM for
attaching the altered copy of the surety agreement to the complaint. The substitution of the
documents would not, in any way, erase the existence of falsification, if any. The case before the
RTC is civil in nature, while the alleged falsification is criminal, which is separate and distinct
from another. Thus, the RTC committed no reversible error when it allowed the substitution of
the altered surety agreement with that of the original.

A Petition for Certiorari under Rule 65 of the Rules of Court is intended for the correction of
errors of jurisdiction only or grave abuse of discretion amounting to lack or excess of
jurisdiction. Its principal office is only 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.33

For a Petition for Certiorari to prosper, the essential requisites that have to concur are: (1) the
writ is directed against a tribunal, a board or any officer exercising judicial or quasi-judicial
functions; (2) such tribunal, board or officer has acted without or in excess of jurisdiction, or
with grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is no
appeal or any plain, speedy and adequate remedy in the ordinary course of
law.34 Ï‚ηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

The phrase without jurisdiction means that the court acted with absolute lack of authority or want
of legal power, right or authority to hear and determine a cause or causes, considered either in
general or with reference to a particular matter. It means lack of power to exercise
authority. Excess of jurisdiction occurs when the court transcends its power or acts without any
statutory authority; or results when an act, though within the general power of a tribunal, board
or officer (to do) is not authorized, and is invalid with respect to the particular proceeding,
because the conditions which alone authorize the exercise of the general power in respect of it
are wanting. Grave abuse of discretion implies such capricious and whimsical exercise of
judgment as to be equivalent to lack or excess of jurisdiction; simply put, power is exercised in
an arbitrary or despotic manner by reason of passion, prejudice, or personal hostility; and such
exercise is so patent or so gross as to amount to an evasion of a positive duty or to a virtual
refusal either to perform the duty enjoined or to act at all in contemplation of law.35

The present case failed to comply with the above-stated requisites. In the instant case, the
soundness of the RTC's Order allowing the substitution of the document involves a matter of
judgment and discretion, which cannot be the proper subject of a petition for certiorari under
Rule 65. This rule is only intended to correct defects of jurisdiction and not to correct errors of
procedure or matters in the trial court's findings or conclusions.

However, this Court agrees with the petitioners' contention that the CA should not have made
determinations as regards the parties' respective rights based on the surety agreement. The CA
went beyond the issues brought before it and effectively preempted the RTC in making its own
determinations. It is to be noted that the present case is still pending determination by the RTC.
The CA should have been more cautious and not have gone beyond the issues submitted before it
in the petition for certiorari; instead, it should have squarely addressed whether or not there was
grave abuse of discretion on the part of the RTC in issuing the Orders dated December 14, 1999
and January 11, 2000.

WHEREFORE, premises considered, the petition is DENIED. Subject to the above disquisitions,
the Decision of the Court of Appeals in CA-G.R. SP No. 57732, dated September 28, 2001, and
the Orders of the Regional Trial Court of Cagayan de Oro City, Branch 21, in Civil Case No. 99-
352, dated December 14, 1999 and January 11, 2000, are AFFIRMED.

SO ORDERED.

[G.R. No. 133657. May 29, 2002.]

REMINGTON INDUSTRIAL SALES CORPORATION, Petitioner, v. THE COURT OF

APPEALS and BRITISH STEEL (ASIA), LTD., Respondents.

DECISION

YNARES-SANTIAGO, J.:

Before us is a petition for review under Rule 45 of the Rules of Court assailing the decision of
the Court of Appeals in CA-G.R. SP No. 44529 dated February 24, 1998, 1 which granted the
petition for certiorari filed by respondent British Steel Asia Ltd. (British Steel) and ordered the
dismissal of petitioner Remington Industrial Sales Corporation’s (Remington) complaint for sum
of money and damages. Also assailed in this petition is the resolution 2 of the Court of Appeals
denying petitioner’s motion for reconsideration.

The facts of the case, as culled from the records, are as follows:chanrob1es virtual 1aw library

On August 21, 1996, petitioner filed a complaint 3 for sum of money and damages arising from
breach of contract, docketed as Civil Case No. 96-79674, before the sala of Judge Marino M. De
la Cruz of the Regional Trial Court of Manila, Branch 22. Impleaded as principal defendant
therein was Industrial Steels, Ltd. (ISL), with Ferro Trading GMBH (Ferro) and respondent
British Steel as alternative defendants.chanrobles virtual lawlibrary

ISL and respondent British Steel separately moved for the dismissal of the complaint on the
ground that it failed to state a cause of action against them. On April 7, 1997, the RTC denied the
motions to dismiss, 4 as well as the ensuing motion for reconsideration. 5 ISL then filed its
answer to the complaint.

On the other hand, respondent British Steel filed a petition for certiorari and prohibition before
the Court of Appeals, 6 docketed as CA-G.R. SP No. 44529. Respondent claimed therein that the
complaint did not contain a single averment that respondent committed any act or is guilty of any
omission in violation of petitioner’s legal rights. Apart from the allegation in the complaint’s
"Jurisdictional Facts" that:chanrob1es virtual 1aw library

1.05. Defendants British Steel (Asia) Ltd. and Ferro Trading Gmbh, while understood by the
plaintiff as mere suppliers of goods for defendant ISL, are impleaded as party defendants
pursuant to Section 13, Rule 3 of the Revised Rules of Court. 7

no other reference was made to respondent that would constitute a valid cause of action against
it. Since petitioner failed to plead any cause of action against respondent as alternative defendant
under Section 13, Rule 3, 8 the trial court should have ordered the dismissal of the complaint
insofar as respondent was concerned.

Meanwhile, petitioner sought to amend its complaint by incorporating therein additional factual
allegations constitutive of its cause of action against Respondent. Pursuant to Section 2, Rule 10
9 of the Rules of Court, petitioner maintained that it can amend the complaint as a matter of right
because respondent has not yet filed a responsive pleading thereto. 10

Subsequently, petitioner filed a Manifestation and Motion 11 in CA-G.R. SP No. 44529 stating
that it had filed a Motion to Admit Amended Complaint together with said Amended Complaint
before the trial court. Hence, petitioner prayed that the proceedings in the special civil action be
suspended.

On January 29, 1998, the trial court ruled on petitioner’s Motion to Admit Amended Complaint
thus:chanrob1es virtual 1aw library

WHEREFORE, the Amended Complaint is NOTED and further proceedings thereon and action
on the other incidents as aforementioned are hereby held in abeyance until final resolution by the
Honorable Court of Appeals (Special 6th Division) of the petition for certiorari and prohibition
of petitioner (defendant British) and/or Manifestations and Motions of therein private
respondent, herein plaintiff.

SO ORDERED. 12

Thereafter, on February 24, 1998, the Court of Appeals rendered the assailed decision in CA-
G.R. SP No. 44529 as follows:chanrob1es virtua1 1aw 1ibrary

WHEREFORE, this Court grants the writ of certiorari and orders the respondent judge to
dismiss without prejudice the Complaint in Civil Case No. 96-79674 against petitioner British
Steel (Asia) Ltd. Costs against private Respondent.

SO ORDERED. 13

In the same decision, the Court of Appeals addressed petitioner’s prayer for suspension of
proceedings in this wise:chanrob1es virtual 1aw library

The incident which transpired after the filing of the instant petition for certiorari and prohibition
are immaterial in the resolution of this petition. What this Court is called upon to resolve is
whether the lower court committed grave abuse of discretion when it denied petitioner’s motion
to dismiss the complaint against it. The admission or rejection by the lower court of said
amended complaint will not, insofar as this Court is concerned, impinge upon the issue of
whether or not said court gravely abused its discretion in denying petitioner’s motion to dismiss.
14

Petitioner filed a motion for reconsideration of the appellate court’s decision, which was denied
in a resolution dated April 28, 1998. Hence, this petition, anchored on the following
grounds:chanrob1es virtual 1aw library

THE HON. COURT OF APPEALS ERRED IN ORDERING THE DISMISSAL OF THE

COMPLAINT AGAINST THE PRIVATE RESPONDENT FOR LACK OF CAUSE OF
ACTION UNDER THE ORIGINAL COMPLAINT EVEN AS SAID COMPLAINT WAS
ALREADY AMENDED AS A MATTER OF RIGHT AND SUFFICIENT CAUSES OF
ACTION ARE AVERRED IN THE AMENDED COMPLAINT, IN GROSS VIOLATION OF
SEC. 2, RULE 10 OF THE 1997 RULES OF CIVIL PROCEDURE.

II

THE HON. COURT OF APPEALS ERRED IN HOLDING THAT IF THE PETITIONER

WANTS TO PURSUE ITS CASE AGAINST THE PRIVATE RESPONDENT, IT HAS TO
REFILE THE COMPLAINT, THUS PRE-EMPTING THE RIGHT OF THE LOWER COURT
TO RULE ON THE AMENDED COMPLAINT AND COMPELLING THE PETITIONER TO
LITIGATE ITS CAUSES OF ACTION AGAINST THE PRIVATE RESPONDENT AS AN
ALTERNATIVE DEFENDANT IN A SEPARATE ACTION, THEREBY ABETTING
MULTIPLICITY OF SUITS. 15

The basic issue in this case is whether or not the Court of Appeals, by granting the extraordinary
writ of certiorari, correctly ordered the dismissal of the complaint for failure to state a cause of
action, despite the fact that petitioner exercised its right to amend the defective complaint under
Section 2, Rule 10 of the Rules of Court. Stated differently, the query posed before us is: can a
complaint still be amended as a matter of right before an answer has been filed, even if there was
a pending proceeding for its dismissal before the higher court?

Section 2, Rule 10 16 of the Revised Rules of Court explicitly states that a pleading may be
amended as a matter of right before a responsive pleading is served. This only means that prior to
the filing of an answer, the plaintiff has the absolute right to amend the complaint whether a new
cause of action or change in theory is introduced. 17 The reason for this rule is implied in the
subsequent Section 3 of Rule 10. 18 Under this provision, substantial amendment of the
complaint is not allowed without leave of court after an answer has been served, because any
material change in the allegations contained in the complaint could prejudice the rights of the
defendant who has already set up his defense in the answer.chanrob1es virtua1 1aw 1ibrary

Conversely, it cannot be said that the defendant’s rights have been violated by changes made in
the complaint if he has yet to file an answer thereto. In such an event, the defendant has not
presented any defense that can be altered 19 or affected by the amendment of the complaint in
accordance with Section 2 of Rule 10. The defendant still retains the unqualified opportunity to
address the allegations against him by properly setting up his defense in the answer.
Considerable leeway is thus given to the plaintiff to amend his complaint once, as a matter of
right, prior to the filing of an answer by the defendant.

The right granted to the plaintiff under procedural law to amend the complaint before an answer
has been served is not precluded by the filing of a motion to dismiss 20 or any other proceeding
contesting its sufficiency. Were we to conclude otherwise, the right to amend a pleading under
Section 2, Rule 10 will be rendered nugatory and ineffectual, since all that a defendant has to do
to foreclose this remedial right is to challenge the adequacy of the complaint before he files an
answer.

Moreover, amendment of pleadings is favored and should be liberally allowed in the furtherance
of justice in order to determine every case as far as possible on its merits without regard to
technicalities. This principle is generally recognized to speed up trial and save party litigants
from incurring unnecessary expense, so that a full hearing on the merits of every case may be
had and multiplicity of suits avoided. 21

In this case, the remedy espoused by the appellate court in its assailed judgment will precisely
result in multiple suits, involving the same set of facts and to which the defendants would likely
raise the same or, at least, related defenses. Plainly stated, we find no practical advantage in
ordering the dismissal of the complaint against respondent and for petitioner to re-file the same,
when the latter can still clearly amend the complaint as a matter of right. The amendment of the
complaint would not prejudice respondents or delay the action, as this would, in fact, simplify
the case and expedite it disposition.

The fact that the other defendants below has filed their answers to the complaint does not bar
petitioner’s right to amend the complaint as against Respondent. Indeed, where some but not all
the defendants have answered, the plaintiff may still amend its complaint once, as a matter of
right, in respect to claims asserted solely against the non-answering defendant, but not as to
claims asserted against the other defendants. 22

Furthermore, we do not agree with respondent’s claim that it will be prejudiced by the admission
of the Amended Complaint because it had spent time, money and effort to file its petition before
the appellate court. 23 We cannot see how the result could be any different for respondent, if
petitioner merely re-filed the complaint instead of being allowed to amend it. As adverted to
earlier, amendment would even work to respondent’s advantage since it will undoubtedly speed
up the proceedings before the trial court. Consequently, the amendment should be allowed in the
case at bar as a matter of right in accordance with the rules.chanrob1es virtua1 1aw 1ibrary

WHEREFORE, the petition is GRANTED. The assailed decision and resolution of the Court of
Appeals in CA-G.R. SP No. 44529 dated February 24, 1998 and April 28, 1998, respectively, are
REVERSED and SET ASIDE. The Regional Trial Court of Manila, Branch 22 is further ordered
to ADMIT petitioner’s Amended Complaint in Civil Case No. 96-79674 and to conduct further
proceedings in said case.

SO ORDERED.

G.R. No. 193650               October 8, 2014

GEORGE PIDLIP P. PALILEO and JOSE DE LA CRUZ, Petitioners,

vs.
PLANTERS DEVELOPMENT BANK, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails the July 28, 2009 Amended Decision2 of the Court
of Appeals (CA) in CA-G.R. SP No. 01317-MIN, entitled "Planters Development Bank,
Petitioner, versus Hon. Eddie R. Roxas (in his capacity as the former Pairing Judge), Hon.
Panambulan M Mimbisa (in his capacity as the Presiding Judge of RTC, Branch 37, General
Santos City), Sheriff Marilyn P. Alano, Sheriff Ramon A. Castillo, George Philip P. Palileo, and
Jose Dela Cruz, Respondents," as well as its August 23, 2010 Resolution3 denying
reconsideration of the assailed amended judgment.

Factual Antecedents
In a June 15, 2006 Decision4 rendered by the Regional Trial Court (RTC) of General Santos
City, Branch 37, in an action for specific performance/sum of money with damages docketed as
Civil Case No. 6474 and entitled "George Philip P. Palileo and Jose Dela Cruz, Plaintiffs, versus,
Planters Development Bank, Engr. Edgardo R. Torcende, Arturo R. delos Reyes, Benjamin N.
Tria, Mao Tividad and Emmanuel Tesalonia, Defendants," it was held thus:

Before this Court is a complaint for specific performance and/or sum of money and damages
with prayer for the issuance of writs of preliminary attachment and preliminary injunction filed
by Plaintiff George Philip Palileo and Jose L. Dela Cruz against Engr. Edgardo R. Torcende,
Planters Development Bank (defendant Bank), Arturo R. Delos Reyes, Benjamin N. Tria, Mao
Tividad, and Emmanuel Tesalonia on 22 December 1998.

After summons together with the verified Complaint and its annexes were duly served upon
defendants, the latter answered. During Pre-Trial conference defendant Bank manifested [its]
intention of settling the case amicably and several attempts to explore the said settlement [were]
made as per records of this case. In the last pre-trial hearing dated 17 November 2000, only
plaintiffs[,] George Philip Palileo and Jose L. Dela Cruz[,] and their counsel appeared, thus, the
latter move [sic] for the presentation of evidence ex-parte, which was granted by the Court with
the reservation of verifying the return card [to determine] whether the order for the pre-trial was
indeed received by defendants. Finally, [at the] 21 November 2001 hearing, x x x defendants
[again] failed to appear and their failure to file pre-trial brief was noted; thus [plaintiffs were]
allowed to present evidence ex-parte before the Clerk of Court.

xxxx

IN LIGHT OF THE FOREGOING, defendants are hereby ORDERED to jointly and severally
PAY plaintiffs as follows:

i) Actual Damages;

a) Plaintiff George Philip Palileo[,] the amount of Two Million Six Hundred Five
Thousand Nine [sic] Seventy Two Pesos and Ninety Two Centavos
(₱2,605,972.92), with 12% compounded interest [per annum] reckoned from the
filing of this case until full settlement thereof;

b) Plaintiff Jose R. Dela Cruz[,] the amount of One Million Five Hundred Twenty
Nine Thousand Five Hundred Eight Thousand [sic] and Eighty Centavos
(₱1,529,508.80), with 12% compounded interest [per annum] reckoned from the
filing of this case until full settlement thereof;

ii) Moral damages in the amount of Five Hundred Thousand Pesos (₱500,000.00) each;

iii) Exemplary Damages in the amount of Five Hundred Thousand Pesos (₱500,000.00)
each;
 iv) Attorney’s Fees in the amount of Five Hundred Thousand [Pesos] (₱500,000.00) each
x x x and to pay the costs.

SO ORDERED.5

Respondent Planters Development Bank (PDB) received a copy of the RTC Decision on July 17,
2006.

On July 31, 2006, PDB filed by private courier service – specifically LBC6 – an Omnibus
Motion for Reconsideration and for New Trial,7 arguing therein that the trial court’s Decision
was based on speculation and inadmissible and selfserving pieces of evidence; that it was
declared in default after its counsel failed to attend the pre-trial conference on account of the
distance involved and difficulty in booking a flight to General Santos City; that it had adequate
and sufficient defenses to the petitioners’ claims; that petitioners’ claims are only against its
codefendant, Engr. Edgardo R. Torcende [Torcende]; that the award of damages and attorney’s
fees had no basis; and that in the interest of justice, it should be given the opportunity to cross-
examine the petitioners’ witnesses, and thereafter present its evidence.

Petitioners’ copy of the Omnibus Motion for Reconsideration and for New Trial was likewise
sent on July 31, 2006 by courier service through LBC, but in their address of record – Tupi,
South Cotabato – there was no LBC service at the time.

On August 2, 2006, PDB filed with the RTC another copy of the Omnibus Motion for
Reconsideration and for New Trial via registered mail; another copy thereof was simultaneously
sent to petitioners by registered mail as well.

Meanwhile, petitioners moved for the execution of the Decision pending appeal.

In an August 30, 2006 Order,8 the RTC denied the Omnibus Motion for Reconsideration and for
New Trial, while it granted petitioners’ motion for execution pending appeal, which it treated as
a motion for the execution of a final and executory judgment. The trial court held, as follows:

Anent the first motion, records show that the Omnibus Motion for Reconsideration and for New
Trial dated 28 July 2006 was initially filed via an LBC courier on 28 July 2006 and was actually
received by the Court on 31 July 2006, which was followed by filing of the same motion thru
registered mail on 2 August 2006. Said motion was set for hearing by the movant on 18 August
2006 or 16 days after its filing.

The motion fails to impress. Section 5, Rule 159 of the 1997 Rules of Civil Procedure as
amended is pertinent thus:

Section 5. Notice of hearing. – The notice of hearing shall be addressed to all parties concerned,
and shall specify the time and date of the hearing which must not be later than ten (10) days after
the filing of the motion. (Underscoring and italics supplied)
The aforesaid provision requires [that] every motion shall be addressed to all parties concerned,
and shall specify the time and date of the hearing NOT later than ten (10) days after the filing of
the motion. Being a litigated motion, the aforesaid rule should have been complied [with]. Its
noncompliance renders it defective.

[The] Rule is settled that a motion in violation thereof is pro forma and a mere scrap of paper. It
presents no question which the court could decide [upon]. In fact, the court has NO reason to
consider it[;] neither [does] the clerk of court [have] the right to receive the same. Palpably, the
motion is nothing but an empty formality deserving no judicial cognizance. Hence, the motion
deserves a short shrift and peremptory denial for being procedurally defective.

As such, it does not toll the running of the reglementary period thus making the assailed decision
final and executory. This supervening situation renders the Motion for Execution pending appeal
academic but at the same time it operates and could serve [as] well as a motion for execution of
the subject final and executory decision. Corollarily, it now becomes the ministerial duty of this
Court to issue a writ of execution thereon.

IN LIGHT OF THE FOREGOING, the Omnibus Motion for Reconsideration and New Trial is
hereby DENIED, and the Motion for Execution Pending Appeal (which is treated as a motion for
execution of a final and executory judgment) is also GRANTED as explained above.
Accordingly, let A WRIT OF EXECUTION be issued against herein defendants to enforce the
FINAL and EXECUTORY Decision dated 15 June 2006.

SO ORDERED.10

PDB received a copy of the above August 30, 2006 Order on September 14, 2006.11

On August 31, 2006, a Writ of Execution12 was issued. PDB filed an Urgent Motion to Quash
Writ of Execution,13 arguing that it was prematurely issued as the June 15, 2006 Decision was
not yet final and executory; that its counsel has not received a copy of the writ; and that no entry
of judgment has been made with respect to the trial court’s Decision. Later on, it filed a
Supplemental Motion to Quash Writ of Execution,14 claiming that the writ was addressed to its
General Santos branch, which had no authority to accept the writ.

On September 7, 2006, PDB filed a Notice of Appeal.15

In an October 6, 2006 Order,16 the RTC denied the motion to quash the writ of execution.

On October 9, 2006, the RTC issued a second Writ of Execution.17

Ruling of the Court of Appeals

On October 11, 2006, PDB filed with the CA an original Petition for Certiorari, which was later
amended,18 assailing 1) the trial court’s August 30, 2006 Order – which denied the omnibus
motion for reconsideration of the RTC Decision and for new trial; 2) its October 6, 2006 Order –
which denied the motion to quash the writ of execution; and 3) the August 31, 2006 and October
9, 2006 writs of execution.

On May 31, 2007, the CA issued a Decision19 dismissing PDB’s Petition for lack of merit. It
sustained the trial court’s pronouncement, that by setting the hearing of the Omnibus Motion for
Reconsideration and for New Trial on August 18, 2006 – or 16 days after its filing on August 2,
2006 – PDB violated Section 5, Rule 15 of the Rules of Court which categorically requires that
the notice of hearing shall specify the time and date of the hearing which must not be later than
10 days after the filing of the motion. Citing this Court’s ruling in Bacelonia v. Court of
Appeals,20 the CA declared that the 10-day period prescribed in Section 5 is mandatory, and a
motion that fails to comply therewith is pro forma and presents no question which merits the
attention and consideration of the court.

The appellate court further characterized PDB’s actions as indicative of a deliberate attempt to
delay the proceedings, noting that it did not timely move to reconsider the trial court’s November
17, 2000 ruling21 allowing petitioners to present their evidence ex parte, nor did it move to be
allowed to present evidence in support of its defense. It was only after the RTC rendered its June
15, 2006 Decision that PDB moved to be allowed to cross-examine petitioners’ witnesses and to
present its evidence on defense.

The CA likewise held that the RTC did not err in ruling that the omnibus motion for
reconsideration did not toll the running of the prescriptive period, which thus rendered the June
15, 2006 Decision final and executory. It noted as well that PDB’s September 7, 2006 notice of
appeal was tardy.

The CA found no irregularity with respect to the writs of execution, which contained the fallo of
the June 15, 2006 Decision of the RTC – thus itemizing the amount of the judgment obligation.
Additionally, it held that the fact that the judgment debtors are held solidarily liable does not
require that the writs should be served upon all of the defendants; that it is not true that the
sheriffs failed to make a demand for the satisfaction of judgment upon PDB, as the mere
presentation of the writ to it operated as a demand to pay; and that PDB failed to attach the
Sheriff’s Return to its Petition, which thus prevents the appellate court from resolving its claim
that the writs were not validly served.

PDB filed a Motion for Reconsideration,22 arguing that Rule 15, Section 5 of the Rules of Court
should be relaxed in view of the fact that judgment against it was based on a technicality – and
not on a trial on the merits; that there was no deliberate intention on its part to delay the
proceedings; that the court acted with partiality in declaring that the Omnibus Motion for
Reconsideration and for New Trial was pro forma; that its notice of appeal was timely; and that
the writs of execution are null and void.

On July 28, 2009, the CA made a complete turnaround and issued the assailed Amended
Decision, which decreed thus:

WHEREFORE, the motion for reconsideration is GRANTED. This Court’s May 31, 2007
Decision is SET ASIDE and a new one is rendered GRANTING the petition for certiorari. The
trial court’s Order dated August 30, 2006 is SET ASIDE and the Writ of Execution issued by the
trial court is QUASHED. The trial court is ORDERED to hear and rule on the merits of
petitioner’s "Omnibus Motion for Reconsideration and New Trial."

SO ORDERED.23

The CA reversed its original finding that the Omnibus Motion for Reconsideration and for New
Trial was pro forma. This time, it held just the opposite, ruling that PDB’s "tacit argument" that
the "distances involved in the case at bench call for a relaxation of the application of Section 5,
Rule 15 of the Rules of Court" deserved consideration. It held that Section 5 should be read
together with Section 424 of the same Rule, thus:

When a pleading is filed and served personally, there is no question that the requirements in
Sections 4 and 5 of Rule 15 of the Revised Rules of Civil Procedure pose no problem to the party
pleading. Under this mode of service and filing of pleadings, the party pleading is able to ensure
receipt by the other party of his pleading at least three days prior to the date of hearing while at
the same time setting the hearing on a date not later than ten days from the filing of the pleading.

When, as in the case at bench, the address of the trial court as well as that of the opposing
counsel is too distant from the office of the counsel of the party pleading to personally effect the
filing and service of the pleading, the latter counsel faces a real predicament. In a perfect world
with the best postal service possible, it would be problematic enough to ensure that both
requisites are fully met: that opposing counsel receives the pleading at least three days before the
date of hearing and that the date of hearing is no more than ten days after the filing (mailing) of
the pleading. But, as a matter of fact, given the state of the postal service today – a matter the
Court takes judicial notice of – the party pleading often finds himself [locked] between the horns
of a dilemma.

The case at bench presents the Court with the novel issue of whether the same rigid application
of the cited Sections-and-Rule is warranted when the filing and service of pleadings is by mail.
The Court is of the opinion that when confronted between [sic] the demands of sufficient notice
and due process on the one hand and the requirement that the date of hearing be set no later than
ten days from filing, the stringent application of the Rules is not warranted and a liberal posture
is more in keeping with Section 6, Rule 1 of the 1997 Rules of Civil Procedure which provides:

SECTION 6. Construction. - These Rules shall be liberally construed in order to promote their
objective of securing a just, speedy, and inexpensive disposition of every action and
proceeding.25

The CA further sustained PDB’s argument that since judgment against it was arrived at by mere
default or technicality, it is correspondingly entitled to a relaxation of the Rules, in line with the
principles of substantial justice. It likewise held that PDB counsel’s act of setting the hearing of
the Omnibus Motion for Reconsideration and for New Trial 16 days after its filing was an
excusable lapse; that no scheme to delay the case is evident from PDB’s actions; that more
telling is the trial court’s "blurring in cavalier fashion" the distinction between Sections 1 and 2
of Rule 39 of the Rules of Court,26 as well as its unequal treatment of the parties from its strict
application of Section 5, Rule 15 against respondent, while it bent backward to accommodate
petitioners by converting the latter’s motion for execution pending appeal into a motion for
execution of a final and executor judgment.

Lastly, the appellate court concluded that the trial court committed grave abuse of discretion,
which thus warrants the grant of PDB’s Petition for Certiorari.

Petitioners filed their Urgent Motion for Reconsideration,27 which the CA denied through its
assailed August 23, 2010 Resolution. Hence, the instant Petition.

Issues

Petitioners frame the issues involved in this Petition, as follows:

Being assailed herein is the refusal of the Court of Appeals, which is a patent error, for not
giving credence to petitioners-appellants’ arguments that the respondent-appellees’ special civil
action for certiorari before it is clearly devoid of merit as (i) the Decision dated June 15, 2006 of
the RTC, Branch 37, General Santos City had become final and executory before the special civil
action for Certiorari was filed before it which should have been dismissed outright, and which
issue of "finality" was never ruled upon, (ii) granting arguendo that a certiorari proceeding could
still be had, the same should be filed under Rule 45 instead of Rule 65 of the 1997 Rules of Civil
Procedure, (iii) the alleged attendant abuse of discretion on the part of the public respondent
judges, even granting arguendo that it exist [sic], were [sic] not grave but on the contrary were
purely errors of judgment and, (iv) the substantial and glaring defects of the petition in the
special civil action for certiorari before the Court of Appeals were consistently and clearly called
to its attention but were unjustifiably ignored by it.28

Petitioners’ Arguments

In their Petition and Reply,29 petitioners seek to reverse the assailed CA dispositions and to
reinstate the appellate court’s original May 31, 2007 Decision, arguing that the trial court’s June
15, 2006 Decision became final and executor on account of PDB’s failure to timely file its
Omnibus Motion for Reconsideration and for New Trial, as it properly filed the same only on
August 2, 2006 – or beyond the 15-day period allowed by the Rules of Court.

Petitioners argue that PDB’s filing of its Omnibus Motion for Reconsideration and for New Trial
on July 31, 2006 by courier service through LBC was improper, since there was no LBC courier
service in Tupi, South Cotabato at the time; naturally, they did not receive a copy of the omnibus
motion. This is precisely the reason why PDB re-filed its omnibus motion on August 2, 2006
through registered mail, that is, to cure the defective service by courier; but by then, the 15-day
period within which to move for reconsideration or new trial, or to file a notice of appeal, had
already expired, as the last day thereof fell on August 1, 2006 – counting from PDB’s receipt of
the trial court’s Decision on July 17, 2006.

Petitioners add that PDB’s notice of appeal – which was filed only on September 7, 2006 – was
tardy as well; that PDB’s resort to an original Petition for Certiorari to assail the trial court’s
August 30, 2006 Order denying the Omnibus Motion for Reconsideration and for New Trial was
improper, for as provided under Section 9, Rule 37 of the Rules of Court,30 an order denying a
motion for new trial or reconsideration is not appealable, the remedy being an appeal from the
judgment or final order; that certiorari was resorted to only to revive PDB’s appeal, which was
already lost; and that it was merely a face-saving measure resorted to by PDB to recover from its
glaring blunders, as well as to delay the execution of the RTC Decision. They also assert that
certiorari is not an available remedy, since PDB did not file a motion for reconsideration with
respect to the other assailed orders of the trial court.

Petitioners maintain as well that the CA erred in relaxing the application of the Rules of Court as
to PDB, a banking institution with adequate resources to engage counsel within General Santos
City and not relegate Civil Case No. 6474 to its Manila lawyers who are thus constrained by the
distance involved.

Respondent’s Arguments

Seeking the denial of the Petition, PDB in its Comment31 maintains that the CA did not err in
declaring that its Omnibus Motion for Reconsideration and for New Trial was not pro forma; that
there are justifiable grounds to move for reconsideration and/or new trial; that it had no intention
to delay the proceedings; that it was correct for the appellate court to relax the application of
Section 5, Rule 15; and that the CA is correct in finding that the trial court committed grave
abuse of discretion in misapplying the Rules and in exhibiting partiality.

Our Ruling

The Court grants the Petition.

The proceedings in the instant case would have been greatly abbreviated if the court a quo and
the CA did not overlook the fact that PDB’s Omnibus Motion for Reconsideration and for New
Trial was filed one day too late. The bank received a copy of the trial court’s June 15, 2006
Decision on July 17, 2006; thus, it had 15 days – or up to August 1, 2006 – within which to file a
notice of appeal, motion for reconsideration, or a motion for new trial, pursuant to the Rules of
Court.32 Yet, it filed the omnibus motion for reconsideration and new trial only on August 2,
2006.

Indeed, its filing or service of a copy thereof to petitioners by courier service cannot be
trivialized.1âwphi1 Service and filing of pleadings by courier service is a mode not provided in
the Rules.33 This is not to mention that PDB sent a copy of its omnibus motion to an address or
area which was not covered by LBC courier service at the time. Realizing its mistake, PDB re-
filed and re-sent the omnibus motion by registered mail, which is the proper mode of service
under the circumstances. By then, however, the 15-day period had expired.

PDB’s Notice of Appeal, which was filed only on September 7, 2006, was tardy; it had only up
to August 1, 2006 within which to file the same. The trial court therefore acted regularly in
denying PDB’s notice of appeal.
Since PDB’s Omnibus Motion for Reconsideration and for New Trial was filed late and the 15-
day period within which to appeal expired without PDB filing the requisite notice of appeal, it
follows that its right to appeal has been foreclosed; it may no longer question the trial court’s
Decision in any other manner. "Settled is the rule that a party is barred from assailing the
correctness of a judgment not appealed from by him."34 The "presumption that a party who did
not interject an appeal is satisfied with the adjudication made by the lower court"35 applies to it.
There being no appeal taken by PDB from the adverse judgment of the trial court, its Decision
has become final and can no longer be reviewed, much less reversed, by this Court. "Finality of a
judgment or order becomes a fact upon the lapse of the reglementary period to appeal if no
appeal is perfected, and is conclusive as to the issues actually determined and to every matter
which the parties might have litigated and have x x x decided as incident to or essentially
connected with the subject matter of the litigation, and every matter coming within the legitimate
purview of the original action both in respect to matters of claim and of defense."36 And "[i]n this
jurisdiction, the rule is that when a judgment becomes final and executory, it is the ministerial
duty of the court to issue a writ of execution to enforce the judgment;"37 "execution will issue as
a matter of right x x x (a) when the judgment has become final and executory; (b) when the
judgment debtor has renounced or waived his right of appeal; [or] (c) when the period for appeal
has lapsed without an appeal having been filed x x x."38

Neither can the Court lend a helping hand to extricate PDB from the effects of its mistake;
indeed, PDB erred more than once during the course of the proceedings. For one, it did not
attempt to set right its failure to appear during pre-trial, which prompted the court to allow
petitioners to present evidence ex parte and obtain a favorable default judgment. Second,
assuming for the sake of argument that it timely filed its Omnibus Motion for Reconsideration
and for New Trial, it nonetheless violated the ten-day requirement on the notice of hearing under
Section 5 of Rule 15. Third, even before it could be notified of the trial court’s resolution of its
omnibus motion on September 14, 2006 – assuming it was timely filed, it filed a notice of appeal
on September 7, 2006 – which thus implies that it abandoned its bid for reconsideration and new
trial, and instead opted to have the issues resolved by the CA through the remedy of appeal. If so,
then there is no Omnibus Motion for Reconsideration and for New Trial that the trial court must
rule upon; its August 30, 2006 Order thus became moot and academic and irrelevant. "[W]here
[an action] or issue has become moot and academic, there is no justiciable controversy, so that a
declaration thereon would be of no practical use or value."39

Fourth, instead of properly pursuing its appeal to free itself from the unfavorable effects of the
trial court’s denial of its notice of appeal, PDB chose with disastrous results to gamble on its
Omnibus Motion for Reconsideration and for New Trial by filing an original Petition for
Certiorari to assail the trial court’s denial thereof. Time and again, it has been said that certiorari
is not a substitute for a lost appeal, especially if one’s own negligence or error in one’s choice of
remedy occasioned such loss.40

What remains relevant for this Court to resolve, then, is the issue relative to the trial court’s
October 6, 2006 Order – which denied the motion to quash the writ of execution – and the
August 31, 2006 and October 9, 2006 writs of execution. The Court observes that the October 6,
2006 Order and the August 31, 2006 and October 9, 2006 writs of execution were set aside and
quashed merely as a necessary consequence of the CA’s directive in the Amended Decision for
the trial court to hear and rule on the merits of PDB’s Omnibus Motion for Reconsideration and
for New Trial. Other than this singular reason, the CA would have sustained them, and this is
clear from a reading of both its original May 31, 2007 Decision and its subsequent Amended
Decision. Now, since the Court has herein declared that PDB’s omnibus motion may not be
considered for being tardy and for having been superseded by the bank’s filing of a notice of
appeal, then the CA’s original pronouncement regarding the October 6, 2006 Order and the
August 31, 2006 and October 9, 2006 writs of execution should necessarily be reinstated as well.

In light of the above conclusions, the Court finds no need to further discuss the other issues
raised by the parties. They are rendered irrelevant by the above pronouncements.

WHEREFORE, the Petition is GRANTED. The assailed July 28, 2009 Amended Decision and
August 23, 2010 Resolution of the Court of Appeals in CA-G.R. SP No. 01317-MIN are
REVERSED and SET ASIDE. The Regional Trial Court of General Santos City, Branch 37 is
ORDERED to proceed with the execution ofits June 15, 2006 Decision in Civil Case No. 6474.

SO ORDERED.

G.R. No. 179638               July 8, 2013

HEIRS OF NUMERIANO MIRANDA, SR., namely: CIRILA (deceased), CORNELIO,

NUMERIANO, JR., ERLINDA, LOLITA, RUFINA, DANILO, ALEJANDRO, FELIMON,
TERESITA, ELIZABETH and ANALIZA, all surnamed MIRANDA, Petitioners,
vs.
PABLO R. MIRANDA, Respondent.

DECISION

DEL CASTILLO, J.:

An action for revival of a judgment cannot modify, alter, or reverse the original judgment, which
is already final and executory.1

This Petition for Review on Certiorari2 under Rule 45 of the Rules of Court assails the
Decision3 dated June 14, 2007 and the Resolution4 dated September 11, 2007 of the Court of
Appeals (CA) in CA-G.R. SP No. 97350.

Factual Antecedents

In 1994, petitioners Cirila, Cornelio, Numeriano, Jr., Erlinda, Lolita, Rufina, Danilo, Alejandro,
Felimon, Teresita, Elizabeth, and Analiza, all surnamed Miranda, representing themselves as the
heirs of Numeriano Miranda, Sr., filed before the Regional Trial Court (RTC) of Muntinlupa
City, a Complaint5 for Annulment of Titles and Specific Performance, docketed as Civil Case
No. 94-612, against the heirs of Pedro Miranda, namely: Pacita and Oscar Miranda; the heir of
Tranquilino Miranda, Rogelio Miranda; and the spouses respondent Pablo Miranda and Aida
Lorenzo.
After trial, the RTC, Branch 256, rendered a Decision6 dated August 30, 1999, the dispositive
portion of which reads:

WHEREFORE, premises considered, this court resolves:

1. To uphold and sustain the validity of TCT Nos. 186011, 186012, and 186013;

2. Ordering Pablo Miranda to indemnify all other heirs of NUMERIANO MIRANDA the
amount equivalent to 12/13 fair market value of the co-owned residential house, erected on the
lot 826-A-3 covered by TCT No. 186013 corresponding to their shares, and for the said heirs to
divide among themselves the aforesaid amount as follows:

1/13 to CIRILA MIRANDA

1/13 to CORNELIO MIRANDA

1/13 to NUMERIANO MIRANDA, JR.

1/13 to ERLINDA MIRANDA

1/13 to LOLITA MIRANDA

1/13 to RUFINA MIRANDA

1/13 to DANILO MIRANDA

1/13 to ALEJANDRO MIRANDA

1/13 to FELIMON MIRANDA

1/13 to TERESITA MIRANDA

1/13 to ELIZABETH MIRANDA

1/13 to ANALIZA MIRANDA

3. Ordering Plaintiffs Lolita Miranda, Alejandro Miranda, Teresita Miranda, Rufina Miranda and
all persons claiming rights under them to immediately vacate the abovementioned residential
house and to jointly and severally pay to the spouses Pablo and Aida Miranda a monthly rental of
₱2,000.00 from the date of notice of the promulgation of this judgment up to the time that they
have actually vacated the property;

4. Proclaiming that ROGELIO MIRANDA is not the biological son or child by nature of
TRANQUILINO MIRANDA, and therefore is not entitled to inherit from the latter;
5. Declaring CORNELIO MIRANDA, NUMERIANO MIRANDA, JR., ERLINDA MIRANDA,
LOLITA MIRANDA, RUFINA MIRANDA, DANIL[O] MIRANDA, ALEJANDRO
MIRANDA, FELIMON MIRANDA, TERESITA MIRANDA, ELIZABETH MIRANDA,
ANALIZA MIRANDA, PABLO MIRANDA and PACITA MIRANDA as the lawful legal heirs
of the deceased TRANQUILINO MIRANDA and ordering them to partition among themselves
Lot 826-A-1 covered by TCT No. 186011 registered in the name of TRANQUILINO
MIRANDA, containing an area of 213 square meters, as follows:

1/13 aliquot share to Cornelio Miranda

1/13 aliquot share to Numeriano Miranda, Jr.

1/13 aliquot share to Erlinda Miranda

1/13 aliquot share to Lolita Miranda

1/13 aliquot share to Rufina Miranda

1/13 aliquot share to Danilo Miranda

1/13 aliquot share to Alejandro Miranda

1/13 aliquot share to Felimon Miranda

1/13 aliquot share to Teresita Miranda

1/13 aliquot share to Elizabeth Miranda

1/13 aliquot share to Analiza Miranda

1/13 aliquot share to Pablo Miranda

1/13 aliquot share to Pacita Miranda

6. Ordering all the abovenamed heirs to commission the survey of Lot 826-A-1 or to authorize in
writing, one of them to commission such survey, in order to avoid a chaotic situation similar to
the case at bar. Should they not agree as to what particular portion shall belong to one another,
they may agree that it be allotted to one or two or several of them, who shall indemnify the
others at a price agreed upon by all of them. Should they not agree as to whom shall the property
be allotted, to sell the property to a third person at a price agreed upon by a majority of all of
them, and to partition the proceeds of the sale in accordance with No. 5 above.

SO ORDERED.7

Petitioners did not file any appeal hence the Decision became final and executory.8
On December 11, 2001, the RTC issued a Writ of Execution,9 which was not implemented.10

On July 8, 2005, respondent filed an Ex-parte Motion11 praying that the RTC issue a "Break-
Open and Demolition Order" in order to compel the petitioners to vacate his property.12 But since
more than five years have elapsed from the time the Writ of Execution should have been
enforced, the RTC denied the Motion in its Order13 dated August 16, 2005.

This prompted respondent to file with the RTC a Petition14 for Revival of Judgment, which was
docketed as Civil Case No. 05-131. Petitioners opposed the revival of judgment assailing, among
others, the jurisdiction of the RTC to take cognizance of the Petition for Revival of Judgment.15

On June 20, 2006, the RTC rendered a Decision16 granting the Petition. Thus:

WHEREFORE, finding the instant petition to be meritorious, the petition is hereby GRANTED.
Pursuant to Rule 39, Section 6 of the Rules of Court, the Decision dated August 30, 1999 in Civil
Case No. 94-612 is hereby REVIVED.

SO ORDERED.17

On July 13, 2006, petitioners filed a Notice of Appeal18 via LBC,19 which was opposed by
respondent on the ground that the Decision dated August 30, 1999 has long become final and
executory.20 Petitioners, in turn, moved for the transmittal of the original records of the case to
the CA, insisting that respondent’s opposition is without merit.21

Ruling of the Regional Trial Court

Finding the appeal barred by prescription, the RTC denied the Notice of Appeal in its
Order22 dated October 10, 2006, to wit:

WHEREFORE, in view of the foregoing, the notice of appeal herein filed is hereby DENIED for
lack of merit.

SO ORDERED.23

Feeling aggrieved, petitioners filed a Petition for Mandamus24 with the CA praying that their
Notice of Appeal be given due course.25

Ruling of the Court of Appeals

On June 14, 2007, the CA denied the Petition for Mandamus on the ground that the Notice of
Appeal was filed out of time.26 The dispositive portion of the Decision reads:

WHEREFORE, premises considered, the petition is DENIED. The appeal is hereby DISMISSED
for having been filed out of time.

SO ORDERED.27
Petitioners moved for reconsideration but the same was denied by the CA in its
Resolution28 dated September 11, 2007.

Issues

Hence, this recourse, with petitioners raising the following issues:

1. WHETHER X X X THE APPEAL WAS PERFECTED ON TIME?

2. WHETHER X X X THE LATE (ONE DAY) FILING WAS JUSTIFIED?

3. WHETHER X X X AN ACTION FOR REVIVAL OF JUDGMENT IS

APPEALABLE?

4. WHETHER THE APPEAL IS MERITORIOUS?

a. Whether the RTC below has exclusive original jurisdiction over an action for
revival of judgment?

b. Whether xxx respondent herein, plaintiff therein, as one of the judgment

creditors can file the said action for revival ALONE?

c. Whether subsequent events or laws have rendered the judgment sought to be

revived modified or altered, or prevent its enforcement?

d. Whether res judicata or laches has seeped in, other judgment creditors not suing
for any such implementation of the 1999 judgment, ONLY PLAINTIFF ALONE?

e. Whether x x x the Petitioners are entitled to damages?29

Petitioners’ Arguments

Petitioners assert that an action to revive judgment is appealable,30 and that their appeal was
perfected on time.31 They insist that the Notice of Appeal, which they filed on the 15th day via
LBC, was seasonably filed since the law does not require a specific mode of service for filing a
notice of appeal.32

Besides, even if their appeal was belatedly filed, it should still be given due course in the interest
of justice,33 considering that their counsel had to brave the storm and the floods caused by
typhoon "Florita" just to file their Notice of Appeal on time.34

Petitioners further contend that their appeal is meritorious.35 They insist that it is the
Metropolitan Trial Court (MeTC), not the RTC, which has jurisdiction over the Petition for
Revival of Judgment since the amount in the tax declarations of the properties involved is less
than Fifty Thousand Pesos (₱50,000.00).36 They likewise assail the Decision dated August 30,
1999, claiming that the deeds and certificates of title subject of Civil Case No. 94-612 were
falsified.37

Respondent’s Arguments

Respondent, on the other hand, maintains that the Notice of Appeal was belatedly filed,38 and
that the revival of judgment is unappealable as it is barred by prescription.39

Our Ruling

The Petition lacks merit.

The Notice of Appeal was belatedly filed.

It is basic and elementary that a Notice of Appeal should be filed "within fifteen (15) days from
notice of the judgment or final order appealed from."40

Under Section 3,41 Rule 13 of the Rules of Court, pleadings may be filed in court either
personally or by registered mail. In the first case, the date of filing is the date of receipt. In the
second case, the date of mailing is the date of receipt.

In this case, however, the counsel for petitioners filed the Notice of Appeal via a private courier,
a mode of filing not provided in the Rules. Though not prohibited by the Rules, we cannot
consider the filing of petitioners’ Notice of Appeal via LBC timely filed. It is established
jurisprudence that "the date of delivery of pleadings to a private letter-forwarding agency is not
to be considered as the date of filing thereof in court;" instead, "the date of actual receipt by the
court x x x is deemed the date of filing of that pleading."42 Records show that the Notice of
Appeal was mailed on the 15th day and was received by the court on the 16th day or one day
beyond the reglementary period. Thus, the CA correctly ruled that the Notice of Appeal was filed
out of time.

Neither can petitioners use typhoon "Florita" as an excuse for the belated filing of the Notice of
Appeal because work in government offices in Metro Manila was not suspended on July 13,
2006, the day petitioners’ Notice of Appeal was mailed via LBC.43

And even if we, in the interest of justice, give due course to the appeal despite its late filing, the
result would still be the same. The appeal would still be denied for lack of merit.

The Decision dated August 30, 1999 is already final and executory.

An action for revival of judgment is a new and independent action.44 It is different and distinct
from the original judgment sought to be revived or enforced.45 As such, a party aggrieved by a
decision of a court in an action for revival of judgment may appeal the decision, but only insofar
as the merits of the action for revival is concerned. The original judgment, which is already final
and executory, may no longer be reversed, altered, or modified.46
In this case, petitioners assail the Decision dated August 30, 1999, which is the original judgment
sought to be revived or enforced by respondent.1âwphi1 Considering that the said Decision had
already attained finality, petitioners may no longer question its correctness. As we have said,
only the merits of the action for revival may be appealed, not the merits of the original judgment
sought to be revived or enforced.

RTC has jurisdiction over the Petition for Revival of Judgment

As to whether the RTC has jurisdiction, we rule in the affirmative. An action for revival of
judgment may be filed either "in the same court where said judgment was rendered or in the
place where the plaintiff or defendant resides, or in any other place designated by the statutes
which treat of the venue of actions in general."47 In this case, respondent filed the Petition for
Revival of Judgment in the same court which rendered the Decision dated August 30, 1999.

All told, we find no error on the part of the CA in denying the Petition and dismissing the appeal
for having been filed out of time.

WHEREFORE, the Petition is hereby DENIED. The Decision dated June 14, 2007 and the
Resolution dated September 11, 2007 of the Court of Appeals in CA-G.R. SP No. 97350 are
hereby AFFIRMED.

SO ORDERED.

G.R. No. 108538             January 22, 1996

LOURDES A. VALMONTE and ALFREDO D. VALMONTE, petitioners,

vs.
THE HONORABLE COURT OF APPEALS, THIRD DIVISION and ROSITA
DIMALANTA, respondents.

DECISION

MENDOZA, J.:

Petitioner Lourdes A. Valmonte is a foreign resident. The question is whether in an action for
partition filed against her and her husband, who is also her attorney, summons intended for her
may be served on her husband, who has a law office in the Philippines. The Regional Trial Court
of Manila, Branch 48, said no and refused to declare Lourdes A. Valmonte in default, but the
Court of Appeals said yes. Hence this petition for review on certiorari.

The facts of the case are as follows:

Petitioners Lourdes A. Valmonte and Alfredo D. Valmonte are husband and wife. They are both
residents of 90222 Carkeek Drive South Seattle, Washington, U.S.A. Petitioner Alfredo D.
Valmonte, who is a member of the Philippine bar, however, practices his profession in the
Philippines, commuting for this purpose between his residence in the state of Washington and
Manila, where he holds office at S-304 Gedisco Centre, 1564 A. Mabini Ermita, Manila.

On March 9, 1992, private respondent Rosita Dimalanta, who is the sister of petitioner Lourdes
A. Valmonte, filed a complaint for partition of real property and accounting of rentals against
petitioners Lourdes A. Valmonte and Alfredo D. Valmonte before the Regional Trial Court of
Manila, Branch 48. The subject of the action is a three-door apartment located in Paco, Manila.

In her Complaint, private respondent alleged:

The plaintiff is of legal age, a widow and is at present a resident of 14823 Conway Road,
Chesterfield, Missouri, U.S.A., while the defendants are spouses, of legal age and at
present residents of 90222 Carkeek Drive, South Seattle, Washington, U.S.A., but, for
purposes of this complaint may be served with summons at Gedisco Center, Unit 304,
1564 A. Mabini St., Ermita, Manila where defendant Alfredo D. Valmonte as defendant
Lourdes Arreola Valmonte's spouse holds office and where he can be found.

Apparently, the foregoing averments were made on the basis of a letter previously sent by
petitioner Lourdes A. Valmonte to private respondent's counsel in which, in regard to the
partition of the property in question, she referred private respondent's counsel to her husband as
the party to whom all communications intended for her should be sent. The letter reads:

July 4, 1991

Dear Atty. Balgos:

This is in response to your letter, dated 20 June 1991, which I received on 3 July 1991.
Please address all communications to my lawyer, Atty. Alfredo D. Valmonte, whose
address, telephone and fax numbers appear below.

c/o Prime Marine

Gedisco Center, Unit 304
1564 A. Mabini, Ermita
Metro Manila
Telephone: 521-1736
Fax: 521-2095

Service of summons was then made upon petitioner Alfredo D. Valmonte, who at the time, was
at his office in Manila. Petitioner Alfredo D. Valmonte accepted the summons, insofar as he was
concerned, but refused to accept the summons for his wife, Lourdes A. Valmonte, on the ground
that he was not authorized to accept the process on her behalf. Accordingly the process server
left without leaving a copy of the summons and complaint for petitioner Lourdes A. Valmonte.

Petitioner Alfredo D. Valmonte thereafter filed his Answer with Counterclaim. Petitioner
Lourdes A. Valmonte, however, did not file her Answer. For this reason private respondent
moved to declare her in default. Petitioner Alfredo D. Valmonte entered a special appearance in
behalf of his wife and opposed the private respondent's motion.

In its Order dated July 3, 1992, the trial court, denied private respondent's motion to declare
petitioner Lourdes A. Valmonte in default. A motion for reconsideration was similarly denied on
September 23, 1992. Whereupon, private respondent filed a petition for certiorari, prohibition
and mandamus with the Court of Appeals.

On December 29, 1992, the Court of Appeals rendered a decision granting the petition and
declaring Lourdes A. Valmonte in default. A copy of the appellate court's decision was received
by petitioner Alfredo D. Valmonte on January 15, 1993 at his Manila office and on January 21,
1993 in Seattle, Washington. Hence, this petition.

The issue at bar is whether in light of the facts set forth above, petitioner Lourdes A. Valmonte
was validly served with summons. In holding that she had been, the Court of Appeals stated:1

[I]n her above-quoted reply, Mrs. Valmonte clearly and unequivocally directed the
aforementioned counsel of Dimalanta to address all communications (evidently referring to her
controversy with her sister Mrs. Dimalanta over the Paco property, now the subject of the instant
case) to her lawyer who happens also to be her husband. Such directive was made without any
qualification just as was her choice/designation of her husband Atty. Valmonte as her lawyer
likewise made without any qualification or reservation. Any disclaimer therefore on the part of
Atty. Valmonte as to his being his wife's attorney (at least with regard to the dispute vis-a-
vis (sic) the Paco property) would appear to be feeble or trifling, if not incredible.

This view is bolstered by Atty. Valmonte's subsequent alleged special appearance made on
behalf of his wife. Whereas Mrs. Valmonte had manifestly authorized her husband to serve as
her lawyer relative to her dispute with her sister over the Paco property and to receive all
communications regarding the same and subsequently to appear on her behalf by way of a so-
called special appearance, she would nonetheless now insist that the same husband would
nonetheless had absolutely no authority to receive summons on her behalf. In effect, she is
asserting that representation by her lawyer (who is also her husband) as far as the Paco property
controversy is concerned, should only be made by him when such representation would be
favorable to her but not otherwise. It would obviously be inequitable for this Court to allow
private respondent Lourdes A. Valmonte to hold that her husband has the authority to represent
her when an advantage is to be obtained by her and to deny such authority when it would turn
out to be her disadvantage. If this be allowed, Our Rules of Court, instead of being an instrument
to promote justice would be made use of to thwart or frustrate the same.

xxx       xxx       xxx

Turning to another point, it would not do for Us to overlook the fact that the disputed
summons was served not upon just an ordinary lawyer of private respondent Lourdes A.
Valmonte, but upon her lawyer husband. But that is not all, the same lawyer/husband
happens to be also her co-defendant in the instant case which involves real property
which, according to her lawyer/husband/co-defendant, belongs to the conjugal
 partnership of the defendants (the spouses Valmonte). It is highly inconceivable and
certainly it would be contrary to human nature for the lawyer/husband/co-defendant to
keep to himself the fact that they (the spouses Valmonte) had been sued with regard to a
property which, he claims to be conjugal. Parenthetically, there is nothing in the records
of the case before Us regarding any manifestation by private respondent Lourdes A.
Valmonte about her lack of knowledge about the case instituted against her and her
lawyer/husband/co-defendant by her sister Rosita. . . .

PREMISES CONSIDERED, the instant petition for certiorari, prohibition

and mandamus is given due course. This Court hereby Resolves to nullify the orders of
the court a quo dated July 3, 1992 and September 23, 1992 and further declares private
respondent Lourdes Arreola Valmonte as having been properly served with summons.

Petitioners assail the aforequoted decision, alleging that the Court of Appeals erred (1) in
refusing to apply the provisions of Rule 14, §17 of the Revised Rules of Court and applying
instead Rule 14, §8 when the fact is that petitioner Lourdes A. Valmonte is a nonresident
defendant; and (2) because even if Rule 14, §8 is the applicable provision, there was no valid
substituted service as there was no strict compliance with the requirement by leaving a copy of
the summons and complaint with petitioner Alfredo D. Valmonte. Private respondent, upon the
other hand, asserts that petitioners are invoking a technicality and that strict adherence to the
rules would only result in a useless ceremony.

We hold that there was no valid service of process on Lourdes A. Valmonte.

To provide perspective, it will be helpful to determine first the nature of the action filed against
petitioners Lourdes A. Valmonte and Alfredo D. Valmonte by private respondent, whether it is
an action in personam, in rem or quasi in rem. This is because the rules on service of summons
embodied in Rule 14 apply according to whether an action is one or the other of these actions.

In an action in personam, personal service of summons or, if this is not possible and he cannot be
personally served, substituted service, as provided in Rule 14, §§7-82 is essential for the
acquisition by the court of jurisdiction over the person of a defendant who does not voluntarily
submit himself to the authority of the court.3 If defendant cannot be served with summons
because he is temporarily abroad, but otherwise he is a Philippine resident, service of summons
may, by leave of court, be made by publication.4 Otherwise stated, a resident defendant in an
action in personam, who cannot be personally served with summons, may be summoned either
by means of substituted service in accordance with Rule 14, §8 or by publication as provided in
§§ 17 and 18 of the same Rule.5

In all of these cases, it should be noted, defendant must be a resident of the Philippines,
otherwise an action in personam cannot be brought because jurisdiction over his person is
essential to make a binding decision.

On the other hand, if the action is in rem or quasi in rem, jurisdiction over the person of the
defendant is not essential for giving the court jurisdiction so long as the court acquires
jurisdiction over the res. If the defendant is a nonresident and he is not found in the country,
summons may be served exterritorially in accordance with Rule 14, §17, which provides:

§17. Extraterritorial service. - When the defendant does not reside and is not found in the
Philippines and the action affects the personal status of the plaintiff or relates to, or the
subject of which is, property within the Philippines, in which the defendant has or claims
a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or
in part, in excluding the defendant from any interest therein, or the property of the
defendant has been attached within the Philippines, service may, by leave of court, be
effected out of the Philippines by personal service as under section 7; or by publication in
a newspaper of general circulation in such places and for such time as the court may
order, in which case a copy of the summons and order of the court shall be sent by
registered mail to the last known address of the defendant, or in any other manner the
court may deem sufficient. Any order granting such leave shall specify a reasonable time,
which shall not be less than sixty (60) days after notice, within which the defendant must
answer..

In such cases, what gives the court jurisdiction in an action in rem or quasi in rem is that it has
jurisdiction over the res, i.e. the personal status of the plaintiff who is domiciled in the
Philippines or the property litigated or attached.

Service of summons in the manner provided in §17 is not for the purpose of vesting it with
jurisdiction but for complying with the requirements of fair play or due process, so that he will
be informed of the pendency of the action against him and the possibility that property in the
Philippines belonging to him or in which he has an interest may be subjected to a judgment in
favor of the plaintiff and he can thereby take steps to protect his interest if he is so minded.6

Applying the foregoing rules to the case at bar, private respondent's action, which is for partition
and accounting under Rule 69, is in the nature of an action quasi in rem. Such an action is
essentially for the purpose of affecting the defendant's interest in a specific property and not to
render a judgment against him. As explained in the leading case of Banco Español Filipino v.
Palanca  :7

[An action quasi in rem  is] an action which while not strictly speaking an action in rem partakes
of that nature and is substantially such. . . . The action quasi in rem differs from the true
action in rem in the circumstance that in the former an individual is named as defendant and the
purpose of the proceeding is to subject his interest therein to the obligation or lien burdening the
property. All proceedings having for their sole object the sale or other disposition of the property
of the defendant, whether by attachment, foreclosure, or other form of remedy, are in a general
way thus designated. The judgment entered in these proceedings is conclusive only between the
parties.

As petitioner Lourdes A. Valmonte is a nonresident who is not found in the Philippines, service
of summons on her must be in accordance with Rule 14, §17. Such service, to be effective
outside the Philippines, must be made either (1) by personal service; (2) by publication in a
newspaper of general circulation in such places and for such time as the court may order, in
which case a copy of the summons and order of the court should be sent by registered mail to the
last known address of the defendant; or (3) in any other manner which the court may deem
sufficient.

Since in the case at bar, the service of summons upon petitioner Lourdes A. Valmonte was not
done by means of any of the first two modes, the question is whether the service on her attorney,
petitioner Alfredo D. Valmonte, can be justified under the third mode, namely, "in any . . .
manner the court may deem sufficient."

We hold it cannot. This mode of service, like the first two, must be made outside the Philippines,
such as through the Philippine Embassy in the foreign country where the defendant
resides.8 Moreover, there are several reasons why the service of summons on Atty. Alfredo D.
Valmonte cannot be considered a valid service of summons on petitioner Lourdes A. Valmonte.
In the first place, service of summons on petitioner Alfredo D. Valmonte was not made upon the
order of the court as required by Rule 14, §17 and certainly was not a mode deemed sufficient by
the court which in fact refused to consider the service to be valid and on that basis declare
petitioner Lourdes A. Valmonte in default for her failure to file an answer.

In the second place, service in the attempted manner on petitioner was not made upon prior leave
of the trial court as required also in Rule 14, §17. As provided in §19, such leave must be applied
for by motion in writing, supported by affidavit of the plaintiff or some person on his behalf and
setting forth the grounds for the application.

Finally, and most importantly, because there was no order granting such leave, petitioner
Lourdes A. Valmonte was not given ample time to file her Answer which, according to the rules,
shall be not less than sixty (60) days after notice. It must be noted that the period to file an
Answer in an action against a resident defendant differs from the period given in an action filed
against a nonresident defendant who is not found in the Philippines. In the former, the period is
fifteen (15) days from service of summons, while in the latter, it is at least sixty (60) days from
notice.

Strict compliance with these requirements alone can assure observance of due process. That is
why in one case,9 although the Court considered publication in the Philippines of the summons
(against the contention that it should be made in the foreign state where defendant was residing)
sufficient, nonetheless the service was considered insufficient because no copy of the summons
was sent to the last known correct address in the Philippines..

Private respondent cites the ruling in De Leon v. Hontanosas, 67 SCRA 458,462-463 (1975), in
which it was held that service of summons upon the defendant's husband was binding on her. But
the ruling in that case is justified because summons were served upon defendant's husband in
their conjugal home in Cebu City and the wife was only temporarily absent, having gone to
Dumaguete City for a vacation. The action was for collection of a sum of money. In accordance
with Rule 14, §8, substituted service could be made on any person of sufficient discretion in the
dwelling place of the defendant, and certainly defendant's husband, who was there, was
competent to receive the summons on her behalf. In any event, it appears that defendant in that
case submitted to the jurisdiction of the court by instructing her husband to move for the
dissolution of the writ of attachment issued in that case.

On the other hand, in the case of Gemperle v. Schenker, 10 it was held that service on the wife of
a nonresident defendant was found sufficient because the defendant had appointed his wife as his
attorney-in-fact. It was held that although defendant Paul Schenker was a Swiss citizen and
resident of Switzerland, service of summons upon his wife Helen Schenker who was in the
Philippines was sufficient because she was her husband's representative and attorney-in-fact in a
civil case, which he had earlier filed against William Gemperle. In fact Gemperle's action was
for damages arising from allegedly derogatory statements contained in the complaint filed in the
first case. As this Court said, "[i]n other words, Mrs. Schenker had authority to sue, and had
actually sued, on behalf of her husband, so that she was, also, empowered to represent him in
suits filed against him, particularly in a case, like the one at bar, which is a consequence of the
action brought by her on his behalf" 11 Indeed, if instead of filing an independent action
Gemperle filed a counterclaim in the action brought by Mr. Schenker against him, there would
have been no doubt that the trial court could have acquired jurisdiction over Mr. Schenker
through his agent and attorney-in-fact, Mrs. Schenker.

In contrast, in the case at bar, petitioner Lourdes A. Valmonte did not appoint her husband as her
attorney-in-fact. Although she wrote private res- pondent's attorney that "all communications"
intended for her should be addressed to her husband who is also her lawyer at the latter's address
in Manila, no power of attorney to receive summons for her can be inferred therefrom. In fact the
letter was written seven months before the filing of this case below, and it appears that it was
written in connection with the negotiations between her and her sister, respondent Rosita
Dimalanta, concerning the partition of the property in question. As is usual in negotiations of this
kind, the exchange of correspondence was carried on by counsel for the parties. But the authority
given to petitioner's husband in these negotiations certainly cannot be construed as also including
an authority to represent her in any litigation.

For the foregoing reasons, we hold that there was no valid service on petitioner Lourdes A.
Valmonte in this case.

WHEREFORE, the decision appealed from is REVERSED and the orders dated July 3, 1992 and
September 23, 1992 of the Regional Trial Court of Manila, Branch 48 are REINSTATED.

SO ORDERED.

G.R. No. 131724. February 28, 2000

MILLENIUM INDUSTRIAL COMMERCIAL CORPORATION, Petitioner,

vs. JACKSON TAN, Respondent.

DECISION

MENDOZA, J.:
In December 1994, Millenium Industrial Commercial Corporation, petitioner herein, executed a
Deed of Real Estate Mortgage1 over its real property covered by TCT No. 24069 in favor of
respondent Jackson Tan. The mortgage was executed to secure payment of petitioner's
indebtedness to respondent in the amount of P2 million, without monthly interest, but which, at
maturity date on June 10, 1995, was payable in the amount of P4 million.

On November 9, 1995, respondent filed against petitioner a complaint for foreclosure of

mortgage in the Regional Trial Court, Branch 6, Cebu City. On November 21, 1995, summons
and a copy of the complaint were served upon petitioner through a certain Lynverd Cinches,
described in the sheriff's return, dated November 23, 1995, as "a Draftsman, a person of
sufficient age and (discretion) working therein, he is the highest ranking officer or Officer-in-
Charge of defendant's Corporation, to receive processes of the Court."2cräläwvirtualibräry

Petitioner moved for the dismissal of the complaint on the ground that there was no valid service
of summons upon it, as a result of which the trial court did not acquire jurisdiction over it.
Petitioner invoked Rule 14, 13 of the 1964 Rules of Court and contended that service on Lynverd
Cinches, as alleged in the sheriff's return, was invalid as he is not one of the authorized persons
on whom summons may be served and that, in fact, he was not even its
employee.3cräläwvirtualibräry

Petitioner also sought the dismissal of the complaint against it on the ground that it had satisfied
its obligation to respondent when the latter opted to be paid in shares of stock under the
following stipulation in the mortgage contract:

That in the remote possibility of failure on the part of the mortgagor to pay the mortgage
obligation and interest in cash, the MORTGAGEE at his option may demand that payment be
made in the form of shares of stock of Millenium IndustrialCommercial Corporation totaling at
least 4,000,000 shares.4cräläwvirtualibräry

Petitioner further prayed for "other reliefs just and equitable under the
premises."5cräläwvirtualibräry

On December 15, 1995, the trial court denied petitioner's Motion to Dismiss. Its order stated:

This refers to the Motion to Dismiss, dated December 4, 1995, by defendant anchored on the
following grounds:

1. That the Court had not acquired jurisdiction over the person of the defendant corporation
because summons was served upon a person who is not known to or an employee of the
defendant corporation.

2. That the obligation sought to be collected was already paid and extinguished.

By interposing the second ground, the defendant has availed of an affirmative defense on the
basis of which the Court has to hear and receive evidence. For the Court to validly decide the
said plea of the defendant it necessarily had to acquire jurisdiction over the person of the
defendant. Thus, defendant is considered to have then abandoned its first ground and is deemed
to have voluntarily submitted itself to the jurisdiction of the Court. It is a legal truism that
voluntary appearance cures the defect of the summons, if any. The defendant's filing of the
motion to dismiss by pleading therein the second ground amounts to voluntary appearance and it
indeed cured the defect.

Wherefore, Motion to Dismiss is hereby denied for lack of merit.6cräläwvirtualibräry

Petitioner moved for reconsideration, but its motion was denied by the trial court in its order,
dated January 16, 1996, for failure of petitioner to raise any new ground. Petitioner then filed a
petition for certiorari in the Court of Appeals, assailing the aforesaid ordersof the trial court.

On September 18, 1997, the Court of Appeals dismissed the petition.7 The appellate court ruled
that although petitioner denied Lynverd Cinches' authority to receive summons for it, its actual
receipt of the summons could be inferred from its filing of a motion to dismiss, hence, the
purpose for issuing summons had been substantially achieved. Moreover, it was held, by
including the affirmative defense that it had already paid its obligation and praying for other
reliefs in its Motion to Dismiss, petitioner voluntarily submitted to the jurisdiction of the
court.8cräläwvirtualibräry

Hence, this petition for review. Petitioner raises the following issues:

I......WHETHER OR NOT SERVICE OF SUMMONS UPON A MERE DRAFTSMAN WHO

IS NOT ONE OF THOSE UPON WHOM SUMMONS MAY BE SERVED IN CASE OF A
DEFENDANT CORPORATION AS MENTIONED IN THE RULES IS VALID.

II......WHETHER OR NOT THE INCLUSION OF ANOTHER AFFIRMATIVE RELIEF IN A

MOTION TO DISMISS ABANDONS AND WAIVES THE GROUND OF LACK OF
JURISDICTION OVER THE PERSON OF THE DEFENDANT THEREIN ALSO PLEADED
UNDER PREVAILING LAW AND JURISPRUDENCE.

III......WHETHER OR NOT THERE IS A LEGAL GROUND TO GRANT PETITIONERS

MOTION TO DISMISS THE COMPLAINT BELOW.

First. Petitioner objects to the application of the doctrine of substantial compliance in the service
of summons for two reasons: (1) the enumeration of persons on whom service of summons on a
corporation may be effected in Rule 14 13, is exclusive and mandatory; and (2) even assuming
that substantial compliance is allowed, its alleged actual receipt of the summons is based on an
unfounded speculation because there is nothing in the records to show that Lynverd Cinches
actually turned over the summons to any of the officers of the corporation.9 Petitioner contends
that it was able to file a motion to dismiss only because of its timely discovery of the foreclosure
suit against it when it checked the records of the case in the trial court.

The contention is meritorious.

Summons is the means by which the defendant in a case is notified of the existence of an action
against him and, thereby, the court is conferred jurisdiction over the person of the defendant.10 If
the defendant is corporation, Rule 14, 13 requires that service of summons be made upon the
corporations president, manager, secretary, cashier, agent, or any of its directors.11 The rationale
of the rule is that service must be made on a representative so integrated with the corporation
sued as to make it a priori presumable that he will realize his responsibilities and know what he
should do with any legal papers received by him.12cräläwvirtualibräry

Petitioner contends that the enumeration in Rule 14, 13 is exclusive and that service of summons
upon one who is not enumerated therein is invalid. This is the general rule.13 However, it is
settled that substantial compliance by serving summons on persons other than those mentioned in
the above rule may be justified. In G & G Trading Corporation v. Court of Appeals,14 we ruled
that although the service of summons was made on a person not enumerated in Rule 14, 13, if it
appears that the summons and complaint were in fact received by the corporation, there is
substantial compliance with the rule as its purpose has been attained.

In Porac Trucking, Inc. v. Court of Appeals,15 this Court enumerated the requisites for the
application of the doctrine of substantial compliance, to wit: (a) there must be actual receipt of
the summons by the person served, i.e., transferring possession of the copy of the summons from
the Sheriff to the person served; (b) the person served must sign a receipt or the sheriff's return;
and (c) there must be actual receipt of the summons by the corporation through the person on
whom the summons was actually served.16 The third requisite is the most important for it is
through such receipt that the purpose of the rule on service of summons is attained.

In this case, there is no dispute that the first and second requisites were fulfilled. With respect to
the third, the appellate court held thatpetitioner's filing of a motion to dismiss the foreclosure suit
is proof that it received the copy of the summons and the complaint. There is, however, no direct
proof of this or that Lynverd Cinches actually turned over the summons to any of the officers of
the corporation. In contrast, in our cases applying the substantial compliance rule,17 there was
direct evidence, such as the admission of the corporation's officers, of receipt of summons by the
corporation through the person upon whom it was actually served. The question is whether it is
allowable to merely infer actual receipt of summons by the corporation through the person on
whom summons was served. We hold that it cannot be allowed. For there to be substantial
compliance, actual receipt of summons by the corporation through the person served must be
shown. Where a corporation only learns of the service of summons and the filing of the
complaint against it through some person or means other than the person actually served, the
service of summons becomes meaningless. This is particularly true in the present case where
there is serious doubt if Lynverd Cinches, the person on whom service of summons was effected,
is in fact an employee of the corporation. Except for the sheriff's return, there is nothing to show
that Lynverd Cinches was really a draftsman employed by the corporation.

Respondent casts doubt on petitioner's claim that it came to know about the summons and the
complaint against it only after it learned that there was a pending foreclosure of its mortgage.
There is nothing improbable about this claim. Petitioner was in default in the payment ofits loan.
It had received demand letters from respondent. Thus, it had reason to believe that a foreclosure
suit would be filed against it. The appellate court was, therefore, in error in giving weight to
respondent's claims. Receipt by petitioner of the summons and complaint cannot be inferred
from the fact that it filed a Motion to Dismiss the case.

Second. We now turn to the issue of jurisdiction by estoppel. Both the trial court and the Court
of Appeals held that by raising the affirmative defense of payment and by praying for other
reliefs in its Motion to Dismiss, petitioner in effect waived its objection to the trial court's
jurisdiction over it. We think this is error.

Our decision in La Naval Drug Corporation v. Court of Appeals18 settled this question. The rule
prior to La Naval  was that if a defendant, in a motion to dismiss, alleges grounds for dismissing
the action other than lack of jurisdiction, he would be deemed to have submitted himself to the
jurisdiction of the court.19 This rule no longer holds true. Noting that the doctrine of estoppel by
jurisdiction must be unequivocal and intentional, we ruled in La Naval:

Jurisdiction over the person must be seasonably raised, i.e., that it is pleaded in a motion to
dismiss or by way of an affirmative defense. Voluntary appearance shall be deemed a waiver of
this defense. The assertion, however, of affirmative defenses shall not be construed as an
estoppel or as a waiver of such defense.20cräläwvirtualibräry

Third. Finally, we turn to the effect of petitioner's prayer for"other reliefs" in its Motion to
Dismiss. In De Midgely v. Fernandos,21 it was held that, in a motion to dismiss, the allegation of
grounds other than lack of jurisdiction over the person of the defendant, including a prayer "for
such other reliefs as" may be deemed "appropriate and proper" amounted to voluntary
appearance. This, however, must be deemed superseded by the ruling in La Naval that estoppel
by jurisdiction must be unequivocal and intentional. It would be absurd to hold that petitioner
unequivocally and intentionally submitted itself to the jurisdiction of the court by seeking other
reliefs to which it might be entitled when the only relief that it can properly ask from the trial
court is the dismissal of the complaint against it.

WHEREFORE , the decision of the Court of Appeals is REVERSED and the complaint against
petitioner is DISMISSED.

SO ORDERED.

[G.R. No. 136426. August 6, 1999.]

E.B. VILLAROSA & PARTNER CO., LTD., Petitioner, v. HON. HERMINIO I. BENITO,

in his capacity as Presiding Judge, RTC, Branch 132, Makati City and IMPERIAL
DEVELOPMENT CORPORATION, Respondent.

DECISION

GONZAGA-REYES, J.:
Before this Court is a petition for certiorari and prohibition with prayer for the issuance of a
temporary restraining order and/or writ of preliminary injunction seeking to annul and set aside
the Orders dated August 5, 1998 and November 20, 1998 of the public respondent Judge
Herminio I. Benito of the Regional Trial Court of Makati City, Branch 132 and praying that the
public respondent court be ordered to desist from further proceeding with Civil Case No. 98-
824.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

Petitioner E.B. Villarosa & Partner Co., Ltd. is a limited partnership with principal office address
at 102 Juan Luna St., Davao City and with branch offices at 2492 Bay View Drive, Tambo,
Parañaque, Metro Manila and Kolambog, Lapasan, Cagayan de Oro City. Petitioner and private
respondent executed a Deed of Sale with Development Agreement wherein the former agreed to
develop certain parcels of land located at Barrio Carmen, Cagayan de Oro belonging to the latter
into a housing subdivision for the construction of low cost housing units. They further agreed
that in case of litigation regarding any dispute arising therefrom, the venue shall be in the proper
courts of Makati.

On April 3, 1998, private respondent, as plaintiff, filed a Complaint for Breach of Contract and
Damages against petitioner, as defendant, before the Regional Trial Court of Makati allegedly
for failure of the latter to comply with its contractual obligation in that, other than a few
unfinished low cost houses, there were no substantial developments therein. 1

Summons, together with the complaint, were served upon the defendant, through its Branch
Manager Engr. Wendell Sabulbero at the stated address at Kolambog, Lapasan, Cagayan de Oro
City 2 but the Sheriff’s Return of Service 3 stated that the summons was duly served "upon
defendant E.B. Villarosa & Partner Co., Ltd. thru its Branch Manager Engr. WENDELL
SABULBERO on May 5, 1998 at their new office Villa Gonzalo, Nazareth, Cagayan de Oro
City, and evidenced by the signature on the face of the original copy of the summons."cralaw
virtua1aw library

On June 9, 1998, defendant filed a Special Appearance with Motion to Dismiss 4 alleging that on
May 6, 1998, "summons intended for defendant" was served upon Engr. Wendell Sabulbero, an
employee of defendant at its branch office at Cagayan de Oro City. Defendant prayed for the
dismissal of the complaint on the ground of improper service of summons and for lack of
jurisdiction over the person of the defendant. Defendant contends that the trial court did not
acquire jurisdiction over its person since the summons was improperly served upon its employee
in its branch office at Cagayan de Oro City who is not one of those persons named in Section 11,
Rule 14 of the 1997 Rules of Civil Procedure upon whom service of summons may be made.

Meanwhile, on June 10, 1998, plaintiff filed a Motion to Declare Defendant in Default 5 alleging
that defendant has failed to file an Answer despite its receipt allegedly on May 5, 1998 of the
summons and the complaint, as shown in the Sheriff’s Return.

On June 22, 1998, plaintiff filed an Opposition to Defendant’s Motion to Dismiss 6 alleging that
the records show that defendant, through its branch manager, Engr. Wendell Sabulbero actually
received the summons and the complaint on May 8, 1998 as evidenced by the signature
appearing on the copy of the summons and not on May 5, 1998 as stated in the Sheriff’s Return
nor on May 6, 1998 as stated in the motion to dismiss; that defendant has transferred its office
from Kolambog, Lapasan, Cagayan de Oro to its new office address at Villa Gonzalo, Nazareth,
Cagayan de Oro; and that the purpose of the rule is to bring home to the corporation notice of the
filing of the action.

On August 5, 1998, the trial court issued an Order 7 denying defendant’s Motion to Dismiss as
well as plaintiff’s Motion to Declare Defendant in Default. Defendant was given ten (10) days
within which to file a responsive pleading. The trial court stated that since the summons and
copy of the complaint were in fact received by the corporation through its branch manager
Wendell Sabulbero, there was substantial compliance with the rule on service of summons and
consequently, it validly acquired jurisdiction over the person of the
defendant.chanroblesvirtuallawlibrary

On August 19, 1998, defendant, by Special Appearance, filed a Motion for Reconsideration 8
alleging that Section 11, Rule 14 of the new Rules did not liberalize but, on the contrary,
restricted the service of summons on persons enumerated therein; and that the new provision is
very specific and clear in that the word "manager" was changed to "general manager",
"secretary" to "corporate secretary", and excluding therefrom agent and director.

On August 27, 1998, plaintiff filed an Opposition to defendant’s Motion for Reconsideration 9
alleging that defendant’s branch manager "did bring home" to the defendant-corporation the
notice of the filing of the action and by virtue of which a motion to dismiss was filed; and that it
was one (1) month after receipt of the summons and the complaint that defendant chose to file a
motion to dismiss.

On September 4, 1998, defendant, by Special Appearance, filed a Reply 10 contending that the
changes in the new rules are substantial and not just general semantics.

Defendant’s Motion for Reconsideration was denied in the Order dated November 20, 1998. 11

Hence, the present petition alleging that respondent court gravely abused its discretion
tantamount to lack or in excess of jurisdiction in denying petitioner’s motions to dismiss and for
reconsideration, despite the fact that the trial court did not acquire jurisdiction over the person of
petitioner because the summons intended for it was improperly served. Petitioner invokes
Section 11 of Rule 14 of the 1997 Rules of Civil Procedure.

Private respondent filed its Comment to the petition citing the cases of Kanlaon Construction
Enterprises Co., Inc. v. NLRC 12 wherein it was held that service upon a construction project
manager is valid and in Gesulgon v. NLRC 13 which held that a corporation is bound by the
service of summons upon its assistant manager.

The only issue for resolution is whether or not the trial court acquired jurisdiction over the
person of petitioner upon service of summons on its Branch Manager.
When the complaint was filed by Petitioner on April 3, 1998, the 1997 Rules of Civil Procedure
was already in force. 14

Section 11, Rule 14 of the 1997 Rules of Civil Procedure provides that:jgc:chanrobles.com.ph

"When the defendant is a corporation, partnership or association organized under the laws of the
Philippines with a juridical personality, service may be made on the president, managing partner,
general manager, corporate secretary, treasurer, or in-house counsel." (Emphasis supplied).

This provision revised the former Section 13, Rule 14 of the Rules of Court which provided
that:jgc:chanrobles.com.ph

"SECTION 13. Service upon private domestic corporation or partnership. — If the defendant is a
corporation organized under the laws of the Philippines or a partnership duly registered, service
may be made on the president, manager, secretary, cashier, agent, or any of its directors."
(Emphasis supplied).

Petitioner contends that the enumeration of persons to whom summons may be served is
"restricted, limited and exclusive" following the rule on statutory construction expressio unios est
exclusio alterius and argues that if the Rules of Court Revision Committee intended to liberalize
the rule on service of summons, it could have easily done so by clear and concise language.

We agree with petitioner.

Earlier cases have uphold service of summons upon a construction project manager 15; a
corporation’s assistant manager 16; ordinary clerk of a corporation 17; private secretary of
corporate executives 18; retained counsel 19; officials who had charge or control of the
operations of the corporation, like the assistant general manager 20; or the corporation’s Chief
Finance and Administrative Officer 21 . In these cases, these persons were considered as "agent"
within the contemplation of the old rule. 22 Notably, under the new Rules, service of summons
upon an agent of the corporation is no longer authorized.chanrobles virtual lawlibrary

The cases cited by private respondent are therefore not in point. In the Kanlaon case, this Court
ruled that under the NLRC Rules of Procedure, summons on the respondent shall be served
personally or by registered mail on the party himself; if the party is represented by counsel or
any other authorized representative or agent, summons shall be served on such person. In said
case, summons was served on one Engr. Estacio who managed and supervised the construction
project in Iligan City (although the principal address of the corporation is in Quezon City) and
supervised the work of the employees. It was held that as manager, he had sufficient
responsibility and discretion to realize the importance of the legal papers served on him and to
relay the same to the president or other responsible officer of petitioner such that summons for
petitioner was validly served on him as agent and authorized representative of petitioner. Also in
the Gesulgon case cited by private respondent, the summons was received by the clerk in the
office of the Assistant Manager (at principal office address) and under Section 13 of Rule 14 (old
rule), summons may be made upon the clerk who is regarded as agent within the contemplation
of the rule.
The designation of persons or officers who are authorized to accept summons for a domestic
corporation or partnership is now limited and more clearly specified in Section 11, Rule 14 of the
1997 Rules of Civil Procedure. The rule now states "general manager" instead of only "manager"
; "corporate secretary" instead of "secretary" ; and "treasurer" instead of "cashier." The phrase
"agent, or any of its directors" is conspicuously deleted in the new rule.

The particular revision under Section 11 of Rule 14 was explained by retired Supreme Court
Justice Florenz Regalado, thus: 23

". . . the then Sec. 13 of this Rule allowed service upon a defendant corporation to ‘be made on
the president, manager, secretary, cashier, agent or any of its directors.’ The aforesaid terms were
obviously ambiguous and susceptible of broad and sometimes illogical interpretations, especially
the word ‘agent’ of the corporation. The Filoil case, involving the litigation lawyer of the
corporation who precisely appeared to challenge the validity of service of summons but whose
very appearance for that purpose was seized upon to validate the defective service is an
illustration of the need for this revised section with limited scope and specific terminology. Thus
the absurd result in the Filoil case necessitated the amendment permitting service only on the in-
house counsel of the corporation who is in effect an employee of the corporation, as
distinguished from an independent practitioner." (Emphasis supplied)

Retired Justice Oscar Herrera, who is also a consultant of the Rules of Court Revision
Committee, stated that" (T)he rule must be strictly observed. Service must be made to one named
in (the) statute . . ." 24

It should be noted that even prior to the effectivity of the 1997 Rules of Civil Procedure, strict
compliance with the rules has been enjoined. In the case of Delta Motor Sales Corporation v.
Mangosing, 25 the Court held:jgc:chanrobles.com.ph

"A strict compliance with the mode of service is necessary to confer jurisdiction of the court over
a corporation. The officer upon whom service is made must be one who is named in the statute;
otherwise the service is insufficient. . .

The purpose is to render it reasonably certain that the corporation will receive prompt and proper
notice in an action against it or to insure that the summons be served on a representative so
integrated with the corporation that such person will know what to do with the legal papers
served on him. In other words, ‘to bring home to the corporation notice of the filing of the
action.’ . . .

The liberal construction rule cannot be invoked and utilized as a substitute for the plain legal
requirements as to the manner in which summons should be served on a domestic
corporation. . ." (Emphasis supplied).

Service of summons upon persons other than those mentioned in Section 13 of Rule 14 (old rule)
has been held as improper. 26 Even under the old rule, service upon a general manager of a
firm’s branch office has been held as improper as summons should have been served at the
firm’s principal office. In First Integrated Bonding & Ins. Co., Inc. v. Dizon, 27 it was held that
the service of summons on the general manager of the insurance firm’s Cebu branch was
improper; default order could have been obviated had the summons been served at the firm’s
principal office.

And in the case of Solar Team Entertainment, Inc. v. Hon. Helen Bautista Ricafort, Et. Al. 28 the
Court succinctly clarified that, for the guidance of the Bench and Bar, "strictest" compliance with
Section 11 of Rule 13 of the 1997 Rules of Civil Procedure (on Priorities in modes of service and
filing) is mandated and the Court cannot rule otherwise, lest we allow circumvention of the
innovation by the 1997 Rules in order to obviate delay in the administration of
justice.chanroblesvirtual|awlibrary

Accordingly, we rule that the service of summons upon the branch manager of petitioner at its
branch office at Cagayan de Oro, instead of upon the general manager at its principal office at
Davao City is improper. Consequently, the trial court did not acquire jurisdiction over the person
of the petitioner.

The fact that defendant filed a belated motion to dismiss did not operate to confer jurisdiction
upon its person. There is no question that the defendant’s voluntary appearance in the action is
equivalent to service of summons. 29 Before, the rule was that a party may challenge the
jurisdiction of the court over his person by making a special appearance through a motion to
dismiss and if in the same motion, the movant raised other grounds or invoked affirmative relief
which necessarily involves the exercise of the jurisdiction of the court, the party is deemed to
have submitted himself to the jurisdiction of the court. 30 This doctrine has been abandoned in
the case of La Naval Drug Corporation v. Court of Appeals, Et Al., 31 which became the basis of
the adoption of a new provision in the former Section 23, which is now Section 20 of Rule 14 of
the 1997 Rules. Section 20 now provides that "the inclusion in a motion to dismiss of other
grounds aside from lack of jurisdiction over the person of the defendant shall not be deemed a
voluntary appearance." The emplacement of this rule clearly underscores the purpose to enforce
strict enforcement of the rules on summons. Accordingly, the filing of a motion to dismiss,
whether or not belatedly filed by the defendant, his authorized agent or attorney, precisely
objecting to the jurisdiction of the court over the person of the defendant can by no means be
deemed a submission to the jurisdiction of the court. There being no proper service of summons,
the trial court cannot take cognizance of a case for lack of jurisdiction over the person of the
defendant. Any proceeding undertaken by the trial court will consequently be null and void. 32

WHEREFORE, the petition is hereby GRANTED. The assailed Orders of the public respondent
trial court are ANNULLED and SET ASIDE. The public respondent Regional Trial Court of
Makati, Branch 132 is declared without jurisdiction to take cognizance of Civil Case No. 98-824,
and all its orders and issuances in connection therewith are hereby ANNULLED and SET
ASIDE.

SO ORDERED.

FIRST DIVISION
PEDRO T. SANTOS, JR., G.R. No. 170943

Petitioner,

Present:

PUNO, C.J., Chairperson,

CARPIO,

- v e r s u s - CORONA,

AZCUNA and

LEONARDO-DE CASTRO, JJ.

PNOC EXPLORATION

CORPORATION,

Respondent. Promulgated:

September 23, 2008

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

DECISION

CORONA, J.:

This is a petition for review1 of the September 22, 2005 decision2 and December 29, 2005
resolution3 of the Court of Appeals in CA-G.R. SP No. 82482.

On December 23, 2002, respondent PNOC Exploration Corporation filed a complaint for a sum
of money against petitioner Pedro T. Santos, Jr. in the Regional Trial Court of Pasig City, Branch
167. The complaint, docketed as Civil Case No. 69262, sought to collect the amount
of P698,502.10 representing petitioner’s unpaid balance of the car loan4 advanced to him by
respondent when he was still a member of its board of directors.

Personal service of summons to petitioner failed because he could not be located in his last
known address despite earnest efforts to do so. Subsequently, on respondent’s motion, the trial
court allowed service of summons by publication.

Respondent caused the publication of the summons in Remate, a newspaper of general

circulation in the Philippines, on May 20, 2003. Thereafter, respondent submitted the affidavit of
publication of the advertising manager of Remate5 and an affidavit of service of respondent’s
employee6 to the effect that he sent a copy of the summons by registered mail to petitioner’s last
known address.

When petitioner failed to file his answer within the prescribed period, respondent moved that the
case be set for the reception of its evidence ex parte. The trial court granted the motion in an
order dated September 11, 2003.

Respondent proceeded with the ex parte presentation and formal offer of its evidence.
Thereafter, the case was deemed submitted for decision on October 15, 2003.

On October 28, 2003, petitioner filed an "Omnibus Motion for Reconsideration and to Admit
Attached Answer." He sought reconsideration of the September 11, 2003 order, alleging that the
affidavit of service submitted by respondent failed to comply with Section 19, Rule 14 of the
Rules of Court as it was not executed by the clerk of court. He also claimed that he was denied
due process as he was not notified of the September 11, 2003 order. He prayed that respondent’s
evidence ex parte be stricken off the records and that his answer be admitted.

Respondent naturally opposed the motion. It insisted that it complied with the rules on service by
publication. Moreover, pursuant to the September 11, 2003 order, petitioner was already deemed
in default for failure to file an answer within the prescribed period.

In an order dated February 6, 2004, the trial court denied petitioner’s motion for reconsideration
of the September 11, 2003 order. It held that the rules did not require the affidavit of
complementary service by registered mail to be executed by the clerk of court. It also ruled that
due process was observed as a copy of the September 11, 2003 order was actually mailed to
petitioner at his last known address. It also denied the motion to admit petitioner’s answer
because the same was filed way beyond the reglementary period.

Aggrieved, petitioner assailed the September 11, 2003 and February 6, 2004 orders of the trial
court in the Court of Appeals via a petition for certiorari. He contended that the orders were
issued with grave abuse of discretion. He imputed the following errors to the trial court: taking
cognizance of the case despite lack of jurisdiction due to improper service of summons; failing to
furnish him with copies of its orders and processes, particularly the September 11, 2003 order,
and upholding technicality over equity and justice.

During the pendency of the petition in the Court of Appeals, the trial court rendered its decision
in Civil Case No. 69262. It ordered petitioner to pay P698,502.10 plus legal interest and costs of
suit.7

Meanwhile, on September 22, 2005, the Court of Appeals rendered its decision8 sustaining the
September 11, 2003 and February 6, 2004 orders of the trial court and dismissing the petition. It
denied reconsideration.9 Thus, this petition.

Petitioner essentially reiterates the grounds he raised in the Court of Appeals, namely, lack of
jurisdiction over his person due to improper service of summons, failure of the trial court to
furnish him with copies of its orders and processes including the September 11, 2003 order and
preference for technicality rather than justice and equity. In particular, he claims that the rule on
service by publication under Section 14, Rule 14 of the Rules of Court applies only to actions in
rem, not actions in personam like a complaint for a sum of money. He also contends that the
affidavit of service of a copy of the summons should have been prepared by the clerk of court,
not respondent’s messenger.

The petition lacks merit.

ProprietyOf

Service By Publication

Section 14, Rule 14 (on Summons) of the Rules of Court provides:

SEC. 14. Service upon defendant whose identity or whereabouts are unknown. – In any
action where the defendant is designated as an unknown owner, or the like, or whenever his
whereabouts are unknown and cannot be ascertained by diligent inquiry, service may, by
leave of court, be effected upon him by publication in a newspaper of general
circulation and in such places and for such times as the court may order. (emphasis supplied)

Since petitioner could not be personally served with summons despite diligent efforts to locate
his whereabouts, respondent sought and was granted leave of court to effect service of summons
upon him by publication in a newspaper of general circulation. Thus, petitioner was properly
served with summons by publication.

Petitioner invokes the distinction between an action in rem and an action in personam and claims
that substituted service may be availed of only in an action in rem. Petitioner is wrong. The in
rem/in personam distinction was significant under the old rule because it was silent as to the kind
of action to which the rule was applicable.10 Because of this silence, the Court limited the
application of the old rule to in rem actions only.11

This has been changed. The present rule expressly states that it applies "[i]n any action where
the defendant is designated as an unknown owner, or the like, or whenever his whereabouts are
unknown and cannot be ascertained by diligent inquiry." Thus, it now applies to any action,
whether in personam, in rem or quasi in rem.12

Regarding the matter of the affidavit of service, the relevant portion of Section 19,13 Rule 14 of
the Rules of Court simply speaks of the following:

… an affidavit showing the deposit of a copy of the summons and order for publication in the
post office, postage prepaid, directed to the defendant by registered mail to his last known
address.

Service of summons by publication is proved by the affidavit of the printer, his foreman or
principal clerk, or of the editor, business or advertising manager of the newspaper which
published the summons. The service of summons by publication is complemented by service of
summons by registered mail  to the defendant’s last known address. This complementary service
is evidenced by an affidavit "showing the deposit of a copy of the summons and order for
publication in the post office, postage prepaid, directed to the defendant by registered mail to his
last known address."

The rules, however, do not require that the affidavit of complementary service be executed by
the clerk of court. While the trial court ordinarily does the mailing of copies of its orders and
processes, the duty to make the complementary service by registered mail is imposed on the
party who resorts to service by publication.

Moreover, even assuming that the service of summons was defective, the trial court acquired
jurisdiction over the person of petitioner by his own voluntary appearance in the
action against him. In this connection, Section 20, Rule 14 of the Rules of Court states:

SEC. 20. Voluntary appearance. – The defendant’s voluntary appearance in the action shall
be equivalent to service of summons. The inclusion in a motion to dismiss of other grounds
aside from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary
appearance. (emphasis supplied)

Petitioner voluntarily appeared in the action when he filed the "Omnibus Motion for
Reconsideration and to Admit Attached Answer."14 This was equivalent to service of summons
and vested the trial court with jurisdiction over the person of petitioner.

EntitlementTo

Notice Of Proceedings

The trial court allowed respondent to present its evidence ex parte on account of petitioner’s
failure to file his answer within the prescribed period. Petitioner assails this action on the part of
the trial court as well as the said court’s failure to furnish him with copies of orders and
processes issued in the course of the proceedings.

The effects of a defendant’s failure to file an answer within the time allowed therefor are
governed by Sections 3 and 4, Rule 9 (on Effect of Failure to Plead) of the Rules of Court:

SEC. 3. Default; declaration of. – If the defending party fails to answer within the time
allowed therefor, the court shall, upon motion of the claiming party with notice to the
defending party, and proof of such failure, declare the defending party in default.
Thereupon, the court shall proceed to render judgment granting the claimant such relief as his
pleading may warrant, unless the court in its discretion requires the claimant to submit evidence.
Such reception of evidence may be delegated to the clerk of court.

SEC. 4. Effect of order of default. – A party in default shall be entitled to notice of
subsequent proceedings but not to take part in the trial. (emphasis supplied)
If the defendant fails to file his answer on time, he may be declared in default upon motion of the
plaintiff with notice to the said defendant. In case he is declared in default, the court shall
proceed to render judgment granting the plaintiff such relief as his pleading may warrant, unless
the court in its discretion requires the plaintiff to submit evidence. The defaulting defendant may
not take part in the trial but shall be entitled to notice of subsequent proceedings.

In this case, even petitioner himself does not dispute that he failed to file his answer on time.
That was in fact why he had to file an "Omnibus Motion for Reconsideration and to Admit
Attached Answer." But respondent moved only for the ex parte presentation of evidence, not
for the declaration of petitioner in default. In its February 6, 2004 order, the trial court stated:

The disputed Order of September 11, 2003 allowing the presentation of evidence ex-parte
precisely ordered that "despite and notwithstanding service of summons by publication, no
answer has been filed with the Court within the required period and/or forthcoming.
["] Effectively[,] that was a finding that the defendant [that is, herein petitioner] was in
default for failure to file an answer or any responsive pleading within the period fixed in the
publication as precisely the defendant [could not] be found and for which reason, service of
summons by publication was ordered. It is simply illogical to notify the defendant of the Order
of September 11, 2003 simply on account of the reality that he was no longer residing and/or
found on his last known address and his whereabouts unknown – thus the publication of the
summons. In other words, it was reasonable to expect that the defendant will not receive any
notice or order in his last known address. Hence, [it was] impractical to send any notice or order
to him. Nonetheless, the record[s] will bear out that a copy of the order of September 11,
2003 was mailed to the defendant at his last known address but it was not claimed. (emphasis
supplied)

As is readily apparent, the September 11, 2003 order did not limit itself to permitting respondent
to present its evidence ex parte but in effect issued an order of default. But the trial court could
not validly do that as an order of default can be made only upon motion of the claiming
party.15 Since no motion to declare petitioner in default was filed, no default order should have
been issued.

To pursue the matter to its logical conclusion, if a party declared in default is entitled to notice of
subsequent proceedings, all the more should a party who has not been declared in default be
entitled to such notice. But what happens if the residence or whereabouts of the defending party
is not known or he cannot be located? In such a case, there is obviously no way notice can be
sent to him and the notice requirement cannot apply to him. The law does not require that the
impossible be done.16 Nemo tenetur ad impossibile. The law obliges no one to perform an
impossibility.17 Laws and rules must be interpreted in a way that they are in accordance with
logic, common sense, reason and practicality.18

Hence, even if petitioner was not validly declared in default, he could not reasonably demand
that copies of orders and processes be furnished him. Be that as it may, a copy of the September
11, 2003 order was nonetheless still mailed to petitioner at his last known address but it was
unclaimed.
CorrectnessOf

Non-Admission Of Answer

Petitioner failed to file his answer within the required period. Indeed, he would not have moved
for the admission of his answer had he filed it on time. Considering that the answer was belatedly
filed, the trial court did not abuse its discretion in denying its admission.

Petitioner’s plea for equity must fail in the face of the clear and express language of the rules of
procedure and of the September 11, 2003 order regarding the period for filing the answer. Equity
is available only in the absence of law, not as its replacement.19 Equity may be applied only in
the absence of rules of procedure, never in contravention thereof.

WHEREFORE, the petition is hereby DENIED.

Costs against petitioner.

SO ORDERED.

G.R. No. 144662 : October 13, 2003

SPOUSES EFREN MASON and DIGNA MASON, petitioners, vs. THE HONORABLE

COURT OF APPEALS and COLUMBUS PHILIPPINES BUS
CORPORATION, Respondents.

DECISION

QUISUMBING, J.:

This petition for review assails the decision,1 dated May 12, 2000, of the Court of Appeals and
its resolution2 dated August 25, 2000 in CA-G.R. SP No. 54649 denying petitioners motion for
reconsideration. The decision set aside the decision3 of the Regional Trial Court of Pasay City,
Branch 112, in Civil Case No. 98-1567 and directed said court to conduct further proceedings on
the complaint for rescission of lease contract.

The antecedent facts of the case, as found by the Court of Appeals, are as follows:

Petitioners spouses Efren and Digna Mason owned two parcels of land located along
Epifanio delos Santos Avenue in Pasay City. On March 30, 1993, petitioners and private
respondent Columbus Philippines Bus Corporation (hereafter Columbus) entered into a lease
contract, under which Columbus undertook to construct a building worth ten million pesos
(P10,000,000) at the end of the third year of the lease. Because private respondent failed to
comply with this stipulation, the petitioners on November 13, 1998, filed a complaint for
rescission of contract with damages against private respondent before the Regional Trial Court of
Pasay City, docketed as Civil Case No. 98-1567. Summons was served upon private respondent
through a certain Ayreen Rejalde. While the receiving copy of the summons described Rejalde as
a secretary of Columbus, the sheriffs return described Rejalde as a secretary to the corporate
president, duly authorized to receive legal processes.

Private respondent failed to file its answer or other responsive pleading, hence petitioners filed a
motion to declare private respondent in default. The motion was granted and petitioners were
allowed to present evidence ex-parte. Thereafter, the case was submitted for decision.

On April 22, 1999, the trial court rendered its decision whose dispositive portion reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and
against defendant declaring the contract of lease rescinded, terminated and cancelled, and
ordering defendant:

1. To pay plaintiffs the amount of P10 Million which is the value of the building which
defendant failed to construct on the leased properties, as and by way [of] actual damages;

2. To pay plaintiffs the amount of P63,862.57 beginning November 1998 until defendant and the
sub-lessee vacate the leased property by way of reasonable compensation for the use of the
properties;

3. and all other persons and entities claiming rights under it, to surrender possession to plaintiffs
and to vacate the leased premises;

4. to pay plaintiffs the amount of P300,000.00 as and by way of moral damages;

5. to pay plaintiffs the amount of P100,000.00 as and by way of exemplary damages;

6. to pay plaintiffs attorneys fees in the amount of P100,000.00; and

7. to pay the cost of suit.

SO ORDERED.4cräläwvirtualibräry

That decision became final on May 12, 1999. The following day, private respondent filed a
motion to lift order of default, which was opposed by petitioners. The trial court ordered the
parties to submit their respective memoranda. However, without waiting for the same, the trial
court on May 26, 1999, denied the motion to lift order of default, thus:

It appearing that the decision rendered by this Court on April 27, 1999 became final and
executory on May 12, 1999, defendants Motion to Lift Order of Default is hereby DENIED.
Concomitant thereto, plaintiffs Motion for Execution is hereby GRANTED.

The Order of this Court on May 21, 1999 allowing the parties to file their respective memoranda
within ten (10) days from May 21, 1999 is hereby revoked and set aside, since the incidents can
be resolved based on the records.
WHEREFORE, let a writ of execution issue to enforce and implement the final and executory
decision rendered by this Court on April 27, 1999.

SO ORDERED.5cräläwvirtualibräry

Private respondent filed a motion for reconsideration, which was denied. Undaunted, private
respondent filed a manifestation and motion to lift the writ of execution. It suffered the same fate
as the motion for reconsideration for being dilatory. The branch sheriff was directed to proceed
with the enforcement of the decision.

Private respondent appealed to the Court of Appeals, which ruled in its favor, thus:

WHEREFORE, the petition is GRANTED; the decision in Civil Case No. 98-1567 and all the
proceedings therein, including the order of default and writ of execution, are SET ASIDE. The
court a quo is ORDERED to require petitioner to file its answer and thereafter to conduct further
appropriate proceedings with reasonable dispatch.

SO ORDERED.6cräläwvirtualibräry

The Court of Appeals held that the trial court erred when it denied private respondents motion to
lift order of default. The appellate court pointed out that private respondent was not properly
served with summons, thus it cannot be faulted if it failed to file an Answer. Section 11, [7 Rule
14 of the 1997 Rules of Civil Procedure requires that service of summons upon domestic private
juridical entity shall be made through its president, managing partner, general manager,
corporate secretary, treasurer or in-house counsel. Since service upon private respondent was
made through a certain Ayreen Rejalde, a mere filing clerk in private respondents office, as
evidenced by the latters employment record, such service cannot be considered valid.
Consequently, the subsequent proceedings, including the order of default, judgment by default
and its execution, were also invalid because the trial court did not acquire jurisdiction over
private respondent. Besides, judgments by default are not favored, especially so when there is
a prima facie showing that the defaulting party has a meritorious defense, which in this case was
grounded on the contract of lease sued upon, said the Court of Appeals.

Petitioner filed a motion for reconsideration, but to no avail. Hence, this petition for review
averring that the Court of Appeals erred in:

I. HOLDING THAT THERE WAS NO VALID SERVICE OF SUMMONS UPON PRIVATE

RESPONDENT COLUMBUS PHILIPPINES BUS CORPORATION

II. NOT HOLDING THAT THERE WAS VALID SERVICE OF SUMMONS

CONFORMABLY WITH THE SUBSTANTIAL COMPLIANCE RULE.

III. HOLDING THAT WITH THE ADOPTION OF SECTION 11, RULE 14 OF THE 1997
RULES OF CIVIL PROCEDURE, THE SUBSTANTIAL COMPLIANCE RULE NO LONGER
APPLIES.
IV. NOT HOLDING THAT JURISDICTION WAS ACQUIRED OVER PRIVATE
RESPONDENT COLUMBUS PHILIPPINES BUS CORPORATION AND THAT ITS
MOTION TO LIFT ORDER OF DEFAULT LACKS MERIT.8cräläwvirtualibräry

The issues in this case may be succinctly stated as follows:

a. Whether there was valid service of summons on private respondent for the trial court to
acquire jurisdiction, and

b. Whether private respondents motion to lift order of default was in order.

On the first issue, petitioners contend that while Section 11, Rule 14 of the 1997 Rules of Civil
Procedure clearly specifies the persons authorized to receive summons on behalf of a private
juridical entity, said provision did not abandon or render inapplicable the substantial compliance
rule. Petitioners cite Millenium Industrial Commercial Corporation v. Tan,9 and maintain that
this Court, by referring to E.B Villarosa & Partner Co., Ltd. v. Judge Benito,10 effectively ruled
that said provision is the statement of the general rule on service of summons upon corporation
and the substantial compliance rule is the exception. Petitioners claim that this Court, in an array
of cases, upheld the substantial compliance rule when it allowed the validity of the service of
summons on the corporations employee other than those mentioned in the Rule where said
summons and complaint were in fact seasonably received by the corporation from said
employee. Petitioners insist that technicality must not defeat speedy justice.

Petitioners stress that even though the summons was received by a mere filing clerk in private
respondents corporation, there was substantial compliance with Section 11, Rule 14 because the
summons actually reached private respondent. This can be gleaned from private respondents
motion to lift order of default where private respondent did not question the validity of the
service of summons but explained in paragraph three thereof that its failure to answer the
complaint was due to its impression that the case would not be pursued by petitioners because
the corporation already made payments to them.[11cräläwvirtualibräry

From said averment, according to petitioners, private respondent in effect admitted that it
received the summons. Notwithstanding this, private respondent did not file its answer to the
complaint, said the petitioners. This is tantamount to negligence which the court cannot tolerate,
petitioners conclude. There being valid service of summons, the Regional Trial Court acquired
jurisdiction over private respondent, according to petitioners.

Petitioners further contend that the Court of Appeals reliance on E.B Villarosa & Partner Co.,
Ltd. v. Judge Benito,12 in denying their motion for reconsideration was misplaced, because the
factual milieu in said case was different from that in the instant case. In Villarosa, according to
them, there was no showing of actual receipt by the defendant corporation of the summons while
in this case, private respondent actually received the summons.

Private respondent counters that nowhere in the Millenium case did this Court expressly state or
remotely imply that we have not abandoned the doctrine of substantial compliance. Private
respondent claims that petitioners misquoted the portion of the Millenium decision where this
Court cited the Villarosa case, to make it appear that the Villarosa ruling, which provides an
interpretation of Section 11, Rule 14 of the 1997 Rules of Civil Procedure, states the general rule
on the service of summons upon corporations where the substantial compliance rule is the
exception. Private respondent avers that what this Court discussed in the Millenium case was the
rule on service of summons under the old Rules of Court prior to the promulgation and
effectivity of the 1997 Rules of Civil Procedure. The Millenium case held that as a general rule,
service upon one who is not enumerated in Section 13,13 Rule 14 of the then Rules of Court is
invalid, according to private respondent. An exception is when the summons is actually received
by the corporation, which means that there was substantial compliance with the rule. Private
respondent stresses that since the exception referred to the old rule, it cannot be made to apply to
the new rule, which clearly specifies and limits the persons authorized to receive the summons in
behalf of the corporation.

Neither can petitioners rely on Millenium to justify their theory, adds private respondent, because
at the time the complaint in this case was filed with the trial court, the 1997 Rules of Civil
Procedure were already in effect. The case law applicable in the instant case, contends private
respondent, is Villarosa which squarely provides for the proper interpretation of the new rule on
the service of summons upon domestic corporation, thus:

The designation of persons or officers who are authorized to accept summons for a domestic
corporation or partnership is now limited and more clearly specified in Section 11, Rule 14 of the
1997 Rules of Civil Procedure. The rule now states general manager instead of only manager;
corporate secretary instead of secretary; and treasurer instead of cashier. The phrase agent, or any
of its directors is conspicuously deleted in the new rule.[14cräläwvirtualibräry

According to private respondent, service through Ayreen Rejalde, a mere filing clerk of private
respondent and not one of those enumerated above, is invalid.

We find private respondents submission on this issue meritorious.

The question of whether the substantial compliance rule is still applicable under Section 11, Rule
14 of the 1997 Rules of Civil Procedure has been settled in Villarosa which applies squarely to
the instant case. In the said case, petitioner E.B. Villarosa & Partner Co. Ltd. (hereafter
Villarosa) with principal office address at 102 Juan Luna St., Davao City and with branches at
2492 Bay View Drive, Tambo, Paraaque, Metro Manila and Kolambog, Lapasan, Cagayan de
Oro City, entered into a sale with development agreement with private respondent Imperial
Development Corporation. As Villarosa failed to comply with its contractual obligation, private
respondent initiated a suit for breach of contract and damages at the Regional Trial Court of
Makati. Summons, together with the complaint, was served upon Villarosa through its branch
manager at Kolambog, Lapasan, Cagayan de Oro City. Villarosa filed a Special Appearance with
Motion to Dismiss on the ground of improper service of summons and lack of jurisdiction. The
trial court denied the motion and ruled that there was substantial compliance with the rule, thus,
it acquired jurisdiction over Villarosa. The latter questioned the denial before us in its petition
for certiorari. We decided in Villarosas favor and declared the trial court without jurisdiction to
take cognizance of the case. We held that there was no valid service of summons on Villarosa as
service was made through a person not included in the enumeration in Section 11, Rule 14 of the
1997 Rules of Civil Procedure, which revised the Section 13, Rule 14 of the 1964 Rules of
Court. We discarded the trial courts basis for denying the motion to dismiss, namely, private
respondents substantial compliance with the rule on service of summons, and fully agreed with
petitioners assertions that the enumeration under the new rule is restricted, limited and exclusive,
following the rule in statutory construction that expressio unios est exclusio alterius. Had the
Rules of Court Revision Committee intended to liberalize the rule on service of summons, we
said, it could have easily done so by clear and concise language. Absent a manifest intent to
liberalize the rule, we stressed strict compliance with Section 11, Rule 14 of the 1997 Rules of
Civil Procedure.

Neither can herein petitioners invoke our ruling in Millenium  to support their position for said
case is not on all fours with the instant case. We must stress that Millenium was decided when
the 1964 Rules of Court were still in force and effect, unlike the instant case which falls under
the new rule. Hence, the cases15 cited by petitioners where we upheld the doctrine of substantial
compliance must be deemed overturned by Villarosa, which is the later case.

At this juncture, it is worth emphasizing that notice to enable the other party to be heard and to
present evidence is not a mere technicality or a trivial matter in any administrative or judicial
proceedings. The service of summons is a vital and indispensable ingredient of due process.
[16 We will deprive private respondent of its right to present its defense in this multi-million
peso suit, if we disregard compliance with the rules on service of summons.

On the second issue, petitioners claim that private respondents motion to lift order of default was
not in order for it was filed late, contrary to the provision in sub-paragraph (b), Section 3,
[17 Rule 9 of the 1997 Rules of Civil Procedure, which requires filing of the motion after notice
but before judgment. Also, the motion was (a) not under oath; (b) did not show the fraud,
accident, mistake or excusable neglect that caused private respondents failure to answer; and (c)
did not show private respondents meritorious defense.

Private respondent, in turn, argues that since service upon it was invalid, the trial court did not
acquire jurisdiction over it. Hence, all the subsequent proceedings in the trial court are null and
void, including the order of default. This renders the second issue now moot and academic.

We find merit in private respondents submissions. Since we have ruled that service of summons
upon private respondent through its filing clerk cannot be considered valid, it necessarily follows
therefore that the Regional Trial Court of Pasay City did not acquire jurisdiction over private
respondent.18 Consequently, all the subsequent proceedings held before it, including the order of
default, are null and void.19 As private respondent points out, the second issue has become moot
and academic.

WHEREFORE, the instant petition is DENIED. The questioned decision, as well as the
resolution, of the Court of Appeals in CA-G.R. SP No. 54649 are AFFIRMED. Costs against
petitioners.

SO ORDERED.
 G.R. No. 147369 : October 23, 2003

Spouses PATRICK JOSE and RAFAELA JOSE, Petitioners, v. Spouses HELEN BOYON

and ROMEO BOYON, Respondents.

DECISION

PANGANIBAN, J.:

In general, substituted service can be availed of only after a clear showing that personal service
of summons was not legally possible. Also, service by publication is applicable in actions in
rem and quasi in rem, but not in personal suits such as the present one which is for specific
performance.

The Case

Before the Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court,
assailing the February 26, 2001 Decision2 of the Court of Appeals (CA) in CA-GR SP No.
60888. The dispositive portion of the CA Decision is worded as follows:

WHEREFORE, on the basis of what prescinds, the assailed resolution and orders issued by the
public respondent are perforce ANNULLED and SET ASIDE. This pronouncement is
nonetheless rendered without prejudice to the refiling of the same case by the private respondents
with the court a quo.3

The Facts

The factual antecedents of the case are narrated by the CA in this wise:

On July 2, 1998, [petitioners] Patrick and Rafaela Jose lodged a complaint for specific
performance against [respondents] Helen and Romeo Boyon to compel them to facilitate the
transfer of ownership of a parcel of land subject of a controverted sale. The action was lodged
before the Regional Trial Court of Muntinlupa which is presided by herein public respondent
Judge N.C. Perello. On July 21, 1998, respondent judge, through the acting Branch Clerk of
Court of Branch 276 of the RTC of Muntinlupa City, issued summons to the [respondents]. As
per return of the summons, substituted service was resorted to by the process server allegedly
because efforts to serve the summons personally to the [respondents] failed. On December 9,
1998, [petitioners] filed before the trial court an Ex-parte Motion for Leave of Court to Effect
Summons by Publication. On December 28, 1998, public respondent issued an Order granting
the Ex-parte Motion for Leave of Court to Effect Summons by Publication. On July 30, 1999, the
respondent judge, sans a written motion, issued an Order declaring herein [respondents] in
default for failure to file their respective answers. As a consequence of the declaration of default,
[petitioners] were allowed to submit their evidence ex-parte. Ultimately, on December 7, 1999,
respondent judge issued the assailed resolution, the dispositive portion of which reads as follows:
 x x x Therefore, Spouses Helen and Romeo Boyon are directed to execute the necessary
document with the effect of withdrawing the Affidavit of Loss they filed and annotated with the
Register of Deeds of Makati City so that title to the parcel of land subject of the Deed of
Absolute Sale in favor of the Plaintiffs be transferred in their names. Thereafter the Register of
Deeds of Makati City or Muntinlupa City may cancel Transfer of Certificate of Title No. 149635
of the Defendants and issue another to Plaintiff under the deed of sale, clean and free of any
reported encumbrance.

Defendants are also directed to pay Plaintiffs actual expenses in the amount of P20,000 and
attorneys fees of P20,000 including costs of this suit.

xxx

On January 5, 2000, [respondent] Helen Boyon, who was then residing in the United States of
America, was surprised to learn from her sister Elizabeth Boyon, of the resolution issued by the
respondent court. On January 18, 2000, [respondents] filed an Ad Cautelam motion questioning,
among others, the validity of the service of summons effected by the court a quo. On March 17,
2000, the public respondent issued an Order denying the said motion on the basis of the
defaulted [respondents] supposed loss of standing in court. On March 29, 2000, the [respondents]
once again raised the issue of jurisdiction of the trial court via a motion for reconsideration.
On June 22, 2000, however, an Order was issued by the public respondent denying the said
motion. The [petitioners] moved for the execution of the controverted judgment which the
respondent judge ultimately granted.4cräläwvirtualibräry

Thereafter, respondents filed before the CA a Petition for certiorari under Rule 65 of the Revised
Rules of Civil Procedure, questioning the jurisdiction of the regional trial court (RTC).

Ruling of the Court of Appeals

The CA held that the trial court had no authority to issue the questioned Resolution and Orders.
According to the appellate court, the RTC never acquired jurisdiction over respondents because
of the invalid service of summons upon them. First, the sheriff failed to comply with the
requirements of substituted service of summons, because he did not specify in the Return of
Summons the prior efforts he had made to locate them and the impossibility of promptly serving
the summons upon them by personal service. Second, the subsequent summons by publication
was equally infirm, because the Complaint was a suit for specific performance and therefore an
action in personam. Consequently, the Resolution and the Orders were null and void, since the
RTC had never acquired jurisdiction over respondents.

Hence, this Petition.5

Issues

In their Memorandum, petitioners raise the following issues for our consideration:
A. The Honorable Court of Appeals erred in not holding that the assailed Resolution
dated December 7, 1999 was already final and executory

B. The Honorable Court of Appeals erred in giving due course to the Petition for Certiorari of
private respondents despite the pendency of an appeal earlier filed

C. The Honorable Court erred in not holding that the Petition for Certiorari was time barred

D. The Honorable Court of Appeals erred in holding that the proceedings in the lower court are
null and void due to invalid and defective service of summons and the court did not acquire
jurisdiction over the person of the respondents.6cräläwvirtualibräry

In sum, the main issue revolves around the validity of the service of summons on respondents.

The Courts Ruling

The Petition has no merit.

Main Issue:

Validity of the Service of Summons

Petitioners aver that the CA erred in ruling that the service of summons on respondents was
invalid. They submit that although the case filed before the trial court was denominated as an
action for specific performance, it was actually an action quasi in rem, because it involved a
piece of real property located in the Philippines. They further argue that in actions quasi in
rem involving ownership of a parcel of land, it is sufficient that the trial court acquire
jurisdiction over the res. Thus, the summons by publication, which they effected subsequent to
the substituted service of summons, was allegedly sufficient.

On the other hand, respondents maintain that the proceedings in the trial court were null and void
because of the invalid and defective service of summons. According to them, the Return of
Summons issued by the process server of the RTC failed to state that he had exerted earnest
efforts to effect the service of summons. He allegedly tried to serve it personally on them on July
22, 1998 at No. 32 Ariza Drive, Camella Homes, Alabang. He, however, resorted to substituted
service on that same day, supposedly because he could not find respondents in the above address.
They further allege that the person to whom he gave the summons was not even a resident of that
address.

Respondents contend that when summons is served by substituted service, the return must show
that it was impossible to serve the summons personally, and that efforts had been exerted toward
that end. They add that noncompliance with the rule on substituted service renders invalid all
proceedings relative thereto.

As to the summons by publication subsequently effected by petitioners, respondents argue that

the case filed before the trial court was an action for specific performance and, therefore, an
action in personam. As such, the summons by publication was insufficient to enable the trial
court to acquire jurisdiction over the persons of respondents.

Respondents conclude that even granting that the service of summons by publication was
permissible under the circumstances, it would still be defective and invalid because of the failure
of petitioners to observe the requirements of law, like an Affidavit attesting that the latter
deposited in the post office a copy of the summons and of the order of publication, paid the
postage, and sent the documents by registered mail to the formers last known address.

We agree with respondents. In general, trial courts acquire jurisdiction over the person of the
defendant by the service of summons. Where the action is in personam and the defendant is in
the Philippines, such service may be done by personal or substituted service, following the
procedures laid out in Sections 6 and 7 of Rule 14 of the Revised Rules of Court, which read:

Section 6. Service in person on defendant. - Whenever practicable, the summons shall be served
by handing a copy thereof to the defendant in person, or, if he refuses to receive and sign for it,
by tendering it to him.

Section 7. Substituted service. - If, for justifiable causes, the defendant cannot be served within a
reasonable time as provided in the preceding section, service may be effected (a) by leaving
copies of the summons at the defendant's residence with some person of suitable age and
discretion then residing therein, or (b) by leaving the copies at defendants office or regular place
of business with some competent person in charge thereof.

As can be gleaned from the above-quoted Sections, personal service of summons is preferred to
substituted service. Only if the former cannot be made promptly can the process server resort to
the latter. Moreover, the proof of service of summons must (a) indicate the impossibility of
service of summons within a reasonable time; (b) specify the efforts exerted to locate the
defendant; and (c) state that the summons was served upon a person of sufficient age and
discretion who is residing in the address, or who is in charge of the office or regular place of
business, of the defendant.7 It is likewise required that the pertinent facts proving these
circumstances be stated in the proof of service or in the officers return. The failure to comply
faithfully, strictly and fully with all the foregoing requirements of substituted service renders the
service of summons ineffective.8

Defective Personal
Service of Summons

In the instant case, it appears that the process server hastily and capriciously resorted to
substituted service of summons without actually exerting any genuine effort to locate
respondents. A review of the records9 reveals that the only effort he exerted was to go to No. 32
Ariza Drive, Camella Homes, Alabang on July 22, 1998, to try to serve the summons personally
on respondents. While the Return of Summons states that efforts to do so were ineffectual and
unavailing because Helen Boyon was in the United States and Romeo Boyon was in Bicol, it did
not mention exactly what efforts -- if any -- were undertaken to find respondents. Furthermore, it
did not specify where or from whom the process server obtained the information on their
whereabouts. The pertinent portion of the Return of Summons is reproduced as follows:

That efforts to serve the said Summons personally upon defendants Sps. Helen and Romeo
Boyon were made but the same were ineffectual and unavailing for the reason that defendant
Helen Boyon is somewhere in the United States of America and defendant Romeo Boyon is in
Bicol thus substituted service was made in accordance with Section 7, Rule 14, of the Revised
Rules of Court.10cräläwvirtualibräry

The Return of Summons shows that no effort was actually exerted and no positive step taken by
either the process server or petitioners to locate and serve the summons personally on
respondents. At best, the Return merely states the alleged whereabouts of respondents without
indicating that such information was verified from a person who had knowledge thereof.
Certainly, without specifying the details of the attendant circumstances or of the 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 substituted service of summons.

The necessity of stating in the process servers Return or Proof of Service the material facts and
circumstances sustaining the validity of substituted service was explained by this Court
in Hamilton v. Levy,11 from which we quote:

x x x The pertinent facts and circumstances attendant to the service of summons must be stated
in the proof of service or Officers Return; otherwise, any substituted service made in lieu of
personal service cannot be upheld. This is necessary because substituted service is in derogation
of the usual method of service. It is a method extraordinary in character and hence may be used
only as prescribed and in the circumstances authorized by statute. Here, no such explanation was
made. Failure to faithfully, strictly, and fully comply with the requirements of substituted service
renders said service ineffective.12cräläwvirtualibräry

Moreover, the requirements of substituted service of summons and the effect of noncompliance
with the subsequent proceedings therefor were discussed in Madrigal v. Court of Appeals13 as
follows:

In a long line of cases, this Court held that the impossibility of personal service justifying
availment of substituted service should be explained in the proof of service; why efforts exerted
towards personal service failed. The pertinent facts and circumstances attendant to the service of
summons must be stated in the proof of service or Officers Return; otherwise, the substituted
service cannot be upheld. It bears stressing that since service of summons, especially for actions
in personam, is essential for the acquisition of jurisdiction over the person of the defendant, the
resort to a substituted service must be duly justified. Failure to do so would invalidate all
subsequent proceedings on jurisdictional grounds.14
Summons by
Publication Improper

It must be noted that extraterritorial service of summons or summons by publication applies only
when the action is in rem or quasi in rem. The first is an action against the thing itself instead of
against the defendants person; in the latter, an individual is named as defendant, and the purpose
is to subject that individuals interest in a piece of property to the obligation or loan burdening
it.15

In the instant case, what was filed before the trial court was an action for specific performance
directed against respondents. While the suit incidentally involved a piece of land, the ownership
or possession thereof was not put in issue, since they did not assert any interest or right over it.
Moreover, this Court has consistently declared that an action for specific performance is
an action in personam.16cräläwvirtualibräry

Having failed to serve the summons on respondents properly, the RTC did not validly acquire
jurisdiction over their persons. Consequently, due process demands that all the proceedings
conducted subsequent thereto should be deemed null and void.17cräläwvirtualibräry

WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED.

Costs against petitioners.

SO ORDERED.

[G.R. NO. 130974 : August 16, 2006]

MA. IMELDA M. MANOTOC, Petitioner, v. HONORABLE COURT OF APPEALS and

AGAPITA TRAJANO on behalf of the Estate of ARCHIMEDES TRAJANO, Respondents.

DECISION

VELASCO, JR., J.:

The court's jurisdiction over a defendant is founded on a valid service of summons. Without a
valid service, the court cannot acquire jurisdiction over the defendant, unless the defendant
voluntarily submits to it. The defendant must be properly apprised of a pending action against
him and assured of the opportunity to present his defenses to the suit. Proper service of summons
is used to protect one's right to due process.

The Case

This Petition for Review on Certiorari 1 under Rule 45 presents the core issue whether there was
a valid substituted service of summons on petitioner for the trial court to acquire jurisdiction.
Petitioner Manotoc claims the court a quo should have annulled the proceedings in the trial court
for want of jurisdiction due to irregular and ineffective service of summons.
 The Facts

Petitioner is the defendant in Civil Case No. 63337 entitled Agapita Trajano, pro se, and on
behalf of the Estate of Archimedes Trajano v. Imelda 'Imee' R. Marcos-Manotoc 2 for Filing,
Recognition and/or Enforcement of Foreign Judgment. Respondent Trajano seeks the
enforcement of a foreign court's judgment rendered on May 1, 1991 by the United States District
Court of Honolulu, Hawaii, United States of America, in a case entitled Agapita Trajano, et al. v.
Imee Marcos-Manotoc a.k.a. Imee Marcos, Civil Case No. 86-0207 for wrongful death of
deceased Archimedes Trajano committed by military intelligence officials of the Philippines
allegedly under the command, direction, authority, supervision, tolerance, sufferance and/or
influence of defendant Manotoc, pursuant to the provisions of Rule 39 of the then Revised Rules
of Court.

Based on paragraph two of the Complaint, the trial court issued a Summons 3 on July 6, 1993
addressed to petitioner at Alexandra Condominium Corporation or Alexandra Homes, E2 Room
104, at No. 29 Meralco Avenue, Pasig City.

On July 15, 1993, the Summons and a copy of the Complaint were allegedly served upon (Mr.)
Macky de la Cruz, an alleged caretaker of petitioner at the condominium unit mentioned
earlier.4 When petitioner failed to file her Answer, the trial court declared her in default through
an Order 5 dated October 13, 1993.

On October 19, 1993, petitioner, by special appearance of counsel, filed a Motion to Dismiss 6 on
the ground of lack of jurisdiction of the trial court over her person due to an invalid substituted
service of summons. The grounds to support the motion were: (1) the address of defendant
indicated in the Complaint (Alexandra Homes) was not her dwelling, residence, or regular place
of business as provided in Section 8, Rule 14 of the Rules of Court; (2) the party (de la Cruz),
who was found in the unit, was neither a representative, employee, nor a resident of the place; (3)
the procedure prescribed by the Rules on personal and substituted service of summons was
ignored; (4) defendant was a resident of Singapore; and (5) whatever judgment rendered in this
case would be ineffective and futile.

During the hearing on the Motion to Dismiss, petitioner Manotoc presented Carlos Gonzales,
who testified that he saw defendant Manotoc as a visitor in Alexandra Homes only two times. He
also identified the Certification of Renato A. de Leon, which stated that Unit E-2104 was owned
by Queens Park Realty, Inc.; and at the time the Certification was issued, the unit was not being
leased by anyone. Petitioner also presented her Philippine passport and the
Disembarkation/Embarkation Card 7 issued by the Immigration Service of Singapore to show
that she was a resident of Singapore. She claimed that the person referred to in plaintiff's
Exhibits "A" to "EEEE" as "Mrs. Manotoc" may not even be her, but the mother of Tommy
Manotoc, and granting that she was the one referred to in said exhibits, only 27 out of 109 entries
referred to Mrs. Manotoc. Hence, the infrequent number of times she allegedly entered
Alexandra Homes did not at all establish plaintiff's position that she was a resident of said place.

On the other hand, Agapita Trajano, for plaintiffs' estate, presented Robert Swift, lead counsel
for plaintiffs in the Estate of Ferdinand Marcos Human Rights Litigation, who testified that he
participated in the deposition taking of Ferdinand R. Marcos, Jr.; and he confirmed that Mr.
Marcos, Jr. testified that petitioner's residence was at the Alexandra Apartment, Greenhills.8 In
addition, the entries 9 in the logbook of Alexandra Homes from August 4, 1992 to August 2,
1993, listing the name of petitioner Manotoc and the Sheriff's Return, 10 were adduced in
evidence.

On October 11, 1994, the trial court rejected Manotoc's Motion to Dismiss on the strength of its
findings that her residence, for purposes of the Complaint, was Alexandra Homes, Unit E-2104,
No. 29 Meralco Avenue, Pasig, Metro Manila, based on the documentary evidence of respondent
Trajano. The trial court relied on the presumption that the sheriff's substituted service was made
in the regular performance of official duty, and such presumption stood in the absence of proof
to the contrary.11

On December 21, 1994, the trial court discarded Manotoc's plea for reconsideration for lack of
merit.12

Undaunted, Manotoc filed a Petition for Certiorari and Prohibition 13 before the Court of

Appeals (CA) on January 20, 1995, docketed as CA-G.R. SP No. 36214 seeking the annulment
of the October 11, 1994 and December 21, 1994 Orders of Judge Aurelio C. Trampe.

Ruling of the Court of Appeals

On March 17, 1997, the CA rendered the assailed Decision, 14 dismissing the Petition
for Certiorari and Prohibition. The court a quo adopted the findings of the trial court that
petitioner's residence was at Alexandra Homes, Unit E-2104, at No. 29 Meralco Avenue, Pasig,
Metro Manila, which was also the residence of her husband, as shown by the testimony of Atty.
Robert Swift and the Returns of the registered mails sent to petitioner. It ruled that the
Disembarkation/Embarkation Card and the Certification dated September 17, 1993 issued by
Renato A. De Leon, Assistant Property Administrator of Alexandra Homes, were hearsay, and
that said Certification did not refer to July 1993 the month when the substituted service was
effected.

In the same Decision, the CA also rejected petitioner's Philippine passport as proof of her
residency in Singapore as it merely showed the dates of her departure from and arrival in the
Philippines without presenting the boilerplate's last two (2) inside pages where petitioner's
residence was indicated. The CA considered the withholding of those pages as suppression of
evidence. Thus, according to the CA, the trial court had acquired jurisdiction over petitioner as
there was a valid substituted service pursuant to Section 8, Rule 14 of the old Revised Rules of
Court.

On April 2, 1997, petitioner filed a Motion for Reconsideration 15 which was denied by the CA in
its Resolution 16 dated October 8, 1997.

Hence, petitioner has come before the Court for review on certiorari .

The Issues
Petitioner raises the following assignment of errors for the Court's consideration:

I. RESPONDENT COURT OF APPEALS COMMITTED [A] SERIOUS ERROR IN

RENDERING THE DECISION AND RESOLUTION IN QUESTION (ANNEXES A AND B)
IN DEFIANCE OF LAW AND JURISPRUDENCE IN RULING THAT THE TRIAL COURT
ACQUIRED JURISDICTION OVER THE PERSON OF THE PETITIONER THROUGH A
SUBSTITUTED SERVICE OF SUMMONS IN ACCORDANCE WITH SECTION 8, RULE 14
OF THE REVISED RULES OF COURT.

II. RESPONDENT COURT OF APPEALS COMMITTED [A] SERIOUS ERROR WHEN IT

RULED THAT THERE WAS A VALID SERVICE OF SUMMONS ON AN ALLEGED
CARETAKER OF PETITIONER'S RESIDENCE IN COMPLETE DEFIANCE OF THE
RULING IN CASTILLO v. CFI OF BULACAN, BR. IV, G.R. NO. L-55869, FEBRUARY 20,
1984, 127 SCRA 632 WHICH DEFINES THE PROPRIETY OF SUCH SERVICE UPON
MERE OVERSEERS OF PREMISES WHERE A PARTY SUPPOSEDLY RESIDES.

III. RESPONDENT COURT OF APPEALS COMMITTED [A] SERIOUS ERROR IN

CONCLUDING THAT THE RESIDENCE OF THE HUSBAND IS ALSO THE RESIDENCE
OF HIS WIFE CONTRARY TO THE RULING IN THE BANK OF THE PHILIPPINE
ISLANDS v. DE COSTER, G.R. NO. 23181, MARCH 16, 1925, 47 PHIL. 594.

IV. RESPONDENT COURT OF APPEALS COMMITTED [A] SERIOUS ERROR IN

FAILING TO APPLY THE RULE ON EXTRA-TERRITORIAL SERVICE OF SUMMONS
UNDER SECTIONS 17 AND 18, RULE 14 OF THE REVISED RULES OF COURT.17

The assigned errors bring to the fore the crux of the disagreement the validity of the substituted
service of summons for the trial court to acquire jurisdiction over petitioner.

The Court's Ruling

We GRANT the petition.

Acquisition of Jurisdiction

Jurisdiction over the defendant is acquired either upon a valid service of summons or the
defendant's voluntary appearance in court. When the defendant does not voluntarily submit to the
court's jurisdiction or when there is no valid service of summons, "any judgment of the court
which has no jurisdiction over the person of the defendant is null and void." 18 In an action
strictly in personam, personal service on the defendant is the preferred mode of service, that is,
by handing a copy of the summons to the defendant in person. If defendant, for excusable
reasons, cannot be served with the summons within a reasonable period, then substituted service
can be resorted to. While substituted service of summons is permitted, "it is extraordinary in
character and in derogation of the usual method of service." 19 Hence, it must faithfully and
strictly comply with the prescribed requirements and circumstances authorized by the rules.
Indeed, "compliance with the rules regarding the service of summons is as much important as the
issue of due process as of jurisdiction." 20
Requirements for Substituted Service

Section 8 of Rule 14 of the old Revised Rules of Court which applies to this case provides:

SEC. 8.21 Substituted service. - If the defendant cannot be served within a reasonable time as
provided in the preceding section [personal service on defendant], service may be effected (a) by
leaving copies of the summons at the defendant's residence with some person of suitable age and
discretion then residing therein, or (b) by leaving the copies at defendant's office or regular place
of business with some competent person in charge thereof.

We can break down this section into the following requirements to effect a valid substituted
service:

(1) Impossibility of Prompt Personal Service

The party relying on substituted service or the sheriff must show that defendant cannot be served
promptly or there is impossibility of prompt service.22 Section 8, Rule 14 provides that the
plaintiff or the sheriff is given a "reasonable time" to serve the summons to the defendant in
person, but no specific time frame is mentioned. "Reasonable time" 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." 23 Under the Rules, the service of
summons has no set period. However, when the court, clerk of court, or the plaintiff asks the
sheriff to make the return of the summons and the latter submits the return of summons, then the
validity of the summons lapses. The plaintiff may then ask for an alias summons if the service of
summons has failed.24 What then is a reasonable time for the sheriff to effect a personal service
in order to demonstrate impossibility of prompt service? 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. The Sheriff's Return provides data to the Clerk of
Court, which the clerk uses in the Monthly Report of Cases to be submitted to the Office of the
Court Administrator within the first ten (10) days of the succeeding month. Thus, one 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 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 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.25 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 the Return to justify substituted service. The form on
Sheriff's Return of Summons on Substituted Service prescribed in the Handbook for Sheriffs
published by the Philippine Judicial Academy requires a narration of the efforts made to find the
defendant personally and the fact of failure.26 Supreme Court Administrative Circular No. 5
dated November 9, 1989 requires that "impossibility of prompt service should be shown by
stating the efforts made to find the defendant personally and the failure of such efforts," which
should be made in the proof of 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." 27 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".28 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 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 immediately deliver it to the defendant
or at least notify the defendant of said receipt of summons. These matters must be clearly and
specifically described in the Return of Summons.

(4) A Competent Person in Charge

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 place. Thus, the person on whom the
substituted service will be made must be the one managing the office or business of defendant,
such as the president or manager; and such individual must have sufficient knowledge to
understand the obligation of the defendant in the summons, its importance, and the prejudicial
effects arising from inaction on the summons. Again, these details must be contained in the
Return.
Invalid Substituted Service in the Case at Bar

Let us examine the full text of the Sheriff's Return, which reads:

THIS IS TO CERTIFY that on many occasions several attempts were made to serve the
summons with complaint and annexes issued by this Honorable Court in the above entitled case,
personally upon the defendant IMELDA 'IMEE' MARCOS-MANOTOC located at Alexandra
Condominium Corpration [sic] or Alexandra Homes E-2 Room 104 No. 29 Merlaco [sic] Ave.,
Pasig, Metro-Manila at reasonable hours of the day but to no avail for the reason that said
defendant is usually out of her place and/or residence or premises. That on the 15th day of July,
1993, substituted service of summons was resorted to in accordance with the Rules of Court in
the Philippines leaving copy of said summons with complaint and annexes thru [sic] (Mr) Macky
de la Cruz, caretaker of the said defendant, according to (Ms) Lyn Jacinto, Receptionist and
Telephone Operator of the said building, a person of suitable age and discretion, living with the
said defendant at the given address who acknowledged the receipt thereof of said processes but
he refused to sign (emphases supplied).

WHEREFORE, said summons is hereby returned to this Honorable Court of origin, duly served
for its record and information.

Pasig, Metro-Manila July 15, 1993.29

A meticulous scrutiny of the aforementioned Return readily reveals the absence of material data
on the serious efforts to serve the Summons on petitioner Manotoc in person. There is no clear
valid reason cited in the Return why those efforts proved inadequate, to reach the conclusion that
personal service has become impossible or unattainable outside the generally couched phrases of
"on many occasions several attempts were made to serve the summons x x x personally," "at
reasonable hours during the day," and "to no avail for the reason that the said defendant is
usually out of her place and/or residence or premises." Wanting in detailed information, the
Return deviates from the ruling in Domagas v. Jensen 30 and other related cases 31 that the
pertinent facts and circumstances on the efforts exerted to serve the summons personally must be
narrated in the Return. It cannot be determined how many times, on what specific dates, and at
what hours of the day the attempts were made. Given the fact that the substituted service of
summons may be assailed, as in the present case, by a Motion to Dismiss, it is imperative that the
pertinent facts and circumstances surrounding the service of summons be described with more
particularity in the Return or Certificate of Service.

Besides, apart from the allegation of petitioner's address in the Complaint, it has not been shown
that respondent Trajano or Sheriff Cañelas, who served such summons, exerted extraordinary
efforts to locate petitioner. Certainly, the second paragraph of the Complaint only states that
respondents were "informed, and so [they] allege" about the address and whereabouts of
petitioner. Before resorting to substituted service, a plaintiff must demonstrate an effort in good
faith to locate the defendant through more direct means.32 More so, in the case in hand, when the
alleged petitioner's residence or house is doubtful or has not been clearly ascertained, it would
have been better for personal service to have been pursued persistently.
In the case Umandap v. Sabio, Jr., 33 it may be true that the Court held that a Sheriff's Return,
which states that "despite efforts exerted to serve said process personally upon the defendant on
several occasions the same proved futile," conforms to the requirements of valid substituted
service. However, in view of the numerous claims of irregularities in substituted service which
have spawned the filing of a great number of unnecessary special civil actions of certiorari and
appeals to higher courts, resulting in prolonged litigation and wasteful legal expenses, the Court
rules in the case at bar that the narration of the efforts made to find the defendant and the fact of
failure written in broad and imprecise words will not suffice. The facts and circumstances should
be stated with more particularity and detail on the number of attempts made at personal service,
dates and times of the attempts, inquiries to locate defendant, names of occupants of the alleged
residence, and the reasons for failure should be included in the Return to satisfactorily show the
efforts undertaken. That such efforts were made to personally serve summons on defendant, and
those resulted in failure, would prove impossibility of prompt personal service.

Moreover, to allow sheriffs to describe the facts and circumstances in inexact terms would
encourage routine performance of their precise duties relating to substituted service for it would
be quite easy to shroud or conceal carelessness or laxity in such broad terms. Lastly, considering
that monies and properties worth millions may be lost by a defendant because of an irregular or
void substituted service, it is but only fair that the Sheriff's Return should clearly and
convincingly show the impracticability or hopelessness of personal service.

Granting that such a general description be considered adequate, there is still a serious
nonconformity from the requirement that the summons must be left with a "person of suitable
age and discretion" residing in defendant's house or residence. Thus, there are two (2)
requirements under the Rules: (1) recipient must be a person of suitable age and discretion; and
(2) recipient must reside in the house or residence of defendant. Both requirements were not met.
In this case, the Sheriff's Return lacks information as to residence, age, and discretion of Mr.
Macky de la Cruz, aside from the sheriff's general assertion that de la Cruz is the "resident
caretaker" of petitioner as pointed out by a certain Ms. Lyn Jacinto, alleged receptionist and
telephone operator of Alexandra Homes. It is doubtful if Mr. de la Cruz is residing with
petitioner Manotoc in the condominium unit considering that a married woman of her stature in
society would unlikely hire a male caretaker to reside in her dwelling. With the petitioner's
allegation that Macky de la Cruz is not her employee, servant, or representative, it is necessary to
have additional information in the Return of Summons. Besides, Mr. Macky de la Cruz's refusal
to sign the Receipt for the summons is a strong indication that he did not have the necessary
"relation of confidence" with petitioner. To protect petitioner's right to due process by being
accorded proper notice of a case against her, the substituted service of summons must be shown
to clearly comply with the rules.

It has been stated and restated that substituted service of summons must faithfully and strictly
comply with the prescribed requirements and in the circumstances authorized by the rules.34

Even American case law likewise stresses the principle of strict compliance with statute or rule
on substituted service, thus:
The procedure prescribed by a statute or rule for substituted or constructive service must be
strictly pursued.35 There must be strict compliance with the requirements of statutes authorizing
substituted or constructive service.36

Where, by the local law, substituted or constructive service is in certain situations authorized in
the place of personal service when the latter is inconvenient or impossible, a strict and literal
compliance with the provisions of the law must be shown in order to support the judgment based
on such substituted or constructive service.37 Jurisdiction is not to be assumed and exercised on
the general ground that the subject matter of the suit is within the power of the court. The inquiry
must be as to whether the requisites of the statute have been complied with, and such compliance
must appear on the record.38 The fact that the defendant had actual knowledge of attempted
service does not render the service effectual if in fact the process was not served in accordance
with the requirements of the statute.39

Based on the above principles, respondent Trajano failed to demonstrate that there was strict
compliance with the requirements of the then Section 8, Rule 14 (now Section 7, Rule 14 of the
1997 Rules of Civil Procedure).

Due to non-compliance with the prerequisites for valid substituted service, the proceedings held
before the trial court perforce must be annulled.

The court a quo heavily relied on the presumption of regularity in the performance of official
duty. It reasons out that "[t]he certificate of service by the proper officer is prima facie evidence
of the facts set out herein, and to overcome the presumption arising from said certificate, the
evidence must be clear and convincing." 40

The Court acknowledges that this ruling is still a valid doctrine. However, for the presumption to
apply, the Sheriff's Return must show that serious efforts or attempts were exerted to personally
serve the summons and that said efforts failed. These facts must be specifically narrated in the
Return. To reiterate, it must clearly show that the substituted service must be made on a person
of suitable age and discretion living in the dwelling or residence of defendant. Otherwise, the
Return is flawed and the presumption cannot be availed of. As previously explained, the Return
of Sheriff Cañelas did not comply with the stringent requirements of Rule 14, Section 8 on
substituted service.

In the case of Venturanza v. Court of Appeals, 41 it was held that "x x x the presumption of
regularity in the performance of official functions by the sheriff is not applicable in this case
where it is patent that the sheriff's return is defective (emphasis supplied)." While the Sheriff's
Return in the Venturanza case had no statement on the effort or attempt to personally serve the
summons, the Return of Sheriff Cañelas in the case at bar merely described the efforts or
attempts in general terms lacking in details as required by the ruling in the case of Domagas v.
Jensen and other cases. It is as if Cañelas' Return did not mention any effort to accomplish
personal service. Thus, the substituted service is void.

On the issue whether petitioner Manotoc is a resident of Alexandra Homes, Unit E-2104, at No.
29 Meralco Avenue, Pasig City, our findings that the substituted service is void has rendered the
matter moot and academic. Even assuming that Alexandra Homes Room 104 is her actual
residence, such fact would not make an irregular and void substituted service valid and effective.

IN VIEW OF THE FOREGOING, this Petition for Review is hereby GRANTED and the
assailed March 17, 1997 Decision and October 8, 1997 Resolution of the Court of Appeals and
the October 11, 1994 and December 21, 1994 Orders of the Regional Trial Court, National
Capital Judicial Region, Pasig City, Branch 163 are hereby REVERSED and SET ASIDE.No
costs.

SO ORDERED.

SECOND DIVISION

G.R. No. 206653, February 25, 2015

YUK LING ONG, Petitioner, v. BENJAMIN T. CO, Respondent.

DECISION

MENDOZA, J.:

In court proceedings, there is no right more cherished than the right of every litigant to be given
an opportunity to be heard. This right begins at the very moment that summons is served on the
defendant. The Rules of Court places utmost importance in ensuring that the defendant
personally grasp the weight of responsibility that will befall him. Thus, it is only in exceptional
circumstances that constructive notification, or substituted service of summons, is allowed. If the
server falls short of the rigorous requirements for substituted service of summons, then the Court
has no other option but to strike down a void judgment, regardless of the consequences.

This is a petition for review on certiorari seeking to reverse and set aside the June 27, 2012
Decision1 and the March 26, 2013 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No.
106271, which denied the petition for annulment of judgment.

The Facts

Petitioner Yuk Ling Ong (petitioner), a British-Hong Kong national, and respondent Benjamin
Co (respondent), a Filipino citizen, were married on October 3, 1982 at Ellinwood-Malate
Church.3cralawlawlibrary

Sometime in November 2008, petitioner received a subpoena from the Bureau of Immigration
and Deportation (BID) directing her to appear before the said agency because her permanent
residence visa was being subjected to cancellation proceedings. Reportedly, her marriage with
respondent was nullified by the court.

When petitioner appeared before the BID, she was furnished with the copies of the following
documents: (1) petition for declaration of nullity of marriage filed as Civil Case No. CV-01-
0177; (2) petition for declaration of nullity of marriage docketed as Civil Case No. 02-0306; (3)
Decision,4 dated December 11, 2002, in Civil Case No. 02-0306 of the Regional Trial Court,
Branch 260 (RTC), Parañaque City, declaring the marriage between petitioner and respondent as
void ab initio; and (4) their marriage contract5 with the subject decision annotated thereon.
Petitioner was perplexed that her marriage with respondent had been declared void ab initio.

The above documents showed that on April 26, 2001, respondent filed a petition for declaration
of nullity6 on the ground of psychological incapacity before the RTC, which was docketed as
Civil Case No. CV-01-0177. Respondent stated that petitioner’s address was 600 Elcano St.,
Binondo, Manila. There was no showing of its status, whether pending, withdrawn or terminated.

On July 19, 2002, respondent filed another petition for declaration of nullity7 on the ground of
psychological incapacity before the RTC, docketed as Civil Case No. 02-0306. Respondent
indicated that petitioner’s address was 23 Sta. Rosa Street, Unit B-2 Manresa Garden Homes,
Quezon City. On July 29, 2002, the RTC issued summons.8 In his Server’s Return,9 process
server Rodolfo Torres, Jr. stated that, on August 1, 2002, substituted service of summons with
the copy of the petition was effected after several futile attempts to serve the same personally on
petitioner. The said documents were received by Mr. Roly Espinosa, a security officer.

On December 11, 2002, the RTC rendered a decision10 in Civil Case No. 02-0306 finding
respondent’s marriage with petitioner as void ab initio on the ground of psychological incapacity
under Article 36 of the Family Code. It stated that summons was served on petitioner on August
1, 2002, but she failed to file her responsive pleading within the reglementary period. The public
prosecutor also stated that there were no indicative facts to manifest collusion. Thus, the RTC
concluded that petitioner was psychologically incapacitated to perform her essential marital
obligations.

Consequently, petitioner filed a petition for annulment of judgment11 under Rule 47 of the Rules
of Court before the CA on November 24, 2008, claiming that she was never notified of the cases
filed against her. She prayed that the RTC decision, dated December 11, 2002, in Civil Case No.
02-0306, be nullified on the grounds of extrinsic fraud and lack of jurisdiction.

Petitioner alleged that first, respondent committed extrinsic fraud because, as seen in Civil Case
No. CV-01-0177, he deliberately indicated a wrong address to prevent her from participating in
the trial; second, jurisdiction over her person was not acquired in Civil Case No. 02-0306
because of an invalid substituted service of summons as no sufficient explanation, showing
impossibility of personal service, was stated before resorting to substituted service of
summons; third, the alleged substituted service was made on a security guard of their townhouse
and not on a member of her household; and fourth, she was not psychologically incapacitated to
perform her marital obligations.12cralawlawlibrary

Ruling of the Court of Appeals

On June 27, 2012, the CA rendered the assailed decision finding the petition for annulment of
judgment to be devoid of merit. It held that there was no sufficient proof to establish that
respondent employed fraud to insure petitioner’s non-participation in the trial of Civil Case No.
CV-01-0177.
Relying on Robinson v. Miralles,13the CA further ruled that the substituted service of summons
in Civil Case No. 02-0306 was valid. It found that there was a customary practice in petitioner’s
townhouse that the security guard would first entertain any visitors and receive any
communication in behalf of the homeowners. With this set-up, it was obviously impossible for
the process server to personally serve the summons upon petitioner. It also declared that the
process server’s return carries with it the presumption of regularity in the discharge of a public
officer’s duties and functions.

Petitioner moved for reconsideration, but her motion was denied by the CA in its
Resolution,14 dated March 26, 2013.

Hence, this petition, anchored on the following

ISSUES

1. Whether or not the Trial Court in Civil Case No. 02-0306 validly acquired
jurisdiction over the person of the petitioner.

2. Whether or not the facts proven by the petitioner constitute extrinsic fraud within
the purview of Rule 47 of the Rules of Court.15

Petitioner argues that there was an invalid substituted service of summons. The process server’s
return only contained a general statement that substituted service was resorted to “after several
futile attempts to serve the same personally,”16 without stating the dates and reasons of the failed
attempts. Petitioner also reiterates her argument that extrinsic fraud was employed.

In his Comment,17 filed on July 9, 2014, respondent contended that the server’s return
satisfactorily stated the reason for the resort to a substituted service of summons on August 1,
2002; and it was improbable that petitioner failed to receive the summons because it was sent to
the same address which she declared in this present petition.

Petitioner filed her Reply18 on October 8, 2014 reiterating her previous arguments.

The Court’s Ruling

The Court finds merit in the petition.

Annulment of judgment is a recourse equitable in character, allowed only in exceptional cases as

where there is no available or other adequate remedy. Rule 47 of the 1997 Rules of Civil
Procedure, as amended, governs actions for annulment of judgments or final orders and
resolutions, and Section 2 thereof explicitly provides only two grounds for annulment of
judgment, that is, extrinsic fraud and lack of jurisdiction.19 Annulment of judgment is an
equitable principle not because it allows a party-litigant another opportunity to reopen a
judgment that has long lapsed into finality but because it enables him to be discharged from the
burden of being bound to a judgment that is an absolute nullity to begin with.20cralawlawlibrary

Petitioner raises two grounds to support her claim for annulment of judgment: (1) extrinsic fraud
and (2) lack of jurisdiction. Her contention on the existence of extrinsic fraud, however, is too
unsubstantial to warrant consideration. The discussion shall then focus on the ground of lack of
jurisdiction.

Lack of jurisdiction on the part of the trial court in rendering the judgment or final order is either
lack of jurisdiction over the subject matter or nature of the action, or lack of jurisdiction over the
person of the petitioner. The former is a matter of substantive law because statutory law defines
the jurisdiction of the courts over the subject matter or nature of the action. The latter is a matter
of procedural law, for it involves the service of summons or other processes on the
petitioner.21cralawlawlibrary

In the present case, petitioner contends that there was lack of jurisdiction over her person
because there was an invalid substituted service of summons. Jurisdiction over the defendant is
acquired either upon a valid service of summons or the defendant's voluntary appearance in
court.22  If the defendant does not voluntarily appear in court, jurisdiction can be acquired by
personal or substituted service of summons as laid out under Sections 6 and 7 of Rule 14 of the
Rules of Court, which state:chanRoblesvirtualLawlibrary

Sec. 6. Service in person on defendant. - Whenever practicable, the summons shall be served by
handing a copy thereof to the defendant in person, or, if he refuses to receive and sign for it, by
tendering it to him.

Sec. 7. Substituted Service. - If, for justifiable causes, the defendant cannot be served within a
reasonable time as provided in the preceding section, service may be effected (a) by leaving
copies of the summons at the defendant's residence with some person of suitable age and
discretion then residing therein, or (b) by leaving the copies at defendant's office or regular place
of business with some competent person in charge thereof.

The landmark case of Manotoc v. CA (Manotoc)23  thoroughly discussed the rigorous

requirements of a substituted service of summons, to wit: xxx

(1) Impossibility of Prompt Personal Service

xxx

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 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 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 the Return to justify substituted service.

(3)  A Person of Suitable Age and Discretion

xxx

The sheriff must therefore determine if the person found in the alleged dwelling or residence of
defendant is of legal age, what 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 immediately
deliver it to the defendant or at least notify the defendant of said receipt of summons. These
matters must be clearly and specifically described in the Return of Summons. (Emphases
and underscoring supplied)

The pronouncements of the Court in Manotoc have been applied to several succeeding cases.
In Pascual v. Pascual,24 the return of summons did not show or indicate the actual exertion or
positive steps taken by the officer or process server in serving the summons personally to the
defendant. Similarly, in Spouses Afdal v. Carlos,25 the process server’s indorsements therein
failed to state that the personal service on the defendants was rendered impossible and that
efforts were made to find them personally. In both those cases, the Court ruled that the
meticulous requirements for substituted service of summons were not met.

There are cases, however, in which Manotoc was applied, but, nevertheless, it was ruled that
there was no lack of jurisdiction over the person of the defendant. In Sagana v. Francisco,26 the
diligent efforts exerted by the sheriff to locate the respondent were determined, not only based on
the sheriff's return, but also on the process server's notation and case records. In the case
of Wong v. Factor-Koyama,27 on the other hand, even if the sheriff performed an invalid
substituted service of summons, jurisdiction over the person of defendant was obtained because
the latter had actively participated in trial, amounting to a voluntary appearance under Section 20
of Rule 14.28cralawlawlibrary

In the case at bench, the summons in Civil Case No. 02-030629 was issued on July 29, 2002. In
his server’s return,30 the process server resorted to substituted service of summons on August 1,
2002. Surprisingly, the process server immediately opted for substituted service of summons
after only two (2) days from the issuance of the summons.  The server’s return stated the
following:chanRoblesvirtualLawlibrary

SERVER’S RETURN

THIS IS TO CERTIFY THAT on August 1, 2002, substituted service of summons with copy of
petition, were effected to respondent, Yuk Ling H. Ong, at the Unit B-2, No. 23 Sta. Rosa St.,
Manresa Garden Homes, Manresa Garden City, Quezon City, after several futile attempts to
serve the same personally. The said documents were received by Mr. Roly Espinosa of
sufficient age and discretion, the Security Officer thereat.

Therefore, respectfully returning to Court, original copy of summons, Duly Served, this 2nd day
of August, 2002.

RODOLFO P. TORRES, JR.

Process Server

(Emphasis supplied)

The server’s return utterly lacks sufficient detail of the attempts undertaken by the process server
to personally serve the summons on petitioner. The server simply made a general statement that
summons was effected after several futile attempts to serve the same personally. The server did
not state the specific number of attempts made to perform the personal service of summons; the
dates and the corresponding time the attempts were made; and the underlying reason for each
unsuccessful service. He did not explain either if there were inquiries made to locate the
petitioner, who was the defendant in the case. These important acts to serve the summons on
petitioner, though futile, must be specified in the return to justify substituted service.

The server’s return did not describe in detail the person who received the summons, on behalf of
petitioner. It simply stated that the summons was received “by Mr. Roly Espinosa of sufficient
age and discretion, the Security Officer thereat.” It did not expound on the competence of the
security officer to receive the summons.

Also, aside from the server’s return, respondent failed to indicate any portion of the records
which would describe the specific attempts to personally serve the summons. Respondent did not
even claim that petitioner made any voluntary appearance and actively participated in Civil Case
No. 02-0306.

The case of Robinson v. Miralles,  cited by the CA, is not applicable. In that case, the return
described in thorough detail how the security guard refused the sheriff’s entry despite several
attempts. The defendant in the said case specifically instructed the guard to prevent anybody to
proceed to her residence. In the present case, the attempts made by the process server were stated
in a broad and ambiguous statement.

The CA likewise erred in ruling that the presumption of regularity in the performance of official
duty could be applied in the case at bench. This presumption of regularity, however, was never
intended to be applied even in cases where there are no showing of substantial compliance with
the requirements of the rules of procedure. Such presumption does not apply where it is patent
that the sheriff’s or server’s return is defective.31 As earlier explained, the server’s return did not
comply with the stringent requirements of substituted service of summons.

Given that the meticulous requirements in Manotoc were not met, the Court is not inclined to
uphold the CA’s denial of the petition for annulment of judgment for lack of jurisdiction over the
person of petitioner because there was an invalid substituted service of summons. Accordingly,
the decision in Civil Case No. 02-0306 must be declared null and void.
The stricter rule in substituted service of summons was meant to address “[t]he numerous claims
of irregularities in substituted service which have spawned the filing of a great number of
unnecessary special civil actions of certiorari and appeals to higher courts, resulting in prolonged
litigation and wasteful legal expenses.”32cralawlawlibrary

Although the decision in Civil Case No. 02-0306 was promulgated as early as December 11,
2002, the Court must strike it down for lack of jurisdiction over the person of petitioner. The
favorable judgment enjoyed by respondent cannot be categorized as a genuine victory because it
was fought against an adversary, who was ignorant of the existing dispute. Whatever prize
bestowed upon the victor in such a void decision must also be undone. Respondent, if he wishes
to pursue, must start from scratch and institute his action for declaration of nullity again; this
time with petitioner fully aware and ready for litigation.

WHEREFORE, the petition is GRANTED. The June 27, 2012 Decision and the March 26,
2013 Resolution of the Court of Appeals in CA-G.R. SP No. 106271 are
hereby REVERSED and SET ASIDE. The December 11, 2002 Decision of the Regional Trial
Court, Branch 260, Parañaque City is hereby declared VOID.

SO ORDERED.chanroblesvir

G.R. No. 158407             January 17, 2005

FILOMENA DOMAGAS, petitioner,
vs.
VIVIAN LAYNO JENSEN, respondent.

DECISION

CALLEJO, SR., J.:

This is a petition for review on certiorari, under Rule 45 of the Rules of Court, of the
Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 73995, which affirmed the
Decision2 of the Regional Trial Court (RTC) of Dagupan City, Branch 44, in Civil Case No.
2000-0244-D, which declared null and void the decision of the Municipal Trial Court (MTC) of
Calasiao, Pangasinan in Civil Case No. 879.3

The antecedent facts follow.

On February 19, 1999, petitioner Filomena Domagas filed a complaint for forcible entry against
respondent Vivian Jensen before the MTC of Calasiao, Pangasinan. The petitioner alleged in her
complaint that she was the registered owner of a parcel of land covered by Original Certificate of
Title (OCT) No. P-30980, situated in Barangay Buenlag, Calasiao, Pangasinan, and with an area
of 827 square meters. On January 9, 1999 the respondent, by means of force, strategy and stealth,
gained entry into the petitioner’s property by excavating a portion thereof and thereafter
constructing a fence thereon. As such, the petitioner was deprived of a 68-square meter portion
of her property along the boundary line. The petitioner prayed that, after due proceedings,
judgment be rendered in her favor, thus:

3. And, after trial, judgment be rendered:

a) DECLARING the writ of Preliminary Mandatory Injunction and Writ of Preliminary

Injunction permanent;

b) ORDERING defendant, his representatives, agents and persons acting under her, to
vacate the portion of the property of the plaintiff occupied by them and to desist from
entering, excavating and constructing in the said property of the plaintiff described in
paragraph 2 hereof and/or from disturbing the peaceful ownership and possession of the
plaintiff over the said land, pending the final resolution of the instant action;

c) ORDERING defendant to pay reasonable rental at FIVE THOUSAND (₱5,000.00)

PESOS per month from January 9, 1999 up to the time she finally vacates and removes
all constructions made by her in the property of the plaintiff and up to the time she finally
restores the said property in the condition before her illegal entry, excavation and
construction in the property of the plaintiff;

d) ORDERING defendant to pay actual damages in the amount of TWENTY

THOUSAND (₱20,000.00) PESOS; moral damages in the amount of TWENTY
THOUSAND (₱20,000.00) PESOS; attorney’s fees of THIRTY THOUSAND
(₱30,000.00) PESOS in retainer’s fee and ONE THOUSAND FIVE HUNDRED
(₱1,500.00) PESOS per court appearance fee; exemplary damages in the amount of
TWENTY THOUSAND (₱20,000.00) PESOS, and, costs.

Plaintiff further prays for other reliefs and remedies just and equitable in the premises.4

The case was docketed as Civil Case No. 879. The summons and the complaint were not served
on the respondent because the latter was apparently out of the country. This was relayed to the
Sheriff by her (the respondent’s) brother, Oscar Layno, who was then in the respondent’s house
at No. 572 Barangay Buenlag, Calasiao, Pangasinan. The Sheriff left the summons and
complaint with Oscar Layno, who received the same.5

Nonetheless, on May 17, 1999, the court rendered judgment ordering the respondent and all
persons occupying the property for and in the latter’s behalf to vacate the disputed area and to
pay monthly rentals therefor, including actual damages, attorney’s fees, and exemplary damages.
The fallo of the decision reads:

1) Ordering the defendant, her representatives, agents and persons acting under her, to
vacate the 68-square meters which she encroached upon;

2) Ordering the defendant to pay a monthly rental of ₱1,000.00 to the plaintiff;

 3) To pay plaintiff actual damages of ₱20,000.00; attorney’s fees of ₱15,000.00 and
exemplary damages in the amount of ₱20,000.00 plus the costs.

SO ORDERED.6

The respondent failed to appeal the decision. Consequently, a writ of execution was issued on
September 27, 1999.

On August 16, 2000, the respondent filed a complaint against the petitioner before the RTC of
Dagupan City for the annulment of the decision of the MTC in Civil Case No. 879, on the
ground that due to the Sheriff’s failure to serve the complaint and summons on her because she
was in Oslo, Norway, the MTC never acquired jurisdiction over her person. The respondent
alleged therein that the service of the complaint and summons through substituted service on her
brother, Oscar Layno, was improper because of the following: (a) when the complaint in Civil
Case No. 879 was filed, she was not a resident of Barangay Buenlag, Calasiao, Pangasinan, but
of Oslo, Norway, and although she owned the house where Oscar Layno received the summons
and the complaint, she had then leased it to Eduardo Gonzales; (b) she was in Oslo, Norway, at
the time the summons and the complaint were served; (c) her brother, Oscar Layno, was merely
visiting her house in Barangay Buenlag and was not a resident nor an occupant thereof when he
received the complaint and summons; and (d) Oscar Layno was never authorized to receive the
summons and the complaint for and in her behalf.7

The respondent further alleged that the MTC had no jurisdiction over the subject matter of the
complaint in Civil Case No. 879 because the petitioner, the plaintiff therein, failed to show prior
possession of the property. She further claimed that the alleged forcible entry was simply based
on the result of the survey conducted by Geodetic Engineer Leonardo de Vera showing that the
property of the respondent encroached on that of the petitioner.

The respondent filed a Manifestation dated August 31, 2000, and appended thereto the
following: (a) a copy8 of her passport showing that she left the country on February 17, 1999; (b)
a copy9 of the Contract of Lease dated November 24, 1997, executed by her and Eduardo D.
Gonzales over her house for a period of three (3) years or until November 24, 2000; (c) her
affidavit10 stating, inter alia, that she owned the house at Barangay Buenlag, Calasiao,
Pangasinan, which she leased to Eduardo Gonzales; that she was married to Jarl Jensen, a citizen
of Norway, on August 23, 1987 and had resided in Norway with her husband since 1993; that
she arrived in the Philippines on December 31, 1998, but left on February 17, 1999; she returned
to the Philippines on July 30, 2000 and learned, only then, of the complaint against her and the
decision of the MTC in Civil Case No. 879; her brother Oscar Layno was not a resident of the
house at Barangay Buenlag; and that she never received the complaint and summons in said
case; (d) the affidavit11 of Oscar Layno declaring that sometime in April 1999, he was in the
respondent’s house to collect rentals from Eduardo Gonzales; that the Sheriff arrived and served
him with a copy of the summons and the complaint in Civil Case No. 879; and that he never
informed the respondent of his receipt of the said summons and complaint; (e) an affidavit12 of
Eduardo Gonzales stating that he leased the house of the respondent and resided thereat; the
respondent was not a resident of the said house although he (Gonzales) allowed the respondent to
occupy a room therein whenever she returned to the Philippines as a balikbayan; and that Oscar
Layno was not residing therein but only collected the rentals.

In her answer to the complaint, the petitioner alleged that the respondent was a resident of
Barangay Buenlag, Calasiao, Pangasinan and was the owner of the subject premises where Oscar
Layno was when the Sheriff served the summons and complaint; that the service of the
complaint and summons by substituted service on the respondent, the defendant in Civil Case
No. 879, was proper since her brother Oscar Layno, a resident and registered voter of Barangay.
Buenlag, Calasiao, Pangasinan, received the complaint and summons for and in her behalf.

The petitioner appended the following to her answer: (a) a copy13 of the Deed of Absolute Sale
executed by Jose Layno in her favor, dated August 26, 1992, showing that the respondent was a
resident of Barangay Buenlag, Calasiao, Pangasinan; (b) a Real Estate Mortgage14 executed by
the respondent, dated February 9, 1999 showing that she was a resident of Barangay Buenlag,
Calasiao, Pangasinan; (c) the Joint Affidavit15 of Vicenta Peralta and Orlando Macalanda, both
residents of Barangay Buenlag, Calasiao, Pangasinan, declaring that the respondent and her
brother Oscar Layno were their neighbors; that the respondent and her brother had been residents
of Barangay Buenlag since their childhood; that although the respondent left the country on
several occasions, she returned to the Philippines and resided in her house at No. 572 located in
the said barangay; and (d) the Voter’s Registration Record16 of Oscar Layno, approved on June
15, 1997.

After due proceedings, the trial court rendered a decision in favor of the respondent. The
dispositive portion reads:

WHEREFORE, judgment is rendered in favor of plaintiff Vivian Layno Jensen and against
defendant Filomena Domagas, as follows:

1. The Decision of the Municipal Trial Court of Calasiao, Pangasinan in Civil Case No.
879, entitled Filomena Domagas versus Vivian Layno Jensen is declared null and void,
for lack of jurisdiction over the person of the plaintiff and the subject matter.

2. Defendant Filomena Domagas is ordered to pay plaintiff, the following:

a.) Actual damages, representing litigation expenses in the amount of ₱50,000.00;

b.) Attorney’s fees in the amount of ₱50,000.00;

c.) Moral Damages in the amount of ₱50,000.00;

d.) Exemplary Damages in the amount of ₱50,000.00; and

e.) Costs of suit.

SO ORDERED.17
The trial court declared that there was no valid service of the complaint and summons on the
respondent, the defendant in Civil Case No. 879, considering that she left the Philippines on
February 17, 1999 for Oslo, Norway, and her brother Oscar Layno was never authorized to
receive the said complaint and summons for and in her behalf.

The petitioner appealed the decision to the CA which, on May 6, 2003, rendered judgment
affirming the appealed decision with modifications. The CA ruled that the complaint in Civil
Case No. 879 was one for ejectment, which is an action quasi in rem. The appellate court ruled
that since the defendant therein was temporarily out of the country, the summons and the
complaint should have been served via extraterritorial service under Section 15 in relation to
Section 16, Rule 14 of the Rules of Court, which likewise requires prior leave of court.
Considering that there was no prior leave of court and none of the modes of service prescribed
by the Rules of Court was followed by the petitioner, the CA concluded that there was really no
valid service of summons and complaint upon the respondent, the defendant in Civil Case No.
879.

Hence, the present petition.

The petitioner assails the decision of the CA, alleging that the appellate court erred in holding
that the respondent’s complaint for ejectment is an action quasi in rem. The petitioner insists that
the complaint for forcible entry is an action in personam; therefore, substituted service of the
summons and complaint on the respondent, in accordance with Section 7, Rule 14 of the Rules of
Court, is valid. The petitioner, likewise, asserts that Oscar Layno is a resident and a registered
voter of Barangay Buenlag, Calasiao, Pangasinan; hence, the service of the complaint and
summons on the respondent through him is valid.

The respondent, on the other hand, asserts that the action for forcible entry filed against her was
an action quasi in rem, and that the applicable provision of the Rules of Court is Section 15 of
Rule 14, which calls for extraterritorial service of summons.

The sole issue is whether or not there was a valid service of the summons and complaint in Civil
Case No. 879 on the respondent herein who was the defendant in the said case. The resolution of
the matter is anchored on the issue of whether or not the action of the petitioner in the MTC
against the respondent herein is an action in personam or quasi in rem.

The ruling of the CA that the petitioner’s complaint for forcible entry of the petitioner against the
respondent in Civil Case No. 879 is an action quasi in rem, is erroneous. The action of the
petitioner for forcible entry is a real action and one in personam.

The settled rule is that the aim and object of an action determine its character.18 Whether a
proceeding is in rem, or in personam, or quasi in rem for that matter, is determined by its nature
and purpose, and by these only.19 A proceeding 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.20 The purpose
of a proceeding in personam is to impose, through the judgment of a court, some responsibility
or liability directly upon the person of the defendant.21 Of this character are suits to compel a
defendant to specifically perform some act or actions to fasten a pecuniary liability on him.22 An
action in personam is said to be one which has for its object a judgment against the person, as
distinguished from a judgment against the propriety to determine its state. It has been held that
an action in personam is a proceeding to enforce personal rights or obligations; such action is
brought against the person. As far as suits for injunctive relief are concerned, it is well-settled
that it is an injunctive act in personam.23 In Combs v. Combs,24 the appellate court held that
proceedings to enforce personal rights and obligations and in which personal judgments are
rendered adjusting the rights and obligations between the affected parties is in personam. Actions
for recovery of real property are in personam.25

On the other hand, 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.26 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.27 Actions quasi in rem deal with the
status, ownership or liability of a particular property but which are intended to operate on these
questions only as between the particular parties to the proceedings and not to ascertain or cut off
the rights or interests of all possible claimants. The judgments therein are binding only upon the
parties who joined in the action.28

Section 1, Rule 70 of the Rules of Court provides:

Section 1. Who may institute proceedings, and when. - Subject to the provisions of the next
succeeding section, a person deprived of the possession of any land or building in force,
intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against
whom 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, or the
legal representatives or assigns of any such lessor, vendor, vendee, or other person, may, at any
time within one (1) year after such unlawful deprivation or withholding of possession, bring an
action in the proper Municipal Trial Court against the person or persons unlawfully withholding
or depriving of possession, or any person or persons claiming under them, for the restitution of
such possession, together with damages and costs.

Under Section 15, Rule 70 of the said Rule, the plaintiff may be granted a writ of preliminary
prohibition or mandatory injunction:

Sec. 15. Preliminary Injunction. – The court may grant preliminary injunction, in accordance
with the provisions of Rule 58 hereof, to prevent the defendant from committing further acts of
dispossession against the plaintiff.

A possessor deprived of his possession through forcible entry or unlawful detainer may, within
five (5) days from the filing of the complaint, present a motion in the action for forcible entry or
unlawful detainer for the issuance of a writ of preliminary mandatory injunction to restore him in
his possession. The court shall decide the motion within thirty (30) days from the filing thereof.
If, after due proceedings, the trial court finds for the plaintiff, it shall then render judgment in his
or her favor, thus:

Sec. 17. Judgment. – If, after trial, the court finds that the allegations of the complaint are true, it
shall render judgment in favor of the plaintiff for the restitution of the premises, the sum justly
due as arrears of rent or as reasonable compensation for the use and occupation of the premises,
attorney’s fees and costs. If it finds that said allegations are not true, it shall render judgment for
the defendant to recover his costs. If a counterclaim is established, the court shall render
judgment for the sum found in arrears from either party and award costs as justice requires.

From the aforementioned provisions of the Rules of Court and by its very nature and purpose, an
action for unlawful detainer or forcible entry is a real action and in personam because the
plaintiff seeks to enforce a personal obligation or liability on the defendant under Article 539 of
the New Civil Code,29 for the latter to vacate the property subject of the action, restore physical
possession thereof to the plaintiff, and pay actual damages by way of reasonable compensation
for his use or occupation of the property.30

As gleaned from the averments of the petitioner’s complaint in the MTC, she sought a writ of a
preliminary injunction from the MTC and prayed that the said writ be made permanent. Under its
decision, the MTC ordered the defendant therein (the respondent in this case), to vacate the
property and pay a "monthly rental" of ₱1,000.00 to the plaintiff therein (the petitioner in this
case).

On the issue of whether the respondent was validly served with the summons and complaint by
the Sheriff on April 5, 1999, the petitioner asserts that since her action of forcible entry against
the respondent in Civil Case No. 879 was in personam, summons may be served on the
respondent, by substituted service, through her brother, Oscar Layno, in accordance with Section
7, Rule 14 of the Rules of Court. The petitioner avers that Oscar Layno, a person of suitable age
and discretion, was residing in the house of the respondent on April 5, 1999. She avers that the
fact that the house was leased to and occupied by Eduardo Gonzales was of no moment.
Moreover, the Sheriff is presumed to have performed his duty of properly serving the summons
on the respondent by substituted service.

The contention of the petitioner has no merit.

In Asiavest Limited v. Court of Appeals ,31 the Court had the occasion to state:

In an action in personam, jurisdiction over the person of the defendant is necessary for the court
to validly try and decide the case. Jurisdiction over the person of a resident defendant who does
not voluntarily appear in court can be acquired by personal service of summons as provided
under Section 7, Rule 14 of the Rules of Court. If he cannot be personally served with summons
within a reasonable time, substituted service may be made in accordance with Section 8 of said
Rule. If he is temporarily out of the country, any of the following modes of service may be
resorted to: (a) substituted service set forth in Section 8; (2) personal service outside the country,
with leave of court; (3) service by publication, also with leave of court; or (4) any other manner
the court may deem sufficient.32
Thus, any judgment of the court which has no jurisdiction over the person of the defendant is
null and void.33

In the present case, the records show that the respondent, before and after his marriage to Jarl
Jensen on August 23, 1987, remained a resident of Barangay Buenlag, Calasiao, Pangasinan.
This can be gleaned from the Deed of Absolute Sale dated August 26, 1992 in which she
declared that she was a resident of said barangay. Moreover, in the Real Estate Mortgage
Contract dated February 9, 1999, ten days before the complaint in Civil Case No. 879 was filed,
the petitioner categorically stated that she was a Filipino and a resident of Barangay Buenlag,
Calasiao, Pangasinan. Considering that the respondent was in Oslo, Norway, having left the
Philippines on February 17, 1999, the summons and complaint in Civil Case No. 879 may only
be validly served on her through substituted service under Section 7, Rule 14 of the Rules of
Court, which reads:

SEC. 7. Substituted service. — If, for justifiable causes, the defendant cannot be served within a
reasonable time as provided in the preceding section, service may be effected (a) by leaving
copies of the summons at the defendant’s residence with some person of suitable age and
discretion then residing therein, or (b) by leaving the copies at defendant’s office or regular place
of business with some competent person in charge thereof.

Strict compliance with the mode of service is required in order that the court may acquire
jurisdiction over the person of the defendant.34 The statutory requirement of substituted service
must be followed faithfully and strictly and any substituted service other than that authorized by
the statute is rendered ineffective.35 As the Court held in Hamilton v. Levy :36

… The pertinent facts and circumstances attendant to the service of summons must be stated in
the proof of service or Officer’s Return; otherwise, any substituted service made in lieu of
personal service cannot be upheld. This is necessary because substituted service is in derogation
of the usual method of service. It is a method extraordinary in character and hence may be used
only as prescribed and in the circumstances authorized by statute. Here, no such explanation was
made. Failure to faithfully, strictly, and fully comply with the requirements of substituted service
renders said service ineffective.37

In Keister v. Narcereo,38 the Court held that the term "dwelling house" or "residence" are
generally held to refer to the time of service; hence, it is not sufficient to leave the summons at
the former’s dwelling house, residence or place of abode, as the case may be. Dwelling house or
residence refers to the place where the person named in the summons is living at the time when
the service is made, even though he may be temporarily out of the country at the time. It is, thus,
the service of the summons intended for the defendant that must be left with the person of
suitable age and discretion residing in the house of the defendant. Compliance with the rules
regarding the service of summons is as much important as the issue of due process as of
jurisdiction.39

The Return of Service filed by Sheriff Eduardo J. Abulencia on the service of summons reads:
Respectfully returned to the court of origin the herein summons and enclosures in the above-
entitled case, the undersigned caused the service on April 5, 1999.

Defendant Vivian Layno Jensen is out of the country as per information from her brother Oscar
Layno, however, copy of summons and enclosures was received by her brother Oscar Layno on
April 5, 1999 as evidenced by his signature appearing in the original summons.

Calasiao, Pangasinan, April 6, 1999.

(Sgd.)
EDUARDO J. ABULENCIA

Junior Process Server40

As gleaned from the said return, there is no showing that as of April 5, 1999, the house where the
Sheriff found Oscar Layno was the latter’s residence or that of the respondent herein. Neither is
there any showing that the Sheriff tried to ascertain where the residence of the respondent was on
the said date. It turned out that the occupant of the house was a lessor, Eduardo Gonzales, and
that Oscar Layno was in the premises only to collect the rentals from him. The service of the
summons on a person at a place where he was a visitor is not considered to have been left at the
residence or place or abode, where he has another place at which he ordinarily stays and to which
he intends to return.41

The Voter’s Registration Record of Oscar Layno dated June 15, 1997 wherein he declared that
he was a resident of No. 572 Barangay Buenlag, Calasiao, Pangasinan, as well as the Joint
Affidavit of Vicenta Peralta and Orlando Macasalda cannot prevail over the Contract of Lease
the respondent had executed in favor of Eduardo Gonzales showing that the latter had resided
and occupied the house of the respondent as lessee since November 24, 1997, and the affidavit of
Eduardo Gonzales that Oscar Layno was not residing in the said house on April 5, 1999.

In sum, then, the respondent was not validly served with summons and the complaint in Civil
Case No. 879 on April 5, 1999, by substituted service. Hence, the MTC failed to acquire
jurisdiction over the person of the respondent; as such, the decision of the MTC in Civil Case
No. 879 is null and void.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. No costs.

SO ORDERED.

[G.R. NO. 168723 : July 9, 2008]

DOLE PHILIPPINES, INC. (TROPIFRESH DIVISION), Petitioner, v. HON. REINATO

G. QUILALA in his capacity as pairing judge of Branch 150, RTC-Makati City, and ALL
SEASON FARM, CORP., Respondents.

DECISION
 QUISUMBING, J.:

This Petition for Review assails the Decision1 dated May 20, 2005 of the Court of Appeals in
CA-G.R. SP No. 87723 and its Resolution2 dated June 28, 2005, denying the motion for
reconsideration. The appellate court had affirmed the Order3 dated February 6, 2004 of the
Regional Trial Court (RTC) of Makati City, Branch 150, in Civil Case No. 03-093 and its
Order4 dated September 16, 2004 denying the motion for partial reconsideration.

The factual antecedents of this case are as follows.

In a complaint filed with the RTC of Makati City, presided over by Pairing Judge Reinato
Quilala, private respondent All Season Farm Corporation ("All Season") sought the recovery of a
sum of money, accounting and damages from petitioner Dole Philippines, Inc. (Tropifresh
Division) ("Dole") and several of its officers. According to Dole, an alias summons was served
upon it through a certain Marifa Dela Cruz, a legal assistant employed by Dole Pacific General
Services, Ltd., which is an entity separate from Dole.

On May 20, 2003, Dole filed a motion to dismiss the complaint on the following grounds: (a) the
RTC lacked jurisdiction over the person of Dole due to improper service of summons; (b) the
complaint failed to state a cause of action; (c) All Season was not the real party in interest; and
(d) the officers of Dole cannot be sued in their personal capacities for alleged acts performed in
their official capacities as corporate officers of Dole.5 In its Order dated February 6, 2004, the
RTC denied said motion. Dole moved for partial reconsideration raising the same issues but its
motion was denied.

Thereafter, Dole filed a petition for certiorari with the Court of Appeals contending that the alias
summons was not properly served. The appellate court, however, ruled otherwise. It reasoned
that Dole's president had known of the service of the alias summons although he did not
personally receive and sign it. It also held that in today's corporate setup, documents addressed to
corporate officers are received in their behalf by their staff.6 Dole sought reconsideration, but its
motion was likewise denied.

Hence, this petition where petitioner raises the lone issue:

WHETHER OR NOT THE COURT OF APPEALS COMMITTED AN ERROR OF LAW

WHEN IT ALLOWED SUBSTITUTED SERVICE ON A PRIVATE CORPORATION WHEN
IT HELD THAT DOLE WAS VALIDLY SERVED WITH SUMMONS IN SPITE OF THE
FACT THAT SUMMONS WAS NOT SERVED ON ITS PRESIDENT, MANAGING
PARTNER, GENERAL MANAGER, CORPORATE SECRETARY, TREASURER OR IN-
HOUSE COUNSEL THEREBY IGNORING THE RULE ON SERVICE OF SUMMONS ON
PRIVATE DOMESTIC CORPORATIONS.7

Simply stated, the issue in this case is whether there was a valid service of summons on
petitioner for the trial court to acquire jurisdiction over the person of the corporate defendant
below, now the petitioner herein.
Petitioner contends that for the court to validly acquire jurisdiction over a domestic corporation,
summons must be served only on the corporate officers enumerated in Section 11,8 Rule 14 of
the 1997 Rules of Civil Procedure. Petitioner maintains that the alias summons was not validly
served on it since the alias summons was served on Marifa Dela Cruz, an employee of Dole
Pacific General Services, Ltd., which is an entity separate and distinct from petitioner. It further
avers that even if she were an employee of the petitioner, she is not one of the officers
enumerated under Section 11, Rule 14. Thus, the RTC, without proper service of summons, lacks
jurisdiction over petitioner as defendant below.

Private respondent All Season, for its part, contends that the trial court had acquired jurisdiction
over petitioner, since petitioner received the alias summons through its president on April 23,
2003. According to private respondent, there was full compliance with Section 11, Rule 14,
when Marifa Dela Cruz received the summons upon instruction of petitioner's president as
indicated in the Officer's Return.9 More so, petitioner had admitted that it received the alias
summons in its Entry of Appearance with Motion for Time10 filed on May 5, 2003.

Well-settled is the rule that service of summons on a domestic corporation is restricted, limited
and exclusive to the persons enumerated in Section 11, Rule 14 of the 1997 Rules of Civil
Procedure, following the rule in statutory construction that expressio unios est exclusio
alterius.11 Service must therefore be made on the president, managing partner, general manager,
corporate secretary, treasurer, or in-house counsel.

In this case, it appears that on April 23, 2003, Marifa Dela Cruz, a legal assistant, received the
alias summons.12 Contrary to private respondent's claim that it was received upon instruction of
the president of the corporation as indicated in the Officer's Return, such fact does not appear in
the receiving copy of the alias summons which Marifa Dela Cruz signed. There was no evidence
that she was authorized to receive court processes in behalf of the president. Considering that the
service of summons was made on a legal assistant, not employed by herein petitioner and who is
not one of the designated persons under Section 11, Rule 14, the trial court did not validly
acquire jurisdiction over petitioner.

However, under Section 20 of the same Rule, a defendant's voluntary appearance in the action is
equivalent to service of summons.13 As held previously by this Court, the filing of motions
seeking affirmative relief, such as, 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, are considered voluntary submission to the jurisdiction of the court.14

Note that on May 5, 2003, petitioner filed an Entry of Appearance with Motion for Time. It was
not a conditional appearance entered to question the regularity of the service of summons, but an
appearance submitting to the jurisdiction of the court by acknowledging the receipt of the alias
summons and praying for additional time to file responsive pleading.15 Consequently, petitioner
having acknowledged the receipt of the summons and also having invoked the jurisdiction of the
RTC to secure affirmative relief in its motion for additional time, petitioner effectively submitted
voluntarily to the jurisdiction of the RTC. It is estopped now from asserting otherwise, even
before this Court.16 The RTC therefore properly took cognizance of the case against Dole
Philippines, Inc., and we agree that the trial and the appellate courts committed no error of law
when Dole's contentions were overruled.

WHEREFORE, the petition is DENIED for lack of merit. The Decision dated May 20, 2005 of
the Court of Appeals in CA-G.R. SP No. 87723 and its Resolution dated June 28, 2005
are AFFIRMED. Costs against petitioner.

SO ORDERED.

G.R. No. 181517, July 06, 2015

GREEN STAR EXPRESS, INC. AND FRUTO SAYSON, JR., Petitioners, v. NISSIN-

UNIVERSAL ROBINA CORPORATION, Respondent.

DECISION

PERALTA, J.:

For resolution is a Petition for Review under Rule 45 of the Rules of Court which petitioners
Green Star Express, Inc. and Fruto Sayson, Jr. brought before the Court, assailing the
Decision1 of the Court of Appeals (CA) dated September 17, 2007 and its Resolution2 dated
January 22, 2008 in CA-G.R. SP No. 86824. The CA nullified the Resolution dated May 5, 2004
of the Regional Trial Court (RTC) of San Pedro, Laguna, Branch 31, in Civil Case No. SPL-
0969, and dismissed the complaint for lack of jurisdiction.

The following are the antecedents of the case:ChanRoblesVirtualawlibrary

On February 25, 2003, a Mitsubishi L-300 van which Universal Robina Corporation (URC)
owned figured in a vehicular accident with petitioner Green Star Express, Inc.'s (Green Star)
passenger bus, resulting in the death of the van's driver. Thus, the bus driver, petitioner Fruto
Sayson, Jr., was charged with the crime of reckless imprudence resulting in homicide.

Thereafter, Green Star sent a demand letter to respondent Nissin-Universal Robina Corporation
(NURC) for the repair of its passenger bus amounting to P567,070.68. NURC denied any
liability therefor and argued that the criminal case shall determine the ultimate liabilities of the
parties. Thereafter, the criminal case was dismissed without prejudice, due to insufficiency of
evidence.

Sayson and Green Star then filed a complaint for damages against NURC before the RTC of San
Pedro, Laguna. Francis Tinio, one of NURC's employees, was the one who received the
summons. On February 6, 2004, NURC filed a Motion to Dismiss claiming lack of jurisdiction
due to improper service.

On May 5, 2004, the RTC issued a Resolution denying NURC's motion to dismiss. It ruled that
there was substantial compliance because there was actual receipt of the summons by NURC.
The dispositive portion of said Resolution thus reads:chanRoblesvirtualLawlibrary
WHEREFORE, in view of the foregoing, defendant's "Motion to Dismiss" is hereby DENIED.3
Since its Motion for Reconsideration was denied, NURC elevated the case to the CA via a
Petition for Certiorari. On September 17, 2007, the CA reversed the RTC ruling,
hence:chanRoblesvirtualLawlibrary
WHEREFORE, the instant Petition for Certiorari is GRANTED. The assailed Resolutions,
dated May 5, 2004 and dated July 26, 2004, of the Regional Trial Court of San Pedro, Laguna,
Branch 31, in Civil Case No. SPL-0969, are hereby NULLIFIED and a new
one rendered granting Petitioner's Motion to Dismiss, dated February 3, 2004. Private
Respondents' Amended Complaint for Damages filed against Petitioner Nissin-Universal Robina
Corporation is accordingly dismissed for lack of jurisdiction.

SO ORDERED.4
Aggrieved, Green Star and Sayson moved for reconsideration, but the same was denied. Hence,
this petition.

The lone issue is whether or not the summons was properly served on NURC, vesting the trial
court with jurisdiction.

The petition is bereft of merit.

It is a well-established rule that the rules on service of summons upon a   domestic private 
juridical entity must be strictly complied with. Otherwise, the court cannot be said to have
acquired jurisdiction over the person of the defendant.5chanrobleslaw

NURC maintains that the RTC did not acquire jurisdiction over it as the summons was received
by its cost accountant, Francis Tinio. It argues that under Section 11, Rule 14 of the 1997 Rules
of Court, which provides the rule on service of summons upon a juridical entity, in cases where
the defendant is a domestic corporation like NURC, summons may be served only through its
officers.6  Thus:chanRoblesvirtualLawlibrary
Section 11. Service upon domestic private juridical entity. — When the defendant is a
corporation, partnership or association organized under the laws of the Philippines with a
juridical personality, service may be made on the president, managing partner, general
manager, corporate secretary, treasurer, or in-house counsel.7
This provision replaced the former Section 13, Rule 14 of the 1964 Rules of Court which
read:chanRoblesvirtualLawlibrary
Section 13. Service upon private domestic corporation or partnership. — If the defendant is a
corporation organized under the laws of the Philippines or a partnership duly registered, service
may be made on the president, manager, secretary, cashier, agent, or any of its directors.8
In the past, the Court upheld service of summons upon a construction project manager, a
corporation's assistant manager, ordinary clerk of a corporation, private secretary of corporate
executives, retained counsel, and officials who had control over the operations of the corporation
like the assistant general manager or the coiporation's Chief Finance and Administrative Officer.
The Court then considered said persons as "agent" within the contemplation of the old rule.
Notably, under the new Rules, service of summons upon an agent of the corporation is no longer
authorized.9 The rule now likewise states "general manager" instead of "manager"; "corporate
secretary" instead of merely "secretary"; and "treasurer" instead of "cashier."10 It has now
become restricted, limited, and exclusive only to the persons enumerated in the aforementioned
provision, following the rule in statutory construction that the express mention of one person
excludes all others, or expressio unios est exclusio alterius. Service must, therefore, be made
only on the persons expressly listed in the rules.11 If the revision committee intended to liberalize
the rule on service of summons, it could have easily done so by clear and concise
language.12chanrobleslaw

Here, Tinio, a member of NURC's accounting staff, received the summons on January 22, 2004.
Green Star claims that it was received upon instruction of Junadette Avedillo, the general
manager of the corporation. Such fact, however, does not appear in the Sheriffs Return.13 The
Return did not even state whether Avedillo was present at the time the summons was received by
Tinio, the supposed assistant manager. Green Star further avers that the sheriff tendered the
summons, but Avedillo simply refused to sign and receive the same. She then allegedly
instructed Tinio to just receive it in her behalf. However, Green Star never presented said sheriff
as witness during the hearing of NURC's motion to dismiss to attest to said claim. And while the
sheriff executed an affidavit which appears to support such allegation, the same was likewise not
presented as evidence. It was only when the case was already before the CA that said affidavit
first surfaced. Since the service of summons was made on a cost accountant, which is not one of
the designated persons under Section 11 of Rule 14, the trial court did not validly acquire
jurisdiction over NURC,14 although the corporation may have actually received the
summons.15 To rule otherwise will be an outright circumvention of the rules, aggravating further
the delay in the administration of justice.16chanrobleslaw

At this juncture, it is worth emphasizing that notice to enable the other party to be heard and to
present evidence is not a mere technicality or a trivial matter in any administrative or judicial
proceedings. The service of summons is a vital and indispensable ingredient of due process.
Corporations would be easily deprived of their right to present their defense in a multi-million
peso suit, if the Court would disregard the mandate of the Rules on the service of summons.

WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated September 17,
2007 and Resolution dated January 22, 2008 in CA-G.R. SP No. 86824 are hereby AFFIRMED.

SO ORDERED.cralawlawlibrary

G.R. No. 206147, January 13, 2016

MICHAEL C. GUY, Petitioner, v. ATTY. GLENN C. GACOTT, Respondent.

DECISION

MENDOZA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court filed
by petitioner Michael C. Guy (Guy), assailing the June 25, 2012 Decision1 and the March 5,
2013 Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No. 94816, which affirmed the
June 28, 20093 and February 19, 20104 Orders of the Regional Trial Court, Branch 52, Puerto
Princesa City, Palawan (RTC), in Civil Case No. 3108, a case for damages. The assailed RTC
orders denied Guy's Motion to Lift Attachment Upon Personalty5 on the ground that he was not a
judgment debtor.

The Facts

It appears from the records that on March 3, 1997, Atty. Glenn Gacott (Gacott) from Palawan
purchased two (2) brand new transreceivers from Quantech Systems Corporation (QSC) in
Manila through its employee Rey Medestomas (Medestomas), amounting to a total of PI
8,000.00. On May 10, 1997, due to major defects, Gacott personally returned the transreceivers
to QSC and requested that they be replaced. Medestomas received the returned transreceivers
and promised to send him the replacement units within two (2) weeks from May 10, 1997.

Time passed and Gacott did not receive the replacement units as promised. QSC informed him
that there were no available units and that it could not refund the purchased price. Despite
several demands, both oral and written, Gacott was never given a replacement or a refund. The
demands caused Gacott to incur expenses in the total amount of P40,936.44. Thus, Gacott filed a
complaint for damages. Summons was served upon QSC and Medestomas, afterwhich they filed
their Answer, verified by Medestomas himself and a certain Elton Ong (Ong). QSC and
Medestomas did not present any evidence during the trial.6

In a Decision,7 dated March 16, 2007, the RTC found that the two (2) transreceivers were
defective and that QSC and Medestomas failed to replace the same or return Gacott's money. The
dispositive portion of the decision reads:chanRoblesvirtualLawlibrary

WHEREFORE, judgment is hereby rendered in favor of the plaintiff, ordering the defendants to
jointly and severally pay plaintiff the following:chanRoblesvirtualLawlibrary

1. Purchase price plus 6% per annum from March 3,1997 up to and until fully paid
-------------------------------------------------------- P 18,000.00
2. Actual Damages ----------------------------------- 40,936.44
3. Moral Damages -----------------------------------  75,000.00
4. Corrective Damages ----------------------------  100,000.00
5. Attorney's Fees ------------------------------------ 60,000.00
6. Costs.

SO ORDERED.
cralawlawlibrary

The decision became final as QSC and Medestomas did not interpose an appeal. Gacott then
secured a Writ of Execution,8 dated September 26, 2007.

During the execution stage, Gacott learned that QSC was not a corporation, but was in fact a
general partnership registered with the Securities and Exchange Commission (SEC). In the
articles of partnership,9 Guy was appointed as General Manager of QSC.
To execute the judgment, Branch Sheriff Ronnie L. Felizarte (Sheriff Felizarte) went to the main
office of the Department of Transportation and Communications, Land Transportation Office
(DOTC-LTO), Quezon City, and verified whether Medestomas, QSC and Guy had personal
properties registered therein.10 Upon learning that Guy had vehicles registered in his name,
Gacott instructed the sheriff to proceed with the attachment of one of the motor vehicles of Guy
based on the certification issued by the DOTC-LTO.11

On March 3, 2009, Sheriff Felizarte attached Guy's vehicle by virtue of the Notice of
Attachment/Levy upon Personalty12 served upon the record custodian of the DOTC-LTO of
Mandaluyong City. A similar notice was served to Guy through his housemaid at his residence.

Thereafter, Guy filed his Motion to Lift Attachment Upon Personalty, arguing that he was not a
judgment debtor and, therefore, his vehicle could not be attached.13 Gacott filed an opposition to
the motion.

The RTC Order

On June 28, 2009, the RTC issued an order denying Guy's motion. It explained that considering
QSC was not a corporation, but a registered partnership, Guy should be treated as a general
partner pursuant to Section 21 of the Corporation Code, and he may be held jointly and severally
liable with QSC and Medestomas. The trial court wrote:chanRoblesvirtualLawlibrary

All persons who assume to act as a corporation knowing it to be without authority to do so shall
be liable as general partners for all debts, liabilities and damages incurred or arising as a result
thereof x x x. Where, by any wrongful act or omission of any partner acting in the ordinary
course of the business of the partnership x x x, loss or injury is caused to any person, not being a
partner in the partnership, or any penalty is incurred, the partnership is liable therefore to the
same extent as the partner so acting or omitting to act. All partners are liable solidarity with the
partnership for everything chargeable to the partnership under Article 1822 and
1823.14cralawlawlibrary

Accordingly, it disposed:chanRoblesvirtualLawlibrary

WHEREFORE, with the ample discussion of the matter, this Court finds and so holds that the
property of movant Michael Guy may be validly attached in satisfaction of the liabilities
adjudged by this Court against Quantech Co., the latter being an ostensible Corporation and the
movant being considered by this Court as a general partner therein in accordance with the order
of this court impressed in its decision to this case imposing joint and several liability to the
defendants. The Motion to Lift Attachment Upon Personalty submitted by the movant is
therefore DENIED for lack of merit.

SO ORDERED.15cralawlawlibrary

Not satisfied, Guy moved for reconsideration of the denial of his motion. He argued that he was
neither impleaded as a defendant nor validly served with summons and, thus, the trial court did
not acquire jurisdiction over his person; that under Article 1824 of the Civil Code, the partners
were only solidarily liable for the partnership liability under exceptional circumstances; and that
in order for a partner to be liable for the debts of the partnership, it must be shown that all
partnership assets had first been exhausted.16

On February 19, 2010, the RTC issued an order17 denying his motion.

The denial prompted Guy to seek relief before the CA.

The CA Ruling

On June 25, 2012, the CA rendered the assailed decision dismissing Guy's appeal for the same
reasons given by the trial court. In addition thereto, the appellate court
stated:chanRoblesvirtualLawlibrary

We hold that Michael Guy, being listed as a general partner of QSC during that time, cannot
feign ignorance of the existence of the court summons. The verified Answer filed by one of the
partners, Elton Ong, binds him as a partner because the Rules of Court does not require that
summons be served on all the partners. It is sufficient that service be made on the "president,
managing partner, general manager, corporate secretary, treasurer or in-house counsel." To Our
mind, it is immaterial whether the summons to QSC was served on the theory that it was a
corporation. What is important is that the summons was served on QSC's authorized officer
xxx.18ChanRoblesVirtualawlibrary
cralawlawlibrary

The CA stressed that Guy, being a partner in QSC, was bound by the summons served upon QSC
based on Article 1821 of the Civil Code. The CA further opined that the law did not require a
partner to be actually involved in a suit in order for him to be made liable. He remained
"solidarity liable whether he participated or not, whether he ratified it or not, or whether he had
knowledge of the act or omission."19

Aggrieved, Guy filed a motion for reconsideration but it was denied by the CA in its assailed
resolution, dated March 5, 2013.

Hence, the present petition raising the following

ISSUE

THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN

HOLDING THAT PETITIONER GUY IS SOLIDARILY LIABLE WITH THE
PARTNERSHIP FOR DAMAGES ARISING FROM THE BREACH OF THE
CONTRACT OF SALE WITH RESPONDENT GACOTT.20ChanRoblesVirtualawlibrary
cralawlawlibrary

Guy argues that he is not solidarity liable with the partnership because the solidary liability of the
partners under Articles 1822, 1823 and 1824 of the Civil Code only applies when it stemmed
from the act of a partner. In this case, the alleged lapses were not attributable to any of the
partners. Guy further invokes Article 1816 of the Civil Code which states that the liability of the
partners to the partnership is merely joint and subsidiary in nature.

In his Comment,21 Gacott countered, among others, that because Guy was a general and
managing partner of QSC, he could not feign ignorance of the transactions undertaken by QSC.
Gacott insisted that notice to one partner must be considered as notice to the whole partnership,
which included the pendency of the civil suit against it.

In his Reply,22 Guy contended that jurisdiction over the person of the partnership was not
acquired because the summons was never served upon it or through any of its authorized office.
He also reiterated that a partner's liability was joint and subsidiary, and not solidary.

The Court's Ruling

The petition is meritorious.

The service of summons was

flawed; voluntary appearance
cured the defect 

Jurisdiction over the person, or jurisdiction in personam - the power of the court to render a
personal judgment or to subject the parties in a particular action to the judgment and other
rulings rendered in the action - is an element of due process that is essential in all actions, civil as
well as criminal, except in actions in rem or quasi in rem.23 Jurisdiction over the person of the
plaintiff is acquired by the mere filing of the complaint in court. As the initiating party, the
plaintiff in a civil action voluntarily submits himself to the jurisdiction of the court. As to the
defendant, the court acquires jurisdiction over his person either by the proper service of the
summons, or by his voluntary appearance in the action.24

Under Section 11, Rule 14 of the 1997 Revised Rules of Civil Procedure, when the defendant is
a corporation, partnership or association organized under the laws of the Philippines with a
juridical personality, the service of summons may be made on the president, managing partner,
general manager, corporate secretary, treasurer, or in-house counsel. Jurisprudence is replete
with pronouncements that such provision provides an exclusive enumeration of the persons
authorized to receive summons for juridical entities.25cralawred

The records of this case reveal that QSC was never shown to have been served with the
summons through any of the enumerated authorized persons to receive such, namely: president,
managing partner, general manager, corporate secretary, treasurer or in-house counsel. Service of
summons upon persons other than those officers enumerated in Section 11 is invalid. Even
substantial compliance is not sufficient service of summons. The CA was obviously mistaken
when it opined that it was immaterial whether the summons to QSC was served on the theory
that it was a corporation.27

Nevertheless, while proper service of summons is necessary to vest the court jurisdiction over
the defendant, the same is merely procedural in nature and the lack of or defect in the service of
summons may be cured by the defendant's subsequent voluntary submission to the court's
jurisdiction through his filing a responsive pleading such as an answer. In this case, it is not
disputed that QSC filed its Answer despite the defective summons. Thus, jurisdiction over its
person was acquired through voluntary appearance.

A partner must be separately

and distinctly impleaded before
he can be bound by a judgment

The next question posed is whether the trial court's jurisdiction over QSC extended to the person
of Guy insofar as holding him solidarity liable with the partnership. After a thorough study of the
relevant laws and jurisprudence, the Court answers in the negative.

Although a partnership is based on delectus personae or mutual agency, whereby any partner can
generally represent the partnership in its business affairs, it is non sequitur that a suit against the
partnership is necessarily a suit impleading each and every partner. It must be remembered that a
partnership is a juridical entity that has a distinct and separate personality from the persons
composing it.28

In relation to the rules of civil procedure, it is elementary that a judgment of a court is conclusive
and binding only upon the parties and their successors-in-interest after the commencement of the
action in court.29 A decision rendered on a complaint in a civil action or proceeding does not bind
or prejudice a person not impleaded therein, for no person shall be adversely affected by the
outcome of a civil action or proceeding in which he is not a party.30 The principle that a person
cannot be prejudiced by a ruling rendered in an action or proceeding in which he has not been
made a party conforms to the constitutional guarantee of due process of law.31

In Muñoz v. Yabut, Jr.,32 the Court declared that a person not impleaded and given the
opportunity to take part in the proceedings was not bound by the decision declaring as null and
void the title from which his title to the property had been derived. The effect of a judgment
could not be extended to non-parties by simply issuing an alias writ of execution against them,
for no man should be prejudiced by any proceeding to which he was a stranger.

In Aguila v. Court of Appeals33 the complainant had a cause of action against the partnership.
Nevertheless, it was the partners themselves that were impleaded in the complaint. The Court
dismissed the complaint and held that it was the partnership, not its partners, officers or agents,
which should be impleaded for a cause of action against the partnership itself. The Court added
that the partners could not be held liable for the obligations of the partnership unless it was
shown that the legal fiction of a different juridical personality was being used for fraudulent,
unfair, or illegal purposes.34

Here, Guy was never made a party to the case. He did not have any participation in the entire
proceeding until his vehicle was levied upon and he suddenly became QSC's "co-defendant
debtor" during the judgment execution stage. It is a basic principle of law that money judgments
are enforceable only against the property incontrovertibly belonging to the judgment
debtor.35 Indeed, the power of the court in executing judgments extends only to properties
unquestionably belonging to the judgment debtor alone. An execution can be issued only against
a party and not against one who did not have his day in court. The duty of the sheriff is to levy
the property of the judgment debtor not that of a third person. For, as the saying goes, one man's
goods shall not be sold for another man's debts.36

In the spirit of fair play, it is a better rule that a partner must first be impleaded before he could
be prejudiced by the judgment against the partnership. As will be discussed later, a partner may
raise several defenses during the trial to avoid or mitigate his obligation to the partnership
liability. Necessarily, before he could present evidence during the trial, he must first be
impleaded and informed of the case against him. It would be the height of injustice to rob an
innocent partner of his hard-earned personal belongings without giving him an opportunity to be
heard. Without any showing that Guy himself acted maliciously on behalf of the company,
causing damage or injury to the complainant, then he and his personal properties cannot be made
directly and solely accountable for the liability of QSC, the judgment debtor, because he was not
a party to the case.

Further, Article 1821 of the Civil Code does not state that there is no need to implead a
partner in order to be bound by the partnership liability. It provides
that:chanRoblesvirtualLawlibrary

Notice to any partner of any matter relating to partnership affairs, and the knowledge of
the partner acting in the particular matter, acquired while a partner or then present to his
mind, and the knowledge of any other partner who reasonably could and should have
communicated it to the acting partner, operate as notice to or knowledge of the partnership,
except in the case of fraud on the partnership, committed by or with the consent of that partner.

[Emphases and Underscoring Supplied]

cralawlawlibrary

A careful reading of the provision shows that notice to any partner, under certain circumstances,
operates as notice to or knowledge to the partnership only. Evidently, it does not provide for the
reverse situation, or that notice to the partnership is notice to the partners. Unless there is an
unequivocal law which states that a partner is automatically charged in a complaint against the
partnership, the constitutional right to due process takes precedence and a partner must first be
impleaded before he can be considered as a judgment debtor. To rule otherwise would be a
dangerous precedent, harping in favor of the deprivation of property without ample notice and
hearing, which the Court certainly cannot countenance.

Partners' liability is subsidiary

and generally joint; immediate levy
upon the property of a partner
cannot be made

Granting that Guy was properly impleaded in the complaint, the execution of judgment would be
improper. Article 1816 of the Civil Code governs the liability of the partners to third persons,
which states that:chanRoblesvirtualLawlibrary
Article 1816. All partners, including industrial ones, shall be liable pro rata with all their
property and after all the partnership assets have been exhausted, for the contracts which
may be entered into in the name and for the account of the partnership, under its signature and by
a person authorized to act for the partnership. However, any partner may enter into a separate
obligation to perform a partnership contract.

[Emphasis supplied]
cralawlawlibrary

This provision clearly states that, first, the partners' obligation with respect to the partnership
liabilities is subsidiary in nature. It provides that the partners shall only be liable with their
property after all the partnership assets have been exhausted. To say that one's liability is
subsidiary means that it merely becomes secondary and only arises if the one primarily liable
fails to sufficiently satisfy the obligation. Resort to the properties of a partner may be made only
after efforts in exhausting partnership assets have failed or that such partnership assets are
insufficient to cover the entire obligation. The subsidiary nature of the partners' liability with the
partnership is one of the valid defenses against a premature execution of judgment directed to a
partner.

In this case, had he been properly impleaded, Guy's liability would only arise after the properties
of QSC would have been exhausted. The records, however, miserably failed to show that the
partnership's properties were exhausted. The report37 of the sheriff showed that the latter went to
the main office of the DOTC-LTO in Quezon City and verified whether Medestomas, QSC and
Guy had personal properties registered therein. Gaeott then instructed the sheriff to proceed with
the attachment of one of the motor vehicles of Guy.38 The sheriff then served the Notice of
Attachment/Levy upon Personalty to the record custodian of the DOTC-LTO of Mandaluyong
City. A similar notice was served to Guy through his housemaid at his residence.

Clearly, no genuine efforts were made to locate the properties of QSC that could have been
attached to satisfy the judgment - contrary to the clear mandate of Article 1816. Being
subsidiarily liable, Guy could only be held personally liable if properly impleaded and after all
partnership assets had been exhausted.

Second, Article 1816 provides that the partners' obligation to third persons with respect to the
partnership liability is pro rata or joint. Liability is joint when a debtor is liable only for the
payment of only a proportionate part of the debt. In contrast, a solidary liability makes a debtor
liable for the payment of the entire debt. In the same vein, Article 1207 does not presume
solidary liability unless: 1) the obligation expressly so states; or 2) the law or nature
requires solidarity. With regard to partnerships, ordinarily, the liability of the partners is not
solidary.39 The joint liability of the partners is a defense that can be raised by a partner impleaded
in a complaint against the partnership.

In other words, only in exceptional circumstances shall the partners' liability be solidary in
nature. Articles 1822, 1823 and 1824 of the Civil Code provide for these exceptional conditions,
to wit:chanRoblesvirtualLawlibrary
Article 1822. Where, by any wrongful act or omission of any partner acting in the ordinary
course of the business of the partnership or with the authority of his co-partners, loss or injury is
caused to any person, not being a partner in the partnership, or any penalty is incurred, the
partnership is liable therefor to the same extent as the partner so acting or omitting to act.

Article 1823. The partnership is bound to make good the loss:chanRoblesvirtualLawlibrary

(1)  Where one partner acting within the scope of his apparent authority receives money or
property of a third person and misapplies it; and

(2) Where the partnership in the course of its business receives money or property of a third
person and the money or property so received is misapplied by any partner while it is in the
custody of the partnership.

Article 1824. All partners are liable solidarity with the partnership for everything chargeable to
the partnership under Articles 1822 and 1823.

[Emphases Supplied]
cralawlawlibrary

In essence, these provisions articulate that it is the act of a partner which caused loss or injury
to a third person that makes all other partners solidarity liable with the partnership because of the
words "any wrongful act or omission of any partner acting in the ordinary course of the
business, " "one partner acting within the scope of his apparent authority" and "misapplied by
any partner while it is in the custody of the partnership." The obligation is solidary because the
law protects the third person, who in good faith relied upon the authority of a partner, whether
such authority is real or apparent.40

In the case at bench, it was not shown that Guy or the other partners did a wrongful act or
misapplied the money or property he or the partnership received from Gacott. A third person
who transacted with said partnership can hold the partners solidarity liable for the whole
obligation if the case of the third person falls under Articles 1822 or 1823.41 Gacott's claim
stemmed from the alleged defective transreceivers he bought from QSC, through the latter's
employee, Medestomas. It was for a breach of warranty in a contractual obligation entered into
in the name and for the account of QSC, not due to the acts of any of the partners. For said
reason, it is the general rule under Article 1816 that governs the joint liability of such breach, and
not the exceptions under Articles 1822 to 1824. Thus, it was improper to hold Guy solidarity
liable for the obligation of the partnership.

Finally, Section 21 of the Corporation Code,42 as invoked by the RTC, cannot be applied to

sustain Guy's liability. The said provision states that a general partner shall be liable for all debts,
liabilities and damages incurred by an ostensible corporation. It must be read, however, in
conjunction with Article 1816 of the Civil Code, which governs the liabilities of partners against
third persons. Accordingly, whether QSC was an alleged ostensible corporation or a duly
registered partnership, the liability of Guy, if any, would remain to be joint and subsidiary
because, as previously stated, all partners shall be liable pro rata with all their property and
after all the partnership assets have been exhausted for the contracts which may be entered into
in the name and for the account of the partnership.

WHEREFORE, the petition is GRANTED. The June 25, 2012 Decision and the March 5, 2013
Resolution of the Court of Appeals in CA-G.R. CV No. 94816 are hereby REVERSED and SET
ASIDE. Accordingly, the Regional Trial Court, Branch 52, Puerto Princesa City, is ORDERED
TO RELEASE Michael C. Guy's Suzuki Grand Vitara subject of the Notice of
Levy/Attachment upon Personalty.

SO ORDERED.chanrobles

G.R. No. 201378, October 18, 2017

G.V. FLORIDA TRANSPORT, INC., Petitioner, v. TIARA COMMERCIAL

CORPORATION, Respondent.

DECISION

JARDELEZA, J.:

This is a petition for review on certiorari1 under Rule 45 of the Rules of Court filed by petitioner
G.V. Florida Transport Inc. (GV Florida) to challenge the Decision of the Court of Appeals (CA)
in CA-G.R. SP No. 110760 dated October 13, 2011 (Decision)2 and its Resolution dated March
26, 2012 (Resolution)3 which denied GV Florida's subsequent motion for reconsideration. The
CA granted respondent Tiara Commercial Corporation's (TCC) petition for certiorari and
prohibition under Rule 65 of the Rules of Court. It found that Branch 129 of the Regional Trial
Court (RTC), Caloocan City, acted with grave abuse of discretion when it refused to grant TCC's
motion to dismiss GV Florida's third-party complaint in an action for damages pending before
the RTC.

The bus company Victory Liner, Inc. (VLI) filed an action for damages4 against GV Florida and
its bus driver Arnold Vizquera (Vizquera) before the RTC. This action arose out of a vehicle
collision between the buses of VLI and GV Florida along Capirpiwan, Cordon, Isabela on May
1, 2007. In its complaint, VLI claimed that Vizquera's negligence was the proximate cause of the
collision and GV Florida failed to exercise due diligence in supervising its employee.5

In its Answer,6 GV Florida alleged that the Michelin tires of its bus had factory and mechanical
defects which caused a tire blow-out. This, it claimed, was the proximate cause of the vehicle
collision.7

On April 8, 2008, GV Florida instituted a third-party complaint8 against TCC. According to GV

Florida, on March 23, 2007, it purchased from TCC fifty (50) brand new Michelin tires, four (4)
of which were installed into the bus that figured in the collision. It claimed that though Vizquera
exerted all efforts humanly possible to avoid the accident, the bus nevertheless swerved to the
oncoming south-bound lane and into the VLI bus. GV Florida maintains that the "proximate
cause of the accident is the tire blow out which was brought about by factory and mechanical
defects in the Michelin tires which third-party plaintiff GV Florida absolutely and totally had no
control over."9

The RTC ordered the service of summons on TCC. In the return of summons, it appears that the
sheriff served the summons to a certain Cherry Gino-gino (Gino-gino) who represented herself
as an accounting manager authorized by TCC to receive summons on its behalf.10

TCC filed a Special Entry of Appearance with an Ex-parte Motion for Extension of Time to File
Responsive Pleading and/or Motion to Dismiss.11 Therein, it stated that the summons was
received by Gino-gino, its financial supervisor. The RTC granted TCC's prayer for extension of
time to file a responsive pleading or a motion to dismiss.

TCC eventually filed a motion to dismiss12 GV Florida's third-party complaint. First, it argued
that the RTC never acquired jurisdiction over it due to improper service of summons. Under
Section 11 of Rule 14, there is an exclusive list of the persons upon whom service of summons
on domestic juridical entities may be made. As the summons in this case was not served on any
of the persons listed in Section 11of Rule 14, there was no proper service of summons on TCC
that would vest the RTC with jurisdiction over it. Second, TCC stated that the purported cause of
action in the third-party complaint is a claim for an implied warranty which has already
prescribed, having been made beyond the six-month period allowed in the Civil Code. Third, the
third-party complaint failed to state a cause of action against TCC. TCC harped on the fact that
GV Florida did not mention in the third-party complaint that the tires that blew out were
purchased from it. Moreover, a tire blow-out does not relieve a common carrier of its liability.
Fourth, TCC argues that there is a condition precedent which the law requires before a claim for
implied warranty may be made. The party claiming must submit a warranty claim and demand.
GV Florida failed to do so in this case. Fifth, GV Florida has the burden of first establishing that
the cause of the accident was not its own negligence before it can be allowed to file a third-party
complaint against TCC. Sixth, venue was improperly laid since TCC's principal place of business
is in Makati. And finally, TCC states that the third-party complaint should be dismissed due to
GV Florida's failure to implead Michelin as an indispensable party.13

The RTC denied TCC's motion to dismiss in an Order14 dated March 2, 2009. It also denied
TCC's subsequent motion for reconsideration in an Order15 dated July 16, 2009.

On October 5, 2009, TCC filed before the CA a petition for certiorari and prohibition under Rule
65 of the Rules of Court challenging the RTC's denial of its motion to dismiss and motion for
reconsideration.

In the meantime, TCC filed its Answer Ad Cautelam16which repeated its arguments pertaining to
jurisdiction, the prescription of the implied warranty claim, the impropriety of the third-party
complaint and the venue of the action, and the failure to implead Michelin. Upon order of the
RTC, the case was set for pre-trial17 and the parties submitted their respective pre-trial briefs.
Notably, TCC filed its pre-trial brief without any reservations as to the issue of jurisdiction.
Moreover, not only did it fail to include in its identification of issues the question of the RTC's
jurisdiction, TCC even reserved the option to present additional evidence.18
On October 13, 2011, the CA rendered its Decision granting TCC's petition and reversing the
Orders of the RTC. Emphasizing that the enumeration in Section 11 of Rule 14 of the Rules of
Court is exclusive, the CA found that the RTC never acquired jurisdiction over TCC because of
the improper service of summons upon a person not named in the enumeration.19 It then
proceeded to rule that GV Florida's third-party complaint against TCC is a claim for implied
warranty which, under Article 1571 of the Civil Code, must be filed within six months from
delivery. While the CA noted that the delivery receipt tor the tires is not in the records of the
case, it may be assumed that the tires were delivered a few days after the purchase date of March
23, 2007. Since GV Florida only filed the third party complaint on April 8, 2008, the action has
prescribed.20

GV Florida thus filed this petition for review on certiorari under Rule 45 of the Rules of Court
seeking the reversal of the CA's Decision.

GV Florida argues that the RTC acquired jurisdiction over TCC. While it agrees that the
enumeration in Section 11 of Rule 14 of the Rules of Court is exclusive, GV Florida argues that
service of summons is not the only means through which a court acquires jurisdiction over a
party. Under Section 20 of Rule 14, voluntary appearance of a defendant is equivalent to service
of summons, which then gives a court jurisdiction over such defendant. In this case, GV Florida
claims that TCC voluntarily appeared and submitted to the jurisdiction of the RTC when it filed
motions and pleadings seeking affirmative relief from said court. It adds that Section 11 of Rule
14 is only a general rule which allows for substantial compliance when there is clear proof that
the domestic juridical entity in fact received the summons. Moreover, GV Florida argues that
improper service of summons is not a ground for dismissal of the third-party complaint since the
RTC has the authority to issue alias summons.21

GV Florida also challenges the CA's ruling that its third-party complaint against TCC should be
dismissed on the ground of prescription. It claims that prescription cannot be the basis of a
dismissal when the issue involves evidentiary matters that can only be threshed out during trial.
In this case, GV Florida asserts that the issue of whether its action has prescribed requires a
determination of when the Michelin tires were delivered. Thus, there is a need to examine the
delivery receipts which, as GV Florida highlights, are not in the records of the CA as stated in
the Decision itself.22

In its Comment, TCC raises the procedural defense that GV Florida's petition was filed out of
time. It insists that GV Florida's motion for extension of time to file its petition is no longer
allowed by virtue of AM No. 7-7-12-SC which prohibits the filing of motions for extension of
time in petitions filed under Rule 45 and Rule 65 of the Rules of Court.23 Further, TCC repeats
its position that the RTC did not acquire jurisdiction over it due to improper service of summons.
It also disputes GV Florida's argument that it voluntarily appeared. TCC insists that it initially
filed a Special Entry of Appearance to apprise the RTC that "[TCC] is represented without
necessarily waiving any right/s of the latter."24 TCC adds that in its motion to dismiss and
Answer Ad Cautelam, it consistently raised the question of the propriety of the service of
summons and the RTC's lack of jurisdiction over it.25
Moreover, TCC insists that GV Florida's implied warranty claim has prescribed and that the
latter has, in any case, failed to comply with a condition precedent—the filing of a warranty
claim or demand. TCC also insists that GV Florida has never complained about the other
Michelin tires it purchased. This, in TCC's view, belies GV Florida's claim that the tires are
defective.26

TCC also contends that GV Florida's filing of the third-party complaint is improper. It explains
that the test for ascertaining whether a third-party complaint may be filed is whether the third-
party defendant may assert any defense which the third-party plaintiff may have against the
original plaintiff in the original case. However, GV Florida's defense against VLI, which is lack
of negligence, is personal to GV Florida and cannot be raised by TCC for its own benefit. TCC
also asserts that in any case, the venue of the third-party complaint is improperly laid since
TCC's principal place of business is in Makati.27

Finally, TCC claims that the third-party complaint should be dismissed for failure to implead an
indispensable party—Michelin, the manufacturer of the tires which GV Florida claims are
defective.28

We GRANT the petition.

We emphasize that GV Florida's appeal came from an original special civil action
for certiorari and prohibition under Rule 65 filed before the CA. In cases such as this, the
question of law presented before us is whether the CA was correct in its ruling that the lower
court acted with grave abuse of discretion amounting to lack or excess of jurisdiction.29

In particular, the main issue we must resolve is whether the CA correctly found that the RTC's
Order dismissing GV Florida's third-party complaint is tainted with grave abuse of discretion
which, in turn, merits its reversal and the reinstitution of the third-party complaint.

However, we shall first resolve the procedural issue raised by TCC pertaining to the timeliness of
this petition.

Section 2 of Rule 45 of the Rules of Court governing the procedure for filing an appeal through a
petition for review on certiorari expressly allows the filing of a motion for extension of time.
Under the Rules, the period to file a petition for review on certiorari is fifteen (15) days from
receipt of the judgment, resolution, or final order appealed from. Nevertheless, on motion of the
party filed before the reglementary period, this Court may grant extension for a period not
exceeding thirty (30) days. In a Resolution30 dated July 16, 2012, we granted Florida's motion for
extension of time. We thus find GV Florida's petition to be timely filed.

B
The central issue in this case arose from the RTC's Order dated March 2, 2009 denying TCC's
motion to dismiss GV Florida's third-party complaint. In remedial law, an order denying a
motion to dismiss is classified as an interlocutory order.31 This classification is vital because the
kind of court order determines the particular remedy that a losing party may pursue. In the case
of a final order—one that finally disposes of a case—the proper remedy is an appeal. On the
other hand, when an order is merely interlocutory—one which refers to something between the
commencement and end of the suit which decides some point or matter but is not the final
decision of the whole controversy,32—Section 1 of Rule 41 provides that an appeal cannot be
had. In this instance, a party's recourse is to file an answer, with the option to include grounds
stated in the motion to dismiss, and proceed to trial. In the event that an adverse judgment is
rendered, the party can file an appeal and raise the interlocutory order as an error.33

This general rule is subject to a narrow exception. A party may question an interlocutory order
without awaiting judgment after trial if its issuance is tainted with grave abuse of discretion
amounting to lack or excess of jurisdiction.34 In this case, the party can file a special civil action
for certiorari under Rule 65.

A special civil action for certiorari is an original civil action and not an appeal. An appeal aims
to correct errors in judgment and rectify errors in the appreciation of facts and law which a lower
court may have committed in the proper exercise of its jurisdiction.35 A special civil action
for certiorari, on the other hand, is used to correct errors in jurisdiction. We have defined an
error in jurisdiction as "one where the officer or tribunal acted without or in excess of its
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction."36

This distinction finds concrete significance when a party pleads before a higher court seeking the
correction of a particular order. When a party seeks an appeal of a final order, his or her petition
must identify the errors in the lower court's findings of fact and law. Meanwhile, when a party
files a special civil action for certiorari, he or she must allege the acts constituting grave abuse of
discretion.

Grave abuse of discretion has a precise meaning in remedial law. It is not mere abuse of
discretion but must be grave "as when the power is exercised in an arbitrary or despotic manner
by reason of passion or personal hostility, and must be so patent and so gross as to amount to an
evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in
contemplation of law."37 In more concrete terms, not every error committed by a tribunal
amounts to grave abuse of discretion. A misappreciation of the facts or a misapplication of the
law does not, by itself, warrant the filing of a special civil action for certiorari. There must be a
clear abuse of the authority vested in a tribunal. This abuse must be so serious and so grave that
it warrants the interference of the court to nullify or modify the challenged action and to undo the
damage done.38

In Pahila-Garrido v. Tortogo,39 we found grave abuse of discretion when a trial court judge
issued a temporary restraining order to prevent the implementation of a writ of execution for an
indefinite period. There, we declared that the blatant violation of the Rules of Court is clearly
grave abuse of discretion.40 In Belongilot v. Cua,41 we also ruled that the Ombudsman's dismissal
of a complaint for a violation of Republic Act No. 3019 was attended with grave abuse of
discretion because it used irrelevant considerations and refused to properly examine pertinent
facts in arriving at its decision on the issue of probable cause.42 We held that "an examination of
the records reveal a collective pattern of action—done capriciously, whimsically and without
regard to existing rules and attendant facts."43

There are instances when litigants file a petition seeking the reversal of an interlocutory order yet
their pleadings fail to allege any grave abuse of discretion on the part of the lower tribunal.
Instead, these petitions merely identify errors of fact and law and seek their reversal. In such a
case, the higher court must dismiss the petition because it fails to allege the core requirement of a
Rule 65 petition—the allegation of the presence of grave abuse of discretion. Without this
requirement, litigants can easily circumvent the rule that an interlocutory order cannot be
appealed. They will simply file a pleading denominated as a special civil action for certiorari,
but which instead raises errors in judgment and is, in truth, an appeal. An appeal and a special
civil action for certiorari are, however, not interchangeable remedies.44

In the present case, TCC's petition for certiorari did not identify the RTC's specific acts
constituting grave abuse of discretion. Rather, it imputed errors in the RTC's proper
interpretation of the law. Further, the CA's Decision makes no finding of any grave abuse of
discretion on the part of the RTC. The penultimate paragraph of the Decision, which summarizes
the basis for its ruling, states:

In fine, the RTC failed to acquire jurisdiction over the person of [TCC] since the service of
summons to its Account Manager is not binding on the corporation. Furthermore, the action
brought by [GV Florida] against [TCC] is already barred by prescription having filed beyond the
six-month prescriptive period. Having settled the pivotal issues in this case, We find that it is no
longer necessary to address other arguments raised by the petitioner since those questions, if
considered, would not alter the outcome of this case.45

The CA, in choosing to reverse the RTC in a special civil action for certiorari, based its decision
on its disagreement with the RTC as to the correct application of the law. This is not an error in
jurisdiction but merely an error in judgment. Instead of granting the petition and reversing the
RTC, what the CA should have done was to dismiss the petition for certiorari for failing to
allege grave abuse of discretion. We further note that the RTC Order challenged before the CA
through the petition for certiorari is an interlocutory order. As there was no showing of grave
abuse of discretion, TCC's recourse is to proceed to trial and raise this error in its appeal in the
event of an adverse judgment.

II

Nevertheless, we have examined the errors raised by GV Florida in the appeal filed before us and
hold that the CA erred in its conclusions of law as well.

We agree that there was improper service of summons on TCC. We, however, apply
jurisprudence and rule that in cases of improper service of summons, courts should not
automatically dismiss the complaint by reason of lack of jurisdiction over the person of the
defendant. The remedy is to issue alias summons and ensure that it is properly served.46
Service of summons is the main mode through which a court acquires jurisdiction over the
person of the defendant in a civil case. Through it, the defendant is informed of the action against
him or her and he or she is able to adequately prepare his or her course of action. Rules
governing the proper service of summons are not mere matters of procedure. They go into a
defendant's right to due process.47 Thus, strict compliance with the rules on service of summons
is mandatory.

Section 11, Rule 14 of the Rules of Court provides the procedure for the issuance of summons to
a domestic private juridical entity. It states:

Sec. 11. Service upon domestic private juridical entity. - When the defendant is a corporation,
partnership or association organized under the laws of the Philippines with a juridical
personality, service may be made on the president, managing partner, general manager, corporate
secretary, treasurer, or in-house counsel.

This enumeration is exclusive. Section 11 of Rule 14 changed the old rules pertaining to the
service of summons on corporations. While the former rule allowed service on an agent of a
corporation, the current rule has provided for a list of specific persons to whom service of
summons must be made.

In Nation Petroleum Gas, Incorporated v. Rizal Commercial Banking Corporation,48 we

explained that the purpose of this rule is "to insure that the summons be served on a
representative so integrated with the corporation that such person will know what to do with the
legal papers served on him."49 This rule requires strict compliance; the old doctrine that
substantial compliance is sufficient no longer applies.50 In E.B. Villarosa & Partner Co., Ltd. v.
Benito,51 we ruled that the liberal construction of the rules cannot be invoked as a substitute for
the plain requirements stated in Section 11 of Rule 14.52 In Mason v. Court of Appeals,53 we
definitively ruled that Villarosa settled the question of the application of the rule on substantial
compliance. It does not apply in the case of Section 11 of Rule 14. We said:

The question of whether the substantial compliance rule is still applicable under Section II, Rule
14 of the 1997 Rules of Civil Procedure has been settled in Villarosa which applies squarely to
the instant case. In the said case, petitioner E. B. Villarosa & Partner Co. Ltd. (hereafter
Villarosa) with principal office address at 102 Juan Luna St., Davao City and with branches at
2492 Bay View Drive, Tambo, Parañaque, Metro Manila and Kolambog, Lapasan, Cagayan de
Oro City, entered into a sale with development agreement with private respondent Imperial
Development Corporation. As Villarosa failed to comply with its contractual obligation, private
respondent initiated a suit for breach of contract and damages at the Regional Trial Court of
Makati. Summons, together with the complaint, was served upon Villarosa through its branch
manager at Kolambog, Lapasan, Cagayan de Oro City. Villarosa filed a Special Appearance with
Motion to Dismiss on the ground of improper service of summons and lack of jurisdiction. The
trial court denied the motion and ruled that there was substantial compliance with the rule, thus,
it acquired jurisdiction over Villarosa. The latter questioned the denial before us in its petition
for certiorari. We decided in Villarosa's favor and declared the trial court without jurisdiction to
take cognizance of the case. We held that there was no valid service of summons on Villarosa as
service was made through a person not included in the enumeration in Section 11, Rule 14 of the
1997 Rules of Civil Procedure, which revised [ ] Section 13, Rule 14 of the 1964 Rules of Court.
We discarded the trial court's basis for denying the motion to dismiss, namely, private
respondent's substantial compliance with the rule on service of summons, and fully agreed with
petitioner's assertions that the enumeration under the new rule is restricted, limited and exclusive,
following the rule in statutory construction that expressio unios est exclusio alterius. Had the
Rules of Court Revision Committee intended to liberalize the rule on service of summons, we
said, it could have easily done so by clear and concise language. Absent a manifest intent to
liberalize the rule, we stressed strict compliance with Section 11, Rule 14 of the 1997 Rules of
Civil Procedure.54 (Italics in the original.)

Service of summons, however, is not the only mode through which a court acquires jurisdiction
over the person of the defendant. Section 20 of Rule 14 of the Rules of Court states:

Sec. 20. Voluntary appearance. - The defendant's voluntary appearance in the action shall be
equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside
from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary
appearance.

There is voluntary appearance when a party, without directly assailing the court's lack of
jurisdiction, seeks affirmative relief from the court.55 When a party appears before the court
without qualification, he or she is deemed to have waived his or her objection regarding lack of
jurisdiction due to improper service of summons.56 When a defendant, however, appears before
the court for the specific purpose of questioning the court's jurisdiction over him or her, this is a
special appearance and does not vest the court with jurisdiction over the person of the
defendant.57 Section 20 of Rule 14 of the Rules of Court provides that so long as a defendant
raises the issue of lack of jurisdiction, he or she is allowed to include other grounds of objection.
In such case, there is no voluntary appearance.

Still, improper service of summons and lack of voluntary appearance do not automatically
warrant the dismissal of the complaint. In Lingner & Fisher GMBH v. Intermediate Appellate
Court,58 we held:

A case should not be dismissed simply because an original summons was wrongfully served. It
should be difficult to conceive, for example, that when a defendant personally appears before a
Court complaining that he had not been validly summoned, that the case filed against him should
be dismissed. An alias summons can be actually served on said defendant.59 (Italics in the
original)

We repeated this doctrine in later cases such as Tung Ho Steel Enterprises Corporation v. Ting
Guan Trading Corporation,60Spouses Anuncacion v. Bocanegra,61 and Teh v. Court of Appeals.62

In Philippine American Life & General Insurance Company v. Breva,63 we even said that there is
no grave abuse of discretion when a trial court refuses to dismiss a complaint solely on the
ground of lack of jurisdiction over the person of the defendant because of improper service of
summons.64
Thus, when there is improper service of summons and the defendant makes a special appearance
to question this, the proper and speedy remedy is for the court to issue alias summons.

In the present case, the summons was served to Gino-gino, a financial supervisor of TCC. While
she is not one of the officers enumerated in Section 11 of Rule 14, we find that TCC has
voluntarily appeared before (and submitted itself to) the RTC when it filed its pre-trial
brief without any reservation as to the court's jurisdiction over it. At no point in its pre-trial brief
did TCC raise the issue of the RTC's jurisdiction over it. In fact, it even asked the RTC that it be
allowed to reserve the presentation of additional evidence through documents and witnesses.
While it is true that TCC initially filed an Answer Ad Cautelam, we rule that TCC waived any
objection raised therein as to the jurisdiction of the court when it subsequently filed its pre-trial
brief without any reservation and even prayed to be allowed to present additional evidence. This,
to this Court's mind, is an unequivocal submission to the jurisdiction of the RTC to conduct the
trial.

Moreover, we apply the doctrine in Lingner & Fisher GMBH and hold that the mere fact of
improper service of summons does not lead to the outright dismissal of the third-party complaint.
While the RTC should issue an alias  summons to remedy the error, its refusal to dismiss GV
Florida's third-party complaint on the ground of lack of jurisdiction (over TCC due to improper
service of summons) does not constitute grave abuse of discretion.

III

We also disagree with the CA that GV Florida's third-party complaint should be dismissed on the
ground of prescription.

Prescription is a ground for the dismissal of a complaint without going to trial on the merits.
Under Rule 16 of the Rules of Court, it is raised in a motion to dismiss which is filed before the
answer. It may also be raised as an affirmative defense in the answer. At the discretion of the
court, a preliminary hearing on the affirmative defense may be conducted as if a motion to
dismiss was filed.65 Nevertheless, this is only a general rule. When the issue of prescription
requires the determination of evidentiary matters, it cannot be the basis of an outright dismissal
without hearing.

In  Sanchez v. Sanchez (Sanchez),66 we held that the trial court erred when it dismissed an action
on the ground of prescription on the basis of the pleadings filed and without requiring any trial.
The issue of prescription in Sanchez required the prior determination of whether the sale subject
of the case was valid, void or voidable. This is a matter that requires the presentation of
evidence since the fact of prescription is not apparent in the pleadings. We said:

The Court has consistently held that the affirmative defense of prescription does not
automatically warrant the dismissal of a complaint under Rule 16 of the Rules of Civil
Procedure. An allegation of prescription can effectively be used in a motion to dismiss only
when the complaint on its face shows that indeed the action has already prescribed. If the issue of
prescription is one involving evidentiary matters requiring a full-blown trial on the merits, it
cannot be determined in a motion to dismiss x x x.67 (Citations omitted.)
Here, TCC alleges that GV Florida's third-party complaint (which it argues is essentially an
action for implied warranty) has already prescribed. The Civil Code states that this claim must be
made within six months from the time of the delivery of the thing sold. Without preempting the
RTC's findings on the validity of the argument that this is a warranty claim, a finding that the
action has prescribed requires the ascertainment of the delivery date of the tires in question. This,
in turn, requires the presentation of the delivery receipts as well as their identification and
authentication. Under the Rules of Court, a party presenting a document as evidence must first
establish its due execution and authenticity as a preliminary requirement for its admissibility.68

We find that the reckoning date from which the prescriptive period may be ascertained is not
apparent from the pleadings themselves. We agree with GV Florida's observation that the CA
itself admitted in its Decision that the delivery receipts do not appear in the records. A finding of
fact as to the date of delivery can only be made after hearing and reception of evidence. Thus, the
CA erred in ruling that GV Florida's third-party complaint should be dismissed on the ground of
prescription.

We further note that the CA based its finding on the delivery date on mere presumptions. The
assailed Decision states that since Florida purchased the Michelin tires on March 23, 2007, it
may be presumed that the delivery was made in the ensuing days. Since the third-party complaint
was filed only on April 8, 2008, or more than one year from the date of purchase, it concluded
that the claim on the implied warranty has prescribed.69 Findings of fact, however, cannot be
based on mere assumptions. The Rules of Court provide the process through which factual
findings are arrived at. This procedure must be followed as it is the means chosen by law to
ascertain judicial truth. Relying on probabilities, when the rules provide for a specific procedure
to ascertain facts, cannot be countenanced.

Since we cannot proceed to rule beyond the question of whether the CA correctly ruled that the
RTC committed grave abuse of discretion, this being the only question of law presented before
us in this petition for review on certiorari, we shall withhold ruling on the other issues raised by
TCC in its Comment which have not been discussed by the CA in its Decision. In any case, we
find that the other matters raised by TCC in its Comment are questions that should first be
threshed out before the RTC.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated
October 13, 2011 and its Resolution dated March 26, 2012 are REVERSED. The Order dated
March 2, 2009 of Branch 129 of the Regional Trial Court of Caloocan City is REINSTATED.

SO ORDERED.

SECOND DIVISION

G.R. No. 158836, September 30, 2015

SUNRISE GARDEN CORPORATION, Petitioner, v. COURT OF APPEALS AND FIRST

ALLIANCE REAL ESTATE DEVELOPMENT, INC., Respondents.
 G.R. No. 158967

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY ANTIPOLO

CITY, Petitioner, v. COURT OF APPEALS AND FIRST ALLIANCE REAL ESTATE
DEVELOPMENT, INC., Respondents.

G.R. No. 160726

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY ANTIPOLO

CITY, Petitioner, v. FIRST ALLIANCE REAL ESTATE DEVELOPMENT,
INC., Respondents.

G.R. No. 160778

SUNRISE GARDEN CORPORATION, Petitioner, v. FIRST ALLIANCE REAL ESTATE

DEVELOPMENT, INC., Respondent.

DECISION

LEONEN, J.:

A person who is not a party in the main action cannot be the subject of the ancillary writ of
preliminary injunction. These consolidated petitions arose out of a pending case between Sunrise
Garden Corporation and Hardrock Aggregates, Inc. First Alliance Real Estate Development, Inc.
was not a party to that case.

In 1998, the Sangguniang Panlungsod of Antipolo City passed City Ordinance No. 08-
981 entitled "An Ordinance Creating a Technical Committee to Conduct a Feasibility Study,
Preliminary and Parcellary Survey for the Proposed Construction of a City Road Connecting
Four (4) Barangays in Antipolo City (Barangay Cupang, Mayamot, Mabugan and Munting
Dilao) Starting From the Boundary of Cupang and Rancho Estate Subdivision in Marikina City
Traversing Marcos Highway and Sumulong Highway Up to Barangay Munting Dilao, Antipolo
City Exiting or Egressing to Imelda Avenue, Cainta, Rizal and Appropriating the Amount of
Five Million (P5,000,000.00) Pesos Therefore."2

In 1999, the Sangguniang Barangay of Cupang requested the Sangguniang Panlungsod of

Antipolo City to construct a city road to connect Barangay Cupang and Marcos Highway.3 The
request was approved through the enactment of Resolusyon Big. 027-99.4

The Technical Committee created by City Ordinance No. 08-98 posted notices to property
owners that would be affected by the construction of the city road.5 The notices
stated:chanRoblesvirtualLawlibrary

NOTICE TO THE PUBLIC

PURSUANT TO CITY ORDINANCE NO. 08-98 DATED: NOVEMBER 11, 1998 AND
BARANGAY RESOLUTION NO. 027-99 OF CUPANG BARANGAY COUNCIL, DATED
SEPTEMBER 10, 1999, CITY ROAD (PHASE I), THE GENERAL PUBLIC IS HEREBY
NOTIFIED THAT THE CITY GOVERNMENT OF ANTIPOLO IS GOING TO CONSTRUCT
THE 20.00 METERS WIDE CITY ROAD, LINKING MARCOS HIGHWAY TO ANTIPOLO-
SAN MATEO NATIONAL ROAD (C-6), ALL PROPERTY OWNERS AFFECTED ARE
ENJOINED TO SEE THE PLANNING OFFICER OF ANTIPOLO CITY FOR DETAILS OF
THE PROGRAM.6ChanRoblesVirtualawlibrary
In 2002, Engr. Eligio Cruz, Project Coordinator, submitted a report7 to the City Mayor,8 a portion
of which states:chanRoblesvirtualLawlibrary
3. Pilot Road had been determined and property owners had been appraised [sic] like M[r].
Armando Carpio who owns majority of the affected lots[,] Mr. Alonzo Espanola of Hard Rock,
Heavens Gate, Josefma Santos through Mr. Manuel Santos, Jr., Heirs of Crispulo Zapanta
through Vice Mayor Lorenzo Zapanta, Gaudencio Caluma, RCR Realty, Maxima Matias, Heirs
of Gabriel Martinez through Sec. Martinez an[d] several actual occupants in the course traversed
by the Pilot Road[.]9ChanRoblesVirtualawlibrary
Sunrise Garden Corporation was an affected landowner. Its property was located in Barangay
Cupang, which Sunrise Garden Corporation planned to develop into a memorial park.10

Sunrise Garden Corporation, through Cesar T. Guy, Chair of the Board of Directors, executed an
Undertaking11 where Sunrise Garden Corporation would construct the city road at its own
expense, subject to reimbursement through tax credits.12 A portion of the Undertaking
states:chanRoblesvirtualLawlibrary
That I am the owner in fee simple of several parcels of land situated at Cupang, Antipolo, Rizal
with a consolidated area of 116 Hectares, more or less;cralawlawlibrary

....

That I have applied for the development of the aforestated consolidated lots into a memorial park
known as "SUNRISE GARDEN["];cralawlawlibrary

That setting aside of and/or providing a 6 hectares City Park is among the conditions set forth by
the Antipolo, [sic] City council in the approval of the said project;cralawlawlibrary

....

That I am willing to undertake and finance development of the City Park and City Road
connecting Marcos Highway to Marikina - San Mateo - Antipolo National Highway which cost
shall be applied to our [t]axes and other fees payable to the City Government;cralawlawlibrary

That I am willing to sign and execute all legal instrument necessary to transfer ownership of the
same to the City government[.]13ChanRoblesVirtualawlibrary
The city road project, thus, became a joint project of the Sangguniang Panlungsod of Antipolo,
Barangay Cupang, Barangay Mayamot, and Sunrise Garden Corporation.14

Sunrise Garden Corporation's contractor15 began to position its construction

equipment.16 However, armed guards,17 allegedly hired by Hardrock Aggregates, Inc., prevented
Sunrise Garden Corporation's contractor from using an access road to move the construction
equipment.18

On January 24, 2002, Sunrise Garden Corporation filed a Complaint19 for damages with prayer
for temporary restraining order and writ of preliminary injunction against Hardrock Aggregates,
Inc.20

Hardrock Aggregates, Inc. filed its Answer to the Complaint.21

The trial court issued a temporary restraining order on February 15, 2002, "directing Hardrock to
cease and desist from preventing/blocking the contractor in moving its equipments to the site of
the proposed city road."22

Undaunted by the temporary restraining order, Hardrock Aggregates, Inc. continued to block the
movement of the construction equipment.23

On March 19, 2002, the trial court ordered the issuance of a Writ of Preliminary Injunction,
subject to the posting of a bond by Sunrise Garden Corporation.24 On March 22, 2002, the Writ
of Preliminary Injunction was issued.25cralawred

While the Complaint was pending, informal settlers started to encroach on the area of the
proposed city road.26

Sunrise Garden Corporation, thus, filed a Motion and Manifestation on May 16, 2002,27 praying
for the amendment of the Writ of Preliminary Injunction "to include any and all persons or group
of persons from interfering, preventing or obstructing all of petitioner's contractors, equipment
personnel and representatives in proceeding with the construction of the city road as authorized
by Ordinance No. 08-98 of Antipolo City."28

The trial court granted Sunrise Garden Corporation's Motion and Manifestation and issued an
Amended Writ of Preliminary Injunction29 on May 22,
2002,30 stating:chanRoblesvirtualLawlibrary
IT IS HEREBY ORDERED by the undersigned Judge of this Court, that, until further orders,
you, the said defendant and all your attorneys, representatives, agents and any other persons
assisting you including any and all persons or groups of persons from interfering, preventing or
obstructing all of plaintiff's contractors, equipment personnel and representatives in proceeding
with the construction of a new access road as authorized by the Antipolo City Government and
Barangay Cupang, leading to its memorial project site. As necessary, the services of Deputy
Sheriff Rolando P. Palmares can be sought to enforce this Writ.

Antipolo City, this 22nd day of May 2002.31ChanRoblesVirtualawlibrary

In compliance with the Amended Writ of Preliminary Injunction, the informal settlers allowed
the construction equipment passage to the city road project. The construction of the city road
then continued.32

Thereafter, armed guards of K-9 Security Agency, allegedly hired by First Alliance Real Estate
Development, Inc.,33 blocked Sunrise Garden Corporation's contractor's employees and
prevented them from proceeding with the construction.34

First Alliance Real Estate Development, Inc., through its representative Mr. Boy Pineda,
requested to have a dialogue with Sunrise Garden Corporation.35 It was agreed that the meeting
would be between the representatives of First Alliance Real Estate Development, Inc. and
Sunrise Garden Corporation.36 A meeting was scheduled on October 8, 2002 to be held at the
Office of the City Planning.37 On the day of the meeting, First Alliance Real Estate
Development, Inc.'s representative, however, did not arrive.38

A verification with the Business Permit, License and Franchising Office of the City
Mayor39 revealed that First Alliance Real Estate Development, Inc. had no business record, and
K-9 Security Agency had no permit to post guards.40

A Motion to cite K-9 Security Agency in contempt was filed on October 11, 200241 by Sunrise
Garden Corporation.42

On November 11, 2002, K-9 Security Agency, joined by First Alliance Real Estate
Development, Inc. and represented by the same counsel,43 opposed the Motion to cite them in
contempt, raising the defense of lack of jurisdiction over their persons, since they were not
bound by the Amended Writ of Preliminary Injunction.44 The Opposition45 stated
that:chanRoblesvirtualLawlibrary
1.3 The purpose of the Writ of Injunction is to preserve the relation between the parties during
the pendency of the suit. This cannot be applied to K-9 and the Security Guards who are not
parties in the case. Neither did they claim authority from the defendant, for which reason this
Honorable Court did not acquire jurisdiction over them and could not validly enforce the
Amended Writ of Injunction against them . . . .

....

1.5 Moreover, insofar as the K-9 and the Security Guards are concerned, the amended Writ of
Injunction is void, for lack of notice to them, in accordance with Sec. 5, Rule 58, Rules of Civil
Procedure quoted in part as follows:chanRoblesvirtualLawlibrary
"Section 5. Preliminary Injunction not granted without notice; exception - no preliminary
injunction shall be granted without hearing and prior notice to the party or person sought to be
enjoined xxx."46 (Emphasis supplied, citation omitted)ChanRoblesVirtualawlibrary
It was further alleged in the Opposition that Sunrise Garden Corporation was intruding into First
Alliance Real Estate Development, Inc.'s titled properties.47

On November 15, 2002, Sunrise Garden Corporation filed an Ex-parte Motion to require K-9
Security Agency and First Alliance Real Estate Development, Inc. to comply with the May 22,
2002 Amended Writ of Preliminary Injunction.48

The trial court granted Sunrise Garden Corporation's Motion and issued an Order dated
November 22, 2002 requiring K-9 Security Agency to comply with the Amended Writ of
Preliminary Injunction.49

Despite the issuance of the Order to comply, security guards dressed in civilian clothes still
allegedly prevented the workers from proceeding to the construction site on November 28,
2002.50

Engr. Eligio Cruz, the Project Coordinator, spoke to the guards of K-9 Security Agency on the
site and showed them a copy of the Order issued by the trial court.51 A copy of the Order shown
to the guards was allegedly already served by Sheriff Roland Palmares and received by K-9
Security Agency's Bagong Nayon Office and First Alliance Real Estate Development,
Inc.52 However, the guards replied that they were under Forefront Security Agency, not K-9
Security Agency.53 The guards informed Engr. Eligio Cruz that First Alliance Real Estate
Development, Inc. ordered them not to allow the city road construction.54

On November 29, 2002, Engr. Eligio Cruz wrote a letter-report55 to Hon. Mauricio M. Rivera,
Executive Judge of the Regional Trial Court of Antipolo City,56 as
follows:chanRoblesvirtualLawlibrary
Relative to the Order dated November 22, 2002, I wish to inform this Honorable Court that on
November 28, 2002 at about 1:30 P.M. several K-9 Security Guards dressed in civilian clothes
armed with shotguns, scattered and deployed in ambush position on the mountain slope of the
property of Armando Carpio, blocked the buldozer [sic] clearing the City Road which had barely
began [sic].

The undersigned explained to the four guards who approached the contents of the Order and
showed to the team leader (who refused to give his name) the copy served by Sheriff Roland
Palmares and received by their Bagong Nayon Office as well as their principal First Alliance
Realty Corp.

That the aforestated team leader answered back that they are now under FOREFRONT
SECURITY AGENCY and have nothing to do with K-9 SECURITY subject of the order.
Further the same guards are under the control of Officer-in-Charge ROLAND TOMINES, and
have instructions from their principal FIRST ALLIANCE REALTY not to allow the construction
of the City Road.

IN VIEW of the foregoing incident, which constitute [sic] a clear defiance of the order, I am
constrained to report the matters to this Honorable Court for
disposition.57ChanRoblesVirtualawlibrary
On November 29, 2002, Sunrise Garden Corporation filed a Motion to cite Forefront Security
Agency and First Alliance Real Estate Development, Inc. in contempt.58 Sunrise Garden
Corporation alleged that First Alliance Real Estate Development, Inc. was notified and
voluntarily submitted to the jurisdiction of the court.59 Sunrise Garden Corporation also alleged
that First Alliance Real Estate Development, Inc. adopted K-9 Security Agency's Opposition.60

On December 4, 2002, K-9 Security Agency filed a Motion for Reconsideration of the November
22, 2002 Order.61 Allegedly attached to the Motion were photocopies of TCT Nos. 342073-76
and 337784 to show that First Alliance Real Estate Development, Inc. was the registered owner
of the parcel of land where the pieces of construction equipment were being placed.62

Apparently, to resolve the issue of ownership raised by First Alliance Real Estate Development,
Inc., the trial court ordered on December 9, 2002 the City Planning and Development Office to
conduct a table survey of the affected properties.63 The
Order64 states:chanRoblesvirtualLawlibrary
When this case was called for hearing today, counsel for First Alliance Realty Corporation
submitted the xerox copies of titles of the Property which according to him are inside the area
being built as city road. Plaintiff's counsel also argued that the tiles [sic] of First Alliance are
outside the area where the road will traverse....

Now, each of the parties are authorized to send a representative for the purpose of table survey
and whatever the result of the table survey, City Planning and Development Office shall submit a
report before this Court within five (5) days from the termination of table survey. The table
survey would contain the signatures of each representative, the representative of the [sic] Sunrise
and the representative of First Alliance.65ChanRoblesVirtualawlibrary
On December 27, 2002, P/Supt. Jose Fenix Dayao of Antipolo City dispatched SPO4 Conrado
Abren Soza and other police officers to inspect the construction site.66 Upon arrival, the police
officers were fired at by the security guards of Forefront Security Agency.67

On January 15, 2003, the City Planning and Development Office, through Edgardo T. Cruz,
reported68 to the court that it could not accomplish the table survey, as required by the trial court
in its Order dated December 9, 2002, because the Register of Deeds could not provide copies of
First Alliance Real Estate Development, Inc.'s transfer certificates of title.69 Attached to the City
Planning and Development Office's report was a letter70 from the Register of Deeds of Marikina
City, stating that a certain Arty. Benjamin A. Flestado had filed a similar request in 2001, which
request was forwarded to the Land Registration Authority.71 Allegedly, the existing request for
verification shows that First Alliance Real Estate Development, Inc. could not acquire a
favorable report from the Land Registration Authority proving ownership over the property.72

On January 29, 2003, the trial court issued an Order stating that since First Alliance Real Estate
Development, Inc. could not prove ownership over the properties, then First Alliance Real Estate
Development, Inc. or any of its hired security agencies must comply with the Amended Writ of
Preliminary Injunction.73 Portions of the January 29, 2003
Order74 read:chanRoblesvirtualLawlibrary
Considering the fact that the First Alliance Realty Corporation could not prove that the titles of
their land will be traversed or affected in the road construction being made by Sunrise Garden
Corporation[,] it is incumbent [upon] the former to produce the certified copies of the Certificate
of Titles of the First Alliance Realty Corporation to this Court so that the same will be sent to the
CPDC of Antipolo City for the compliance of the Court order to make a table survey. As it is
now, the First Alliance Realty Corporation is bound to comply with the amended injunction
order of this Court dated November 22, 2002 wherein it is ordered that IT IS HEREBY
ORDERED by the undersigned Judge of this Court, that, until further orders, you, the said
defendant and all your attorneys, representatives, agents and any other persons assisting you
including any and all persons or groups of persons from interfering, preventing or obstructing all
plaintiff's contractors, equipment personnel and representatives in proceeding with the
construction of a new access road as authorized by the Antipolo City Government and Barangay
Cupang, leading to its memorial project site. . . .

WHEREFORE, the First Alliance Realty Corporation or any of its Security Agencies acting as
guard assigned in the Land must comply with the amended writ of preliminary injunction, as
above mentioned.75ChanRoblesVirtualawlibrary
K-9 Security Agency and First Alliance Real Estate Development, Inc. filed a Motion for
Reconsideration76 reiterating their arguments that since the trial court did not acquire jurisdiction
over them, the Writ of Preliminary Injunction could not be enforced against them.77 First
Alliance Real Estate Development, Inc. and K-9 Security Agency's Motion for Reconsideration
was denied.78

First Alliance Real Estate Development, Inc. thus filed a Petition for Certiorari with prayer for
preliminary injunction and temporary restraining order before the Court of Appeals.79 This was
docketed as CA-G.R. SP No. 75758.80

In a Resolution dated March 7, 2003, the Court of Appeals issued ex-parte a temporary
restraining order valid for 60 days.81

In the same Resolution, the Court of Appeals required the Office of the Solicitor General to
comment on the Petition for Certiorari .82 The Office of the Solicitor General then entered its
appearance and filed its Comment.83

The Court of Appeals held two hearings with regard to the prayer for the issuance of a Writ of
Preliminary Injunction.84 During the hearing on April 24, 2003, Justice Sabio requested
counsels85 of the parties to maintain the status quo even after the lapse of the effectivity of the
temporary restraining order, as follows:86
J. SABIO:

If we can have a word of honor among gentlemen that until the case would be decided there
should be no, [sic] if we maintain the status quo. A gentleman's agreement. With the assurance
that the court will resolve the incident at the earliest possible time.87
On June 20, 2003, the Court of Appeals issued a Writ of Preliminary Injunction.88 The
Resolution89 stated:chanRoblesvirtualLawlibrary
It will be recalled that in the hearing of the prayer for injunctive relief sought in this case last
April 24, 2003, there was a gentleman's agreement among counsels of parties that status quo be
maintained until such time that the main case will be resolved by this Court.

Petitioner, however, through a motion informed this Court that private respondents are
threatening to bulldoze the property subject matter of this litigation. Petitioner further stated that
such act of private respondent will render judgment hereon moot and academic. Under such
circumstances, we are left with no choice but to issue the injunctive relief sought, considering
further that the issuance thereof is warranted.

WHEREFORE, let a writ of Preliminary Injunction be issued conditioned upon petitioner's

posting of a cash or surety bond in the amount of P200,000.00 to answer for the damages which
may be sustained by private respondent by reason of this injunction or if the court should finally
decide that the applicant is not entitled thereto. After which, the Division Clerk of Court is
directed to issue the writ of preliminary injunction enjoining respondents, its agents or
representatives from implementing public respondent's amended writ of injunction dated May
22, 2002, January 29, 2003 and February 24, 2003 Orders.90 (Citation
omitted)ChanRoblesVirtualawlibrary
Sunrise Garden Corporation and the Republic of the Philippines, through the Office of the
Solicitor General, separately filed Petitions for Certiorari and Prohibition, with prayer for
temporary restraining order and writ of preliminary injunction assailing the Writ of Preliminary
Injunction issued by the Court of Appeals. Sunrise Garden Corporation's Petition91 was docketed
as G.R. No. 158836, and the Republic of the Philippines' Petition92 was docketed as G.R. No.
158967.

Sunrise Garden Corporation offered93 to post a bond as provided under Rule 58, Section 694 of
the Rules of Court and prayed that this court issue a temporary restraining order to prevent the
Court of Appeals from implementing the Writ of Preliminary Injunction.95

Republic of the Philippines subsequently filed a Supplemental Petition96 for Certiorari on

August 21, 2003 informing this court that the Court of Appeals allegedly issued a second Writ of
Preliminary Injunction dated August 13, 2003, which states:chanRoblesvirtualLawlibrary
WHEREAS, in the Resolution promulgated August 13, 2003, the Division Clerk of Court is
directed to issue the Writ of Preliminary Injunction pursuant to the June 20, 2003 Resolution of
this Court.

NOW, THEREFORE, YOU RESPONDENT JUDGE OF THE REGIONAL TRIAL COURT OF

ANTIPOLO CITY, BRANCH 73, YOUR AGENTS, EMPLOYEES, REPRESENTATIVES OR
SUCH OTHER PERSON OR PERSONS ACTING IN YOUR BEHALF ARE ENJOINED
FROM IMPLEMENTING THE AMENDED WRIT OF INJUNCTION DATED MAY 22, 2002,
JANUARY 29, 2003 AND FEBRUARY 24, 2003 ORDERS.

GIVEN BY THE AUTHORITY OF THE HONORABLE COURT OF APPEALS, Mme. Justice

BENNIE ADEFUN-DE LA CRUZ [sic], Chairman, Mr. Justice JOSE L. SABIO, JR. and Mr.
Justice HAKIM S. ABDULWAHID, Members, this 13th day of August 2003, Manila,
Philippines.97ChanRoblesVirtualawlibrary
Republic of the Philippines prayed that the second Writ of Preliminary Injunction dated August
13, 2003 be dissolved.98

While the Petitions for Certiorari and Prohibition were pending before this court, the Court of
Appeals, on November 5, 2003, granted First Alliance Real Estate Development, Inc.'s Petition
for Certiorari and annulled the Amended Writ of Preliminary Injunction issued by the trial
court,99 reasoning as follows:chanRoblesvirtualLawlibrary
Indeed, public respondent court acted with grave abuse of discretion and without jurisdiction
when it sought the enforcement of its amended writ of preliminary injunction against petitioner,
who was never a party to the pending case. Worse, it threatened petitioner with contempt of court
for not following an unlawful order.

Sec. 5, Rule 58, 1st sentence provides, thus: "No preliminary injunction shall be granted without
hearing and prior notice to the party or person sought to be enjoined" (underscoring for
emphasis). In the case at bench, petitioner was not only not impleaded as party to the case, but
that it was never given prior notice regarding the writ of injunction.

Public respondents' assertion that notice was already made to Hardrock Aggregates, Inc. is
specious. There is no showing at all as to the relationship between Hardrock Aggregates, Inc. and
petitioner. Since there is nothing to prove and establish that Hardrock, Inc. and petitioner are one
and the same, then they should be treated as separate and distinct personalities.

....

WHEREFORE, foregoing premises considered, the petition having merit, in fact and in law is
hereby GIVEN DUE COURSE. Resultantly, the assailed ordered [sic] are
hereby ANNULLED and SET ASIDE for having been issued with grave abuse of discretion and
without jurisdiction. No costs.

SO ORDERED.100 (Emphasis and underscoring in the original)ChanRoblesVirtualawlibrary

Republic of the Philippines then questioned the Court of Appeals' Decision and filed a Petition
for Review101 on Certiorari before this court. The Petition was docketed as G.R. No.
160726.102 Sunrise Garden Corporation also filed a separate Petition for Review
on Certiorari 103 before this court, docketed as G.R. No. 160778.104

First Alliance Real Estate Development, Inc. then filed its Comment105 on the Petition
for Certiorari filed by Sunrise Garden and a Consolidated Comment,106 addressing the issues
raised in the Office of the Solicitor General's Petition for Certiorari and Supplemental Petition
for Certiorari .

In a Resolution107 dated January 28, 2004, this court consolidated G.R. Nos. 158836, 158967,
160726, and 160778.

First Alliance Real Estate Development, Inc. filed an Omnibus Motion,108 praying that its
Consolidated Comment in G.R. No. 158967 "be adopted as its Comment [for] G.R. No.
160726."109 First Alliance Real Estate Development, Inc. subsequently filed a
Manifestation,110 praying that the Comment it filed in G.R. Nos. 158967 and 158836 be adopted
as its Comment in G.R. No. 160778.111

Sunrise Garden Corporation and Republic of the Philippines argue that the Court of Appeals
committed grave abuse of discretion in not dismissing the Petition outright due to insufficiency
of form and substance.112 Sunrise Garden Corporation argues that First Alliance Real Estate
Development, Inc. failed to prove its ownership over the properties in dispute.113 Thus, it did not
establish any right that would entitle it to the reliefs prayed for.114 Also, no evidence was
presented before the trial court and the Court of Appeals that would prove First Alliance Real
Estate Development, Inc.'s claim that its property would be affected by the city road project.115

Sunrise Garden Corporation points out that First Alliance Real Estate Development, Inc. still
failed to attach a certified true copy of its alleged titles to the properties affected by the city road
project.116 Sunrise Garden Corporation also manifests that the alleged properties of First Alliance
Real Estate Development, Inc. will not be affected by the city road project based on an alleged
study conducted by the Antipolo City Planning and Development Office.117

Further, Sunrise Garden Corporation and Republic of the Philippines argue that the Court of
Appeals gravely abused its discretion when it issued the Writ of Preliminary Injunction because
the Writ violated Presidential Decree No. 1818.118

Section 1 of Presidential Decree No. 1818 provides:chanRoblesvirtualLawlibrary

Section 1. No court in the Philippines shall have jurisdiction to issue any restraining order,
preliminary injunction, or preliminary mandatory injunction in any case, dispute, or controversy
involving an infrastructure project, or a mining, fishery, forest or other natural resource
development project of the government, or any public utility operated by the government,
including among others public utilities for the transport of the goods or commodities, stevedoring
and arrastre contracts, to prohibit any person or persons, entity or governmental official from
proceeding with, or continuing the execution or implementation of any such project, or the
operation of such public utility, or pursuing any lawful activity necessary for such execution,
implementation or operation.ChanRoblesVirtualawlibrary
Sunrise Garden Corporation and Republic of the Philippines119 posit that the term "infrastructure
project" includes the construction of roads.120 Also, the construction of the city road is a capital
investment on the part of government because payment to Sunrise Garden Corporation shall be
through tax credits.121

Republic of the Philippines adds that Presidential Decree No. 1818 is applicable because it does
not distinguish between local government projects and national government projects.122 Further,
the city road project is intended to benefit not only the residents of several barangay that it will
traverse, but also the students of the barangay school.123 Once the city road project is completed,
the travel time of the students will be lessened from two hours to just 30 minutes.124

Sunrise Garden Corporation admits that the Writ of Preliminary Injunction was not issued
against First Alliance Real Estate Development, Inc.125 Nevertheless, the nullification of the trial
court's Orders effectively hampered the city road project.126 The argument of First Alliance Real
Estate Development, Inc. that "its property is being taken without just compensation"127 proves
that the injury to First Alliance Real Estate Development, Inc. is quantifiable.

Sunrise Garden Corporation and Republic of the Philippines argue that the Writ of Preliminary
Injunction did not state the law and facts on which it was based.128 The Court of Appeals did not
state what clear legal right was being protected.129 It merely stated that "private respondents are
threatening to bulldoze the property subject matter of [the] litigation."130

As to the alleged "gentlemen's agreement" stated in the Order of the Court of Appeals, Sunrise
Garden Corporation points out that as per the transcript of stenographic notes, the "gentlemen's
agreement" was merely a suggestion of the court, but the parties themselves never came to an
agreement.131

Sunrise Garden Corporation and Republic of the Philippines argue that First Alliance Real Estate
Development, Inc. was not denied due process when the trial court issued the Amended Writ of
Preliminary Injunction because it was afforded several opportunities to be heard.132

Republic of the Philippines acknowledges that the complaint for damages filed by Sunrise
Garden Corporation was only against Hardrock Aggregates, Inc. because it was the entity that
initially blocked the movement of the construction equipment of Sunrise Garden Corporation's
contractor. However, First Alliance Real Estate Development, Inc. was given several
opportunities to air its side. The first opportunity was the meeting scheduled on October 8, 2002
between First Alliance Real Estate Development, Inc., and Sunrise Garden Corporation.
However, First Alliance Real Estate Development, Inc. did not appear despite being the
requesting party.133

Further, First Alliance Real Estate Development, Inc. was duly notified when it allegedly
received a copy of Sunrise Garden Corporation's Motion to cite for contempt and filed an
Opposition to the Motion.134 Sunrise Garden Corporation points out that First Alliance Real
Estate Development, Inc. appeared in court to argue why it should not be cited in contempt.135

First Alliance Real Estate Development, Inc. was given another chance to be heard when it filed
a Motion for Reconsideration on February 6, 2003 before the trial court.136 Thus, First Alliance
Real Estate Development, Inc. cannot claim that it was denied due process.137

In any case, Republic of the Philippines argues that the issuance of a Writ of Preliminary
Injunction does not require a trial-type hearing under Rule 58, Section 5 of the Rules of Court.138

Sunrise Garden Corporation argues that the trial court had jurisdiction to issue the Amended Writ
of Preliminary Injunction and enforce it against First Alliance Real Estate Development,
Inc.139 Assuming that the trial court did not have jurisdiction over the person of First Alliance
Real Estate Development, Inc., this was cured when the latter voluntarily appeared in
court.140 First Alliance Real Estate Development, Inc. even filed pleadings such as an Opposition
and a Motion for Reconsideration.141 Other than filing pleadings, First Alliance Real Estate
Development, Inc. argued that its properties will be affected by the city road project.142 This issue
was then submitted for resolution before the trial court.143

Sunrise Garden Corporation further argues that First Alliance Real Estate Development, Inc. had
a plain, speedy, and adequate remedy, which was to present its title to the property.144

On the other hand, First Alliance Real Estate Development, Inc. counters that the trial court did
not acquire jurisdiction over its person as it was not impleaded as a party-litigant in the
Complaint for damages filed by Sunrise Garden Corporation against Hardrock Aggregates,
Inc.145 Sunrise Garden Corporation does not deny that First Alliance Real Estate Development,
Inc. was not included in the Complaint.146

First Alliance Real Estate Development, Inc. was not involved in the Complaint for damages
before the trial court.147 Nonetheless, Sunrise Garden Corporation sought to enforce the
Amended Writ of Injunction against it even though the Amended Writ was addressed to
Hardrock Aggregates, Inc.148 First Alliance Real Estate Development, Inc. alleges that it has no
business relations with Hardrock Aggregates, Inc.149 Thus, the Amended Writ of Preliminary
Injunction is not binding on First Alliance Real Estate Development, Inc., and it cannot be held
in contempt.150

First Alliance Real Estate Development, Inc. argues that the Amended Writ of Preliminary
Injunction dated May 22, 2002 was void as to First Alliance Real Estate Development, Inc. since
it was never notified of the hearing.151 Further, to implement the Amended Writ against First
Alliance Real Estate Development, Inc. was equivalent to deprivation of property without due
process.152 First Alliance Real Estate Development, Inc., or its properties, was not involved in
Civil Case No. 02-6396 and yet Sunrise Garden insists on including First Alliance Real Estate
Development, Inc.'s properties in the city road project.153

First Alliance Real Estate Development, Inc. argues that the Amended Writ of Preliminary
Injunction will allow Sunrise Garden Corporation to take possession and control of First Alliance
Real Estate Development, Inc.'s property without due process of law.154 First Alliance Real
Estate Development, Inc. cites Buayan Cattle Co., Inc. v. Hon. Quintillan, etc., et al.155 where
this court held that "[injunctions are not available to take property out of the possession or
control of one party and place it into that of another whose title was not clearly, been [sic]
established."156

First Alliance Real Estate Development, Inc. claims that the construction of the city road has the
effect of appropriating and taking First Alliance Real Estate Development, Inc.'s private property
for public use.157 First Alliance Real Estate Development, Inc. questions the lack of authority of
Sunrise Garden Corporation to take the property considering that the Office of the Solicitor
General admitted before the Court of Appeals that there was no expropriation ordinance, as
follows:158
J. Sabio:

xxx could you show this Court an Ordinance authorizing the expropriation of that property? xxx

Sol. Saludares:

There is no expropriation Ordinance.

J. Sabio:

How can you enter a property without any authority, [sic] it [sic] is basic that you can enter the
property only upon a Court Order.
 xxx

Sol. Saludares:

We have here a copy of the Ordinance, your honor.

J. Sabio:

What does it say?

Sol. Saludares:

An Ordinance creating a technical committee to conduct x x x.

J. Sabio:

That is not expropriation. I have read that. That is not expropriation.159 (Emphasis supplied,
citations omitted)
Further, the temporary restraining order and preliminary injunction issued by the Court of
Appeals is not violative of Presidential Decree No. 1818.160 First Alliance Real Estate
Development, Inc. argues that the cases relied upon by Sunrise Garden Corporation and Republic
of the Philippines, Gov. Garcia v. Hon. Burgos161 and Republic v. Silerio,162 are not applicable
because in these cases, biddings were conducted.163 No bidding was conducted for the city road
project as shown by Sunrise Garden Corporation's admission that it had an agreement with the
City Government of Antipolo.164 "There was no bidding conducted and the agreement between
the Petitioner [Sunrise Garden Corporation] and the City Government of Antipolo City relative
to [the] construction of the access road and payment by way of tax credit can still be questioned,
for being illegal."165

First Alliance Real Estate Development, Inc. also alleges that Sunrise Garden Corporation
disregarded the Court of Appeals' advice or their "gentlemen's agreement" to maintain the status
quo when Sunrise Garden Corporation sought an Order from the trial court to enforce the
Amended Writ of Injunction.166

First Alliance Real Estate Development, Inc. also questions the standing of Republic of the
Philippines and the City Government of Antipolo because they were not impleaded as parties in
CA-G.R. SP No. 75758 and Civil Case No. 02-6396.167 Since they were not parties during the
proceedings in the lower courts, they were not affected by the Writ of Preliminary Injunction.168

Also, the Petitions filed by Republic of the Philippines through the Office of the Solicitor
General and before this court do not indicate the authority of the City Government of Antipolo to
"represent the Republic"169 and sign the certification of non-forum shopping.170

With regard to Republic of the Philippines' claim that a second Writ of Preliminary Injunction
was issued by the Court of Appeals on August 13, 2003, First Alliance Real Estate Development,
Inc. explains that this alleged second Writ of Preliminary Injunction was actually the Writ issued
by the Court of Appeals in its Resolution dated June 20, 2003.171 It is not a second Writ of
Preliminary Injunction.

On the arguments raised by First Alliance Real Estate Development, Inc., Republic of the
Philippines counters that First Alliance Real Estate Development, Inc. cannot claim denial of due
process due to the lack of expropriation proceeding.172

Republic of the Philippines argues that expropriation and eminent domain are different, citing
Section 19173 of Republic Act No. 7160.174 Republic of the Philippines explained that if
compensation for the property is accepted, then there is no need for an expropriation
proceeding.175 In addition, First Alliance Real Estate Development, Inc. is not an affected
landowner.176

As to the allegation that there was no public bidding, Republic of the Philippines discussed that
the City Government of Antipolo had no funds for the road project, thus, it could not bid out the
project.177 However, due to the urgent need for the construction of the city road, the local
government had to negotiate with a party "who [could] advance its realty taxes."178 Sunrise
Garden Corporation offered to do so, and the local government found the offer favorable.179

The resolution of this case involves the following issues:

First, whether the Court of Appeals committed grave abuse of discretion when it issued a Writ of
Preliminary Injunction, contrary to the provisions of Presidential Decree No.
1818;cralawlawlibrary

Second, whether respondent First Alliance Real Estate Development, Inc. was denied due
process when the trial court issued its January 29, 2003 Order requiring respondent First Alliance
Real Estate Development, Inc. to comply with the Amended Writ of Preliminary Injunction.

Finally, whether the trial court acquired jurisdiction over respondent First Alliance Real Estate
Development, Inc.

At the outset, G.R. Nos. 158836 and 158967 were rendered moot and academic when the Court
of Appeals promulgated its Decision in CA-G.R. SPNo. 75758 on November 5, 2003.

A case that is moot and academic has been defined as follows:chanRoblesvirtualLawlibrary

A moot and academic case is one that ceases to present a justiciable controversy by virtue of
supervening events, so that a declaration thereon would be of no practical use or
value.180 (Citation omitted)ChanRoblesVirtualawlibrary
In Philippine Savings Bank (PSBANK) v. Senate Impeachment Court,181 this court
stated:chanRoblesvirtualLawlibrary
It is well-settled that courts will not determine questions that have become moot and academic
because there is no longer any justiciable controversy to speak of. The judgment will not serve
any useful purpose or have any practical legal effect because, in the nature of things, it cannot be
enforced.182 (Citation omitted)ChanRoblesVirtualawlibrary
While the Petitions for Certiorari are moot and academic, we clarify that Presidential Decree No.
1818, cited by the parties, has been repealed by Republic Act No. 8975.183 The repealing clause
of this law provides for an express repeal, thus:chanRoblesvirtualLawlibrary
SEC. 9. Repealing Clause.—All laws, decrees, including Presidential Decree Nos. 605, 1818 and
Republic Act No. 7160, as amended, orders, rules and regulations or parts thereof inconsistent
with this Act are hereby repealed or amended accordingly.ChanRoblesVirtualawlibrary
This court has held that implied repeals are not favored, and "the failure to add a specific
repealing clause indicates that the intent was not to repeal any existing law[.]"184 The express
repeal of Presidential Decree No. 1818 clearly indicates Congress' intent to replace Presidential
Decree No. 1818 with Republic Act No. 8975.

Republic Act No. 8975 was approved on November 7, 2000 and was published in the Malaya
and the Manila Bulletin on November 11, 2000. It was also published in the Official Gazette on
May 7, 2001.185 When this case was filed, Republic Act No. 8975 was already effective.

Section 3 of Republic Act No. 8975 provides:chanRoblesvirtualLawlibrary

SEC. 3. Prohibition on the Issuance of Temporary Restraining Orders, Preliminary Injunctions
and Preliminary Mandatory Injunctions. — No court, except the Supreme Court, shall issue any
temporary restraining order, preliminary injunction or preliminary mandatory injunction against
the government, or any of its subdivisions, officials or any person or entity, whether public or
private, acting under the government's direction, to restrain, prohibit or compel the following
acts:

(a) Acquisition, clearance and development of the right-of-way and/or site or location of
any national government project;cralawlawlibrary

(b) Bidding or awarding of contract/project of the national government as defined under Section

2 hereof[.] (Emphasis supplied)ChanRoblesVirtualawlibrary
In the recent decision of this court in Dynamic Builders v. Hon. Presbitero, Jr.,186 we clarified
that Republic Act No. 8975 is applicable to national government infrastructure projects.187 It also
discussed the remedies available to aggrieved parties in cases involving local government
infrastructure projects as follows:chanRoblesvirtualLawlibrary
Republic Act No. 8975 does not sanction splitting a cause of action in order for a party to avail
itself of the ancillary remedy of a temporary restraining order from this court. Also, this law
covers only national government infrastructure projects. This case involves a local government
infrastructure project.

For local government infrastructure projects, Regional Trial Courts may issue provisional
injunctive reliefs against government infrastructure projects only when (1) there are compelling
and substantial constitutional violations; (2) there clearly exists a right in esse; (3) there is a need
to prevent grave and irreparable injuries; (4) there is a demonstrable urgency to the issuance of
the injunctive relief; and (5) when there are public interests] at stake in restraining or enjoining
the project while the action is pending that far outweigh (a) the inconvenience or costs to the
party to whom the project is awarded and (b) the public benefits that will result from the
completion of the project. The time periods for the validity of temporary restraining orders
issued by trial courts should be strictly followed. No preliminary injunction should issue unless
the evidence to support the injunctive relief is clear and convincing.188 (Emphasis
supplied)ChanRoblesVirtualawlibrary
In this case, the notice to the public states that "the City Government of Antipolo is going to
construct the 20.00 meters wide city road[.]"189 Also, the funds for the project would come from
the Sangguniang Panlungsod of Antipolo City. There is nothing on record to show that the city
road project is a national government project. Hence, the prohibition on the issuance of
restraining orders or injunctions against national government projects does not apply.

II

Due process requires that a party be given the chance to be heard. The general rule is that "no
man shall be affected by any proceeding to which he is a stranger, and strangers to a case are not
bound by a judgment rendered by the court."190 Corollarily, an ancillary writ of remedy cannot
affect non-parties to a case.

Fernandez v. Court of Appeals191 involved an Administrative Complaint against three Court of

Appeals Justices.192 One of the acts complained of was the issuance of a Writ of Preliminary
Injunction, enjoining the implementation of an Order of the trial court.193 This court dismissed
the Complaint on the ground that an Administrative Complaint is not a substitute for a lost
appeal.194 This court also held that in any case, complainants did not have the personality to
question the Writ of Preliminary Injunction since they were not the aggrieved
parties.195 Complainants had the option to intervene in the Petitions filed but did not do
so.196 This court discussed that:chanRoblesvirtualLawlibrary
Section 1 of Rule 19 of the Rules of Court provides that a person who has a legal interest in the
matter in litigation, or in the success of either of the parties, or an interest against both, or is so
situated as to be adversely affected by a distribution or other disposition of property in the
custody of the court or of an officer thereof may, with leave of court, be allowed to intervene in
the action. Conversely, a person who is not a party in the main suit cannot be bound by an
ancillary writ, such as a preliminary injunction. Indeed, he cannot be affected by any proceeding
to which he is a stranger.197 (Emphasis supplied, citation omitted)ChanRoblesVirtualawlibrary
In Mabayo Farms, Inc. v. Court of Appeals,198 a Writ of Preliminary Injunction was issued
against Juanito Infante, Domingo Infante, Lito Mangalidan, Jaime Aquino, John Doe, Peter Doe,
and Richard Doe.199 A certain Antonio Santos, who claimed ownership over the parcel of land,
filed a Petition for Certiorari before the Court of Appeals, arguing that to enforce the Writ of
Preliminary Injunction against him would be grave abuse of discretion since the trial court did
not acquire jurisdiction over his person.200 Mabayo Farms countered that Antonio Santos was
covered by the Writ because it was issued against three Does, and these Does include Antonio
Santos.201 Also, since Santos received a copy of the Writ of Preliminary Injunction, he cannot
claim lack of due process, and it was his duty to intervene in the case.202 The Court of Appeals
granted the Petition for Certiorari and enjoined the trial court from enforcing the Writ of
Preliminary Injunction against Santos.203 This court affirmed204 the Decision of the Court of
Appeals and held that:chanRoblesvirtualLawlibrary
A preliminary injunction is an order granted at any stage of an action prior to final judgment,
requiring a person to refrain from a particular act. As an ancillary or preventive remedy, a writ of
preliminary injunction may therefore be resorted to by a party to protect or preserve his rights
and for no other purpose during the pendency of the principal action. Its object is to preserve the
status quo until the merits of the case can be heard. It is not a cause of action in itself but merely
a provisional remedy, an adjunct to a main suit. Thus, a person who is not a party in the main
suit, like private respondent in the instant case, cannot be bound by an ancillary writ, such as
the writ of preliminary injunction issued against the defendants in Civil Case No. 6695. He
cannot be affected by any proceeding to which he is a stranger.205 (Emphasis supplied, citations
omitted)ChanRoblesVirtualawlibrary
Regarding Mabayo Farms' argument that Santos should have intervened, this court discussed
that:chanRoblesvirtualLawlibrary
First, private respondent had no duty to intervene in the proceedings in Civil Case No. 6695.
Intervention in an action is neither compulsory nor mandatory but only optional and permissive.
Second, to warrant intervention, two requisites must concur: (a) the movant has a legal interest in
the matter in litigation, and (b) intervention must not unduly delay or prejudice the adjudication
of the rights of the parties nor should the claim of the intervenor be capable of being properly
decided in a separate proceeding. The interest, which entitles a person to intervene in a suit, must
involve the matter in litigation and of such direct and immediate character that the intervenor
will either gain or lose by the direct legal operation and effect of the judgment. Civil Case No.
6695 was an action for permanent injunction and damages. As a stranger to the case, private
respondent had neither legal interest in a permanent injunction nor an interest on the damages to
be imposed, if any, in Civil Case No. 6695. To allow him to intervene would have unnecessarily
complicated and prolonged the case.206 (Citations omitted)ChanRoblesVirtualawlibrary
It may be argued that respondent First Alliance Real Estate Development, Inc. should have
intervened in the case filed before the trial court. However, respondent First Alliance Real Estate
Development, Inc.'s interests, or its properties, were not part of the issues raised in petitioner
Sunrise Garden Corporation's Complaint. That Complaint was against Hardrock Aggregates, Inc.
and not respondent First Alliance Real Estate Development, Inc. or its properties.

III

We rule that the Court of Appeals did not err when it annulled and set aside the trial court's
Orders dated January 29, 2003, and February 24, 2002.

The Court of Appeals discussed that:chanRoblesvirtualLawlibrary

Indeed public respondent court acted with grave abuse of discretion and without jurisdiction
when it sought the enforcement of its amended writ of preliminary injunction against petitioner,
who was never a party to the pending case. Worse, it threatened petitioner with contempt of court
for not following an unlawful order.

Sec. 5, Rule 58, 1st sentence provides, thus: "No preliminary injunction shall be granted without
hearing and prior notice to the party or person sought to be enjoined. . ." In the case at bench,
petitioner was not only not impleaded as party to the case, but that it was never given prior notice
regarding the writ of injunction.

Public respondents' [referring to the Republic] assertion that notice was already made to
Hardrock Aggregates, Inc. is specious. There is no showing at all as to the relationship between
Hardrock Aggregates, Inc. and petitioner. Since there is nothing to prove and establish that
Hardrock, Inc. and petitioners are one and the same, then they should be treated as separate and
distinct personalities.207ChanRoblesVirtualawlibrary
Respondent First Alliance Real Estate Development, Inc. argues that CA-G.R. SP No. 75758 is
related to Civil Case No. 02-6396 where it was not included as a party litigant.208 Respondent
First Alliance Real Estate Development, Inc. reiterates that it is not liable for contempt because
the trial court never acquired jurisdiction over it and, hence, it is not bound by the Amended Writ
of Preliminary Injunction.209

Rule 58, Section 5 of the Rules of Court requires that the party to be enjoined must be notified
and heard. The rule provides:chanRoblesvirtualLawlibrary
RULE 58

PRELIMINARY INJUNCTION

....

SEC. 5. Preliminary injunction not granted without notice; exception.—No preliminary

injunction shall be granted without hearing and prior notice to the party or person sought to be
enjoined. If it shall appear from facts shown by affidavits or by the verified application that great
or irreparable injury would result to the applicant before the matter can be heard on notice, the
court to which the application for preliminary injunction was made, may issue ex parte a
temporary restraining order to be effective only for a period of twenty (20) days from service on
the party or person sought to be enjoined, except as herein provided. Within the said twenty-day
period, the court must order said party or person to show cause, at a specified time and place,
why the injunction should not be granted, determine within the same period whether or not the
preliminary injunction shall be granted, and accordingly issue the corresponding order.
(Emphasis supplied)ChanRoblesVirtualawlibrary
In this case, petitioners Republic of the Philippines and Sunrise Garden Corporation did not
refute that respondent First Alliance Real Estate Development, Inc. was never a party to the case.
During the hearings before the Court of Appeals, counsel for petitioner Sunrise Garden
Corporation placed much emphasis on its argument that respondent First Alliance Real Estate
Development, Inc. did not prove ownership over the property but did not refute the primary issue
of lack of jurisdiction over respondent First Alliance Real Estate Development, Inc. This is an
admission that the trial court did not acquire jurisdiction over respondent First Alliance Real
Estate Development, Inc.
J. SABIO:
It is fundamental that an order of a court cannot be enforced against a person who is not a
party to a case.
ATTY. GALIT [counsel for petitioner Sunrise Garden Corporation]:
As I said, Your Honor, that is on my supposition. Earlier, Your Honor, both my good
Companeros here have intelligently and clearly ventilated, open the eyes of the Honorable
Court that this particular person is claiming, Your Honor, a right which is not existing. A
right which is not existing, Your Honor. Why take refuge from an allegation that according
to him this is not the proper forum. This is now the proper forum for the petitioner to prove
his right because he is being challenged.
J. SABIO:
He does not have to prove anything. He has the title in his possession.
ATTY. GALIT:
 Mere title, Your Honor, without any specification to be attested by a competent person such
as the expert witness, a geodetic engineer, a licensed geodetic engineer. . .
J. SABIO:
That is not the issue in this case. As we said if you try to question the validity of the title of
the petitioner[,] do it in a proper forum. This is not the proper forum. The issue here is not
that. The issue is whether a writ of injunction can be enforced against a person who is not a
party to the case. That is the pure and simple issue in this petition.
ATTY. GALIT:
We have made clear, Your Honor, as to the procedural aspect of the case and as to the
substantive aspect of the case. As to the substantive aspect of the case the petitioner, despite
several challenges against them they failed and they continued to fail to present any iota of
evidence that would prove clear and unmistakable right to warrant the. . .
J. SABIO:
That is not the issue where he has to defend his title. Because his title is not the one, the
subject matter of the case in the court below.
ATTY. GALIT:
Your Honor, guided by the Supreme Court decision, a mere photocopy, a mere xerox copy
of any public document, alleged public documents cannot be said to be a basis of any right.
This is a mere xerox copy to be treated as a mere scrap of paper.
J. SABIO:
Then you challenge it in a proper forum[,] not this forum. That is not the issue here. That is
beyond us to decide. The issue is whether he [sic] injunction issued by the lower court
should be enforced [against] petitioner who is not a party to the case.
....
ATTY. GALIT:
To be clear, Your Honor, and with all due respect to this Honorable Court. We take a
parallel stand and we absolutely submit to the pronouncement of this Honorable Court that
a party who is not a party litigant in the case below will never be affected by any issuance
of an injunction. That is precisely correct and we do not dispute that, your Honor.
....
ATTY. SAAVEDRA [co-counsel for petitioner Sunrise Garden Corporation]:
As a matter of fact insofar as we are concerned, Your Honor, whether the lower court has
jurisdiction over their person because they were not impleaded is immaterial. Because they
are in the nature or category of strangers who refused to obey the writ of injunction which
was addressed to the squatters. Since they have no right to be protected, they have not
shown that they own any portion of the land to be traversed what right do they have to be
protected for.
J. SABIO:
Again let us not go back to that issue so that we will not be misled, we do not becloud the
real issue. The issue here is basic and fundamental. Whether petitioner [w]ho has not been a
party to the case because he has not been impleaded can be cited for contempt for refusal to
obey or comply with the amended writ of preliminary injunction? That is all.210
Petitioner Sunrise Garden Corporation additionally argues that the trial court acquired
jurisdiction because respondent First Alliance Real Estate Development, Inc. voluntarily
appeared in court to argue why it should not be cited in contempt.211
While Rule 14, Section 20212 of the Rules of Court provides that voluntary appearance is
equivalent to service of summons, the same rule also provides that "[t]he inclusion in a motion to
dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall not
be deemed a voluntary appearance."213

In Philippine Commercial International Bank v. Spouses Dy Hong Pi, et al.,214 this court

discussed that voluntary appearance in court may not always result in submission to the
jurisdiction of a court.
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.215 (Citations omitted)
The appearance of respondent First Alliance Real Estate Development, Inc. and K-9 Security
Agency should not be deemed as a voluntary appearance because it was for the purpose of
questioning the jurisdiction of the trial court. The records of this case show that the defense of
lack of jurisdiction was raised at the first instance and repeatedly argued by K-9 Security Agency
and respondent First Alliance Real Estate Development, Inc. in their pleadings.216

Petitioner Sunrise Garden Corporation posits that a third-party claim would have been the proper
remedy for respondent First Alliance Real Estate Development, Inc., and not a petition
for certiorari before the Court of Appeals.217 Petitioner Sunrise Garden Corporation cited Ciudad
Real & Development Corporation v. Court of Appeals218 where this court allegedly ruled that it is
grave abuse of discretion to allow a "petitioner who is not a party litigant in the proceedings
below [to file a petition] for certiorari ."219

Counsel for respondent First Alliance Real Estate Development, Inc. countered
that:chanRoblesvirtualLawlibrary
With respect to the comment of counsel for the respondent, Your Honor, [sic] We [sic] have
personality to challenge that because the writ of injunction, the order citing us for contempt are
[sic] addressed to us, Your Honor. And we have the personality to ask for the nullity of that
order, Your Honor.220ChanRoblesVirtualawlibrary
The case cited by petitioner Sunrise Garden Corporation is not applicable. In Ciudad Real, the
trial court denied the Motion to intervene filed by Magdiwang Realty Corporation.221 Magdiwang
Realty Corporation did not question the trial court's Order, and it became final and
executory.222 When the case was brought before the Court of Appeals, the court recognized
Magdiwang Realty Corporation's standing.223 This court held that:chanRoblesvirtualLawlibrary
Despite the finality of the order denying Magdiwang's intervention way back in 1989, the
respondent court in its Decision of August 20, 1992 recognized the standing of Magdiwang to
assail in the appellate court the Compromise Agreement. Again, this ruling constitutes grave
abuse of discretion for Magdiwang was not a party in interest in Civil Case No. Q-
35393.224ChanRoblesVirtualawlibrary
Considering that the trial court gravely abused its discretion when it sought to enforce the
Amended Writ of Preliminary Injunction against respondent First Alliance Real Estate
Development, Inc., the Court of Appeals did not err in granting the Petition for Certiorari filed
by respondent First Alliance Real Estate Development, Inc.

WHEREFORE, premises considered, the Petitions in G.R. Nos. 158836 and 158967
are DISMISSED for being moot and academic.

The Petitions in G.R. Nos. 160726 and 160778 are DENIED, and the Decision of the Court of
Appeals in CA-G.R. SPNo. 75758 is AFFIRMED.

SO ORDERED.

G.R. No. 209518, June 19, 2017

MA. HAZELINA A. TUJAN-MILITANTE, Petitioner, v. ANA KARI CARMENCITA

NUSTAD, AS REPRESENTED BY ATTY. MARGUERITE THERESE L.
LUCILA, Respondent.

DECISION

TIJAM, J.:

Petitioner Ma. Hazelina A. Tujan-Militante seeks to set aside and reverse the: (1) Decision1 dated
February 27, 2013, which dismissed petitioner's Petition for Certiorari under Rule 65; and (2)
Resolution2 dated October 2, 2013, which denied petitioner's Motion for Reconsideration of the
Court of Appeals3 (CA) in CA-G.R. SP No. 124811.

The Facts

On June 2, 2011, Respondent Ana Kari Carmencita Nustad (Nustad), as represented by Atty.
Marguerite Therese Lucila (Atty. Lucila), filed a petition before the Regional Trial Court, Branch
55, Lucena City (RTC) and prayed that Ma. Hazelina A. Tujan-Militante (Tujan-Militante) be
ordered to surrender to the Register of Deeds of Lucena City the owner's duplicate copy of the
Transfer Certificate of Title Nos. T-435798, T-436799, T-387158 and T-387159, which were all
issued in Nustad's name. She averred that Tujan-Militante has been withholding the said titles.

In its Order dated July 26, 2011, the RTC set the petition for a hearing4.

Instead of filing an Answer, Tujan-Militante filed an Omnibus Motion to Dismiss and Annul
Proceedings5 dated September 2, 2011. She averred that the RTC did not acquire jurisdiction
over her person as she was not able to receive summons. Moreover, she argued that the Order
appeared to be a decision on the merits, as it already ruled with certainty that she is in possession
of the subject titles.

The Ruling of the RTC

In an Order dated November 23, 2011, the RTC6 denied Tujan-Militante's Motion and ruled that
it has jurisdiction over the case. Further the RTC stated that it has not yet decided on the merits
of the case when it ordered Tujan-Militante to surrender TCT Nos. T-435798, T-436799, T-
387158 and T-387159 because it merely set the petition for a hearing.

Tujan-Militante filed a Motion for Reconsideration7 and alleged that the Power of Attorney
executed by Nustad in favor of Atty. Lucila is void and non-existent. Tujan-Militante likewise
averred that Atty. Lucila is representing a Norwegian, who is not allowed to own lands in the
Philippines. Aside from the dismissal of the case, petitioner prayed that the Office of the
Solicitor General and the Land Registration Authority be impleaded. Moreover, Tujan-Militante
prayed for moral and exemplary damages, attorney's fees, and costs of suit.

In an Order8 dated February 27, 2012, the court a quo denied Tujan-Militante's Motion for
Reconsideration.

Aggrieved, Tujan-Militante filed a Petition for Certiorari before the CA.

The Ruling of the CA

In a Decision9 dated February 27, 2013, the CA recognized the jurisdictional defect over the
person of Tujan-Militante, but nevertheless ruled that the flaw was cured by Tujan-Militante's
filing of her Motion for Reconsideration. Such Motion sought for affirmative reliefs, which is
considered as voluntary submission to the jurisdiction of the court.

Tujan-Militante filed a Motion for Reconsideration, which was denied by the CA in a

Resolution10 dated October 2, 2013.

Hence, this appeal.

The Court's Ruling

The appeal is bereft of merit.

A trial court acquires jurisdiction over the person of the defendant by service of summons.
However, it is equally significant that even without valid service of summons, a court may still
acquire jurisdiction over the person of the defendant, if the latter voluntarily appears before
it.11 Section 20, Rule 14 of the Rules of Court provides:

Section 20. Voluntary Appearance. - The defendant's voluntary appearance in the action shall be
equivalent to service of summons. The inclusion in a motion to dismiss of other grounds of relief
aside from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary
appearance.

By seeking affirmative reliefs from the trial court, the individual [petitioner is] deemed to have
voluntarily submitted to the jurisdiction of the court. A party cannot invoke the jurisdiction of the
court to secure the affirmative relief against his opponent and after obtaining or failing to obtain
such relief, repudiate or question that same jurisdiction.12

In this case, while Tujan-Militante's motion to dismiss challenged the jurisdiction of the court a
quo on the ground of improper service of summons, the subsequent filing of a Motion for
Reconsideration which sought for affirmative relief is tantamount to voluntary appearance and
submission to the authority of such court. Such affirmative relief is inconsistent with the position
that no voluntary appearance had been made, and to ask for such relief, without the proper
objection, necessitates submission to the [court]'s jurisdiction.13

As to the claim of Tujan-Militante that the requirements laid down in Sec. 24, Rule 13214 of the
Rules of Court apply with respect to the power of attorney notarized abroad, he cited the ruling
in Lopez v. Court of Appeals.15 In said case, this Court held that the power of attorney must
comply with the requirements set forth under Sec. 25 (now Sec. 24), Rule 132 of the Rules of
Court in order to be considered as valid.

Section 24 of Rule 132 provides that:

Section 24. Proof of official record.- The record of public documents referred to in

paragraph (a) of Section 19, when admissible for any purpose, may be evidenced by an official
publication thereof or by a copy attested by the officer having legal custody of the record, or by
his deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that
such officer has the custody. If the office in which the record is kept is in a foreign country, the
certificate may be made by a secretary of the embassy or legation, consul general, consul, vice
consul or consular agent or by any officer in the foreign service of the Philippines stationed in
the foreign country in which the record is kept, and authenticated by the seal of his office.
(emphasis supplied)

Section 19 of Rule 132 states that:

Section 19.  Classes of documents. - For the purpose of their presentation in evidence, documents
are either public or private.

Public documents are:

(a) The written official acts or records of the official acts of the sovereign authority, official
bodies and tribunals, and public officers, whether of the Philippines or of a foreign
country;
(b) Documents acknowledged before a notary public except last wills and testaments; and
(c) Public records kept in the Philippines, of private documents required by law to be entered
therein.

All other writings are private. (emphasis supplied)

In the Heirs of Spouses Arcilla v. Teodoro16, this Court clarified that the ruling in the Lopez case
is inapplicable because the Rules of Evidence which were then effective were the old Rules,
prior to their amendment in 1989. When the Rules of Evidence were amended in 1989, the
introductory phrase "An official record or an entry therein" was substituted by the phrase "The
record of public documents referred to in paragraph (a) of Section 19"17, as found in the present
Rules. Also, Section 25 of the former Rules became Section 24 of the present Rules.

On this note, the case of Heirs of Spouses Arcilla explained further:

It cannot be overemphasized that the required certification of an officer in the foreign service

under Section 24 refers only to the documents enumerated in Section 19 (a), to wit: written
official acts or records of the official acts of the sovereign authority, official bodies and tribunals,
and public officers of the Philippines, or of a foreign country. The Court agrees with the CA
that had the Court intended to include notarial documents as one of the public documents
contemplated by the provisions of Section 24, it should not have specified only the
documents referred to under paragraph (a) of Section 19.18 (emphasis supplied)

As the Rules explicitly provide that the required certification of an officer in the foreign service
refers only to written official acts or records of the official acts of the sovereign authority,
official bodies and tribunals, and public officers of the Philippines, or of a foreign country, as
found in Section 19(a), Rule 132, such enumeration does not include documents acknowledged
before a notary public abroad.

With all these, We rule on the validity of the subject notarial document. What is important is that
[Nustad] certified before a commissioned officer clothed with powers to administer an oath that
she is authorizing Atty. Lucila to institute the petition before the court a quo on her behalf.19

A notarized document has in its favor the presumption of regularity, and to overcome the same,
there must be evidence that is clear, convincing and more than merely preponderant; otherwise,
the document should be upheld.20

Lastly, Tujan-Militante's contention that the TCTs under the name of Nustad are invalid because
of her citizenship constitutes a collateral attack on the titles. The CA correctly ruled that the issue
as to whether an alien is or is not qualified to acquire the lands covered by the subject titles can
only be raised in an action expressly instituted for that purpose.21
WHEREFORE, the instant appeal is DENIED. Accordingly, the Decision dated February 27,
2013 and Resolution dated October 2, 2013, of the Court of Appeals in CA-G.R. SP No. 124811
are AFFIRMED in toto.

SO ORDERED.

G.R. No. 202069, March 07, 2018

REPUBLIC OF THE PHILIPPINES, Petitioner, v. ALVIN C. DIMARUCOT AND

NAILYN TAÑEDO-DIMARUCOT, Respondents.

DECISION

CAGUIOA, J.:

The Case

This is a Petition for Review on Certiorari1 (Petition) filed under Rule 45 of the Rules of Court
(Rules) against the Decision2 dated July 29, 2011 (Assailed Decision) and Resolution3 dated May
24, 2012 (Assailed Resolution) in CA-G.R. SP No. 116572 rendered by the Court of Appeals
(CA) Sixteenth Division and Former Sixteenth Division, respectively.

The Assailed Decision and Resolution stem from the following orders4 rendered by the Regional
Trial Court of Guimba, Nueva Ecija, Branch 33 (RTC) against petitioner Republic of the
Philippines (Republic) in Civil Case No. 1527-G, to wit:

1. The Order5 dated August 13, 2010 (August 2010 RTC Order) denying the Motion for
Reconsideration of the Decision6 dated July 2, 2010 rendered by the RTC (RTC
Decision) which, in turn, declared the marriage between respondents Alvin C. Dimarucot
(Alvin) and Nailyn Tanedo-Dimarucot (Nailyn) (collectively, Respondents) null and
void; and

2. The Order7 dated September 13, 2010 (September 2010 RTC Order) denying due course
to the Republic's Notice of Appeal8 dated September 1, 2010.

The Facts

Respondents met sometime in 2002 and became friends.9 This friendship immediately

progressed and turned into an intimate romantic relationship,10 leading to Nailyn's pregnancy in
March 2003. Two months later, the Respondents wed in civil rights on May 18, 2003.11

Nailyn gave birth to the Respondents' first child, Ayla Nicole, on November 11, 2003.12 Years
later, on December 13, 2007, Nailyn gave birth to Respondents' second child, Anyelle.13

It appears, however, that Respondents' whirlwind romance resulted in a problematic marriage, as

Alvin filed a Petition for Declaration of Absolute Nullity of Marriage (RTC Petition) before the
RTC on September 22, 2009.14

In the RTC Petition, Alvin alleged that Nailyn suffers from psychological incapacity which
renders her incapable of complying with the essential obligations of marriage.15 Hence, Alvin
prayed that his marriage with Nailyn be declared null and void pursuant to Article 36 of the
Family Code.16

The Provincial Prosecutor was deputized by the Office of the Solicitor General (OSG) to assist in
the case.17

On July 2, 2010, the RTC, through Presiding Judge Ismael P. Casabar (Judge Casabar), rendered
a Decision declaring Respondents' marriage null and void. The pertinent portions of the RTC
Decision read:
From the evidence adduced by [Alvin], this court is convinced that [Nailyn] is psychologically
incapacitated to perform her basic marital obligations. Her being a loose-spender, overly
materialistic and her complete disregard of the basic foundation of their marriage [—] to live
together, observe mutual love, respect and fidelity and render mutual help and support are
manifestations of her psychological incapacity to comply with the basic marital duties and
responsibilities. Her incapacity is grave, permanent and incurable. It existed from her childhood
and became so manifest after the celebration of their marriage.

WHEREFORE, judgment is rendered declaring the marriage between [Alvin] and [Nailyn] void
on the ground of psychological incapacity on the part of [Nailyn] to fulfill the basic marital
obligations.18
On July 27, 2010, the Republic, through the OSG, filed a Motion for Reconsideration19 (MR) of
even date, alleging that "[Alvin] failed to prove the juridical antecedence,
gravity and incurability of his wife's alleged psychological incapacity."20 However, the Notice
of Hearing annexed to the MR erroneously set the same for hearing on July 6, 2010 (instead
of August 6, 2010 as the OSG later explained21).22

The RTC denied the Republic's MR through the August 2010 RTC Order, which reads in part:
Acting on the [MR] filed by the [OSG] through State Solicitor Josephine D. Arias and it
appearing that the motion was set for hearing on July 6, 2010 yet the motion itself was filed only
on July 27, 2010.

This Court is at loss as to when the instant motion should be heard.

Under these circumstances, the instant motion is considered one which is not set for hearing and
therefore, a mere scrap of paper, and as such it presents no question which merits the attention
and consideration of the court. It is not even a motion for it does not comply with the rules and
hence, the clerk has no right to receive it.

Failure to comply with the requirements of Rule 15, sections 4, 5 and 6 is a fatal flaw.

WHEREFORE, for lack of merit, the motion is denied.23 (Citations omitted)

Thus, on September 1, 2010, the Republic filed a Notice of Appeal of even date, which was
denied in the September 2010 RTC Order. Said order reads, in part:
Record shows that the [MR] did not comply with the requirements set forth under Rule 15,
sections 4, 5 and 6 of the [Rules], in that it was not set for hearing. Said [MR] did not interrupt
the running of the period of appeal. Hence, the [RTC Decision] rendered in this case attained
finality.

WHEREFORE, the [Notice of Appeal] being taken out of time is hereby

DISMISSED.24 (Citation omitted)
Subsequently, on October 22, 2010, the Republic filed a Petition for Certiorari25 (CA Petition)
before the CA, ascribing grave abuse of discretion on the part of the RTC for issuing the August
and September 2010 RTC orders.26

The Republic claimed that its MR substantially complied with the requirements of Sections 4, 5
and 6 of Rule 15 governing motions.27 Hence, the RTC should not have treated said MR as a
mere scrap of paper solely because of the misstatement of the proposed hearing date in the
Notice of Hearing appended thereto, considering that the RTC is "not without any discretion" to
set the MR for hearing on a different date.28

The Republic also raised, albeit in passing, that with the exception of the copy of the RTC
Petition, the OSG was not furnished with other orders, legal processes and pleadings after it had
deputized the Provincial Prosecutor to assist in the RTC case.29

On July 29, 2011, the CA rendered the Assailed Decision denying the CA Petition.

The CA held that the CA Petition warrants outright dismissal because it was filed without the
benefit of a motion for reconsideration30 — an indispensable requirement for the filing of a
petition for certiorari under Rule 65.31 The CA further held that in any case, the Republic's
allegation that its MR substantially complied with all the requirements under Rule 15 lacks
merit. Pertinent portions of the Assailed Decision read:
In a litany of cases, the [Court] already held that a motion for reconsideration, as a general rule,
must have first been filed before the tribunal, board or officer against whom the writ of certiorari
is sought. This is intended to afford the latter an opportunity to correct any factual or fancied
error attributed to it. And while there are exceptions to said rule, x x x

xxxx

none of the x x x exceptions attends this case since a motion for reconsideration is a plain,
speedy and adequate remedy in the ordinary course of law, the OSG should have filed first a
motion for reconsideration of the [August 2010 RTC Order] rather than merely presume that the
trial court would motu proprio take cognizance of its (the OSG's) alleged "typographical error".
It should not have prematurely filed the present petition before [the CA]. Its failure to explain or
justify as to why it did not first move for reconsideration of the herein assailed [August 2010
RTC Order] deprives [the CA] of any 'concrete, compelling and valid reason' to except (sic) the
Republic from the aforementioned general rule of procedure.
Even the OSG's allegation that its motion for reconsideration complied with all the requirements
of Sections 4, 5 and 6, Rule 15 of the [Rules], fails to convince [the CA].

xxxx

The x x x requirements — that the notice shall be directed to the parties concerned and shall state
the time and date for the hearing of the motion — are mandatory, so much so that if not
religiously complied with, the motion becomes pro forma. Indeed, as held by the RTC, a
motion that does not comply with the requirements of Sections 4 and 5 of Rule 15 of the [Rules]
is a worthless piece of paper which the clerk of court has no right to receive and which the
court has no authority to act upon.

xxxx

WHEREFORE, the petition is DISMISSED for lack of merit.32 (Emphasis and italics in the

original)
The Republic filed a Motion for Reconsideration33 (CA MR), arguing that the CA failed to
consider that Atty. Amy Linda C. Dimarucot (Atty. Amy), the Clerk of Court of the RTC, is
respondent Alvin's sibling, and that her participation in her brother's case constitutes a violation
of Section 1, Rule 137 of the Rules.34 The Republic further argued that the RTC should not have
denied its Notice of Appeal, since appeal is precisely the proper remedy to assail the August
2010 RTC Order pursuant to Section 9, Rule 37 of the Rules and Section 20 (2) of the Rules on
Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages.35

The CA denied the CA MR in the Assailed Resolution. Therein, the CA clarified that the RTC
Order adverted to in the Assailed Decision is the September 2010 RTC Order (denying the
Republic's Notice of Appeal) and not the August 2010 RTC Order (denying the Republic's MR
of the RTC Decision), as erroneously stated therein.36 The Assailed Resolution did not pass upon
the Republic's allegation anent Atty. Amy's alleged violation of Rule 137.

The Republic received a copy of the Assailed Resolution on May 31, 2012.37

On June 15, 2012, the Republic filed a Motion for Extension of Time to File Petition,38 praying
for an additional period of thirty (30) days, or until July 15, 2012, within which to file its petition
for review.39

The Republic filed the present Petition on July 16, 2012, as July 15, 2012 fell on a Sunday.40

On August 15, 2012, the Court issued a Resolution directing Alvin and Nailyn to file their
respective comments to the Petition.41 Alvin and Nailyn filed their comments42 dated January 7,
2013 and December 2, 2013, respectively.

The Republic filed its Consolidated Reply43 to the respondents' comments on May 7, 2014.

The Issues
The Petition calls on the Court to resolve the following issues:

1. Whether the CA erred when it caused the outright dismissal of the CA Petition because it
was filed without the benefit of a prior motion for reconsideration of the September 2010
RTC Order;

2. Whether the CA erred when it affirmed the August and September 2010 RTC orders
which denied the Republic's MR and subsequent Notice of Appeal on procedural
grounds; and

3. Whether the CA erred when it did not pass upon Atty. Amy's alleged violation of Rule
137.

The Court's Ruling

In this Petition, the Republic claims that the RTC employed a "double standard" in the
application of the Rules, for while it strictly applied Rule 15 (governing motions) against the
Republic, it did not apply Rule 137 (governing disqualification of judicial officers) against its
Clerk of Court Atty. Amy, who participated in the RTC proceedings despite being the sister of
party-respondent Alvin.44

Proceeding therefrom, the Republic argues that in affirming the RTC orders, the CA erroneously
deprived it of the opportunity to fully ventilate its objections against the RTC Decision which
declared Alvin and Nailyn's marriage null and void.45

The Court grants the Petition.

A prior motion for reconsideration is not necessary for a petition for certiorari to prosper in
cases where such motion would be useless.

It is true that this Court has ruled that "certiorari, as a special civil action will not lie unless a
motion for reconsideration is first filed before the respondent tribunal, to allow it an opportunity
to correct its assigned errors."46 However, this general rule is subject to well-defined exceptions,
thus:
Moreover, while it is a settled rule that a special civil action for certiorari under Rule 65 will not
lie unless a motion for reconsideration is filed before the respondent court; there are well-defined
exceptions established by jurisprudence, such as [i] where the order is a patent nullity, as
where the court a quo has no jurisdiction; [ii] where the questions raised in the certiorari
proceedings 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; [iii] where there is an urgent necessity for the
resolution of the question and any further delay would prejudice the interests of the Government
or of the petitioner or the subject matter of the action is perishable; [iv] where, under the
circumstances, a motion for reconsideration would be useless; [v] where petitioner was deprived
of due process and there is extreme urgency for relief; [vi] where, in a criminal case, relief from
an order of arrest is urgent and the granting of such relief by the trial court is improbable; [vii]
where the proceedings in the lower court are a nullity for lack of due process; [viii] where the
proceedings were ex parte or in which the petitioner had no opportunity to object; and [ix] where
the issue raised is one purely of law or where public interest is involved.47 (Citations omitted;
emphasis and italics in the original)
The Republic invokes the fourth exception above, and argues that the filing of a motion for
reconsideration of the September 2010 RTC Order would have been useless as it was based on
the earlier August 2010 RTC Order.48 The Court agrees.

To recall, the denial of the Republic's Notice of Appeal through the September 2010 RTC Order
was premised on the RTC's earlier finding that the MR was a pro-forma motion due to non-
compliance with Rule 15. As well, it is necessary to emphasize that the September 2010 RTC
Order explicitly states that the RTC Decision had "attained finality" because the Republic's MR
did not toll the Republic's period to appeal.49

Clearly, the Republic's direct resort to the CA via certiorari was warranted under the
circumstances, as it was led to believe that seeking reconsideration of the September 2010 RTC
Order would have been a useless exercise. The CA thus erred when it caused the outright
dismissal of the CA Petition solely on the basis of the Republic's failure to file a prior
motion for reconsideration.

Strict compliance with Rule 15 should have been waived in the interest of substantial justice.

The Republic concedes that it misstated the proposed hearing date in the Notice of Hearing
attached to its MR. It argues, however, that this misstatement does not serve as sufficient basis to
treat its MR as a mere scrap of paper, considering that said Notice of Hearing fulfilled the
purpose of Rule 15, that is, "to afford the adverse parties a chance to be heard before [the
MR] is resolved by the [RTC]."50

The Republic's argument proceeds from the assumption that the only defect in its Notice of
Hearing was the typographical error in its proposed hearing date. This is error. Reference to
Sections 4, 5 and 6 of Rule 15 is in order:
SEC. 4. Hearing of motion. — Except for motions which the court may act upon without
prejudicing the rights of the adverse party, every written motion shall be set for hearing by the
applicant.

Every written motion required to be heard and the notice of the hearing thereof shall be
served in such a manner as to ensure its receipt by the other party at least three (3) days
before the date of hearing, unless the court for good cause sets the hearing on shorter notice.

SEC. 5. Notice of hearing. — The notice of hearing shall be addressed to all parties concerned,
and shall specify the time and date of the hearing which must not be later than ten (10) days after
the filing of the motion.

SEC. 6. Proof of service necessary. — No written motion set for hearing shall be acted upon
by the court without proof of service thereof. (Emphasis supplied; italics in the original)
The requirements outlined in the cited provisions can be summarized as follows:
 i. Every written motion which cannot be acted upon without prejudicing the rights of the
adverse party must be set for hearing;

ii. The adverse party must be given: (a) a copy of such written motion, and (b) notice of the
corresponding hearing date;

iii. The copy of the written motion and the notice of hearing described in (ii) must be
furnished to the adverse party at least three (3) days before the hearing date, unless
otherwise ordered by the RTC (3-day notice rule); and

iv. No written motion that is required to be heard shall be acted upon by the receiving court
without proof of service done in the manner prescribed in (iii).

Perusal of the foregoing shows that the Republic failed to comply with the first and third
requirements.

Notably, while the Republic furnished Alvin and Nailyn's respective counsels with copies of the
MR and Notice of Hearing, the Republic did so only by registered mail.51 As a result, Alvin
received notice of the Republic's MR only on August 11, 2010.52 Hence, even if the RTC
construed the Republic's typographical error to read August 6, 2010 instead of July 6, 2010, the
Republic would have still failed to comply with the 3-day notice rule.

To be sure, the 3-day notice rule was established not for the benefit of movant but for the adverse
party, in order to avoid surprises and grant the latter sufficient time to study the motion and
enable it to meet the arguments interposed therein.53 The duty to ensure receipt by the adverse
party at least three days before the proposed hearing date necessarily falls on the movant.

Nevertheless, considering the nature of the case and the issues involved therein, the Court
finds that relaxation of the Rules was called for. It is well settled that procedural rules may be
relaxed in the interest of substantial justice. Accordingly, the "strict and rigid application, [of
procedural rules] which would result in technicalities that tend to frustrate rather than promote
substantial justice, must always be eschewed."54

Here, the State's policy of upholding the sanctity of marriage takes precedence over strict
adherence to Rule 15, for the finality of the RTC Decision necessarily entails the permanent
severance of Alvin and Nailyn's marital ties. Hence, the RTC should have exercised its
discretion, as it did have such discretion, and set the MR for hearing on a later date with due
notice to the parties to allow them to fully thresh out the Republic's assigned errors. The CA
thus erred when it affirmed the RTC in this respect.

The Republic's objection against Atty. Amy's participation in the annulment case should have
been raised at the first instance before the RTC.

Sections 1 and 2 of Rule 137 provide:

SECTION 1. Disqualification of judges. — No judge or judicial officer shall sit in any case in
which he, or his wife or child, is pecuniarily interested as heir, legatee, creditor or otherwise, or
in which he is related to either party within the sixth degree of consangunity (sic) or affinity, or
to counsel within the fourth degree, computed according to the rules of the civil law, or in which
he has been executor, administrator, guardian, trustee or counsel, or in which he has presided in
any inferior court when his ruling or decision is the subject of review, without the written
consent of all parties in interest, signed by them and entered upon the record.

A judge may, in the exercise of his sound discretion, disqualify himself from sitting in a case, for
just or valid reasons other than those mentioned above.

SEC. 2. Objection that judge disqualified, how made and effect. — If it be claimed that an
official is disqualified from sitting as above provided, the party objecting to his competency
may, in writing, file with the official his objection, stating the grounds therefor, and the
official shall thereupon proceed with the trial, or withdraw, therefrom in accordance with
his determination of the question of his disqualification. His decision shall be forthwith made
in writing and filed with the other papers in the case, but no appeal or stay shall be allowed from,
or by means of, his decision in favor of his own competency, until after final judgment in the
case. (Emphasis supplied; italics in the original)
Section 2, Rule 137 is clear and leaves no room for interpretation. An objection on the basis of
Section 1, Rule 137 must be made in writing and filed before the judicial officer concerned.
Thus, the Republic should have raised its objection concerning Atty. Amy's disqualification
before the RTC. Consequently, the CA was not bound to pass upon such objection, and thus,
did not err in refusing to do so.

In any case, the duty of clerks of court to disqualify themselves in accordance with the
parameters set by Section 1, Rule 137 pertains to such clerks, not the courts and presiding judges
they serve. Supreme Court Administrative Circular No. 58-200855 (SC AC No. 58-08) lends
guidance:
1. Clerks of court, assistant clerks of court, deputy clerks of court and branch clerks of court in
all levels shall conduct a screening of cases now pending before their respective courts or
divisions to verify and report in writing to their respective presiding judges, Chairpersons of
Divisions, or in en banc cases, to the Presiding Justice and Chief Justice, as the case may be, if
there are grounds for their disqualification in regard to the performance of their functions
and duties, under the first paragraph of Section 1, Rule 137 of the Rules of Court.56 (Emphasis
supplied)
In the absence of any showing of collusion between Judge Casabar and Atty. Amy, the latter's
failure to report the circumstances requiring her disqualification cannot serve as basis to ascribe
grave abuse of discretion to the former.

Nevertheless, Atty. Amy's alleged failure to observe SC AC No. 58-08, if true, cannot be
countenanced. Thus, pursuant to its power of administrative supervision over all court personnel,
the Court deems it appropriate to refer the Republic's allegations to the Office of the Court
Administrator for appropriate action.

WHEREFORE, premises considered, the Petition for Review on Certiorari is GRANTED. The

Assailed Decision of the Court of Appeals Sixteenth Division dated July 29, 2011 and Assailed
Resolution of the Court of Appeals Former Sixteenth Division dated May 24, 2012 in CA-G.R.
SP No. 116572 are hereby REVERSED AND SET ASIDE. The Regional Trial Court, Branch
33 in Guimba, Nueva Ecija is DIRECTED to give due course to the Republic's Notice of Appeal
dated September 1, 2010 and to elevate the case records to the Court of Appeals for review.

Let a copy of this Decision be furnished to the Office of the Court Administrator for its
information and appropriate action.

SO ORDERED.

G.R. No. 198531, September 28, 2015

ETHEL, EMMIE, ELVIE, EARLYN, EVELYN, ALL SURNAMED ACAMPADO, AND

KATIPUNAN M. DE LOS REYES AND THE REGIONAL TRIAL COURT, KALIBO,
AKLAN, BRANCH 6, Petitioners, v. SPOUSES LOURDES R. COSMILLA AND
FELIMON COSMILLA, AND LORELIE COSMILLA, FOR HERSELF AND AS
ATTORNEY-IN-FACT OF LOURDES R. COSMILLA, Respondents.

DECISION

PEREZ, J.:

For resolution of the Court is the instant Petition for Review on Certiorari1 filed by petitioners
Ethel Acampado, Emmie Acampado, Elvie Acampado, Earlyn Acampado and Evelyn Acampado
seeking to reverse and set aside the Resolutions dated 28 June 20072 and 19 August 20113 of the
Court of Appeals, Cebu City in CA-G.R. SP. No. 00805. The assailed resolutions reversed the
Order4 dated 16 May 2005 of the Regional Trial Court (RTC) of Aklan, Branch 6 which denied
the Motion for Reconsideration filed by respondents Spouses Lourdes and Felimon Cosmilla for
being pro forma. The dispositive portion of the Court of Appeals Decision
reads:chanRoblesvirtualLawlibrary

"WHEREFORE, petitioner's motion for reconsideration is hereby GRANTED and the Order of
the Court a quo dated May 16, 2005, declaring the Motion for Reconsideration pro forma is
hereby ANNULLED and SET ASIDE and the court a quo is hereby directed to forthwith resolve
petitioners' motion for reconsideration of its Decision dated March 31,
2005."5ChanRoblesVirtualawlibrary
ChanRoblesVirtualawlibrary
The Antecedents

The present petition stems from the Petition for the Declaration of the Nullity of Document filed
by respondents against petitioners before the RTC of Kalibo, Aklan, Branch 6. In their Amended
Complaint6 docketed as SPL. Civil Case No. 6644, respondents Spouses Cosmilla alleged that
the sale of their share on the subject property was effected thru a forged Special Power of
Attorney (SPA) and is therefore null and void.7

After trial on the merits, the RTC rendered a Decision8 dated 31 March 2005 dismissing the
complaint of the respondents for failure to prove by preponderance of evidence that the
signatures of the respondents in the SPA were forged. The RTC disposed in this
wise:chanRoblesvirtualLawlibrary
"WHEREFORE, in view of the foregoing considerations, [respondents'] complaint is hereby
DISMISSED. [Respondents] are also ordered to jointly and severally pay [petitioner Katipunan
de los Reyes] the sum of P25,000.00 for transportation expenses and attorney's fees as well as
[petitioner Acampados] P21,772.50 for attorney's fees and litigation expenses.

Costs against the [respondents]."9ChanRoblesVirtualawlibrary

Aggrieved, respondents filed a Motion for Reconsideration10 on 6 May 2005 seeking for the
reversal of the earlier RTC Decision.

For failure of the respondents, however, to comply with the requirement of notice of hearing as
required under Sections 4 and 5 of Rule 15 of the Revised Rules of Court, the court a quo denied
the Motion for Reconsideration in Order11 dated 16 May 2005, viz:chanRoblesvirtualLawlibrary
"WHEREFORE, in view of the foregoing considerations, the Motion for Reconsideration is
declared pro forma and the decision sought to be reconsidered is declared final and executory as
the period of appeal has already expired.

SO ORDERED."
cralawred
Ascribing grave abuse of discretion, respondents elevated the matter to the Court of Appeals by
filing a Petition for Certiorari, Prohibition and Mandamus12 with prayer for Preliminary
Injunction and TRO seeking to annul and set aside the RTC Order dated 16 May 2005.

For lack of merit, the Court of Appeals dismissed the petition filed by the respondents in a
Decision dated 27 October 2006.13 The appellate court held that there is no showing that lower
court committed grave abuse of discretion amounting to lack or excess in jurisdiction in denying
the Motion for Reconsideration of the respondents. Resonating the disquisition of the lower
court, the Court of Appeals declared that a motion which fails to comply with Sections 4, 5 and 6
of the Rules of Court is nothing but a useless piece of paper and does not stall the running of the
reglementary period.14

On Motion for Reconsideration by Respondents,15 however, the Court of Appeals reversed its

earlier Resolution and allowed the relaxation of the procedural in a Resolution16 dated 28 June
2007. Hence, the appellate court vacated the 16 May 2005 Order of the RTC directed the court a
quo to thresh out the Motion for Reconsideration filed by the respondents on the merits.

In a Resolution17 dated 19 August 2011, the Court of Appeals denied the Motion for
Reconsideration filed by petitioners.chanrobleslaw

Issue

Petitioners are now before this Court via this instant Petition for Review on Certiorari18 praying
that the Court of Appeals Resolution be reversed and set aside on the ground
that:chanRoblesvirtualLawlibrary
THE COURT OF APPEALS GRAVELY ERRED AND COMMITTED REVERSIBLE ERROR
IN ISSUING RESOLUTION DATED 28 JUNE 2007 AND RESOLUTION DATED 19
AUGUST 2011 WHICH, IN EFFECT RECONSIDERED ITS OWN DECISION DATED 27
OCTOBER 2006 DISMISSING THE PETITION FOR CERTIORARI, PROHIBITION,
MANDAMUS WITH PRAYER FOR PRELIMINARY INJUNCTION AND TRO OF
RESPONDENTS.19ChanRoblesVirtualawlibrary
ChanRoblesVirtualawlibrary
The Court's Ruling

We resolve to grant the petition.

The Motion for Reconsideration is a contentious motion that needs to comply with the required
notice and hearing and service to the adverse party as mandated by the following provisions of
the Revised Rules of Court:chanRoblesvirtualLawlibrary
RULE 15. SEC. 4. Hearing of motion. - Except for motions which the court may act upon
without prejudicing the rights of the adverse party, every written motion shall be set for hearing
by the applicant.

Every written motion required to be heard and the notice of the hearing thereof shall be served in
such a manner as to ensure its receipt by the other party at least three (3) days before the date of
hearing, unless the court for good cause sets the hearing on shorter notice.
SEC. 5. Notice of hearing. - The notice of hearing shall be addressed to all parties concerned,
and shall specify the time and date of the hearing which must not be later than ten (10) days after
the filing of the motion.

SEC. 6. Proof of service necessary. No written motion set for hearing shall be acted upon by the
court without proof of service thereof.ChanRoblesVirtualawlibrary
The foregoing requirements — that the notice shall be directed to the parties concerned, and shall
state the time and place for the hearing of the motion — are mandatory, and if not religiously
complied with, the motion becomes pro forma.20 A motion that does not comply with the
requirements of Sections 4 and 5 of Rule 15 of the Rules of Court is a worthless piece of paper
which the clerk of court has no right to receive and which the court has no authority to act
upon.21 The logic for such requirement is simple: a motion invariably contains a prayer which the
movant makes to the court which is usually in the interest of the adverse party to oppose.22 The
notice of hearing to the adverse party is therefore a form of due process; it gives the other party
the opportunity to properly vent his opposition to the prayer of the movant.23 In keeping with the
principles of due process, therefore, a motion which does not afford the adverse party a chance to
oppose should simply be disregarded.24 Principles of natural justice demand that a right of a party
should not be affected without giving it an opportunity to be heard.25cralawred

Harsh as they may seem, these rules were introduced to avoid capricious change of mind in order
to provide due process to both parties and to ensure impartiality in the trial.26

It is important, however, to note that these doctrines refer exclusively to a motion, since a motion
invariably contains a prayer, which the movant makes to the court, which is to repeat usually in
the interest of the adverse party to oppose and in the observance of due process, the other party
must be given the opportunity to oppose the motion.27In keeping with the principles of due
process, therefore, a motion which does not afford the adverse party the chance to oppose it
should simply be disregarded.28Failure to comply with the required notice and hearing is a
fatal defect that is deleterious to respondents cause.29

In New Japan Motors, Inc. v. Perucho,30 the Court dismissed the motion for reconsideration that
was unaccompanied by a notice of hearing as a piece of paper unworthy of judicial
cognizance:chanRoblesvirtualLawlibrary
"Under Sections 4 and 5 of Rule 15 of the Rules of Court, x x x a motion is required to be
accompanied by a notice of hearing which must be served by the applicant on all parties
concerned at least three (3) days before the hearing thereof. Section 6 of the same rule
commands that '(n)o motion shall be acted upon by the Court, without proof of service of the
notice thereof x x x.' It is therefore patent that the motion for reconsideration in question is
fatally defective for it did not contain any notice of hearing. We have already consistently
held in a number of cases that the requirements of Sections 4, 5 and 6 of Rule 15 of the
Rules of Court are mandatory and that failure to comply with the same is fatal to movant's
cause." (Emphasis supplied)ChanRoblesVirtualawlibrary
Nevertheless, the three-day requirement is not a hard and fast rule.31 Where a party has been
given an opportunity to be heard, the time to study the motion and oppose it, there is compliance
with the rule.32 The test is the presence of the opportunity to be heard, as well as to have time to
study the motion and meaningfully oppose or controvert the grounds upon which it is based.33

We here follow the rule and so pronounce that contrary to the findings of the appellate court,
petitioners were not given ample opportunity to vent their side on the issue since they were not
able to promptly receive a copy of the notice of hearing impinging the latter's right to due
process. We consulted the records and we found that no notice of hearing was appended to the
Motion for Reconsideration34 of the respondent. As discussed above, a motion for
reconsideration is a litigated motion where the right of the adverse party will be affected by its
admission. The adverse party in this case had the right to resist the motion because it may result
to the reversal of a prior favorable decision. The proof of service was therefore indispensable in
order to avoid surprises on the opposite party. The absence thereof is fatal to the motion.

It bears stressing that a motion without notice and hearing, is pro forma, a mere scrap of paper
that cannot be acted by the court.35 It presents no question that the court can decide.36 The court
has no reason to consider it and the clerk has no right to receive it.37 Indisputably, any motion
that does not contain proof of service and notice to the adverse party is not entitled to judicial
cognizance.38

Considering that the running of the period towards the finality of the judgment was not stopped,
the RTC Decision dated 31 March 2005 became final and executory. Every litigation must come
to an end once a judgment becomes final, executory and unappealable.39 For just as a losing party
has the right to file an appeal within the prescribed period, the winning party also has the
correlative right to enjoy the finality of the resolution of his case by the execution and
satisfaction of the judgment, which is the life of the law.40 To frustrate it by dilatory schemes on
the part of the losing party is to frustrate all the efforts, time and expenditure of the courts. It is in
the interest of justice that we should write finis to this litigation.41 Consequently, we find no
reversible error when the RTC denied respondents' motion for reconsideration.
WHEREFORE, premises considered, the instant petition is hereby GRANTED. The assailed
Resolutions of the Court of Appeals are hereby REVERSED and SET ASIDE. The Decision of
the Regional Trial Court dismissing the complaint of the respondents and its Order declaring
their Motion for Reconsideration as, pro forma are hereby REINSTATED.

SO ORDERED.chanroblesvirtuallawlibrary

G.R. No. 217456, November 24, 2015

MARILOU S. LAUDE AND MESEHILDA S. LAUDE, Petitioners, v. HON. ROLINE M.

GINEZ-JABALDE, PRESIDING JUDGE, BRANCH 74, REGIONAL TRIAL COURT OF
THE CITY OF OLONGAPO; HON. PAQUITO N. OCHOA, JR., EXECUTIVE
SECRETARY; HON. ALBERT F. DEL ROSARIO, SECRETARY OF THE
DEPARTMENT OF FOREIGN AFFAIRS; HON. GEN. GREGORIO PIO P.
CATAPANG, CHIEF OF STAFF OF THE ARMED FORCES OF THE PHILIPPINES;
HON. EMILIE FE DELOS SANTOS, CHIEF CITY PROSECUTOR OF OLONGAPO
CITY; AND L/CPL JOSEPH SCOTT PEMBERTON, Respondent.

DECISION

LEONEN, J.:

Failure to meet the three-day notice rule for filing motions and to obtain the concurrence of the
Public Prosecutor to move for an interlocutory relief in a criminal prosecution cannot be excused
by general exhortations of human rights. This Petition fails to show any grave abuse of discretion
on the part of the trial court judge. Furthermore, the accused, while undergoing trial and before
conviction, is already detained in the Philippines in compliance with the obligations contained in
the Agreement Between the Government of the United States of America and the Government of
the Republic of the Philippines Regarding the Treatment of United States Armed Forces Visiting
the Philippines (Visiting Forces Agreement).

This is a Petition for Certiorari1 under Rule 65, with prayer for the issuance of a writ of
mandatory injunction filed by Marilou S. Laude and Mesehilda S. Laude (petitioners).

On October 11, 2014, Jeffrey "Jennifer" Laude (Jennifer) was killed at the Celzone Lodge on
Ramon Magsaysay Drive in Olongapo City allegedly by 19-year-old US Marine L/CPL Joseph
Scott Pemberton (Pemberton).2 On October 15, 2014, a Complaint for murder was filed by
Jennifer's sibling, Marilou S. Laude, against Pemberton before the Olongapo City Office of the
City Prosecutor.3 On October 22, 2014, Pemberton was detained in Camp Aguinaldo, the general
headquarters of the Armed Forces of the Philippines.4

On December 15, 2014, the Public Prosecutor filed an Information for murder against Pemberton
before the Regional Trial Court in Olongapo City.5 The case was docketed as Case No. 865-14,
and was raffled to Branch 74.6 A warrant of arrest against Pemberton was issued on December
16, 2014.7 Pemberton surrendered personally to Judge Roline M. Ginez-Jabalde8 (Judge Ginez-
Jabalde) on December 19, 2014, and he was then arraigned.9
On the same day, Marilou S. Laude filed an Urgent Motion to Compel the Armed Forces of the
Philippines to Surrender Custody of Accused to the Olongapo City Jail and a Motion to Allow
Media Coverage.10 "The [M]otion was [scheduled] for hearing on December 22, 2014, at 2
p.m."11 According to petitioners, they were only able to serve the Motion on Pemberton's counsel
through registered mail.12 In any case, they claim to have also "furnished a copy of the [M]otion
personally ... at the hearing of the [M]otion."13

On December 23, 2014, Judge Ginez-Jabalde denied petitioners' Urgent Motion for lack of merit,
the dispositive portion of which reads:14chanroblesvirtuallawlibrary

Wherefore, the . . . UrgentMotion [sic] to Compel the Armed Forces of the Philippines to
Surrender Custody of Accused to the Olongapo City Jail [is] denied for utter lack of
merit.15 (Emphasis in the original)
cralawlawlibrary

Petitioners received a copy of the Order on January 5, 2015.16 On January 9, 2015, petitioners
filed a Motion for Reconsideration.17 On February 18, 2015, Judge Ginez-Jabalde issued an
Order denying petitioners' Motion for Reconsideration for lack of merit.

In a Resolution19 dated April 21, 2015, respondents were required to file their Comment on the
Petition. On June 5, 2015, public respondents, as represented by the Office of the Solicitor
General, filed their (First) Motion for Extension of Time to File Comment20 for 60 days. On the
same day, Pemberton posted his Motion for Additional Time to File Comment21 for 10 days.
Pemberton filed his Comment by counsel on June 16, 2015,22 while public respondents, through
the Office of the Solicitor General, filed their Comment on September 23, 2015.23

Petitioners argue that "[Respondent Judge committed grave abuse of discretion tantamount to an
excess or absence of jurisdiction when she dismissed the Urgent Motion to Compel the Armed
Forces of the Philippines to Surrender Custody o[f] Accused to the Olongapo City Jail [based] on
mere technicalities[.]"24 In particular, they argue that the three-day rule on motions under Rule
15, Section 425 of the 1997 Rules of Court is not absolute, and should be liberally interpreted
when a case is attended by exigent circumstances.26

Petitioners advance that the rationale behind the three-day notice rule is satisfied when there is
an opportunity to be heard, which was present in this case since Pemberton's counsel and the
Public Prosecutor were present in the hearing of the two Motions filed by
petitioners.27 Petitioners allege that the court noted their attendance, and were able to make
comments during the December 22, 2014 Motion hearing.28 They assert that the rights of
Pemberton were not compromised in any way.29

Petitioners also aver that the three-day notice rule should be liberally applied due to the timing of
the arrest and arraignment.30 "The Urgent Motion was set for hearing on December 22,
2014[.]"31 This date preceded a series of legal holidays beginning on December 24, 2014, where
all the courts and government offices suspended their work.32 Petitioners point out that a "murder
trial is under a distinctly special circumstance in that Paragraph 6, Article V of the Visiting
Forces Agreement. . . provides for [a] one-year trial period[,] after which the United States shall
be relieved of any obligations under said paragraph[.]"33 Petitioners had to file and set the Motion
hearing at the earliest possible date.34

Petitioners further argue that Judge Ginez-Jabalde should not have dismissed the Urgent Motion
to Compel the Armed Forces of the Philippines to Surrender Custody of Accused to the
Olongapo City Jail "considering that the Urgent Motion raised issues that are of transcendental
importance and of primordial public interest."35 Petitioners aver that under international human
rights law, in particular the International Covenant on Civil and Political Rights and the United
Nations Declaration of Basic Principles of Justice for Victims of Crime and Abuse of Power,
they have the right to access to justice,36 which is "distinct from the power of the Public
Prosecutors to prosecute [the] criminal case."37

Furthermore, petitioners advance that Philippine authorities ought to "have primary jurisdiction
over [Respondent Pemberton's person while [he] is being tried [in] a Philippine Court[,]"38 in
accordance with Article V, paragraph (3)(b) of the Visiting Forces Agreement,39 which
states:chanRoblesvirtualLawlibrary

3. In cases where the right to exercise jurisdiction is concurrent, the following rules shall apply:
(a) Philippine authorities shall have the primary right to exercise jurisdiction over all
offenses committed by United States personnel . . .
(Emphasis and underscoring in the original)40
cralawlawlibrary

Petitioners argue that the custody of Pemberton must be ordered transferred to the Olongapo City
Jail, considering that the crime involved is murder, which is non-bailable.41 They aver that it is
unconstitutional to refuse to put him "in the custody of Philippine jail authorities[,]" as such
refusal "undermines the Constitutional Powers of [the Court] to hear a jurisdictional matter
brought before it"42 and to promulgate rules for the practice of law.43 Petitioners argue that even
though the Visiting Forces Agreement gives the United States the "sole discretion" to decide
whether to surrender custody of an accused American military personnel to the Philippine
authorities, "the rule is that . . . the Court [still] has control over any proceeding involving a
jurisdictional matter brought before it, even if it may well involve the country's relations with
another foreign power."44

As for the nonconformity of the Public Prosecutor, petitioners argue that the Public Prosecutor's
refusal to sign the Urgent Motion to Compel the Armed Forces of the Philippines to Surrender
Custody of Accused to the Olongapo City Jail rendered the requirement for conformity
superfluous.45 Petitioners allege that the Public Prosecutor's act is contrary to Department of
Justice Secretary Leila M. De Lima's (Secretary De Lima) position on the matter.46 They quote
Secretary De Lima as having said the following statement in a news article dated December 17,
2014:chanRoblesvirtualLawlibrary
The Philippines will now insist on the custody (of Pemberton) now that the (case) is filed in
court and especially since the warrant of arrest has been issued," De Lima told reporters in an
ambush interview.47cralawlawlibrary

Petitioners also quoted Secretary De Lima as having stated in another news article dated
December 18, 2014 the following:chanRoblesvirtualLawlibrary

Justice Secretary Leila De Lima stressed that Pemberton should be under the custody of
Philippine authorities, following the filing of charges.

"There is also a provision in the Visiting Forces Agreement that, in cases of extraordinary
circumstances, the Philippine government can insist on the custody and for me, there are enough
such circumstances, such as cruelty and treachery, that justified the filing of the murder and not
homicide," De Lima said.48cralawlawlibrary

The contrary manifestations made by Secretary De Lima, according to petitioners, meant that
"[t]he conformity of the Public Prosecutor . . . is a mere superfluity"49 and was meant "to deny
[petitioners' 'quest for justice[.]'"50

Due to the nature of the case, petitioners pray in this Petition that procedural requirements be set
aside.51

In his Comment dated June 16, 2015, Pemberton argues that Judge Ginez-Jabalde did not
commit grave abuse of discretion in denying the Urgent Motion to Compel the Armed Forces of
the Philippines to Surrender Custody of Accused to the Olongapo City Jail since petitioners
violated the three-day notice rule and failed to secure the conformity of the Public Prosecutor
assigned to the case.52 He claims that he "was not given an opportunity to be heard"53 on
petitioners' Motion.

In his counterstatement of facts, Pemberton avers that he voluntarily surrendered to the Regional
Trial Court, Branch 74, on December 19, 2014.54 On the same day, Marilou S. Laude filed an
Urgent Motion to Compel the Armed Forces of the Philippines to Surrender Custody of the
Accused to the Olongapo City Jail, and setting the Motion hearing for December 22, 2015, but
did not obtain the Public Prosecutor's conformity.55 Marilou S. Laude also failed to personally
serve a copy of the Urgent Motion on Pemberton at least three days prior to the hearing thereof.56

Pemberton further avers that on December 22, 2014, Judge Ginez-Jabalde heard the Urgent
Motion to Compel the Armed Forces of the Philippines to Surrender Custody of the Accused to
the Olongapo City Jail and a Motion to Suspend the Proceedings.57 Counsel for Pemberton was
in court to attend the hearing for the Motion to Suspend the Proceedings, but did not have
knowledge of the Urgent Motion to Compel the Armed Forces of the Philippines to Surrender
Custody of the Accused to the Olongapo City Jail filed by Marilou S. Laude.58 Counsel for
Pemberton received a copy of the Urgent Motion only "a few minutes"59 before it was to be
heard.60

On December 23, 2014, Judge Ginez-Jabalde denied Marilou S. Laude's Urgent Motion to
Compel the Armed Forces of the Philippines to Surrender Custody of the Accused to the
Olongapo City Jail for being devoid of merit.61 Marilou S. Laude filed a Motion for
Reconsideration on January 9, 2015,62 without conformity of the Public Prosecutor.63 On January
20, 2015, Pemberton filed his Ad Cautelam Opposition [To Private Complainant's Motion for
Reconsideration], arguing that Judge Ginez-Jabalde correctly denied Marilou S. Laude's Urgent
Motion due to the latter's "failure to comply with settled procedure regarding hearing of
motions[.]"64 Pemberton further argues that the custody over him "rightfully remain[ed] with the
[United States] authorities. . . ." He cites Section 6 of the Visiting Forces Agreement, which
provides that the "custody of any United States personnel over whom the Philippines is to
exercise jurisdiction shall immediately reside with United States military authorities, if they so
request, from the commission of the offense, until completion of all judicial proceedings."65

Pemberton further argues in his Comment that the presence of his counsel during the Urgent
Motion to Compel the Armed Forces of the Philippines to Surrender Custody of the Accused to
the Olongapo City Jail hearing did "not equate to an opportunity to be heard as to satisfy the
purpose of the three-day notice rule."66 Citing Preysler, Jr. v. Manila Southcoast Development
Corporation,67 Cabrera v. Ng,68 and Jehan Shipping Corporation v. National Food
Authority,69 Pemberton avers that an opposing party is given opportunity to be heard when he is
"afforded sufficient time to study the motion and to meaningfully oppose and controvert the
same."70 Even though his counsel was able to orally comment on the Urgent
Motion,71 Pemberton was deprived of any meaningful opportunity to study and oppose
it,72 having been furnished a copy a few minutes before the hearing.73 Marilou S. Laude also
failed to provide "justifiable reason for . . . failure to comply with the three-day notice that would
warrant a liberal construction of the rules."74

Pemberton likewise argues that Marilou S. Laude, being only the private complainant, lacks the
legal personality to file the Urgent Motion to Compel the Armed Forces of the Philippines to
Surrender Custody of Accused to the Olongapo City Jail and the subsequent Motion for
Reconsideration "without the conformity of the Public Prosecutor."75 Quoting Rule 110, Section
576 of the Revised Rules of Criminal Procedure, Pemberton states that the Public Prosecutor's
lack of consent "rendered the Urgent Motion a mere scrap of paper."77 He adds that the defect is
"not a mere technicality[.]"78

Pemberton also argues that Marilou S. Laude cannot rely on the alleged statements of Secretary
De Lima for the following reasons:79 First, Secretary De Lima did not direct the Olongapo City
Office of the City Prosecutor to give its approval to the Urgent Motion and Motion for
Reconsideration;80 second, Secretary De Lima did not state that the Public Prosecutor should
insist on turning over the custody of Pemberton to the Philippine authorities.81 Neither was there
any such order from Secretary De Lima.82 Petitioners' claims are, therefore, without legal basis.83

According to Pemberton, petitioners' use of the '"right to access to justice' under international
law did not excuse [petitioner Marilou [S. Laude] from securing the authority and conformity of
the Public Prosecutor[.]"84 He argues that both the International Covenant on Civil and Political
Rights and the United Nations Declaration of Basic Principles of Justice for Victims of Crime
and Abuse of Power "refer to national or domestic legislation in affording [victims] access to
justice."85 The Rules of Court and jurisprudence have established procedures for criminal
proceedings, and these require Marilou S. Laude "to obtain authority and consent from the Public
Prosecutor"86 before filing a Motion in the ongoing criminal proceeding.87

As for the issue of custody under the Visiting Forces Agreement, Pemberton argues that there is
a difference between "jurisdiction" and "custody."88 He avers that jurisdiction is "the power and
authority of a court to try, hear[,] and decide a case."89 Pemberton does not dispute that
"Philippine authorities have the primary right to exercise jurisdiction over offenses committed by
[a] United States personnel[,] [which is] why the case is being tried [in] a Philippine
court."90 However, custody "pertains to [the] actual physical control over the person of the
accused[,]"91 and under the Visiting Forces Agreement, Pemberton argues that custody shall
reside with the United States Military authorities, since the Visiting Forces Agreement expressly
provides that "[t]he custody of any United States personnel . . . shall immediately reside with
[the] United States military authorities . . . from the commission of the offense until completion
of all judicial proceedings."92

Public respondents advance that Judge Ginez-Jabalde did not commit grave abuse of discretion
when she denied the Urgent Motion to Compel the Armed Forces of the Philippines to Surrender
Custody of Accused to the Olongapo City Jail.93 Public respondents, through their Comment
filed by the Office of the Solicitor General, argue that "[petitioners are not real parties in
interest[.]"94 They claim that "the real party in interest is the People [of the Philippines],
represented by the public prosecutor in the lower court and by the Office of the Solicitor General
... in the Court of Appeals and in the Supreme Court."95 While public respondents recognize that
petitioners may intervene as private offended parties, "the active conduct of. . . trial [in a
criminal case] is properly the duty of the public prosecutor."96 The nonconformity of the Public
Prosecutor in petitioners' Urgent Motion to Compel the Armed Forces of the Philippines to
Surrender Custody of Accused to the Olongapo City Jail is fatal in light of its nature pertaining
to the place of Pemberton's confinement.97 The issue of confinement of an accused pertains to the
criminal aspect of the case and "involves the right to prosecute[,] which [is lodged] exclusively
to the People[.]"98

Referring to Rule 110, Section 5 of the Rules of Court, public respondents aver that the
requirement for motions to be "filed in the name of and under the authority of the public
prosecutor"99 is not a mere technical requirement, but is part of "the essential, inherent, and
exclusive power of the State to prosecute criminals[.]"100 Public respondents counter petitioners'
claim that the Public Prosecutor's approval is superfluous given the alleged position of Secretary
De Lima in the newspaper articles. Citing Feria v. Court of Appeals, public respondents argue
that newspaper articles are "hearsay evidence, twice removed"101 and are "inadmissible" for
having no probative value, "whether objected to or not."102

As for the three-day notice rule under the Rules of Court, public respondents argue that
petitioners' failure to comply cannot be excused in light of the rule's purpose, that is, for the
Motion's adverse party not to be surprised, granting one sufficient time to study the Motion and
be able to meet the arguments contained in it.103

Public respondents argue that while the Visiting Forces Agreement "grants primary jurisdiction
to Philippine authorities"104 in this case, Pemberton's handover specifically to the Olongapo City
Jail is unnecessary.105 The Visiting Forces Agreement does not specify the place of an accused
American personnel's confinement. The issue of custody is thus "best left to the discretion of the
trial court."106 According to public respondents, for so long as the present arrangement neither
renders it difficult for Pemberton to appear in court when he is required nor impairs Judge Ginez-
Jabalde's authority to try the case, the trial court may validly decide for Pemberton to remain
where he currently is.107

Lastly, public respondents maintain that petitioners are not entitled to a mandatory injunction
since they have no "clear and unmistakable right to the transfer of [respondent Pemberton] from
Camp Aguinaldo to the Olongapo City Jail."108 They underscore that "petitioners are private
offended parties[,] not the real party in interest in [this] criminal case[.]"109

We dismiss the Petition.

The failure of petitioners to comply with the three-day notice rule is unjustified.

Rule 15, Section 4 of the Rules of Court clearly makes it a mandatory rule that the adverse party
be given notice of hearing on the motion at least three days prior.

Failure to comply with this notice requirement renders the motion defective consistent with
protecting the adverse party's right to procedural due process.110 In Jehan Shipping
Corporation:111chanroblesvirtuallawlibrary

As an integral component of procedural due process, the three-day notice required by the Rules
is not intended for the benefit of the movant. Rather, the requirement is for the purpose of
avoiding surprises that may be sprung upon the adverse party, who must be given time to study
and meet the arguments in the motion before a resolution by the court. Principles of natural
justice demand that the right of a party should not be affected without giving it an opportunity to
be heard.112 (Emphasis supplied, citations omitted)cralawlawlibrary

While the general rule is that a motion that fails to comply with the requirements of Rule 15 is a
mere scrap of paper, an exception may be made and the motion may still be acted upon by the
court, provided doing so will neither cause prejudice to the other party nor violate his or her due
process rights.113 The adverse party must be given time to study the motion in order to enable
him or her to prepare properly and engage the arguments of the movant.114 In this case, the
general rule must apply because Pemberton was not given sufficient time to study petitioners'
Motion, thereby depriving him of his right to procedural due process.

Petitioners admit that they personally furnished Pemberton a copy of the Urgent Motion to
Compel the Armed Forces of the Philippines to Surrender Custody of Accused to the Olongapo
City Jail only during the hearing.115 They attempt to elude the consequences of this belated notice
by arguing that they also served a copy of the Motion by registered mail on Pemberton's
counsel.116 They also attempt to underscore the urgency of the Motion by making a reference to
the Christmas season and the "series of legal holidays"117 where courts would be closed.118 To
compound their obfuscation, petitioners claim that the hearing held on December 22, 2014,
attended by Pemberton's counsel sufficiently satisfied the rationale of the three-day notice rule.
These circumstances taken together do not cure the Motion's deficiencies. Even granting that
Pemberton's counsel was able to comment on the motion orally during the hearing, which
incidentally was set for another incident,119 it cannot be said that Pemberton was able to study
and prepare for his counterarguments to the issues raised in the Motion. Judge Ginez-Jabalde
was correct to deny the Urgent Motion to Compel the Armed Forces of the Philippines to
Surrender Custody of Accused to the Olongapo City Jail based on noncompliance of procedural
rules. To rule otherwise would be to prejudice Pemberton's rights as an accused.

II

Petitioners also argue that the Urgent Motion to Compel the Armed Forces of the Philippines to
Surrender Custody of Accused to the Olongapo City Jail is an assertion of their right to access to
justice as recognized by international law and the 1987 Constitution. They justify the separate
filing of the Motion as a right granted by Article 2, paragraph (3) of the International Covenant
on Civil and Political Rights,120 independent of "the power of the Public Prosecutors to prosecute
[a] criminal case."121

Article 2, paragraph (3) of the International Covenant on Civil and Political Rights states:  

3. Each State Party to the present Covenant undertakes:chanRoblesvirtualLawlibrary

(a)  To ensure that any person whose rights or freedoms as herein recognized are violated shall
have an effective remedy, notwithstanding that the violation has been committed by persons
acting in an official capacity;

(b) To ensure that any person claiming such a remedy shall have his right thereto determined by
competent judicial, administrative or legislative authorities, or by any other competent authority
provided for by the legal system of the State, and to develop the possibilities of judicial remedy;

(c) To ensure that the competent authorities shall enforce such remedies when
granted.122ChanRoblesVirtualawlibrary
cralawlawlibrary

There is no need to discuss whether this provision has attained customary status, since under
treaty law, the Philippines, as a State Party,123 is obligated to comply with its obligations under
the International Covenant on Civil and Political Rights.124 However, petitioners went too far in
their interpretation, ignoring completely the nature of the obligation contemplated by the
provision in an attempt to justify their failure to comply with a domestic procedural rule aimed to
protect a human right in a proceeding, albeit that of the adverse party.

On March 29, 2004, the United Nations Human Rights Committee issued General Comment No.
31,125 which pertained to the nature of the general legal obligations imposed by the International
Covenant on Civil and Political Rights on State Parties. On Article 2, paragraph (3), the General
Comment states:chanRoblesvirtualLawlibrary
15. Article 2, paragraph 3, requires that in addition to effective protection of Covenant
rights[,] States Parties must ensure that individuals also have accessible and effective
remedies to vindicate those rights. Such remedies should be appropriately adapted so as to take
account of the special vulnerability of certain categories of person, including in particular
children. The Committee attaches importance to States Parties' establishing appropriate judicial
and administrative mechanisms for addressing claims of rights violations under domestic
law. The Committee notes that the enjoyment of the rights recognized under the Covenant can be
effectively assured by the judiciary in many different ways, including direct applicability of the
Covenant, application of comparable constitutional or other provisions of law, or the interpretive
effect of the Covenant in the application of national law. Administrative mechanisms are
particularly required to give effect to the general obligation to investigate allegations of
violations promptly, thoroughly and effectively through independent and impartial bodies.
National human rights institutions, endowed with appropriate powers, can contribute to this end.
A failure by a State Party to investigate allegations of violations could in and of itself give rise to
a separate breach of the Covenant. Cessation of an ongoing violation is an essential element of
the right to an effective remedy.

16. Article 2, paragraph 3, requires that States Parties make reparation to individuals whose
Covenant rights have been violated. Without reparation to individuals whose Covenant rights
have been violated, the obligation to provide an effective remedy, which is central to the efficacy
of article 2, paragraph 3, is not discharged. In addition to the explicit reparation required by
articles 9, paragraph 5, and 14, paragraph 6, the Committee considers that the Covenant
generally entails appropriate compensation. The Committee notes that, where appropriate,
reparation can involve restitution, rehabilitation and measures of satisfaction, such as public
apologies, public memorials, guarantees of non-repetition and changes in relevant laws and
practices, as well as bringing to justice the perpetrators of human rights violations.126 (Emphasis
supplied)
cralawlawlibrary

The obligation contemplated by Article 2, paragraph (3) is for the State Party to establish a
system of accessible and effective remedies through judicial and administrative mechanisms. The
present trial of Pemberton, to which petitioner, Marilou S. Laude, is included as a private
complainant, indicates that there is a legal system of redress for violated rights. That petitioners
chose to act on their own, in total disregard of the mechanism for criminal proceedings
established by this court, should not be tolerated under the guise of a claim to justice. This is
especially in light of petitioners' decision to furnish the accused in the case a copy of her Motion
only during the hearing. Upholding human rights pertaining to access to justice cannot be
eschewed to rectify an important procedural deficiency that was not difficult to comply with.
Human rights are not a monopoly of petitioners. The accused also enjoys the protection of these
rights.

III

The conformity of the Public Prosecutor to the Urgent Motion to Compel the Armed Forces of
the Philippines to Surrender Custody of Accused to the Olongapo City Jail is not a mere
"superfluity."127 In Jimenez v. Sorongon,128 this court held that in criminal cases, the People is the
real party in interest, which means allowing a private complainant to pursue a criminal action on
his own is a rare exception:129chanroblesvirtuallawlibrary

Procedural law basically mandates that "[ajll criminal actions commenced by complaint or by
information shall be prosecuted under the direction and control of a public prosecutor." In
appeals of criminal cases before the CA and before this Court, the OSG is the appellate counsel
of the People. . . .
....

The People is the real party in interest in a criminal case and only the OSG can represent the
People in criminal proceedings pending in the CA or in this Court. This ruling has been
repeatedly stressed in several cases and continues to be the controlling doctrine.

While there may be rare occasions when the offended party may be allowed to pursue the
criminal action on his own behalf (as when there is a denial of due process), this exceptional
circumstance does not apply in the present case.

In this case, the petitioner has no legal personality to assail the dismissal of the criminal case
since the main issue raised by the petitioner involved the criminal aspect of the case, i.e., the
existence of probable cause. The petitioner did not appeal to protect his alleged pecuniary
interest as an offended party of the crime, but to cause the reinstatement of the criminal action
against the respondents. This involves the right to prosecute which pertains exclusively to the
People, as represented by the OSG.130 (Emphasis supplied, citations omitted)cralawlawlibrary

In this case, petitioners have not shown why the Motion may be allowed to fall under the
exception. The alleged grave abuse of discretion of the Public Prosecutor was neither clearly
pleaded nor argued. The duty and authority to prosecute the criminal aspects of this case,
including the custody issue, are duly lodged in the Public Prosecutor. Her refusal to give her
conforme to the Motion is an act well within the bounds of her position. That petitioners used as
bases newspaper articles for claiming that the Public Prosecutor acted contrary to the position of
Secretary De Lima cannot be given weight. Public respondents are correct in asserting that the
proper remedy would have been for petitioners to have the act reversed by Secretary De Lima
through proper legal venues.

IV

Finally, petitioners argue that the Visiting Forces Agreement should be declared
"unconstitutional insofar as it impairs the . . . power of the Supreme Court[.]"131 They advance
this argument in the context of their Motion to place Pemberton under the custody of Philippine
authorities while the case is being tried,132 with their prayer in this Petition phrased
thus:chanRoblesvirtualLawlibrary

(b) Declare the VFA unconstitutional insofar as it impairs the constitutional power of the
Supreme Court to promulgate rules for practice before it, including the Rules of Criminal
Procedure[.]133cralawlawlibrary

The constitutionality of an official act may be the subject of judicial review, provided the matter
is not raised collaterally. In Planters Products, Inc. v. Fertiphil
Corporation:134chanroblesvirtuallawlibrary

Judicial review of official acts on the ground of unconstitutionality may be sought or availed of
through any of the actions cognizable by courts of justice, not necessarily in a suit for declaratory
relief. . . The constitutional issue, however, (a) must be properly raised and presented in the
case, and (b) its resolution is necessary to a determination of the case, i.e., the issue of
constitutionality must be the very lis mota presented.135 (Emphasis supplied, citation
omitted)cralawlawlibrary

The constitutionality of the Visiting Forces Agreement is not the lis mota of this Petition.
Petitioners started their Petition with a claim that their right to access to justice was violated, but
ended it with a prayer for a declaration of the Visiting Forces Agreement's unconstitutionality.
They attempt to create the connection between the two by asserting that the Visiting Forces
Agreement prevents the transfer of Pemberton to Olongapo City Jail, which allegedly is
tantamount to the impairment of this court's authority.

First, this Petition is not the proper venue to rule on the issue of whether the Visiting Forces
Agreement transgresses the judicial authority of this court to promulgate rules pertaining to
criminal cases. Second, the issues of criminal jurisdiction and custody during trial as contained in
the Visiting Forces Agreement were discussed in Nicolas v. Secretary Romulo, et
al:136chanroblesvirtuallawlibrary

The VFA being a valid and binding agreement, the parties are required as a matter of
international law to abide by its terms and provisions.

The VFA provides that in cases of offenses committed by the members of the US Armed Forces
in the Philippines, the following rules apply:
Article V
Criminal Jurisdiction
xxx  xxx  xxx

6. The custody of any United States personnel over whom the Philippines is to exercise
jurisdiction shall immediately reside with United States military authorities, if they so request,
from the commission of the offense until completion of all judicial proceedings. United States
military authorities shall, upon formal notification by the Philippine authorities and without
delay, make such personnel available to those authorities in time for any investigative or judicial
proceedings relating to the offense with which the person has been charged. In extraordinary
cases, the Philippine Government shall present its position to the United States Government
regarding custody, which the United States Government shall take into full account. In the event
Philippine judicial proceedings are not completed within one year, the United States shall be
relieved of any obligations under this paragraph. The one year period will not include the time
necessary to appeal. Also, the one year period will not include any time during which scheduled
trial procedures are delayed because United States authorities, after timely notification by
Philippine authorities to arrange for the presence of the accused, fail to do so.
Petitioners contend that these undertakings violate another provision of the Constitution, namely,
that providing for the exclusive power of this Court to adopt rules of procedure for all courts in
the Philippines (Art. VIII, Sec. 5[5]). They argue that to allow the transfer of custody of an
accused to a foreign power is to provide for a different rule of procedure for that accused, which
also violates the equal protection clause of the Constitution (Art. Ill, Sec. 1. [sic]).

Again, this Court finds no violation of the Constitution.

The equal protection clause is not violated, because there is a substantial basis for a different
treatment of a member of a foreign military armed forces allowed to enter our territory and all
other accused.

The rule in international law is that a foreign armed forces allowed to enter one's territory is
immune from local jurisdiction, except to the extent agreed upon. The Status of Forces
Agreements involving foreign military units around the world vary in terms and conditions,
according to the situation of the parties involved, and reflect their bargaining power. But the
principle remains, i.e., the receiving State can exercise jurisdiction over the forces of the sending
State only to the extent agreed upon by the parties.

As a result, the situation involved is not one in which the power of this Court to adopt rules of
procedure is curtailed or violated, but rather one in which, as is normally encountered around
the world, the laws (including rules of procedure) of one State do not extend or apply —
except to the extent agreed upon — to subjects of another State due to the recognition of
extraterritorial immunity given to such bodies as visiting foreign armed forces.

Nothing in the Constitution prohibits such agreements recognizing immunity from

jurisdiction or some aspects of jurisdiction (such as custody), in relation to long-recognized
subjects of such immunity like Heads of State, diplomats and members of the armed forces
contingents of a foreign State allowed to enter another State's territory. On the contrary, the
Constitution states that the Philippines adopts the generally accepted principles of
international law as part of the law of the land. (Art. II, Sec. 2).

Applying, however, the provisions of VFA, the Court finds that there is a different treatment
when it comes to detention as against custody. The moment the accused has to be detained, e.g.,
after conviction, the rule that governs is the following provision of the VFA:
Article V
Criminal Jurisdiction
xxx  xxx   xxx

Sec. 10. The confinement or detention by Philippine authorities of United States personnel shall
be carried out in facilities agreed on by appropriate Philippines and United States authorities.
United States personnel serving sentences in the Philippines shall have the right to visits and
material assistance.
It is clear that the parties to the VFA recognized the difference between custody during the
trial and detention after conviction, because they provided for a specific arrangement to cover
detention. And this specific arrangement clearly states not only that the detention shall be
carried out in facilities agreed on by authorities of both parties, but also that the detention
shall be "by Philippine authorities."137 (Emphasis supplied, citations omitted)
cralawlawlibrary

In any case, Pemberton is confined, while undergoing trial, in Camp Aguinaldo, which by
petitioners' own description is the "General Head Quarters of the Armed Forces of the
Philippines[.] "138Their claim that the detention facility is under the "control, supervisionfj and
jurisdiction of American military authorities"139is not substantiated.

Petitioners' prayer for the issuance of a writ of mandatory injunction to compel public
respondents to turn over the custody of Pemberton "from American military authorities to the
OLONGAPO CITY JAIL"140 is likewise denied for lack of merit. In Semirara Coal Corporation
v. HGL Development Corporation:141chanroblesvirtuallawlibrary

It is likewise established that a writ of mandatory injunction is granted upon a showing that (a)
the invasion of the right is material and substantial; (b) the right of complainant is clear and
unmistakable; and (c) there is an urgent and permanent necessity for the writ to prevent
serious damage.142 (Emphasis supplied, citation omitted)cralawlawlibrary

Nowhere in their Petition did petitioners discuss the basis for their claim that they are entitled to
the sought writ, let alone mention it in their arguments. This court cannot consider the issuance
of a writ of mandatory injunction or a temporary restraining order without any legal and factual
basis.

Besides, considering the extent of the scope of this court's power to issue a temporary restraining
order, prayers for the issuance of a writ of mandatory injunction is usually unnecessary.

WHEREFORE, premises considered, the Petition for Certiorari is DISMISSED for lack of

grave abuse of discretion resulting in lack or excess of jurisdiction. The prayer for the issuance
of a writ of mandatory injunction is likewise DENIED for lack of merit.

SO ORDERED.
[G.R. No. 169292, April 13 : 2011]

SPOUSES FRANCISCO DE GUZMAN, JR. AND AMPARO O. DE GUZMAN,

PETITIONERS, VS. CESAR OCHOA AND SYLVIA A. OCHOA, REPRESENTED BY
ARACELI S. AZORES, AS THEIR ATTORNEY-IN-FACT, RESPONDENTS.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari assailing the August 11, 2005 Decision[1] of the Court of
Appeals (CA), in CA-GR. SP No. 89329, filed by petitioners, Spouses Francisco De Guzman, Jr.
and Amparo O. De Guzman (petitioners).  In the assailed decision, the CA found no commission
of grave abuse of discretion when the public respondent therein, Judge Amelia A. Fabros (Judge
Fabros), Presiding Judge of the Regional Trial Court, Pasig City, Branch 160 (RTC), denied
petitioners' second motion to dismiss, in Civil Case No. 68896, an action for annulment of
contract and damages.

The facts of the case have been succinctly summarized by the CA as follows:

On March 25, 2002, respondent spouses Cesar Ochoa and Sylvia Ochoa, through respondent
Araceli Azores, ostensibly acting as attorney-in-fact, commenced in the Regional Trial Court
(RTC) in Pasig City an action seeking the annulment of contract of mortgage, foreclosure sale,
certificate of sale and damages. The action, docketed as Civil Case No. 68896 and entitled Cesar
Ochoa and Sylvia A. Ochoa, etc. v. Josefa M. Guevarra, et al., was raffled to Branch 160,
presided by the respondent RTC Judge.

On May 22, 2002, the petitioners, as defendants in Civil Case No. 68896, filed a motion to
dismiss, alleging the sole ground that the complaint did not state a cause of action. The
petitioners' motion to dismiss was formally opposed by the private respondents.

On December 16, 2002, the respondent RTC Judge denied petitioners' motion to dismiss and at
the same time set Civil Case No. 68896 for pre-trial conference, directing the parties to submit
their respective pre-trial briefs.

On March 31, 2003, the petitioners filed a second motion to dismiss, alleging that the
certification against forum shopping attached to the complaint was not executed by the principal
parties (plaintiffs) in violation of Sec. 5, Rule 7, 1997 Rules of Civil Procedure, rendering the
complaint fatally defective and thus dismissible.

The private respondents opposed the second motion to dismiss.

On February 12, 2004, the respondent RTC Judge issued her first assailed order, denying the
second motion to dismiss, disposing thus:

xxx

Inasmuch as the records show that the pending incident is the second motion to dismiss filed by
the defendants, the same is hereby Denied for lack of merit.

SO ORDERED.

On May 25, 2004. the petitioners filed their motion for reconsideration, but the respondent RTC
Judge denied the motion through her second assailed order dated December 29, 2004, to wit:

Acting on the Motion for Reconsideration (of the Order dated February 12, 2004, filed by the
defendant Spouses Francisco and Amparo De Guzman, through counsel, on May 25, 2004, and
after considering the grounds stated therein in support of their motion, and finding no cogent
reason to warrant the reconsideration sought for, the motion is DENIED.

SO ORDERED.[2]

Aggrieved, petitioners elevated the order of denial to the CA via a petition for certiorari
contending that the RTC should have dismissed the complaint motu proprio since it was fatally
defective. They pointed out that the Verification and Certification of Non-Forum Shopping
attached to the complaint was not signed by Cesar Ochoa or Sylvia Ochoa but by Araceli S.
Azores (Azores), who was acting as the attorney-in-fact of Cesar Ochoa only. They invited the
attention of the RTC to the fact that the powers delegated to Azores did not include the authority
to institute an action in court. Thus, according to the petitioners, the denial by the RTC of their
motion to dismiss was capricious, whimsical and arbitrary, amounting to lack or excess of
jurisdiction and should be struck down as null and void.

On August 11, 2005, the CA denied the petition for lack' of merit. The CA, in its decision,
agreed with the RTC that following the omnibus motion rule, the defects of the complaint
pointed out by the petitioners were deemed waived when they failed to raise it in their first
motion to dismiss.

Not in conformity, the petitioners filed this petition for review under Rule 45, anchored on this:

GROUND

THE COURT A QUO DECIDED A QUESTION OF SUBSTANCE IN A MANNER NOT

IN ACCORD WITH LAW AND JURISPRUDENCE WHEN IT REFUSED TO DISMISS,
THE COMPLAINT DESPITE THE FACT THAT IT WAS INDUBITABLY SHOWN
AND ESTABLISHED THAT THE ESSENTIAL REQUIREMENT OF CERTIFICATION
OF NON-FORUM SHOPPING PURSUANT TO SECTION 5, RULE 7 OF THE RULES
OF COURT WAS NOT OBSERVED AND COMPLIED WITH SINCE THE SAME WAS
NOT ACCOMPLISHED PERSONALLY BY THE PURPORTED PLAINTIFFS
THEREIN.

It is the position of the petitioners that the second motion to dismiss does not violate the
Omnibus Motion Rule under Section 8, Rule 15 of the Rules of Court because the issue raised in
the second motion was a question of jurisdiction. For said reason, the matter of the defective
verification and certification cannot be considered to have been waived when it was not
interposed at the first instance. Considering that the issue is jurisdictional, the RTC should have
dismissed the complaint motu proprio.

The Court disagrees with the petitioners.

An order denying a motion to dismiss is an interlocutory order which neither terminates the case
nor finally disposes of it, as it leaves something to be done by the court before the case is finally
decided on the merits. As such, the general rule is that the denial of a motion to dismiss cannot
be questioned in a special civil action for certiorari which is a remedy designed to correct errors
of jurisdiction and not errors of judgment.[3]

Therefore, an order denying a motion to dismiss may only be reviewed in the ordinary course of
law by an appeal from the judgment after trial.  The ordinary procedure to be followed in such
cases is to file an answer, go to trial, and if the decision is adverse, reiterate the issue on appeal
from the final judgment.[4]
Only in exceptional cases where the denial of the motion to dismiss is tainted with grave abuse
of discretion that the Court allows the extraordinary remedy of certiorari. By "grave abuse of
discretion," we mean such capricious and whimsical exercise of judgment that is equivalent to
lack of jurisdiction. The abuse of discretion must be grave as where the power is exercised in an
arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent and
gross as to amount to an evasion of positive duty or to a virtual refusal-to perform the duty
enjoined by or to .act all in contemplation of law.[5]

In this case, the petitioners failed to convincingly substantiate its charge of arbitrariness on the
part of Judge Fabros. Absent such showing of arbitrariness, capriciousness, or ill motive, the
Court cannot but sustain the ruling of the CA.

Section 8, Rule 15 of the Rules of Court defines an omnibus motion as a motion attacking a
pleading, judgment or proceeding. A motion to dismiss is an omnibus motion because it attacks a
pleading, that is, the complaint. For this reason, a motion to dismiss, like any other omnibus
motion, must raise and include all objections available at the time of the filing of the motion
because under Section 8, "all objections not so included shall be deemed waived." As inferred
from the provision, only the following defenses under Section 1, Rule 9, are excepted from its
application: [a] lack of jurisdiction over the subject matter; [b] there is another action pending
between the same parties for the same cause (litis pendentia); [c] the action is barred by prior
judgment (res judicata); and [d] the action is barred by the statute of limitations or prescription.

In the case at bench, the petitioners raised the ground of defective verification and certification of
forum shopping only when they filed their second motion to dismiss, despite the fact that this
ground was existent and available to them at the time of the filing of their first motion to dismiss.
Absent any justifiable reason to explain this fatal omission, the ground of defective verification
and certification of forum shopping was deemed waived and could no longer be questioned by
the petitioners in their second motion to dismiss.

Moreover, contrary to petitioners' assertion, the requirement regarding verification of a pleading

is formal, not jurisdictional. Such requirement is simply a condition affecting the form of the
pleading, and non-compliance with which does not necessarily render the pleading fatally
defective. Verification is simply intended to secure an assurance that the allegations in the
pleading are true and correct and not the product of the imagination or a matter of speculation,
and that the pleading is filed in good faith. In fact, the court may order the correction of the
pleading if verification is lacking or act on the pleading although it is not verified, if the
attending circumstances are such that strict compliance with the rules may be dispensed with in
order that the ends of justice may thereby be served.[6]

Similarly, the rule requiring the submission of such certification of non-forum shopping,
although obligatory, is not jurisdictional.[7]  The certification requirement is rooted in the
principle that a party-litigant shall
not be allowed to pursue simultaneous remedies in different fora, as this Q practice is detrimental
to an orderly judicial procedure.[8]
As to whether the trial court should have dismissed the complaint motu proprio, the Court rules
in the negative. Section 5, Rule 7 of the Rules of Court is clear that failure to comply with the
requirements on the rule against forum shopping shall be cause for the dismissal of the case
"upon motion and after hearing."

WHEREFORE, the petition is DENIED.

SO ORDERED.

G.R. No. 232189

ALEX RAUL B. BLAY, Petitioner

vs.
CYNTHIA B. BANA, Respondent

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated February 23, 2017 and
the Resolution3 dated June 6, 2017 of the Court of Appeals (CA) in CA-G.R. SP No. 146138,
which affirmed the Orders dated May 29, 20154 and March 3, 20165 of the Regional Trial Court
of Pasay City, Branch 109 (RTC) in Civil Case No. R-PSY-14-17714-CV that: (a) granted
petitioner Alex Raul B. Blay’s (petitioner) Motion to Withdraw; and (b) declared respondent
Cynthia B. Baña’s (respondent) Counterclaim for independent adjudication.

The Facts

On September 17, 2014, petitioner filed before the RTC a Petition for Declaration of Nullity of
Marriage,6 seeking that his marriage to respondent be declared null and void on account of his
psychological incapacity pursuant to Article 36 of the Family Code.7 Subsequently, respondent
filed her Answer with Compulsory Counterclaim8 dated December 5, 2014.

However, petitioner later lost interest over the case, and thus, filed a Motion to Withdraw9 his
petition. In her comment/opposition10 thereto, respondent invoked Section 2, Rule 17 of the
Rules of Court (alternatively, Section 2, Rule 1 7), and prayed that her counterclaims be declared
as remaining for the court's independent adjudication.11 In turn, petitioner filed his
reply,12 averring that respondent's counterclaims are barred from being prosecuted in the same
action due to her failure to file a manifestation therefor within fifteen (15) days from notice of
the Motion to Withdraw, which - according to petitioner - was required under the same Rules of
Court provision. In particular, petitioner alleged that respondent filed the required manifestation
only on March 30, 2015. However, respondent's counsel received a copy of petitioner's Motion
to Withdraw on March 11, 2015; hence, respondent had only until March 26, 2015 to manifest
before the trial court her desire to prosecute her counterclaims in the same action.13

The RTC Ruling

In an Order14 dated May 29, 2015, the RTC granted petitioner’s Motion to Withdraw
petition.15 Further, it declared respondent's counterclaim "as remaining for independent
adjudication" and as such, gave petitioner fifteen (15) days to file his answer thereto.16

Dissatisfied, petitioner filed a motion for reconsideration,17 which was denied in an Order18 dated

March 3, 2016. Thus, he elevated the matter to the CA via a petition for certiorari, 19 praying that
the RTC Orders be set aside to the extent that they allowed the counterclaim to remain for
independent adjudication before the same trial court.20

The CA Ruling

In a Decision21 dated February 23, 2017, the CA dismissed the petition for lack of merit.22 It
found no grave abuse of discretion on the part of the RTC, holding that under Section 2, Rule 17
of the Rules of Court, if a counterclaim has been filed by the defendant before the service upon
him of the petitioner’s motion for dismissal, the dismissal shall be limited to the complaint.23

Aggrieved, petitioner moved for reconsideration,24 which was denied in a Resolution25 dated June

6, 2017; hence, this petition.

The Issue Before the Court

The issue for the Court's resolution is whether or not the CA erred in upholding the RTC Orders
declaring respondent's counterclaim for independent adjudication before the same trial court.

The Court’s Ruling

The petition is meritorious.

Section 2, Rule 17 of the Rules of Court provides for the procedure relative to counterclaims in
the event that a complaint is dismissed by the court at the plaintiffs instance, viz. :

Section 2. Dismissal upon motion of plaintiff. - Except as provided in the preceding section, a
complaint shall not be dismissed at the plaintiffs instance save upon approval of the court and
upon such terms and conditions as the court deems proper. If a counterclaim has been pleaded
by a defendant prior to the service upon him of the plaintiff's motion for dismissal, the
dismissal shall be limited to the complaint. The dismissal shall be without prejudice to the
right of the defendant to prosecute his counterclaim in a separate action unless within
fifteen (15) days from notice of the motion he manifests his preference to have his
counterclaim resolved in the same action. Unless otherwise specified in the order, a dismissal
under this paragraph shall be without prejudice. A class suit shall not be dismissed or
compromised without the approval of the court.1âwphi1

As per the second sentence of the provision, if a counterclaim has been pleaded by the defendant
prior to the service upon him of the plaintiff's motion for the dismissal - as in this case - the rule
is that the dismissal shall be limited to the complaint. Commentaries on the subject elucidate
that "[i]nstead of an ‘action’ shall not be dismissed, the present rule uses the term ‘complaint’. A
dismissal of an action is different from a mere dismissal of the complaint. For this reason, since
only the complaint and not the action is dismissed, the defendant inspite of said dismissal may
still prosecute his counterclaim in the same acton."26

However, as stated in the third sentence of Section 2, Rule 17, if the defendant desires to
prosecute his counterclaim in the same action, he is required to file a manifestation within
fifteen (15) days from notice of the motion. Otherwise, his counterclaim may be prosecuted in a
separate action. As explained by renowned remedial law expert, former Associate Justice
Florenz D. Regalado, in his treatise on the matter:

Under this revised section, where the plaintiff moves for the dismissal of the complaint to which
a counterclaim has been interpose, the dismissal shall be limited to the complaint. Such dismissal
shall be without prejudice to the right of the defendant to either prosecute his counterclaim in a
separate action or to have the same resolved in the same action. Should he opt for the first
alternative, the court should render the corresponding order granting and reserving his
right to prosecute his claim in a separate complaint. Should he choose to have his
counterclaim disposed of in the same action wherein the complaint had been dismissed, he
must manifest within 15 days from notice to him of plaintiff's motion to dismiss. x x x27

In this case, the CA confined the application of Section 2, Rule 17 to that portion of its second
sentence which states that the "dismissal shall be limited to the complaint." Evidently, the CA
ignored the same provision's third sentence, which provides for the alternatives available to the
defendant who interposes a counterclaim prior to the service upon him of the plaintiff's motion
for dismissal. As may be clearly inferred therefrom, should the defendant desire to prosecute his
counterclaim, he is required to manifest his preference therefor within fifteen (15) days from
notice of the plaintiff's motion to dismiss. Failing in which, the counterclaim may be prosecuted
only in a separate action.

The rationale behind this rule is not difficult to discern: the passing of the fifteen (15)-day period
triggers the finality of the court's dismissal of the complaint and hence, bars the conduct of
further proceedings, i.e., the prosecution of respondent's counterclaim, in the same action. Thus,
in order to obviate this finality, the defendant is required to file the required manifestation within
the aforesaid period; otherwise, the counterclaim may be prosecuted only in a separate action.

It is hornbook doctrine in statutory construction that "[t]he whole and every part of the statute
must be considered in fixing the meaning of any of its parts and in order to produce a
harmonious whole. A statute must be so construed as to harmonize and give effect to all its
provisions whenever possible. In short, every meaning to be given to each word or phrase must
be ascertained from the context of the body of the statute since a word or phrase in a statute is
always used in association with other words or phrases and its meaning may be modified or
restricted by the latter."28

By narrowly reading Section 2, Rule 1 7 of the Rules of Court, the CA clearly violated the
foregoing principle and in so doing, erroneously sustained the assailed RTC Orders declaring
respondent’s counterclaim "as remaining for independent adjudication" despite the latter's failure
to file the required manifestation within the prescribed fifteen (15)-day period. As petitioner
aptly points out:

[I]f the intention of the framers of the Rules of Court is a blanket dismissal of the complaint
ALONE if a counterclaim has been pleaded prior to the service of the notice of dismissal then
there is NO EVIDENT PURPOSE for the third (3rd) sentence of Sec. 2, Rule 17.

x x x x29

[I]t is clearly an ABSURD conclusion if the said provision will direct the defendant to manifest
within fifteen (15) days from receipt of the notice of dismissal his preference to prosecute his
counterclaim in the SAME ACTION when the same AUTOMATICALLY REMAINS. If the
automatic survival of the counterclaim and the death of the complaint as being ruled by the Court
of Appeals in its questioned Decision is indeed true, then the third sentence should have required
defendant to manifest that he will prosecute his counterclaim in a SEPARATE [and not - as the
provision reads - in the same] ACTION.30 (Emphases and underscoring in the original)

Petitioner's observations are logically on point. Consequently, the CA rulings, which affirmed
the patently erroneous R TC Orders, must be reversed. As it should be, the RTC should have
only granted petitioner's Motion to Withdraw and hence, dismissed his Petition for Declaration
of Nullity of Marriage, without prejudice to, among others, the prosecution of respondent's
counterclaim in a separate action.

WHEREFORE, the petition is GRANTED. The Decision dated February 23, 2017 and the
Resolution dated June 6, 2017 of the Court of Appeals in CA-G.R. SP No. 146138 are
hereby REVERSED and SET ASIDE. A new one is ENTERED solely granting petitioner Alex
Raul B. Blay’s Motion to Withdraw his Petition for Declaration of Nullity of Marriage in Civil
Case No. R-PSY-14-17714-CV. The aforesaid dismissal is, among others, without prejudice to
the prosecution of respondent Cynthia B. Baña's counterclaim in a separate action.

SO ORDERED.

G.R. No. 155701, March 11, 2015

LIM TECK CHUAN, Petitioner, v. SERAFIN UY AND LEOPOLDA CECILIO, LIM

SING CHAN @ HENRY LIM, Respondents.

DECISION

REYES, J.:

Before this Court is a petition for review on certiorari1 under Rule 45 filed by Lim Teck Chuan
(petitioner) assailing the Orders dated April 25, 20022  and  October  21,  20023  of  the 
Regional  Trial  Court  (RTC)  of Lapu-lapu City, Branch 27, in Civil Case No. 4786-L, which
dismissed the case upon a joint motion of respondents Serafin Uy (Serafin) and Leopolda Cecilio
(Leopolda) despite an opposition and manifestation of the petitioner to have his counterclaim
prosecuted in the same action, and denied the petitioner’s motion for reconsideration for being
barren of merit, respectively.

The antecedent facts are as follows:

The subject matter of the present controversy is a piece of land known as Lot 5357 with an area
of 33,610 square meters, covered by Transfer Certificate of Title (TCT) No. T-0500, situated
in Barrio Agus, Lapu-lapu City, Cebu, owned and registered under the name of Antonio Lim
Tanhu (Antonio), married to Dy Ochay.

Lot 5357 was sold by Antonio to the spouses Francisco Cabansag (Francisco) and Estrella
Cabansag (Spouses Cabansag) as evidenced by a Deed of Sale executed on January 8, 1966. 
Apparently, Francisco failed to transfer the title of the property to their names because of his
work and frequent travels abroad.4cralawred

In 1988, Spouses Cabansag sold the lot to Serafin, as evidenced by a Deed of Sale dated April 8,
1988.  To pave the way for the transfer of title to Serafin’s name, Spouses Cabansag attempted to
have the same transferred under their names first.  However, Francisco failed to do so as he lost
the owner’s copy of TCT No. T-0500 together with other documents pertaining to the sale of the
subject lot.  This prompted Serafin to exert efforts to secure copies of the lost documents
himself.  On May 15, 1996, Serafin filed a petition before the RTC, docketed as Cadastral Case
No. 21 praying for the issuance of a new owner’s duplicate TCT in his name, thereby cancelling
TCT No. T-0500 in the name of Antonio.5cralawred

Serafin’s petition for the issuance of a new owner’s copy of TCT No. T-0500 was raffled to the
RTC of Lapu-lapu City, Branch 27, then sitting as a cadastral court (Cadastral Court).  After due
notice and hearing, the Cadastral Court issued an Order6 on June 14, 1996 directing the Register
of Deeds of Lapu-lapu City to issue a new owner’s duplicate copy of TCT No. T-0500.

However,  the  aforesaid  order  was  recalled  and  nullified  on September 3, 19967 on the
ground that the petitioner filed an Opposition and/or Motion for Reconsideration with
Manifestation for Special Appearance8 dated August 22, 1996 alleging that he is one of the six
legitimate descendants of Antonio; and that the original owner’s copy of TCT No. T-0500 was
not lost and has always been in his custody.  The court further directed the petitioner to deposit
the said owner’s copy of TCT No. T-0500 with said court.

In the meantime, on August 2, 1996, Lim Sing Chan alias Henry Lim (Henry) executed
an Affidavit of Sole Adjudication/Settlement of the Estate of Antonio Lim Tanhu with Deed of
Sale9 (Affidavit of Self-Adjudication) claiming that he is the only surviving heir of Antonio.  In
the same document, Henry sold Lot 5357 to Leopolda in the amount of P500,000.00.

With this turn of events, Serafin filed on July 25, 1997 a Complaint10 for quieting of title,
surrender of owner’s copy of certificate of title, declaration of nullity of affidavit of
adjudication and sale, annulment of tax declaration, and other reliefs with a prayer for
preliminary injunction before the RTC, docketed as Civil Case No. 4786-L.  Impleaded as
defendants were Leopolda, Henry, and the herein petitioner.
Leopolda filed her Answer11 (with counterclaim, and cross-claim against Henry), asserting that
she was the buyer in good faith and for value of Lot 5357.  She alleged that the said property was
never encumbered to any person during the lifetime of Antonio; that the deed of sale in favor of
Spouses Cabansag was simulated and spurious; and that the said document was never registered
with the proper government agency, nor was it ever annotated on the certificate of title covering
the said property.  She claimed that  the  lot  in  question  was  sold  to  her  as  evidenced  by 
the  Affidavit of Self-Adjudication executed by Henry; that she caused the issuance of a new tax
declaration over the said property in her name; that since then, she has been in open, actual and
material possession of the subject lot in the concept of an owner.

For his part, the petitioner averred in his Answer12 (with counterclaim, and cross-claims against
Leopolda and Henry), that Lot 5357 was never transferred nor encumbered to any person during
Antonio’s lifetime.  The deed of sale in favor of Spouses Cabansag was simulated and spurious,
and was intended to defraud the estate of Antonio.  Furthermore, the petitioner questioned
Henry’s claim that he was an heir of Antonio, much less the only surviving heir of the latter. 
Corollarily, the petitioner questioned the validity of Henry’s Affidavit of Self-Adjudication and
Leopolda’s claim of title to the subject property.

On November 11, 1997, Leopolda filed her Answer13 to the petitioner’s cross-claim.  She
basically reiterated her allegations raised in her Answer to Serafin’s complaint.

Henry did not file an answer to any of the claims against him.

On December 22, 1998, the pre-trial conference14 was conducted where the parties agreed to the
following stipulation of facts:chanRoblesvirtualLawlibrary

[T]hat Antonio Lim Tanhu was the registered owner of Lot 5357 of the Cadastral Survey of
Opon located in Lapu-lapu City[;] that Antonio Lim Tanhu died on April 13, 1991[;] that
Antonio Lim Tanhu was succeeded upon his death by his six children, namely, the defendant
Lim Teck Chuan, Lim Sing Tai, Helen Lim, Lenesita Lim, Warlito Lim and Michael Lim Tan
Ho[;] that the defendant Lim Sing Chan is actually a fictitious person[;] that there exists an
ancient document denominated as Deed of Absolute Sale of Lot 5357 executed on January 8,
1966 by Antonio Lim Tanhu in favor of the spouses Francisco Cabansag and Estrella M.
Cabansag (Exhibit A)[;] that there also exists a document denominated as Deed of Absolute Sale
(Exhibit B) of Lot 5357 executed on April 8, 1988 by the spouses Francisco Cabansag and
Estrella M. Cabansag in favor of the plaintiff[;] and that there exists, too, a document
denominated as Affidavit of [Sale] Adjudication/Settlement of Estate of Antonio Lim Tanhu
with Deed of Sale executed on May 2, 1996 by a certain Lim Sing Chan (Exhibit 1-Cecilio). x x
x.15cralawlawlibrary

The parties also agreed to the following issues:chanRoblesvirtualLawlibrary

1. Whether or not the plaintiff has valid causes of action for quieting of title, declaration of
nullity of documents of sale and tax declarations, reconveyance of title and damages
against the defendants[;]
 2. Whether or not the defendants Leopolda Cecilio and Lim Teck Chuan have valid
counterclaims against the plaintiff; and

3. Whether or not the defendant Lim Teck Chuan has a valid cross-claim against the
defendant Leopolda Cecilio.16

cralawlawlibrary

Thereafter, the pre-trial order was amended such that it should not be considered as established
and stipulated facts that Henry is a fictitious person and that the Deed of Sale of Lot 5357
purportedly executed by Antonio on January 8, 1966 is genuine and authentic since there were
actually no admissions made on these circumstances.17cralawred

In the same Order18 dated July 17, 1999, the RTC denied Serafin’s motion for summary
judgment19 because under the circumstances, there were actually genuine issues of fact to be
resolved and passed upon by the court.

Eventually, the RTC set the initial trial of the case on March 28, 2001.20  However, it was
postponed upon motion of Leopolda’s counsel and upon the manifestation of Serafin’s counsel
that there was an on-going negotiation for an amicable settlement.  For his part, the petitioner’s
counsel manifested that the petitioner was not involved in any negotiation for amicable
settlement.  The scheduled hearing was reset to July 11, 200121 and later to November 12,
2001.22cralawred

On September 20, 2001, Serafin and Leopolda submitted a Joint Motion to Dismiss.23 They
averred that:chanRoblesvirtualLawlibrary

1. That the case at [bench] is filed by the Plaintiff Serafin Uy against the defendants for
“quieting of title, surrender of owner of certificate of title, declaration of nullity of
affidavit of adjudication and sale annulment of tax declaration, and other reliefs
consistent with law, justice and equity[?];ChanRoblesVirtualawlibrary

2. That in the case at bench, Plaintiff Serafin Uy seeks the quieting of title on his right over
Lot 5357 of the Cadastral Survey of Opon situated at Barangay Agus, Lapu-lapu City, in
view of the affidavit of adjudication and Sale dated August 2, 1996 (Annex “F”) of the
Complaint, and Tax Decl. No. 01532 issued in the name of Leopolda Cecilio both of
which documents affected Lot 5357 (Annex G to the
Complaint);ChanRoblesVirtualawlibrary

3. That Plaintiff Serafin Uy and Defendant Leopolda Cecilio have amicably settled their
differences in the case at bench and Def. Leopolda Cecilio has agreed to waive her
counterclaim for damages in the instant case;ChanRoblesVirtualawlibrary

4. That Plaintiff Serafin Uy has already secured a certificate of title to Lot No. 5357 in his
name dated July 26, 2001, and has also agreed for the cancellation of the same, and for
 issuance of a new one, over said Lot 5357, in their common
names;ChanRoblesVirtualawlibrary

5. That whatever claim defendant Lim Teck Chuan may have on said Lot No. 5357, the
same may be ventilated by said defendant in an appropriate independent action that he
may initiate and file[.]

P R A Y E R

WHEREFORE, this Honorable Court is most respectfully prayed and humbly implored to
dismiss the Complaint and the respective counterclaims of the defendants in the case at
bench.24cralawlawlibrary

On October 4, 2001, the petitioner filed his Opposition/Comment25 praying for the denial of the
Joint Motion to Dismiss on the ground of bad faith, and to prohibit Serafin and Leopolda from
undertaking any further transaction involving the subject lot.  The pertinent portion of his
opposition reads as follows:chanRoblesvirtualLawlibrary

1.  That the [petitioner] opposes the ‘Joint Motion to Dismiss’ filed by [Serafin] and [Leopolda]
on the grounds:

1.1 that there [is] BAD FAITH on the part of [Serafin] and [Leopolda];
1.2. That the [petitioner] was not involved in any amicable settlements between [Serafin]
and [Leopolda] because both [Serafin] and [Leopolda] connived to MISLEAD this
Honorable Court and to DEFRAUD the estate of [Antonio];
1.3. That the [petitioner] has valid counterclaims against [Serafin] for moral damages of P
5,000,000[.00]; exemplary damages of P 1,200,000[.00]; and Attorney’s fees of P
50,000[.00]; on the ground that [Serafin] maliciously and deliberately presented to this
Honorable Court the FALSIFIED AND FICTITIOUS ‘deed of sale’ PURPORTEDLY
executed by [Antonio] in favor of [Francisco];
1.4. That the [petitioner] has valid cross[-]claims against Cross-defendants Lim Sing Chan
alias Henry Lim whose real name is Henry Lim Ormoc, and [Leopolda] for moral
damages of P 5,000,000[.00] each, attorney’s fees of P 50,000[.00] each, and
exemplary damages of P 1,000,000[.00] for [Henry] and P 1,600,000[.00] for
[Leopolda] because [Henry] and [Leopolda] connived with each other to defraud the
estate of [Antonio] on the ground that [Henry] MISREPRESENTED himself as an heir
of [Antonio] while [Leopolda] has KNOWLEDGE of such MISREPRESENTATION;
1.5. That the [petitioner] manifest[s] to this Honorable Court of his preference that the
above-counterclaims and cross-claims be resolved in the present case[.]26
cralawlawlibrary

The petitioner further averred that the transfer of Antonio’s title under TCT No. T-0500 in the
name of Serafin is irregular and illegal since the true owner’s copy of TCT No. T-0500 remained
in his possession.

Henry continued to remain silent.

On October 10, 2001, Serafin filed his Reply27 to the comment/opposition of the petitioner.  He
substantially averred that:

1. With the end in view of registering Lot 5357 in his name, he instituted the instant case
due to the existence of certain documents affecting his title thereto, namely:
Henry’s Affidavit of Self-Adjudication with Deed of Sale dated August 2, 1996 naming
Leopolda as the buyer, and Tax Declaration No. 01532 issued in the name of the
latter;ChanRoblesVirtualawlibrary

2. Under his Affidavit of Self-Adjudication, Henry already transferred whatever right and

interest he had on the subject lot to Leopolda.  On the other hand, by reason of the
amicable settlement between him (Serafin) and Leopolda, the latter waived and
abandoned all her rights to Lot 5357.  Ergo, as far as Leopolda is concerned, her waiver
negated all the legal consequences of Tax Declaration No. 01532 and Henry’s Affidavit
of Self-Adjudication.  Since the same were the very documents that cast clouds on his
(Serafin) title over Lot 5357, his main causes of action in the case at bench had become
moot and academic as his title to the said lot had been
quieted;ChanRoblesVirtualawlibrary

3. The petitioner was impleaded because of the following points: a) he alleged that he is one
of the heirs of the late Antonio; b) he contested the claim of Henry that the latter is the
only surviving heir of said decedent, and prayed upon the court to declare Henry as an
impostor; and c) he challenged the genuineness and due execution of the deed of absolute
sale between Antonio and Spouses Cabansag;ChanRoblesVirtualawlibrary

4. Aside from his claim for damages, the petitioner’s counterclaim sought the nullification
of the Deed of Absolute Sale dated January 8, 1966 between Antonio and Spouses
Cabansag which required the impleading of persons who were not parties in the case. 
These persons included Spouses Cabansag who was indispensable party to any action for
the annulment of the deed which was executed in their favor. However, to implead the
said persons, there was a need to summon them so that the court can acquire jurisdiction
over them - and in order that they can be summoned, there was a need for the petitioner
to file a formal complaint against them;ChanRoblesVirtualawlibrary

5. Moreover, the cross-claim of the petitioner against Henry can also be resolved in a
separate action for the declaration of the true heirs of Antonio wherein all the heirs of the
latter will be impleaded, and where the petitioner can prove that he was indeed one of the
heirs of said decedent – especially so that there is yet no judicial or extra-judicial
declaration as to who were Antonio’s heirs;ChanRoblesVirtualawlibrary

6. The dismissal of the case will not affect the rights of the petitioner because whatever
claim he had on the subject lot and against any party may be ventilated in an appropriate
and separate action.

On November 6, 2001, the petitioner, through counsel, filed his Motion to Implead

Indispensable Parties and Supplemental Opposition to Joint Motion to Dismiss.28  Invoking
Section 1129 of Rule 3 of the Rules of Court, the petitioner averred that there is a need to implead
Spouses Cabansag in order that a final determination of all the issues could be had in the case.

Acting on the Joint Motion to Dismiss, the RTC issued the assailed Order30 dated April 25, 2002
granting the same and denying the petitioner’s motion to implead Spouses Cabansag.  The order
is quoted as follows:chanRoblesvirtualLawlibrary

Going over the arguments of the parties, the Court finds the arguments of the movants as
tenable.  For what is the use of so continuously litigating this case when [Serafin] admits and
confirms that the principal reliefs he prayed for have already been met or satisfied as his title to
the property in question has already been quieted with him having “already secured a certificate
of title to Lot No. 5357 in his name dated July 26, 2001, and has also agreed for the cancellation
of the same, and for the issuance of a new one, over said Lot 5357, in their common names.”  In
fact, even without said reliefs having been met or satisfied, nobody, not even the courts of
justice, can compel a party-litigant in a civil action like [Serafin] to so continuously litigate his
case if he does not want to anymore.

Finding therefore, the subject motion to dismiss to be proper and in order, this case is ordered
dismissed so with the respective counterclaims of the defendants.  Considering however, that
[the petitioner] is not a party and even opposed the subject motion to dismiss, the dismissal of his
counterclaims and cross-claim is without prejudice to give him his day in court.  And with this
pronouncement of dismissal, the motion to implead indispensable parties of [the petitioner]
becomes moot and academic and therefore is denied.31cralawlawlibrary

On May 30, 2002, the petitioner filed a Motion for Reconsideration32 which was denied in the
Order33 dated October 21, 2002.

Aggrieved, the petitioner went up to this Court via a petition for review on certiorari under Rule
45 raising the lone assignment of error that:chanRoblesvirtualLawlibrary

THE LOWER COURT ERRED IN DISMISSING CIVIL CASE 4786-L UPON A JOINT
MOTION TO DISMISS FILED BY THE RESPONDENTS WHO ARE PLAINTIFF AND ONE
OF THE DEFENDANTS, RESPECTIVELY, IN THE AFOREMENTIONED CASE DESPITE
THE OPPOSITION BY HEREIN PETITIONER AND THE MANIFESTATION OF THE
LATTER OF HIS PREFERENCE MADE WITHIN FIFTEEN (15) DAYS FROM THE JOINT
MOTION TO DISMISS, TO HAVE HIS COUNTERCLAIM, AS WELL AS HIS CROSS-
CLAIM, PROSECUTED IN THE SAME ACTION, IN ACCORDANCE WITH SECTION 2,
RULE 17 OF THE 1997 RULES OF CIVIL PROCEDURE.34cralawlawlibrary

The petitioner faults the RTC for dismissing the case in its entirety in spite of his counterclaim
and cross-claim.  He asserts that within 15 days from notice of the filing of the joint motion to
dismiss, he filed his opposition thereto and expressed his preference to have
his counterclaim and cross-claim be resolved in the same action.  Therefore, pursuant to the
provisions of Section 2, Rule 17 of the Rules of Court, his timely expression of such preference
should be enough for the trial court not to dismiss the case in its entirety, and to limit its action to
the dismissal of the complaint.
Preliminarily, the respondents question the petitioner’s recourse to this Court in filing the instant
petition alleging that no appeal may be taken from an order of the RTC dismissing an action
without prejudice.35  Nonetheless, the Rules of Court do not prohibit any of the parties from
filing a Rule 45 petition with this Court in case only questions of law are raised or involved.36 
In Bukidnon Doctors’ Hospital, Inc. v. Metropolitan Bank & Trust Co.,37 the Court explained
that:chanRoblesvirtualLawlibrary

Section 2(c), Rule 41 of the Rules of Court categorically provides that in all cases where only
questions of law are raised, the appeal from a decision or order of the Regional Trial Court shall
be to the Supreme Court by petition for review on certiorari in accordance with Rule 45. Section
2(c) of Rule 41 of the Rules of Court reads:

SEC. 2. Modes of appeal. –

(a) Ordinary appeal. – The appeal to the Court of Appeals in cases decided by the Regional Trial
Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the
court which rendered the judgment or final order appealed from and serving a copy thereof upon
the adverse party.  No record on appeal shall be required except in special proceedings and other
cases of multiple or separate appeals where the law or these Rules so require.  In such cases, the
record on appeal shall be filed and served in like manner.

(b) Petition for review. – The appeal to the Court of Appeals in cases decided by the Regional
Trial Court in the exercise of its appellate jurisdiction shall be by petition for review in
accordance with Rule 42.

(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.cralawlawlibrary

Section 1 of Rule 45 provides:

SECTION 1. Filing of petition with Supreme Court. – A party desiring to appeal by certiorari
from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the
Regional Trial Court or other courts whenever authorized by law, may file with the Supreme
Court a verified petition for review on certiorari.  The petition shall raise only questions of law
which must be distinctly set forth.
A question of law exists when the doubt or controversy concerns the correct application of law or
jurisprudence to a certain set of facts; or when the issue does not call for an examination of the
probative value of the evidence presented, the truth or falsehood of facts being admitted.  A
question of fact exists when the doubt or difference arises as to the truth or falsehood of facts or
when the query invites calibration of the whole evidence considering mainly the credibility of the
witnesses, the existence and relevancy of specific surrounding circumstances, as well as their
relation to each other and to the whole, and the probability of the situation.38 (Citation
omitted)cralawlawlibrary

Considering that the issue in the instant case is clearly one of law as it calls for the correct
application of the Rules of Court, the petitioner’s direct resort to this Court is proper.
The Court now looks into the propriety of the order of the RTC in dismissing the case.  Needless
to state, the Court is again confronted with the issue of whether the dismissal of the complaint,
specifically upon motion of the plaintiff under Section 2 of Rule 17 of the Rules of Court also
calls for the dismissal of the defendant’s counterclaim, as in the case at bar.

Rule 17 of the Rules of Civil Procedure provides the following:chanRoblesvirtualLawlibrary

SECTION 1. Dismissal upon notice by plaintiff. – A complaint may be dismissed by the plaintiff
by filing a notice of dismissal at any time before service of the answer or of a motion for
summary judgment. Upon such notice being filed, the court shall issue an order confirming the
dismissal.  Unless otherwise stated in the notice, the dismissal is without prejudice, except that a
notice operates as an adjudication upon the merits when filed by a plaintiff who has once
dismissed in a competent court an action based on or including the same claim.

SECTION 2. Dismissal upon motion of plaintiff. – Except as provided in the preceding section, a
complaint shall not be dismissed at the plaintiff’s instance save upon approval of the court and
upon such terms and conditions as the court deems proper.  If a counterclaim has been pleaded
by a defendant prior to the service upon him of the plaintiff’s motion for dismissal, the dismissal
shall be limited to the complaint.  The dismissal shall be without prejudice to the right of the
defendant to prosecute his counterclaim in a separate action unless within fifteen (15) days from
notice of the motion he manifests his preference to have his counterclaim resolved in the same
action.  Unless otherwise specified in the order, a dismissal under this paragraph shall be without
prejudice.  A class suit shall not be dismissed or compromised without the approval of the court.

SECTION 3. Dismissal due to fault of plaintiff. – If, for no justifiable cause, the plaintiff fails to
appear on the date of the presentation of his evidence in chief on the complaint, or to prosecute
his action for an unreasonable length of time, or to comply with these Rules or any order of the
court, the complaint may be dismissed upon motion of the defendant or upon the court’s own
motion, without prejudice to the right of the defendant to prosecute his counterclaim in the same
or in a separate action.  This dismissal shall have the effect of an adjudication upon the merits,
unless otherwise declared by the court.

SECTION 4.  Dismissal of counterclaim, cross-claim, or third-party complaint. – The provisions

of this Rule shall apply to the dismissal of any counterclaim, cross-claim, or third-party
complaint.  A voluntary dismissal by the claimant by notice as in Section 1 of this Rule, shall be
made before a responsive pleading or a motion for summary judgment is served or, if there is
none, before the introduction of evidence at the trial or hearing.cralawlawlibrary

The RTC granted the Joint Motion to Dismiss upon the behest of Serafin, the plaintiff therein on
the main ground that the case had become moot and academic since his title to Lot 5357 had
been allegedly quieted and the reliefs prayed for were obtained.  In the Order dated October 21,
2002 denying the motion for reconsideration, the RTC elucidated
that:chanRoblesvirtualLawlibrary

The Court in issuing the dismissal order dated April 25, 2002 had already made its position on
the matter very clearly such that it finds no reason to disturb the subject order.  As clarified, a
party-litigant in a civil action like the plaintiff herein, cannot be compelled to so continuously
litigate his case if he does not want to anymore as was obtaining in this case.  More so that the
principal reliefs prayed for in the complaint had already been served as was so admitted by the
plaintiff.  Being so, this Court finds it repugnant to go on with the hearing of movant’s-
defendant’s counterclaim for what is to be countered by the movant when the claim of the
plaintiff, at his own instance, had already been dismissed it having been served and satisfied as
aforestated.  And this is so because what is contemplated under the Rules authorizing the hearing
of defendant’s counterclaim is when the dismissal is not at the instance of the
plaintiff.39cralawlawlibrary

As can be gleaned from the assailed orders, the RTC erred when it dismissed the case when the
present rules state that the dismissal shall be limited only to the complaint.  A dismissal of an
action is different from a mere dismissal of the complaint.  For this reason, since only the
complaint and not the action is dismissed, the defendant in spite of said dismissal may still
prosecute his counterclaim in the same action.40  The case of Pinga v. Heirs of German
Santiago41 is quite instructive which this Court finds worth reiterating.  In Pinga, the Court
clearly stated that the dismissal of the complaint does not necessarily result to the dismissal of
the counterclaim, abandoning the rulings in Metals Engineering Resources Corporation v. Court
of Appeals,42International Container Terminal Services, Inc. v. Court of Appeals,43 and BA
Finance Corporation v. Co.44  The Court held that:chanRoblesvirtualLawlibrary

At present, even Section 2, concerning dismissals on motion of the plaintiff, now recognizes the
right of the defendant to prosecute the counterclaim either in the same or separate action
notwithstanding the dismissal of the complaint, and without regard as to the permissive or
compulsory nature of the counterclaim.

In his commentaries on the 1997 Rules of Civil Procedure, Justice Regalado expounds on the
effects of the amendments to Section 2 and 3 of Rule 17:
2.  Under this revised section 2, where the plaintiff moves for the dismissal of his complaint to
which a counterclaim has been interposed, the dismissal shall be limited to the complaint. Such
dismissal shall be without prejudice to the right of the defendant to either prosecute his
counterclaim in a separate action or to have the same resolved in the same action. Should he opt
for the first alternative, the court should render the corresponding order granting and reserving
his right to prosecute his claim in a separate complaint. Should he choose to have his
counterclaim disposed of in the same action wherein the complaint had been dismissed, he must
manifest such preference to the trial court within 15 days from notice to him of plaintiff’s motion
to dismiss.  These alternative remedies of the defendant are available to him regardless of
whether  his  counterclaim  is  compulsory  or  permissive.  x x x.45  (Italics in the original)
cralawlawlibrary

In the instant case, the petitioner’s preference to have his counterclaim (and cross-claims) be
prosecuted in the same action was timely manifested. The records show that Serafin and
Leopolda furnished the petitioner’s counsel with a copy of their Joint Motion to Dismiss by
posting it (via registered mail) on September 19, 2001.46  Said motion was filed in court the
following day.47 On October 4, 2001, the petitioner filed
his Opposition/Comment thereto.48 Copies of the said opposition were personally served upon the
opposing parties on the same date.49  In paragraph 1.550 of said opposition, the petitioner
expressed his preference to have his counterclaim and cross-claim prosecuted in the same case,
as he thus stated:chanRoblesvirtualLawlibrary

1.5 That the undersigned defendant manifest to this Honorable Court of his preference that the
above[ ]counterclaims and cross-claims be resolved in the present case.51
cralawlawlibrary

There are valid reasons why the petitioner vehemently objected to the dismissal of the case upon
the joint motion of Serafin and Leopolda and insisted to have his counterclaim prosecuted in the
same action.

Serafin instituted the instant case due to the existence of certain documents affecting his title,
namely: Henry’s Affidavit of Self-Adjudication with Deed of Sale which names Leopolda as the
buyer; and Tax Declaration No. 01532 which was issued in the name of the latter.  In his
Affidavit of Self-Adjudication, Henry transferred whatever right and interest he had on the
subject lot to Leopolda.  Subsequently, by reason of the amicable settlement between Serafin and
Leopolda, the latter waived and abandoned all her rights to Lot 5357.

On the other hand, the petitioner asserts that the subject property was never transferred nor
encumbered to any person during Antonio’s lifetime.  He insists that the deed of sale in favor of
Spouses Cabansag is simulated and spurious, and was intended to defraud the estate of Antonio. 
Further, he asserts that said Spouses Cabansag are mere creations of Serafin.

Forthwith, the foregoing contentions touch on the very merits of the case which this Court is not
prepared to rule upon for want of sufficient factual basis since this case was dismissed by the
RTC even before the parties were able to present their evidence on the merits.  Nonetheless, the
records show that Serafin had been aware of the petitioner’s claim over the property as
descendants of Antonio and Dy Ochay even before the institution of this case, which was why he
impleaded the petitioner in this case. Then, the Joint Motion to Dismiss was filed by Serafin and
Leopolda on the ground that both parties were able to settle their differences.  It is rather
intriguing that in said joint motion, it was alleged that Serafin was already able to secure a
certificate of title in his name dated July 26, 2001 and that both parties agreed for its cancellation
and have a title over said property issued in their common names.52  Clearly, the petitioner was
peremptorily left out of the picture.  From the case’s inception, the petitioner’s interests and that
of his siblings over the subject property were vigilantly defended as evidenced by the numerous
and exchange of pleadings made by the parties.  It can not therefore be denied that the petitioner
has certainly valid defenses and enforceable claims against the respondents for being dragged
into this case.  Thus, the petitioner’s manifestation of his preference to have his counterclaim
prosecuted in the same action is valid and in accordance with Section 2, Rule 17 of the Rules of
Court.

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED.  The Orders

dated April 25, 2002 and October 21, 2002 of the Regional Trial Court of Lapu-lapu City,
Branch 27 in Civil Case No. 4786-L are MODIFIED in that the counterclaim of Lim Teck
Chuan as defendant in Civil Case No. 4786-L is REINSTATED.  The Regional Trial Court
is ORDERED to hear and decide Lim Teck Chuan’s counterclaim with dispatch.
SO ORDERED.cra

G.R. No. 175507               October 8, 2014

RAMON CHING AND POWING PROPERTIES, INC., Petitioners,

vs.
JOSEPH CHENG, JAIME CHENG, MERCEDES IGNE1 AND LUCINA
SANTOS, Respondents.

DECISION

LEONEN, J.:

Rule 17 of the Rules of Civil Procedure governs dismissals of actions at the instance of the
plaintiff. Hence, the "two-dismissal rule" under Rule 17, Section 1 of the Rules of Civil
Procedure will not apply if the prior dismissal was done at the instance of the defendant.

This is a petition for review on certiorari assailing the decision2 and resolution3 of the Court of
Appeals in CA-G.R. SP. No. 86818, which upheld the (1) order4 dated November 22, 2002
dismissing Civil Case No. 02-103319 without prejudice, and (2) the omnibus order5 dated July
30, 2004, which denied petitioners’ motion for reconsideration. Both orders were issued by the
Regional Trial Court of Manila, Branch 6.6

The issues before this court are procedural. However, the factual antecedents in this case, which
stemmed from a complicated family feud, must be stated to give context to its procedural
development.

It is alleged that Antonio Ching owned several businesses and properties, among which was Po
Wing Properties, Incorporated (Po Wing Properties).7 His total assets are alleged to have been
worth more than 380 million.8 It is also alleged that whilehe was unmarried, he had children
from two women.9

Ramon Ching alleged that he was the only child of Antonio Ching with his common-law wife,
Lucina Santos.10 She, however, disputed this. She maintains that even ifRamon Ching’s birth
certificate indicates that he was Antonio Ching’s illegitimate child, she and Antonio Ching
merely adopted him and treated him like their own.11

Joseph Cheng and Jaime Cheng, on the other hand, claim to be Antonio Ching’s illegitimate
children with his housemaid, Mercedes Igne.12 While Ramon Ching disputed this,13 both
Mercedes and Lucina have not.14

Lucina Santos alleged that when Antonio Ching fell ill sometime in 1996, he entrusted her with
the distribution of his estate to his heirs if something were to happen to him. She alleged that she
handed all the property titles and business documents to Ramon Ching for
safekeeping.15 Fortunately, Antonio Ching recovered from illness and allegedly demanded that
Ramon Ching return all the titles to the properties and business documents.16

On July 18, 1996, Antonio Ching was murdered.17 Ramon Ching allegedly induced Mercedes
Igne and her children, Joseph Cheng and Jaime Cheng, to sign an agreement and waiver18 to
Antonio Ching’s estate in consideration of ₱22.5 million. Mercedes Igne’s children alleged that
Ramon Ching never paid them.19 On October 29, 1996, Ramon Ching allegedly executed an
affidavit of settlement of estate,20 naming himself as the sole heir and adjudicating upon himself
the entirety of Antonio Ching’s estate.21

Ramon Ching denied these allegationsand insisted that when Antonio Ching died, the Ching
family association, headed by Vicente Cheng, unduly influenced him to give Mercedes Igne and
her children financial aid considering that they served Antonio Ching for years. It was for this
reason that an agreement and waiver in consideration of 22.5 million was made. He also alleged
that hewas summoned by the family association to execute an affidavit of settlement of estate
declaring him to be Antonio Ching’s sole heir.22

After a year of investigating Antonio Ching’s death, the police found Ramon Ching to be its
primary suspect.23 Information24 was filed against him, and a warrant of arrest25 was issued.

On October 7, 1998, Joseph Cheng, Jaime Cheng, and Mercedes Igne (the Chengs) filed a
complaint for declaration of nullity of titles against Ramon Ching before the Regional Trial
Court of Manila. This case was docketed as Civil Case No. 98-91046 (the first case).26

On March 22, 1999, the complaint was amended, with leave of court, to implead additional
defendants, including Po Wing Properties, of which Ramon Ching was a primary
stockholder.The amended complaint was for "Annulment of Agreement, Waiver, Extra-Judicial
Settlement of Estate and the Certificates of Title Issued by Virtue of Said Documents with Prayer
for Temporary Restraining Order and Writ of Preliminary Injunction."27 Sometime after, Lucina
Santos filed a motion for intervention and was allowed to intervene.28

After the responsive pleadings had been filed, Po Wing Properties filed a motion to dismiss on
the ground of lack of jurisdiction of the subject matter.29

On November 13, 2001, the Regional Trial Court of Manila, Branch 6, granted the motion to
dismiss on the ground of lack of jurisdiction over the subject matter.30 Upon motion of the
Chengs’ counsel, however, the Chengs and Lucina Santos were given fifteen (15) days to file the
appropriate pleading. They did not do so.31

On April 19, 2002, the Chengs and Lucina Santos filed a complaint for "Annulment of
Agreement, Waiver, Extra-Judicial Settlement of Estate and the Certificates of Title Issued by
Virtue of Said Documents with Prayer for Temporary Restraining Order and Writ of Preliminary
Injunction" against Ramon Ching and Po Wing Properties.32 This case was docketed as Civil
Case No. 02-103319 (the second case) and raffled to Branch 20 of the Regional Trial Court of
Manila.33 When Branch 20 was made aware of the first case, it issued an order transferring the
case to Branch 6, considering that the case before it involved substantially the same parties and
causes of action.34

On November 11, 2002, the Chengs and Lucina Santos filed a motion to dismiss their complaint
in the second case, praying that it be dismissed without prejudice.35

On November 22, 2002, Branch 6 issued an order granting the motion to dismiss on the basis
that the summons had not yet been served on Ramon Ching and Po Wing Properties, and they
had not yet filed any responsive pleading. The dismissal of the second case was made without
prejudice.36

On December 9, 2002, Ramon Ching and Po Wing Properties filed a motion for reconsideration
of the order dated November 22, 2002. They argue that the dismissal should have been with
prejudice under the "two dismissal rule" of Rule 17, Section 1 of the 1997 Rules of Civil
Procedure, in view of the previous dismissal of the first case.37

During the pendency of the motion for reconsideration, the Chengs and Lucina Santos filed a
complaint for "Disinheritance and Declaration of Nullity of Agreement and Waiver, Affidavit of
Extra judicial Agreement, Deed of Absolute Sale, and Transfer Certificates of Title with Prayer
for TRO and Writ of Preliminary Injunction" against Ramon Ching and Po Wing Properties. This
case was docketed as Civil Case No. 02-105251(the third case) and was eventually raffled to
Branch 6.38

On December 10, 2002, Ramon Ching and Po Wing Properties filed their comment/opposition to
the application for temporary restraining order in the third case. They also filed a motion to
dismiss on the ground of res judicata, litis pendencia, forum-shopping, and failure of the
complaint to state a cause of action. A series of responsive pleadings were filed by both parties.39

On July 30, 2004, Branch 6 issued an omnibus order40 resolving both the motion for
reconsideration in the second case and the motion to dismiss in the third case. The trial court
denied the motion for reconsideration and the motion to dismiss, holding that the dismissal of the
second case was without prejudice and, hence, would not bar the filing of the third case.41 On
October 8, 2004, while their motion for reconsideration in the third case was pending, Ramon
Ching and Po Wing Properties filed a petition for certiorari (the first certiorari case) with the
Court of Appeals, assailing the order dated November 22,2002 and the portion of the omnibus
order dated July 30, 2004, which upheldthe dismissal of the second case.42

On December 28, 2004, the trial court issued an order denying the motion for reconsideration in
the third case. The denial prompted Ramon Ching and Po Wing Properties to file a petition for
certiorari and prohibition with application for a writ of preliminary injunction or the issuance of
a temporary restraining order (the second certiorari case) with the Court of Appeals.43

On March 23, 2006, the Court of Appeals rendered the decision44 in the first certiorari case
dismissing the petition. The appellate court ruled that Ramon Ching and Po Wing Properties’
reliance on the "two-dismissal rule" was misplaced since the rule involves two motions for
dismissals filed by the plaintiff only. In this case, it found that the dismissal of the first case was
upon the motion of the defendants, while the dismissal of the second case was at the instance of
the plaintiffs.45

Upon the denial of their motion for reconsideration,46 Ramon Ching and Po Wing Properties filed
this present petition for review47 under Rule 45 of the Rules of Civil Procedure.

Ramon Ching and Po Wing Properties argue that the dismissal of the second case was with
prejudice since the non-filing of an amended complaint in the first case operated as a dismissal
on the merits.48 They also argue that the second case should be dismissed on the ground of res
judicata since there was a previous final judgment of the first case involving the same parties,
subject matter, and cause of action.49

Lucina Santos was able to file a comment50 on the petition within the period required.51 The
Chengs, however, did not comply.52 Upon the issuance by this court of a show cause order on
September 24, 2007,53 they eventually filed a comment with substantially the same allegations
and arguments as that of Lucina Santos’.54

In their comment, respondents allege that when the trial court granted the motion to dismiss,
Ramon Ching’s counsel was notified in open court that the dismissal was without prejudice.
They argue that the trial court’s order became final and executory whenhe failed to file his
motion for reconsideration within the reglementary period.55

Respondents argue that the petition for review should be dismissed on the ground of forum
shopping and litis pendencia since Ramon Ching and Po Wing Properties are seeking relief
simultaneously in two forums by filing the two petitions for certiorari, which involved the same
omnibus order by the trial court.56 They also argue that the "two-dismissal rule" and res judicata
did not apply since (1) the failure to amend a complaint is not a dismissal, and (2) they only
moved for dismissal once in the second case.57

In their reply,58 petitioners argue that they did not commit forum shopping since the actions they
commenced against respondents stemmed from the complaints filed against them in the trial
courts.59 They reiterate that their petition for review is only about the second case; it just so
happened that the assailed omnibus order resolved both the second and third cases.60

Upon the filing of the parties’ respective memoranda,61 the case was submitted for decision.62

For this court’s resolution are the following issues:

I. Whether the trial court’s dismissal of the second case operated as a bar to the filing of a
third case, asper the "two-dismissal rule"; and

II. Whether respondents committed forum shopping when they filed the third case while
the motion for reconsideration of the second case was still pending.

The petition is denied.

The "two-dismissal rule" vis-à-vis

the Rules of Civil Procedure

Dismissals of actions are governed by Rule 17 of the 1997 Rules of Civil Procedure. The
pertinent provisions state:

RULE 17
DISMISSAL OF ACTIONS

SEC. 1. Dismissal upon notice by plaintiff. — A complaint may be dismissed by the plaintiff by
filing a notice of dismissal at any time before service of the answer or of a motion for summary
judgment. Upon such notice being filed, the court shall issue an order confirming the dismissal.
Unless otherwise stated in the notice, the dismissal is without prejudice, except that a notice
operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in a
competent court an action based on or including the same claim.

SEC. 2. Dismissal upon motion of plaintiff. — Except as provided in the preceding section, a
complaint shall not be dismissed at the plaintiff's instance save upon approval of the court and
upon such terms and conditions as the court deems proper. If a counterclaim has been pleaded by
a defendant prior to the service upon him of the plaintiff’s motion for dismissal, the dismissal
shall be limited to the complaint. The dismissal shall be without prejudice to the right of the
defendant to prosecute his counterclaim in a separate action unless within fifteen (15) days from
notice of the motion he manifests his preference to have his counterclaim resolved in the same
action. Unless otherwise specified in the order, a dismissal under this paragraph shall be without
prejudice. A class suit shall not be dismissed or compromised without the approval of the court.

SEC. 3. Dismissal due to fault of plaintiff. — If, for no justifiable cause, the plaintiff fails to
appear on the date of the presentation of his evidence in chief on the complaint, or to prosecute
his action for an unreasonable length of time, or to comply with these Rules or any order of the
court, the complaint may be dismissed upon motion of the defendant or upon the court's own
motion, without prejudice to the right of the defendant to prosecute his counterclaim in the same
or in a separate action. This dismissal shall have the effect of an adjudication upon the merits,
unless otherwise declared by the court. (Emphasis supplied)

The first section of the rule contemplates a situation where a plaintiff requests the dismissal of
the case beforeany responsive pleadings have been filed by the defendant. It is donethrough
notice by the plaintiff and confirmation by the court. The dismissal is without prejudice unless
otherwise declared by the court.

The second section of the rule contemplates a situation where a counterclaim has been pleaded
by the defendant before the service on him or her of the plaintiff’s motion to dismiss. It requires
leave of court, and the dismissal is generally without prejudice unless otherwise declared by the
court.
The third section contemplates dismissals due to the fault of the plaintiff such as the failure to
prosecute. The case is dismissed either upon motion of the defendant or by the court motu
propio. Generally, the dismissal is with prejudice unless otherwise declared by the court.

In all instances, Rule 17 governs dismissals at the instance of the plaintiff, not of the defendant.
Dismissals upon the instance of the defendant are generally governed by Rule 16, which covers
motions to dismiss.63

In Insular Veneer, Inc. v. Hon. Plan,64 Consolidated Logging and Lumber Mills filed a complaint
against Insular Veneer to recover some logs the former had delivered to the latter. It also filed ex
partea motion for issuance of a restraining order. The complaint and motion were filed in a trial
court in Isabela.65

The trial court granted the motion and treated the restraining order as a writ of preliminary
injunction. When Consolidated Logging recovered the logs, it filed a notice of dismissal under
Rule 17, Section 1 of the 1964 Rules of Civil Procedure.66

While the action on its notice for dismissal was pending, Consolidated Logging filed the same
complaint against Insular Veneer, this time in a trial court in Manila. It did not mention any
previous action pending in the Isabela court.67

The Manila court eventually dismissed the complaint due to the nonappearance of Consolidated
Logging’s counsel during pre-trial. Consolidated Logging subsequently returned to the Isabela
court to revive the same complaint. The Isabela court apparently treated the filing of the
amended complaint as a withdrawal of its notice of dismissal.68

Insular Veneer also filed in the Isabela court a motion to dismiss, arguing that the dismissal by
the Manila court constituted res judicataover the case. The Isabela court, presided over by Judge
Plan, denied the motion to dismiss. The dismissal was the subject of the petition for certiorari
and mandamus with this court.69

This court stated that:

In resolving that issue, we are confronted with the unarguable fact that Consolidated Logging on
its volition dismissed its action for damages and injunction in the Isabela court and refiled
substantially the same action in the Manila court. Then, when the Manila court dismissed its
action for failure to prosecute, it went hack [sic] to the Isabela court and revived its old action by
means of an amended complaint.

Consolidated Logging would liketo forget the Manila case, consign it to oblivion as if it were a
bad dream, and prosecute its amended complaint in the Isabela court as if nothing had transpired
in the Manila court. We hold that it cannot elude the effects of its conduct in junking the Isabela
case and in giving that case a reincarnation in the Manila court.

Consolidated Logging’ [sic] filed a new case in Manila at its own risk. Its lawyer at his peril
failed toappear at the pre-trial.70
This court ruled that the filing of the amended complaint in the Isabela court was barred by the
prior dismissal of the Manila court, stating that:

The provision in section 1(e), Rule 16 of the Rules of Court that an action may be dismissed
because "there is another action pending between the same parties for the same cause"
presupposes that two similar actions are simultaneously pending in two different Courts of First
Instance. Lis pendensas a ground for a motion to dismiss has the same requisites as the plea of
res judicata.

On the other hand, when a pleading is amended, the original pleading is deemed abandoned. The
original ceases to perform any further function as a pleading. The case stands for trial on the
amended pleading only. So, when Consolidated Logging filed its amended complaint dated
March 16, 1970 in Civil Case No. 2158, the prior dismissal order dated January 5, 1970 in the
Manila case could he [sic] interposed in the Isabela court to support the defense of res judicata.71

As a general rule, dismissals under Section 1 of Rule 17 are without prejudice except when it is
the second time that the plaintiff caused its dismissal. Accordingly, for a dismissal to operate as
an adjudication upon the merits, i.e, with prejudice to the re-filing of the same claim, the
following requisites must be present:

(1) There was a previous case that was dismissed by a competent court;

(2) Both cases were based on or include the same claim;

(3) Both notices for dismissal werefiled by the plaintiff; and

(4) When the motion to dismiss filed by the plaintiff was consented to by the defendant
on the ground that the latter paid and satisfied all the claims of the former.72

The purpose of the "two-dismissal rule" is "to avoid vexatious litigation."73 When a complaint is
dismissed a second time, the plaintiff is now barred from seeking relief on the same claim.

The dismissal of the second case was without prejudice in view of the "two-dismissal rule"

Here, the first case was filed as an ordinary civil action. It was later amended to include not only
new defendants but new causes of action that should have been adjudicated in a special
proceeding. A motion to dismiss was inevitably filed by the defendants onthe ground of lack of
jurisdiction.

The trial court granted that motion to dismiss, stating that:

A careful perusal of the allegations of the Amended Complaint dated February 10, 1999, filed by
Plaintiff Joseph Cheng, show that additional causes of action were incorporated i.e. extra-judicial
settlement of the intestate estate of Antonio Ching and receivership, subject matters, which
should be threshed out in a special proceedings case. This is a clear departure from the main
cause of action in the original complaint which is for declaration of nullity of certificate of titles
with damages. And the rules of procedure which govern special proceedings case are different
and distinct from the rules of procedure applicable in an ordinary civil action.

In view of the afore-going, the court finds the Motion to Dismiss filed by Atty. Maria Lina Nieva
S. Casals to be meritorious and the Court is left with no alternative but to dismiss as it hereby
dismisses the Amended Complaint.

However, on motion of Atty. Mirardo Arroyo Obias, counsel for the plaintiffs, he is given a
period of fifteen (15) days from today, within which to file an appropriate pleading, copy
furnished to all the parties concerned.

....

SO ORDERED.74

Petitioners are of the view that when Atty. Mirardo Arroyo Obias failed to file the appropriate
pleading within fifteen (15) days, he violated the order of the court. This, they argue, made the
original dismissal an adjudication upon the merits, in accordance with Rule 17, Section 3, i.e., a
dismissal through the default of the plaintiff. Hence, they argue that when respondents filed the
second case and then caused its dismissal, the dismissal should have been with prejudice
according to Rule 17, Section 1, i.e., two dismissals caused by the plaintiff on the same claim.
Unfortunately, petitioners’ theory is erroneous.

The trial court dismissed the first case by granting the motion to dismiss filed by the defendants.
When it allowed Atty. Mirardo Arroyo Obias a period of fifteen (15) days tofile an appropriate
pleading, it was merely acquiescing to a request made bythe plaintiff’s counsel that had no
bearing on the dismissal of the case.

Under Rule 17, Section 3, a defendant may move to dismiss the case if the plaintiff defaults; it
does not contemplate a situation where the dismissal was due to lack of jurisdiction. Since there
was already a dismissal prior to plaintiff’s default, the trial court’s instruction to file the
appropriate pleading will not reverse the dismissal. If the plaintiff fails to file the appropriate
pleading, the trial court does not dismiss the case anew; the order dismissing the case still stands.

The dismissal of the first case was done at the instance of the defendant under Rule 16, Section
1(b) of the Rules of Civil Procedure, which states:

SECTION 1. Grounds.— Within the time for but before filing the answer to the complaint or
pleading asserting a claim, a motion to dismiss may be made on any of the following grounds:

....

(b) That the court has no jurisdiction over the subject matter of the claim;

....
Under Section 5 of the same rule,75 a party may re-file the same action or claim subject to certain
exceptions.

Thus, when respondents filed the second case, they were merely refiling the same claim that had
been previously dismissed on the basis of lack of jurisdiction. When they moved to dismiss the
second case, the motion to dismiss can be considered as the first dismissal at the plaintiff’s
instance.

Petitioners do not deny that the second dismissal was requested by respondents before the service
of any responsive pleadings. Accordingly, the dismissal at this instance is a matter of right that is
not subject to the trial court’s discretion. In O.B. Jovenir Construction and Development
Corporation v. Macamir Realty and Development Corporation:76

[T]he trial court has no discretion or option to deny the motion, since dismissal by the plaintiff
under Section 1, Rule 17 is guaranteed as a matter of right to the plaintiffs. Even if the motion
cites the most ridiculous of grounds for dismissal, the trial court has no choice but to consider the
complaint as dismissed, since the plaintiff may opt for such dismissal as a matter of right,
regardless of ground.77 (Emphasis supplied)

For this reason, the trial court issued its order dated November 22, 2002 dismissing the case,
without prejudice. The order states:

When this Motion was called for hearing, all the plaintiffs namely, Joseph Cheng, Jaime Cheng,
Mercedes Igne and Lucina Santos appeared without their counsels. That they verbally affirmed
the execution of the Motion to Dismiss, as shown by their signatures over their respective names
reflected thereat. Similarly, none of the defendants appeared, except the counsel for defendant,
Ramon Chang [sic], who manifested that they have not yet filed their Answer as there was a
defect in the address of Ramon Cheng [sic] and the latter has not yet been served with summons.

Under the circumstances, and further considering that the defendants herein have not yet filed
their Answers nor any pleading, the plaintiffs has [sic] the right to out rightly [sic] cause the
dismissal of the Complaint pursuant to Section 2, Rule 17 of the 1997 Rules of Civil Procedure
without prejudice. Thereby, and as prayed for, this case is hereby ordered DISMISSED without
prejudice.

SO ORDERED.78 (Emphasis supplied)

When respondents filed the third case on substantially the same claim, there was already one
prior dismissal at the instance of the plaintiffs and one prior dismissal at the instance of the
defendants. While it is true that there were two previous dismissals on the same claim, it does not
necessarily follow that the re-filing of the claim was barred by Rule 17, Section 1 of the Rules of
Civil Procedure. The circumstances surrounding each dismissal must first be examined to
determine before the rule may apply, as in this case.

Even assuming for the sake of argument that the failure of Atty. Mirardo Arroyo Obias to file the
appropriate pleading in the first case came under the purview of Rule 17, Section 3 of the Rules
of Civil Procedure, the dismissal in the second case is still considered as one without prejudice.
In Gomez v. Alcantara:79

The dismissal of a case for failure to prosecute has the effect of adjudication on the merits, and is
necessarily understood to be with prejudice to the filing of another action, unless otherwise
provided in the order of dismissal. Stated differently, the general rule is that dismissal of a case
for failure to prosecute is to be regarded as an adjudication on the merits and with prejudice to
the filing of another action, and the only exception is when the order of dismissal expressly
contains a qualification that the dismissal is without prejudice.80 (Emphasis supplied)

In granting the dismissal of the second case, the trial court specifically orders the dismissal to be
without prejudice. It is only when the trial court’s order either is silent on the matter, or states
otherwise, that the dismissal will be considered an adjudication on the merits.

However, while the dismissal of the second case was without prejudice, respondents’ act of filing
the third case while petitioners’ motion for reconsideration was still pending constituted forum
shopping.

The rule against forum shopping and the "twin-dismissal rule"

In Yap v. Chua:81

Forum shopping is the institution of two or more actions or proceedings involving the same
parties for the same cause of action, either simultaneously or successively, on the supposition
that one or the other court would make a favorable disposition. Forum shopping may be resorted
to by any party against whom an adverse judgment or order has been issued in one forum, in an
attempt to seek a favorable opinion in another, other than by appeal or a special civil action for
certiorari. Forum shopping trifles with the courts, abuses their processes, degrades the
administration of justice and congest court dockets. What iscritical is the vexation brought upon
the courts and the litigants by a party who asks different courts to rule on the same or related
causes and grant the same or substantially the same reliefs and in the process creates the
possibility of conflicting decisions being renderedby the different fora upon the same issues.
Willful and deliberate violation of the rule against forum shopping is a ground for summary
dismissal of the case; it may also constitute direct contempt.

To determine whether a party violated the rule against forum shopping, the most important factor
toask is whether the elements of litis pendentiaare present, or whether a final judgment in one
case will amount to res judicatain another; otherwise stated, the test for determining forum
shopping is whether in the two (or more) cases pending, there is identity of parties, rights or
causes of action, and reliefs sought.82 (Emphasis supplied)

When respondents filed the third case, petitioners’ motion for reconsideration of the dismissal of
the second case was still pending. Clearly, the order of dismissal was not yet final since it could
still be overturned upon reconsideration, or even on appeal to a higher court.
Moreover, petitioners were not prohibited from filing the motion for reconsideration. This court
has already stated in Narciso v. Garcia83 that a defendant has the right to file a motion for
reconsideration of a trial court’s order denying the motion to dismiss since "[n]o rule prohibits
the filing of such a motion for reconsideration."84 The second case, therefore, was still pending
when the third case was filed.

The prudent thing that respondents could have done was to wait until the final disposition of the
second case before filing the third case. As it stands, the dismissal of the second case was
without prejudice to the re-filing of the same claim, in accordance with the Rules of Civil
Procedure. In their haste to file the third case, however, they unfortunately transgressed certain
procedural safeguards, among which are the rules on litis pendentiaand res judicata.

In Yap:

Litis pendentiaas a ground for the dismissal of a civil action refers to that situation wherein
another action is pending between the same parties for the same cause of action, such that the
second action becomes unnecessary and vexatious. The underlying principle of litis pendentia is
the theory that a party is not allowed to vex another more than once regarding the same subject
matter and for the same cause of action. This theory is founded on the public policy that the same
subject matter should not be the subject of controversy incourts more than once, in order that
possible conflicting judgments may be avoided for the sake of the stability of the rights and
status of persons.

The requisites of litis pendentiaare: (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 ofwhich party is successful, would amount to res judicatain the other.85 (Emphasis
supplied)

There is no question that there was an identity of parties, rights, and reliefs in the second and
third cases. While it may be true that the trial court already dismissed the second case when the
third case was filed, it failed to take into account that a motion for reconsideration was filed in
the second case and, thus, was still pending. Considering that the dismissal of the second case
was the subject of the first certiorari case and this present petition for review, it can be
reasonably concluded that the second case, to this day, remains pending.

Hence, when respondents filed the third case, they engaged in forum shopping. Any judgment by
this court on the propriety of the dismissal of the second case will inevitably affect the
disposition of the third case.

This, in fact, is the reason why there were two different petitions for certiorari before the
appellate court. The omnibus order dated July 30, 2004 denied two pending motions by
petitioners: (1) the motion for reconsideration in the second case and (2) the motion to dismiss in
the third case. Since petitioners are barred from filing a second motion for reconsideration of the
second case, the first certiorari case was filed before the appellate court and is now the subject of
this review. The denial of petitioners’ motion for reconsideration in the third case, however,
could still be the subject of a separate petition for certiorari. That petition would be based now on
the third case, and not on the second case.

This multiplicity of suits is the veryevil sought to be avoided by the rule on forum shopping. In
Dy v. Mandy Commodities Co., Inc.,86 the rule is that:

Once there is a finding of forum shopping, the penalty is summary dismissal not only of the
petition pending before this Court, but also of the other case that is pending in a lower court. This
is so because twin dismissal is a punitive measure to those who trifle with the orderly
administration of justice.87 (Emphasis supplied)

The rule originated from the 1986 case of Buan v. Lopez, Jr.88 In Buan, petitioners filed a
petition for prohibition with this court while another petition for prohibition with preliminary
injunction was pending before the Regional Trial Court of Manila involving the same parties and
based on the same set of facts. This court, in dismissing both actions, stated:

Indeed, the petitioners in both actions . . . have incurred not only the sanction of dismissal oftheir
case before this Court in accordance with Rule 16 of the Rules of Court, but also the punitive
measure of dismissal of both their actions, that in this Court and that in the Regional Trial Court
as well. Quite recently, upon substantially identical factual premises, the Court en banchad
occasion to condemn and penalize the act of litigants of filing the same suit in different courts,
aptly described as "forum shopping[.]"89

The rule essentially penalizes the forum shopper by dismissing all pending actions on the same
claim filed in any court. Accordingly, the grant of this petition would inevitably result in the
summary dismissal of the third case. Any action, therefore, which originates from the third case
pending with any court would be barred by res judicata.

Because of the severity of the penalty of the rule, an examination must first be made on the
purpose of the rule.1âwphi1 Parties resort to forum shopping when they file several actions of
the same claim in different forums in the hope of obtaining a favorable result. It is prohibited by
the courts as it "trifle[s] with the orderly administration of justice."90

In this case, however, the dismissal of the first case became final and executory upon the failure
of respondents’counsel to file the appropriate pleading. They filed the correct pleading the
second time around but eventually sought its dismissal as they"[suspected] that their counsel is
not amply protecting their interests as the case is not moving for almost three (3) years."91 The
filing of the third case, therefore, was not precisely for the purpose of obtaining a favorable result
butonly to get the case moving, in an attempt to protect their rights.

It appears that the resolution on the merits of the original controversy between the parties has
long beenmired in numerous procedural entanglements. While it might be more judicially
expedient to apply the "twin-dismissal rule" and disallow the proceedings in the third case to
continue, it would not serve the ends of substantial justice. Courts of justice must always
endeavor to resolve cases on their merits, rather than summarily dismiss these on technicalities:
[C]ases should be determined on the merits, after all parties have been given full opportunity to
ventilate their causes and defenses, rather than on technicalities or procedural imperfections. In
that way, the ends of justice would be served better. Rules of procedure are mere tools designed
to expedite the decision or resolution of cases and other matters pending in court. A strict and
rigid application of rules, resulting in technicalities that tend to frustrate rather than promote
substantial justice, must be avoided.In fact, Section 6 of Rule 1 states that the Rules [on Civil
Procedure] shall be liberally construed in order to promote their objective of ensuring the just,
speedy and inexpensive disposition of every action and proceeding.92 (Emphasis supplied)

The rule on forum shopping will not strictly apply when it can be shown that (1) the original case
has been dismissed upon request of the plaintiff for valid procedural reasons; (2) the only
pending matter is a motion for reconsideration; and (3) there are valid procedural reasons that
serve the goal of substantial justice for the fresh new· case to proceed.

The motion for reconsideration filed in the second case has since been dismissed and is now the
subject of a petition for certiorari. The third case filed apparently contains the better cause of
action for the plaintiffs and is now being prosecuted by a counsel they are more comfortable
with. Substantial justice will be better served if respondents do not fall victim to the labyrinth in
the procedures that their travails led them. It is for this reason that we deny the petition.
WHEREFORE, the petition is DENIED. The Regional Trial Court of Manila, Branch 6 is
ordered to proceed with Civil Case No. 02-105251 with due and deliberate dispatch.

SO ORDERED.

[G.R. No. 185954 : February 16, 2010]

OFFICE OF THE OMBUDSMAN, PETITIONER, VS. MAXIMO D. SISON,

RESPONDENT.

DECISION

VELASCO JR., J.:

The Case

Before us is a Petition for Review on Certiorari under Rule 45 assailing and seeking to set aside
the Resolution1 dated December 18, 2008 of the Court of Appeals (CA) in CA-G.R. SP No.
96611, entitled Maximo D. Sison v. Fr. Noel Labendia for Himself and in Representation of Isog
Han Samar Movement, Diocese of Calbayog, Catbalogan, Samar. The CA Resolution denied
petitioner Office of the Ombudsman's Omnibus Motion for Intervention and to Admit Attached
Motion for Reconsideration of the CA's June 26, 2008 Decision.2

The Facts

On October 11, 2004, the Isog Han Samar Movement, represented by Fr. Noel Labendia of the
Diocese of Calbayog, Catbalogan, Samar, filed a letter-complaint addressed to then Ombudsman,
Hon. Simeon Marcelo, accusing Governor Milagrosa T. Tan and other local public officials3 of
the Province of Samar, including respondent Maximo D. Sison, of highly anomalous transactions
entered into by them amounting to several millions of pesos. Sison was the Provincial Budget
Officer.

The letter-complaint stemmed from the audit investigation dated August 13, 2004 conducted by
the Legal and Adjudication Office (LAO), Commission on Audit (COA), which found, among
others, that various purchases totaling PhP 29.34 million went without proper bidding procedures
and documentations; that calamity funds were expended without a State of Calamity having been
declared by the President; and that purchases for rice, medicines, electric fans, and cement were
substantially overpriced.

The Special Audit Team, which was created under LAO Office Order No. 2003-059 dated July
7, 2003, summarized the corresponding COA audit findings and observations, to wit:

1. Rules and regulations pertaining to procurement of supplies and materials were

consciously and continually violated as disclosed in the verification of selected purchases of
the Province. Below were the findings and observations:

a. Purchases of various items, totaling at least PhP 29.34 million and allegedly
procured through public bidding, were found highly irregular for lack of proper bidding
procedures and documentation;

b. At least PhP 28.165 million worth of purchases through repeat orders were made
by the Province without observing the pertinent law, rules and regulations governing this
mode of procurement; and

c. Emergency purchases of medicines and assorted goods totaling PhP 14.67 million
were found not complying with the requirements set forth under the Rules and
Regulations on Supplies and Property Management in Local Governments (RRSPMLG).
Moreover, the purchases were charged against the calamity fund, despite absence of any
declaration from the President that Samar was under a state of calamity, in violation of
Sec. 324(d) of R.A. 7160.

2. Inconsistencies in the dates of supporting documents relating to the purchases discussed

in finding No. 1 were so glaring that they raised doubts on the validity of the transactions per
se;

3. The use of the 5% budgetary reserves for calamity as funding source of emergency
purchases was not legally established, there being no declaration from the Office of the
President that Samar was under a state of calamity, as required under Sec. 324(d) of R.A.
7160;
4. Splitting of requisitions and purchase orders was resorted to in violation of COA Circular
No. 76-41 dated July 30, 1976;

5. There was overpricing in the purchase of rice, medicines, electric fans and cement in the
amount of PhP 580,000.00, PhP 322,760.00, PhP 341,040.00, and PhP 3.6 million,
respectively. An overpayment was also committed in the payments of cement in the amount
of PhP 96,364.09;

6. Other observations gathered corollary to the purchases made are the following:

a. Purchase Orders were not duly accomplished to include a complete description of

the items to be purchased, the delivery date and the terms of payment, in violation of the
provisions of Section 74 and other corollary provisions of RRSPMLG. Some were even
acknowledged by suppliers;

b. At least 36 vouchers/claims were not supported with an official receipt, in

violation of the provisions of Section 4 of PD 1445 that all disbursements must be
supported with complete documentation; and

c. Advanced deliveries of medicines and assorted goods were made on some

purchases even before the purchase orders were prepared and before the public biddings
were conducted.

7. The necessity and veracity of the distribution of t-shirts/caps, medicines, assorted goods
and cement purchased by the Province of Samar could not be established due to rampant
inconsistencies in dates, quantities, as well as the signatures of the alleged recipients in the
Requisition and Issue Slip; and,

8. Financial Assistance (FA)/Assistance to Individuals in Crisis Situation (AICS) totaling at

least PhP 5.4 million in 2002 and PhP 2.78 million as of April 2003 were granted to various
applicant-recipients without subjecting them to the guidelines set forth by the Department of
Social Welfare and Development (DSWD).4 x x x

On January 24, 2005, the Office of the Ombudsman, through Director Jose T. De Jesus, Jr.,
found basis to proceed with the administrative case against the impleaded provincial officials of
Samar, docketed as OMB-C-A-05-0051-B. The latter were then required to file their counter-
affidavits and countervailing evidence against the complaint.

In his counter-affidavit, Sison vehemently denied the accusations contained in the letter-
complaint and claimed his innocence on the charges. He asserted that his function is limited to
the issuance of a certification that an appropriation for the requisition exists, that the
corresponding amount has been obligated, and that funds are available. He did not, in any way,
vouch for the truthfulness of the certification issued by the requesting parties. In addition, he
averred that he never participated in the alleged irregularities as shown in the minutes and
attendance sheet of the bidding.

Further, he alleged that not one of the documentary evidences so far attached in the letter-
complaint bore his signature and that he was neither factually connected nor directly implicated
in the complaint.

On May 6, 2005, Sison submitted his Position Paper to the Office of the Ombudsman and
reiterated that he had not participated in the alleged anomalous purchases and use of public funds
by the Province of Samar.

On August 22, 2006, the Office of the Ombudsman rendered a Decision, finding Sison and
several other local officials of the Province of Samar guilty of grave misconduct, dishonesty, and
conduct prejudicial to the best interest of the service and dismissing him from service. The
dispositive portion of the Decision reads:

VIEWED IN THE FOREGOING LIGHT, DECISION is hereby rendered as follows:

1. Respondents ROLANDO B. MONTEJO, DAMIANO Z. CONDE, JR., ROMEO C.

REALES, MAXIMO D. SISON, AURELIO A. BARDAJE and NUMERIANO C.
LEGASPI are FOUND GUILTY of GRAVE MISCONDUCT, DISHONESTY and
CONDUCT PREJUDICIAL TO THE BEST INTEREST OF THE SERVICE, and are
METED the penalty of DISMISSAL FROM SERVICE, and shall carry with it the
cancellation of eligibility, forfeiture of retirement benefits, and the perpetual disqualification
for re-employment in the government service.

Accordingly, Governor Milagrosa T. Tan and Executive Director Presentacion R. Montesa of the
Bureau of Local Government Finance, Department of Finance, are respectfully directed to
implement this Order upon receipt hereof and to forthwith inform the Office of compliance
herewith.

2. The administrative complaint against respondents MILAGROSA T. TAN, FE ORTEGA

TAN ARCALES, SUSANO DIMAKILING SALURIO, BARTOLOME P. FIGUEROA,
ANTONIO DE LEON BOLASTIG, III, ROSENAIDA A. ROSALES and BARTOLOME R.
CASTILLO III is DISMISSED in view of their re-election in May 2004;

3. The administrative complaint against ERNESTO CARCILLAR ARCALES, FELIX T.

BABALCON, JR., JIMMY R. DY, JUAN COLINARES LATORRE, JR., MARIA
LOURDES CORTEZ UY, BIENVENIDA P. REPOL and RAMON P. DEAN, JR., who are
no longer public officials, is DISMISSED.
4. For insufficiency of evidence, the administrative complaint against ANAMIE P.
MANATAD-NUNEZ and ROSIE AMARO VILLACORTE is DISMISSED.

5. The Fact-Finding and Intelligence Office is DIRECTED to conduct further fact-finding

investigations on the following:

a. On DV Nos. 221-2002-12-083 and 221-2002-11-065: (a) to DETERMINE the

other public officials who may be held administratively liable; and (b) to FILE, if
necessary, the corresponding Complaint;

b. On Bid Nos. 079-2002, 442-2002, 554-2002, 861-2002, 937-2002, 947-2002,

1221-2002, 1375-2002, 1411-2002, 007-2003, 014-2003, 023-2003, 047-2003 and 082-
2002: (a) to VERIFY whether actual public biddings took place relative to the
transactions covered by these bids; (b) to CHECK the veracity of the documents relative
to the repeat orders made; (c) to DETERMINE the other public officials who may appear
to be administratively liable therefor; and (d) to FILE, if warranted, the corresponding
Complaint; and

c. On Bid Nos. 078-2002, 448-2002, 931-2002, 1230-2001, 411-2002, 944-2002,

1244-2002, 1407-2001, 198-2002, 316-2002 and 431-2002: (a) to DETERMINE whether
actual public biddings were held relative to the above-mentioned transactions; (b) to
CHECK the veracity of the documents relative to the repeat orders made; (c) to
ASCERTAIN the other public officials who may be held administratively liable therefor;
and (d) to FILE the corresponding Complaint, if warranted.

Accordingly, let a copy of this Memorandum be furnished the Fact- Finding and Intelligence
Office for its appropriate action.

SO ORDERED.5 (Emphasis supplied.)

Aggrieved, Sison appealed to the CA via a Petition for Review under Rule 43, docketed as CA-
G.R. SP No. 96611.

On June 26, 2008, the CA rendered a decision reversing and setting aside the decision of the
Office of the Ombudsman against Sison. The fallo of the CA decision reads:

WHEREFORE, the decision of the Ombudsman dated 22 August 2006 in OMB-C-A-05-0051-B

in so far as it finds the herein petitioner MAXIMO D. SISON administratively liable for grave
misconduct, dishonesty and conduct prejudicial to the best interest of service is hereby
REVERSED and SET ASIDE for insufficiency of evidence. Accordingly, he is absolved from
administrative liability as charged.
SO ORDERED.6

In ruling thus, the CA held that the Office of the Ombudsman failed to adduce substantial
evidence in order to convict Sison. Moreover, it reasoned that Sison's responsibility as Provincial
Budget Officer was to ensure that appropriations exist in relation to the emergency purchase
being made and that he had no hand or discretion in characterizing a particular purchase as
emergency in nature. Hence, he cannot be held administratively liable for simply attesting to the
existence of appropriations for a certain purpose, save if such certification is proved to be false.

On July 22, 2008, the Office of the Ombudsman filed an Omnibus Motion for Intervention and to
Admit Attached Motion for Reconsideration, which was subsequently denied by the CA in its
assailed resolution of December 18, 2008.

Hence, we have this petition.

The Issues

Whether the [CA] gravely erred in denying petitioner's right to intervene in the proceedings,
considering that (a) the Office of the Ombudsman has sufficient legal interest warranting its
intervention in the proceedings before the [CA] since it rendered the subject decision pursuant to
its administrative authority over public officials and employees; and (b) contrary to the appellate
court a quo's ruling, petitioner Office of the Ombudsman filed its Omnibus Motion to Intervene
and to Admit Attached Motion for Reconsideration on a patently erroneous decision of the [CA]
which has not yet attained finality.

II

Whether the [CA] erred in ruling that the finding of the Office of the Ombudsman was not
supported by substantial evidence.

III

Whether the [CA] erred in giving due course to respondent's petition for review when this was
prematurely filed as it disregarded the well-entrenched jurisprudential doctrine of exhaustion of
administrative remedies.

Our Ruling

The appeal lacks merit.

Intervention Is Discretionary upon the Court

The pivotal issue in this case is whether the Office of the Ombudsman may be allowed to
intervene and seek reconsideration of the adverse decision rendered by the CA.
In its Decision, the CA did not allow the Office of the Ombudsman to intervene, because (1) the
Office of the Ombudsman is not a third party who has a legal interest in the administrative case
against petitioner; (2) the Omnibus Motion for Intervention was filed after the CA rendered its
Decision; and (3) the Office of the Ombudsman was the quasi-judicial body which rendered the
impugned decision.

In its Petition, however, the Office of the Ombudsman asserts that it has sufficient legal interest
to warrant its intervention in the proceedings, since it rendered the subject decision pursuant to
its administrative authority over public officials and employees. Further, it contends that the
Omnibus Motion to Intervene was timely filed, since, at the time of its filing, the decision of the
CA had not yet attained finality.

We are not persuaded.

It is fundamental that the allowance or disallowance of a Motion to Intervene is addressed to the

sound discretion of the court.7 The permissive tenor of the rules shows the intention to give to the
court the full measure of discretion in permitting or disallowing the intervention,8 thus:

SECTION 1. Who may intervene. - A person who has a legal interest in the matter in litigation,
or in the success of either of the parties, or an interest against both, or is so situated as to be
adversely affected by a distribution or other disposition of property in the custody of the court or
of an officer thereof may, with leave of court, be allowed to intervene in the action. The court
shall consider whether or not the intervention will unduly delay or prejudice the adjudication of
the rights of the original parties, and whether or not the intervenor's rights may be fully protected
in a separate proceeding.

SECTION 2. Time to intervene. - The motion to intervene may be filed at any time before
rendition of judgment by the trial court. A copy of the pleading-in-intervention shall be
attached to the motion and served on the original parties.9 (Emphasis supplied.)

Simply, intervention is a procedure by which third persons, not originally parties to the suit but
claiming an interest in the subject matter, come into the case in order to protect their right or
interpose their claim.10 Its main purpose is to settle in one action and by a single judgment all
conflicting claims of, or the whole controversy among, the persons involved.11

To warrant intervention under Rule 19 of the Rules of Court, two requisites must concur: (1) the
movant has a legal interest in the matter in litigation; and (2) intervention must not unduly delay
or prejudice the adjudication of the rights of the parties, nor should the claim of the intervenor be
capable of being properly decided in a separate proceeding. The interest, which entitles one to
intervene, must involve the matter in litigation and of such direct and immediate character that
the intervenor will either gain or lose by the direct legal operation and effect of the judgment.12

In support of its argument that it has legal interest, the Office of the Ombudsman cites Philippine
National Bank v. Garcia, Jr. (Garcia). 13 In the said case, the Philippine National Bank (PNB)
imposed upon its employee, Garcia, the penalty of forced resignation for gross neglect of duty.
On appeal, the Civil Service Commission (CSC) exonerated Garcia from the administrative
charges against him. In accordance with the ruling in Civil Service Commission v.
Dacoycoy,14 this Court affirmed the standing of the PNB to appeal to the CA the CSC resolution
exonerating Garcia. After all, PNB was the aggrieved party which complained of Garcia's acts of
dishonesty. Should Garcia be finally exonerated, it might then be incumbent upon PNB to take
him back into its fold. PNB should, therefore, be allowed to appeal a decision that, in its view,
hampered its right to select honest and trustworthy employees, so that it can protect and preserve
its name as a premier banking institution in the country.

Based on the facts above, the Office of the Ombudsman cannot use Garcia to support its
intervention in the appellate court for the following reasons:

First, Sison was not exonerated from the administrative charges against him, and was, in fact,
dismissed for grave misconduct, dishonesty, and conduct prejudicial to the best interest of the
service by the Office of the Ombudsman in the administrative case, OMB-C-A-05-0051-B. Thus,
it was Sison who appealed to the CA being, unquestionably, the party aggrieved by the judgment
on appeal.

Second, the issue here is the right of the Office of the Ombudsman to intervene in the appeal of
its decision, not its right to appeal.

And third, Garcia should be read along with Mathay, Jr. v. Court of Appeals15 and National

Appellate Board of the National Police Commission v. Mamauag (Mamauag),16 in which this
Court qualified and clarified the exercise of the right of a government agency to actively
participate in the appeal of decisions in administrative cases. In Mamauag, this Court ruled:

RA 6975 itself does not authorize a private complainant to appeal a decision of the disciplining
authority. Sections 43 and 45 of RA 6975 authorize 'either party' to appeal in the instances that
the law allows appeal. One party is the PNP member-respondent when the disciplining authority
imposes the penalty of demotion or dismissal from the service. The other party is the government
when the disciplining authority imposes the penalty of demotion but the government believes
that dismissal from the service is the proper penalty.

However, the government party that can appeal is not the disciplining authority or tribunal which
previously heard the case and imposed the penalty of demotion or dismissal from the service.
The government party appealing must be the one that is prosecuting the administrative case
against the respondent. Otherwise, an anomalous situation will result where the disciplining
authority or tribunal hearing the case, instead of being impartial and detached, becomes an active
participant in prosecuting the respondent. Thus, in Mathay, Jr. v. Court of Appeals, decided
after Dacoycoy, the Court declared:

To be sure when the resolutions of the Civil Service Commission were brought to the Court of
Appeals, the Civil Service Commission was included only as a nominal party. As a quasi-judicial
body, the Civil Service Commission can be likened to a judge who should "detach himself from
cases where his decision is appealed to a higher court for review."

In instituting G.R. No. 126354, the Civil Service Commission dangerously departed from its role
as adjudicator and became an advocate. Its mandated function is to "hear and decide
administrative cases instituted by or brought before it directly or on appeal, including contested
appointments and to review decisions and actions of its offices and agencies," not to litigate.

Clearly, the Office of the Ombudsman is not an appropriate party to intervene in the instant case.
It must remain partial and detached. More importantly, it must be mindful of its role as an
adjudicator, not an advocate.

It is an established doctrine that judges should detach themselves from cases where their
decisions are appealed to a higher court for review. The raison d'etre for such a doctrine is the
fact that judges are not active combatants in such proceeding and must leave the opposing parties
to contend their individual positions and the appellate court to decide the issues without the
judges' active participation.17 When judges actively participate in the appeal of their judgment,
they, in a way, cease to be judicial and have become adversarial instead.18

In Pleyto v. Philippine National Police Criminal Investigation and Detection Group (PNP-
CIDG),19 the Court applied this doctrine when it held that the CA erred in granting the Motion to
Intervene filed by the Office of the Ombudsman, to wit:

The court or the quasi-judicial agency must be detached and impartial, not only when hearing
and resolving the case before it, but even when its judgment is brought on appeal before a higher
court. The judge of a court or the officer of a quasi-judicial agency must keep in mind that he is
an adjudicator who must settle the controversies between parties in accordance with the evidence
and applicable laws, regulations and/or jurisprudence. His judgment should already clearly and
completely state his findings of fact and law. There must be no more need for him to justify
further his judgment when it is appealed before appellate courts. When the court judge or the
quasi-judicial officer intervenes as a party in the appealed case, he inevitably forsakes his
detachment and impartiality, and his interest in the case becomes personal since his objective
now is no longer only to settle the controversy between the original parties (which he had already
accomplished by rendering his judgment), but more significantly, to refute the appellant's
assignment of errors, defend his judgment, and prevent it from being overturned on appeal.

Likewise, the facts reveal that this case was elevated to the CA via a verified Petition for Review
under Rule 43 of the Rules of Court and Supreme Court Administrative Circular No. 1-95 dated
May 16, 1995, which govern appeals to the CA from judgments or final orders of quasi-judicial
agencies.

Rule 43, as well as Administrative Circular No. 1-95, provides that the petition for review shall
state the full names of the parties to the case without impleading the court or agencies either
as petitioners or respondents.20 Thus, the only parties in such an appeal are the appellant as
petitioner and appellee as respondent. The court or, in this case, the administrative agency that
rendered the judgment appealed from, is not a party in the said appeal.

Therefore, the Office of the Ombudsman does not have the legal interest to intervene. As the CA
held correctly:

The Office of the Ombudsman is not a third party who has a legal interest in the administrative
case against the petitioner such that it would be directly affected by the judgment that this Court
had rendered. It must be remembered that the legal interest required for an intervention must be
direct and immediate in character. Lest it be forgotten, what was brought on appeal before this
Court is the very Decision by the Office of the Ombudsman. Plainly, the Office of the
Ombudsman, as an adjudicator, and not an advocate, has no legal interest at stake in the outcome
of this Rule 43 Petition.21

Motion for Intervention Was Not Filed on Time

Furthermore, the Rules provides explicitly that a motion to intervene may be filed at any
time before rendition of judgment by the trial court. In the instant case, the Omnibus Motion
for Intervention was filed only on July 22, 2008, after the Decision of the CA was promulgated
on June 26, 2008.

In support of its position, petitioner cites Office of the Ombudsman v. Samaniego.22 That case,

however, is not applicable here, since the Office of the Ombudsman filed the motion for
intervention during the pendency of the proceedings before the CA.

It should be noted that the Office of the Ombudsman was aware of the appeal filed by Sison. The
Rules of Court provides that the appeal shall be taken by filing a verified petition for review with
the CA, with proof of service of a copy on the court or agency a quo.23 Clearly, the Office of
the Ombudsman had sufficient time within which to file a motion to intervene. As such, its
failure to do so should not now be countenanced. The Office of the Ombudsman is expected to
be an "activist watchman," not merely a passive onlooker.24

In this case, it cannot be denied that the Omnibus Motion for Intervention was belatedly filed. As
we held in Rockland Construction Co., Inc. v. Singzon, Jr., no intervention is permitted after a
decision has already been rendered.25

In light of the foregoing considerations, all other issues raised in the petition are rendered moot
and academic and no further discussion is necessary.

WHEREFORE, the petition is DENIED. The CA Resolution dated December 18, 2008 in CA-
G.R. SP No. 96611 is AFFIRMED.

SO ORDERED.

G.R. No. 172206               July 3, 2013

OFFICE OF THE OMBUDSMAN, PETITIONER,

vs.
ERNESTO M. DE CHAVEZ, ROLANDO L. LONTOC, SR., DR. PORFIRIO C. LIGAYA,
ROLANDO L. LONTOC, JR. AND GLORIA M. MENDOZA, RESPONDENTS.

DECISION

PERALTA, J.:
This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying
that the Resolution1 of the Court of Appeals (CA), dated April 7, 2006, be reversed and set aside.

The crux of the controversy is whether the Batangas State University Board of Regents (BSU-
BOR) could validly enforce the Office of the Ombudsman's Joint Decision dated February 14,
2005 and Supplemental Resolution dated July 12, 2005, finding herein respondents guilty of
dishonesty and grave misconduct and imposing the penalty of dismissal from service with its
accessory penalties, despite the fact that said Joint Decision and Supplemental Resolution are
pending appeal before the CA.

On August 18, 2005, the BSU-BOR received an Order from Deputy Ombudsman Victor
Fernandez directing the former to enforce the aforementioned Office of the Ombudsman's Joint
Decision and Supplemental Resolution. Pursuant to said Order, the BSU-BOR issued Resolution
No. 18, series of 2005, dated August 22, 2005, resolving to implement the Order of the Office of
the Ombudsman. Thus, herein respondents filed a petition for injunction with prayer for issuance
of a temporary restraining order or preliminary injunction before the Regional Trial Court of
Batangas City, Branch 4 (RTC), against the BSU-BOR. The gist of the petition before the RTC
is that the BSU-BOR should be enjoined from enforcing the Ombudsman's Joint Decision and
Supplemental Resolution because the same are still on appeal and, therefore, are not yet final and
executory.

On September 26, 2005, the RTC ordered the dismissal of herein respondents' petition for
injunction on the ground of lack of cause of action. Respondents filed their notice of appeal and
promptly filed a Motion for Issuance of a Temporary Restraining Order and/or Injunction dated
December 8, 2005 with the CA. On February 17, 2006, the CA issued a Resolution granting
respondents' prayer for a temporary restraining order enjoining the BSU-BOR from enforcing its
Resolution No. 18, series of 2005.

Thereafter, on March 7, 2006, the Office of the Ombudsman filed a Motion to Intervene and to
Admit Attached Motion to Recall Temporary Restraining Order, with the Motion to Recall
Temporary Restraining Order attached thereto. Respondents opposed said motion and then filed
an Urgent Motion for Issuance of a Writ of Preliminary Injunction. On April 7, 2006, the CA
issued the Resolution subject of the present petition, pertinent portions of which are reproduced
below:

At the outset, let it be emphasized that We are accepting and taking cognizance of the pleadings
lodged by the Office of the Ombudsman only in so far as to afford it with ample opportunity to
comment on and oppose appellants' application for injunctive relief, but not for the purpose of
allowing the Ombudsman to formally and actively intervene in the instant appeal. Basically, this
is a regular appeal impugning the disposition of the trial court, the pivotal issue of which is only
for the appellants and the Board of Regents of BSU to settle and contest, and which may be
completely adjudicated upon without the active participation of the Office of the Ombudsman.

xxxx
In the final reckoning, We stand firm by Our conclusion that the administrative penalty of
dismissal from the service imposed upon herein appellants is not yet final and immediately
executory in nature in view of the appeal interposed therefrom by the appellants before this
Court, and this fact, in the end, impelled Us to act with favor upon appellants' prayer for
injunctive relief to stay the execution of the impugned Resolution of the Board of Regents of
BSU.

Wherefore, premises considered, the Ombudsman's Motion to Recall the TRO is denied. On the
other hand, appellants' Urgent Motion for Issuance of a Writ of Preliminary Injunction is
granted. Accordingly, let a Writ of Preliminary Injunction be issued, as it is hereby issued,
conditioned upon the posting by the appellants of an Injunction Bond in the sum of
Php10,000.00, enjoining the Board of Regents of BSU, and all other persons and agents acting
under its command authority, pending the complete resolution of this appeal, from effecting the
enforcement and implementation of its Resolution No. 18, Series of 2005 issued pursuant to the
July 12, 2005 Supplemental Resolution of the Ombudsman, Central Office.

SO ORDERED.2

Petitioners then filed a petition for review on certiorari before this Court, assailing the
aforequoted CA Resolution dated April 7, 2006, alleging that:

I.

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS DISREGARDED THE

WELL-ENTRENCHED RULE AGAINST FORUM SHOPPING WHEN, INSTEAD OF
OUTRIGHTLY DISMISSING RESPONDENTS' PETITION, THE SAID COURT TOOK
COGNIZANCE OF THE PETITION AND SUBSEQUENTLY ISSUED ITS RESOLUTIONS
DATED 17 FEBRUARY 2006 AND 7 APRIL 2006, RESPECTIVELY;

II.

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS SERIOUSLY

OVERLOOKED THE PROVISIONS OF RULE 58 OF THE 1997 REVISED RULES OF
CIVIL PROCEDURE WHEN IT TOOK COGNIZANCE OF RESPONDENTS' UNVERIFIED
PETITION AND SUBSEQUENTLY ISSUED ITS 17 FEBRUARY 2006 AND 7 APRIL 2006
RESOLUTIONS;

III.

THE ISSUANCE BY THE HONORABLE COURT OF APPEALS OF THE 17 FEBRUARY

2006 AND 7 APRIL 2006 RESOLUTIONS ENJOINING THE IMPLEMENTATION OF
BOARD RESOLUTION NO. 18, SERIES OF 2005 ISSUED BY THE BOARD OF REGENTS
OF BATANGAS STATE UNIVERSITY UNDULY DISREGARDS THE ESTABLISHED
RULES RELATIVE TO IMPLEMENTATION OF OMBUDSMAN DECISION PENDING
APPEAL, CONSIDERING THAT:
BOARD RESOLUTION NO. 18, SERIES OF 2005 WAS ISSUED BY THE BOARD OF
REGENTS OF THE BATANGAS STATE UNIVERSITY PURSUANT TO THE JOINT
DECISION AND SUPPLEMENTAL RESOLUTION ISSUED BY THE OFFICE OF THE
OMBUDSMAN.

UNDER THE OMBUDSMAN RULES OF PROCEDURE, AN APPEAL DOES NOT STAY

THE EXECUTION OF DECISIONS, RESOLUTIONS OR ORDERS ISSUED BY THE
OFFICE OF THE OMBUDSMAN.

IV.

RESPONDENTS ARE NOT ENTITLED TO THE INJUNCTIVE RELIEF PRAYED FOR IN

THEIR UNVERIFIED MOTION FILED BEFORE THE HONORABLE COURT OF
APPEALS.3

Controverting petitioner's claims, respondents in turn allege that:

1. PETITIONER (OMBUDSMAN) HAS NO LEGAL PERSONALITY TO INSTITUTE

THE INSTANT PETITION INASMUCH AS IT IS NOT A PARTY TO THE
APPEALED CASE PENDING BEFORE THE COURT OF APPEALS;

2. ASSUMING THAT THE PETITIONER HAS THE LEGAL PERSONALITY TO

INTERVENE IN THE APPEALED CASE BEFORE THE COURT OF APPEALS, THE
INSTANT PETITION IS NOT THE PROPER RECOURSE AVAILABLE TO THE
PETITIONER; AND

3. THE COURT OF APPEALS DID NOT COMMIT ANY GRAVE ABUSE OF

DISCRETION IN ISSUING THE ASSAILED RESOLUTIONS.4

At the outset, the Court must clarify that a petition for review on certiorari is not the proper
remedy to question the CA Resolution dated April 7, 2006 granting the Writ of Preliminary
Injunction and denying petitioner's motion for intervention. Said Resolution did not completely
dispose of the case on the merits, hence, it is merely an interlocutory order. As such, Section 1,
Rule 41 of the Rules of Court provides that no appeal may be taken therefrom. However, where
the assailed interlocutory order is patently erroneous and the remedy of appeal would not afford
adequate and expeditious relief, the Court allows certiorari as a mode of redress.5

In this case, the discussion below will show that the assailed Resolution is patently erroneous,
and that granting the Office of the Ombudsman the opportunity to be heard in the case pending
before the lower court is of primordial importance. Thus, the Court resolves to relax the
application of procedural rules by treating the petition as one for certiorari under Rule 65 of the
Rules of Court.

The CA should have allowed the Office of the Ombudsman to intervene in the appeal pending
with the lower court. The wisdom of this course of action has been exhaustively explained in
Office of the Ombudsman v. Samaniego.6 In said case, the CA also issued a Resolution denying
the Office of the Ombudsman's motion to intervene. In resolving the issue of whether the Office
of the Ombudsman has legal interest to intervene in the appeal of its Decision, the Court
expounded, thus:

x x x the Ombudsman is in a league of its own. It is different from other investigatory and
prosecutory agencies of the government because the people under its jurisdiction are public
officials who, through pressure and influence, can quash, delay or dismiss investigations directed
against them. Its function is critical because public interest (in the accountability of public
officers and employees) is at stake.

xxxx

The Office of the Obudsman sufficiently alleged its legal interest in the subject matter of
litigation. Paragraph 2 of its motion for intervention and to admit the attached motion to recall
writ of preliminary injunction averred:

"2. As a competent disciplining body, the Ombudsman has the right to seek redress on the
apparently erroneous issuance by this Honorable Court of the Writ of Preliminary Injunction
enjoining the implementation of the Ombudsman's Joint Decision x x x."

In asserting that it was a "competent disciplining body," the Office of the Ombudsman correctly
summed up its legal interest in the matter in controversy. In support of its claim, it invoked its
role as a constitutionally mandated "protector of the people," a disciplinary authority vested with
quasi-judicial function to resolve administrative disciplinary cases against public officials. To
hold otherwise would have been tantamount to abdicating its salutary functions as the guardian
of public trust and accountability.

Moreover, the Office of the Ombudsman had a clear legal interest in the inquiry into whether
respondent committed acts constituting grave misconduct, an offense punishable under the
Uniform Rules in Administrative Cases in the Civil Service. It was in keeping with its duty to act
as a champion of the people and preserve the integrity of public service that petitioner had to be
given the opportunity to act fully within the parameters of its authority.

It is true that under our rule on intervention, the allowance or disallowance of a motion to
intervene is left to the sound discretion of the court after a consideration of the appropriate
circumstances. However, such discretion is not without limitations. One of the limits in the
exercise of such discretion is that it must not be exercised in disregard of law and the
Constitution. The CA should have considered the nature of the Ombudsman's powers as
provided in the Constitution and RA 6770.

xxxx

Both the CA and respondent likened the Office of the Ombudsman to a judge whose decision
was in question. This was a tad too simplistic (or perhaps even rather disdainful) of the power,
duties and functions of the Office of the Ombudsman. The Office of the Ombudsman cannot be
detached, disinterested and neutral specially when defending its decisions. Moreover, in
administrative cases against government personnel, the offense is committed against the
government and public interest. What further proof of a direct constitutional and legal interest in
the accountability of public officers is necessary?7

Here, since its power to ensure enforcement of its Joint Decision and Supplemental Resolution is
in danger of being impaired, the Office of the Ombudsman had a clear legal interest in defending
its right to have its judgment carried out. The CA patently erred in denying the Office of the
Ombudsman's motion for intervention.

A discussion of the next issue of the propriety of the issuance of a writ of preliminary injunction
in this case would necessarily touch on the very merits of the case, i.e., whether the concerned
government agencies and instrumentalities may execute the Office of the Ombudsman's order to
dismiss a government employee from service even if the Ombudsman's decision is pending
appeal. It would also be a great waste of time to remand the case back to the CA, considering
that the entire records of the proceedings have already been elevated to this Court. Thus, at this
point, the Court shall fully adjudicate the main issue in the case.

Note that for a writ of preliminary injunction to issue, the following essential requisites must
concur, to wit: (1) that the invasion of the right is material and substantial; (2) that the right of
complainant is clear and unmistakable; and, (3) that there is an urgent and paramount necessity
for the writ to prevent serious damage.8 In the present case, the right of respondents cannot be
said to be clear and unmistakable, because the prevailing jurisprudence is that the penalty of
dismissal from the service meted on government employees or officials is immediately executory
in accordance with the valid rule of execution pending appeal uniformly observed in
administrative disciplinary cases. In Facura v. Court of Appeals,9 the Court fully threshed out
this matter, thus:

The issue of whether or not an appeal of the Ombudsman decision in an administrative case
carries with it the immediate suspension of the imposed penalty has been laid to rest in the recent
resolution of the case of Ombudsman v. Samaniego, where this Court held that the decision of
the Ombudsman is immediately executory pending appeal and may not be stayed by the filing of
an appeal or the issuance of an injunctive writ, to wit:

"Section 7, Rule III of the Rules of Procedure of the Office of the Ombudsman, as amended by
Administrative Order No. 17 dated September 15, 2003, provides:

SEC. 7. Finality and execution of decision. - Where the respondent is absolved of the charge, and
in case of conviction where the penalty imposed is public censure or reprimand, suspension of
not more than one month, or a fine equivalent to one month salary, the decision shall be final,
executory and unappealable. In all other cases, the decision may be appealed to the Court of
Appeals on a verified petition for review under the requirements and conditions set forth in Rule
43 of the Rules of Court, within fifteen (15) days from receipt of the written Notice of the
Decision or Order denying the motion for reconsideration.

An appeal shall not stop the decision from being executory. In case the penalty is suspension or
removal and the respondent wins such appeal, he shall be considered as having been under
preventive suspension and shall be paid the salary and such other emoluments that he did not
receive by reason of the suspension or removal.

A decision of the Office of the Ombudsman in administrative cases shall be executed as a matter
of course.1âwphi1 The Office of the Ombudsman shall ensure that the decision shall be strictly
enforced and properly implemented. The refusal or failure by any officer without just cause to
comply with an order of the Office of the Ombudsman to remove, suspend, demote, fine, or
censure shall be a ground for disciplinary action against such officer. [Emphases supplied]

The Ombudsman's decision imposing the penalty of suspension for one year is immediately
executory pending appeal. It cannot be stayed by the mere filing of an appeal to the CA. This
rule is similar to that provided under Section 47 of the Uniform Rules on Administrative Cases in
the Civil Service.

In the case of In the Matter to Declare in Contempt of Court Hon. Simeon A. Datumanong,
Secretary of the DPWH, we held:

The Rules of Procedure of the Office of the Ombudsman are clearly procedural and no vested
right of the petitioner is violated as he is considered preventively suspended while his case is on
appeal. Moreover, in the event he wins on appeal, he shall be paid the salary and such other
emoluments that he did not receive by reason of the suspension or removal. Besides, there is no
such thing as a vested interest in an office, or even an absolute right to hold office. Excepting
constitutional offices which provide for special immunity as regards salary and tenure, no one
can be said to have any vested right in an office.

xxxx

x x x Here, Section 7, Rule III of the Rules of Procedure of the Office of the Ombudsman, as
amended, is categorical, an appeal shall not stop the decision from being executory.

Moreover, Section 13 (8), Article XI of the Constitution authorizes the Office of the Ombudsman
to promulgate its own rules of procedure. In this connection, Sections 18 and 27 of the
Ombudsman Act of 1989 also provide that the Office of the Ombudsman has the power to
"promulgate its rules of procedure for the effective exercise or performance of its powers,
functions and duties" and to amend or modify its rules as the interest of justice may require. For
the CA to issue a preliminary injunction that will stay the penalty imposed by the Ombudsman in
an administrative case would be to encroach on the rule-making powers of the Office of the
Ombudsman under the Constitution and RA 6770 as the injunctive writ will render nugatory the
provisions of Section 7, Rule III of the Rules of Procedure of the Office of the Ombudsman.

Clearly, Section 7, Rule III of the Rules of Procedure of the Office of the Ombudsman
supersedes the discretion given to the CA in Section 12, Rule 43 of the Rules of Court when a
decision of the Ombudsman in an administrative case is appealed to the CA. The provision in the
Rules of Procedure of the Office of the Ombudsman that a decision is immediately executory is a
special rule that prevails over the provisions of the Rules of Court. Specialis derogat generali.
When two rules apply to a particular case, that which was specially designed for the said case
must prevail over the other. [Emphases supplied]

Thus, Section 7, Rule III of the Rules of Procedure of the Office of the Ombudsman, as amended
by Administrative Order (A.O.) No. 17, is categorical in providing that an appeal shall not stop
an Ombudsman decision from being executory. This rule applies to the appealable decisions of
the Ombudsman, namely, those where the penalty imposed is other than public censure or
reprimand, or a penalty of suspension of more than one month, or a fine equivalent to more than
one month's salary. Hence, the dismissal of De Jesus and Parungao from the government service
is immediately executory pending appeal.

The aforementioned Section 7 is also clear in providing that in case the penalty is removal and
the respondent wins his appeal, he shall be considered as having been under preventive
suspension and shall be paid the salary and such other emoluments that he did not receive by
reason of the removal. As explained above, there is no such thing as a vested interest in an office,
or an absolute right to hold office, except constitutional offices with special provisions on salary
and tenure. The Rules of Procedure of the Ombudsman being procedural, no vested right of De
Jesus and Parungao would be violated as they would be considered under preventive suspension,
and entitled to the salary and emoluments they did not receive in the event that they would win
their appeal.

The ratiocination above also clarifies the application of Rule 43 of the Rules of Court in relation
to Section 7 of the Rules of Procedure of the Office of the Ombudsman. The CA, even on terms
it may deem just, has no discretion to stay a decision of the Ombudsman, as such procedural
matter is governed specifically by the Rules of Procedure of the Office of the Ombudsman.

The CA's issuance of a preliminary mandatory injunction, staying the penalty of dismissal
imposed by the Ombudsman in this administrative case, is thus an encroachment on the rule-
making powers of the Ombudsman under Section 13 (8), Article XI of the Constitution, and
Sections 18 and 27 of R.A. No. 6770, which grants the Office of the Ombudsman the authority to
promulgate its own rules of procedure. The issuance of an injunctive writ renders nugatory the
provisions of Section 7, Rule III of the Rules of Procedure of the Office of the Ombudsman.10

From the foregoing elaboration, there can be no cavil that respondents do not have any right to a
stay of the Ombudsman's decision dismissing them from service. Perforce, the BSU-BOR acted
properly in issuing Resolution No. 18, series of 2005, dated August 22, 2005, pursuant to the
order of the Ombudsman, as its legally-mandated duty. The CA's Resolution granting
respondents' prayer for a writ of preliminary injunction is patently erroneous.

WHEREFORE, the petition is GRANTED. The Resolution of the Court of Appeals, dated April
7, 2006, is SET ASIDE. The Order of the Regional Trial Court of Batangas City, Branch 4, dated
September 26, 2005 in Civil Case No. 7775, is REINSTATED.

SO ORDERED.

G.R. No. 178221               December 1, 2010

MAY D. AÑONUEVO, ALEXANDER BLEE DESANTIS and JOHN DESANTIS
NERI, Petitioners,
vs.
INTESTATE ESTATE OF RODOLFO G. JALANDONI, represented by BERNARDINO
G. JALANDONI as Special Administrator, Respondent.

DECISION

PEREZ, J.:

On appeal1 is the Decision2 dated 31 May 2007 of the Court of Appeals in CA-G.R. SP No.
00576. In the said decision, the Court of Appeals nullified, on certiorari, the Orders3 of the
Regional Trial Court, Branch 40, of Negros Occidental (intestate court) allowing herein
petitioners and their siblings4 to intervene in the estate proceedings of the late Rodolfo G.
Jalandoni.5 The decretal portion of the decision of the appellate court reads:

ACCORDINGLY, the petition for certiorari is hereby GRANTED, the assailed Orders dated July
2, 2004 and January 26, 2005, of the Regional Trial Court in Spec. Proc. No. 338 are hereby SET
ASIDE and NULLIFIED, and a permanent injunction is hereby issued enjoining respondents
[petitioners], their agents and anyone acting for and in their behalves, from enforcing the assailed
Orders. No costs.6

The antecedents are:

Rodolfo G. Jalandoni (Rodolfo) died intestate on 20 December 1966.7 He died without issue.8

On 28 April 1967, Bernardino G. Jalandoni (Bernardino), the brother of Rodolfo, filed a petition
for the issuance of letters of administration9 with the Court of First Instance of Negros
Occidental, to commence the judicial settlement of the latter’s estate. The petition was docketed
as Spec. Proc. No. 338 and is currently pending before the intestate court.10

On 17 January 2003, the petitioners and their siblings filed a Manifestation11 before the intestate
court. In the Manifestation, they introduced themselves as the children of Sylvia Blee Desantis
(Sylvia)—who, in turn, was revealed to be the daughter of Isabel Blee (Isabel) with one John
Desantis.12

The petitioners and their siblings contend that their grandmother—Isabel—was, at the time of
Rodolfo’s death, the legal spouse of the latter.13 For which reason, Isabel is entitled to a share in
the estate of Rodolfo.

Seeking to enforce the right of Isabel, the petitioners and their siblings pray that they be allowed
to intervene on her behalf in the intestate proceedings of the late Rodolfo G. Jalandoni.14 As it
was, by the time the Manifestation was filed, both Sylvia and Isabel have already passed away
with the former predeceasing the latter.15
To support their cause, the petitioners and their siblings appended in their Manifestation, the
following documents:

a.) Two (2) marriage certificates between Isabel and Rodolfo;16

b.) The birth certificate of their mother, Sylvia;17 and

c.) Their respective proof of births.18

It is the assertion of the petitioners and their siblings that the foregoing pieces of evidence
sufficiently establish that Isabel was the spouse of Rodolfo, and that they are her lawful
representatives.

The respondent intestate estate of Rodolfo G. Jalandoni, now represented by Bernardino as its
Special Administrator, however, begged to differ. It opposed the intervention on the ground that
the petitioners and their siblings have failed to establish the status of Isabel as an heir of Rodolfo.
The very evidence presented by the petitioners and their siblings showed that Isabel had a
previous and subsisting marriage with John Desantis at the time she was purportedly married to
Rodolfo.

In its Comment to the Manifestation,19 the respondent called attention to the entries in the birth
certificate of Sylvia, who was born on 14 February 1946.20 As it turned out, the record of birth of
Sylvia states that she was a "legitimate" child of Isabel and John Desantis.21 The document also
certifies the status of both Isabel and John Desantis as "married."22 The respondent posits that the
foregoing entries, having been made in an official registry, constitute prima facie proof of a prior
marriage between Isabel and John Desantis.23

According to the respondent, Isabel’s previous marriage, in the absence of any proof that it was
dissolved, made her subsequent marriage with Rodolfo bigamous and void ab initio.24

On 2 July 2004, the intestate court issued an order allowing the petitioners and their siblings to
take part in the settlement proceedings.25 The intestate court was convinced that the evidence at
hand adequately establish Isabel’s status as the legal spouse of Rodolfo and, by that token,
permitted the petitioners and their siblings to intervene in the proceedings on her behalf.26

The intestate court also held that the birth certificate of Sylvia was insufficient to prove that there
was a previous marriage between Isabel and John Desantis.27 It ventured on the possibility that
the entries in the birth record of Sylvia regarding her legitimacy and the status of her parents,
may have been made only in order to save Isabel and her family from the social condemnation of
having a child out of wedlock.28

The respondent sought for reconsideration, but was denied by the intestate court in its order
dated 26 January 2006.29 Undeterred, the respondent hoisted a petition for certiorari before the
Court of Appeals.
On 31 May 2007, the Court of Appeals granted the petition and nullified the orders of the
intestate court.30

In coming to its conclusion, the Court of Appeals found that it was an error on the part of the
intestate court to have disregarded the probative value of Sylvia’s birth certificate.31 The
appellate court, siding with the respondent, held that Sylvia’s birth certificate serves as prima
facie evidence of the facts therein stated—which includes the civil status of her parents.32 Hence,
the previous marriage of Isabel with John Desantis should have been taken as established.

The Court of Appeals added that since the petitioners and their siblings failed to offer any other
evidence proving that the marriage of Isabel with John Desantis had been dissolved by the time
she was married to Rodolfo, it then follows that the latter marriage—the Isabel-Rodolfo union—
is a nullity for being bigamous.33 From that premise, Isabel cannot be considered as the legal
spouse of Rodolfo. The petitioners and their siblings, therefore, failed to show that Isabel has any
interest in the estate of Rodolfo.

Hence, the instant appeal.34

The sole issue in this appeal is whether the Court of Appeals erred when it nullified the orders of
the intestate court allowing the petitioners and their siblings to intervene in the settlement
proceedings.

The petitioners answer in the affirmative. They proffer the following arguments:

One. The Court of Appeals exceeded the limits of review under a writ of certiorari.35 In
nullifying the intestate court’s order, the appellate court did not confine itself to the issue of
whether the same was issued with grave abuse of discretion.36 Rather, it chose to re-assess the
evidence and touch upon the issue pertaining to Isabel’s right to inherit from Rodolfo.37

Had the appellate court limited itself to the issue of whether grave abuse of discretion exists, it
would have found that the intestate court did not act whimsically or capriciously in issuing its
assailed orders.38 Grave abuse of discretion on the part of the intestate court is belied by the fact
that the said orders may be supported by the two (2) marriage certificates between Isabel and
Rodolfo.39

Second. Assuming ex-gratia argumenti that the Court of Appeals was correct in addressing the
issue of whether there was sufficient evidence to prove that Isabel has a right to inherit from
Rodolfo, it nevertheless erred in finding that there was none.40 A proper evaluation of the
evidence at hand does not support the conclusion that Isabel had a previous marriage with John
Desantis.41

To begin with, the respondent was not able to produce any marriage certificate executed between
Isabel and John Desantis.42 The conspicuous absence of such certificate can, in turn, only lend
credibility to the position that no such marriage ever took place.
Moreover, the entries in the birth certificate of Sylvia do not carry the necessary weight to be
able to prove a marriage between Isabel and John Desantis.43 In assessing the probative value of
such entries, the Court of Appeals should have taken note of a "typical" practice among unwed
Filipino couples who, in order to "save face" and "not to embarrass their families," concoct the
illusion of marriage and make it appear that a child begot by them is legitimate.44

Since the alleged previous marriage of Isabel with John Desantis was not satisfactorily proven,
the Court of Appeals clearly erred in finding that her marriage with Rodolfo is bigamous.

We are not impressed.

First Argument

The first argument raised by the petitioners is specious at best. The question of whether the
intestate court gravely abused its discretion is intricately linked with the issue of whether there
was sufficient evidence to establish Isabel’s status as the legal spouse of Rodolfo.

A court’s power to allow or deny intervention, albeit discretionary in nature, is circumscribed by

the basic demand of sound judicial procedure that only a person with interest in an action or
proceeding may be allowed to intervene.45 Otherwise stated, a court has no authority to allow a
person, who has no interest in an action or proceeding, to intervene therein.46

Consequently, when a court commits a mistake and allows an uninterested person to intervene in
a case—the mistake is not simply an error of judgment, but one of jurisdiction. In such event, the
allowance is made in excess of the court’s jurisdiction and can only be the product of an exercise
of discretion gravely abused. That kind of error may be reviewed in a special civil action for
certiorari.

Verily, the Court of Appeals was acting well within the limits of review under a writ of
certiorari, when it examined the evidence proving Isabel’s right to inherit from Rodolfo. The
sufficiency or insufficiency of such evidence determines whether the petitioners and their
siblings have successfully established Isabel’s interest in Rodolfo’s estate—which, as already
mentioned, is an indispensable requisite to justify any intervention. Ultimately, the re-assessment
of the evidence presented by the petitioners and their siblings will tell if the assailed orders of the
intestate court were issued in excess of the latter’s jurisdiction or with grave abuse of discretion.

We now proceed to the second argument of the petitioners.

Second Argument

The second argument of the petitioners is also without merit. We agree with the finding of the
Court of Appeals that the petitioners and their siblings failed to offer sufficient evidence to
establish that Isabel was the legal spouse of Rodolfo. The very evidence of the petitioners and
their siblings negates their claim that Isabel has interest in Rodolfo’s estate.
Contrary to the position taken by the petitioners, the existence of a previous marriage between
Isabel and John Desantis was adequately established. This holds true notwithstanding the fact
that no marriage certificate between Isabel and John Desantis exists on record.

While a marriage certificate is considered the primary evidence of a marital union, it is not
regarded as the sole and exclusive evidence of marriage.47 Jurisprudence teaches that the fact of
marriage may be proven by relevant evidence other than the marriage certificate.48 Hence, even a
person’s birth certificate may be recognized as competent evidence of the marriage between his
parents.49

In the present case, the birth certificate of Sylvia precisely serves as the competent evidence of
marriage between Isabel and John Desantis. As mentioned earlier, it contains the following
notable entries: (a) that Isabel and John Desantis were "married" and (b) that Sylvia is their
"legitimate" child.50 In clear and categorical language, Sylvia’s birth certificate speaks of a
subsisting marriage between Isabel and John Desantis.

Pursuant to existing laws,51 the foregoing entries are accorded prima facie weight. They are
presumed to be true. Hence, unless rebutted by clear and convincing evidence, they can, and will,
stand as proof of the facts attested.52 In the case at bench, the petitioners and their siblings
offered no such rebuttal.

The petitioners did no better than to explain away the entries in Sylvia’s birth certificate as
untruthful statements made only in order to "save face."53 They urge this Court to take note of a
"typical" practice among unwed Filipino couples to concoct the illusion of marriage and make it
appear that a child begot by them is legitimate. That, the Court cannot countenance.

The allegations of the petitioners, by themselves and unsupported by any other evidence, do not
diminish the probative value of the entries. This Court cannot, as the petitioners would like Us to
do, simply take judicial notice of a supposed folkway and conclude therefrom that the usage was
in fact followed. It certainly is odd that the petitioners would themselves argue that the document
on which they based their interest in intervention contains untruthful statements in its vital
entries.

Ironically, it is the evidence presented by the petitioners and their siblings themselves which,
properly appreciated, supports the finding that Isabel was, indeed, previously married to John
Desantis. Consequently, in the absence of any proof that such marriage had been dissolved by
the time Isabel was married to Rodolfo, the inescapable conclusion is that the latter marriage is
bigamous and, therefore, void ab initio.

The inability of the petitioners and their siblings to present evidence to prove that Isabel’s prior
marriage was dissolved results in a failure to establish that she has interest in the estate of
Rodolfo. Clearly, an intervention by the petitioners and their siblings in the settlement
proceedings cannot be justified. We affirm the Court of Appeals.

WHEREFORE, the instant appeal is DENIED. Accordingly, the decision dated 31 May 2007
of the Court of Appeals in CA-G.R. SP No. 00576 is hereby AFFIRMED.
Costs against the petitioners.

SO ORDERED.

G.R. No. L-29264             August 29, 1969

BARBARA RODRIGUEZ, petitioner,
vs.
HON. COURT OF APPEALS (Second Division, composed of JUSTICES JUAN P.
ENRIQUEZ, HERMOGENES CONCEPCION, JR. and EDILBERTO SORIANO),
ATANACIO VALENZUELA, MAXIMINA VICTORIO, LIBERATA SANTOS, NIEVES
CRUZ, substituted by her heirs, ARSENIO, JAYME, ANDRES, NELO and AMANDA, all
surnamed NERY, and CARMEN and ARSENIA, both surnamed MENDOZA, respondents.

Fortunato de Leon for petitioner.

Sycip, Salazar, Luna, Manalo and Feliciano for respondent Atanacio Valenzuela.
San Juan, Africa, Gonzales and San Agustin for respondent Nieves Cruz.

CASTRO, J.:

For a clear understanding of the issues posed by the present petition

for mandamus  and certiorari with preliminary injunction, we hereunder quote the statement of
the case and the findings of fact made by the Court of Appeals in its decision dated October 4,
1967 in CA-G.R. 35084-R, as well as the dispositive portion of the said decision:

On December 31, 1958, in Parañaque, Rizal, by virtue of a document denominated

"Kasunduan" written in the vernacular and ratified before Notary Public Lazaro C. Ison
of that locality, Nieves Cruz, now deceased, authorized the spouses Atanacio Valenzuela,
and Maximina Victorio and Liberate Santos to sell a certain parcel of land of about
44,634 square meters belonging to her and situated in Sitio Matatdo, Barrio San Dionisio,
Parañaque, Rizal, the identity of which is not now in dispute. Among, the anent
conditions of this authority were that the price payable to Nieves Cruz for the land would
be P1.60 per square meter and any overprice would pertain to the agents; that Nieves
Cruz would receive from said agents, by way of advance payment on account of the
purchase price to be paid by whomsoever may buy the land, the sum of P10,000.00 upon
the execution of the agreement aforesaid, and another P10,000.00 on January 5, 1959;
that the balance on the total purchase price would be payable to Nieves Cruz upon the
issuance of the Torrens title over the property, the obtention of which was undertaken by
the agents who also were bound to advance the expense therefor in the sum of P4,000.00
which would be deductible from the last amount due on the purchase price; and that
should the agent find no buyer by the time that Torrens title is issued, Nieves Cruz
reserved the right to look for a buyer herself although all sums already received from the
agents would be returned to them without interest.

As confirmed by Nieves Cruz in a "recibo", Exhibit 2, bearing the date "... ng Enero ng
1959," the stipulated "advance payment (paunang bayad)" of P20,000.00 was duly made
to her. Contrary to the agreement that the balance on the purchase price would be paid
upon the issuance of the Torrens title over the land (September 9, 1960), Nieves Cruz and
her children, however, collected from the agents, either thru Maximina Victorio or thru
Salud G. de Leon, daughter of Liberate Santos, various sums of money during the period
from July 3, 1959 up to September 3, 1961, all of which were duly receipted for by
Nieves Cruz and/or her children and in which receipts it is expressly stated that said
amounts were "bilang karagdagan sa ipinagbili naming lupa sa kanila (additional
payments for the land we sold to them)", Exhibits 12, 12-a to 12-z-1. These totalled
P27,198.60 which with the P20,000.00 previously paid amounted to P47,198.60.

Meanwhile, proceedings to place the land under the operation of the Torrens system were
initiated. In due season, the registration court — finding a registrable title in the name of
the applicants, Emilio Cruz and Nieves Cruz, but that —

"... the applicant Nieves Cruz has likewise sold her one-half (1/2) undivided share
to the spouses Atanacio Valenzuela and Maxima (Maximina) Victorio and to
Liberata Santos from whom she had received partial payments thereof in the sum
of P22,000.00;" (Exhibit 4-a).

decreed, on July 15, 1960, the registration of the land in the names of the applicants
aforesaid —

"Subject ... to the rights of the spouses Atanacio Valenzuela and Maximina
Victorio and to Liberata Santos over the one-half share of Nieves Cruz of the
parcel of land for which the latter was paid P22,000.00 as partial payment
thereof." (Exhibit 4).

The judgment aforesaid having become final, the corresponding Original Certificate of
Title No. 2488 of the Registry of Deeds of Rizal was, on September 9, 1960, duly entered
and issued to the applicants aforesaid, subject, amongst others, to the limitation
heretofore stated.

Eventually, pursuant to a partition between Nieves Cruz and her brother, Emilio Cruz, by
virtue of which the entire land was subdivided into two lots of 48,260 square meters each,
Original Transfer of Title No. 2488 was cancelled and superseded by two new transfer
certificates respectively covering the two sub-divided lots, that which pertained to Nieves
Cruz, Lot A (LRC) Psd-13106, being covered by Transfer Certificate of Title No. 80110
issued on October 3, 1960. Said title carried over the annotation heretofore mentioned
respecting the rights of Atanacio Valenzuela and Maximina Victorio and Liberata Santos
over the portion covered thereby. (Exhibits 6 and 6-a).

Then, on September 15, 1961, Nieves Cruz sold the property in question to Barbara
Lombos Rodriguez, her "balae" because the latter's son was married to her daughter, for
the sum of P77,216.00 (Exhibit J). In consequence, Transfer Certificate of Title No.
80110 in the name of Nieves Cruz was cancelled and, in lieu thereof, Transfer Certificate
of Title No. 91135 was issued in the name of Barbara Lombos Rodriguez (Exhibit I)
which likewise carried over the annotation respecting the rights of Atanacio Valenzuela,
Maximina Victorio and Liberata Santos over the property covered thereby.

Forthwith, on September 16, 1961, Nieves Cruz, through counsel, gave notice to
Atanacio Valenzuela, Maximina Victorio and Liberata Santos of her decision to rescind
the original agreement heretofore adverted to, enclosing with said notice Bank of
America check for P48,338.60, representing sums advanced by the latter which were
tendered to be returned. Atanacio Valenzuela, Maximina Victorio and Liberata Santos,
through counsel, balked at the attempt at rescission, denying non-compliance with their
undertaking inasmuch as, per agreement, the balance on the purchase price for the land
was not due until after the 1962 harvest. They, accordingly, returned Nieves Cruz' check.

Thus rebuffed, plaintiff Nieves Cruz hailed defendants Atanacio Valenzuela, Maximina
Victorio and Liberate Santos before the Rizal Court in the instant action for rescission of
the "Kasunduan" heretofore adverted to, the cancellation of the annotation on the title to
the land respecting defendant's right thereto, and for damages and attorney's fees. In their
return to the complaint, defendants traversed the material averments thereof, contending
principally that the agreement sought to be rescinded had since been novated by a
subsequent agreement whereunder they were to buy the property directly. They also
impleaded Barbara Lomboa Rodriguez on account of the sale by the plaintiff to her of the
subject property and interposed a counterclaim against both plaintiff and Rodriguez for
the annulment of the sale of the land to the latter, as well as the transfer certificate of title
issued in her favor consequent thereto and the reconveyance of the land in their favor,
and also for damages and attorney's fees.

Pending the proceedings below, plaintiff Nieves Cruz died and was, accordingly,
substituted as such by her surviving children, to wit: Arsenio, Nelo, Jaime, Andres and
Amanda, all surnamed Nery, and Carmen and Armenia both surnamed Mendoza.

In due season, the trial court — finding for plaintiff Nieves Cruz and her buyer, Barbara
Lombos Rodriguez, and against defendants — rendered judgment thus —

"IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered (1)

Ordering the cancellation at the back of Transfer Certificate of Title No. 91135 of
the Register of Deeds of Rizal, stating that the land covered thereby was sold to
the defendants; (2) Ordering the defendants to pay to the plaintiff, jointly and
severally the sum of P67,564.00 as actual damages and P5,000.00 by way of
attorney's fees; (3) Dismissing the defendants counterclaim; and (4) Ordering the
defendants to pay the costs of this suit jointly and severally."

xxx     xxx     xxx

We find no obstacle to appellants' purchase of the land in the prohibition against an agent
buying the property of his principal entrusted to him for sale. With the agreement of
Nieves Cruz to sell the land directly to said appellants, her agents originally, it cannot
seriously be contended that the purchase of the land by appellants was, without the
express consent of the principal Nieves Cruz. Accordingly, that purchase is beyond the
coverage of the prohibition.

By and large, we are satisfied from a meticulous assay of the evidence at bar that the
contract of sale over the land subsequently made by Nieves Cruz in favor of appellants
was duly and satisfactorily proved. No showing having been made by appellees to
warrant the rescission of that contract, the attempt of such rescission is legally untenable
and necessarily futile. The specific performance of that contract is under the
circumstances, legally compellable.

Considering that the rights of appellants, as such purchasers of the portion corresponding
to Nieves Cruz, is a matter of official record in the latter's certificate of title over the land
— the annotation of which was authorized by the decision of the registration court and
which annotation was duly carried over in the subsequent titles issued therefor, including
that issued in the name of appellee Rodriguez — said appellee must be conclusively
presumed to have been aware, as indeed she was, of the prior rights acquired by
appellants over the said portion. Said appellee's acquisition of the land from Nieves Cruz
remains subject, and must yield, to the superior rights of appellants. Appellee Rodriguez
cannot seek refuge behind the protection afforded by the Land Registration Act to
purchasers in good faith and for value. Aware as she was of the existence of the
annotated prior rights of appellants, she cannot now be heard to claim a right better than
that of her grantor, Nieves Cruz. Her obligation to reconvey the land to the appellants is
thus indubitable.

xxx     xxx     xxx

WHEREFORE, the judgment appealed from is hereby REVERSED in toto, and, in lieu
thereof, another is hereby rendered:

(1) Setting aside and annulling the deed of sale, Exhibit J, executed by plaintiff in favor
of Barbara Lombos Rodriguez;

(2) Declaring defendant-appellee Barbara Lombos Rodriguez divested of title over the
property covered by TCT No. 91135 of the Register of Deeds of Rizal and title thereto
vested in defendants-appellants upon payment of the latter to appellee Rodriguez of the
sum of P28,877.40, representing the balance of the agreed purchase price due on the
property minus P13,000.00 awarded under paragraph (4) within 90 days after this
decision shall have become final, and ordering the Register of Deeds of Rizal to cancel
TCT No. 91135 and issue in lieu thereof a new certificate of title in favor of appellants,
upon payment of corresponding fees;

(3) Ordering plaintiffs and defendant Barbara Lombos Rodriguez to deliver to the
defendants-appellants possession of the property aforementioned; and

(4) Ordering appellees jointly and severally to pay to defendants-appellants the sum of
P5,000.00 as temperate damages, P3,000.00 as moral damages and P5,000.00 as
 attorney's fees plus costs. These amounts shall be deducted from the P28,877.40
appellants are required to pay to Rodriguez under paragraph (2) hereof.

This case is before us for the second time. In L-28462, the heirs of Nieves Cruz and the present
petitioner (Barbara Lombos Rodriguez) filed a joint petition for certiorari — as an original
action under Rule 65 and, simultaneously, as an appeal under Rule 45. As the former, it sought
redress against the refuse of the respondent Court of Appeals to consider a motion for
reconsideration filed beyond the reglementary period. As the latter, it sought a review of the
respondent Court's findings of fact and conclusions of law. On January 3, 1968 we denied the
joint petition; the joint petition was thereafter amended, and this amended petition we likewise
denied on January 26, 1968; on February 20, 1968 we denied the motion for reconsideration filed
solely by Rodriguez.

On July 20, 1968, Rodriguez alone filed the present petition for mandamus and certiorari. She
prays for the issuance of a writ of preliminary injunction to restrain the respondents from
enforcing the decision of the Court of Appeals in CA-G.R. 35084-R and from entering into any
negotiation or transaction or otherwise exercising acts of ownership over the parcel of land
covered by transfer certificate of title 91135 issued by the Register of Deeds of Rizal. She also
prays that preliminary injunction issue to restrain the Register of Deeds of Rizal from registering
any documents affecting the subject parcel of land. No injunction, however, was issued by us.

The petition in the present case, L-29264, while again assailing the findings of fact and
conclusions of law made by the respondent Court, adds two new grounds. The first is the
allegation that the land involved in CA-G.R. 35084-R has a value in excess of P200,000. The
petitioner complains that the Court of Appeals should have certified the appeal to us, pursuant to
section 3 of Rule 50 in relation to section 17(5) of the Judiciary Act of 1948, 1 as she had asked
the said Court to do in her supplemental motion of June 14, 1968. The second ground is the
claim that the Court of Appeals gravely abused its discretion in denying her May 14, 1968
motion for new trial, based on alleged newly discovered evidence.

In their answer, Atanacio Valenzuela, Maximina Victorio and Liberata Santos allege that the
findings of fact made by the Court of Appeals in its decision of October 4, 1967 are substantiated
by the record and the conclusions of law are supported by applicable laws and jurisprudence,
and, moreover, that these findings are no longer open to review inasmuch as the said decision has
become final and executory, the period of appeal provided in Rule 45 having expired. Atanacio
Valenzuela, et al. also maintain that the land in litigation had a value of less than P200,000,
according to the records of the case, when their appeal from the decision of the Court of First
Instance of Rizal in civil case 6901 was perfected; that the petitioner's motion for new trial in the
Court of Appeals was filed out of time; and that the petitioner is estopped from questioning the
jurisdiction of the Court of Appeals in the matter of the value of the land in controversy. Two
grounds for the defense of estoppel are offered by Atanacio Valenzuela, et al. One is that the
petitioner speculated in obtaining a favorable judgment in the Court of Appeals by submitting
herself to the jurisdiction of the said Court and she cannot now therefore be allowed to attack its
jurisdiction when the judgment turned out to be unfavorable. The other is that the petitioner's
laches made possible the sale in good faith by Atanacio Valenzuela, et al., of the land in
litigation to Emilio and Isidro Ramos, in whose names the land is at present registered under
transfer certificate of title 229135 issued on September 25, 1968 by the Register of Deeds of
Rizal.

The heirs of Nieves Cruz filed an answer unqualifiedly admitting the basic allegations of the
petition, except as to the value of the land, as to which they are non-committal.

It is our considered view that the petitioner's claim of grave abuse by the respondent Court in
denying her motion for new trial is devoid of merit. It is not disputed that, on the assumption that
the respondent Court had jurisdiction over the appeal, the petitioner had already lost her right to
appeal from the decision of October 4, 1967 when the petition in L-28462 was filed in January
1968. It logically follows that the case had passed the stage for new trial on newly discovered
evidence when the petitioner filed her motion for new trial on May 14, 1968.

Two issues remain, to wit, (1) the value of the land in controversy; and (2) estoppel.

At the time appeal was taken to the Court of Appeals. section 17(5) of the Judiciary Act of 1948,
as amended, provided:

The Supreme Court shall have exclusive jurisdiction to review, revise, reverse modify or affirm
on appeal, certiorari or writ of error, as the law or rules of court may provide, final judgments
and decrees of inferior courts as herein provided, in —

xxx     xxx     xxx

(5) All civil cases in which the value in controversy exceeds two hundred thousand pesos,
exclusive of interests and costs or in which the title or possession of real estate exceeding
in value the sum of two hundred thousand pesos to be ascertained by the oath of a party
to the cause or by other competent evidence, is involved or brought in question. The
Supreme Court shall likewise have exclusive jurisdiction over all appeals in civil cases,
even though the value in controversy, exclusive of interests and costs, is two hundred
thousand pesos or less, when the evidence involved in said cases is the same as the
evidence submitted in an appealed civil case within the exclusive jurisdiction of the
Supreme Court as provided herein.

The petitioner would have us believe that, other than a realtor's sworn statement dated June 14,
1968, which was filed with the respondent Court together with her supplemental motion, there is
nothing in the records that would indicate the value of the litigated parcel. We disagree. The
"Kasunduan" (annex A to the petition) dated December 31, 1958 executed by and between
Nieves Cruz and Atanacio Valenzuela, et al. fixed the value of the land (of an area of 44,634
square meters) at P1.60 per square meter. The decision (annex B) of the Court of First Instance
of Rizal dated August 12, 1964 assessed the value of the land at P3.00 per square meter. The
decision (annex D) dated October 4, 1967 of the respondent Court of Appeals pointed out that
the consideration stated in the deed of sale of the land executed by Nieves Cruz in favor of
Rodriguez, the petitioner herein, is P77,216. Moreover, until June 14, 1968, no party to the cause
questioned the valuation of P3.00 per square meter made by the trial court. The records,
therefore, overwhelmingly refute the petitioner's allegation. They also prove that the value of the
entire parcel of land had been impliedly admitted by the parties as being below P200,000.

Granting arguendo, however, that the value of the land in controversy is in excess of P200,000,
to set aside at this stage all proceedings had before the Court of Appeals in CA-G.R. 35084-R,
and before this Court in L-28462, would violate all norms of justice and equity and contravene
public policy. The appeal from the decision of the Court of First Instance of Rizal was pending
before the respondent Court during the period from 1964 until October 4, 1967, when on the
latter date it was decided in favor of the appellants and against the petitioner herein and the heirs
of Nieves Cruz. Yet, the appellees therein did not raise the issue of jurisdiction. The joint petition
in L-28462 afforded the petitioner herein the opportunity to question the jurisdiction of the
respondent Court. Again, the value of the land in controversy, was not questioned by the
petitioners, not even in their amended joint petition. It was not until June 14, 1968 that the
petitioner herein filed with the respondent Court a supplemental motion wherein she raised for
the first time the issue of value and questioned the validity of the final decision of the respondent
Court on the jurisdictional ground that the real estate involved has a value in excess of P200,000.
That the petitioner's present counsel became her counsel only in May, 1968 provides no excuse
for the petitioner's failure to exercise due diligence for over three years to discover that the land
has a value that would oust the respondent Court of jurisdiction. The fact remains that the
petitioner had allowed an unreasonable period of time to lapse before she raised the question of
value and jurisdiction, and only after and because the respondent Court had decided the case
against her. The doctrine of estoppel by laches bars her from now questioning the jurisdiction of
the Court of Appeals.

The learned disquisition of Mr. Justice Arsenio P. Dizon, speaking for this Court in Serafin
Tijam, et al. vs. Magdaleno Sibonghanoy, et al. (L-21450, April 15, 1968), explained, in
unequivocal terms, the reasons why, in a case like the present, a losing party cannot be permitted
to belatedly raise the issue of jurisdiction.

A party may be estopped or barred from raising a question in different ways and for
different reasons. Thus we speak of estoppel in pais, of estoppel by deed or by record,
and of estoppel by laches.

Laches, in a general sense, is failure or neglect, for an unreasonable and unexplained

length of time, to do that which, by exercising due diligence, could or should have been
done earlier; it is negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert it either has abandoned it or
declined to assert it.

The doctrine of laches or of "stale demands" is based upon grounds of public policy
which requires, for the peace of society, the discouragement of stale claims and, unlike
the statute of limitation is not a mere question of time but is principally a question of the
inequity or unfairness of permitting a right or claim to be enforced or asserted.

It has been held that a party cannot invoke the jurisdiction of a court to secure affirmative
relief against his opponent and, after obtaining or failing to obtain such relief, repudiate
 or question that same jurisdiction (Dean vs. Dean, 136 Or. 694, 86 A. L. R. 79). In the
case just cited, by way of explaining the rule, it was further said that the question whether
the court had jurisdiction either of the subject matter of the action or of the parties was
not important in such cases because the party is barred from such conduct not because
the judgment or order of the court is valid and conclusive as an adjudication, but for the
reason that such a practice cannot be tolerated — obviously for reasons of public policy.

Furthermore, it has also been held that after voluntarily submitting a cause and
encountering an adverse decision on the merits, it is too late for the loser to question the
jurisdiction or power of the court (Pease vs. Rathbun-Jones, etc., 243 U.S. 273, 61 L. Ed.
715, 37 S. Ct. 283; St. Louis, etc. vs. McBride, 141 U.S. 127, 35 L. Ed. 659). And
in Littleton vs. Burgess, 16 Wyo 58, the Court said that it is not right for a party who has
affirmed and invoked the jurisdiction of a court in a particular matter to secure an
affirmative relief, to afterwards deny that same jurisdiction to escape a penalty.

Upon this same principle is what We said in the three cases mentioned in the resolution
of the Court of Appeals of May 20, 1963 (supra) — to the effect that we frown upon the
"undesirable practice" of a party submitting his case for decision and then accepting the
judgment, only if favorable, and attacking it for lack of jurisdiction, when adverse — as
well as in Pindañgan etc. vs. Dans, et al., G.R. L-14591, September 26,
1962; Montelibano, et al. vs. Bacolod-Murcia Milling Co., Inc., G.R. L-15092; Young
Men Labor Union, etc. vs. The Court of Industrial Relations, et al., G.R. No.
L-20307, Feb. 26, 1965; and Mejia vs. Lucas, 100 Phil. p. 277.

We do not here rule that where the pleadings or other documents in the records of a case state a
value of a real estate in controversy, a party to the cause may not show that the true value thereof
is more or is less than that stated in the records. Section 17(5) of the Judiciary Act of 1948
precisely allows a party to submit a sworn statement of such higher or lower value. This is not to
say, of course, that the court is bound by a party's sworn statement, for where more than one
party submit materially differing statements of value, or where a party's sworn statement
conflicts with other competent evidence, the true value is to be determined by the trial court as an
issue of fact before it.

The time when the issue of the value of a real estate in controversy is to be resolved is prior to, or
simultaneously with, the approval of the record on appeal and appeal bond, for it is upon the
perfection of the appeal that the appellate court acquires jurisdiction over the case (Rule 41,
section 9). It is at this time that a party to the cause, be he the intended appellant or the intended
appellee, must raise the issue of value before the trial court, for said court to allow appeal
involving a question of fact either to this Court or to the Court of Appeals, depending on its
finding on the value of the realty. Failure to raise this issue before the trial court amounts to a
submission of the issue solely on the basis of the pleadings and evidence a quo and is equivalent
to a waiver of the right to present the statement under oath or to adduce the other competent
evidence referred to in section 17(b) of the Judiciary Act of 1948.

A contrary rule would be disastrous. For one thing, to allow a party to present proof of value
before an appellate court would be to convert the said court to a trial court. For another thing, the
value of real estate may change between the perfection of an appeal and the receipt of the record
or the payment of the appellate court docket fee; hence, it is best, for stability, to have the value
determined at the precise instant when the trial court must decide to which appellate court the
appeal should be made and not at some uncertain time thereafter. Worse yet, to permit a party to
prove before the Court of Appeals or before us, after a decision on the merits has been rendered,
that a real estate in controversy exceeds, or does not exceed P200,000 in value, would be to
encourage speculation by litigants; for, a losing party can be expected to raise the issue of value
of the realty to show that it is in excess of P200,000 if the unfavorable judgment is rendered by
the Court of Appeals, or to show that it does not exceed P200,000 if the unfavorable judgment is
rendered by this Court, in an attempt to litigate the merits of the case all over again. 2

In the case at bar, the records — as of the perfection of the appeal on August 12, 1964 — show
that the litigated real estate had a value not in excess of P200,000. Conformably with the
Judiciary Act of 1948, therefore, the appeal from the decision of the Court of First Instance of
Rizal in civil case 6901 was within the jurisdiction of the Court of Appeals.

Other issues, both of fact and of law, are raised in the pleadings. Considering our conclusion that
the respondent Court had jurisdiction over the appeal, it is not necessary to discuss, much less
resolve, any of those other issues. However, because the petitioner and the heirs of Nieves Cruz
have hammered on the twin issues of the existence of an oral contract of sale and of the efficacy
of an oral novatory contract of sale, a brief discussion of these issues would not be amiss.

The agency agreement of December 31, 1958 is not impugned by any of the parties. Nieves
Cruz, however, asserted that the agency remained in force until she rescinded it on September
16, 1961 by notice to that effect to Atanacio Valenzuela, et al., tendering with the said notice the
return, in check, of the sum of P48,338.60 which she had received from Atanacio Valenzuela, et
al. The defendants, upon the other hand, contend that the agency agreement was novated by a
contract of sale in their favor and that the balance of the purchase price was not due until after
the 1962 harvest. Rodriguez, when impleaded by Atanacio Valenzuela, et al., denied that she was
a buyer in bad faith from Nieves Cruz.

The parties and the lower courts are agreed that Nieves Cruz had received P20,000 from
Atanacio Valenzuela, et al., by January 5, 1959 and that the payment of this total sum was in
accordance with the agency agreement. The parties and the lower courts, however, are at
variance on the basis or reason for the subsequent payments. The petitioner herein, the heirs of
Nieves Cruz and the Court of First Instance of Rizal take the position that the payments after
January 5, 1959 were received by Nieves Cruz as partial or installment payments of the purchase
price on the representations of Atanacio Valenzuela, et al., that they had a buyer for the property
from whom these payments came, all pursuant to the agency agreement. The respondents
Atanacio Valenzuela, et al., on the other hand, assert that those amounts were paid by them, as
disclosed buyers, to Nieves Cruz and her children, pursuant to a novatory verbal contract of sale
entered into with Nieves Cruz, subsequent to the agency agreement and prior to the issuance of
the decree of registration of July 15, 1960.

It is thus clear that the decisive issues are (a) whether or not Nieves Cruz did agree to sell to
Atanacio Valenzuela, et al., the litigated parcel of land sometime after January 5, 1959, and (b)
whether or not the said agreement is enforceable or can be proved under the law. The fact that
Atanacio Valenzuela, et al. were agents of Nieves Cruz under the agency agreement of
December 31, 1958 is not material, for if it is true that Nieves Cruz did agree to sell to her agents
the real estate subject of the agency, her consent took the transaction out of the prohibition
contained in article 1491(2) of the Civil Code. Neither are articles 1874 and 1878(5) and (12) of
the Civil Code relevant, for they refer to sales made by an agent for a principal and not to sales
made by the owner personally to another, whether that other be acting personally or through a
representative.

Was there a novatory oral contract to sell entered into by Nieves in favor of Atanacio
Valenzuela, et al.? In resolving this question, the respondent Court pointed to significant facts
and circumstances sustaining an affirmative answer.

Cited by the Court of Appeals is the testimony of Andres Nery, a successor-in-interest of Nieves
Cruz and a substitute plaintiff upon Nieves Cruz' death, to the effect that after they had gone to
the defendants several times, they were told that the buyer was Salud de Leon. This witness also
said, according to the transcript cited by the respondent Court, that they were paid little by little
and had been paid a grand total of P48,000. The respondent Court likewise adverted to the
receipts (exhibits L-12 to L-22, exhibit L-24, exhibit L-26, and exhibits 12, 12-a to 12-z-1)
signed by Nieves Cruz and/or her children and concluded that on the faces of these receipts it is
clear that the amounts therein stated were in payment by Atanacio Valenzuela, et al. of the land
which the recipients had sold to them ("ipinagbile naming lupa sa kanila"). Of incalculable
significance is the notation in the original certificate of title and in the transfer certificate of title
in the name of Nieves Cruz which, in unambiguous language, recorded Nieves Cruz' sale of her
interest in the land to Atanacio Valenzuela, et al. If that notation were inaccurate or false, Nieves
Cruz would not have remained unprotesting for over a year after the entry of the decree of
registration in July, 1960, nor would she and her children have received 13 installment payments
totalling P19,963 during the period from September 9, 1960 to September 3, 1961.

Salud de Leon, it should be borne in mind, is the husband of Rogaciano F. de Leon and the
daughter of the defendant Liberata Santos. It should likewise be remembered that, as remarked
by the trial court, Salud de Leon testified that it was she who had the oral agreement with Nieves
Cruz for the purchase by Atanacio Valenzuela, et al. of the litigated property and, as found by the
respondent Court, Salud de Leon was the representative of Atanacio Valenzuela, et al., not of
Nieves Cruz.

We conclude, therefore, that there is substantial evidence in the record sustaining the finding of
the respondent Court that the parties to the agency agreement subsequently entered into a new
and different contract by which the landowner, Nieves Cruz, verbally agreed to sell her interest
in the litigated real estate to Atanacio Valenzuela, et al.

A legion of receipts there are of payments of the purchase price signed by Nieves Cruz. True,
these receipts do not state all the basic elements of a contract of sale, for they do not expressly
identify the object nor fix a price or the manner of fixing the price. The parties, however, are
agreed — at least the plaintiff has not questioned the defendants' claim to this effect — that the
object of the sale referred to in the receipts is Nieves Cruz' share in the land she co-owned with
her brother Emilio and that the price therefor is P1.60 per square meter. At all events, by failing
to object to the presentation of oral evidence to prove the sale and by accepting from the
defendants a total of P27,198.60 after January 5, 1959, the plaintiff thereby ratified the oral
contract, conformably with article 1405 of the Civil Code, and removed the partly executed
agreement from the operation of the Statute of Frauds. And, finally, the sale was established and
recognized in the land registration proceedings wherein the land court, in its decision,
categorically stated:

[T]he applicant Nieves Cruz has likewise sold her one-half (½) undivided share to the
spouses Atanacio Valenzuela and Maximina Victorio and Liberata Santos from whom
she had received partial payment thereof in the sum of P22,000.00.

The pertinent certificates of title bear the annotation of the aforesaid right of Atanacio
Valenzuela, et al. The final decision of the land court — to the effect that Nieves Cruz had sold
her undivided share to Atanacio Valenzuela, et al., and had received a partial payment of
P22,000 — is now beyond judicial review, and, because a land registration case is a proceeding
in rem, binds even Rodriguez.

Rodriguez nevertheless insist that despite the rescission by the Court of Appeals of her purchase
from Nieves Cruz, the said respondent Court did not order Nieves Cruz to return the P77,216
which she had received from her. While mutual constitution follows rescission of a contract
(article 1385, Civil Code), the respondent Court should not be blamed for omitting to order
Nieves Cruz to restore what she had received from the petitioner on account of the rescinded
contract of sale. In the first place, in the pleadings filed before the trial court, Rodriguez made no
claim for restitution against Nieves Cruz or her heirs. In the second place, Nieves Cruz died in
the course of the proceedings below and was substituted by her heirs who, necessarily, can be
held individually liable for restitution only to the extent that they inherited from her.

Nevertheless, inasmuch as rescission of the contract between Nieves Cruz and the petitioner
herein was decreed by the respondent Court, the latter should be entitled to restitution as a matter
of law. It is of no moment that herein petitioner did not file any cross-claim for restitution against
the plaintiff, for her answer was directed to the defendants' claim which was in the nature of a
third-party complaint. She was neither a co-defendant nor a co-third-party defendant with Nieves
Cruz; nor were Nieves Cruz and the herein petitioner opposing parties a quo, for they joined in
maintaining the validity of their contract. Section 4 of Rule 9, therefore, has no application to the
petitioner's right to restitution.

We declare, consequently, that the estate of Nieves Cruz is liable to Barbara Lombos Rodriguez
for the return to the latter of the sum of P77,216, less the amount which Atanacio Valenzuela, et
al. had deposited with the trial court in accordance with the decision of respondent Court. We
cannot order the heirs of Nieves Cruz to make the refund. As we observed above, these heirs are
liable for restitution only to the extent of their individual inheritance from Nieves Cruz. Other
actions or proceedings have to be commenced to determine the liability accruing to each of the
heirs of Nieves Cruz.
ACCORDINGLY, the present petition for mandamus and certiorari  is denied, at petitioner's
cost.

G.R. No. 83141 September 21, 1990

SPOUSES FLORENTINO L. FERNANDEZ AND VIVENCIA B.

FERNANDEZ, petitioners,
vs.
HON. COURT OF APPEALS AND ZENAIDA ANGELES FERNANDEZ, respondents.

Wilfredo Espiritu Taganas for petitioners.

L.B. Camins for private respondent.

MEDIALDEA, J.:

This is a petition for review of the decision of the Court of Appeals in CA-G.R. CV No. 05191
which modified the decision of the Regional Trial Court, Branch 95, Quezon City in Civil Case
No. Q-32843 ordering private respondent Zenaida Angeles-Fernandez to execute a deed of
conveyance over 1/3 portion or 110 square meters of the lot subject of the action.

The facts of the case are as follows:

On November 28, 1966, petitioners-spouses Florentino and Vivencia Fernandez and private
respondent Zenaida Angeles-Fernandez and the latter's husband Justiniano Fernandez purchased
in common a parcel of land with an area of 310 square meters Identified as Lot 13, Block 19,
Pagasa Subdivision, Quezon City. The parcel of land was purchased for P15,500.00. Spouses
Florentino and Vivencia Fernandez advanced the downpayment of P5,500.00 to the vendors-
spouses Santos and Matilde de Torres. A Deed of Conditional Sale (Exhibit "B") was executed
by the spouses de Torres in favor of the two Fernandez couples.

On February 24, 1967, the vendors Torres executed a Deed of Absolute Sale in favor of spouses
Zenaida and Justiniano Fernandez only. When petitioners learned that the Absolute Deed of Sale
did not include their names as vendees they confronted Zenaida and Justiniano Fernandez. Thus,
on April 24, 1967, Zenaida and Justiniano Fernandez executed an affidavit (Exhibit "D") in
which they acknowledged the sale to petitioners Florentino and Vivencia Fernandez of a portion
of the subject parcel of land consisting of 110 square meters and the receipt of the consideration
therefor in the amount of P5,500.00.

When private respondent Zenaida Angeles-Fernandez planned to build a house on the lot, she
was informed by the City Engineer of Quezon City that the area in Pag-asa is classified under the
zoning ordinance as R-2 or residential 2, wherein the minimum requirement for a family house is
240 square meters and therefore, no two (2) separate and independent family houses can be built
on the 310 square meter lot. She also found out that the Register of Deeds will not issue a
separate title for only 110 square meters (p. 4, C.A. Decision; p. 36, Rollo).

Thus, a duplex building was constructed on the subject land, one unit known as No. 216-A Road
I, Pag-asa, Quezon City which was occupied by petitioners Florentino and Vivencia and the
other unit known as No. 216, Pag-asa, Quezon City which was occupied by the spouses Zenaida
and Justiniano.

On January 26, 1970, Zenaida and Justiniano caused the issuance of a certificate of title (TCT
No. 149347) only in their names (p. 47, Rollo).

On February 26, 1976, private respondent Zenaida Fernandez and her husband Justiniano
Fernandez filed a petition for voluntary dissolution of their conjugal partnership before the
Juvenile and Domestic Relations Court, Quezon City. In the petition, the couple prayed for
judicial approval of their compromise agreement wherein Justiniano waived all his rights to the
conjugal properties including the subject parcel of land. Pursuant to the compromise agreement,
the Juvenile and Domestic Relations Court awarded the parcel of land subject of the instant case
to private respondent Zenaida Angeles-Fernandez on December 13, 1976. In a letter dated
October 22, 1977, private respondent demanded that petitioners vacate the premises of the lot
awarded to her. On June 9, 1981, petitioners' spouses Florentino and Vivencia filed an action to
quiet title and damages against Zenaida Fernandez only, who was then already estranged from
her husband Justiniano. In another letter dated June 21, 1981, Zenaida reiterated her demand that
petitioners vacate the premises of the lot awarded to her, which lot was also the subject matter of
the complaint for quieting of title filed by petitioners.

After trial, a decision (pp. 43-45, Rollo) was rendered on July 23, 1984 wherein the trial court
made the following findings and conclusions:

1. The genuineness and/or due execution of the Deed of Conditional Sale dated
November 28, 1966 (Exhibit 'B' & Exhibit '2') and Affidavit dated April 24, 1967
(Exhibit 'D' & Exhibit '4'), were admitted by defendant Zenaida Angeles-
Fernandez. Likewise, the voluntariness of the execution thereof, including their
contents, were not seriously controverted by defendant Zenaida Angeles-
Fernandez. Said documents, therefore, should be taken against her for as ruled by
the higher court; a man's acts, conduct, and declarations wherever made, if
voluntary, are admissible against him, for the reason that it is fair to presume that
they correspond with the truth, and it is his fault if they do not. (US vs. Ching Po,
23 Phil. 578, 583);

2. The claim of defendant Zenaida Angeles-Fernandez to the effect that the

P5,500.00 used as down payment for the purchase price in the total amount of
P15,500.00 mentioned in the Deed of Conditional Sale dated November 28, 1966
(Exhibit 'B' & Exhibit '2'), was merely a loan, and that she and her husband
Justiniano E. Fernandez have already paid the same almost three-fold to plaintiffs,
cannot be considered there being no concrete proof on record to substantiate the
same. The Court noted, however, that no further amount, aside from the
 P5,500.00 were paid by the plaintiffs for the purchase of Lot 13, Block N-19 of
Pag-asa Subdivision. By mathematical computations, said amount was short for
the amount they should pay for the 1/2 portion of the purchased lot, and they
should be required to reimburse defendant Zenaida Angeles- Fernandez;

3. Likewise, the verbal claim of the defendant Zenaida Angeles- Fernandez that
she and her husband Justiniano B. Fernandez executed the Affidavit dated April
24, 1967 (Exhibit 'D' & Exhibit '4') as security or assurance to plaintiffs' non-
eviction from the premises they are co-occupying and/or payment of the alleged
loan, appears gratuitous and illogical, and cannot be given weight more than their
admission (Exhibit 'B' & Exhibit '4'), while admission is against interest.

4. The fact that the names of plaintiffs no longer appear as co-vendees in the Deed
of Absolute Sale dated February 24,1967 (Exhibit 'C', & Exhibit '3'), and to the
title to Lot 13, Block N-1 9 of the Pagasa Subdivision, Quezon City Exhibit 'A' &
Exhibit '1'), as of not moment (sic) and inconsequential to their right or ownership
over the 1/2 portion of the lot, the same having been sufficiently established by
the Deed of Conditional Sale dated November 28, 1966 (Exhibit 'B' and Exhibit
'2'); the Affidavit dated April 24,1967 (Exhibit 'D' & Exhibit '4'); and the proof on
record showing that defendant Zenaida Angeles-Fernandez collected taxes due on
the subject lot for the year 1974, 1975,1976 and 1977 (Exhibit 'H'). (pp. 50-51,
Rollo)

Anent the ownership of the duplex house, the trial court concluded that although the petitioners
advanced the sum of P l,258.00 (Exhibit "K" and "K-1") for the unit occupied by them, said
amount is not sufficient to construct one unit of the duplex building.

The trial court disposed of the case as follows:

All told, this Court finds plaintiffs spouses Florentino L. Fernandez and Vivencia
B. Fernandez, owner of 1/2 portion or the area of 113 square meters of the Lot 13,
Block N-19 of Pag-asa Subdivision, Quezon City, subject to reimbursement of the
sum of P 2,250.00, representing the difference of the total amount they ought to
pay for the purchase price thereof, to defendant Zenaida Angeles-Fernandez, plus
legal interest thereon from February 24, 1967 until fully paid; and defendant
Zenaida Angeles-Fernandez owner of the other one-half or 113 square meters of
the aforesaid lot, together with both units of the duplex house existing thereon,
subject to the provision of Article 448 of the Civil Code.

WHEREFORE, decision is hereby rendered:

l. ORDERING defendant Zenaida Angeles-Fernandez to execute a deed of

conveyance over 1/2 portion of 13 square meters of Lot 13, Block N-19 of Pag-
asa Subdivision, covered by Transfer Certificate of Title No. 149347 of the
Register of Deeds of Quezon City, in favor of plaintiffs, spouses Florentino L.
 Fernandez and Vivencia B. Fernandez, upon the latter's payment of P 2,225.00
plus legal interest thereon counted from February 24, 1967, until fully paid.

2. The portion of the duplex building resting on the portion of the lot to be
reconveyed to the plaintiffs, spouses Florentino L. Fernandez and Vivencia B.
Fernandez, shall remain under the ownership of defendant Zenaida Angeles-
Fernandez, subject to the provision of Article 448 of the Civil Code.

xxx

(pp. 53-54, Rollo).

Petitioners filed a motion to reconsider the decision insofar as the area awarded them was
concerned and the amount spent by them for the construction of the duplex house. On November
15, 1984, an order (pp. 55-56, Rollo) was issued by the trial court amending the July 23, 1984
decision, thus:

WHEREFORE, 1) The dispositive portion of the decision dated July 23, 1984, is
hereby amended as follows: 'l. ORDERING defendant Zenaida Angeles-
Fernandez to execute a deed of conveyance over 1/3 portion or 110 square meters
of Lot 13, Block N-19 of the Pag-asa Subdivision, covered by Transfer Certificate
of Title No. 149347 of the Register of Deeds of Quezon City, in favor of
plaintiffs, spouses Florentino L. Fernandez and Vivencia B. Fernandez, upon the
latter's payment of P 2,225 plus legal interest thereon counted from February 24,
1967, until fully paid.' 2) Denying all other matters raised in the motion for
reconsideration and opposition thereto.

SO ORDERED. (pp. 55-56, Rollo)

While the order amended the area of the land to be awarded to the petitioners from 1/2 to 1/3, it
failed to delete the portion ordering petitioners to pay private respondent the amount of P 2,225,
as originally ordered in the July 23, 1984 decision.

Not satisfied with the trial court's decision and the order amending said decision, both the
petitioners and the private respondent appealed to respondent Court of Appeals. In a decision
(pp. 33-40, Rollo) promulgated on January 26, 1988, respondent appellate court made a different
conclusion and modified the decision of the trial court:

The main basis of the trial court in concluding that the plaintiffs are entitled to 1/2
and later to 1/3 portion of the lot and house in Pag-asa are the deed of conditional
sale (Exh. B and 2) and the affidavit executed by Justiniano Fernandez (Exh. D).

It appears, however, that the effect of said documents have been modified by later
events. The first is the absolute deed of sale of the house and lot in question and
the subsequent issuance of the title thereof only in the name of Justiniano
Fernandez and his wife (Exh. C and 3 and Exh. A and 1). Thereafter, Transfer
Certificate of Title No. 149347 in the name of the spouses Justiniano E.
Fernandez and Zenaida A. Fernandez was issued by the Register of Deeds of
Quezon City on January 26, 1970 (Exh. A). If, indeed, the herein plaintiffs were
entitled to 1/2 of the said property, they should have taken steps to include their
names in the said title or at least had it annotated on said title. A Certificate of
Title issued a party accumulates all the ultimate facts with respect to a particular
piece of registered land in one single document, making out a precise and correct
statement to the exact status of the fee simple title which the owner has in fact.
Once issued, the certificate is the evidence of the title which the owner has
(Legarda vs. Saleeby, 31 Phil. 590). A torrens title concludes all controversy over
ownership of land covered by final decree of registration, and title by adverse
possession cannot be acquired against the registered owner (Sec. 46, Act 496;
J.M. Tuason and Co. vs. Vibat, L-28884, May 29,1963,8 SCRA 54; Espiritu vs.
Sison, CA 51612-R, Feb. 14,1979).

What militates more against the claim of ownership of a portion of the property in
question by the plaintiffs is the fact that as a result of marriage settlement between
Justiniano Fernandez and his wife Zenaida, the whole property was adjudicated to
Zenaida. The settlement was approved by the Juvenile and Domestic Relations
Court. The herein plaintiffs were supposed to know about said marriage
settlement of property. Here is a situation where Zenaida was in fact abandoned
by her husband Justiniano, who is a nephew of plaintiff Florentino Fernandez.
The plaintiffs should have intervened in said case by filing their claims on the
property that was to be granted to Zenaida alone in the marriage settlement.
Indeed, it would be less than fair for the herein plaintiffs to demand their alleged
share against Zenaida alone after their nephew agreed to grant said property to his
wife whom he abandoned.

Lastly, the cause of action of the plaintiffs had already prescribed. As already
stated, the Transfer Certificate of Title was issued in the name of the spouses
Justiniano and Zenaida Fernandez in 1970. From said date, Justiniano and his
wife exercised acts of absolute ownership by mortgaging the property. The instant
action to claim ownership of the portion of the land was filed on July 9, 1981.

With these findings, We find no merit in the contention of plaintiffs-appellants

that they are entitled to damages and attorney's fees.

WHEREFORE, the decision appealed from is hereby MODIFIED by declaring

the defendant Zenaida Fernandez as the sole owner of the property in question
covered by Transfer Certificate of Title No. 14934, Registry of Deeds of Quezon
City. In fairness to the plaintiffs, however, defendant Zenaida Fernandez is
ordered to return to the plaintiffs the amount of P5,500.00 plus interest at the legal
rate from November 28, 1966 until full payment thereof. SO ORDERED. (pp. 39-
40, Rollo)
Petitioners' motion for reconsideration of the decision of the Court of Appeals was denied on
April 22, 1988 (p. 42, Rollo).

On June 15, 1988, petitioners filed the instant petition for review. They contend that respondent
appellate court erred in not declaring them part owners of the lot in question despite the fact that
it is not disputed that petitioners and defendant Zenaida Fernandez with her husband Justiniano
Fernandez entered into an agreement with the vendors-spouses Santos and Matilde de Torres that
the subject land would be purchased by them in common.

While, as a rule, this Court is bound by the findings of the Court of Appeals in matters of fact,
that rule is subject to well-settled exceptions, amongst them: (1) when the same are grounded
entirely on speculation, surmise, and conjecture; (2) the inference made is manifestly mistaken;
(3)...; (4) its judgment is based on a misapprehension of facts; (5) it went beyond the issues of
the case and its findings contravene admissions of the parties; (6) its findings of fact are contrary
to those of the trial court; (7) the same are conclusions without citation of specific evidence;
(8) ...; and (9) when the findings of fact of the Court of Appeals are not supported by the
evidence or contradicted in fact by the evidence on record (Teodoro v. Court of Appeals, L-
31471, November 12, 1987).

In the instant case, there is a disparity in the factual findings and conclusions of the respondent
appellate court and the trial court. On the basis of the evidence presented and in view of the
accepted rule that "the judge who tries a case in the court below, has vastly superior advantage
for the ascertainment of truth and the detection of falsehood over an appellate court of review
(Roque v. Buan, L-22459, October 31, 1967, 21 SCRA 642), the findings of the trial court must
be upheld.

We agree with petitioners' contention that respondent court erred in not declaring them as part
owners of the subject property. There is sufficient evidence on record to prove that petitioners
and spouses Justiniano and Zenaida Fernandez purchased in common the lot subject of this case
and that it was the parties' intention to become owners of specific portions thereof.

The purchase of the property by the two Fernandez couples was evidenced by a Deed of
Conditional Sale (Exhibit "B" and Exhibit "2") executed by the previous owners Spouses Santos
and Matilde de Torres in favor of the petitioners and the Spouses Zenaida and Justiniano
Fernandez. Respondent appellate court concluded that the effect of the Deed of Conditional Sale
was modified by later events specifically, the execution of a deed of Absolute Sale in favor of
Justiniano Fernandez and private respondent Zenaida Fernandez only. However, respondent
appellate court lost sight of the fact that upon petitioners' knowledge that the Deed of Absolute
Sale was executed in favor of Justiniano and Zenaida Fernandez only, the petitioners confronted
the latter spouses which led to the execution by the latter on April 24,1967 of an affidavit
(Exhibit 'D') acknowledging petitioners' purchase of 110 square meters of the subject lot and the
receipt of the consideration therefor for P5,500.00. The due execution and authenticity of both
the Deed of Conditional Sale and Affidavit were never denied by private respondent. Having
recognized the sale and the receipt of the consideration in the affidavit, private respondent is now
estopped from going against such declaration.
It is noted that subsequent to the execution of the affidavit, a duplex house was constructed on
the lot where one unit was occupied by private respondent Zenaida and her husband Justiniano
and the other unit by the petitioners. The expenses for the construction of the duplex were
advanced by the spouses Zenaida and Justiniano, but they demanded reimbursement of the
expenses they advanced for the portion belonging to petitioners. Exhibit "I" and Exhibit "J"
reveal that on November 10, 1969, Justiniano demanded from the petitioners payment of their
share of the materials used in the construction of their portion of the duplex house amounting to
P 2,607.70 (p. 44, Rollo) and the taxes due from them for the house and lot. On March 8, 1977,
petitioners paid for their share of the realty taxes for the year 1974,1975,1976 and 1977 in the
total amount of P 894.36 to private respondent Zenaida (Exhibit "H"). For the expenses in the
construction of the portion of the duplex possessed by petitioners, they gave P1,258.10 to
Justiniano who issued a receipt therefor (Exhibit "K" and "K-1") Petitioners promised to
liquidate the balance in installment at the rate of P 300.00 a month. The trial court concluded that
the amount of P l,258.10 advanced by petitioners was not sufficient to construct their portion of
the duplex house and that no evidence was presented to prove that petitioners paid for the
balance. From this findings, it erroneously concluded that the entire duplex house belongs to
private respondent Zenaida Angeles-Fernandez.

It should be noted that Justiniano Fernandez admitted in Exhibits "I" and "J" petitioner's
ownership of the portion of the duplex house now occupied by them. It may be that the amount
of P1,258.10 paid by petitioner Florentino Fernandez to Justiniano Fernandez was not sufficient
to construct their portion of the duplex house but such insufficiency cannot be made the basis for
divesting them of their ownership.

Respondent court's conclusion that petitioners were not part owners of subject land relied much
on the existence of Transfer Certificate of Title No. 149347 issued in the name of Spouses
Justiniano and Zenaida Fernandez only. It further concluded that if, indeed, petitioners were
entitled to 1/2 of the property, they should have taken steps to include their names in the title.

Section 50 of Act No. 496 (now Sec. 51 of P.D. 1529), provides that the registration of the deed
is the operative act to bind or affect the land insofar as third persons are concerned. But where
the party has knowledge of a prior existing interest which is unregistered at the time he acquired
a right to the same land, his knowledge of that prior unregistered interest has the effect of
registration as to him. The torrens system cannot be used as a shield for the commission of fraud
(Gustillo v. Maravilla, 48 Phil. 442). As far as private respondent Zenaida Angeles and her
husband Justiniano are concerned, the non-registration of the affidavit admitting their sale of a
portion of 110 square meters of the subject land to petitioners cannot be invoked as a defense
because (K)nowledge of an unregistered sale is equivalent to registration (Winkleman v. Veluz,
43 Phil. 604).

The respondent appellate court also erred in ruling that the cause of action of petitioners had
already prescribed in view of the issuance in 1970 of a certificate of title in the name of the
Spouses Justiniano and Zenaida Fernandez. As already stated, the issuance of a certificate of title
in the name appearing therein does not preclude petitioners from asserting their right of
ownership over the land in question. Time and again it has been ruled that the torrens system
should not be used as a shield to protect fraud. Moreover, prescription cannot be considered
against petitioners who had been in possession of subject premises from the time it was
purchased from the de Torres spouses in 1967 and continue to possess the same under claim of
ownership. There is no sufficient basis for the respondent court to conclude that spouses Zenaida
and Justiniano were possessing the entire property adversely against petitioners. At most, the
first time that respondent Zenaida Fernandez claimed adverse possession of the entire premises
was when she demanded from petitioners the possession of the unit possessed by them in a letter
dated October 22, 1977 (Exhibit "F") emboldened by a decision of the Juvenile and Domestic
Relations Court awarding the premises to her. The decision of private respondent to claim total
ownership of the premises was in fact, pursued only half-heartedly by her because the second
time that she demanded possession of the premises was four (4) years after or on June 21, 1981,
after an action to quiet title was filed by petitioners on June 9,1981. In Almanza v. Arguelles, L-
49250, December 21, 1987, We held that, "prescription cannot be invoked in an action for
reconveyance, which is, in effect an action to quiet title against the plaintiff therein who is in
possession of the land in question. As lawful possessor and owner of the disputed portion, her
cause of action for reconveyance which, in effect, seeks to quiet title to property in one's
possession is imprescriptible (also cited in Caragay-Layno v. Court of Appeals, 133 SCRA 718,
citing Sapto et al. v. Fabiana, 103 Phil. 683 and Faja v. C.A., 75 SCRA 441). The reason, we
explained in Bucton v. Gabar, L-36359, January 31, 1974, 55 SCRA 499, is:

... that while the owner in fee continues liable to an action, proceeding, or suit
upon the adverse claim, he has a continuing right to the aid of a court of equity to
ascertain and determine the nature of such claim and its effect on his title, or to
assert any superior equity in his favor. He may wait until his possession is
disturbed or his title is attacked before taking steps to vindicate his right. But the
rule that the statute of limitations is not available as a defense of an action to
remove a cloud from title can only be invoked by a complainant when he is in
possession. .... (44 Am. Jur., p. 47)

The judgment in the petition for dissolution of the conjugal partnership filed with the Juvenile
and Domestic Relations Court of private respondent Zenaida Angeles-Fernandez and her
husband Justiniano where the property in question was awarded to Zenaida cannot bind the
petitioners who were not parties thereto. The failure of petitioners to intervene in the said
proceedings for dissolution of conjugal partnership is not fatal. Petitioners may file their claim of
ownership over the one-third portion of the property in question separately which they did when
they brought the complaint for quieting of title before the trial court.

As already stated, the affidavit executed by Justiniano Fernandez and private respondent Zenaida
Angeles Fernandez acknowledged the sale of one-third (1/3) portion of the subject land to
petitioners-spouses Florentino and Vivencia Fernandez and the receipt by the former of the
amount of P5,500.00 as consideration thereof. However, the trial court in awarding the said one-
third portion to petitioners also ordered the payment by them of P 2,225.00 to private respondent
Zenaida Angeles-Fernandez, oblivious of the fact that only 1/3 and not one half (1/2) pertain to
petitioners and that the P5,500.00 advanced by petitioners at the time the subject property was
purchased from the de Torres spouses was sufficient payment for the 1/3 portion awarded to
them.
ACCORDINGLY, the petition is GRANTED. The decision of respondent appellate court is
REVERSED. Judgment is hereby rendered declaring petitioners owners of 1) one-third (1/3) or
110 square meters of Lot 13, Block N-19 of Pag-asa Subdivision, presently occupied by them,
covered by TCT No. 149347 of the Register of Deeds of Quezon City; and 2) the portion of the
duplex house occupied by them after payment of the balance of P l,349.70 advanced by the
husband of private respondent Zenaida Fernandez for the construction thereof, with interest at
the legal rate from November 1969 until fully paid.

SO ORDERED.

G.R. No. 153828. October 24, 2003

LINCOLN L. YAO, Petitioner, v. HONORABLE NORMA C. PERELLO, in her capacity as

Presiding Judge of the Regional Trial Court, Branch 276, Muntinlupa City, THE EX-OFICIO
SHERIFF, REGIONAL TRIAL COURT, MUNTINLUPA CITY and BERNADINE D.
VILLARIN, Respondents.

DECISION

CORONA, J.:

Before us is a petition for certiorari filed by Lincoln L. Yao, assailing the resolution dated

March 22, 2002 and Order dated May 10, 2002, of the Regional Trial Court of Paraaque City,
Branch 274,[1which respectively granted private respondent Bernadine D. Villarins petition for
prohibition and denied petitioners motion for intervention.

The present controversy stemmed from a complaint filed by petitioner before the Housing and
Land Use Regulatory Board (HLURB) against a certain corporation, PR Builders, Inc. and its
managers, Enrico Baluyot and Pablito Villarin, private respondents husband.

On September 17, 1999, the HLURB rendered a decision rescinding the contract to sell between
petitioner and PR Builders, and ordering PR Builders to refund petitioner the amount
of P2,116,103.31, as well as to pay damages in the amount of P250,000.

Thereafter, the HLURB issued a writ of execution against PR Builders and its managers, and
referred the writ to the office of the Clerk of Court of Muntinlupa for enforcement.

Pursuant to the writ, the deputy sheriff levied on a parcel of land in Canlubang, Calamba,
Laguna, registered in the names of spouses Pablito Villarin and private respondent, Bernadine
Villarin. The property was scheduled for public auction on March 20, 2002.

On March 19, 2002, private respondent filed before the RTC of Paraaque City, a petition for
prohibition with prayer for temporary restraining order and/or writ of preliminary injunction,
seeking to enjoin Sheriff Melvin T. Bagabaldo from proceeding with the public auction. Private
respondent alleged that she co-owned the property subject of the execution sale; that the property
regime between private respondent and her husband was complete separation of property, and
that she was not a party in the HLURB case, hence, the subject property could not be levied on to
answer for the separate liability of her husband.

On even date, public respondent Judge Norma C. Perrello issued a 72-hour temporary restraining
order and set the case for raffle and conference on March 22, 2002.

The case was eventually raffled to RTC, Branch 276, presided by public respondent judge. A
conference was then conducted, after which public respondent judge issued the assailed
resolution of March 22, 2002 granting private respondents petition for prohibition and declaring
the subject property exempt from execution. Hence, the scheduled auction sale did not
materialize.

On April 25, 2002, or more than a month after public respondent judge issued the resolution of
March 22, 2002, petitioner filed a motion for intervention. However, public respondent judge
denied the motion in her assailed order of May 10, 2002:

ORDER

The MOTION FOR INTERVENTION is denied, considering that this case has long been
decided, hence the intervention is too late. There is no case for them to intervene.

Let the decision be executed to satisfy the judgment debt.

SO ORDERED in open Court.[2cräläwvirtualibräry

Aggrieved, petitioner filed the instant petition for certiorari imputing grave abuse of discretion
to public respondent judge in: (a) declaring the subject property exempt from execution and
therefore could not be sold to satisfy the obligation of private respondents husband, and (b)
denying petitioners motion for intervention on the ground that the same was filed late.

It is a basic precept that the power of the court in the execution of judgments extends only to
properties unquestionably belonging to the judgment debtor. The levy by the sheriff on property
by virtue of a writ of attachment may be considered as made under the authority of the court only
vis-a-vis property belonging to the defendant. For indeed, one man's goods shall not be sold for
another man's debts.[3In the case at bar, the property levied on by the sheriff was clearly not
exclusively owned by Pablito Villarin. It was co-owned by herein private respondent who was a
stranger in the HLURB case. The property relation of spouses Villarin was governed by the
regime of complete separation of property as decreed in the order4 dated November 10, 1998 of
the Regional Trial Court, Branch 27, Paraaque City.

Articles 145 and 146 of the Family Code governing the regime of complete separation of
property provide:

Art. 145. Each spouse shall own, dispose of, possess, administer and enjoy his or her own
separate estate, without need of the consent of the other. To each spouse shall belong all earnings
from his or her profession, business or industry and all fruits, natural, industrial or civil, due or
received during his marriage from his or her separate property. (214a)

Art. 146. Both spouses shall bear the family expenses in proportion to their income, or, in case of
insufficiency or default thereof, to the current market value of their separate properties.

The liability of the spouses to creditors for family expenses shall, however, be solidary. (215a)

It is clear from the foregoing that the only time the separate properties of the spouses can be
made to answer for liabilities to creditors is when those liabilities are incurred for family
expenses. This has not been shown in the case at bar.

Accordingly, private respondent acted well within her rights in filing a petition for prohibition
against the deputy sheriff because the latter went beyond his authority in attaching the subject
property. This right is specifically reserved by Section 17, Rule 39 of the Rules of Court.

Petitioner insists that, in a petition for prohibition, it is essential that the party who is interested
in sustaining the act or acts sought to be prohibited or enjoined be impleaded as private
respondent. Thus, as the judgment creditor in the HLURB case, petitioner claims that he was an
indispensable party in the petition for prohibition and should have been allowed to intervene in
the said case. He was not allowed to do so.

Section 2, Rule 65 of the Rules of Court provides:

SEC. 2 Petition for prohibition. - When the proceedings of any tribunal, corporation, board,
officer or person, whether exercising judicial, quasi-judicial or ministerial functions, are without
or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or
excess of jurisdiction, and there is no appeal or any other plain, speedy, and adequate remedy in
the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper
court, alleging the facts with certainty and praying that judgment be rendered commanding the
respondent to desist from further proceedings in the action or matter specified therein, or
otherwise granting such incidental reliefs as law and justice may require.

The petition shall likewise be accompanied by a certified true copy of the judgment, order or
resolution subject thereof, copies of all pleadings and documents relevant and pertinent thereto,
and a sworn certification of non-forum shopping as provided in the last paragraph of Section 3,
Rule 46. (2a)

Consequently, petitioners claim that he had the right to intervene is without basis. Nothing in the
said provision requires the inclusion of a private party as respondent in petitions for prohibition.
On the other hand, to allow intervention, it must be shown that (a) the movant has a legal interest
in the matter in litigation or otherwise qualified, and (b) consideration must be given as to
whether the adjudication of the rights of the original parties may be delayed or prejudiced, or
whether the intervenors rights may be protected in a separate proceeding or not. Both
requirements must concur as the first is not more important than the second.[5cräläwvirtualibräry
In the case at bar, it cannot be said that petitioners right as a judgment creditor was adversely
affected by the lifting of the levy on the subject real property. Records reveal that there are other
pieces of property exclusively owned by the defendants in the HLURB case that can be levied
upon.

Moreover, even granting for the sake of argument that petitioner indeed had the right to
intervene, he must exercise said right in accordance with the rules and within the period
prescribed therefor.

As provided in the Rules of Court, the motion for intervention may be filed at any time before
rendition of judgment by the trial court.[6 Petitioner filed his motion only on April 25, 2002, way
beyond the period set forth in the rules. The court resolution granting private respondents
petition for prohibition and lifting the levy on the subject property was issued on March 22,
2002. By April 6, 2002, after the lapse of 15 days, the said resolution had already become final
and executory.

Besides, the mere fact that petitioner failed to move for the reconsideration of the trial courts
resolution is sufficient cause for the outright dismissal of the instant petition. Certiorari as a
special civil action will not lie unless a motion for reconsideration is first filed before the
respondent court to allow it an opportunity to correct its errors, if any.

Finally, grave abuse of discretion is committed when the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility. The Court fails to find grave abuse of
discretion committed by public respondent judge in rendering the assailed resolution and order.

WHEREFORE, the petition is hereby dismissed for lack of merit.

SO ORDERED.

G. R. No. 91486 - September 10, 2003

ALBERTO G. PINLAC, ATTY. ERIBERTO H. DECENA, RODOLFO F. REYES,

FELIPE BRIONES, JUANITO METILLA, JR., FELIPE A. FLORES, HERMINIO
ELEVADO, NARCISO S. SIMEROS, petitioners, vs. COURT OF APPEALS, ATTY.
CORAZON A. MERRERA, ATTY. JEAN MAKASIAR-PUNO, SERGIO ACABAN,
represented by Atty. Ramon Gerona, ATTY. ROGELIO VELASCO, MARTINA S.
NONA, OVIDEO MEJICA, ALFREDO ITALIA, MARIANO GUEVARRA, JESUS
YUJUICO, DOMINADOR RIVERA, SATURNINA SALES, represented by Atty.
Consolacion Sales-Demontano, FRED CHUA, SONIA SY CHUA, LAWRENCE CHUA,
CAROLINA C. RUBIO, represented by Tessie Sebastian, GEORGE G. GUERRERO,
BEATRIZ TANTOCO, represented by Filomena Cervantes, ATTY. MARCELA
CELESTINO-GARCIA, FEDERICO GARCIA, ILDEFONSO MORALES, LEONCIA
VELASCO, OCRAVIO F. LINA, ANA MARIA JARAMILLO, ESTRELLA BASA, JOSE
ESTEVA, JR., CIRILO GONZALES, VILLY TOBIAS, MIGUEL DELA PAZ, RUBEN
GUILLERMO, FAUSTO YADAO, represented by Jeremias Panlilio, RICARDO YAP,
ROSAURO/PATRICK MARQUEZ, represented by Emmanuel Marquez, MODESTA
FABRIG and MAXIMINO SALCEDA, MELIA LATOMBO, TERESITA PANGILINAN-
RIVERO, ARCH. DANILO C. DE CASTRO, JOSE S. LEDESMA, JAIME P. ANG,
VEICENTE P. ANG, MAURO U. GABRIEL, ATTY. VIRGINIA GOMEZ, GIL S.
BONILLA, LOURDES BLANCO, represented by Catalina Blanco, JOSEFA SANCHEZ
and ROSALINA VILLEGAS, represented by Heidi Bobis, SHIRLEY BUCAG, QUIRINA
O. TUVERA, represented by Wilfredo Orejuros, GREGORIO AVENTINO, represented
by Enrico Aventino, LEONARDO L. NICOLAS, NICOMEDES PENARANDA,
FRANCISCA MEDRANO, OFELIA IGNACIO, ROSENDO ABUBO, represented by
Santos Chavez, SOLEDAD BAUTISTA DE COLUMNA, represented by Zenaida Valle,
MARQUITA/ SEBASTIAN LOPEZ, represented by Emmanuel Marquez, DELIA
DORION, GERARDO L. SANTIAGO, FIDEL PANGANIBAN, represented by Manuel
dela Roca, MATEO and OFELIA INOVEJAS, REMEDIOS C. DOVAS, represented by
Josefa Capistrano, DOMINGO ALTAMIRANO and SPOUSES ROLANDO
ALTAMIRANO and MINERVA FETALVERO, BEATRIZ RINGPIS, ROSARIO DE
MATA, RUFINA CRUZ, represented by JOSEFA MANABAT, SPOUSES ANITA
SALONGA-CAPAGCUAN and MAYNARD CAPAGCUAN, DISCORA YATCO,
represented by VICTORINA Y. FIRME, and CONSUELO YATCO, GENEROSA
MEDINA VDA. DE NOGUERA, represented by ATTY. RAYMUNDO M. NOGUERA,
BEATRIZ SALANDANAN and LOURDES ALONTE-VASQUEZ, PEDRO COSIO and
VICTORINA CARINO, RUTH C. ZARATE, PRECIOSISIMA V. YAPCHULAY,
BASILISA B. YAPCHULAY, OFELIA B. YAPCHULAY, FELISA B. YAPCHULAY, FE
B. YAPCHULAY, WILMA B. YAPCHULAY, FELIX B. YAPCHULAY, MARIANO B.
YAPCHULAY, GEN. ALFREDO LIM, and other registered OWNERS OF VILAR-
MALOLES (VILMA) SUBDIVISION, respondents.
REPUBLIC OF THE PHILIPPINES, intervenor.
WORLD WAR II VETERANS LEGIONARIES OF THE PHILIPPINES, intervenor.

RESOLUTION

YNARES-SANTIAGO, J.:

This resolves the Petition-In-Intervention1 filed by the Republic of the Philippines, represented

by the Land Registration Authority and the Motion for Clarification2 filed by respondents.

The facts may be briefly restated as follows: The controversy stemmed from a Petition for
Quieting of Title filed by petitioners over 3 vast parcels of land known as Lot Nos. 1, 2 & 3. Lot
No. 1 is covered by TCT No. 5690, while Lot Nos. 2 and 3 were originally covered by OCT No.
614 and OCT No. 333, respectively. On March 21, 1988, the trial court rendered a Partial
Decision3 in favor of petitioners and against the defendants who were declared in default,
including respondent owners of Vilmar-Maloles (Vilma) Subdivision whose properties were
within Lot No. 2. The dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of petitioners and

against the defaulted respondents:
1) Declaring petitioners through the principal petitioners hereof, to wit: Alberto G. Pinlac, Atty.
Eriberto H. Decena, Rodolfo T. Reyes, Felipe Briones and Juanito S. Metilla as absolute owners
in fee simple title of the aforesaid Lots 1, 2 & 3 hereof by virtue of extra-ordinary prescription,
with the exception of the lands covered by the respective transfer certificate of title belonging to
the non-defaulted respondents;

2) Declaring Original Certificate of Title No. 614, TCT No. 5690 and TCT No. 3548 of the
Register of Deeds of Quezon City, and the subsequent TCTs issued therefrom, with the
exception of those titles belonging to the non-defaulted respondents, as null and void ab initio;

3) Ordering the Register of Deeds of Quezon City to cancel OCT No. 614, TCT No. 5690 and
TCT No. 3548 as well as the subsequent TCTs issued and emanating therefrom, with the
exception of those titles belonging to the non-defaulted respondents, from its record;

4) Declaring the area of TCT No. 333 in excess of its true and actual area of 4,574 Sq. Meters, as
well as the TCTs subsequently issued by the Register of Deeds of Quezon City, covering the area
in excess of said actual area, with the exception of those belonging to non-defaulted respondents,
as null and void ab initio;

5) Ordering the Register of Deeds of Quezon City to cancel all TCTs subsequently issued based
on OCT No. 333 in excess of the actual area of 4,574 Sq. Meters, with the exception of those
titles belonging to the non-defaulted respondents;

6) Declaring the writ of preliminary injunction dated August 7, 1985, in so far as those areas
covered by the cancelled OCTs and TCTs hereof are concerned, as permanent;

7) Ordering the Register of Deeds of Quezon City to issue herein petitioners the corresponding
individual transfer certificate of titles upon proper application made thereof.

SO ORDERED.

On May 17, 1989, the defaulted title owners of Vilma filed with the Court of Appeals a Petition
to Annul the Partial Decision of the trial court, which was granted in a decision4 dated November
15, 1989. The appellate court ruled that the court a quo did not acquire jurisdiction over the
person of respondents because of defective service of summons by publication. Petitioners
motion for reconsideration of the said decision was denied; hence, they filed this petition
for certiorari.

On January 19, 2001, we rendered a Decision denying the petition and affirming the Judgment of
the Court of Appeals. The dispositive portion thereof reads:

WHEREFORE, in view of all the foregoing, the decision of the Court of Appeals in CA-G.R. SP
No. 17596 is AFFIRMED and the instant petition is DENIED for lack of merit.

SO ORDERED.5
Petitioners filed a Motion for Reconsideration6 contending, inter alia, that the disposition of the
trial court with respect to Lot No. 3, should not have been annulled by the Court of Appeals
because the petition for annulment of judgment filed by the respondents concerned only Lot No.
2. They prayed that the January 19, 2001 decision of the Court which affirmed the decision of
the Court of Appeals be reconsidered insofar as Lot No. 3 is concerned.

On November 20, 2001, the Court issued a Resolution partially granting petitioners motion for
reconsideration by reinstating paragraphs 4 and 5 of the dipositive portion of the trial courts
Partial Decision pertaining to Lot No. 3, thus

WHEREFORE, the Motion for Reconsideration is PARTIALLY GRANTED and our Decision
promulgated on January 19, 2001 is MODIFIED as follows:

(1) reinstating paragraph (4) and (5) of the Partial Decision of the court a quo; and

(2) affirming the Decision of the Court of Appeals in CA-G.R. No. 17596 in all other respects.

SO ORDERED.7

On July 22, 2002, the Republic of the Philippines, represented by the Land Registration
Authority (LRA), thru the Office of the Solicitor General (OSG), filed a motion for intervention
and a Petition-In-Intervention praying that judgment be rendered declaring:

1) That OCT No. 333 is a valid and existing title in line with the decisions this Honorable Court
had already rendered;

2) That OCT No. 333 was never expanded from its original area of 52,949,737 square meters;

3) That the land occupied by petitioners is not forest land and is covered by OCT No. 333;

4) That the proceedings conducted in Civil Case No. Q-35673 with respect to OCT No. 333 are
null and void; and

5) That the proceedings conducted in Civil Case No. Q-35672 is null and void, no notice of the
hearings/proceedings having been sent to the Republic and other interested parties.

The Republic likewise prays for such other relief as may be just and equitable under the
circumstances.8

The rule on intervention, like all other rules of procedure is intended to make the powers of the
Court fully and completely available for justice. It is aimed to facilitate a comprehensive
adjudication of rival claims overriding technicalities on the timeliness of the filing
thereof.9 Indeed, in exceptional cases, the Court has allowed intervention notwithstanding the
rendition of judgment by the trial court. In one case, intervention was allowed even when the
petition for review of the assailed judgment was already submitted for decision in the Supreme
Court.10
In Mago v. Court of Appeals,11 intervention was granted even after the decision became final and
executory, thus

The permissive tenor of the provision on intervention shows the intention of the Rules to give to
the court the full measure of discretion in permitting or disallowing the same. But needless to
say, this discretion should be exercised judiciously and only after consideration of all the
circumstances obtaining in the case.

But it is apparent that the courts a quo only considered the technicalities of the rules on
intervention and of the petition for relief from judgment. The denial of their motion to intervene
arising from the strict application of the rule was an injustice to petitioners whose substantial
interest in the subject property cannot be disputed. It must be stressed that the trial court granted
private respondent's petition for prohibition with injunction without petitioners being impleaded,
in total disregard of their right to be heard, when on the face of the resolution of the Community
Relations and Information Office (CRIO) sought to be enjoined, petitioners were the ones
directly to be affected. We need not belabor the point that petitioners are indeed indispensable
parties with such an interest in the controversy or subject matter that a final adjudication cannot
be made in their absence without affecting, nay injuring, such interest.

In Director of Lands v. Court of Appeals where the motions for intervention were filed when the
case had already reached this Court, it was declared:

It is quite clear and patent that the motions for intervention filed by the movants at this stage of
the proceedings where trial had already been concluded x x x and on appeal x x x the same was
affirmed by the Court of Appeals and the instant petition for certiorari to review said judgment is
already submitted for decision by the Supreme Court, are obviously and manifestly late, beyond
the period prescribed under x x x Section 2, Rule 12 of the Rules of Court [now Rule 19, Section
2 of the 1997 Rules on Civil Procedure].

But Rule 12 of the Rules of Court, like all other Rules therein promulgated, is simply a rule of
procedure, the whole purpose and object of which is to make the powers of the Court fully and
completely available for justice. The purpose of procedure is not to thwart justice. Its proper aim
is to facilitate the application of justice to the rival claims of contending parties. It was created
not to hinder and delay but to facilitate and promote the administration of justice. It does not
constitute the thing itself which courts are always striving to secure to litigants. It is designed as
the means best adopted to obtain that thing. In other words, it is a means to an end.

In Tahanan Development Corp. v. Court of Appeals, this Court allowed intervention almost at
the end of the proceedings. Accordingly, there should be no quibbling, much less hesitation or
circumvention, on the part of subordinate and inferior courts to abide and conform to the rule
enunciated by the Supreme Court.12

The Solicitor General summarized the interest of the Republic in Lot No. 3 (originally covered
by OCT No. 333), as follows:
On March 5, 1979, then President Marcos issued Proclamation No. 1826 "reserving for national
government center site a parcel of land situated in the Constitution Hill, Quezon City, Metro
Manila, containing an area of four million for hundred forty thousand FOUR HUNDRED
SIXTY-SIX SQUARE METERS." In a certification [Annex "F", Rollo, p. 1415] issued by the
Land Registration Authority, it attested to the fact that the National Government Center
described in Proclamation No. 1826 "is within the area covered by GLRO Record No. 1037
(OCT-333) and GLRO Record No. 5975 as plotted in our Municipal Index Sheet (MIS) Nos.
2574-C, 5707-B, 5708-A, 5708-B and 3339-D."

In a letter [Annex "B-2", Rollo, p. 1330], the Housing and Urban Development Coordinating
Council certified that within the Project site/jurisdiction of the National Government Center
Housing Project (NGCHP) and the NGC-EASTSIDE DEVELOPMENT PROJECT, the
following government buildings, offices and complexes are situated:

1) House of Representatives;

2) Civil Service Commission (CSC);

3) Department of Social Works and Development (DSWD);

4) Sandiganbayan;

5) Commission on Audit (COA);

6) Department of Public Works and Highways (DPWH) Depot;

7) Polytechnic University of the Philippines (PUP) Commonwealth Campus;

8) TESDA Skills Training Center;

9) Several Public Elementary and High Schools, Health Centers and Barangay Halls.

It also certified that the NGCHP under its Peoples Housing Alternative for Social Empowerment
land Acquisition Development Program (PHASE-LADP), has already awarded 3,975 TCTs to its
beneficiaries. This program comprises the biggest chunk of the NGCHP with about 117 hectares
intended for disposition to qualified beneficiaries. Further, in line with the National Governments
thrust of fast-tracking the implementation of the NGCHP, the remaining 20,696 TCTs are about
to be awarded to qualified beneficiaries."13

Clearly, the intervention of the Republic is necessary to protect public interest as well as
government properties located and projects undertaken on Lot No. 3. The Constitutional mandate
that no person shall be deprived of life, liberty, or property without due process of law can
certainly be invoked by the Republic which is an indispensable party to the case at bar. As
correctly pointed out by the Solicitor General, while the provision is intended as a protection of
individuals against arbitrary action of the State, it may also be invoked by the Republic to protect
its properties.14
After a thorough re-examination of the case, we find that our November 20, 2001 Resolution
reinstating paragraphs 4 and 5 of the trial courts Partial Decision pertaining to Lot No. 3,
overlooked certain aspects which, if not corrected, will cause extreme and irreparable confusion
and prejudice. The reinstated portions of the decision states:

4) Declaring the area of [OCT] No. 333 in excess of its true and actual area of 4,574 Sq. Meters,
as well as the TCTs subsequently issued by the Register of Deeds of Quezon City, covering the
area in excess of said actual area, with the exception of those belonging to non-defaulted
respondents, as null and void ab initio;

5) Ordering the Register of Deeds of Quezon City to cancel all TCTs subsequently issued based
on OCT No. 333 in excess of the actual area of 4,574 Sq. Meters, with the exception of those
titles belonging to the non-defaulted respondents;15

We note that paragraph 4 does not at all specify which portions are in excess of the 4,574 square
meter area of OCT No. 333 and which areas belong to the defaulted and non-defaulted
respondents. Neither did the body of the trial courts decision state the metes and bounds that
would serve as basis in implementing the dispositive portion thereof. Verily, this flaw goes into
the very identity of the disputed land. Paragraphs 4 and 5 are therefore null and void for having
been rendered in violation of the constitutional mandate that "no decision shall be rendered by
any court without expressing therein clearly and distinctly the facts and the law on which it is
based."16 Hence, the November 20, 2001 Resolution reinstating paragraphs 4 and 5 of the trial
courts Partial Decision should be modified.

The OSGs prayer that OCT No. 333 be held as a valid and existing title is likewise meritorious.
In Republic v. Tofemi Realty Corporation (Tofemi),17 an action for "Cancellation of Titles &
Reversion" of TCT No. 55747 and TCT No. 55748, the validity of OCT No. 333 from which
said transfer certificates of title originated, has already been settled. In dismissing the petition of
the Republic, it was held therein that OCT No. 333 is a valid title duly issued by the Land
Registration Court. The Republic did not appeal therefrom and the decision became final and
executory. Pertinent portion of which states

Regarding the issue of nullity of OCT No. 333,

We find that the then Land Registration Court had the power, authority and jurisdiction to issue
it. It was issued after trial, or presumptively in a fair and square trial with all the requisites of the
law (The Phil. British Co., Inc. vs. de los Angeles, 63 SCRA 52).

The Act of Congress of July 1, 1902, known in local history as the "Philippine Bill of 1902", in
its sections 13 to 18, mentions three (3) classes of land, to wit, "public land" or public domain",
"mineral lands", and "timber land". (Ramos vs. Director of Lands, 39 Phil. 175). Early decisions
as regards classification of public lands, such as Mapa vs. Insular Government, 10 Phil 175,
Ramos vs. Director of Lands, supra, and Ankron vs. Government of the Philippine Islands, 40
Phil. 10, which were decided under the Philippine Bill of 1902 and the first Public Land Act No.
926 enacted by the Philippine Commission on October 7, 1926, or prior to the passage of Act
No. 2874, had impliedly ruled that there was no legal provision vesting in the chief Executive or
President of the Philippines the power to classify lands of the public domain into mineral, timber
and agricultural; so that the courts then were free to make corresponding classifications in
justiciable cases, or were invested with implicit power in so doing, depending upon the
preponderance of the evidence. In Mapa vs. Insular Government, supra, Feb. 10, 1908, the Court
of Land Registration granted the application for registration after finding that it was neither
"timber" nor "mineral" and came within the definition of "Agricultural land" under Act 926. The
Attorney General appealed. The Supreme Court affirmed the appealed judgment. In G.L.R.O.
No. 1037, the application for registration was granted and consequently the issuance of a title
was decreed in favor of the applicant because the Land Registration Court found that the land
applied for is agricultural susceptible of private appropriation (Ramos vs. Director of
Lands, supra; Ankron vs. Government of the Philippine Islands, supra). We repeat by way of
emphasis, the record does not reveal that the Government has always considered the lot in
question as forest reserve prior to the issuance of OCT 333. To declare the land now as forest
land on the authority of LC Map 639 of Rizal approved on March 11, 1937 only, would deprive
defendants of their registered property without due process of law. It was pronounced in Ramos
vs. Director of lands, supra:

"x x x Upon the other hand, the presumption should be, in lieu of contrary evidence, that land is
agricultural in nature. One very good reason is that it is good for the Philippine Islands to have a
large public domain come under private ownership. Such is the natural attitude of the sagacious
citizen."

OCT No. 333 being legal and valid; ergo, TCTs Nos. 55747 and 55748, being derived from the
said mother title, are also legal and valid. These TCTs were in turn derived from TCTs Nos.
45832 and 45833, covering Lots Nos. 65, 76 and 81 which originally formed parts of Parcel C of
Plan Psu-32606 approved by the Court of First Instance of Rizal on October 21, 1924.
(Emphasis supplied)18

Stare decisis et non quieta movere. Stand by the decisions and disturb not what is settled. It is a
salutary and necessary judicial practice that when a court has laid down a principle of law
applicable to a certain state of facts, it must adhere to such principle and apply it to all future
cases in which the facts sued upon are substantially the same.19 It is beyond cavil, therefore, that
since the court had already ruled on the validity OCT No. 333, said issue must be laid to rest and
must no longer be relitigated in the present case.

With respect, however, to the area covered by OCT No. 333, the principle of stare decisis is not
applicable because the decision of the Court of Appeals did not indicate the boundaries of the lot
covered by OCT No. 333. While it was held therein that the area of OCT No. 333 is 52,949,735
square meters, the metes and bounds of the land covered by OCT No. 333 was not specified. We
cannot adopt the findings as to the area of OCT No. 333 for it might cause deprivation of
property of adjacent land owners without due process of law.

So, also, the Court cannot nullify the entire Partial Decision of the court a quo. The defaulted
defendants whose properties are located in Lot No. 1 did not question the decision of the trial
court. Neither was it shown in the Petition-In-Intervention that the OSG is an indispensable party
to Lot No. 1.
In their Motion for Clarification and Manifestation, respondents seek the clarification of
paragraph 1 of the trial courts Partial Decision declaring petitioners as owners of, among others,
Lot No. 2 where respondents properties are located. Paragraph 1, provides:

1) Declaring petitioners through the principal petitioners hereof, to wit: Alberto G. Pinlac, Atty.
Eriberto H. Decena, Rodolfo F. Reyes, Felipe Briones and Juanito S. Metilla as absolute owners
in fee simple title of the aforesaid Lots 1, 2 & 3 hereof by virtue of extraordinary prescription,
with the exception of the lands covered by the respective transfer certificate of title belonging to
non-defaulted respondents.20

In view of the annulment of the trial courts Partial Decision with respect to Lot No. 2 originally
covered by OCT No. 614, all portions of the decision pertaining to Lot No. 2, including that in
paragraph 1 declaring petitioners as absolute owners in fee simple of Lot No. 2, is declared void.
Likewise, the declaration of nullity of paragraphs 4 and 5 of the dispositive portion of the
decision a quo concerning Lot No. 3, renders the disposition in paragraph 1 insofar as it affects
Lot No. 3, also void. Under the 1997 Rules on Civil Procedure, specifically Rule 47, Section 7
thereof, a judgment of annulment shall set aside the questioned judgment or final order or
resolution and render the same null and void, without prejudice to the original action being re-
filed in the proper court.

In the meantime, the World War II Veterans Legionaries of the Philippines (WW II) filed a
Petition-in-Intervention with prior leave of court. It alleges that the Court of Appeals decision
dated November 15, 1989 in CA-G.R. SP No. 17596, which is the subject of the instant petition
for review, ran counter to the June 22, 1989 decision of the same court in CA-G.R. SP No.
17221, which merely amended the first paragraph of the Partial Decision of the trial court in
Civil Case No. Q-35672. The latter decision of the appellate court was affirmed by this Court in
G.R. No. 90245 on April 8, 1990.

We find no conflict between the two decisions of the Court of Appeals. It is true that both
decisions affected the portion of the Partial Decision of the trial court which declared petitioners,
who are individual members of the WW II, as absolute owners of Lot Nos. 1, 2 and 3. However,
the decision in CA-G.R. SP No. 17221 merely granted WW IIs prayer that it be substituted for its
individual members, who were declared the owners of Lot Nos. 1, 2 and 3 in the Partial
Decision. Aside from this, the decision in CA-G.R. SP No. 17221 had nothing to do with the
merits of the case. As such, it did not contradict the Court of Appeals decision of November 15,
1989 in CA-G.R. SP No. 17596 which set aside the Partial Decision of the trial court.

WHEREFORE, in view of all the foregoing, the Petition-In-Intervention of the Republic of the
Philippines is PARTIALLY GRANTED. The Resolution promulgated on November 20, 2001 is
MODIFIED as follows: The Decision dated March 21, 1988 of the Regional Trial Court of
Quezon City, Branch 83, in Civil Case No. Q-35762, is annulled insofar as it concerns Lot No. 2,
originally covered by OCT No. 614 and Lot No. 3 originally covered by OCT No. 333. The
November 15, 1999 Decision of the Court of Appeals in CA-G.R. No. 17596 is affirmed in all
other respects.
As clarified above, paragraph 1 of the dispositive portion of the decision of the court a quo is
void insofar as it declares petitioners as absolute owners in fee simple of Lot Nos. 2 and 3.

The Petition-in-Intervention filed by the World War Veterans Legionaries of the Philippines is
DENIED for lack of merit.

SO ORDERED.

G.R. No. 162692, August 26, 2015

NILO V. CHIPONGIAN, Petitioner, v. VICTORIA BENITEZ-LIRIO, FEODOR

BENITEZ AGUILAR, AND THE COURT OF APPEALS, Respondents.

DECISION

BERSAMIN, J.:

This appeal seeks the review and reversal of the decision promulgated on October 30,
2002,1 whereby the Court of Appeals (CA) dismissed the petition for certiorari that the
petitioner had instituted to annul the dismissal by the trial court of his complaint-in-intervention
in Special Proceedings No. SP-797 entitled In the matter of the Intestate Estate of Vicente O.
Benitez, Petition for Letters of Administration. Victoria Benitez Lirio and Feodor Benitez
Aguilar, Petitioners.

Antecedents

The late Vicente Benitez was married to Isabel Chipongian, the petitioner's sister. Isabel had
predeceased Vicente, who died on November 13, 1989. The couple had no offspring.2 On July
20, 1982, after the death of Isabel, Vicente and the petitioner had executed a deed of extrajudicial
settlement respecting the estate of Isabel, whereby the latter waived all his rights to the estate of
Isabel in favor of Vicente.3 According to the petitioner, however, Vicente executed an affidavit
on the same date whereby he affirmed that the waiver did not extend to the paraphernal
properties of Isabel.4

Upon the death of Vicente, Victoria Benitez Lirio (Victoria), a sister of Vicente, and Feodor
Benitez Aguilar (Feodor), a nephew of Vicente, initiated proceedings for the settlement of the
estate of Vicente in the Regional Trial Court on September 24, 1990 (RTC).5 In its order dated
May 13, 1994,6 the RTC appointed Feodor the administrator of Vicente's estate. On May 20,
1994,7 it issued the letters of administration to Feodor.

The petitioner intervened in Special Proceedings No. SP-797.8 On May 27, 1994, he sought the
partial revocation of the May 13, 1994 order in order to exclude the paraphernal properties of
Isabel from inclusion in the estate of Vicente.9 He cited the affidavit of Vicente in support of the
partial revocation.

Feodor countered with the request that he be allowed to continue to administer all the properties
left by Vicente, including the paraphernal properties of Isabel.10

On June 8, 1994, the petitioner specifically moved for the exclusion of the paraphernal properties
of Isabel from Vicente's estate. However, he withdrew the motion even before the RTC could
rule on it. Instead, he filed a Motion for Leave to Intervene and to Admit Complaint-in-
Intervention.11

Respondents Victoria and Feodor opposed the complaint-in-intervention.12

The RTC granted the Motion for Leave to Intervene and to Admit Complaint-in-Intervention, and
admitted the complaint-in-intervention of the petitioner.13

Judgment of the RTC

On August 21, 1998, the RTC rendered judgment dismissing the complaint-in-intervention, and
ordering the costs of suit to be paid by the petitioner,14 pertinently holding:cralawlawlibrary

There is no dispute that the estate of the late Isabel Chipongian was extra-judicially settled on
July 20, 1982 by and between Vicente O. Benitez and Nilo V. Chipongian and was published in
the BAYANIHAN Weekly News on August 16, 23, and 30, 1982. The herein intervenor actively
participated in the execution of the extra-judicial settlement of his sister's estate. As a matter of
fact the intervenor therein "agreed x x x x x x to quitclaim and waive all my rights to the estate
left by my declared sister Isabel Chipongian and I hereby adjudicated them in favor of my
brother-in-law Vicente O. Benitez" (Exh. 23-B)

Section 4, Rule 74 of the Rules, provides for a limitation of 2 years after the settlement and
distribution of an estate in accordance with either Section 1 or Section 2 of the same Rule, within
which an heir or other person deprived of his lawful participation in the estate may compel the
settlement of the said estate in the Courts for the purpose of satisfying such lawful participation
(Tinatan v. Serilla, 54 O.G. p. 6080 9/15/58). The intervenor took part and had knowledge of the
extra-judicial settlement of the estate and is therefore bound thereby. If he was indeed deprived
of his lawful share or right in his sister's estate, it comes as a surprise why it took him more than
12 years assert the purported affidavit allegedly executed in his favor by Vicente O. Benitez.

Careful note was taken of the fact that the purported affidavit of Vicente O. Benitez in favor of
the herein intervenor was executed simultaneously with the deed of extra-judicial settlement of
Isabel Chipongian's estate which was published but the affidavit was not. No reason was
advanced by the intervenor why Vicente O. Benitez's affidavit was not published and why it was
only after 12 long years that intervenor brought it out.

It is well-settled that the negligence or omission to assert a right within a reasonable time
warrants not only a presumption that the party entitled to assert it either had abandoned it or
declined to assert it but also casts doubt on the validity of the claim of ownership. Such neglect
to assert a right taken in conjunction with the lapse of time more or less great and other
circumstances causing prejudice to the adverse party operates as a bar in a Court of equity
(Guerrero v. CA, 126 SCRA 109).
WHEREFORE, on the foregoing premises, the complaint in intervention is hereby dismissed
with costs. The petitioner's counterclaim is also dismissed.

SO ORDERED.15
chanrobleslaw

The petitioner moved for the reconsideration of the judgment,16 but the RTC denied the Motion
for Reconsideration on March 8, 1999.17

Thus, on March 19, 1999, the petitioner filed a notice of appeal.18

On March 30, 1999, the RTC denied due course to the notice of appeal for having been filed
beyond the reglementary period.19

On April 19, 1999, the petitioner filed a Motion for Reconsideration vis-a-vis the order denying
due course to his notice of appeal.20

On July 5, 1999, the RTC issued its order whereby it conceded that the petitioner had timely
filed the notice of appeal, but still denied the Motion for Reconsideration on the ground that he
had not perfected his appeal because of his failure to pay the appellate court docket fees.21

On July 26, 1999, the petitioner brought his Motion to Set Aside the July 5, 1999 order denying
his Motion for Reconsideration.22

On August 13, 1999, the RTC denied the Motion to Set Aside.23

Decision of the CA

On October 26, 1999, the petitioner instituted his petition for certiorari in the CA,24 alleging that
the RTC had committed grave abuse of discretion amounting to lack or excess of jurisdiction in
dismissing his appeal, and denying his Motion for Reconsideration. He averred that on March
19, 1999, he filed the notice of appeal;25 that he paid the appellate court docket fees on March 31,
1999;26 that the RTC denied due course to the notice of appeal on the ground that it had been
filed beyond the reglementary period; that he thus filed his Motion for Reconsideration against
the order denying due course;27 that on July 5, 1999, the RTC issued its order whereby it
conceded that the petitioner had timely filed the notice of appeal, but still denied the Motion for
Reconsideration on the ground that he had not perfected his appeal because of his failure to pay
the appellate court docket fees;28 that he filed his Motion to Set Aside Order, appending thereto
the copies of the official receipts of the payment of the appellate court docket fees;29 that through
the order of August 13, 1999, the RTC still denied the Motion to Set Aside Order, a copy of
which order was received by his counsel on August 27, 1999;30 that his last day to bring the
special civil action for certiorari was on October 26 1999, the 60th day from such date; and that
there was no appeal, or any plain, speedy and adequate remedy in the ordinary course of law.31

On October 30, 2002, the CA dismissed the petition for certiorari,32 opining

thusly:cralawlawlibrary
The Supreme Court has time and again stressed that the perfection of appeals in the manner and
within the period permitted by law is not only mandatory but jurisdictional. The failure to perfect
an appeal renders the decision of the trial court final and executory. [Bank of America, NT & SA
v. Gerochi, Jr., 230 SCRA 9 (1994) citing Alto Sales Corp. v. IAC, 197 SCRA 618 (1991),
Falcon Mfg. v. NLRC, 199 SCRA 814 (1991), Kabushin Kaisha Isetan v. IAC, 203 SCRA 583
(1991)]

This rule is founded upon the principle that the right to appeal is not part of due process of law
but is a mere statutory privilege to be exercised only in the manner and in accordance with the
provisions of the law. [Bello v. Fernando, 4 SCRA 135 (1962); Borre v. Court of Appeals, 158
SCRA 660 (1998); Pedrosa v. Hill, 257 SCRA 373 (1996); People v. Esparas, 260 SCRA 539
(1996)]

Petitioner paid the appeal fees only on March 31, 1999, but as admitted by him in his Motion for
Reconsideration (Rollo, p. 61), the last day to perfect his appeal was on August 21, 1998. (Rollo,
p. 68) In a long line of cases, the Supreme Court has held that failure to comply with the
requirement for payment on time of the appeal fees renders the decision final. (Republic of the
Philippines vs. Court of Appeals, 322 SCRA at 90; Pedrosa vs. Hill, 257 SCRA 373; Luna vs.
NLRC, 270 SCRA 227) We see no compelling reason to depart from this rule.

We find no further need to rule on the other assigned error. Suffice it to state that the respondent
court acted pursuant to law and established jurisprudence; hence, did not commit any abuse of
discretion.

WHEREFORE, for lack of merit, the petition is DISMISSED.

SO ORDERED.33
chanrobleslaw

On November 28, 2002, the petitioner sought reconsideration,34 but the CA denied his Motion for
Reconsideration on March 9, 2004.35

Issues

Hence, this appeal, whereby the petitioner contends that the CA gravely abused its discretion in
dismissing his petition for certiorari assailing the dismissal of his complaint-in-intervention and
the denial of due course to his notice of appeal by the RTC on the ground of the late payment of
the appellate court docket fees. He argues that he should not be deprived of his right to appeal
solely on the basis of the late payment of the appellate court docket fees.36

In contrast, respondents Victoria and Feodor seek the denial of the petition for review because
the petitioner did not file a record on appeal,37 as mandated under Section 2(a) Rule 41 of
the Rules of Court.

In his reply to the respondents' comment,38 the petitioner submits:cralawlawlibrary

x x x It is to be noted that the appeal was from the decision of the trial court to dismiss
petitioner's complaint-in-intervention and not 'the final order or judgment rendered in the case',
obviously referring to the main case, that is, the intestate estate case. Since the intervention was
not an independent proceeding but only ancillary or supplemental to the main case, the rule on
multiple appeals does not apply and the filing of a record on appeal is not a pre-requisite to the
acceptance and consideration of the appeal by the appellate court.
chanrobleslaw

Ruling of the Court

The appeal lacks merit.

Intervention is "a remedy by which a third party, not originally impleaded in the proceedings,
becomes a litigant therein to enable him, her or it to protect or preserve a right or interest which
may be affected by such proceedings."39 If an intervention makes a third party a litigant in the
main proceedings, his pleading-in-intervention should form part of the main case.  Accordingly,
when the petitioner intervened in Special Proceedings No. SP-797, his complaint-in-intervention,
once admitted by the RTC, became part of the main case, rendering any final disposition thereof
subject to the rules specifically applicable to special proceedings, including Rule 109 of
the Rules of Court, which deals with appeals in special proceedings.

Section 1 of Rule 41 enunciates the final judgment rule by providing that an appeal "may be

taken from a judgment or final order that completely disposes of the case, or of a particular
matter therein when declared by these Rules to be appealable." In the context of the final
judgment rule, Section 1 of Rule 109 does not limit the appealable orders and judgments in
special proceedings to the final order or judgment rendered in the main case, but extends the
remedy of appeal to other orders or dispositions that completely determine a particular matter in
the case, to wit:cralawlawlibrary

Rule 109. - Appeals in Special Proceedings

Section 1. Orders or judgments from which appeals may be taken. - An interested person may
appeal in special proceedings from an order or judgment rendered by a Court of First Instance or
a Juvenile and Domestic Relations Court, where such order or
judgment:chanRoblesvirtualLawlibrary

(a) Allows or disallows a will;ChanRoblesVirtualawlibrary

(b) Determines who are the lawful heirs of a deceased person, or the distributive share of the
estate to which such person is entitled;ChanRoblesVirtualawlibrary

(c) Allows or disallows, in whole or in part, any claim against the estate of a deceased
person, or any claim presented on behalf of the estate in offset to a claim against it;

(d) Settles the account of an executor, administrator, trustee or

guardian;ChanRoblesVirtualawlibrary
(e)  Constitutes, in proceedings relating to the settlement of the estate of a deceased person,
or the administration of a trustee or guardian, a final determination in the lower court of
the rights of the party appealing, except that no appeal shall be allowed from the
appointment of a special administrator; and

(f) Is the final order or judgment rendered in the case, and affects the substantial rights of the
person appealing, unless it be an order granting or denying a motion for a new trial or for
reconsideration.chanrobleslaw

The dismissal of the petitioner's intervention constituted "a final determination in the lower court
of the rights of the party appealing," that is, his right in the paraphernal properties of his
deceased sister. As such, it fell under paragraph (c) of Section 1, supra, because it had the effect
of disallowing his claim against the estate of Vicente, as well as under paragraph (e) of Section
1, supra, because it was a final determination in the trial court of his intervention. Conformably
with either or both paragraphs, which are boldly underscored above for easier reference, the
dismissal was the proper subject of an appeal in due course by virtue of its nature of completely
disposing of his intervention.

The proper mode of appealing a judgment or final order in special proceedings is by notice of
appeal and record on appeal. This is pursuant to Section 2(a), Rule 41 of the Rules of Court,
viz.:cralawlawlibrary

Section 2. Modes of appeal. -

(a) Ordinary appeal. - The appeal to the Court of Appeals in cases decided by the Regional Trial
Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the
court which rendered the judgment or final order appealed from and serving a copy thereof upon
the adverse party. No record on appeal shall be required except in special proceedings and
other cases of multiple or separate appeals where the law or these Rules so require. In such
cases, the record on appeal shall be filed and served in like manner.

xxxx
chanrobleslaw

Under Section 3 of Rule 41, a party who wants to appeal a judgment or final order in special
proceedings has 30 days from notice of the judgment or final order within which to perfect an
appeal because he will be filing not only a notice of appeal but also a record on appeal that will
require the approval of the trial court with notice to the adverse party, to wit:cralawlawlibrary

Section 3. Period of ordinary appeal. - The appeal shall be taken within fifteen (15) days from
notice of the judgment or final order appealed from. Where a record on appeal is required, the
appellant shall file a notice of appeal and a record on appeal within thirty (30) days from
notice of judgment or final order. However, an appeal in habeas corpus cases shall be taken
within forty-eight (48) hours from notice of the judgment or fmal order appealed from.

The period of appeal shall be interrupted by a timely motion for new trial or reconsideration. No
motion for extension of time to file a motion for new trial or reconsideration shall be allowed, (n)
(bold emphasis supplied)chanrobleslaw

For the petitioner, therefore, the period for perfecting the appeal by record on appeal was 30 days
from notice of the final order dismissing the intervention. The start of the period of 30 days
happened on September 18, 1998, the date when his counsel received the decision dismissing his
intervention. However, the entire time from the filing of his Motion for Reconsideration on
October 2, 1998 until his receipt of the denial of the Motion for Reconsideration on March 18,
1999 should be deducted from the reckoning of the period to perfect his appeal. He filed the
notice of appeal on March 19, 1999, and paid the appellate court docket fees on March 31,
1999.40 Initially, the RTC denied due course to the notice of appeal on the ground that it had been
filed beyond the reglementary period; hence, the petitioner filed his Motion for
Reconsideration against the order denying due course.41 On July 5, 1999, the RTC issued its
order whereby it conceded that the petitioner had timely filed the notice of appeal, but still
denied the Motion for Reconsideration on the ground that he had not perfected his appeal
because of his failure to pay the appellate court docket fees.42 Hence, he filed a Motion to Set
Aside Order, to which he appended the copies of the official receipts of the payment of the
appellate court docket fees.43 Nonetheless, on August 13, 1999, the RTC denied the Motion to
Set Aside Order, and a copy of the order of denial was received by his counsel on August 27,
1999.44

In Lebin v. Mirasol,45 the Court has discussed the justification for requiring the record on appeal
in appeals in special proceedings, viz.:cralawlawlibrary

The changes and clarifications recognize that appeal is neither a natural nor a constitutional right,
but merely statutory, and the implication of its statutory character is that the party who intends to
appeal must always comply with the procedures and rules governing appeals, or else the right of
appeal may be lost or squandered.

As the foregoing rules further indicate, a judgment or final order in special proceedings is
appealed by record on appeal. A judgment or final order determining and terminating a particular
part is usually appealable, because it completely disposes of a particular matter in the
proceeding, unless otherwise declared by the Rules of Court. The ostensible reason for requiring
a record on appeal instead of only a notice of appeal is the multipart nature of nearly all special
proceedings, with each part susceptible of being finally determined and terminated independently
of the other parts. An appeal by notice of appeal is a mode that envisions the elevation of the
original records to the appellate court as to thereby obstruct the trial court in its further
proceedings regarding the other parts of the case. In contrast, the record on appeal enables the
trial court to continue with the rest of the case because the original records remain with the trial
court even as it affords to the appellate court the full opportunity to review and decide the
appealed matter.

xxxx

The elimination of the record on appeal under Batas Pambansa Blg. 129 made feasible the
shortening of the period of appeal from the original 30 days to only 15 days from notice of the
judgment or final order. Section 3, Rule 41 of the Rules of Court, retains the original 30 days as
the period for perfecting the appeal by record on appeal to take into consideration the need for
the trial court to approve the record on appeal. Within that 30-day period a party aggrieved by a
judgment or final order issued in special proceedings should perfect an appeal by filing both a
notice of appeal and a record on appeal in the trial court, serving a copy of the notice of appeal
and a record on appeal upon the adverse party within the period; in addition, the appealing party
shall pay within the period for taking an appeal to the clerk of court that rendered the appealed
judgment or final order the full amount of the appellate court docket and other lawful fees. A
violation of these requirements for the timely perfection of an appeal by record on appeal, or the
non-payment of the full amount of the appellate court docket and other lawful fees to the clerk of
the trial court may be a ground for the dismissal of the appeal.46chanrobleslaw

Considering that the petitioner did not submit a record on appeal in accordance with Section 3 of
Rule 41, he did not perfect his appeal of the judgment dismissing his intervention. As a result,
the dismissal became final and immutable. He now has no one to blame but himself. The right to
appeal, being statutory in nature, required strict compliance with the rules regulating the exercise
of the right. As such, his perfection of his appeal within the prescribed period was mandatory and
jurisdictional, and his failure to perfect the appeal within the prescribed time rendered the
judgment final and beyond review on appeal. Indeed, we have fittingly pronounced in Lebin v.
Mirasol:cralawlawlibrary

In like manner, the perfection of an appeal within the period laid down by law is mandatory and
jurisdictional, because the failure to perfect the appeal within the time prescribed by the Rules of
Court causes the judgment or final order to become final as to preclude the appellate court from
acquiring the jurisdiction to review the judgment or final order. The failure of the petitioners and
their counsel to file the record on appeal on time rendered the orders of the RTC final and
unappealable. Thereby, the appellate court lost the jurisdiction to review the challenged orders,
and the petitioners were precluded from assailing the orders.47chanrobleslaw

In view of the foregoing, the petitioner lost his right to appeal through his failure to file the
record on appeal, and rendered the dismissal of his intervention final and immutable. With this
outcome, we no longer need to dwell on the denial of due course to his notice of appeal because
of the late payment of the appellate court docket fees.

WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals promulgated on

October 30, 2002 subject to the foregoing clarification on the correct justification for the
dismissal of the appeal being upon the petitioner's failure to perfect his appeal in accordance with
Section 2(a) and Section 3 of Rule 41 of the Rules of Court; and ORDERS the petitioner to pay
the costs of suit.

SO ORDERED.chanroblesvirtuallawlibrary

People vs. M. C. Sergio and J. Lacanilao, October 9, 2019 (pls check on the downloads
240053.pdf)

G.R. No. 108229 August 24, 1993

DASMARIÑAS GARMENTS, INC., petitioner,
vs.
HON. RUBEN T. REYES, Judge, Regional Trial Court, Manila, Branch 50, and
AMERICAN PRESIDENT LINES, LTD., respondents.

Sobreviñas, Diaz, Haudini & Bodegon Law Offices for petitioner.

Tan, Manzano & Velez Law Offices for private respondent.

RESOLUTION

NARVASA, C.J.:

Sometime in September, 1987, in the Regional Trial Court of Manila, the American President
Lines, Ltd. sued Dasmariñas Garments, Inc. to recover the sum of US $53,228.45 as well as an
amount equivalent to twenty-five percent (25%) thereof as attorney's fees and litigation
expenses.

In its answer dated December 1, 1987, Dasmariñas Garments, Inc. (hereafter, simply
Dasmariñas) specifically denied any liability to the plaintiff (hereafter simply APL), and set up
compulsory counterclaims against it.

The case was in due course scheduled for trial on April 27, 1988. On that date APL presented its
first witness whose testimony was completed on November 12, 1988. The case was reset to May
3, 1989 for reception of the testimony of two (2) more witnesses in APL's behalf.

At the hearing of May 3, 1989, instead of presenting its witnesses, APL filed a motion praying
that it intended to take the depositions of H. Lee and Yeong Fang Yeh in Taipei, Taiwan and
prayed that for this purpose, a "commission or letters rogatory be issued addressed to the consul,
vice-consul or consular agent of the Republic of the Philippines in Taipei . . . " Five (5) days
later APL filed an amended motion stating that since the Philippine Government has no
consulate office in Taiwan in view of its "one China policy," there being in lieu thereof an office
set up by the President "presently occupied by Director Joaquin Roces which is the Asia
Exchange Center, Inc.," it was necessary — and it therefore prayed — "that commission or
letters rogatory be issued addressed to Director Joaquin Roces, Executive Director, Asian
Executive Exchange Center, Inc., Room 901, 112 Chunghsiao, E. Road, Section 1, Taipe,
Republic of China, to hear and take the oral deposition of the aforenamed persons . . . ."

The motion was opposed by Dasmariñas. It contended that (a) the motion was "fatally defective
in that it does not seek . . . that a foreign court examine a person within its jurisdiction;" (b)
issuance of letters rogatory was unnecessary because the witnesses "can be examined before the
Philippine Court;" and
(c) the Rules of Court "expressly require that the testimony of a witness must be taken orally in
open court and not by deposition."
Extensive argument on the matter thereafter followed, through various pleadings filed by the
parties, in the course of which APL submitted to the Trial Court (a) the letter received by its
counsel from Director Joaquin R. Roces of the Asian Exchange Center, Inc., dated November 20,
1989, advising that "this Office can only take deposition upon previous authority from the
Department of Foreign Affairs," this being "in consonance with the Supreme Court
Administrative Order requiring courts or judicial bodies to course their requests through the
Department of Foreign Affairs;" and (b) a letter sent by "fax" to the same counsel by a law firm
in Taipei, Lin & Associates Maritime Law Office, transmitting information inter alia of the
mode by which, under the "ROC Civil Procedure Code," "a copy or an abridged copy" of
documents on file with a Taiwan Court may be obtained.

By Order dated March 15, 1991, the Trial Court resolved the incident in favor of APL, disposing
as follows:

ACCORDINGLY, the motion to take testimonies of plaintiff's Taiwanese

witnesses, Kenneth H. Lee and Yeong Fah Yeh, by deposition (upon written
interrogatories) is hereby GRANTED. The Asian Exchange Center, Inc. thru
Director Joaquin R. Roces is hereby COMMISSIONED to take down the
deposition. Compliance with the Rules on the taking of testimony by deposition
upon written interrogatories under Sections 25-29 of Rule 24, Rules of Court is
enjoined.

Let this Order be coursed through the Department of Foreign Affairs, Manila,
pursuant to Supreme Court Administrative Circular No. 4 dated April 6, 1987.

The Court opined that "the Asian Exchange Center, Inc. being the authorized Philippine
representative in Taiwan, may take the testimonies of plaintiff's witnesses residing there by
deposition, but only upon written interrogatories so as to give defendant the opportunity to
cross-examine the witnesses by serving cross-examination."

Dasmariñas sought reconsideration by motion filed June 25, 1991 on the following grounds: (1)
authority of the Asian Exchange Center, Inc. (AECI) to take depositions has not been
established, it not being one of those so authorized by the Rules of Court to take depositions in a
foreign state; (2) AECI's articles of incorporation show that it is not vested with any such
authority; (3) to permit deposition-taking by commission without the authority of the foreign
state in which deposition is taken constitutes infringement of judicial sovereignty; and (4)
depositions by written interrogatories have inherent limitations and are not suitable to matters
dependent on the credibility of witnesses; oral testimony in open court remains the "most
satisfactory method of investigation of facts'" and "'affords the greatest protection to the rights
and liberties of citizens."

By Order dated July 5, 1991, the motion for reconsideration was denied because "filed out of
time" and being a mere rehash of arguments already passed upon. In the same Order, APL was
directed "to take the necessary steps to implement the order authorizing the . . . (deposition-
taking) of its witnesses not later than the end of this month, otherwise the Court will consider
inaction or lack of interest as waiver to adduce additional evidence by deposition."
Dasmariñas instituted a special civil action of certiorari in the Court of Appeals to nullify the
orders of the Trial Court just described. Said Appellate Court restrained enforcement of the
orders of March 15, 1991 and July 5, 1991 "in order to maintain the status quo and to prevent the
infliction of irreparable damage and injury upon the petitioner."

After due proceedings, the Court of Appeals (Third Division) rendered judgment on September
23, 1992 denying Dasmariñas petition for certiorari and upholding the challenged orders of the
Trial Court. Once again, Dasmariñas sought reconsideration of an adverse disposition, and once
again, was rebuffed. Its motion for reconsideration was denied in a Resolution of the Court of
Appeals dated December 11, 1992.

Once again Dasmariñas has availed of the remedy of appeal. It has come to this Court and prays
for the reversal of the Appellate Court's Decision of September 23, 1992 and Resolution dated
December 11, 1992. Once again, it will fail.

Dasmariñas ascribes to the Court of Appeals the following errors, to wit:

1) "in holding that a party could, during the trial of the case, present its evidence
by taking the deposition of its witnesses in a foreign jurisdiction before a private
entity not authorized by law to take depositions in lieu of their oral examination in
open Court considering that:

a) the taking of deposition is a mode of pretrial discovery to be

availed of before the action comes to trial;

b) no urgent or compelling reason has been shown to justify the

departure from the accepted and usual judicial proceedings of
examining witnesses in open court where their demeanor could be
observed by the trial judge;"

2) "in disregarding the inherently unfair situation in allowing private respondent,

a foreign entity suing in the Philippines, to present its evidence by mere
deposition of its witnesses away from the 'penetrating scrutiny' of the trial Judge
while petitioner is obligated to bring and present its witnesses in open court
subject to the prying eyes and probing questions of the Judge;" and

3) "in sanctioning the deposition taking of . . . (APL's) witnesses in Taipei,

Taiwan, a foreign jurisdiction not recognized by the Philippines in view of its
'one-China policy,' before the AECI, a private entity not authorized by law to take
depositions."

Depositions are chiefly a mode of discovery. They are intended as a means to compel disclosure
of facts resting in the knowledge of a party or other person which are relevant in some suit or
proceeding in court. Depositions, and the other modes of discovery (interrogatories to parties;
requests for admission by adverse party; production or inspection of documents or things;
physical and mental examination of persons) are meant to enable a party to learn all the material
and relevant facts, not only known to him and his witnesses but also those known to the adverse
party and the latter's own witnesses. In fine, the object of discovery is to make it possible for all
the parties to a case to learn all the material and relevant facts, from whoever may have
knowledge thereof, to the end that their pleadings or motions may not suffer from inadequacy of
factual foundation, and all the relevant facts may be clearly and completely laid before the Court,
without omission or suppression.

Depositions are principally made available by law to the parties as a means of informing
themselves of all the relevant facts; they are not therefore generally meant to be a substitute for
the actual testimony in open court of a party or witness. The deponent must as a rule be
presented for oral examination in open court at the trial or hearing. This is a requirement of the
rules of evidence. Section 1, Rule 132 of the Rules of Court provides:

Sec. 1. Examination to be done in open court. — The examination of witnesses

presented in a trial or hearing shall be done in open court, and under oath or
affirmation. Unless the witness is incapacitated to speak, or the question calls for
a different mode of answer, the answers of the witness shall be given orally.

Indeed, any deposition offered to prove the facts therein set out during a trial or hearing, in lieu
of the actual oral testimony of the deponent in open court, may be opposed and excluded on the
ground that it is hearsay; the party against whom it is offered has no opportunity to cross-
examine the deponent at the time that his testimony is offered. It matters not that that opportunity
for cross-examination was afforded during the taking of the deposition; for normally, the
opportunity for cross-examination must be accorded a party at the time that the testimonial
evidence is actually presented against him during the trial or hearing.

However, depositions may be used without the deponent being actually called to the witness
stand by the proponent, under certain conditions and for certain limited purposes. These
exceptional situations are governed by Section 4, Rule 24 of the Rules of Court.

Sec. 4. Use of depositions. — At the trial or upon the hearing of a motion of an

interlocutory proceeding, any part or all of a deposition, so far as admissible
under the rules of evidence, may be used against any party who was present or
represented at the taking of the deposition or who had due notice thereof, in
accordance with any of the following provisions:

(a) Any deposition may be used by any party for the purpose of contradicting or
impeaching the testimony of deponent as a witness;

(b) The deposition of a party or of any one who at the time of taking the
deposition was an officer, director, or managing agent of a public or private
corporation, partnership, or association which is a party may be used by an
adverse party for any purpose;

(c) The deposition of a witness, whether or not a party, may be used by any party
for any purpose if the court finds: (1) that the witness is dead; or (2) that the
 witness if out of the province and at a greater distance than fifty (50) kilometers
from the place of trial or hearing, or is out of the Philippines, unless it appears that
his absence was procured by the party offering the deposition; or (3) that the
witness is unable to attend to testify because of age, sickness, infirmity, or
imprisonment; or (4) that the party offering the deposition has been unable to
procure the attendance of the witness by subpoena; or (5) upon application and
notice, that such exceptional circumstances exist as to make it desirable, in the
interest of justice and with due regard to the importance of presenting the
testimony of witnesses orally in open court, to allow the deposition to be used;

(d) If only part of a deposition is offered in evidence by a party, the adverse party
may require him to introduce all of it which is relevant to the part introduced, and
any party may introduce any other parts.

The principle conceding admissibility to a deposition when the deponent is dead, out of the
Philippines, or otherwise unable to come to court to testify, is consistent with another rule of
evidence, found in Section 47, Rule 132 of the Rules of Court.

Sec. 47. Testimony or deposition at a former proceeding. — The testimony or

deposition of a witness deceased or unable to testify, given in a former case or
proceeding, judicial or administrative, involving the same parties and subject
matter, may be given in evidence against the adverse party who had the
opportunity to cross-examine him.

It is apparent then that the deposition of any person may be taken wherever he may be, in the
Philippines or abroad. If the party or witness is in the Philippines, his deposition "shall be taken
before any judge, municipal or notary public" (Sec. 10, Rule 24, Rules of Court). If in a foreign
state or country, the deposition "shall be taken: (a) on notice before a secretary or embassy or
legation, consul general, consul, vice-consul, or consular agent of the Republic of the
Philippines, or (b) before such person or officer as may be appointed by commission or under
letters rogatory" (Sec. 11, Rule 24).

Leave of court is not necessary where the deposition is to be taken before "a secretary or
embassy or legation, consul general, consul, vice-consul, or consular agent of the Republic of
the Philippines," and the defendant's answer has already been served (Sec. 1 Rule 24). After
answer, whether the deposition-taking is to be accomplished within the Philippines or outside,
the law does not authorize or contemplate any intervention by the court in the process, all that is
required being that "reasonable notice" be given "in writing to every other party to the action . . .
(stating) the time and place for taking the deposition and the name and address of each person to
be examined, if known, and if the name is not known, a general description sufficient to identify
him or the particular class or group to which he belongs. . . . " (Sec. 15, Rule 24). The court
intervenes in the process only if a party moves (1) to "enlarge or shorten the time" stated in the
notice (id.), or (2) "upon notice and for good cause shown," to prevent the deposition-taking, or
impose conditions therefor, e.g., that "certain matters shall not be inquired into" or that the taking
be "held with no one present except the parties to the action and their officers or counsel," etc.
(Sec. 16, Rule 24), or
(3) to terminate the process on motion and upon a showing that "it is being conducted in bad
faith or in such manner as unreasonably to annoy, embarrass, or oppress the deponent or party"
(Sec 18, Rule 24).

Where the deposition is to be taken in a foreign country where the Philippines has no "secretary
or embassy or legation, consul general, consul, vice-consul, or consular agent," then obviously it
may be taken only "before such person or officer as may be appointed by commission or under
letters rogatory. Section 12, Rule 24 provides as follows:

Sec. 12. Commission or letters rogatory. — A commission or letters rogatory

shall be issued only when necessary or convenient, on application and notice, and
on such terms and with such directions as are just and appropriate. Officers may
be designated in notices or commissions either by name or descriptive title and
letters rogatory may be addressed "To the Appropriate Judicial Authority in (here
name the country)."

A commission may be defined as "(a)n instrument issued by a court of justice, or other

competent tribunal, to authorize a person to take depositions, or do any other act by authority of
such court or tribunal" (Feria, J., Civil Procedure, 1969 ed., p. 415, citing Cyclopedic Law
Dictionary, p. 200). Letters rogatory, on the other hand, may be defined as "(a)n instrument sent
in the name and by the authority of a judge or court to another, requesting the latter to cause to
be examined, upon interrogatories filed in a cause pending before the former, a witness who is
within the jurisdiction of the judge or court to whom such letters are addressed" (Feria, J., op.
cit., citing Cyclopedic Law Dictionary, p. 653). Section 12, Rule 24 just quoted states that a
commission is addressed to "officers . . . designated . . . either by name or descriptive title,"
while letters rogatory are addressed to some "appropriate judicial authority in the foreign state."
Noteworthy in this connection is the indication in the Rules that letters rogatory may be applied
for and issued only after a commission has been "returned unexecuted" as is apparent from Form
21 of the "Judicial Standard Forms" appended to the Rules of Court, which requires the inclusion
in a "petition for letters rogatory" of the following paragraph, viz.:

xxx xxx xxx

3. A commission issued by this Court on the ______ day of ______, 19__, to take
the testimony of (here name the witness or witnesses) in (here name the foreign
country in which the testimony is to be taken), before _________________ (name
of officer), was returned unexecuted by __________________ on the ground that
____________, all of which more fully appears from the certificate of said
__________ to said commission and made a part hereof by attaching it hereto (or
state other facts to show commission is inadequate or cannot be executed)
(emphasis supplied).

In the case at bar, the Regional Trial Court has issued a commission to the "Asian Exchange
Center, Inc. thru Director Joaquin R. Roces" "to take the testimonies of . . . Kenneth H. Lee and
Yeong Fah Yeh, by deposition (upon written interrogatories) . . . ." It appears that said Center
may, "upon request and authority of the Ministry (now Department) of Foreign Affairs, Republic
of the Philippines" issue a "Certificate of Authentications" attesting to the identity and authority
of Notaries Public and other public officers of the Republic of China, Taiwan (eg., the Section
Chief, Department of Consular Affairs of the latter's Ministry of Foreign Affairs) (Annex B of
Annex N of the petition for review on certiorari) — a prima facie  showing not rebutted by
petitioner.

It further appears that the commission is to be coursed through the Department of Foreign
Affairs conformably with Circular No. 4 issued by Chief Justice Claudio Teehankee on April 6,
1987, pursuant to the suggestion of the Department of Foreign Affairs — directing "ALL
JUDGES OF THE REGIONAL TRIAL COURTS, METROPOLITAN TRIAL COURTS,
MUNICIPAL TRIAL COURTS IN CITIES, MUNICIPAL TRIAL COURTS AND
MUNICIPAL CIRCUIT TRIAL COURTS" "to course all requests for the taking of deposition of
witnesses residing abroad through the Department of Foreign Affairs" to enable it and "the
Philippine Foreign Service establishments to act on the matter in a judicious and expeditious
manner;" this, "in the interest of justice," and to avoid delay in the deposition-taking.

Petitioner would however prevent the carrying out of the commission on various grounds.

The first is that the deposition-taking will take place in "a foreign jurisdiction not recognized by
the Philippines in view of its 'one-China policy.'" This is inconsequential. What matters is that
the deposition is taken before a Philippine official acting by authority of the Philippine
Department of Foreign Affairs and in virtue of a commission duly issued by the Philippine Court
in which the action is pending, and in accordance, moreover, with the provisions of the
Philippine Rules of Court pursuant to which opportunity for cross-examination of the deponent
will be fully accorded to the adverse party.

Dasmariñas also contends that the "taking of deposition is a mode of pretrial discovery to be
availed of before the action comes to trial." Not so. Depositions may be taken at any time after
the institution of any action, whenever necessary or convenient. There is no rule that limits
deposition-taking only to the period of pre-trial or before it; no prohibition against the taking of
depositions after pre-trial. Indeed, the law authorizes the taking of depositions of witnesses
before or after an appeal is taken from the judgment of a Regional Trial Court "to perpetuate
their testimony for use in the event of further proceedings in the said court" (Rule 134, Rules of
Court), and even during the process of execution of a final and executory judgment (East Asiatic
Co. v. C.I.R., 40 SCRA 521, 544).

Dasmariñas further claims that the taking of deposition under the circumstances is a "departure
from the accepted and usual judicial proceedings of examining witnesses in open court where the
demeanor could be observed by the trial judge;" that it is "inherently unfair" to allow APL, "a
foreign entity suing in the Philippines, to present its evidence by mere deposition of its witnesses
away from the 'penetrating scrutiny' of the trial Judge while petitioner is obligated to bring and
present its witnesses in open court subject to the prying eyes and probing questions of the
Judge."

Of course the deposition-taking in the case at bar is a "departure from the accepted and usual
judicial proceedings of examining witnesses in open court where their demeanor could be
observed by the trial judge;" but the procedure is not on that account rendered illegal nor is the
deposition thereby taken, inadmissible. It precisely falls within one of the exceptions where the
law permits such a situation, i.e., the use of deposition in lieu of the actual appearance and
testimony of the deponent in open court and without being "subject to the prying eyes and
probing questions of the Judge." This is allowed provided the deposition is taken in accordance
with the applicable provisions of the Rules of Court and the existence of any of the exceptions
for its admissibility — e.g., "that the witness if out of the province and at a greater distance than
fifty (50) kilometers from the place of trial or hearing, or is out of the Philippines, unless it
appears that his absence was procured by the party offering the deposition; or . . . that the witness
is unable to attend to testify because of age, sickness, infirmity, or imprisonment, etc." (Sec. 4
Rule 24, supra, emphasis supplied) — is first satisfactorily established (See Lopez v. Maceren,
95 Phil. 754).

The Regional Trial Court saw fit to permit the taking of the depositions of the witnesses in
question only by written interrogatories, removing the proponent's option to take them by oral
examination, i.e., by going to Taipei and actually questioning the witnesses verbally with the
questions and answers and observations of the parties being recorded stenographically. The
imposition of such a limitation, and the determination of the cause thereof, are to be sure within
the Court's discretion. The ostensible reason given by the Trial Court for the condition — that the
deposition be taken "only upon written interrogatories" — is "so as to give defendant
(Dasmariñas) the opportunity to cross-examine the witnesses by serving cross-interrogatories."
The statement implies that opportunity to cross-examine will not be accorded the defendant if the
depositions were to be taken upon oral examination, which, of course, is not true. For even if the
depositions were to be taken on oral examination in Taipei, the adverse party is still accorded full
right to cross-examine the deponents by the law, either by proceeding to Taipei and there
conducting the cross-examination orally, or opting to conduct said cross-examination merely by
serving cross-interrogatories.

One other word. In its Order of July 5, 1991 — denying Dasmariñas motion for reconsideration
of the earlier order dated March 15, 1991 (allowing the taking of deposition by commission) —
one of the reasons adduced by the Regional Trial Court for the denial was that the motion had
been "filed out of time." Evidently, the Trial Court reached this conclusion because, as the record
discloses, the motion for reconsideration was filed by Dasmariñas on June 25, 1991, twenty-five
(25) days after notice (on May 20, 1991) of the Order of March 15, 1991 sought to be
reconsidered. Denial of the motion on such a ground is incorrect. In the first place, it appears that
there was a motion for extension of time to file a motion for reconsideration, ending on June 25,
1991 which was however not acted on or granted by the Court. More importantly, the order
sought to be reconsidered is an interlocutory order, in respect of which there is no provision of
law fixing the time within which reconsideration thereof should be sought.

PREMISES CONSIDERED, the Court Resolved to DISMISS the petition for review
on certiorari. Costs against petitioner.

SO ORDERED.

G.R. No. 176389               December 14, 2010

ANTONIO LEJANO, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, Respondent.

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

G.R. No. 176864

PEOPLE OF THE PHILIPPINES, Appellee,

vs.
HUBERT JEFFREY P. WEBB, ANTONIO LEJANO, MICHAEL A. GATCHALIAN,
HOSPICIO FERNANDEZ, MIGUEL RODRIGUEZ, PETER ESTRADA and GERARDO
BIONG, Appellants.

DECISION

ABAD, J.:

Brief Background

On June 30, 1991 Estrellita Vizconde and her daughters Carmela, nineteen years old, and
Jennifer, seven, were brutally slain at their home in Parañaque City. Following an intense
investigation, the police arrested a group of suspects, some of whom gave detailed confessions.
But the trial court smelled a frame-up and eventually ordered them discharged. Thus, the
identities of the real perpetrators remained a mystery especially to the public whose interests
were aroused by the gripping details of what everybody referred to as the Vizconde massacre.

Four years later in 1995, the National Bureau of Investigation or NBI announced that it had
solved the crime. It presented star-witness Jessica M. Alfaro, one of its informers, who claimed
that she witnessed the crime. She pointed to accused Hubert Jeffrey P. Webb, Antonio "Tony
Boy" Lejano, Artemio "Dong" Ventura, Michael A. Gatchalian, Hospicio "Pyke" Fernandez,
Peter Estrada, Miguel "Ging" Rodriguez, and Joey Filart as the culprits. She also tagged accused
police officer, Gerardo Biong, as an accessory after the fact. Relying primarily on Alfaro's
testimony, on August 10, 1995 the public prosecutors filed an information for rape with
homicide against Webb, et al.1

The Regional Trial Court of Parañaque City, Branch 274, presided over by Judge Amelita G.
Tolentino, tried only seven of the accused since Artemio Ventura and Joey Filart remained at
large.2 The prosecution presented Alfaro as its main witness with the others corroborating her
testimony. These included the medico-legal officer who autopsied the bodies of the victims, the
security guards of Pitong Daan Subdivision, the former laundrywoman of the Webb’s household,
police officer Biong’s former girlfriend, and Lauro G. Vizconde, Estrellita’s husband.

For their part, some of the accused testified, denying any part in the crime and saying they were
elsewhere when it took place. Webb’s alibi appeared the strongest since he claimed that he was
then across the ocean in the United States of America. He presented the testimonies of witnesses
as well as documentary and object evidence to prove this. In addition, the defense presented
witnesses to show Alfaro's bad reputation for truth and the incredible nature of her testimony.

But impressed by Alfaro’s detailed narration of the crime and the events surrounding it, the trial
court found a credible witness in her. It noted her categorical, straightforward, spontaneous, and
frank testimony, undamaged by grueling cross-examinations. The trial court remained unfazed
by significant discrepancies between Alfaro’s April 28 and May 22, 1995 affidavits, accepting
her explanation that she at first wanted to protect her former boyfriend, accused Estrada, and a
relative, accused Gatchalian; that no lawyer assisted her; that she did not trust the investigators
who helped her prepare her first affidavit; and that she felt unsure if she would get the support
and security she needed once she disclosed all about the Vizconde killings.

In contrast, the trial court thought little of the denials and alibis that Webb, Lejano, Rodriguez,
and Gatchalian set up for their defense. They paled, according to the court, compared to Alfaro’s
testimony that other witnesses and the physical evidence corroborated. Thus, on January 4, 2000,
after four years of arduous hearings, the trial court rendered judgment, finding all the accused
guilty as charged and imposing on Webb, Lejano, Gatchalian, Fernandez, Estrada, and
Rodriguez the penalty of reclusion perpetua and on Biong, an indeterminate prison term of
eleven years, four months, and one day to twelve years. The trial court also awarded damages to
Lauro Vizconde.3

On appeal, the Court of Appeals affirmed the trial court’s decision, modifying the penalty
imposed on Biong to six years minimum and twelve years maximum and increasing the award of
damages to Lauro Vizconde.4 The appellate court did not agree that the accused were tried by
publicity or that the trial judge was biased. It found sufficient evidence of conspiracy that
rendered Rodriguez, Gatchalian, Fernandez, and Estrada equally guilty with those who had a part
in raping and killing Carmela and in executing her mother and sister.

On motion for reconsideration by the accused, the Court of Appeals' Special Division of five
members voted three against two to deny the motion,5 hence, the present appeal.

On April 20, 2010, as a result of its initial deliberation in this case, the Court issued a Resolution
granting the request of Webb to submit for DNA analysis the semen specimen taken from
Carmela’s cadaver, which specimen was then believed still under the safekeeping of the NBI.
The Court granted the request pursuant to section 4 of the Rule on DNA Evidence6 to give the
accused and the prosecution access to scientific evidence that they might want to avail
themselves of, leading to a correct decision in the case.

Unfortunately, on April 27, 2010 the NBI informed the Court that it no longer has custody of the
specimen, the same having been turned over to the trial court. The trial record shows, however,
that the specimen was not among the object evidence that the prosecution offered in evidence in
the case.

This outcome prompted accused Webb to file an urgent motion to acquit on the ground that the
government’s failure to preserve such vital evidence has resulted in the denial of his right to due
process.
 Issues Presented

Accused Webb’s motion to acquit presents a threshold issue: whether or not the Court should
acquit him outright, given the government’s failure to produce the semen specimen that the NBI
found on Carmela’s cadaver, thus depriving him of evidence that would prove his innocence.

In the main, all the accused raise the central issue of whether or not Webb, acting in conspiracy
with Lejano, Gatchalian, Fernandez, Estrada, Rodriguez, Ventura, and Filart, raped and killed
Carmela and put to death her mother and sister. But, ultimately, the controlling issues are:

1. Whether or not Alfaro’s testimony as eyewitness, describing the crime and identifying
Webb, Lejano, Gatchalian, Fernandez, Estrada, Rodriguez, and two others as the persons
who committed it, is entitled to belief; and

2. Whether or not Webb presented sufficient evidence to prove his alibi and rebut
Alfaro’s testimony that he led the others in committing the crime.

The issue respecting accused Biong is whether or not he acted to cover up the crime after its
commission.

The Right to Acquittal

Due to Loss of DNA Evidence

Webb claims, citing Brady v. Maryland,7 that he is entitled to outright acquittal on the ground of
violation of his right to due process given the State’s failure to produce on order of the Court
either by negligence or willful suppression the semen specimen taken from Carmela.

The medical evidence clearly established that Carmela was raped and, consistent with this,
semen specimen was found in her. It is true that Alfaro identified Webb in her testimony as
Carmela’s rapist and killer but serious questions had been raised about her credibility. At the
very least, there exists a possibility that Alfaro had lied. On the other hand, the semen specimen
taken from Carmela cannot possibly lie. It cannot be coached or allured by a promise of reward
or financial support. No two persons have the same DNA fingerprint, with the exception of
identical twins.8 If, on examination, the DNA of the subject specimen does not belong to Webb,
then he did not rape Carmela. It is that simple. Thus, the Court would have been able to
determine that Alfaro committed perjury in saying that he did.

Still, Webb is not entitled to acquittal for the failure of the State to produce the semen specimen
at this late stage. For one thing, the ruling in Brady v. Maryland9 that he cites has long be
overtaken by the decision in Arizona v. Youngblood,10 where the U.S. Supreme Court held that
due process does not require the State to preserve the semen specimen although it might be
useful to the accused unless the latter is able to show bad faith on the part of the prosecution or
the police. Here, the State presented a medical expert who testified on the existence of the
specimen and Webb in fact sought to have the same subjected to DNA test.
For, another, when Webb raised the DNA issue, the rule governing DNA evidence did not yet
exist, the country did not yet have the technology for conducting the test, and no Philippine
precedent had as yet recognized its admissibility as evidence. Consequently, the idea of keeping
the specimen secure even after the trial court rejected the motion for DNA testing did not come
up. Indeed, neither Webb nor his co-accused brought up the matter of preserving the specimen in
the meantime.

Parenthetically, after the trial court denied Webb’s application for DNA testing, he allowed the
proceeding to move on when he had on at least two occasions gone up to the Court of Appeals or
the Supreme Court to challenge alleged arbitrary actions taken against him and the other
accused.11 They raised the DNA issue before the Court of Appeals but merely as an error
committed by the trial court in rendering its decision in the case. None of the accused filed a
motion with the appeals court to have the DNA test done pending adjudication of their appeal.
This, even when the Supreme Court had in the meantime passed the rules allowing such test.
Considering the accused’s lack of interest in having such test done, the State cannot be deemed
put on reasonable notice that it would be required to produce the semen specimen at some future
time.

Now, to the merit of the case.

Alfaro’s Story

Based on the prosecution’s version, culled from the decisions of the trial court and the Court of
Appeals, on June 29, 1991 at around 8:30 in the evening, Jessica Alfaro drove her Mitsubishi
Lancer, with boyfriend Peter Estrada as passenger, to the Ayala Alabang Commercial Center
parking lot to buy shabu from Artemio "Dong" Ventura. There, Ventura introduced her to his
friends: Hubert Jeffrey P. Webb, Antonio "Tony Boy" Lejano, Miguel "Ging" Rodriguez,
Hospicio "Pyke" Fernandez, Michael Gatchalian, and Joey Filart. Alfaro recalled frequently
seeing them at a shabu house in Parañaque in January 1991, except Ventura whom she had
known earlier in December 1990.

As Alfaro smoked her shabu, Webb approached and requested her to relay a message for him to
a girl, whom she later identified as Carmela Vizconde. Alfaro agreed. After using up their shabu,
the group drove to Carmela’s house at 80 Vinzons Street, Pitong Daan Subdivision, BF Homes,
Parañaque City. Riding in her car, Alfaro and Estrada trailed Filart and Rodriguez who rode a
Mazda pick-up and Webb, Lejano, Ventura, Fernandez, and Gatchalian who were on a Nissan
Patrol car.

On reaching their destination, Alfaro parked her car on Vinzons Street, alighted, and approached
Carmela’s house. Alfaro pressed the buzzer and a woman came out. Alfaro queried her about
Carmela. Alfaro had met Carmela twice before in January 1991. When Carmela came out, Alfaro
gave her Webb’s message that he was just around. Carmela replied, however, that she could not
go out yet since she had just arrived home. She told Alfaro to return after twenty minutes. Alfaro
relayed this to Webb who then told the group to drive back to the Ayala Alabang Commercial
Center.
The group had another shabu session at the parking lot. After sometime, they drove back but
only Alfaro proceeded to Vinzons Street where Carmela lived. The Nissan Patrol and the Mazda
pick-up, with their passengers, parked somewhere along Aguirre Avenue. Carmela was at their
garden. She approached Alfaro on seeing her and told the latter that she (Carmela) had to leave
the house for a while. Carmela requested Alfaro to return before midnight and she would leave
the pedestrian gate, the iron grills that led to the kitchen, and the kitchen door unlocked. Carmela
also told Alfaro to blink her car’s headlights twice when she approached the pedestrian gate so
Carmela would know that she had arrived.

Alfaro returned to her car but waited for Carmela to drive out of the house in her own car. Alfaro
trailed Carmela up to Aguirre Avenue where she dropped off a man whom Alfaro believed was
Carmela’s boyfriend. Alfaro looked for her group, found them, and relayed Carmela’s
instructions to Webb. They then all went back to the Ayala Alabang Commercial Center. At the
parking lot, Alfaro told the group about her talk with Carmela. When she told Webb of
Carmela’s male companion, Webb’s mood changed for the rest of the evening ("bad trip").

Webb gave out free cocaine. They all used it and some shabu, too. After about 40 to 45 minutes,
Webb decided that it was time for them to leave. He said, "Pipilahan natin siya [Carmela] at ako
ang mauuna." Lejano said, "Ako ang susunod" and the others responded "Okay, okay." They all
left the parking lot in a convoy of three vehicles and drove into Pitong Daan Subdivision for the
third time. They arrived at Carmela’s house shortly before midnight.

Alfaro parked her car between Vizconde’s house and the next. While waiting for the others to
alight from their cars, Fernandez approached Alfaro with a suggestion that they blow up the
transformer near the Vizconde’s residence to cause a brownout ("Pasabugin kaya natin ang
transformer na ito"). But Alfaro shrugged off the idea, telling Fernandez, "Malakas lang ang
tama mo." When Webb, Lejano, and Ventura were already before the house, Webb told the
others again that they would line up for Carmela but he would be the first. The others replied, "O
sige, dito lang kami, magbabantay lang kami."

Alfaro was the first to pass through the pedestrian gate that had been left open. Webb, Lejano,
and Ventura followed her. On entering the garage, Ventura using a chair mounted the hood of the
Vizcondes’ Nissan Sentra and loosened the electric bulb over it ("para daw walang ilaw"). The
small group went through the open iron grill gate and passed the dirty kitchen. Carmela opened
the aluminum screen door of the kitchen for them. She and Webb looked each other in the eyes
for a moment and, together, headed for the dining area.

As she lost sight of Carmela and Webb, Alfaro decided to go out. Lejano asked her where she
was going and she replied that she was going out to smoke. As she eased her way out through the
kitchen door, she saw Ventura pulling out a kitchen drawer. Alfaro smoked a cigarette at the
garden. After about twenty minutes, she was surprised to hear a woman’s voice ask, "Sino yan?"
Alfaro immediately walked out of the garden to her car. She found her other companions milling
around it. Estrada who sat in the car asked her, "Okay ba?"

After sitting in the car for about ten minutes, Alfaro returned to the Vizconde house, using the
same route. The interior of the house was dark but some light filtered in from outside. In the
kitchen, Alfaro saw Ventura searching a lady’s bag that lay on the dining table. When she asked
him what he was looking for, he said: "Ikaw na nga dito, maghanap ka ng susi." She asked him
what key he wanted and he replied: "Basta maghanap ka ng susi ng main door pati na rin ng susi
ng kotse." When she found a bunch of keys in the bag, she tried them on the main door but none
fitted the lock. She also did not find the car key.

Unable to open the main door, Alfaro returned to the kitchen. While she was at a spot leading to
the dining area, she heard a static noise (like a television that remained on after the station had
signed off). Out of curiosity, she approached the master’s bedroom from where the noise came,
opened the door a little, and peeked inside. The unusual sound grew even louder. As she walked
in, she saw Webb on top of Carmela while she lay with her back on the floor. Two bloodied
bodies lay on the bed. Lejano was at the foot of the bed about to wear his jacket. Carmela was
gagged, moaning, and in tears while Webb raped her, his bare buttocks exposed.

Webb gave Alfaro a meaningful look and she immediately left the room. She met Ventura at the
dining area. He told her, "Prepare an escape. Aalis na tayo." Shocked with what she saw, Alfaro
rushed out of the house to the others who were either sitting in her car or milling on the sidewalk.
She entered her car and turned on the engine but she did not know where to go. Webb, Lejano,
and Ventura came out of the house just then. Webb suddenly picked up a stone and threw it at
the main door, breaking its glass frame.

As the three men approached the pedestrian gate, Webb told Ventura that he forgot his jacket in
the house. But Ventura told him that they could not get in anymore as the iron grills had already
locked. They all rode in their cars and drove away until they reached Aguirre Avenue. As they
got near an old hotel at the Tropical Palace area, Alfaro noticed the Nissan Patrol slow down.
Someone threw something out of the car into the cogonal area.

The convoy of cars went to a large house with high walls, concrete fence, steel gate, and a long
driveway at BF Executive Village. They entered the compound and gathered at the lawn where
the "blaming session" took place. It was here that Alfaro and those who remained outside the
Vizconde house learned of what happened. The first to be killed was Carmela’s mother, then
Jennifer, and finally, Carmella. Ventura blamed Webb, telling him, "Bakit naman pati yung
bata?" Webb replied that the girl woke up and on seeing him molesting Carmela, she jumped on
him, bit his shoulders, and pulled his hair. Webb got mad, grabbed the girl, pushed her to the
wall, and repeatedly stabbed her. Lejano excused himself at this point to use the telephone in the
house. Meanwhile, Webb called up someone on his cellular phone.

At around 2:00 in the morning, accused Gerardo Biong arrived. Webb ordered him to go and
clean up the Vizconde house and said to him, "Pera lang ang katapat nyan." Biong answered,
"Okay lang." Webb spoke to his companions and told them, "We don’t know each other. We
haven’t seen each other…baka maulit yan." Alfaro and Estrada left and they drove to her father’s
house.12

1. The quality of the witness

Was Alfaro an ordinary subdivision girl who showed up at the NBI after four years, bothered by
her conscience or egged on by relatives or friends to come forward and do what was right? No.
She was, at the time she revealed her story, working for the NBI as an "asset," a stool pigeon,
one who earned her living by fraternizing with criminals so she could squeal on them to her NBI
handlers. She had to live a life of lies to get rewards that would pay for her subsistence and vices.

According to Atty. Artemio Sacaguing, former head of the NBI Anti-Kidnapping, Hijacking, and
Armed Robbery Task Force (AKHAR) Section, Alfaro had been hanging around at the NBI
since November or December 1994 as an "asset." She supplied her handlers with information
against drug pushers and other criminal elements. Some of this information led to the capture of
notorious drug pushers like Christopher Cruz Santos and Orlando Bacquir. Alfaro’s tip led to the
arrest of the leader of the "Martilyo gang" that killed a police officer. Because of her talent, the
task force gave her "very special treatment" and she became its "darling," allowed the privilege
of spending nights in one of the rooms at the NBI offices.

When Alfaro seemed unproductive for sometime, however, they teased her about it and she was
piqued. One day, she unexpectedly told Sacaguing that she knew someone who had the real story
behind the Vizconde massacre. Sacaguing showed interest. Alfaro promised to bring that
someone to the NBI to tell his story. When this did not happen and Sacaguing continued to press
her, she told him that she might as well assume the role of her informant. Sacaguing testified
thus:

ATTY. ONGKIKO:

Q. Atty. Sacaguing, how did Jessica Alfaro become a witness in the Vizconde murder
case? Will you tell the Honorable Court?

xxxx

A. She told me. Your Honor, that she knew somebody who related to her the
circumstances, I mean, the details of the massacre of the Vizconde family. That’s what
she told me, Your Honor.

ATTY. ONGKIKO:

Q. And what did you say?

xxxx

A. I was quite interested and I tried to persuade her to introduce to me that man and she
promised that in due time, she will bring to me the man, and together with her, we will
try to convince him to act as a state witness and help us in the solution of the case.

xxxx

Q. Atty. Sacaguing, were you able to interview this alleged witness?

WITNESS SACAGUING:

A. No, sir.

ATTY. ONGKIKO:

Q. Why not?

WITNESS SACAGUING:

A. Because Jessica Alfaro was never able to comply with her promise to bring the man to
me. She told me later that she could not and the man does not like to testify.

ATTY. ONGKIKO:

Q. All right, and what happened after that?

WITNESS SACAGUING:

A. She told me, "easy lang kayo, Sir," if I may quote, "easy lang Sir, huwag kayong…"

COURT:

How was that?

WITNESS SACAGUING:

A. "Easy lang, Sir. Sir, relax lang, Sir, papapelan ko, papapelan ko na lang ‘yan."

xxxx

ATTY. ONGKIKO:

Q. All right, and what was your reaction when Ms. Alfaro stated that "papapelan ko na
lang yan?"

WITNESS SACAGUING:

A. I said, "hindi puwede yan, kasi hindi ka naman eye witness."

ATTY. ONGKIKO:

Q. And what was the reply of Ms. Alfaro?

WITNESS SACAGUING:
 A. Hindi siya nakakibo, until she went away.

(TSN, May 28, 1996, pp. 49-50, 58, 77-79)

Quite significantly, Alfaro never refuted Sacaguing’s above testimony.

2. The suspicious details

But was it possible for Alfaro to lie with such abundant details some of which even tallied with
the physical evidence at the scene of the crime? No doubt, yes.

Firstly, the Vizconde massacre had been reported in the media with dizzying details. Everybody
was talking about what the police found at the crime scene and there were lots of speculations
about them.

Secondly, the police had arrested some "akyat-bahay" group in Parañaque and charged them with
the crime. The police prepared the confessions of the men they apprehended and filled these up
with details that the evidence of the crime scene provided. Alfaro’s NBI handlers who were
doing their own investigation knew of these details as well. Since Alfaro hanged out at the NBI
offices and practically lived there, it was not too difficult for her to hear of these evidentiary
details and gain access to the documents.

Not surprisingly, the confessions of some members of the Barroso "akyat bahay" gang,
condemned by the Makati RTC as fabricated by the police to pin the crime on them, shows how
crime investigators could make a confession ring true by matching some of its details with the
physical evidence at the crime scene. Consider the following:

a. The Barroso gang members said that they got into Carmela’s house by breaking the glass
panel of the front door using a stone wrapped in cloth to deaden the noise. Alfaro could not use
this line since the core of her story was that Webb was Carmela’s boyfriend. Webb had no reason
to smash her front door to get to see her.

Consequently, to explain the smashed door, Alfaro had to settle for claiming that, on the way out
of the house, Webb picked up some stone and, out of the blue, hurled it at the glass-paneled front
door of the Vizconde residence. His action really made no sense. From Alfaro’s narration, Webb
appeared rational in his decisions. It was past midnight, the house was dark, and they wanted to
get away quickly to avoid detection. Hurling a stone at that glass door and causing a tremendous
noise was bizarre, like inviting the neighbors to come.

b. The crime scene showed that the house had been ransacked. The rejected confessions of the
Barroso "akyat-bahay" gang members said that they tried to rob the house. To explain this
physical evidence, Alfaro claimed that at one point Ventura was pulling a kitchen drawer, and at
another point, going through a handbag on the dining table. He said he was looking for the front-
door key and the car key.
Again, this portion of Alfaro’s story appears tortured to accommodate the physical evidence of
the ransacked house. She never mentioned Ventura having taken some valuables with him when
they left Carmela’s house. And why would Ventura rummage a bag on the table for the front-
door key, spilling the contents, when they had already gotten into the house. It is a story made to
fit in with the crime scene although robbery was supposedly not the reason Webb and his
companions entered that house.

c. It is the same thing with the garage light. The police investigators found that the bulb had been
loosened to turn off the light. The confessions of the Barroso gang claimed that one of them
climbed the parked car’s hood to reach up and darken that light. This made sense since they were
going to rob the place and they needed time to work in the dark trying to open the front door.
Some passersby might look in and see what they were doing.

Alfaro had to adjust her testimony to take into account that darkened garage light. So she
claimed that Ventura climbed the car’s hood, using a chair, to turn the light off. But, unlike the
Barroso "akyat-bahay" gang, Webb and his friends did not have anything to do in a darkened
garage. They supposedly knew in advance that Carmela left the doors to the kitchen open for
them. It did not make sense for Ventura to risk standing on the car’s hood and be seen in such an
awkward position instead of going straight into the house.

And, thirdly, Alfaro was the NBI’s star witness, their badge of excellent investigative
work.lavvphil After claiming that they had solved the crime of the decade, the NBI people had a
stake in making her sound credible and, obviously, they gave her all the preparations she needed
for the job of becoming a fairly good substitute witness. She was their "darling" of an asset. And
this is not pure speculation. As pointed out above, Sacaguing of the NBI, a lawyer and a ranking
official, confirmed this to be a cold fact. Why the trial court and the Court of Appeals failed to
see this is mystifying.

At any rate, did Alfaro at least have a fine memory for faces that had a strong effect on her, given
the circumstances? Not likely. She named Miguel "Ging" Rodriguez as one of the culprits in the
Vizconde killings. But when the NBI found a certain Michael Rodriguez, a drug dependent from
the Bicutan Rehabilitation Center, initially suspected to be Alfaro’s Miguel Rodriguez and
showed him to Alfaro at the NBI office, she ran berserk, slapping and kicking Michael,
exclaiming: "How can I forget your face. We just saw each other in a disco one month ago and
you told me then that you will kill me." As it turned out, he was not Miguel Rodriguez, the
accused in this case.13

Two possibilities exist: Michael was really the one Alfaro wanted to implicate to settle some
score with him but it was too late to change the name she already gave or she had myopic vision,
tagging the wrong people for what they did not do.

3. The quality of the testimony

There is another thing about a lying witness: her story lacks sense or suffers from inherent
inconsistencies. An understanding of the nature of things and the common behavior of people
will help expose a lie. And it has an abundant presence in this case.
One. In her desire to implicate Gatchalian, Fernandez, Estrada, Rodriguez, and Filart, who were
supposed to be Webb’s co-principals in the crime, Alfaro made it a point to testify that Webb
proposed twice to his friends the gang-rape of Carmela who had hurt him. And twice, they
(including, if one believes Alfaro, her own boyfriend Estrada) agreed in a chorus to his proposal.
But when they got to Carmela’s house, only Webb, Lejano, Ventura, and Alfaro entered the
house.

Gatchalian, Fernandez, Estrada, and Rodriguez supposedly stayed around Alfaro’s car, which
was parked on the street between Carmela’s house and the next. Some of these men sat on top of
the car’s lid while others milled on the sidewalk, visible under the street light to anyone who
cared to watch them, particularly to the people who were having a drinking party in a nearby
house. Obviously, the behavior of Webb’s companions out on the street did not figure in a
planned gang-rape of Carmela.

Two. Ventura, Alfaro’s dope supplier, introduced her for the first time in her life to Webb and
his friends in a parking lot by a mall. So why would she agree to act as Webb’s messenger, using
her gas, to bring his message to Carmela at her home. More inexplicably, what motivated Alfaro
to stick it out the whole night with Webb and his friends?

They were practically strangers to her and her boyfriend Estrada. When it came to a point that
Webb decided with his friends to gang-rape Carmela, clearly, there was nothing in it for Alfaro.
Yet, she stuck it out with them, as a police asset would, hanging in there until she had a crime to
report, only she was not yet an "asset" then. If, on the other hand, Alfaro had been too soaked in
drugs to think clearly and just followed along where the group took her, how could she
remember so much details that only a drug-free mind can?

Three. When Alfaro went to see Carmela at her house for the second time, Carmella told her that
she still had to go out and that Webb and his friends should come back around midnight. Alfaro
returned to her car and waited for Carmela to drive out in her own car. And she trailed her up to
Aguirre Avenue where she supposedly dropped off a man whom she thought was Carmela’s
boyfriend. Alfaro’s trailing Carmela to spy on her unfaithfulness to Webb did not make sense
since she was on limited errand. But, as a critical witness, Alfaro had to provide a reason for
Webb to freak out and decide to come with his friends and harm Carmela.

Four. According to Alfaro, when they returned to Carmela’s house the third time around
midnight, she led Webb, Lejano, and Ventura through the pedestrian gate that Carmela had left
open. Now, this is weird. Webb was the gang leader who decided what they were going to do. He
decided and his friends agreed with him to go to Carmela’s house and gang-rape her. Why would
Alfaro, a woman, a stranger to Webb before that night, and obviously with no role to play in the
gang-rape of Carmela, lead him and the others into her house? It made no sense. It would only
make sense if Alfaro wanted to feign being a witness to something she did not see.

Five. Alfaro went out of the house to smoke at the garden. After about twenty minutes, a woman
exclaimed, "Sino yan?" On hearing this, Alfaro immediately walked out of the garden and went
to her car. Apparently, she did this because she knew they came on a sly. Someone other than
Carmela became conscious of the presence of Webb and others in the house. Alfaro walked away
because, obviously, she did not want to get involved in a potential confrontation. This was
supposedly her frame of mind: fear of getting involved in what was not her business.

But if that were the case, how could she testify based on personal knowledge of what went on in
the house? Alfaro had to change that frame of mind to one of boldness and reckless curiosity. So
that is what she next claimed. She went back into the house to watch as Webb raped Carmela on
the floor of the master’s bedroom. He had apparently stabbed to death Carmela’s mom and her
young sister whose bloodied bodies were sprawled on the bed. Now, Alfaro testified that she got
scared (another shift to fear) for she hurriedly got out of the house after Webb supposedly gave
her a meaningful look.

Alfaro quickly went to her car, not minding Gatchalian, Fernandez, Estrada, Rodriguez, and
Filart who sat on the car or milled on the sidewalk. She did not speak to them, even to Estrada,
her boyfriend. She entered her car and turned on the engine but she testified that she did not
know where to go. This woman who a few minutes back led Webb, Lejano, and Ventura into the
house, knowing that they were decided to rape and harm Carmela, was suddenly too shocked to
know where to go! This emotional pendulum swing indicates a witness who was confused with
her own lies.

4. The supposed corroborations

Intending to provide corroboration to Alfaro’s testimony, the prosecution presented six

additional witnesses:

Dr. Prospero A. Cabanayan, the NBI Medico-Legal Officer who autopsied the bodies of the
victims, testified on the stab wounds they sustained14 and the presence of semen in Carmela’s
genitalia,15 indicating that she had been raped.

Normal E. White, Jr., was the security guard on duty at Pitong Daan Subdivision from 7 p.m.
of June 29 to 7 a.m. of June 30, 1991. He got a report on the morning of June 30 that something
untoward happened at the Vizconde residence. He went there and saw the dead bodies in the
master’s bedroom, the bag on the dining table, as well as the loud noise emanating from a
television set.16

White claimed that he noticed Gatchalian and his companions, none of whom he could identify,
go in and out of Pitong Daan Subdivision. He also saw them along Vinzons Street. Later, they
entered Pitong Daan Subdivision in a three-car convoy. White could not, however, describe the
kind of vehicles they used or recall the time when he saw the group in those two instances. And
he did not notice anything suspicious about their coming and going.

But White’s testimony cannot be relied on. His initial claim turned out to be inaccurate. He
actually saw Gatchalian and his group enter the Pitong Daan Subdivision only once. They were
not going in and out. Furthermore, Alfaro testified that when the convoy of cars went back the
second time in the direction of Carmela’s house, she alone entered the subdivision and passed the
guardhouse without stopping. Yet, White who supposedly manned that guardhouse did not notice
her.
Surprisingly, White failed to note Biong, a police officer, entering or exiting the subdivision on
the early morning of June 30 when he supposedly "cleaned up" Vizconde residence on Webb’s
orders. What is more, White did not notice Carmela arrive with her mom before Alfaro’s first
visit that night. Carmela supposedly left with a male companion in her car at around 10:30 p.m.
but White did not notice it. He also did not notice Carmela reenter the subdivision. White
actually discredited Alfaro’s testimony about the movements of the persons involved.

Further, while Alfaro testified that it was the Mazda pick-up driven by Filart that led the three-
vehicle convoy,17 White claimed it was the Nissan Patrol with Gatchalian on it that led the
convoy since he would not have let the convoy in without ascertaining that Gatchalian, a
resident, was in it. Security guard White did not, therefore, provide corroboration to Alfaro’s
testimony.1avvphi1

Justo Cabanacan, the security supervisor at Pitong Daan Subdivision testified that he saw Webb
around the last week of May or the first week of June 1991 to prove his presence in the
Philippines when he claimed to be in the United States. He was manning the guard house at the
entrance of the subdivision of Pitong Daan when he flagged down a car driven by Webb. Webb
said that he would see Lilet Sy. Cabanacan asked him for an ID but he pointed to his United BF
Homes sticker and said that he resided there. Cabanacan replied, however, that Pitong Daan had
a local sticker.

Cabanacan testified that, at this point, Webb introduced himself as the son of Congressman
Webb. Still, the supervisor insisted on seeing his ID. Webb grudgingly gave it and after seeing
the picture and the name on it, Cabanacan returned the same and allowed Webb to pass without
being logged in as their Standard Operating Procedure required.18

But Cabanacan's testimony could not be relied on. Although it was not common for a security
guard to challenge a Congressman’s son with such vehemence, Cabanacan did not log the
incident on the guardhouse book. Nor did he, contrary to prescribed procedure, record the
visitor’s entry into the subdivision. It did not make sense that Cabanacan was strict in the matter
of seeing Webb’s ID but not in recording the visit.

Mila Gaviola used to work as laundry woman for the Webbs at their house at BF Homes
Executive Village. She testified that she saw Webb at his parents’ house on the morning of June
30, 1991 when she got the dirty clothes from the room that he and two brothers occupied at about
4.a.m. She saw him again pacing the floor at 9 a.m. At about 1 p.m., Webb left the house in t-
shirt and shorts, passing through a secret door near the maid’s quarters on the way out. Finally,
she saw Webb at 4 p.m. of the same day.19

On cross-examination, however, Gaviola could not say what distinguished June 30, 1991 from
the other days she was on service at the Webb household as to enable her to distinctly remember,
four years later, what one of the Webb boys did and at what time. She could not remember any
of the details that happened in the household on the other days. She proved to have a selective
photographic memory and this only damaged her testimony.
Gaviola tried to corroborate Alfaro’'s testimony by claiming that on June 30, 1991 she noticed
bloodstains on Webb's t-shirt.20 She did not call the attention of anybody in the household about
it when it would have been a point of concern that Webb may have been hurt, hence the blood.

Besides, Victoria Ventoso, the Webbs' housemaid from March 1989 to May 1992, and Sgt.
Miguel Muñoz, the Webbs' security aide in 1991, testified that Gaviola worked for the Webbs
only from January 1991 to April 1991. Ventoso further testified that it was not Gaviola's duty to
collect the clothes from the 2nd floor bedrooms, this being the work of the housemaid charged
with cleaning the rooms.

What is more, it was most unlikely for a laundrywoman who had been there for only four months
to collect, as she claimed, the laundry from the rooms of her employers and their grown up
children at four in the morning while they were asleep.

And it did not make sense, if Alfaro’s testimony were to be believed that Webb, who was so
careful and clever that he called Biong to go to the Vizconde residence at 2 a.m. to clean up the
evidence against him and his group, would bring his bloodied shirt home and put it in the hamper
for laundrywoman Gaviola to collect and wash at 4 a.m. as was her supposed habit.

Lolita De Birrer was accused Biong’s girlfriend around the time the Vizconde massacre took
place. Birrer testified that she was with Biong playing mahjong from the evening of June 29,
1991 to the early morning of June 30, when Biong got a call at around 2 a.m. This prompted him,
according to De Birrer, to leave and go to BF. Someone sitting at the backseat of a taxi picked
him up. When Biong returned at 7 a.m. he washed off what looked like dried blood from his
fingernails. And he threw away a foul-smelling handkerchief. She also saw Biong take out a
knife with aluminum cover from his drawer and hid it in his steel cabinet.21

The security guard at Pitong Daan did not notice any police investigator flashing a badge to get
into the village although Biong supposedly came in at the unholy hour of two in the morning. His
departure before 7 a.m. also remained unnoticed by the subdivision guards. Besides, if he had
cleaned up the crime scene shortly after midnight, what was the point of his returning there on
the following morning to dispose of some of the evidence in the presence of other police
investigators and on-lookers? In fact, why would he steal valuable items from the Vizconde
residence on his return there hours later if he had the opportunity to do it earlier?

At most, Birrer’s testimony only established Biong’s theft of certain items from the Vizconde
residence and gross neglect for failing to maintain the sanctity of the crime scene by moving
around and altering the effects of the crime. Birrer’s testimony failed to connect Biong's acts to
Webb and the other accused.

Lauro Vizconde testified about how deeply he was affected by the loss of her wife and two
daughters. Carmella spoke to him of a rejected suitor she called "Bagyo," because he was a
Parañaque politician’s son. Unfortunately, Lauro did not appear curious enough to insist on
finding out who the rejected fellow was. Besides, his testimony contradicts that of Alfaro who
testified that Carmela and Webb had an on-going relation. Indeed, if Alfaro were to be believed,
Carmela wanted Webb to come to her house around midnight. She even left the kitchen door
open so he could enter the house.

5. The missing corroboration

There is something truly remarkable about this case: the prosecution’s core theory that Carmela
and Webb had been sweethearts, that she had been unfaithful to him, and that it was for this
reason that Webb brought his friends to her house to gang-rape her is totally uncorroborated!

For instance, normally, if Webb, a Congressman’s son, courted the young Carmela, that would
be news among her circle of friends if not around town. But, here, none of her friends or even
those who knew either of them came forward to affirm this. And if Webb hanged around with
her, trying to win her favors, he would surely be seen with her. And this would all the more be so
if they had become sweethearts, a relation that Alfaro tried to project with her testimony.

But, except for Alfaro, the NBI asset, no one among Carmela’s friends or her friends’ friends
would testify ever hearing of such relationship or ever seeing them together in some popular
hangouts in Parañaque or Makati. Alfaro’s claim of a five-hour drama is like an alien page,
rudely and unconnectedly inserted into Webb and Carmela’s life stories or like a piece of jigsaw
puzzle trimmed to fit into the shape on the board but does not belong because it clashes with the
surrounding pieces. It has neither antecedent nor concomitant support in the verifiable facts of
their personal histories. It is quite unreal.

What is more, Alfaro testified that she saw Carmela drive out of her house with a male
passenger, Mr. X, whom Alfaro thought the way it looked was also Carmela’s lover. This was
the all-important reason Webb supposedly had for wanting to harm her. Again, none of
Carmela’s relatives, friends, or people who knew her ever testified about the existence of Mr.X
in her life. Nobody has come forward to testify having ever seen him with Carmela. And despite
the gruesome news about her death and how Mr. X had played a role in it, he never presented
himself like anyone who had lost a special friend normally would. Obviously, Mr. X did not
exist, a mere ghost of the imagination of Alfaro, the woman who made a living informing on
criminals.

Webb’s U.S. Alibi

Among the accused, Webb presented the strongest alibi.

a. The travel preparations

Webb claims that in 1991 his parents, Senator Freddie Webb and his wife, Elizabeth, sent their
son to the United States (U.S.) to learn the value of independence, hard work, and
money.22 Gloria Webb, his aunt, accompanied him. Rajah Tours booked their flight to San
Francisco via United Airlines. Josefina Nolasco of Rajah Tours confirmed that Webb and his
aunt used their plane tickets.
Webb told his friends, including his neighbor, Jennifer Claire Cabrera, and his basketball buddy,
Joselito Orendain Escobar, of his travel plans. He even invited them to his despedida party on
March 8, 1991 at Faces Disco along Makati Ave.23 On March 8,1991, the eve of his departure, he
took girlfriend Milagros Castillo to a dinner at Bunchums at the Makati Cinema Square. His
basketball buddy Rafael Jose with Tina Calma, a blind date arranged by Webb, joined them.
They afterwards went to Faces Disco for Webb's despedida party. Among those present were his
friends Paulo Santos and Jay Ortega.24

b. The two immigration checks

The following day, March 9, 1991, Webb left for San Francisco, California, with his Aunt Gloria
on board United Airlines Flight 808.25 Before boarding his plane, Webb passed through the
Philippine Immigration booth at the airport to have his passport cleared and stamped.
Immigration Officer, Ferdinand Sampol checked Webb’s visa, stamped, and initialed his
passport, and let him pass through.26 He was listed on the United Airlines Flight’s Passenger
Manifest.27

On arrival at San Francisco, Webb went through the U.S. Immigration where his entry into that
country was recorded. Thus, the U.S. Immigration Naturalization Service, checking with its Non-
immigrant Information System, confirmed Webb's entry into the U.S. on March 9, 1991. Webb
presented at the trial the INS Certification issued by the U.S. Immigration and Naturalization
Service,28 the computer-generated print-out of the US-INS indicating Webb's entry on March 9,
1991,29 and the US-INS Certification dated August 31, 1995, authenticated by the Philippine
Department of Foreign Affairs, correcting an earlier August 10, 1995 Certification.30

c. Details of U.S. sojourn

In San Francisco, Webb and his aunt Gloria were met by the latter’s daughter, Maria Teresa
Keame, who brought them to Gloria’s house in Daly City, California. During his stay with his
aunt, Webb met Christopher Paul Legaspi Esguerra, Gloria’s grandson. In April 1991, Webb,
Christopher, and a certain Daphne Domingo watched the concert of Deelite Band in San
Francisco.31 In the same month, Dorothy Wheelock and her family invited Webb to Lake Tahoe
to return the Webbs’ hospitality when she was in the Philippines.32

In May 1991, on invitation of another aunt, Susan Brottman, Webb moved to Anaheim Hills,
California.33 During his stay there, he occupied himself with playing basketball once or twice a
week with Steven Keeler34 and working at his cousin-in-law’s pest control company.35 Webb
presented the company’s logbook showing the tasks he performed,36 his paycheck,37 his ID, and
other employment papers. On June 14, 1991 he applied for a driver's license38 and wrote three
letters to his friend Jennifer Cabrera.39

On June 28, 1991, Webb’s parents visited him at Anaheim and stayed with the Brottmans. On
the same day, his father introduced Honesto Aragon to his son when he came to visit.40 On the
following day, June 29, Webb, in the company of his father and Aragon went to Riverside,
California, to look for a car. They bought an MR2 Toyota car.41 Later that day, a visitor at the
Brottman’s, Louis Whittacker, saw Webb looking at the plates of his new car.42 To prove the
purchase, Webb presented the Public Records of California Department of Motor Vehicle43 and a
car plate "LEW WEBB."44 In using the car in the U.S., Webb even received traffic citations.45

On June 30, 1991 Webb, again accompanied by his father and Aragon,46 bought a bicycle at
Orange Cycle Center.47 The Center issued Webb a receipt dated June 30, 1991.48 On July 4,
1991, Independence Day, the Webbs, the Brottmans, and the Vaca family had a lakeside picnic.49

Webb stayed with the Brottmans until mid July and rented a place for less than a month. On
August 4, 1991 he left for Longwood, Florida, to stay with the spouses Jack and Sonja
Rodriguez.50 There, he met Armando Rodriguez with whom he spent time, playing basketball on
weekends, watching movies, and playing billiards.51 In November 1991, Webb met performing
artist Gary Valenciano, a friend of Jack Rodriguez, who was invited for a dinner at the
Rodriguez’s house.52 He left the Rodriguez’s home in August 1992, returned to Anaheim and
stayed with his aunt Imelda Pagaspas. He stayed there until he left for the Philippines on October
26, 1992.

d. The second immigration checks

As with his trip going to the U.S., Webb also went through both the U.S. and Philippine
immigrations on his return trip. Thus, his departure from the U.S. was confirmed by the same
certifications that confirmed his entry.53 Furthermore, a Diplomatic Note of the U.S. Department
of State with enclosed letter from Acting Director Debora A. Farmer of the Records Operations,
Office of Records of the US-INS stated that the Certification dated August 31, 1995 is a true and
accurate statement. And when he boarded his plane, the Passenger Manifest of Philippine
Airlines Flight No. 103,54 certified by Agnes Tabuena55 confirmed his return trip.

When he arrived in Manila, Webb again went through the Philippine Immigration. In fact, the
arrival stamp and initial on his passport indicated his return to Manila on October 27, 1992. This
was authenticated by Carmelita Alipio, the immigration officer who processed Webb’s
reentry.56 Upon his return, in October 1992, Paolo Santos, Joselito Erondain Escobar, and Rafael
Jose once again saw Webb playing basketball at the BF's Phase III basketball court.

e. Alibi versus positive identification

The trial court and the Court of Appeals are one in rejecting as weak Webb’s alibi. Their reason
is uniform: Webb’s alibi cannot stand against Alfaro’s positive identification of him as the rapist
and killer of Carmela and, apparently, the killer as well of her mother and younger sister.
Because of this, to the lower courts, Webb’s denial and alibi were fabricated.

But not all denials and alibis should be regarded as fabricated. Indeed, if the accused is truly
innocent, he can have no other defense but denial and alibi. So how can such accused penetrate a
mind that has been made cynical by the rule drilled into his head that a defense of alibi is a
hangman’s noose in the face of a witness positively swearing, "I saw him do it."? Most judges
believe that such assertion automatically dooms an alibi which is so easy to fabricate. This quick
stereotype thinking, however, is distressing. For how else can the truth that the accused is really
innocent have any chance of prevailing over such a stone-cast tenet?
There is only one way. A judge must keep an open mind. He must guard against slipping into
hasty conclusion, often arising from a desire to quickly finish the job of deciding a case. A
positive declaration from a witness that he saw the accused commit the crime should not
automatically cancel out the accused’s claim that he did not do it. A lying witness can make as
positive an identification as a truthful witness can. The lying witness can also say as forthrightly
and unequivocally, "He did it!" without blinking an eye.

Rather, to be acceptable, the positive identification must meet at least two criteria:

First, the positive identification of the offender must come from a credible witness. She is
credible who can be trusted to tell the truth, usually based on past experiences with her. Her
word has, to one who knows her, its weight in gold.

And second, the witness’ story of what she personally saw must be believable, not inherently
contrived. A witness who testifies about something she never saw runs into inconsistencies and
makes bewildering claims.

Here, as already fully discussed above, Alfaro and her testimony fail to meet the above criteria.

She did not show up at the NBI as a spontaneous witness bothered by her conscience. She had
been hanging around that agency for sometime as a stool pigeon, one paid for mixing up with
criminals and squealing on them. Police assets are often criminals themselves. She was the
prosecution’s worst possible choice for a witness. Indeed, her superior testified that she
volunteered to play the role of a witness in the Vizconde killings when she could not produce a
man she promised to the NBI.

And, although her testimony included details, Alfaro had prior access to the details that the
investigators knew of the case. She took advantage of her familiarity with these details to include
in her testimony the clearly incompatible act of Webb hurling a stone at the front door glass
frames even when they were trying to slip away quietly—just so she can accommodate this
crime scene feature. She also had Ventura rummaging a bag on the dining table for a front door
key that nobody needed just to explain the physical evidence of that bag and its scattered
contents. And she had Ventura climbing the car’s hood, risking being seen in such an awkward
position, when they did not need to darken the garage to force open the front door—just so to
explain the darkened light and foot prints on the car hood.

Further, her testimony was inherently incredible. Her story that Gatchalian, Fernandez, Estrada,
Rodriguez, and Filart agreed to take their turns raping Carmela is incongruent with their
indifference, exemplified by remaining outside the house, milling under a street light, visible to
neighbors and passersby, and showing no interest in the developments inside the house, like if it
was their turn to rape Carmela. Alfaro’s story that she agreed to serve as Webb’s messenger to
Carmela, using up her gas, and staying with him till the bizarre end when they were practically
strangers, also taxes incredulity.

To provide basis for Webb’s outrage, Alfaro said that she followed Carmela to the main road to
watch her let off a lover on Aguirre Avenue. And, inexplicably, although Alfaro had only played
the role of messenger, she claimed leading Webb, Lejano, and Ventura into the house to gang-
rape Carmella, as if Alfaro was establishing a reason for later on testifying on personal
knowledge. Her swing from an emotion of fear when a woman woke up to their presence in the
house and of absolute courage when she nonetheless returned to become the lone witness to a
grim scene is also quite inexplicable.

Ultimately, Alfaro’s quality as a witness and her inconsistent, if not inherently unbelievable,
testimony cannot be the positive identification that jurisprudence acknowledges as sufficient to
jettison a denial and an alibi.

f. A documented alibi

To establish alibi, the accused must prove by positive, clear, and satisfactory evidence57 that (a)
he was present at another place at the time of the perpetration of the crime, and (b) that it was
physically impossible for him to be at the scene of the crime.58

The courts below held that, despite his evidence, Webb was actually in Parañaque when the
Vizconde killings took place; he was not in the U.S. from March 9, 1991 to October 27, 1992;
and if he did leave on March 9, 1991, he actually returned before June 29, 1991, committed the
crime, erased the fact of his return to the Philippines from the records of the U.S. and Philippine
Immigrations, smuggled himself out of the Philippines and into the U.S., and returned the normal
way on October 27, 1992. But this ruling practically makes the death of Webb and his passage
into the next life the only acceptable alibi in the Philippines. Courts must abandon this unjust and
inhuman paradigm.

If one is cynical about the Philippine system, he could probably claim that Webb, with his
father’s connections, can arrange for the local immigration to put a March 9, 1991 departure
stamp on his passport and an October 27, 1992 arrival stamp on the same. But this is pure
speculation since there had been no indication that such arrangement was made. Besides, how
could Webb fix a foreign airlines’ passenger manifest, officially filed in the Philippines and at
the airport in the U.S. that had his name on them? How could Webb fix with the U.S.
Immigration’s record system those two dates in its record of his travels as well as the dates when
he supposedly departed in secret from the U.S. to commit the crime in the Philippines and then
return there? No one has come up with a logical and plausible answer to these questions.

The Court of Appeals rejected the evidence of Webb’s passport since he did not leave the
original to be attached to the record. But, while the best evidence of a document is the original,
this means that the same is exhibited in court for the adverse party to examine and for the judge
to see. As Court of Appeals Justice Tagle said in his dissent,59 the practice when a party does not
want to leave an important document with the trial court is to have a photocopy of it marked as
exhibit and stipulated among the parties as a faithful reproduction of the original. Stipulations in
the course of trial are binding on the parties and on the court.

The U.S. Immigration certification and the computer print-out of Webb’s arrival in and departure
from that country were authenticated by no less than the Office of the U.S. Attorney General and
the State Department. Still the Court of Appeals refused to accept these documents for the reason
that Webb failed to present in court the immigration official who prepared the same. But this was
unnecessary. Webb’s passport is a document issued by the Philippine government, which under
international practice, is the official record of travels of the citizen to whom it is issued. The
entries in that passport are presumed true.60

The U.S. Immigration certification and computer print-out, the official certifications of which
have been authenticated by the Philippine Department of Foreign Affairs, merely validated the
arrival and departure stamps of the U.S. Immigration office on Webb’s passport. They have the
same evidentiary value. The officers who issued these certifications need not be presented in
court to testify on them. Their trustworthiness arises from the sense of official duty and the
penalty attached to a breached duty, in the routine and disinterested origin of such statement and
in the publicity of the record.61

The Court of Appeals of course makes capital of the fact that an earlier certification from the
U.S. Immigration office said that it had no record of Webb entering the U.S. But that erroneous
first certification was amply explained by the U.S. Government and Court of Appeals Justice
Tagle stated it in his dissenting opinion, thus:

While it is true that an earlier Certification was issued by the U.S. INS on August 16, 1995
finding "no evidence of lawful admission of Webb," this was already clarified and deemed
erroneous by no less than the US INS Officials. As explained by witness Leo Herrera-Lim,
Consul and Second Secretary of the Philippine Embassy in Washington D.C., said Certification
did not pass through proper diplomatic channels and was obtained in violation of the rules on
protocol and standard procedure governing such request.

The initial request was merely initiated by BID Commissioner Verceles who directly
communicated with the Philippine Consulate in San Francisco, USA, bypassing the Secretary of
Foreign Affairs which is the proper protocol procedure. Mr. Steven Bucher, the acting Chief of
the Records Services Board of US-INS Washington D.C. in his letter addressed to Philip
Antweiler, Philippine Desk Officer, State Department, declared the earlier Certification as
incorrect and erroneous as it was "not exhaustive and did not reflect all available information."
Also, Richard L. Huff, Co-Director of the Office of Information and privacy, US Department of
Justice, in response to the appeal raised by Consul General Teresita V. Marzan, explained that
"the INS normally does not maintain records on individuals who are entering the country as
visitors rather than as immigrants: and that a notation concerning the entry of a visitor may be
made at the Nonimmigrant Information system. Since appellant Webb entered the U.S. on a mere
tourist visa, obviously, the initial search could not have produced the desired result inasmuch as
the data base that was looked into contained entries of the names of IMMIGRANTS and not that
of NON-IMMIGRANT visitors of the U.S..62

The trial court and the Court of Appeals expressed marked cynicism over the accuracy of travel
documents like the passport as well as the domestic and foreign records of departures and
arrivals from airports. They claim that it would not have been impossible for Webb to secretly
return to the Philippines after he supposedly left it on March 9, 1991, commit the crime, go back
to the U.S., and openly return to the Philippines again on October 26, 1992. Travel between the
U.S. and the Philippines, said the lower courts took only about twelve to fourteen hours.
If the Court were to subscribe to this extremely skeptical view, it might as well tear the rules of
evidence out of the law books and regard suspicions, surmises, or speculations as reasons for
impeaching evidence. It is not that official records, which carry the presumption of truth of what
they state, are immune to attack. They are not. That presumption can be overcome by evidence.
Here, however, the prosecution did not bother to present evidence to impeach the entries in
Webb’s passport and the certifications of the Philippine and U.S.’ immigration services
regarding his travel to the U.S. and back. The prosecution’s rebuttal evidence is the fear of the
unknown that it planted in the lower court’s minds.

7. Effect of Webb’s alibi to others

Webb’s documented alibi altogether impeaches Alfaro's testimony, not only with respect to him,
but also with respect to Lejano, Estrada, Fernandez, Gatchalian, Rodriguez, and Biong. For, if
the Court accepts the proposition that Webb was in the U.S. when the crime took place, Alfaro’s
testimony will not hold together. Webb’s participation is the anchor of Alfaro’s story. Without it,
the evidence against the others must necessarily fall.

CONCLUSION

In our criminal justice system, what is important is, not whether the court entertains doubts about
the innocence of the accused since an open mind is willing to explore all possibilities, but
whether it entertains a reasonable, lingering doubt as to his guilt. For, it would be a serious
mistake to send an innocent man to jail where such kind of doubt hangs on to one’s inner being,
like a piece of meat lodged immovable between teeth.

Will the Court send the accused to spend the rest of their lives in prison on the testimony of an
NBI asset who proposed to her handlers that she take the role of the witness to the Vizconde
massacre that she could not produce?

WHEREFORE, the Court REVERSES and SETS ASIDE the Decision dated December 15, 2005
and Resolution dated January 26, 2007 of the Court of Appeals in CA-G.R. CR-H.C. 00336 and
ACQUITS accused-appellants Hubert Jeffrey P. Webb, Antonio Lejano, Michael A. Gatchalian,
Hospicio Fernandez, Miguel Rodriguez, Peter Estrada and Gerardo Biong of the crimes of which
they were charged for failure of the prosecution to prove their guilt beyond reasonable doubt.
They are ordered immediately RELEASED from detention unless they are confined for another
lawful cause.

Let a copy of this Decision be furnished the Director, Bureau of Corrections, Muntinlupa City
for immediate implementation. The Director of the Bureau of Corrections is DIRECTED to
report the action he has taken to this Court within five days from receipt of this Decision.

SO ORDERED.

G.R. No. 152643             August 28, 2008

CONCEPCION CUENCO VDA. DE MANGUERRA and THE HON. RAMON C.
CODILLA, JR., Presiding Judge of the Regional Trial Court of Cebu City, Branch
19, petitioners,
vs.
RAUL RISOS, SUSANA YONGCO, LEAH ABARQUEZ and ATTY. GAMALIEL D.B.
BONJE, respondents.

DECISION

NACHURA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the
Court of Appeals (CA) Decision1 dated August 15, 2001 and its Resolution2 dated March 12,
2002. The CA decision set aside the Regional Trial Court (RTC) Orders dated August 25,
20003 granting Concepcion Cuenco Vda. de Manguerra’s (Concepcion’s) motion to take
deposition, and dated November 3, 20004 denying the motion for reconsideration of respondents
Raul G. Risos, Susana Yongco, Leah Abarquez, and Atty. Gamaliel D.B. Bonje.

The facts of the case, as culled from the records, follow:

On November 4, 1999, respondents were charged with Estafa Through Falsification of Public

Document before the RTC of Cebu City, Branch 19, through a criminal information dated
October 27, 1999, which was subsequently amended on November 18, 1999. The case, docketed
as Criminal Case No. CBU-52248,5 arose from the falsification of a deed of real estate mortgage
allegedly committed by respondents where they made it appear that Concepcion, the owner of
the mortgaged property known as the Gorordo property, affixed her signature to the document.
Hence, the criminal case.6

Earlier, on September 10, 1999, Concepcion, who was a resident of Cebu City, while on vacation
in Manila, was unexpectedly confined at the Makati Medical Center due to upper gastro-
intestinal bleeding; and was advised to stay in Manila for further treatment.7

On November 24, 1999, respondents filed a Motion for Suspension of the Proceedings in
Criminal Case No. CBU-52248 on the ground of prejudicial question. They argued that Civil
Case No. CEB-20359, which was an action for declaration of nullity of the mortgage, should first
be resolved.8 On May 11, 2000, the RTC granted the aforesaid motion. Concepcion’s motion for
reconsideration was denied on June 5, 2000.9

This prompted Concepcion to institute a special civil action for certiorari before the CA seeking
the nullification of the May 11 and June 5 RTC orders. The case was docketed as CA-G.R. SP
No. 60266 and remains pending before the appellate court to date.10

On August 16, 2000, the counsel of Concepcion filed a motion to take the latter’s
deposition.11 He explained the need to perpetuate Concepcion’s testimony due to her weak
physical condition and old age, which limited her freedom of mobility.
On August 25, 2000, the RTC granted the motion and directed that Concepcion’s deposition be
taken before the Clerk of Court of Makati City.12 The respondents’ motion for reconsideration
was denied by the trial court on November 3, 2000. The court ratiocinated that procedural
technicalities should be brushed aside because of the urgency of the situation, since Concepcion
was already of advanced age.13 After several motions for change of venue of the deposition-
taking, Concepcion’s deposition was finally taken on March 9, 2001 at her residence.14

Aggrieved, respondents assailed the August 25 and November 3 RTC orders in a special civil
action for certiorari before the CA in CA-G.R. SP No. 62551.15

On August 15, 2001, the CA rendered a Decision16 favorable to the respondents, the dispositive
portion of which reads:

WHEREFORE, the petition is GRANTED and the August 25, 2000 and November 3,
2000 orders of the court a quo are hereby SET ASIDE, and any deposition that may have
been taken on the authority of such void orders is similarly declared void.

SO ORDERED.17

At the outset, the CA observed that there was a defect in the respondents’ petition by not
impleading the People of the Philippines, an indispensable party. This notwithstanding, the
appellate court resolved the matter on its merit, declaring that the examination of prosecution
witnesses, as in the present case, is governed by Section 15, Rule 119 of the Revised Rules of
Criminal Procedure and not Rule 23 of the Rules of Court. The latter provision, said the appellate
court, only applies to civil cases. Pursuant to the specific provision of Section 15, Rule 119,
Concepcion’s deposition should have been taken before the judge or the court where the case is
pending, which is the RTC of Cebu, and not before the Clerk of Court of Makati City; and thus,
in issuing the assailed order, the RTC clearly committed grave abuse of discretion. 18

In its Resolution dated March 12, 2002 denying petitioner’s motion for reconsideration, the CA
added that the rationale of the Rules in requiring the taking of deposition before the same court is
the constitutional right of the accused to meet the witnesses face to face. The appellate court
likewise concluded that Rule 23 could not be applied suppletorily because the situation was
adequately addressed by a specific provision of the rules of criminal procedure.19

Hence, the instant petition raising the following issues:

I.

WHETHER OR NOT RULE 23 OF THE 1997 RULES OF CIVIL PROCEDURE

APPLIES TO THE DEPOSITION OF PETITIONER.

II.

WHETHER OR NOT FAILURE TO IMPLEAD THE "PEOPLE OF THE

PHILIPPINES" IN A PETITION FOR CERTIORARI ARISING FROM A CRIMINAL
 CASE A QUO CONSTITUTES A WAIVABLE DEFECT IN THE PETITION FOR
CERTIORARI.20

It is undisputed that in their petition for certiorari before the CA, respondents failed to implead
the People of the Philippines as a party thereto. Because of this, the petition was obviously
defective. As provided in Section 5, Rule 110 of the Revised Rules of Criminal Procedure, all
criminal actions are prosecuted under the direction and control of the public prosecutor.
Therefore, it behooved the petitioners (respondents herein) to implead the People of the
Philippines as respondent in the CA case to enable the Solicitor General to comment on the
petition.21

However, this Court has repeatedly declared that the failure to implead an indispensable party is
not a ground for the dismissal of an action. In such a case, the remedy is to implead the non-party
claimed to be indispensable. Parties may be added by order of the court, on motion of the party
or on its own initiative at any stage of the action and/or such times as are just. If the
petitioner/plaintiff refuses to implead an indispensable party despite the order of the court, the
latter may dismiss the complaint/petition for the petitioner’s/plaintiff’s failure to comply.22

In this case, the CA disregarded the procedural flaw by allowing the petition to proceed, in the
interest of substantial justice. Also noteworthy is that, notwithstanding the non-joinder of the
People of the Philippines as party-respondent, it managed, through the Office of the Solicitor
General, to file its Comment on the petition for certiorari. Thus, the People was given the
opportunity to refute the respondents’ arguments.

Instructive is the Court’s pronouncement in Commissioner Domingo v. Scheer23 in this wise:

There is nothing sacred about processes or pleadings, their forms or contents. Their sole
purpose is to facilitate the application of justice to the rival claims of contending parties.
They were created, not to hinder and delay, but to facilitate and promote, the
administration of justice. They do not constitute the thing itself, which courts are always
striving to secure to litigants. They are designed as the means best adapted to obtain that
thing. In other words, they are a means to an end. When they lose the character of the one
and become the other, the administration of justice is at fault and courts are
correspondingly remiss in the performance of their obvious duty.24

Accordingly, the CA cannot be faulted for deciding the case on the merits despite the procedural
defect.

On the more important issue of whether Rule 23 of the Rules of Court applies to the instant case,
we rule in the negative.

It is basic that all witnesses shall give their testimonies at the trial of the case in the presence of
the judge.25 This is especially true in criminal cases in order that the accused may be afforded the
opportunity to cross-examine the witnesses pursuant to his constitutional right to confront the
witnesses face to face.26 It also gives the parties and their counsel the chance to propound such
questions as they deem material and necessary to support their position or to test the credibility
of said witnesses.27 Lastly, this rule enables the judge to observe the witnesses’ demeanor.28

This rule, however, is not absolute. As exceptions, Rules 23 to 28 of the Rules of Court provide
for the different modes of discovery that may be resorted to by a party to an action. These rules
are adopted either to perpetuate the testimonies of witnesses or as modes of discovery. In
criminal proceedings, Sections 12,29 1330 and 15,31 Rule 119 of the Revised Rules of Criminal
Procedure, which took effect on December 1, 2000, allow the conditional examination of both
the defense and prosecution witnesses.

In the case at bench, in issue is the examination of a prosecution witness, who, according to the
petitioners, was too sick to travel and appear before the trial court. Section 15 of Rule 119 thus
comes into play, and it provides:

Section 15. Examination of witness for the prosecution. – When it satisfactorily appears

that a witness for the prosecution is too sick or infirm to appear at the trial as directed by
the court, or has to leave the Philippines with no definite date of returning, he may
forthwith be conditionally examined before the court where the case is pending. Such
examination, in the presence of the accused, or in his absence after reasonable notice to
attend the examination has been served on him, shall be conducted in the same manner as
an examination at the trial. Failure or refusal of the accused to attend the examination
after notice shall be considered a waiver. The statement taken may be admitted in behalf
of or against the accused.

Petitioners contend that Concepcion’s advanced age and health condition exempt her from the
application of Section 15, Rule 119 of the Rules of Criminal Procedure, and thus, calls for the
application of Rule 23 of the Rules of Civil Procedure.

The contention does not persuade.

The very reason offered by the petitioners to exempt Concepcion from the coverage of Rule 119
is at once the ground which places her squarely within the coverage of the same provision. Rule
119 specifically states that a witness may be conditionally examined: 1) if the witness is too sick
or infirm to appear at the trial; or 2) if the witness has to leave the Philippines with no definite
date of returning. Thus, when Concepcion moved that her deposition be taken, had she not been
too sick at that time, her motion would have been denied. Instead of conditionally examining her
outside the trial court, she would have been compelled to appear before the court for examination
during the trial proper.

Undoubtedly, the procedure set forth in Rule 119 applies to the case at bar. It is thus required that
the conditional examination be made before the court where the case is pending. It is also
necessary that the accused be notified, so that he can attend the examination, subject to his right
to waive the same after reasonable notice. As to the manner of examination, the Rules mandate
that it be conducted in the same manner as an examination during trial, that is, through question
and answer.
At this point, a query may thus be posed: in granting Concepcion’s motion and in actually taking
her deposition, were the above rules complied with? The CA answered in the negative. The
appellate court considered the taking of deposition before the Clerk of Court of Makati City
erroneous and contrary to the clear mandate of the Rules that the same be made before the court
where the case is pending. Accordingly, said the CA, the RTC order was issued with grave abuse
of discretion.

We agree with the CA and quote with approval its ratiocination in this wise:

Unlike an examination of a defense witness which, pursuant to Section 5, Rule 119 of the
previous Rules, and now Section 13, Rule 119 of the present Revised Rules of Criminal
Procedure, may be taken before any "judge, or, if not practicable, a member of the Bar in
good standing so designated by the judge in the order, or, if the order be made by a court
of superior jurisdiction, before an inferior court to be designated therein," the
examination of a witness for the prosecution under Section 15 of the Revised Rules of
Criminal Procedure (December 1, 2000) may be done only "before the court where the
case is pending."32

Rule 119 categorically states that the conditional examination of a prosecution witness shall be
made before the court where the case is pending. Contrary to petitioners’ contention, there is
nothing in the rule which may remotely be interpreted to mean that such requirement applies
only to cases where the witness is within the jurisdiction of said court and not when he is
kilometers away, as in the present case. Therefore, the court may not introduce exceptions or
conditions. Neither may it engraft into the law (or the Rules) qualifications not
contemplated.33 When the words are clear and categorical, there is no room for interpretation.
There is only room for application.34

Petitioners further insist that Rule 23 applies to the instant case, because the rules on civil
procedure apply suppletorily to criminal cases.

It is true that Section 3, Rule 1 of the Rules of Court provides that the rules of civil procedure
apply to all actions, civil or criminal, and special proceedings. In effect, it says that the rules of
civil procedure have suppletory application to criminal cases. However, it is likewise true that
the criminal proceedings are primarily governed by the Revised Rules of Criminal Procedure.
Considering that Rule 119 adequately and squarely covers the situation in the instant case, we
find no cogent reason to apply Rule 23 suppletorily or otherwise.

To reiterate, the conditional examination of a prosecution witness for the purpose of taking his
deposition should be made before the court, or at least before the judge, where the case is
pending. Such is the clear mandate of Section 15, Rule 119 of the Rules. We find no necessity to
depart from, or to relax, this rule. As correctly held by the CA, if the deposition is made
elsewhere, the accused may not be able to attend, as when he is under detention. More
importantly, this requirement ensures that the judge would be able to observe the witness’
deportment to enable him to properly assess his credibility. This is especially true when the
witness’ testimony is crucial to the prosecution’s case.
While we recognize the prosecution’s right to preserve its witness’ testimony to prove its case,
we cannot disregard rules which are designed mainly for the protection of the accused’s
constitutional rights. The giving of testimony during trial is the general rule. The conditional
examination of a witness outside of the trial is only an exception, and as such, calls for a strict
construction of the rules.

WHEREFORE, the petition is hereby DENIED. The Court of Appeals Decision and Resolution
dated August 25, 2000 and March 12, 2002, respectively, in CA-G.R. SP No. 62551,
are AFFIRMED.

SO ORDERED.

FIRST DIVISION

G.R. Nos. 169823-24, September 11, 2013

HERMINIO T. DISINI, Petitioner, v. THE HON. SANDIGANBAYAN, FIRST DIVISION,

AND THE PEOPLE OF THE PHILIPPINES, Respondents.

G.R. Nos. 174764-65, September 11, 2013

HERMINIO T. DISINI, Petitioner, v. SANDIGANBAYAN, FIRST DIVISION, AND THE

PEOPLE OF THE PHILIPPINES, Respondents.

DECISION

BERSAMIN, J.:

The Sandiganbayan has exclusive original jurisdiction over the criminal action involving
petitioner notwithstanding that he is a private individual considering that his criminal prosecution
is intimately related to the recovery of ill-gotten wealth of the Marcoses, their immediate family,
subordinates and close associates.

The Case

Petitioner Herminio T. Disini assails via petition for certiorari the resolutions promulgated by

the Sandiganbayan in Criminal Case No. 28001 and Criminal Case No. 28002, both
entitled People v. Herminio T. Disini, on January 17, 2005 (denying his motion to quash the
informations)1 and August 10, 2005 (denying his motion for reconsideration of the denial of his
motion to quash),2 alleging that the Sandiganbayan (First Division) thereby committed grave
abuse of discretion amounting to lack or excess of jurisdiction.

Antecedents

The Office of the Ombudsman filed two informations dated June 30, 2004 charging Disini in the
Sandiganbayan with corruption of public officials, penalized under Article 212 in relation to
Article 210 of the Revised Penal Code (Criminal Case No. 28001), and with a violation of
Section 4(a) of Republic Act 3019 (R.A. No. 3019), also known as the Anti-Graft and Corrupt
Practices Act (Criminal Case No. 28002).

The accusatory portions of the informations read as follows:chanrobles virtua1aw 1ibrary

Criminal Case No. 28001

That during the period from 1974 to February 1986, in Manila, Philippines, and within the
jurisdiction of this Honorable Court, accused HERMINIO T. DISINI, conspiring together and
confederating with the then President of the Philippines Ferdinand E. Marcos, did then and there,
wil[l]fully, unlawfully and feloniously offer, promise and give gifts and presents to said
Ferdinand E. Marcos, consisting of accused DISINI’s ownership of two billion and five hundred
(2.5 billion) shares of stock in Vulcan Industrial and Mining Corporation and four billion (4
billion) shares of stock in The Energy Corporation, with both shares of stock having then a book
value of P100.00 per share of stock, and subcontracts, to Engineering and Construction Company
of Asia, owned and controlled by said Ferdinand E. Marcos, on the mechanical and electrical
construction work on the Philippine Nuclear Power Plant Project (“Project”) of the National
Power Corporation at Morong, Bataan, all for and in consideration of accused Disini seeking and
obtaining for Burns and Roe and Westinghouse Electrical Corporation (Westinghouse), the
contracts to do the engineering and architectural design and to construct, respectively, the
Project, as in fact said Ferdinand E. Marcos, taking undue advantage of his position and
committing the offense in relation to his office and in consideration of the aforesaid gifts and
presents, did award or cause to be awarded to said Burns and Roe and Westinghouse, the
contracts to do the engineering and architectural design and to construct the Project, respectively,
which acts constitute the crime of corruption of public officials.

CONTRARY TO LAW.3cralaw virtualaw library

Criminal Case No. 28002

That during the period 1974 to February 1986, in Manila, Philippines, and within the jurisdiction
of the Honorable Court, accused HERMINIO T. DISINI, conspiring together and confederating
with the then President of the Philippines, Ferdinand E. Marcos, being then the close personal
friend and golfing partner of said Ferdinand E. Marcos, and being further the husband of
Paciencia Escolin-Disini who was the first cousin of then First Lady Imelda Romualdez-Marcos
and family physician of the Marcos family, taking advantage of such close personal relation,
intimacy and free access, did then and there, willfully, unlawfully and criminally, in connection
with the Philippine Nuclear Power Plant (PNPP) Project (“PROJECT”) of the National Power
Corporation (NPC) at Morong, Bataan, request and receive from Burns and Roe, a foreign
consultant, the total amount of One Million U.S. Dollars ($1,000,000.00), more or less, and also
from Westinghouse Electric Corporation (WESTINGHOUSE), the total amount of Seventeen
Million U.S. Dollars ($17,000,000.00), more or less, both of which entities were then having
business, transaction, and application with the Government of the Republic of the Philippines, all
for and in consideration of accused DISINI securing and obtaining, as accused Disini did secure
and obtain, the contract for the said Burns and Roe and Westinghouse to do the engineering and
architectural design, and construct, respectively, the said PROJECT, and subsequently, request
and receive subcontracts for Power Contractors, Inc. owned by accused DISINI, and Engineering
and Construction Company of Asia (ECCO-Asia), owned and controlled by said Ferdinand E.
Marcos, which stated amounts and subcontracts constituted kickbacks, commissions and gifts as
material or pecuniary advantages, for securing and obtaining, as accused DISINI did secure and
obtain, through the direct intervention of said Ferdinand E. Marcos, for Burns and Roe the
engineering and architectural contract, and for Westinghouse the construction contract, for the
PROJECT.

CONTRARY TO LAW.4
On August 2, 2004, Disini filed a motion to quash,5 alleging that the criminal actions had been
extinguished by prescription, and that the informations did not conform to the prescribed form.
The Prosecution opposed the motion to quash.6cralaw virtualaw library

On September 16, 2004, Disini voluntarily submitted himself for arraignment to obtain the
Sandiganbayan’s favorable action on his motion for permission to travel abroad.7 He then
entered a plea of not guilty to both informations.

As stated, on January 17, 2005, the Sandiganbayan (First Division) promulgated its first assailed
resolution denying the motion to quash.8cralaw virtualaw library

Disini moved for the reconsideration of the resolution dated January 17, 2005,9 but the
Sandiganbayan (First Division) denied his motion on August 10, 2005 through the second
assailed resolution.10cralaw virtualaw library

Issues

Undaunted, Disini commenced this special civil action for certiorari, alleging that:

A. THE RESPONDENT COURT HAS NO JURISDICTION OVER THE OFFENSES

CHARGED.
1. THE RESPONDENT COURT GRAVELY ERRED WHEN IT RULED THAT
SECTION 4, PARAGRAPHS (A) AND (B) OF REPUBLIC ACT NO. 8249 DO
NOT APPLY SINCE THE INFORMATIONS WERE “FILED PURSUANT TO
E.O. NOS. 1, 2, 14 AND 14-A”.

2. THE RESPONDENT COURT GRAVELY ERRED WHEN IT ASSUMED

JURISDICTION WITHOUT HAVING MET THE REQUISITE UNDER
SECTION 4 OF R.A. 8249 THAT THE ACCUSED MUST BE A PUBLIC
OFFICER.

B. THE RESPONDENT COURT ACTED WITH SUCH GRAVE ABUSE OF

DISCRETION WHEN IT EFFECTIVELY IGNORED, DISREGARDED, AND
DENIED PETITIONER’S CONSTITUTIONAL AND STATUTORY RIGHT TO
PRESCRIPTION.
 1. THE RESPONDENT COURT GRAVELY ERRED IN DETERMINING THE
APPLICABLE PRESCRIPTIVE PERIOD.

2. THE RESPONDENT COURT GRAVELY ERRED IN DETERMINING THE

COMMENCEMENT OF THE PRESCRIPTIVE PERIOD.

3. THE RESPONDENT COURT GRAVELY ERRED IN DETERMINING THE

POINT OF INTERRUPTION OF THE PRESCRIPTIVE PERIOD.

C. BY MERELY ASSUMING THE PRESENCE OF GLARINGLY ABSENT ELEMENTS

IN THE OFFENSES CHARGED TO UPHOLD THE ‘SUFFICIENCY’ OF THE
INFORMATIONS IN CRIMINAL CASE NOS. 28001 AND 28002, THE
RESPONDENT COURT DEMONSTRATED ITS PREJUDGMENT OVER THE
SUBJECT CASES AND ACTED WITH GRAVE ABUSE OF ITS DISCRETION.

D. THE RESPONDENT COURT ACTED WITH GRAVE ABUSE OF DISCRETION IN

REFUSING TO QUASH THE INFORMATIONS DESPITE THEIR UTTER FAILURE
TO COMPLY WITH THE PRESCRIBED FORM, THUS EFFECTIVELY DENYING
THE ACCUSED HIS CONSTITUTIONAL AND STATUTORY RIGHT TO BE
INFORMED OF THE NATURE AND CAUSE OF THE ACCUSATION AGAINST
HIM.11

Ruling

The petition for certiorari has no merit.

1.
Preliminary Considerations

To properly resolve this case, reference is made to the ruling of the Court in G.R. No. 175730
entitled Herminio Disini v. Sandiganbayan,12 which involved the civil action for reconveyance,
reversion, accounting, restitution, and damages (Civil Case No. 0013 entitled Republic v.
Herminio T. Disini, et al.) filed by the Presidential Commission on Good Government (PCGG)
against Disini and others.13 The amended complaint in Civil Case No. 0013 alleged that Disini
had acted in unlawful concert with his co-defendants in acquiring and accumulating ill-gotten
wealth through the misappropriation of public funds, plunder of the nation’s wealth, extortion,
embezzlement, and other acts of corruption,14 as follows:chanrobles virtua1aw 1ibrary
4. Defendant HERMINIO T. DISINI is a close associate of defendant Ferdinand E. Marcos and
the husband of the first cousin of Defendant Imelda R. Marcos. By reason of this relationship x
xx defendant Herminio Disini obtained staggering commissions from the Westinghouse in
exchange for securing the nuclear power plant contract from the Philippine government.

xxxx

13. Defendants Herminio T. Disini and Rodolfo Jacob, by themselves and/or in unlawful concert,
active collaboration and willing participation of defendants Ferdinand E. Marcos and Imelda R.
Marcos, and taking undue advantage of their association and influence with the latter defendant
spouses in order to prevent disclosure and recovery of ill-gotten assets, engaged in devices,
schemes, and stratagems such as:

xxxx

(c) unlawfully utilizing the Herdis Group of Companies and Asia Industries, Inc. as conduits
through which defendants received, kept, and/or invested improper payments such as
unconscionably large commissions from foreign corporations like the Westinghouse
Corporation;

(d) secured special concessions, privileges and/or benefits from defendants Ferdinand E. Marcos
and Imelda R. Marcos, such as a contract awarded to Westinghouse Corporation which built an
inoperable nuclear facility in the country for a scandalously exorbitant amount that included
defendant’s staggering commissions – defendant Rodolfo Jacob executed for HGI the contract
for the aforesaid nuclear plant;15
Through its letter dated April 8, 1991,16 the PCGG transmitted the records of Criminal Case No.
28001 and Criminal Case No. 28002 to then Ombudsman Conrado M. Vasquez for appropriate
action, to wit:chanrobles virtua1aw 1ibrary
In line with the decision of the Supreme Court in the case of Eduardo M. Cojuangco, Jr. versus
the PCGG (G.R. Nos. 92319–92320) dated October 2, 1990, we are hereby transmitting to your
Office for appropriate action the records of the attached criminal case which we believe is
similar to the said Cojuangco case in certain aspects, such as: (i) some parts or elements are also
parts of the causes of action in the civil complaints[-] filed with the Sandiganbayan; (ii) some
properties or assets of the respondents have been sequestered; (iii) some of the respondents are
also party defendants in the civil cases.

Although the authority of the PCGG has been upheld by the Supreme Court, we are constrained
to refer to you for proper action the herein-attached case in view of the suspicion that the PCGG
cannot conduct an impartial investigation in cases similar to that of the Cojuangco case. x x x
Ostensibly, the PCGG’s letter of transmittal was adverting to the ruling in Cojuangco, Jr. v.
Presidential Commission on Good Government (Cojuangco, Jr.),17viz:chanrobles virtua1aw
1ibrary
x x x [T]he PCGG and the Solicitor General finding a prima facie basis filed a civil complaint
against petitioner and intervenors alleging substantially the same illegal or criminal acts subject
of the subsequent criminal complaints the Solicitor General filed with the PCGG for preliminary
investigation. x x x.

Moreover, when the PCGG issued the sequestration and freeze orders against petitioner’s
properties, it was on the basis of a prima facie finding that the same were ill-gotten and/or were
acquired in relation to the illegal disposition of coconut levy funds. Thus, the Court finds that
the PCGG cannot possibly conduct the preliminary investigation of said criminal
complaints with the “cold neutrality of an impartial judge,”as it has prejudged the
matter. x x x18cralaw virtualaw library

xxxx
The Court finds that under the circumstances of the case, the PCGG cannot inspire belief
that it could be impartial in the conduct of the preliminary investigation of the aforesaid
complaints against petitioner and intervenors. It cannot possibly preside in the said
preliminary investigation with an even hand.

The Court holds that a just and fair administration of justice can be promoted if the PCGG
would be prohibited from conducting the preliminary investigation of the complaints
subject of this petition and the petition for intervention and that the records of the same
should be forwarded to the Ombudsman, who as an independent constitutional officer has
primary jurisdiction over cases of this nature, to conduct such preliminary investigation
and take appropriate action.19 (Bold emphasis supplied)
It appears that the resolutions of the Office of the Ombudsman, following its conduct of the
preliminary investigation on the criminal complaints thus transmitted by the PCGG, were
reversed and set aside by the Court in Presidential Commission on Good Government v.
Desierto,20 with the Court requiring the Office of the Ombudsman to file the informations that
became the subject of Disini’s motion to quash in Criminal Case No. 28001 and Criminal Case
No. 28002.

2.
Sandiganbayan has exclusive and original jurisdiction over the offenses charged

Disini challenges the jurisdiction of the Sandiganbayan over the offenses charged in Criminal
Case No. 28001 and Criminal Case No. 28002. He contends that: (1) the informations did not
allege that the charges were being filed pursuant to and in connection with Executive Order
(E.O.) Nos. 1, 2, 14 and 14-A; (2) the offenses charged were not of the nature contemplated by
E.O. Nos. 1, 2, 14 and 14-A because the allegations in the informations neither pertained to the
recovery of ill-gotten wealth, nor involved sequestration cases; (3) the cases were filed by the
Office of the Ombudsman instead of by the PCGG; and (4) being a private individual not
charged as a co-principal, accomplice or accessory of a public officer, he should be prosecuted in
the regular courts instead of in the Sandiganbayan.

The Office of the Solicitor General (OSG) counters that the Sandiganbayan has jurisdiction over
the offenses charged because Criminal Case No. 28001 and Criminal Case No. 28002 were filed
within the purview of Section 4(c) of R.A. No. 8249; and that both cases stemmed from the
criminal complaints initially filed by the PCGG pursuant to its mandate under E.O. Nos. 1, 2, 14
and 14-A to investigate and file the appropriate civil or criminal cases to recover ill-gotten
wealth not only of the Marcoses and their immediately family but also of their relatives,
subordinates and close associates.

We hold that the Sandiganbayan has jurisdiction over Criminal Case No. 28001 and Criminal
Case No. 28002.

Presidential Decree (P.D.) No. 1606 was the law that established the Sandiganbayan and defined
its jurisdiction. The law was amended by R.A. No. 7975 and R.A. No. 8249. Under Section 4 of
R.A. No. 8249, the Sandiganbayan was vested with original and exclusive jurisdiction over all
cases involving:chanrobles virtua1aw 1ibrary
a. Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and
Corrupt Practices Act, Republic Act No. 1379, and Chapter II, Section 2, Title VII, Book II of
the Revised Penal Code, where one or more of the accused are officials occupying the following
positions in the government whether in a permanent, acting or interim capacity, at the time of the
commission of the offense:

xxxx

b. Other offenses or felonies whether simple or complexed with other crimes committed by the
public officials and employees mentioned in subsection (a) of this section in relation to their
office.

c. Civil and criminal cases filed pursuant to and in connection with Executive Order Nos. 1,
2, 14 and 14-A, issued in 1986. (Bold emphasis supplied)

In cases where none of the accused are occupying positions corresponding to salary grade ‘27’ or
higher, as prescribed in the said Republic Act No. 6758, or military or PNP officers mentioned
above, exclusive original jurisdiction thereof shall be vested in the proper regional trial court,
metropolitan trial court, municipal trial court and municipal circuit trial court, as the case may
be, pursuant to their respective jurisdiction as provided in Batas Pambansa Blg. 129, as amended.

xxxx

In case private individuals are charged as co-principals, accomplices or accessories with the
public officers or employees, including those employed in government-owned or controlled
corporations, they shall be tried jointly with said public officers and employees in the proper
courts which shall exercise exclusive jurisdiction over them.

xxxx
It is underscored that it was the PCGG that had initially filed the criminal complaints in the
Sandiganbayan, with the Office of the Ombudsman taking over the investigation of Disini only
after the Court issued in Cojuangco, Jr. the directive to the PCGG to refer the criminal cases to
the Office of the Ombudsman on the ground that the PCGG would not be an impartial office
following its finding of a prima facie case being established against Disini to sustain the
institution of Civil Case No. 0013.

Also underscored is that the complaint in Civil Case No. 0013 and the informations in Criminal
Case No. 28001 and Criminal Case No. 28002 involved the same transaction, specifically the
contracts awarded through the intervention of Disini and President Marcos in favor of Burns &
Roe to do the engineering and architectural design, and Westinghouse to do the construction of
the Philippine Nuclear Power Plant Project (PNPPP). Given their sameness in subject matter, to
still expressly aver in Criminal Case No. 28001 and Criminal Case No. 28002 that the charges
involved the recovery of ill-gotten wealth was no longer necessary.21 With Criminal Case No.
28001 and Criminal Case No. 28002 being intertwined with Civil Case No. 0013, the PCGG had
the authority to institute the criminal prosecutions against Disini pursuant to E.O. Nos. 1, 2, 14
and 14-A.

That Disini was a private individual did not remove the offenses charged from the jurisdiction of
the Sandiganbayan. Section 2 of E.O. No. 1, which tasked the PCGG with assisting the President
in “[t]he recovery of all ill-gotten wealth accumulated by former President Ferdinand E. Marcos,
his immediate family, relatives, subordinates and close associates, whether located in the
Philippines or abroad, including the takeover or sequestration of all business enterprises and
entities owned or controlled by them, during his administration, directly or through nominees, by
taking undue advantage of their public office and/or using their powers, authority, influence,
connections or relationship,” expressly granted the authority of the PCGG to recover ill-gotten
wealth covered President Marcos’ immediate family, relatives, subordinates and close
associates, without distinction as to their private or public status.

Contrary to Disini’s argument, too, the qualifying clause found in Section 4 of R.A. No.
824922 applied only to the cases listed in Subsection 4a and Subsection 4b of R.A. No. 8249, the
full text of which follows:chanrobles virtua1aw 1ibrary
xxxx

a. Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and
Corrupt Practices Act, Republic Act No. 1379, and Chapter II, Section 2, Title VII, Book II of
the Revised Penal Code, where one or more of the accused are officials occupying the following
positions in the government whether in a permanent, acting or interim capacity, at the time of the
commission of the offense:

(1) Officials of the executive branch occupying the positions of regional director and
higher, otherwise classified as Grade ‘27’ and higher, of the Compensation and Position
Classification Act of 1989 (Republic Act No. 6758), specifically including:

(a) Provincial governors, vice-governors, members of the sangguniang panlalawigan and

provincial treasurers, assessors, engineers and other provincial department heads;

(b) City mayors, vice-mayors, members of the sangguniang panlungsod, city treasurers, assessors
engineers and other city department heads;

(c) Officials of the diplomatic service occupying the position of consul and higher;

(d) Philippine army and air force colonels, naval captains, and all officers of higher rank;

(e) Officers of the Philippine National Police while occupying the position of provincial director
and those holding the rank of senior superintendent or higher;

(f) City and provincial prosecutors and their assistants, and officials and prosecutors in the Office
of the Ombudsman and special prosecutor;
(g) Presidents, directors or trustees, or managers of government-owned or -controlled
corporations, state universities or educational institutions or foundations;

(2) Members of Congress and officials thereof classified as Grade ‘27’ and up under the
Compensation and Position Classification Act of 1989;

(3) Members of the judiciary without prejudice to the provisions of the Constitution;

(4) Chairmen and members of Constitutional Commissions, without prejudice to the provisions
of the Constitution; and

(5) All other national and local officials classified as Grade ‘27’ and higher under the
Compensation and Position Classification Act of 1989.

b. Other offenses or felonies whether simple or complexed with other crimes committed by the
public officials and employees mentioned in subsection a of this section in relation to their
office. (bold emphasis supplied)

xxxx
Unquestionably, public officials occupying positions classified as Grade 27 or higher are
mentioned only in Subsection 4a and Subsection 4b, signifying the plain legislative intent of
limiting the qualifying clause to such public officials. To include within the ambit of the
qualifying clause the persons covered by Subsection 4c would contravene the exclusive mandate
of the PCGG to bring the civil and criminal cases pursuant to and in connection with E.O. Nos.
1, 2, 14 and 14-A. In view of this, the Sandiganbayan properly took cognizance of Criminal Case
No. 28001 and Criminal Case No. 28002 despite Disini’s being a private individual, and despite
the lack of any allegation of his being the co-principal, accomplice or accessory of a public
official in the commission of the offenses charged.

3.
The offenses charged in the informations have not yet prescribed

In resolving the issue of prescription, the following must be considered, namely: (1) the period of
prescription for the offense charged; (2) the time when the period of prescription starts to run;
and (3) the time when the prescriptive period is interrupted.23cralaw virtualaw library

The information in Criminal Case No. 28001 alleged that Disini had offered, promised and given
gifts and presents to Ferdinand E. Marcos; that said gifts were in consideration of Disini
obtaining for Burns & Roe and Westinghouse Electrical Corporation (Westinghouse) the
contracts, respectively, to do the engineering and architectural design of and to construct the
PNPPP; and that President Marcos did award or cause to be awarded the respective contracts to
Burns & Roe and Westinghouse, which acts constituted the crime of corruption of public
officials.24cralaw virtualaw library
The crime of corruption of public officials charged in Criminal Case No. 28001 is punished by
Article 212 of the Revised Penal Code with the “same penalties imposed upon the officer
corrupted.”25 Under the second paragraph of Article 210 of the Revised Penal Code (direct
bribery),26 if the gift was accepted by the officer in consideration of the execution of an act that
does not constitute a crime, and the officer executes the act, he shall suffer the penalty of prision
mayor in its medium and minimum periods and a fine of not less than three times the value of the
gift. Conformably with Article 90 of the Revised Penal Code,27 the period of prescription for this
specie of corruption of public officials charged against Disini is 15 years.

As for Criminal Case No. 28002, Disini was charged with a violation of Section 4(a) of R.A. No.
3019. By express provision of Section 11 of R.A. No. 3019, as amended by Batas Pambansa
Blg. 195, the offenses committed under R.A. No. 3019 shall prescribe in 15 years. Prior to the
amendment, the prescriptive period was only 10 years. It became settled in People v.
Pacificador,28 however, that the longer prescriptive period of 15 years would not apply to crimes
committed prior to the effectivity of Batas Pambansa Blg. 195, which was approved on March
16, 1982, because the longer period could not be given retroactive effect for not being favorable
to the accused. With the information alleging the period from 1974 to February 1986 as the time
of the commission of the crime charged, the applicable prescriptive period is 10 years in order to
accord with People v. Pacificador.

For crimes punishable by the Revised Penal Code, Article 91 thereof provides that prescription
starts to run from the day on which the crime is discovered by the offended party, the authorities,
or their agents. As to offenses punishable by R.A. No. 3019, Section 2 of R.A. No.
332629 states:chanrobles virtua1aw 1ibrary
Section 2. Prescription shall begin to run from the day of the commission of the violation of the
law, and if the same be not known at the time, from the discovery thereof and the institution of
judicial proceedings for its investigation and punishment.

The prescription shall be interrupted when proceedings are instituted against the guilty person,
and shall begin to run again if the proceedings are dismissed for reasons not constituting double
jeopardy.
The ruling on the issue of prescription in Presidential Ad Hoc Fact-Finding Committee on
Behest Loans v. Desierto30 is also enlightening, viz:chanrobles virtua1aw 1ibrary
Generally, the prescriptive period shall commence to run on the day the crime is committed. That
an aggrieved person “entitled to an action has no knowledge of his right to sue or of the facts out
of which his right arises,” does not prevent the running of the prescriptive period. An exception
to this rule is the “blameless ignorance” doctrine, incorporated in Section 2 of Act No. 3326.
Under this doctrine, “the statute of limitations runs only upon discovery of the fact of the
invasion of a right which will support a cause of action. In other words, the courts would decline
to apply the statute of limitations where the plaintiff does not know or has no reasonable means
of knowing the existence of a cause of action.” It was in this accord that the Court confronted the
question on the running of the prescriptive period in People v. Duque which became the
cornerstone of our 1999 Decision in Presidential Ad Hoc Fact-Finding Committee on Behest
Loans v. Desierto (G.R. No. 130149), and the subsequent cases which Ombudsman Desierto
dismissed, emphatically, on the ground of prescription too. Thus, we held in a catena of cases,
that if the violation of the special law was not known at the time of its commission, the
prescription begins to run only from the discovery thereof, i.e., discovery of the unlawful nature
of the constitutive act or acts.

Corollary, it is safe to conclude that the prescriptive period for the crime which is the subject
herein, commenced from the date of its discovery in 1992 after the Committee made an
exhaustive investigation. When the complaint was filed in 1997, only five years have elapsed,
and, hence, prescription has not yet set in. The rationale for this was succinctly discussed in the
1999 Presidential Ad Hoc Fact-Finding Committee on Behest Loans, that “it was well-high
impossible for the State, the aggrieved party, to have known these crimes committed prior to the
1986 EDSA Revolution, because of the alleged connivance and conspiracy among involved
public officials and the beneficiaries of the loans.” In yet another pronouncement, in the 2001
Presidential Ad Hoc Fact-Finding Committee on Behest Loans v. Desierto (G.R. No. 130817),
the Court held that during the Marcos regime, no person would have dared to question the
legality of these transactions. (Citations omitted)31
Accordingly, we are not persuaded to hold here that the prescriptive period began to run from
1974, the time when the contracts for the PNPP Project were awarded to Burns & Roe and
Westinghouse. Although the criminal cases were the offshoot of the sequestration case to recover
ill-gotten wealth instead of behest loans like in Presidential Ad Hoc Fact-Finding Committee on
Behest Loans v. Desierto, the connivance and conspiracy among the public officials involved and
the beneficiaries of the favors illegally extended rendered it similarly well-nigh impossible for
the State, as the aggrieved party, to have known of the commission of the crimes charged prior to
the EDSA Revolution in 1986. Notwithstanding the highly publicized and widely-known nature
of the PNPPP, the unlawful acts or transactions in relation to it were discovered only through the
PCGG’s exhaustive investigation, resulting in the establishment of a prima facie case sufficient
for the PCGG to institute Civil Case No. 0013 against Disini. Before the discovery, the PNPPP
contracts, which partook of a public character, enjoyed the presumption of their execution having
been regularly done in the course of official functions.32 Considering further that during the
Marcos regime, no person would have dared to assail the legality of the transactions, it would be
unreasonable to expect that the discovery of the unlawful transactions was possible prior to 1986.

We note, too, that the criminal complaints were filed and their records transmitted by the PCGG
to the Office of the Ombudsman on April 8, 1991 for the conduct the preliminary
investigation.33 In accordance with Article 91 of the Revised Penal Code34 and the ruling
in Panaguiton, Jr. v. Department of Justice,35 the filing of the criminal complaints in the Office
of the Ombudsman effectively interrupted the running of the period of prescription. According
to Panaguiton:36
In Ingco v. Sandiganbayan and Sanrio Company Limited v. Lim, which involved violations of
the Anti-Graft and Corrupt Practices Act (R.A. No. 3019) and the Intellectual Property Code
(R.A. No. 8293), which are both special laws, the Court ruled that the prescriptive period is
interrupted by the institution of proceedings for preliminary investigation against the accused. In
the more recent case of Securities and Exchange Commission v. Interport Resources
Corporation, the Court ruled that the nature and purpose of the investigation conducted by the
Securities and Exchange Commission on violations of the Revised Securities Act, another
special law, is equivalent to the preliminary investigation conducted by the DOJ in criminal
cases, and thus effectively interrupts the prescriptive period.
The following disquisition in the Interport Resources case is instructive, thus:chanrobles
virtua1aw 1ibrary
While it may be observed that the term “judicial proceedings” in Sec. 2 of Act No. 3326 appears
before “investigation and punishment” in the old law, with the subsequent change in set-up
whereby the investigation of the charge for purposes of prosecution has become the exclusive
function of the executive branch, the term “proceedings” should now be understood either
executive or judicial in character: executive when it involves the investigation phase and judicial
when it refers to the trial and judgment stage. With this clarification, any kind of investigative
proceeding instituted against the guilty person which may ultimately lead to his prosecution
should be sufficient to toll prescription.
Indeed, to rule otherwise would deprive the injured party the right to obtain vindication on
account of delays that are not under his control.
The prevailing rule is, therefore, that irrespective of whether the offense charged is punishable by
the Revised Penal Code or by a special law, it is the filing of the complaint or information in the
office of the public prosecutor for purposes of the preliminary investigation that interrupts the
period of prescription. Consequently, prescription did not yet set in because only five years
elapsed from 1986, the time of the discovery of the offenses charged, up to April 1991, the time
of the filing of the criminal complaints in the Office of the Ombudsman.

4.
The informations were sufficient in form and substance

It is axiomatic that a complaint or information must state every single fact necessary to constitute
the offense charged; otherwise, a motion to dismiss or to quash on the ground that the complaint
or information charges no offense may be properly sustained. The fundamental test in
determining whether a motion to quash may be sustained based on this ground is whether the
facts alleged, if hypothetically admitted, will establish the essential elements of the offense as
defined in the law.37 Extrinsic matters or evidence aliunde are not considered.38 The test does not
require absolute certainty as to the presence of the elements of the offense; otherwise, there
would no longer be any need for the Prosecution to proceed to trial.

The informations in Criminal Case No. 28001 (corruption of public officials) and Criminal Case
No. 28002 (violation of Section 4(a) of RA No. 3019) have sufficiently complied with the
requirements of Section 6, Rule 110 of the Rules of Court, viz:chanrobles virtua1aw 1ibrary
Section 6. Sufficiency of complaint or information. — A complaint or information is sufficient if
it states the name of the accused; the designation of the offense given by the statute; the acts or
omissions complained of as constituting the offense; the name of the offended party; the
approximate date of the commission of the offense; and the place where the offense was
committed.

When the offense is committed by more than one person, all of them shall be included in the
complaint or information.
The information in Criminal Case No. 28001 alleging corruption of public officers specifically
put forth that Disini, in the period from 1974 to February 1986 in Manila, Philippines, conspiring
and confederating with then President Marcos, willfully, unlawfully and feloniously offered,
promised and gave gifts and presents to President Marcos, who, by taking undue advantage of
his position as President, committed the offense in relation to his office, and in consideration of
the gifts and presents offered, promised and given by Disini, President Marcos caused to be
awarded to Burns & Roe and Westinghouse the respective contracts to do the engineering and
architectural design of and to construct the PNPPP. The felonious act consisted of causing the
contracts for the PNPPP to be awarded to Burns & Roe and Westinghouse by reason of the gifts
and promises offered by Disini to President Marcos.

The elements of corruption of public officials under Article 212 of the Revised Penal

Code are:chanrobles virtua1aw 1ibrary

1. That the offender makes offers or promises, or gives gifts or presents to a public officer;
and

2. That the offers or promises are made or the gifts or presents are given to a public officer
under circumstances that will make the public officer liable for direct bribery or indirect
bribery.

The allegations in the information for corruption of public officials, if hypothetically admitted,

would establish the essential elements of the crime. The information stated that: (1) Disini made
an offer and promise, and gave gifts to President Marcos, a public officer; and (2) in
consideration of the offers, promises and gifts, President Marcos, in causing the award of the
contracts to Burns & Roe and Westinghouse by taking advantage of his position and in
committing said act in relation to his office, was placed under circumstances that would make
him liable for direct bribery.39 The second element of corruption of public officers simply
required the public officer to be placed under circumstances, not absolute certainty, that would
make him liable for direct or indirect bribery. Thus, even without alleging that President Marcos
received or accepted Disini’s offers, promises and gifts – an essential element in direct bribery –
the allegation that President Marcos caused the award of the contracts to Burns & Roe and
Westinghouse sufficed to place him under circumstances of being liable for direct bribery.

The sufficiency of the allegations in the information charging the violation of Section 4(a) of
R.A. No. 3019 is similarly upheld. The elements of the offense under Section 4(a) of R.A. No.
3019 are:chanrobles virtua1aw 1ibrary

1. That the offender has family or close personal relation with a public official;

2. That he capitalizes or exploits or takes advantage of such family or close personal

relation by directly or indirectly requesting or receiving any present, gift, material or
pecuniary advantage from any person having some business, transaction, application,
request, or contract with the government;

3. That the public official with whom the offender has family or close personal relation has
to intervene in the business transaction, application, request, or contract with the
government.

The allegations in the information charging the violation of Section 4(a) of R.A. No. 3019, if
hypothetically admitted, would establish the elements of the offense, considering that: (1) Disini,
being the husband of Paciencia Escolin-Disini, the first cousin of First Lady Imelda Romualdez-
Marcos, and at the same time the family physician of the Marcoses, had close personal relations
and intimacy with and free access to President Marcos, a public official; (2) Disini, taking
advantage of such family and close personal relations, requested and received $1,000,000.00
from Burns & Roe and $17,000,000.00 from Westinghouse, the entities then having business,
transaction, and application with the Government in connection with the PNPPP; (3) President
Marcos, the public officer with whom Disini had family or close personal relations, intervened to
secure and obtain for Burns & Roe the engineering and architectural contract, and for
Westinghouse the construction of the PNPPP.

WHEREFORE, the Court DISMISSES the petition for certiorari; AFFIRMS the resolutions

promulgated on January 17, 2005 and August 16, 2005 by the Sandiganbayan (First Division) in
Criminal Case No. 28001 and Criminal Case No. 28002; and DIRECTS petitioner to pay the
costs of suit.chanroblesvirtualawlibrary

SO ORDERED.

G.R. No. 185527               July 18, 2012

HARRY L. GO, TONNY NGO, JERRY NGO AND JANE GO, Petitioners,

vs.
THE PEOPLE OF THE PHILIPPINES and HIGHDONE COMPANY, LTD., ET
AL., Respondents.

DECISION

PERLAS-BERNABE, J.:

The procedure for taking depositions in criminal cases recognizes the prosecution's right to
preserve testimonial evidence and prove its case despite the unavailability of its witness. It
cannot, however, give license to prosecutorial indifference or unseemly involvement in a
prosecution witness' absence from trial. To rule otherwise would effectively deprive the accused
of his fundamental right to be confronted with the witnesses against him.

In this Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, petitioners
seek to nullify and set aside the February 19, 2008 Decision1 and November 28, 2008
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 99383, which reversed the
September 12, 2006 Order3 issued by the Regional Trial Court (RTC) of Manila, Branch 27 in
Civil Case No. 06-114844 and upheld the grant of the prosecution’s motion to take the testimony
of a witness by oral depositions in Laos, Cambodia.

Petitioners Harry Go, Tonny Ngo, Jerry Ngo and Jane Go were charged before the Metropolitan
Trial Court (MeTC) of Manila for Other Deceits under Article 318 of the Revised Penal Code
(RPC) docketed as Criminal Case No. 396447. The Information4 dated September 24, 2003, later
amended5 on September 14, 2004, reads:
"That sometime in August 1996, in the City of Manila, Philippines, the said accused, conspiring,
confederating together and helping one another, did then and there willfully, unlawfully and
feloniously defraud Highdone Company Ltd. Represented by Li Luen Ping, in the following
manner, to wit: all said accused, by means of false manifestations and fraudulent representations
which they made to said Li Luen Ping to the effect that they have chattels such as machinery,
spare parts, equipment and raw materials installed and fixed in the premises of BGB Industrial
Textile Mills Factory located in the Bataan Export Processing Zone (BEPZ) in Mariveles,
Bataan, executed a Deed of Mortgage for a consideration of the amount of $464,266.90 or its
peso equivalent at P20,892,010.50 more or less in favor of ML Resources and Highdone
Company Ltd. Representing that the said deed is a FIRST MORTGAGE when in truth and in
fact the accused well knew that the same had been previously encumbered, mortgaged and
foreclosed by CHINA BANK CORPORATION as early as September 1994 thereby causing
damage and prejudice to said HIGHDONE COMPANY LTD., in the said amount of
$464,266.90 or its peso equivalent at P20,892,010.50 more or less."

Upon arraignment, petitioners pleaded not guilty to the charge.

The prosecution's complaining witness, Li Luen Ping, a frail old businessman from Laos,
Cambodia, traveled from his home country back to the Philippines in order to attend the hearing
held on September 9, 2004. However, trial dates were subsequently postponed due to his
unavailability.

On October 13, 2005, the private prosecutor filed with the MeTC a Motion to Take Oral
Deposition6 of Li Luen Ping, alleging that he was being treated for lung infection at the
Cambodia Charity Hospital in Laos, Cambodia and that, upon doctor's advice, he could not make
the long travel to the Philippines by reason of ill health.

Notwithstanding petitioners' Opposition,7 the MeTC granted8 the motion after the prosecution

complied with the directive to submit a Medical Certificate of Li Luen Ping. Petitioners sought
its reconsideration which the MeTC denied,9 prompting petitioners to file a Petition for
Certiorari10 before the RTC.

On September 12, 2006, the RTC granted the petition and declared the MeTC Orders null and
void.11 The RTC held that Section 17, Rule 23 on the taking of depositions of witnesses in civil
cases cannot apply suppletorily to the case since there is a specific provision in the Rules of
Court with respect to the taking of depositions of prosecution witnesses in criminal cases, which
is primarily intended to safeguard the constitutional rights of the accused to meet the witness
against him face to face.

Upon denial by the RTC of their motion for reconsideration through an Order dated March 5,
2006,12 the prosecution elevated the case to the CA.

On February 19, 2008, the CA promulgated the assailed Decision which held that no grave abuse
of discretion can be imputed upon the MeTC for allowing the deposition-taking of the
complaining witness Li Luen Ping because no rule of procedure expressly disallows the taking of
depositions in criminal cases and that, in any case, petitioners would still have every opportunity
to cross-examine the complaining witness and make timely objections during the taking of the
oral deposition either through counsel or through the consular officer who would be taking the
deposition of the witness.

On November 28, 2008, the CA denied petitioners' motion for reconsideration. Hence, this
petition alleging that –

I.THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE

METROPOLITAN TRIAL COURT INFRINGED THE CONSTITUTIONAL RIGHT
OF THE PETITIONERS TO A PUBLIC TRIAL IN ALLOWING THE TAKING OF
THE DEPOSITION OF THE COMPLAINING WITNESS IN LAOS, CAMBODIA.

II.THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE DEPOSITION

TAKING OF THE COMPLAINING WITNESS IN LAOS, CAMBODIA IS AN
INFRINGEMENT OF THE CONSTITUTIONAL RIGHT OF THE PETITIONERS TO
CONFRONT THE SAID WITNESS FACE TO FACE.

III.THE COURT OF APPEALS ERRED IN SUSTAINING THE JUDICIAL

LEGISLATION COMMITTED BY THE METROPOLITAN TRIAL COURT IN
APPLYING THE RULES ON DEPOSITION-TAKING IN CIVIL CASES TO
CRIMINAL CASES.

IV.THE COURT OF APPEALS ERRED IN LIMITING THE TRADITIONAL

DEFINITION OF GRAVE ABUSE OF DISCRETION, OVERLOOKING THE
ESTABLISHED RULE THAT VIOLATION OF THE CONSTITUTION, THE LAW
OR JURISPRUDENCE SIMILARLY COMES WITHIN THE PURVIEW OF GRAVE
ABUSE OF DISCRETION.

We rule in favor of petitioners.

The Procedure for Testimonial Examination of an Unavailable Prosecution Witness is Covered

Under Section 15, Rule 119.

The examination of witnesses must be done orally before a judge in open court.13 This is true
especially in criminal cases where the Constitution secures to the accused his right to a public
trial and to meet the witnessess against him face to face. The requirement is the "safest and most
satisfactory method of investigating facts" as it enables the judge to test the witness' credibility
through his manner and deportment while testifying.14 It is not without exceptions, however, as
the Rules of Court recognizes the conditional examination of witnesses and the use of their
depositions as testimonial evidence in lieu of direct court testimony.

Even in criminal proceedings, there is no doubt as to the availability of conditional examination

of witnesses – both for the benefit of the defense, as well as the prosecution. The Court's ruling
in the case of Vda. de Manguerra v. Risos15 explicitly states that –
"x x x As exceptions, Rule 23 to 28 of the Rules of Court provide for the different modes of
discovery that may be resorted to by a party to an action. These rules are adopted either to
perpetuate the testimonies of witnesses or as modes of discovery. In criminal proceedings,
Sections 12, 13 and 15, Rule 119 of the Revised Rules of Criminal Procedure, which took effect
on December 1, 2000, allow the conditional examination of both the defense and prosecution
witnesses." (Underscoring supplied)16

The procedure under Rule 23 to 28 of the Rules of Court allows the taking of depositions in civil
cases, either upon oral examination or written interrogatories, before any judge, notary public or
person authorized to administer oaths at any time or place within the Philippines; or before any

Philippine consular official, commissioned officer or person authorized to administer oaths in a

foreign state or country, with no additional requirement except reasonable notice in writing to the
other party.17

But for purposes of taking the deposition in criminal cases, more particularly of a prosecution
witness who would forseeably be unavailable for trial, the testimonial examination should be
made before the court, or at least before the judge, where the case is pending as required by the
clear mandate of Section 15, Rule 119 of the Revised Rules of Criminal Procedure. The pertinent
provision reads thus:

SEC. 15. Examination of witness for the prosecution. – When it satisfactorily appears that a
witness for the prosecution is too sick or infirm to appear at the trial as directed by the court, or
has to leave the Philippines with no definite date of returning, he may forthwith be conditionally
examined before the court where the case is pending. Such examination, in the presence of the
accused, or in his absence after reasonable notice to attend the examination has been served on
him shall be conducted in the same manner as an examination at the trial. Failure or refusal of
the accused to attend the examination after notice shall be considered a waiver. The statement
taken may be admitted in behalf of or against the accused.

Since the conditional examination of a prosecution witness must take place at no other place than
the court where the case is pending, the RTC properly nullified the MeTC's orders granting the
motion to take the deposition of Li Luen Ping before the Philippine consular official in Laos,
Cambodia. We quote with approval the RTC's ratiocination in this wise:

The condition of the private complainant being sick and of advanced age falls within the
provision of Section 15 Rule 119 of the Rules of Court. However, said rule substantially
provides that he should be conditionally examined before the court where the case is pending.
Thus, this Court concludes that the language of Section 15 Rule 119 must be interpreted to
require the parties to present testimony at the hearing through live witnesses, whose demeanor
and credibility can be evaluated by the judge presiding at the hearing, rather than by means of
deposition. No where in the said rule permits the taking of deposition outside the Philippines
whether the deponent is sick or not.18 (Underscoring supplied)

Certainly, to take the deposition of the prosecution witness elsewhere and not before the very
same court where the case is pending would not only deprive a detained accused of his right to
attend the proceedings but also deprive the trial judge of the opportunity to observe the
prosecution witness' deportment and properly assess his credibility, which is especially
intolerable when the witness' testimony is crucial to the prosecution's case against the accused.
This is the import of the Court's ruling in Vda. de Manguerra19 where we further declared that –

While we recognize the prosecution's right to preserve the testimony of its witness in order to
prove its case, we cannot disregard the rules which are designed mainly for the protection of the
accused's constitutional rights. The giving of testimony during trial is the general rule. The
conditional examination of a witness outside of the trial is only an exception, and as such, calls
for a strict construction of the rules.20 (Underscoring supplied)

It is argued that since the Rules of Civil Procedure is made explicitly applicable in all cases, both
civil and criminal as well as special proceedings, the deposition-taking before a Philippine
consular official under Rule 23 should be deemed allowable also under the circumstances.

However, the suggested suppletory application of Rule 23 in the testimonial examination of an

unavailable prosecution witness has been categorically ruled out by the Court in the same case of
Vda. de Manguerra, as follows:

It is true that Section 3, Rule 1 of the Rules of Court provides that the rules of civil procedure
apply to all actions, civil or criminal, and special proceedings. In effect, it says that the rules of
civil procedure have suppletory application to criminal cases. However, it is likewise true that
criminal proceedings are primarily governed by the Revised Rules of Criminal Procedure.

Considering that Rule 119 adequately and squarely covers the situation in the instant case, we
find no cogent reason to apply Rule 23 suppletorily or otherwise." (Underscoring supplied)

The Conditional Examination of a Prosecution Witness Cannot Defeat the Rights of the Accused
to Public Trial and Confrontation of Witnesses

The CA took a simplistic view on the use of depositions in criminal cases and overlooked
fundamental considerations no less than the Constitution secures to the accused, i.e., the right to
a public trial and the right to confrontation of witnesses. Section 14(2), Article III of the

Constitution provides as follows:

Section 14. (1) x x x

(2) In all criminal prosecutions, the accused shall be presumed innocent until the contrary is
proved, and shall enjoy the right to be heard by himself and counsel, to be informed of the nature
and cause of the accusation against him, to have a speedy, impartial and public trial, to meet the
witnesses face to face, and to have compulsory process to secure the attendance of witnesses and
the production of evidence in his behalf. However, after arraignment, trial may proceed
notwithstanding the absence of the accused provided that he has been duly notified and his
failure to appear is unjustifiable. (Underscoring supplied)
In dismissing petitioners' apprehensions concerning the deprivation of their constitutional rights
to a public trial and confrontation, the CA opined that petitioners would still be accorded the
right to cross-examine the deponent witness and raise their objections during the deposition-
taking in the same manner as in a regular court trial.

We disagree. There is a great deal of difference between the face-to- face confrontation in a
public criminal trial in the presence of the presiding judge and the cross-examination of a witness
in a foreign place outside the courtroom in the absence of a trial judge. In the aptly cited case of
People v. Estenzo,21 the Court noted the uniqueness and significance of a witness testifying in
open court, thus:

"The main and essential purpose of requiring a witness to appear and testify orally at a trial is to
secure for the adverse party the opportunity of cross-examination. "The opponent", according to
an eminent authority, "demands confrontation, not for the idle purpose of gazing upon the
witness, or of being gazed upon by him, but for the purpose of cross examination which cannot
be had except by the direct and personal putting of questions and obtaining immediate answers."
There is also the advantage of the witness before the judge, and it is this – it enables the judge as
trier of facts "to obtain the elusive and incommunicable evidence of a witness' deportment while
testifying, and a certain subjective moral effect is produced upon the witness. It is only when the
witness testifies orally that the judge may have a true idea of his countenance, manner and
expression, which may confirm or detract from the weight of his testimony. Certainly, the
physical condition of the witness will reveal his capacity for accurate observation and memory,
and his deportment and physiognomy will reveal clues to his character. These can only be
observed by the judge if the witness testifies orally in court. x x x"22 (Underscoring
supplied)1âwphi1

The right of confrontation, on the other hand, is held to apply specifically to criminal
proceedings and to have a twofold purpose: (1) to afford the accused an opportunity to test the
testimony of witnesses by cross-examination, and (2) to allow the judge to observe the
deportment of witnesses.23 The Court explained in People v. Seneris24 that the constitutional
requirement "insures that the witness will give his testimony under oath, thus deterring lying by
the threat of perjury charge; it forces the witness to submit to cross-examination, a valuable
instrument in exposing falsehood and bringing out the truth; and it enables the court to observe
the demeanor of the witness and assess his credibility."25

As the right of confrontation is intended "to secure the accused in the right to be tried as far as
facts provable by witnesses as meet him face to face at the trial who give their testimony in his
presence, and give to the accused an opportunity of cross-examination,"26 it is properly viewed as
a guarantee against the use of unreliable testimony in criminal trials. In the American case of
Crawford v. Washington,27 the US Supreme Court had expounded on the procedural intent of the
confrontation requirement, thus:

Where testimonial statements are involved, we do not think the Framers meant to leave the Sixth
Amendment's right to confront witness face to face protection to the vagaries of the rules of
evidence, much less to amorphous notions of "reliability". Certainly, none of the authorities
discussed above acknowledges any general reliability exception to the common-law rule.
Admitting statements deemed reliable by a judge is fundamentally at odds with the right of
confrontation. To be sure, the Clause's ultimate goal is to ensure reliability of evidence, but it is a
procedural rather than a substantive guarantee. It commands, not that evidence be reliable, but
that reliability be assessed in a particular manner: by testing in the crucible of cross-examination.
The Clause thus reflects a judgment, not only about the desirability of reliable evidence (a point
on which there could be little dissent), but about how reliability can best be determined."
(Underscoring supplied)

The Webb Ruling is Not on All Fours with the Instant Case

The CA found the frail and infirm condition of the prosecution witness as sufficient and
compelling reason to uphold the MeTC Orders granting the deposition-taking, following the
ruling in the case of People v. Webb28 that the taking of an unavailable witness' deposition is in
the nature of a discovery procedure the use of which is within the trial court's sound discretion
which needs only to be exercised in a reasonable manner and in consonance with the spirit of the
law.29

But the ruling in the cited case is not instantly applicable herein as the factual settings are not
similar.1âwphi1 The accused in the Webb case had sought to take the oral deposition of five
defense witnesses before a Philippine consular agent in lieu of presenting them as live witnesses,
alleging that they were all residents of the United States who could not be compelled by
subpoena to testify in court. The trial court denied the motion of the accused but the CA differed
and ordered the deposition taken. When the matter was raised before this Court, we sustained the
trial court's disallowance of the deposition-taking on the limited ground that there was no
necessity for the procedure as the matter sought to be proved by way of deposition was
considered merely corroborative of the evidence for the defense.30

In this case, where it is the prosecution that seeks to depose the complaining witness against the
accused, the stringent procedure under Section 15, Rule 119 cannot be ignored without violating
the constitutional rights of the accused to due process.

Finally, the Court takes note that prosecution witness Li Luen Ping had managed to attend the
initial trial proceedings before the MeTC of Manila on September 9, 2004. At that time, Li Luen
Ping's old age and fragile constitution should have been unmistakably apparent and yet the
prosecution failed to act with zeal and foresight in having his deposition or testimony taken
before the MeTC pursuant to Section 15, Rule 119 of the Revised Rules of Court. In fact, it
should have been imperative for the prosecution to have moved for the preservation of Li Luen
Ping's testimony at that first instance given the fact that the witness is a non-resident alien who
can leave the Philippines anytime without any definite date of return. Obviously, the prosecution
allowed its main witness to leave the court's jurisdiction without availing of the court procedure
intended to preserve the testimony of such witness. The loss of its cause is attributable to no
other party.

Still, even after failing to secure Li Luen Ping's conditional examination before the MeTC prior
to said witness' becoming sick and unavailable, the prosecution would capitalize upon its own
failure by pleading for a liberal application of the rules on depositions. It must be emphasized
that while the prosecution must provide the accused every opportunity to take the deposition of
witnesses that are material to his defense in order to avoid charges of violating the right of the
accused to compulsory process, the State itself must resort to deposition-taking sparingly if it is
to guard against accusations of violating the right of the accused to meet the witnesses against
him face to face. Great care must be observed in the taking and use of depositions of prosecution
witnesses to the end that no conviction of an accused will rely on ex parte affidavits and
deposition.31

Thus, the CA ignored the procedure under the Revised Rules of Criminal Procedure for taking
the deposition of an unavailable prosecution witness when it upheld the trial court's order
allowing the deposition of prosecution witness Li Luen Ping to take place in a venue other than
the court where the case is pending. This was certainly grave abuse of discretion.

WHEREFORE, the petition is hereby GRANTED. The assailed Decision dated February 19,
2008 and the Resolution dated November 28, 2008 of the Court of Appeals are REVERSED and
SET ASIDE. Accordingly, the Decision of the Regional Trial Court which disallowed the
deposition-taking in Laos, Cambodia is REINSTATED.

SO ORDERED.

G.R. No. 185145               February 5, 2014

SPOUSES VICENTE AFULUGENCIA and LETICIA AFULUGENCIA, Petitioners,

vs.
METROPOLITAN BANK & TRUST CO. and EMMANUEL L. ORTEGA, Clerk of
Court, Regional Trial Court and Ex-Officio Sheriff, Province of Bulacan, Respondents.

DECISION

DEL CASTILLO, J.:

Section 6,1 Rule 25 of the Rules of Court (Rules) provides that "a party not served with written
interrogatories may not be compelled by the adverse party to give testimony in open court, or to
give a deposition pending appeal." The provision seeks to prevent fishing expeditions and
needless delays. Its goal is to maintain order and facilitate the conduct of trial.

Assailed in this Petition for Review on Certiorari2 are the April 15, 2008 Decision3 of the Court
of Appeals (CA) in CA-G.R. SP No. 99535 which dismissed petitioners' Petition for Certiorari
for lack of merit and its October 2, 2008 Resolution4 denying petitioners' Motion for
Reconsideration.5

Factual Antecedents

Petitioners, spouses Vicente and Leticia Afulugencia, filed a Complaint6 for nullification of

mortgage, foreclosure, auction sale, certificate of sale and other documents, with damages,
against respondents Metropolitan Bank & Trust Co. (Metrobank) and Emmanuel L. Ortega
(Ortega) before the Regional Trial Court (RTC) of Malolos City, where it was docketed as Civil
Case No. 336-M-2004 and assigned to Branch 7.

Metrobank is a domestic banking corporation existing under Philippine laws, while Ortega is the
Clerk of Court and Ex-Officio Sheriff of the Malolos RTC.

After the filing of the parties’ pleadings and with the conclusion of pre-trial, petitioners filed a
Motion for Issuance of Subpoena Duces Tecum Ad Testificandum7 to require Metrobank’s
officers8 to appear and testify as the petitioners’ initial witnesses during the August 31, 2006
hearing for the presentation of their evidence-in-chief, and to bring the documents relative to
their loan with Metrobank, as well as those covering the extrajudicial foreclosure and sale of
petitioners’ 200-square meter land in Meycauayan, Bulacan covered by Transfer Certificate of
Title No. 20411 (M). The Motion contained a notice of hearing written as follows:

NOTICE

The Branch Clerk of Court

Regional Trial Court
Branch 7, Malolos, Bulacan

Greetings:

Please submit the foregoing motion for the consideration and approval of the Hon. Court
immediately upon receipt hereof.

(signed)
Vicente C. Angeles9

Metrobank filed an Opposition10 arguing that for lack of a proper notice of hearing, the Motion
must be denied; that being a litigated motion, the failure of petitioners to set a date and time for
the hearing renders the Motion ineffective and pro forma; that pursuant to Sections 1 and 611 of
Rule 25 of the Rules, Metrobank’s officers – who are considered adverse parties – may not be
compelled to appear and testify in court for the petitioners since they were not initially served
with written interrogatories; that petitioners have not shown the materiality and relevance of the
documents sought to be produced in court; and that petitioners were merely fishing for evidence.

Petitioners submitted a Reply12 to Metrobank’s Opposition, stating that the lack of a proper
notice of hearing was cured by the filing of Metrobank’s Opposition; that applying the principle
of liberality, the defect may be ignored; that leave of court is not necessary for the taking of
Metrobank’s officers’ depositions; that for their case, the issuance of a subpoena is not
unreasonable and oppressive, but instead favorable to Metrobank, since it will present the
testimony of these officers just the same during the presentation of its own evidence; that the
documents sought to be produced are relevant and will prove whether petitioners have paid their
obligations to Metrobank in full, and will settle the issue relative to the validity or invalidity of
the foreclosure proceedings; and that the Rules do not prohibit a party from presenting the
adverse party as its own witness.
 Ruling of the Regional Trial Court

On October 19, 2006, the trial court issued an Order13 denying petitioners’ Motion for Issuance
of Subpoena Duces Tecum Ad Testificandum, thus:

The motion lacks merit.

As pointed out by the defendant bank in its opposition, the motion under consideration is a mere
scrap of paper by reason of its failure to comply with the requirements for a valid notice of
hearing as specified in Sections 4 and 5 of Rule 15 of the Revised Rules of Court. Moreover, the
defendant bank and its officers are adverse parties who cannot be summoned to testify unless
written interrogatories are first served upon them, as provided in Sections 1 and 6, Rule 25 of the
Revised Rules of Court.

In view of the foregoing, and for lack of merit, the motion under consideration is hereby
DENIED.

SO ORDERED.14

Petitioners filed a Motion for Reconsideration15 pleading for leniency in the application of the
Rules and claiming that the defective notice was cured by the filing of Metrobank’s Opposition,
which they claim is tantamount to notice. They further argued that Metrobank’s officers – who
are the subject of the subpoena – are not party-defendants, and thus do not comprise the adverse
party; they are individuals separate and distinct from Metrobank, the defendant corporation being
sued in the case.

In an Opposition16 to the Motion for Reconsideration, Metrobank insisted on the procedural

defect of improper notice of hearing, arguing that the rule relative to motions and the
requirement of a valid notice of hearing are mandatory and must be strictly observed. It added
that the same rigid treatment must be accorded to Rule 25, in that none of its officers may be
summoned to testify for petitioners unless written interrogatories are first served upon them.
Finally, it said that since a corporation may act only through its officers and employees, they are
to be considered as adverse parties in a case against the corporation itself.

In another Order17 dated April 17, 2007, the trial court denied petitioners’ Motion for
Reconsideration. The trial court held, thus:

Even if the motion is given consideration by relaxing Sections 4 and 5, Rule 15 of the Rules of
Court, no such laxity could be accorded to Sections 1 and 6 of Rule 25 of the Revised Rules of
Court which require prior service of written interrogatories to adverse parties before any material
and relevant facts may be elicited from them more so if the party is a private corporation who
could be represented by its officers as in this case. In other words, as the persons sought to be
subpoenaed by the plaintiffs-movants are officers of the defendant bank, they are in effect the
very persons who represent the interest of the latter and necessarily fall within the coverage of
Sections 1 and 6, Rule 25 of the Revised Rules of Court.
In view of the foregoing, the motion for reconsideration is hereby denied.

SO ORDERED.18

Ruling of the Court of Appeals

Petitioners filed a Petition for Certiorari19 with the CA asserting this time that their Motion for
Issuance of Subpoena Duces Tecum Ad Testificandum is not a litigated motion; it does not seek
relief, but aims for the issuance of a mere process. For these reasons, the Motion need not be
heard. They likewise insisted on liberality, and the disposition of the case on its merits and not
on mere technicalities.20 They added that Rule 2121 of the Rules requires prior notice and hearing
only with respect to the taking of depositions; since their Motion sought to require Metrobank’s
officers to appear and testify in court and not to obtain their depositions, the requirement of
notice and hearing may be dispensed with. Finally, petitioners claimed that the Rules –
particularly Section 10,22 Rule 132 – do not prohibit a party from presenting the adverse party as
its own witness.

On April 15, 2008, the CA issued the questioned Decision, which contained the following
decretal portion:

WHEREFORE, the petition is DISMISSED for lack of merit. The assailed orders dated October
19, 2006 and April 17, 2007 in Civil Case No. 336-M-2004 issued by the RTC, Branch 7,
Malolos City, Bulacan, are AFFIRMED. Costs against petitioners.

SO ORDERED.23

The CA held that the trial court did not commit grave abuse of discretion in issuing the assailed
Orders; petitioners’ Motion is a litigated motion, especially as it seeks to require the adverse
party, Metrobank’s officers, to appear and testify in court as petitioners’ witnesses. It held that a
proper notice of hearing, addressed to the parties and specifying the date and time of the hearing,
was required, consistent with Sections 4 and 5,24 Rule 15 of the Rules.

The CA held further that the trial court did not err in denying petitioners’ Motion to secure a
subpoena duces tecum/ad testificandum, ratiocinating that Rule 25 is quite clear in providing that
the consequence of a party’s failure to serve written interrogatories upon the opposing party is
that the latter may not be compelled by the former to testify in court or to render a deposition
pending appeal. By failing to serve written interrogatories upon Metrobank, petitioners
foreclosed their right to present the bank’s officers as their witnesses.

The CA declared that the justification for the rule laid down in Section 6 is that by failing to
seize the opportunity to inquire upon the facts through means available under the Rules,
petitioners should not be allowed to later on burden Metrobank with court hearings or other
processes. Thus, it held:

x x x Where a party unjustifiedly refuses to elicit facts material and relevant to his case by
addressing written interrogatories to the adverse party to elicit those facts, the latter may not
thereafter be compelled to testify thereon in court or give a deposition pending appeal. The
justification for this is that the party in need of said facts having foregone the opportunity to
inquire into the same from the other party through means available to him, he should not
thereafter be permitted to unduly burden the latter with courtroom appearances or other
cumbersome processes. The sanction adopted by the Rules is not one of compulsion in the sense
that the party is being directly compelled to avail of the discovery mechanics, but one of
negation by depriving him of evidentiary sources which would otherwise have been accessible to
him.25

Petitioners filed their Motion for Reconsideration,26 which the CA denied in its assailed October
2, 2008 Resolution. Hence, the present Petition.

Issues

Petitioners now raise the following issues for resolution:

THE COURT OF APPEALS COMMITTED REVERSIBLE ERRORS IN REQUIRING

NOTICE AND HEARING (SECS. 4 AND 5, RULE 15, RULES OF COURT) FOR A MERE
MOTION FOR SUBPOENA OF RESPONDENT BANK’S OFFICERS WHEN SUCH
REQUIREMENTS APPLY ONLY TO DEPOSITION UNDER SEC. 6, RULE 25, RULES OF
COURT.

II

THE COURT OF APPEALS COMMITTED (REVERSIBLE) ERROR IN HOLDING THAT

THE PETITIONERS MUST FIRST SERVE WRITTEN INTERROGATORIES TO
RESPONDENT BANK’S OFFICERS BEFORE THEY CAN BE SUBPOENAED.27

Petitioners’ Arguments

Praying that the assailed CA dispositions be set aside and that the Court allow the issuance of the
subpoena duces tecum/ad testificandum, petitioners assert that the questioned Motion is not a
litigated motion, since it seeks not a relief, but the issuance of process. They insist that a motion
which is subject to notice and hearing under Sections 4 and 5 of Rule 15 is an application for
relief other than a pleading; since no relief is sought but just the process of subpoena, the hearing
and notice requirements may be done away with. They cite the case of Adorio v. Hon.
Bersamin,28 which held that –

Requests by a party for the issuance of subpoenas do not require notice to other parties to the
action.1âwphi1 No violation of due process results by such lack of notice since the other parties
would have ample opportunity to examine the witnesses and documents subpoenaed once they
are presented in court.29
Petitioners add that the Rules should have been liberally construed in their favor, and that
Metrobank’s filing of its Opposition be considered to have cured whatever defect the Motion
suffered from.

Petitioners likewise persist in the view that Metrobank’s officers – the subject of the Motion – do
not comprise the adverse party covered by the rule; they insist that these bank officers are mere
employees of the bank who may be called to testify for them.

Respondents’ Arguments

Metrobank essentially argues in its Comment30 that the subject Motion for the issuance of a
subpoena duces tecum/ad testificandum is a litigated motion, especially as it is directed toward
its officers, whose testimony and documentary evidence would affect it as the adverse party in
the civil case. Thus, the lack of a proper notice of hearing renders it useless and a mere scrap of
paper. It adds that being its officers, the persons sought to be called to the stand are themselves
adverse parties who may not be compelled to testify in the absence of prior written
interrogatories; they are not ordinary witnesses whose presence in court may be required by
petitioners at any time and for any reason.

Finally, Metrobank insists on the correctness of the CA Decision, adding that since petitioners
failed up to this time to pay the witnesses’ fees and kilometrage as required by the Rules,31 the
issuance of a subpoena should be denied.

Our Ruling

The Court denies the Petition.

On the procedural issue, it is quite clear that Metrobank was notified of the Motion for Issuance
of Subpoena Duces Tecum Ad Testificandum; in fact, it filed a timely Opposition thereto. The
technical defect of lack of notice of hearing was thus cured by the filing of the Opposition.32

Nonetheless, contrary to petitioners’ submission, the case of Adorio cannot apply squarely to this
case. In Adorio, the request for subpoena duces tecum was sought against bank officials who
were not parties to the criminal case for violation of Batas Pambansa Blg. 22. The situation is
different here, as officers of the adverse party Metrobank are being compelled to testify as the
calling party’s main witnesses; likewise, they are tasked to bring with them documents which
shall comprise the petitioners’ principal evidence. This is not without significant consequences
that affect the interests of the adverse party, as will be shown below.

As a rule, in civil cases, the procedure of calling the adverse party to the witness stand is not
allowed, unless written interrogatories are first served upon the latter. This is embodied in
Section 6, Rule 25 of the Rules, which provides –

Sec. 6. Effect of failure to serve written interrogatories.

Unless thereafter allowed by the court for good cause shown and to prevent a failure of justice, a
party not served with written interrogatories may not be compelled by the adverse party to give
testimony in open court, or to give a deposition pending appeal.

One of the purposes of the above rule is to prevent fishing expeditions and needless delays; it is
there to maintain order and facilitate the conduct of trial. It will be presumed that a party who
does not serve written interrogatories on the adverse party beforehand will most likk, likely be
kely be unpfable to elicpfit facts useful to its case if it later opts to call the adverse pay, to the
witness stand as its witness. Instead of ead, the property will lpocess could be treated aspoa
fishing expedition or an attempft at delaying the proceedings; it produces no significant result
that a prior written interrogatories might not allow okbring.pp provide lp

Besides, since the calling party is deemed bound by the adverse party’s testimony,33 compelling
the adverse party to take this pptfhe witness stand may result in the calling party damaging its
own case. Otherwise stated, if a party cannot elicit facts or information useful to its case through
the facility of written interrogatories or other mode of discovery, then the calling of the adverse
party to the witness stand could only serve to weaken its own case as a result of the calling
party’s being bound by the adverse party’s testimony, whxich may only be worthless and instead
detrimental to the calling party’s cause.

Another reason for the rule is that by requiring prior written interrogatories, the court may limit
the inquiry to what is relevant, and thus prevent the calling party from straying or harassing the
adverse party when it takes the latter to the stand.

Thus, the rule not only protects the adverse party from unwarranted surprises or harassment; it
likewise prevents the calling party from conducting a fishing expedition or bungling its own
case. Using its own judgment and discretion, the court can hold its own in resolving a dispute,
and need not bear witness to the parties perpetrating unfair court practices such as fishing for
evidence, badgering, or altogether ruining their own cases. Ultimately, such unnecessary
processes can only constitute a waste of the court’s precious time, if not pointless entertainment.

In the present case, petitioners seek to call Metrobank’s officers to the witness stand as their
initial and main witnesses, and to present documents in Metrobank’s possession as part of their
principal documentary evidence. This is improper. Petitioners may not be allowed, at the
incipient phase of the presentation of their evidence-in-chief at that, to present Metrobank’s
officers – who are considered adverse parties as well, based on the principle that corporations act
only through their officers and duly authorized agents34 – as their main witnesses; nor may they
be allowed to gain access to Metrobank’s documentary evidence for the purpose of making it
their own. This is tantamount to building their whole case from the evidence of their opponent.
The burden of proof and evidence falls on petitioners, not on Metrobank; if petitioners cannot
prove their claim using their own evidence, then the adverse party Metrobank may not be
pressured to hang itself from its own defense.

It is true that under the Rules, a party may, for good cause shown and to prevent a failure of
justice, be compelled to give testimony in court by the adverse party who has not served written
interrogatories. But what petitioners seek goes against the very principles of justice and fair play;
they would want that Metrobank provide the very evidence with which to prosecute and build
their case from the start. This they may not be allowed to do.

Finally, the Court may not turn a blind eye to the possible consequences of such a move by
petitioners. As one of their causes of action in their Complaint, petitioners claim that they were
not furnished with specific documents relative to their loan agreement with Metrobank at the
time they obtained the loan and while it was outstanding. If Metrobank were to willingly provide
petitioners with these documents even before petitioners can present evidence to show that
indeed they were never furnished the same, any inferences generated from this would certainly
not be useful for Metrobank. One may be that by providing petitioners with these documents,
Metrobank would be admitting that indeed, it did not furnish petitioners with these documents
prior to the signing of the loan agreement, and while the loan was outstanding, in violation of the
law.

With the view taken of the case, the Court finds it unnecessary to further address the other issues
raised by the parties, which are irrelevant and would not materially alter the conclusions arrived
at.

WHEREFORE, the Petition is DENIED. The assailed April 15, 2008 Decision and October 2,
2008 Resolution of the Court of Appeals in CA-G.R. SP No. 99535 are AFFIRMED.

SO ORDERED.

G.R. No. 193158

PHILIPPINE HEALTH INSURANCE CORPORATION, Petitioners,

vs.
OUR LADY OF LOURDES HOSPITAL, Respondent.

DECISION

PERALTA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court (Rules) seeks to

reverse the July 27, 2010 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 110444,
which annulled and set aside the August 11, 2009 Resolution2 and September 4, 2009 Order3 of
the petitioner's Arbitration Department denying respondent's resort to modes of discovery.

Petitioner Philippine Health Insurance Corporation (PHIC) is a government corporation created

under Republic Act (R.A.)  No. 7875,4 as amended,5 to administer and implement the country's
National Health Insurance Program, while respondent Our Lady of Lourdes Hospital ( OLLH) is
an institutional health care provider duly accredited with the PHIC.

On May 14, 2009, PHIC filed a Complaint6 with its Legal Sector - Prosecution Department
against OLLH for the administrative offense of filing multiple claims, which is penalized under
Section 145, Rule XXVIII of the Implementing Rules and Regulations (!RR) of R.A. No. 7875.
Allegedly, OLLH filed two claims of the same amount of PhilHealth benefits involving the same
patient for the same diagnosis and covering the same period of confinement.

The case, which was docketed as HCP-NCR-09-082, was assigned to Senior Arbiter Atty.
Darwin G. De Leon (De Leon) and Summons was duly served upon OLLH.7 On June 23, 2009,
OLLH filed a Verified Answer.8

After which, the parties were directed to file their respective Position Papers.9 PHIC complied
with the order.10

On its part, OLLH moved to defer the submission of its position paper pending the answer of the
PHIC President and CEO to the written interrogatories as well as the inspection and copying of
the original transmittal letter and all other claims that accompanied Annex B11 of the
Complaint.12 According to OLLH, these modes of discovery were availed of because its
representatives were denied and/or not given access to documents and were not allowed to talk to
PHIC personnel with regard to the charge.13

PHIC filed its Comment14 on OLLH's motion. Thereafter, the PHIC Arbitration Department,
through Arbiter De Leon, denied OLLH' s motion. The August 11, 2009 Resolution opined:

In the light of being summary in nature of the rules that govern the administrative proceedings as
in this case, the interrogatories and motion for production and inspection of documents filed by
[OLLH] [cannot] be given due course by this Office. Relevantly, for an obvious reason as can be
inferred from the purpose of the said pleadings, the allowance of the same would not practically
hasten the early disposition of the instant case, instead undermine the objective of the above-
cited provisions [Sections 91 and 92 of the 2004 IRR of R.A. No. 7875, as amended by R.A. No.
9241] which clearly and explicitly demand or call for an immediate resolution of the subject
case. The bare and unsubstantiated allegations of [OLLH] that its representatives were denied
access to the documents pertaining to the PhilHealth claim subject of this controversy and.at the
same time were not allowed to talk to any of the PhilHealth personnel which prompted the
respondent to resort to the modes of discovery herein above-mentioned, deserve scant
consideration for being self-serving. [On] the contrary, this Office perceives the [OLLH's] filing
of the aforesaid pleadings [was] designed for no other conceivable end or purpose but to delay
the proceedings.15

The Motion for Reconsideration16 filed by OLLH suffered the same fate as the September 4,
2009 Order held:

Evidently, the main argument of [OLLH] as can be perused in its Motion is predicated on the
Supreme Court ruling, specifically in Koh v. Intermediate Appellate Court, 144 SCRA 259
[1986], which recognizes the importance of rules on discovery in expediting the trial of the case.
However, in the same cited case, it was also declared that "the recourse to discovery procedure
is not mandatory. If the parties do not choose to resort to such procedures, the pre-trial
conference should be set x x x x.  "
Likewise, it is worth emphasizing that the above-cited decision of the Supreme Court relied upon
by [OLLH] pertains to a civil case filed in the regular court of justice. It would have been
convincing if not plausible if respondent presented the same citation or ruling concerning mode
of discovery which was indispensably applied in administrative case.

Further, it bears stressing that as early as in the case of Angara v. Electoral Commission, 63 Phil.
139, it was ruled by the Supreme Courtthat "where an administrative body is expressly granted
the power of adjudication, it is deemed also vested with the implied power to prescribe the rules
to be observed in the conduct of its proceedings.

"Hence, it isbeyond cavil that the Corporation is vested a quasi-judicial power byvirtue of
Section 17 of Rep. Act No. 7875, therefore, it is empowered toprovide its own rules. Thus,
[OLLH] should be wary of the following provisions in the IRR: (1) Section 96 of its 2004 IRR
expressly gives the Arbiter original and exclusive jurisdiction over all complaints filed with the
Corporation in accordance with the Act; and (2) Section 112 of the same Rules grants said
Arbiter the discretion to resolve the case after the submission of respective position papers of the
parties including any other evidence in support of their claims and defenses or conduct a hearing
when it is deemed necessary. In other words, it is wise and proper for the Arbiter to follow and
adhere to the rules of procedure set forth in this Act which may expedite the resolution of any
case brought to its attention and discard any pleading that may tend to delay the early disposition
of the case for being summary in nature.

Lastly, [OLLH] should be reminded also that the President of this Corporation, who incidentally
is the person to whom the interrogatories are addressed to, albeit being the top official of the
corporation is not the most competent to answer the interrogatories. The type of questions in the
interrogatories point toward issues arising from and related to the filing and processing of claims,
naturally and logically, the one who is entrusted and tasked to process said claim is the
competent person. The resort to modes of discovery shall be defeated if it is not addressed to the
proper competent party. Indisputably, [OLLH] has already been accredited by the Corporation
for quite some time already that it made this Office wonder why until now respondent is not yet
aware on how a certain filed claim is being processed and what department of this Corporation is
tasked to do the job in order for it to have an idea to whom it shall address its interrogatories. Be
that as it may, this Office believes that all the issues and queries raised by [OLLH] in its motion
may be addressed in the hearing to be held AFTER submission of its position paper.17

Aggrieved, OLLH elevated the issue to the Court of Appeals via petition for certiorari. As

stated, the CA reversed the Resolution and Orderof the PHIC Arbitration Department. In ruling
that grave abuse of discretionwas committed when OLLH' s resort to modes of discovery was
denied, theappellate court said:

In the case at bench, petitioner OLLH has shown good cause for its resort to the modes of
discovery as the same was anchored on its being able to intelligently prepare a position paper
considering that it was not allowed access to some pertinent documents or talk to PHIC
personnel with regard the charge of filing multiple claims. Petitioner OLLH also seeks the fullest
possible information that are material and relevant to the case. The subject of the Interrogatories
appears to be relevant and not privileged as they pertain to the procedure being followed by
PHIC in processing and evaluating claims. Petitioner OLLH has also shown the materiality and
relevancy of the document sought lo be produced or inspected - the transmittal letter and other
claims that accompanied the alleged second claim dated June 19, 2007 - which was PHIC's basis
for the charge of filing multiple claims against petitioner OLLH. Verily, petitioner OLLH's resort
to modes of discovery was necessary for the preparation of its defense and the full determination
of petitioner the issue raised in the administrative case.18

Before Us, PHIC contends that Arbiter De Leon did not gravely abuse his discretion since he
merely complied with the rules of procedure governing the exercise of PHI C's quasi-judicial
function. In particular, under Sections 109, 111 and 112 of the 2004 IRR of R.A. No. 7875, an
Answer and Position Paper are the only pleadings recognized and required in the proceedings
before the Arbiter. PHIC holds that OLLH's resort to modes of discovery is not a matter of right
as it is provided neither in the PHIC Charter nor in the IRR, and that even if the Rules may be
applied in suppletory character, the Arbiter may exercise his sound discretion on whether to
resort to modes of discovery consistent with Our ruling in Limos, et al. v. Spouses Odones.  19

PHIC asserts that OLLH' s overt acts clearly reveal its intent to delay the administrative
proceedings. It stresses that the material points which OLLH seeks to establish in its resort to
modes of discovery were already presented in the pleadings and documents it submitted for
consideration of the Arbiter. Specifically, the subject information and documents sought to be
examined are the same information and documents which OLLH itself prepared, produced, and
submitted to the PHIC. Likewise, the PHIC procedure subject of the interrogatories, apart from
being publicly accessible and already known to OLLH, is immaterial to· the case given OLLH' s
sole defense that it inadvertently attached the wrong document that led to the processing of two
separate claims. Thus, the Arbiter rightly found no further need to grant such application for
being superfluous or redundant.

Before proceeding to the merits of the case, We shall deal with OLLH' s proposition that the
petition should be dismissed outright for PHI C's non-compliance with Section 5, Rule 7 of
the Rules on certification against non-forum shopping.20 According to OLLH, PHIC Board
Resolution No. 695, S. 2004,21 does not indicate that Alex B. Canaveral, who is the Officer-in-
Charge of the Office of the Senior Vice-President (SVP) for Legal Services Sector (LSS) of
PHIC, is duly authorized to sign the verification and certification against forum shopping at the
time of the filing of the petition on September 20, 2010.22 Having been signed without proper
authorization from the PHIC Board of Directors, the certification is defective and, therefore,
constitutes a valid cause for the dismissal of the petition.

While Resolution No. 695 does not expressly provide for the authority of Canaveral to sign the
verification and certification against forum shopping, the Court notes that PHIC subsequently
submitted as attachments in its Reply PHIC Board Resolution No. 694, S. 2004, and PHIC Board
Resolution No. 1105, S. 2008. Resolution No. 694 designates, among others, the Vice-President
for Legal Services Group "to sign on all verifications and certificates of non-forum shopping of
all cases involving the Corporation, whether to be filed in court, administrative agency or quasi-
judicial body," while Resolution No. 1105 states that the SVP for LSS is one of those officers
authorized "to represent the Corporation in any and all legal proceedings before any judicial
and/or quasi-judicial bodies that may involve the Corporation, including the signing of initiatory
and/or responsive pleadings including all the necessary and/or incidental legal documents
relative to the legal proceedings."23

Following Shipside, Inc. v. Court of Appeals,24which, in tum, was relied upon in the subsequent
cases of Novelty Philippines, Inc. v. Court of Appeals,25 Vicar Int'! Construction, Inc. v. FEB
Leasing & Finance Corp.,26

Alternative Center for Organizational Reforms and Dev 't, Inc. v. Hon. Zamora,27 Abaya
Investments Corp. v. Merit Phils., et al.  28 and BPI v. Court of Appeals, et al.,29 We, therefore,
rule that there is substantial complianceon the part of PHIC. Aside from the submission, albeit
belatedly, of Resolution Nos. 694 and 1105, Canaveral, by virtue of his office, is definitely in a
position to verify the truthfulness and correctness of the allegations in the petition.30

Now, on the issue of whether the CA erred in annulling and setting aside the August 11, 2009
Resolution and September 4, 2009 Order of the PHIC Arbitration Department, which denied
OLLH's resort to modes of discovery, this Court resolves in the affirmative.

Through written interrogatories, a party may elicit from the adverse party or parties any facts or
matter that are not privileged and are material and relevant to the subject of the pending
action.31 Like other modes of discovery authorized by the Rules, the purpose of written
interrogatories is to assist the parties in clarifying the issues and in ascertaining the facts
involved in a case.32 On the other hand, the provision on production and inspection of documents
is to enable not only the parties but also the court (in this case, the PHIC Arbitration Department)
to discover all the relevant and material facts in connection with the case pending before it.33 It
must be shown, therefore, that the documents sought to be produced, inspected and/or
copied/photographed are material or contain evidence relevant to an issue involved in the
action.34

In this case, the questions contained in the written interrogatories filed and received on July 28,
2009 sought to elicit facts that could already be seen from the allegations as well as attachments
of the Complaint and the Verified Answer. Specifically, the entries in the three (3) Validation
Report that OLLH sought to be identified and/or explained by PHIC are either immaterial or
irrelevant (to the issue of whether OLLH is guilty of filing multiple claims and OLLH's defense
that it inadvertently attached a second copy of the subject PhilHealth Claim Form 2 to the
Transmittal Letter filed on June 19, 2007) or, even if material or relevant, are self-explanatory
and need no further elaboration from PHIC. Thus, the interrogatories were frivolous and need not
be answered. Aside from this, the PHIC Arbitration Department correctly observed that the
written interrogatories were mistakenly addressed to the President and CEO of PHIC, who could
not competently answer, either based on his job description or first-hand experience, issues that
arose from and related to the filing and processing of claims.

We likewise find as self-serving the allegation of OLLH that its representatives were denied
access to the documents pertaining to the subject PhilHealth claim and, at the same time, were
not allowed to talk to any of the PhilHealth personnel. No iota of evidence, documentary or
testimonial, was submitted to substantiate this convenient excuse.1âwphi1
As the PHIC Arbitration Department held, all the issues and queries raised by OLLH in its
written interrogatories and motion for production/inspection may be addressed in a hearing to be
held after submission of the position paper of the parties. If the Arbiter deemed it necessary,
based on the required pleadings already submitted g may be conducted wherein witnesses who
testify may be subjected to clarificatory questions. In such hearing, the Arbiter has the power to
issue subpoena ad testificandum and duces tecum; he may issue subpoenas requiring attendance
and testimony of witnesses or the production of documents and other material/s necessary. In
effect, these serve the same purposes of the modes of discovery.

The foregoing considered, Arbiter De Leon did not commit grave abuse of discretion in denying
OLLH's plea for written interrogatories and production/inspection of documents. His resolutions
were consistent with the summary nature of the administrative proceedings, expeditiously
resolving the case from the perspectives of time dimension and efficiency dimension.

WHEREFORE, premises considered, the petition is GRANTED. The July 27, 2010 Decision

of the Court of Appeals in CA-G.R. SP No. 110444, which reversed the August 11, 2009
Resolution and September 4, 2009 Order of the Arbitration Department of the Philippine Health
Insurance Corporation that denied Our Lady of Lourdes Hospital's resort to modes of discovery,
is ANNULLED AND SET ASIDE.

SO ORDERED.

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 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 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.

G.R. No. 199501               March 6, 2013

REPUBLIC OF THE PHILIPPINES, represented by the REGIONAL EXECUTIVE

DIRECTOR, DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES,
REGION III, Petitioner,
vs.
HEIRS OF ENRIQUE ORIBELLO, JR. and THE REGISTER OF DEEDS OF
OLONGAPO CITY, Respondents.

DECISION

CARPIO, J.:

The Case

This petition for review1 assails the 29 April 2011 Decision2 and 16 November 2011
Resolution3 of the Court of Appeals in CA-G.R. CV No. 90559. The Court of Appeals denied
petitioner Republic of the Philippines' (peitioner) appeal of the Order of the Regional Trial
Court, Olongapo City, Branch 72,4 which dismissed petitioner's action for reversion and
cancellation of Original Certificate of Title (OCT) No. P-5004 in the name of Enrique Oribello,
Jr. (Oribello ).

The Facts

The present controversy involves a parcel of land situated in Nagbaculao, Kalaklan, Olongapo
City, which was once classified as forest land by the Bureau of Forest Development. The
property was originally occupied by a certain Valentin Fernandez (Valentin) in 1968 by virtue of
a Residential Permit issued by the same government office.

Upon Valentin’s death, his son, Odillon Fernandez (Odillon), continued to occupy the property,
together with spouses Ruperto and Matilde Apog. Sometime in 1969, Odillon sold the property
to a certain Mrs. Florentina Balcita who, later on, sold the same property to Oribello. Oribello
filed a Miscellaneous Sales Application with the Department of Environment and Natural
Resources (DENR), which denied the application since the land remained forest land.

On 20 February 1987, the subject property was declared open to disposition under the Public
Land Act. Thus, Oribello filed another Miscellaneous Sales Application on 6 April 1987.
On 27 March 1990, the Director of Lands issued an Order for the issuance of a patent in favor of
Oribello. On even date, Miscellaneous Sales Patent No. 12756 and OCT No. P-5004 were issued
to Oribello.

Matilde Apog (Apog) and Aliseo San Juan (San Juan),5 claiming to be actual occupants of the
property, protested with the DENR the issuance of the sales patent and OCT in favor of Oribello.
They sought the annulment of the sales patent, arguing that Oribello and Land Inspector
Dominador Laxa (Laxa) committed fraud and misrepresentation in the approval of the
Miscellaneous Sales Application of Oribello. They alleged that Laxa submitted a false report to
the Director of Lands, by stating that there were no other claimants to the property and that
Oribello was the actual occupant thereof, when the contrary was true.

After investigation, the Regional Executive Director of the DENR found substantial evidence
that fraud and misrepresentation were committed in the issuance of the sales patent in favor of
Oribello, warranting a reversion suit.

On 25 March 1992, the Office of the Solicitor General, representing petitioner, instituted a
complaint for reversion and cancellation of title before the Regional Trial Court of Olongapo
City, docketed as Civil Case No. 225-0-92. The case was thereafter consolidated with Civil Case
No. 233-0-91, a complaint for recovery of possession filed by Oribello against Apog and San
Juan.

During the trial, petitioner marked numerous documentary evidence and presented several
witnesses on various hearing dates.6

In an Order dated 20 December 1996, the trial court warned petitioner on the possible effect of
its non-appearance on the next scheduled hearing, thus:

WHEREFORE, let the continuation of the reception of evidence for the Republic of the
Philippines be reset to February 14, 21 and 28, 1997, all at 10:00 o’clock in the morning, as
previously scheduled.

The Solicitor General is warned that should his designated lawyer or any of his assistants fail to
appear on the dates above-stated, the Court will be constrained to consider the presentation of
evidence for the Republic of the Philippines as terminated.

Atty. Dumpit, therefore, is advised that he bring his witnesses on said dates to testify for the
defendants Matilde Apog and Eliseo San Juan should the Solicitor General fail to appear and
present evidence.

xxxx

SO ORDERED.7 (Emphasis supplied)
On the hearing of 4 April 1997, Atty. Oscar Pascua, representing petitioner, presented a witness
on the stand.For petitioner’s failure to appear on the hearing of 12 September 1997, the trial
court issued an Order8 on even date holding as follows:

On July 25, 1997, this Court issued an Order, quoted as follows:

xxxx

On several occasions when these cases were set for trial, neither Atty. Barcelo nor Atty. Pascua
appeared, constraining the Court to postpone the hearing. The actuations of both lawyers result to
delay in the early termination of these cases which have been pending since 1992.

xxxx

WHEREFORE, the Republic of the Philippines is hereby deemed to have abandoned the case for
the government.

Attorney Dumpit for the defendant Matilde Apog, et al., is hereby required to manifest in writing
on whether or not he is adopting the evidence already presented by the Republic of the
Philippines, and if so, to make his offer of evidence within 30 days from today. Atty. Leyco is
given 10 days from receipt of a copy of his offer to file his comment or opposition. Let the
reception of evidence, if there be any on any part of Enrique Oribello, be set on October 24, 1997
at 10:00 a.m. as previously scheduled. And in addition thereto on November 21, and December
5, 1997 also both at 10:00 a.m. To give way to the filing of these pleadings, cancel the hearing
scheduled for October 3, 1997.

Upon receipt of proof from the Post Office by this Court which will show that Atty. Pascua has
received a copy of the Order dated July 25, 1997, the Motion to hold him in contempt will be
deemed submitted for resolution. Furnish Atty. Barcelo, the Solicitor General, the Executive
Regional Director, DENR, R-III, Angeles City, and Atty. Oscar Pascua, a copy of this Order.
Attys. Dumpit and Leyco are both notified in open court of this Order.

SO ORDERED.9

The trial of the consolidated cases continued and the reception of evidence of the private parties
proceeded.

However, in its Order of 21 February 2005, the trial court dismissed the consolidated cases
without prejudice for non-substitution of the deceased plaintiff (Oribello) and his counsel, to wit:

Considering that the plaintiff’s counsel is already dead, and the plaintiff is likewise dead already,
there being no substitution of party-plaintiffs or any record showing the heirs or party in interest,
these cases are dismissed without prejudice.10
Petitioner moved for reconsideration, contending that the Order applied exclusively to Civil Case
No. 233-0-91 (for recovery of possession) and did not affect Civil Case No. 225-0-92 (for
reversion of property). Petitioner prayed that it be allowed to present its evidence.

Acting favorably on the motion, the trial court allowed the continuation of the presentation of
petitioner’s evidence in its Order dated 29 June 2005.11

Aggrieved, Oribello’s heirs filed a Manifestation and Motion, bringing to the attention of the trial
court the previous 12 September 1997 Order declaring petitioner to have abandoned the
reversion case. Oribello’s heirs pointed out that from the time petitioner received the Order in
1997, it did nothing to question the same, making the Order final.

In its Resolution of 12 July 2006, the trial court recalled its 29 June 2005 Order, and declared
instead:

Finding merit in defendants’ Motion and Manifestation, the Order dated 29 June 2005 granting
the Motion for Reconsideration filed by the Solicitor General is recalled and the above-entitled
case is DISMISSED.

SO RESOLVED.12

Petitioner appealed to the Court of Appeals.

The Ruling of the Court of Appeals

The Court of Appeals denied petitioner’s appeal. The Court of Appeals held "that the remedy of
appeal is no longer available" to petitioner. The appellate court agreed with respondents that
petitioner has lost its right to participate in the proceedings of Civil Case No. 225-0-92 when it
failed to question the trial court’s 12 September 1997 Order, declaring it to have abandoned the
case. As a consequence of petitioner’s inaction, such order inevitably became final.

Moreover, the Court of Appeals ruled that petitioner is barred by laches and estoppel for failing
to challenge the 12 September 1997 Order after almost a decade from receipt thereof. The
appellate court stated that "while the general rule is that an action to recover lands of public
domain is imprescriptible, said right can be barred by laches or estoppel."

The Court of Appeals disposed of the case as follows:

WHEREFORE, the foregoing premises considered, the instant appeal is hereby DENIED for
lack of merit.

SO ORDERED.13 (Emphasis in the original)

The Court of Appeals denied the motion for reconsideration.

The Issues
Petitioner anchors the present petition on the following grounds:

1. Interlocutory orders are not subject of appeal.

2. The consolidated cases, without any order of severance, cannot be subject of multiple
appeals.

3. There can be no private ownership over an unclassified public forest.

The Ruling of the Court

Is the 12 September 1997 Order interlocutory?

Petitioner contends that the 12 September 1997 Order of the trial court, deeming it to have
abandoned the case, is interlocutory in nature; thus, is not appealable.14 Respondents argue
otherwise, maintaining that such Order is a dismissal of the complaint on the ground of failure to
prosecute which is, under the Rules,15 considered an adjudication on the merits, and hence
appealable.

We agree with petitioner.

A final order is defined as "one which disposes of the subject matter in its entirety or terminates
a particular proceeding or action, leaving nothing else to be done but to enforce by execution
what has been determined by the court."16

Conversely, an interlocutory order "does not dispose of the case completely but leaves something
to be decided upon"17 by the court. Its effects are merely provisional in character and substantial
proceedings have to be further conducted by the court in order to finally resolve the issue or
controversy.18

Based on the records, petitioner has presented testimonial evidence on various hearing dates and
marked numerous documents during the trial of Civil Case No. 225-0-92. Such acts do not
manifest lack of interest to prosecute. Admittedly there was delay in this case. However, such
delay is not the delay warranting dismissal of the complaint. To be a sufficient ground for
dismissal, delay must not only be lengthy but also unnecessary resulting in the trifling of court
processes.19 There is no proof that petitioner intended to delay the proceedings in this case, much
less abuse judicial processes.

While petitioner failed to appear on the hearing of 12 September 1997, such failure does not
constitute a ground for the dismissal of the reversion complaint for failure to prosecute.
Petitioner’s non-appearance on that date should simply be construed as a waiver of the right to
present additional evidence.20

We note that prior to the issuance of the 12 September 1997 Order, the trial court already warned
petitioner on the likely adverse effect of its non-appearance on the next hearing date. If petitioner
fails to attend the next scheduled hearing, the trial court would consider petitioner’s presentation
of evidence as terminated. Termination of presentation of a party’s evidence does not equate to
dismissal of the complaint for failure to prosecute. In fact, the trial court merely "deemed"
petitioner to have abandoned the case without stating expressly and unequivocally that the
complaint for reversion was dismissed. Had the trial court declared, in no uncertain terms, that
the reversion suit was dismissed for failure to prosecute, there is no doubt that petitioner would
have questioned such ruling, as it now did with respect to the trial court’s 29 June 2005 Order.

While it is within the trial court’s discretion to dismiss motu proprio the complaint on the ground
of plaintiff’s failure to prosecute, it must be exercised with caution. Resort to such action must be
determined according to the procedural history of each case, the situation at the time of the
dismissal, and the diligence (or the lack thereof) of the plaintiff to proceed therein.21 As the Court
held in Gomez v. Alcantara,22 if a lesser sanction would achieve the same result, then dismissal
should not be resorted to.

Unless a party’s conduct is so indifferent, irresponsible, contumacious or slothful as to provide

substantial grounds for dismissal, i.e., equivalent to default or non-appearance in the case, the
courts should consider lesser sanctions which would still amount to achieving the desired end. In
the absence of a pattern or scheme to delay the disposition of the case or of a wanton failure to
observe the mandatory requirement of the rules on the part of the plaintiff, as in the case at bar,
courts should decide to dispense with rather than wield their authority to dismiss.23 (Emphasis
supplied)

Notably, the trial court, even after its supposed "dismissal" of the case for petitioner’s
abandonment, continued to recognize petitioner’s personality in its proceedings. In fact, in its
Order of 16 January 1998, well beyond the "dismissal" on 12 September 1997, the trial court
directed the service of such order to the Solicitor General, to wit:

xxxx

Should Atty. Dumpit fail to submit the said offer of evidence, it will be deemed a waiver on his
part to do so. Atty. Leyco announced that he is presenting evidence for and in behalf of the
defendants Oribello in Civil Case No. 225-0-92 and as plaintiff in Civil Case No. 233-0-91.

To give way to the filing of said pleadings, cancel the hearing on February 20, 1998. Let the
reception of evidence for the plaintiff Oribellos be set on March 20, 1998 at 9:00 a.m.. Attys.
Leyco and Dumpit are notified in open court. Furnish a copy of this order the Solicitor General,
DENR Office in Angeles City, as well as Atty. Pascua.24 (Emphasis supplied)

In addition, the above Order states that Oribello’s counsel was presenting evidence on the two
consolidated cases. This means that Oribello himself continued to recognize the pendency of the
reversion suit (Civil Case No. 225-0-92), contrary to his subsequent allegation that such case has
already been dismissed.

Are the consolidated cases subject to multiple appeals?

Section 1, Rule 31 of the Rules of Court provides:

SECTION 1. Consolidation. — When actions involving a common question of law or fact are
pending before the court, it may order a joint hearing or trial of any or all the matters in issue in
the actions; it may order all the actions consolidated, and it may make such orders concerning
proceedings therein as may tend to avoid unnecessary costs or delay.

Consolidation is a procedural device to aid the court in deciding how cases in its docket are to be
tried so that the business of the court may be dispatched expeditiously and with economy while
providing justice to the parties.25 To promote this end, the rule allows the consolidation and a
single trial of several cases in the court’s docket, or the consolidation of issues within those
cases.26 The Court explained, thus:

In the context of legal procedure, the term "consolidation" is used in three different senses:

(1) Where all except one of several actions are stayed until one is tried, in which case the
judgment in the one trial is conclusive as to the others. This is not actually consolidation
but is referred to as such. (quasi-consolidation)

(2) Where several actions are combined into one, lose their separate identity, and become
a single action in which a single judgment is rendered. This is illustrated by a situation
where several actions are pending between the same parties stating claims which might
have been set out originally in one complaint. (actual consolidation)1âwphi1

(3) Where several actions are ordered to be tried together but each retains its separate
character and requires the entry of a separate judgment. This type of consolidation does
not merge the suits into a single action, or cause the parties to one action to be parties to
the other. (consolidation for trial)27

In the present case, the complaint for reversion filed by petitioner (Civil Case No. 225-0-92) was
consolidated with the complaint for recovery of possession filed by Oribello (Civil Case No.
223-0-91). While these two cases involve common questions of law and fact,28 each action
retains its separate and distinct character. The reversion suit settles whether the subject land will
be reverted to the State, while the recovery of possession case determines which private party has
the better right of possession over the subject property. These cases, involving different issues
and seeking different remedies, require the rendition and entry of separate judgments. The
consolidation is merely for joint trial of the cases. Notably, the complaint for recovery of
possession proceeded independently of the reversion case, and was disposed of accordingly by
the trial court.

Since each action does not lose its distinct character, severance of one action from the other is
not necessary to appeal a judgment already rendered in one action. There is no rule or law
prohibiting the appeal of a judgment or part of a judgment in one case which is consolidated with
other cases. Further, severance is within the sound discretion of the court for convenience or to
avoid prejudice. It is not mandatory under the Rules of Court that the court sever one case from
the other cases before a party can appeal an adverse ruling on such case.

Is the property unclassified public forest?

In its petition, petitioner contended that the subject property remains unclassified public forest,
incapable of private appropriation. In its complaint, petitioner alleged that Oribello committed
fraud and misrepresentation in acquiring the subject property.

This Court is not a trier of facts. Fraud is a question offact. 29 Whether there was fraud and
misrepresentation in the issuance of the sales patent in favor of Oribello calls for a thorough
evaluation of the parties' evidence. Thus, this Court will have to remand the reversion case to the
trial court for further proceedings in order to resolve this issue and accordingly dispose of the
case based on the parties' evidence on record.

WHEREFORE, the Court GRANTS the petition IN PART and SETS ASIDE the assailed
Decision and Resolution of the Court of Appeals. The reversion case is remanded to the trial
court for further proceedings. The trial court is ordered to resolve the reversion case with utmost
dispatch.

SO ORDERED.

Marano vs. Pryce Gases Inc., 755 SCRA (pls check on downloads 24433)

G.R. No. 169677               February 18, 2013

METROPOLITAN BANK AND TRUST COMPANY, as successor-in-interest of ASIAN

BANK CORPORATION, Petitioner,
vs.
HON. EDILBERTO G. SANDOVAL, HON. FRANCISCO H. VILLARUZ, JR. and HON.
RODOLFO A. PONFERRADA (in their capacities as Chairman and Members,
respectively, of the Second Division of SANDIGANBAYAN) and the REPUBLIC OF THE
PHILIPPINES, Respondents.

DECISION

BERSAMIN, J.:

The court, in furtherance of convenience or to avoid prejudice, may order a separate trial of any
claim, cross-claim, counterclaim, or third-party complaint, or of any separate issue or of any
number of claims, cross-claims, counterclaims, third-party complaints or issues.1 But a separate
trial may be denied if a party is thereby deprived of his right to be heard upon an issue dealt with
and determined in the main trial.

Through this special civil action for certiorari, Metropolitan Bank and Trust Company
(Metrobank) hereby seeks to set aside and nullify the resolutions dated June 25, 20042 and July
13, 20053 issued in Civil Case No. 0004, whereby the Sandiganbayan granted the motion for
separate trial filed by the Republic of the Philippines (Republic), and upheld its jurisdiction over
the Republic’s claim against the petitioner as the successor-in-interest of Asian Bank
Corporation (Asian Bank).
 Antecedents

On July 17, 1987, the Republic brought a complaint for reversion, reconveyance, restitution,
accounting and damages in the Sandiganbayan against Andres V. Genito, Jr., Ferdinand E.
Marcos, Imelda R. Marcos and other defendants. The action was obviously to recover allegedly
ill-gotten wealth of the Marcoses, their nominees, dummies and agents. Among the properties
subject of the action were two parcels of commercial land located in Tandang Sora (Old Balara),
Quezon City, covered by Transfer Certificate of Title (TCT) No. 2664234 and TCT No.
2665885 of the Registry of Deeds of Quezon City registered in the names of Spouses Andres V.
Genito, Jr. and Ludivina L. Genito.

On February 5, 2001, the Republic moved for the amendment of the complaint in order to
implead Asian Bank as an additional defendant. The Sandiganbayan granted the motion.6 It
appears that Asian Bank claimed ownership of the two parcels of land as the registered owner by
virtue of TCT No. N-201383 and TCT No. N-201384 issued in its name by the Registry of
Deeds of Quezon City. Asian Bank was also in possession of the properties by virtue of the writ
of possession issued by the Regional Trial Court (RTC) in Quezon City.7

When the Republic was about to terminate its presentation of evidence against the original
defendants in Civil Case No. 0004, it moved to hold a separate trial against Asian Bank.8

Commenting on the motion, Asian Bank sought the deferment of any action on the motion until
it was first given the opportunity to test and assail the testimonial and documentary evidence the
Republic had already presented against the original defendants, and contended that it would be
deprived of its day in court if a separate trial were to be held against it without having been
sufficiently apprised about the evidence the Republic had adduced before it was brought in as an
additional defendant.9

In its reply to Asian Bank’s comment, the Republic maintained that a separate trial for Asian
Bank was proper because its cause of action against Asian Bank was entirely distinct and
independent from its cause of action against the original defendants; and that the issue with
respect to Asian Bank was whether Asian Bank had actual or constructive knowledge at the time
of the issuance of the TCTs for the properties in its name that such properties were the subject of
the complaint in Civil Case No. 0004, while the issue as to the original defendants was whether
they had "committed the acts complained of as constituting illegal or unlawful accumulation of
wealth which would, as a consequence, justify forfeiture of the said properties or the satisfaction
from said properties of the judgement that may be rendered in favor of the Republic."10

Asian Bank’s rejoinder to the Republic’s reply asserted that the issue concerning its supposed
actual or constructive knowledge of the properties being the subject of the complaint in Civil
Case No. 0004 was intimately related to the issue delving on the character of the properties as the
ill-gotten wealth of the original defendants; that it thus had a right to confront the evidence
presented by the Republic as to the character of the properties; and that the Sandiganbayan had
no jurisdiction to decide Asian Bank’s ownership of the properties because the Sandiganbayan,
being a special court with limited jurisdiction, could only determine the issue of whether or not
the properties were illegally acquired by the original defendants.11
On June 25, 2004, the Sandiganbayan issued the first assailed resolution granting the Republic’s
motion for separate trial, giving its reasons as follows:

xxxx

A cursory reading of the comment filed by defendant Asian Bank to plaintiff’s request for a
separate trial would readily reveal that defendant is not actually opposing the conduct of a
separate trial insofar as the said bank is concerned. What it seeks is the opportunity to confront
the witnesses and whatever documentary exhibits that may have been earlier presented by
plaintiff in the case before the Court grants a separate trial. This being the situation, we find no
reason to deny the motion in light of plaintiff’s position that its claim as against Asian Bank is
entirely separate and distinct from its claims as against the original defendants, albeit dealing
with the same subject matter. In fact, as shown by the allegations of the Second Amended
Complaint where Asian Bank was impleaded as a party defendant, the action against the latter is
anchored on the claim that its acquisition of the subject properties was tainted with bad faith
because of its actual or constructive knowledge that the said properties are subject of the present
recovery suit at the time it acquired the certificates of title covering the said properties in its
name. Consequently, whether or not it is ultimately established that the properties are ill-gotten
wealth is of no actual significance to the incident pending consideration since the action against
defendant bank is predicated not on the claim that it had knowledge of the ill-gotten wealth
character of the properties in question but rather on whether or not it had knowledge, actual or
constructive, of the fact that the properties it registered in its name are the subject of the instant
recovery suit. Besides, plaintiff already admits that the evidence it had presented as against the
original defendants would not apply to defendant bank for the reason that there is no allegation in
the second amended complaint imputing responsibility or participation on the part of the said
bank insofar as the issue of accumulation of wealth by the original defendants are concerned.
Thus, there appears no basis for defendant bank’s apprehension that it would be deprived of its
right to due process if its not given the opportunity to cross-examine the witnesses presented
prior to its inclusion as party defendant in the case. To reiterate, the only issue insofar as
defendant bank is concerned is whether there is evidence to show that it acquired the titles to the
sequestered properties in bad faith.

Neither are we inclined to sustain defendant’s bank argument that the Court cannot grant a
separate trial in this case because it has no jurisdiction over the claim that defendant bank
acquired the properties in bad faith. Indeed, the issue of defendant bank’s acquisition of the
properties in bad faith is merely incidental to the main action which is for reversion,
reconveyance, restitution, accounting and damages. It is axiomatic that jurisdiction over the
subject matter of a case is conferred by law and is determined by the allegations in the complaint
and the character of the relief sought, irrespective of whether the plaintiff is entitled to all or
some of the claims asserted therein (Russell v. Vestil, 304 SCRA 738; Saura v. Saura, Jr., 313
SCRA 465).12

Asian Bank moved for the reconsideration of the resolution, but the Sandiganbayan denied its
motion through the second assailed resolution issued on July 13, 2005.13
Hence, Metrobank commenced this special civil action for certiorari as the successor-in-interest
of Asian Bank and transferee of the properties.14

Issues

Metrobank contends that the Sandiganbayan committed grave abuse of discretion in ruling that:
(1) the Republic was entitled to a separate trial against Asian Bank; (2) the only issue as regards
Asian Bank was whether there was evidence that Asian Bank acquired the properties in bad
faith; and

(3) the Sandiganbayan had jurisdiction over the issue of Asian Bank’s alleged bad faith in
acquiring the properties.15

Anent the first issue, Metrobank states that the holding of a separate trial would deny it due
process, because Asian Bank was entitled to contest the evidence of the Republic against the
original defendants prior to Asian Bank’s inclusion as an additional defendant; that Asian Bank
(Metrobank) would be deprived of its day in court if a separate trial was held against it,
considering that the Republic had already presented such evidence prior to its being impleaded as
an additional defendant; that such evidence would be hearsay unless Asian Bank (Metrobank)
was afforded the opportunity to test and to object to the admissibility of the evidence; that
because Asian Bank disputed the allegedly ill-gotten character of the properties and denied any
involvement in their allegedly unlawful acquisition or any connivance with the original
defendants in their acquisition, Asian Bank should be given the opportunity to refute the
Republic’s adverse evidence on the allegedly illgotten nature of the properties.16

With respect to the second issue, Metrobank submits thuswise:

8.02 x x x the Honorable Sandiganbayan failed to consider that Respondent Republic of the
Philippines’ claim for the recovery of the subject properties from Asian Bank Corporation is
anchored mainly on its allegations that: a) the subject properties constitute ill-gotten wealth of
the other defendants in the instant civil case; and, b) Asian Bank Corporation acquired the
subject properties in bad faith and with due notice of the pendency of the ill-gotten wealth case.
In other words, the determination of the character of the subject properties as "ill-gotten wealth"
is equally important and relevant for Asian Bank Corporation as it is for the other defendants
considering that the issue of its alleged acquisition in bad faith of the subject properties is
premised on Respondent Republic of the Philippines’ claim that the subject properties form part
of the ill-gotten wealth of the late President Marcos and his cronies. Such being the case, Asian
Bank Corporation is entitled as a matter of right to contest whatever evidence was presented by
Respondent Republic of the Philippines on these two (2) issues, specifically the character and
nature of the subject properties.

8.03 It must be stressed that the discretion of the court to order a separate trial of such issues
should only be exercised where the issue ordered to be separately tried is so independent of the
other issues that its trial will in no way involve the trial of the issues to be thereafter tried and
where the determination of that issues will satisfactorily and with practical certainty dispose of
the case, if decided for defendant. Considering that the issue on Asian Bank Corporation’s
alleged acquisition in bad faith of the subject properties is intimately related to the issue on the
character and nature of the subject properties as ill-gotten wealth of the other defendants in the
instant civil case, there is absolutely no legal or factual basis for the holding of a separate trial
against Asian Bank Corporation.17

As to the third issue, Metrobank posits that Asian Bank acquired the properties long after they
had been acquired by the original defendants supposedly through unlawful means; that the
Republic admitted that the evidence adduced against the original defendants would not apply to
Asian Bank because the amended complaint in Civil Case No. 0004 did not impute any
responsibility to Asian Bank for the accumulation of wealth by the original defendants, or did not
allege that Asian Bank had participated in such accumulation of wealth; that there was also no
allegation or proof that Asian Bank had been a business associate, dummy, nominee or agent of
the Marcoses; that the inclusion of Asian Bank was not warranted under the law; that Asian Bank
was a transferee in good faith and for valuable consideration; that the Sandiganbayan had no
jurisdiction over civil cases against innocent purchasers for value like Asian Bank that had no
notice of the allegedly ill-gotten nature of the properties; and that considering the admission of
the Republic that the issue on the accumulation of wealth by the original defendants did not at all
concern Asian Bank, it follows that the Sandiganbayan had no jurisdiction to pass judgment on
the validity of Asian Bank’s ownership of the properties.18

In contrast, the Republic insists that the Rules of Court allowed separate trials if the issues or
claims against several defendants were entirely distinct and separate, notwithstanding that the
main claim against the original defendants and the issue against Asian Bank involved the same
properties; that the allegations in the case against Spouses Genito and the other original
defendants pertained to the Republic’s claim that the properties listed in Annex A of the original
complaint constituted ill-gotten wealth, resulting in the probable forfeiture of the listed properties
should the Republic establish in the end that such original defendants had illegally or unlawfully
acquired such properties; that although the Republic conceded that neither Asian Bank nor
Metrobank had any participation whatsoever in the commission of the illegal or unlawful acts,
the only issue relevant to Metrobank being whether it had knowledge that the properties had
been in custodia legis at the time of its acquisition of them to determine its allegation of being an
innocent purchaser for valuable consideration; that because the properties were situated in the
heart of Quezon City, whose land records had been destroyed by fire in 1998, resulting in the
rampant proliferation of fake land titles, Asian Bank should have acted with extra caution in
ascertaining the validity of the mortgagor’s certificates of title; and that the series of transactions
involving the properties was made under dubious circumstances.19

The Republic posits that the Sandiganbayan had exclusive original jurisdiction over all cases
involving the recovery of ill-gotten wealth pursuant to Executive Orders No. 1, No. 2, No. 14
and No. 14-A issued in 1986, laws encompassing the recovery of sequestered properties disposed
of by the original defendants while such properties remained in custodia legis and pending the
final resolution of the suit; and that the properties pertaining to Spouses Genito were among the
properties placed under the writs of sequestration issued by the Presidential Commission on
Good Government (PCGG), thereby effectively putting such properties in custodia legis and
rendering them beyond disposition except upon the prior approval of the Sandiganbayan.20
 Ruling

The petition for certiorari is partly meritorious.

The Sandiganbayan gravely abused its discretion in granting the Republic’s motion for separate
trial, but was correct in upholding its jurisdiction over the Republic’s claim against Asian Bank
(Metrobank).

First and Second Issues:

Separate Trials are Improper

The first and second issues, being interrelated, are jointly discussed and resolved.

The rule on separate trials in civil actions is found in Section 2, Rule 31 of the Rules of Court,
which reads:

Section 2. Separate trials. – The court, in furtherance of convenience or to avoid prejudice, may
order a separate trial of any claim, cross-claim, counterclaim, or third-party complaint, or of any
separate issue or of any number of claims, cross-claims, counterclaims, third-party complaints or
issues.

The text of the rule grants to the trial court the discretion to determine if a separate trial of any
claim, cross-claim, counterclaim, or third-party complaint, or of any separate issue or of any
number of claims, cross-claims, counterclaims, third-party complaints or issues should be held,
provided that the exercise of such discretion is in furtherance of convenience or to avoid
prejudice to any party.

The rule is almost identical with Rule 42(b) of the United States Federal Rules of Civil
Procedure (Federal Rules), a provision that governs separate trials in the United States Federal
Courts (US Federal Courts), viz:

Rule 42. Consolidation; Separate Trials.

xxxx

(b) Separate Trials. The court, in furtherance of convenience or to avoid prejudice, or when
separate trials will be conducive to expedition and economy, may order a separate trial of any
claim, crossclaim, counterclaim, or third-party claim, or of any separate issue or of any number
of claims, crossclaims, counterclaims, third-party claims, or issues, always preserving the
inviolate right of trial by jury as declared by the Seventh Amendment to the Constitution or as
given by a statute of the United States.

The US Federal Courts have applied Rule 42(b) by using several principles and parameters
whose application in this jurisdiction may be warranted because our rule on separate trials has
been patterned after the original version of Rule 42(b).21 There is no obstacle to adopting such
principles and parameters as guides in the application of our own rule on separate trials. This is
because, generally speaking, the Court has randomly accepted the practices in the US Courts in
the elucidation and application of our own rules of procedure that have themselves originated
from or been inspired by the practice and procedure in the Federal Courts and the various US
State Courts.

In Bowers v. Navistar International Transport Corporation,22 we find the following explanation

made by the US District Court for the Southern District of New York on the objectives of having
separate trials, to wit:

The aim and purpose of the Rule is aptly summarized in C. Wright and A Miller’s Federal
Practice and Procedure:

The provision for separate trials in Rule 42 (b) is intended to further convenience, avoid delay
and prejudice, and serve the ends of justice. It is the interest of efficient judicial administration
that is to be controlling rather than the wishes of the parties. The piecemeal trial of separate
issues in a single suit is not to be the usual course. It should be resorted to only in the exercise of
informed discretion when the court believes that separation will achieve the purposes of the rule.

xxxx

As explained recently by the Second Circuit in United v. Alcan Aluminum Corp., Nos. 92-6158,
6160 1993 WL 100100, 1 (2d Cir., April 6, 1993), the purpose of separate trials under Rule 42
(b)  is to "isolate issues to be resolved, avoid lengthy and perhaps needless litigation . . . and to
encourage settlement discussions and speed up remedial action." (citing, Amoco Oil v. Borden,
Inc., 889 F.2d 664, 668 (5th Cir. 1989); Katsaros v. Cody, 744 F.2d 270, 278 (2d Cir.), cert.
denied sub nom., 469 U.S. 1072, 105 S. Ct. 565, 83 L. Ed. 2d 506 (1984) (separate trials are
proper to further convenience or to avoid prejudice); Ismail v. Cohen, 706 F. Supp. 243, 251
(S.D.N.Y. 1989) (quoting, United States v. International Business Machines Corp., 60 F.R.D.
654, 657 (S.D.N.Y. 1973) (separate trials under Rule 42 (b)  are appropriate, although not
mandatory, to "(1) avoid prejudice; (2) provide for convenience, or (3) expedite the proceedings
and be economical.") Separate trials, however, remain the exception rather than the rule. See,
e.g., Response of Carolina, Inc. v. Leasco Response, Inc., 537 F.2d 137 (5th Cir. 1976) xxx
(separation of issues is not the usual course under Rule 42 (b)). The moving party bears the
burden of establishing that separate trials are necessary to prevent prejudice or confusion and
serve the ends of justice. Buscemi v. Pepsico, Inc., 736 F. Supp. 1267, 1271 (S.D.N.Y. 1990).

In Divine Restoration Apostolic Church v. Nationwide Mutual Insurance Co.,23 the US District

Court for the Southern District of Texas, Houston Division specified that separate trials remained
the exception, and emphasized that the moving party had the burden to establish the necessity for
the separation of issues, viz:

Rule 42 (b) provides that a court has discretion to order separate trials of claims "in furtherance
of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and
economy." FED. R. CIV. P.42 (b). Thus, the two primary factors to be considered in determining
whether to order separate trials are efficient judicial administration and potential prejudice.
Separation of issues for separate trials is "not the usual course that should be
followed," McDaniel v. Anheuser-Bush, Inc., 987 F. 2d 298, 304 (5th Cir. 1993), and the burden
is on the party seeking separate trials to prove that separation is necessary. 9A CHARLES
ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL PRACTICE
AND PROCEDURE 2388 (3d ed. 2001).

xxxx

Still, in Corrigan v. Methodist Hospital,24 the US District Court for the Eastern District of
Pennsylvania has cautioned against the unfettered granting of separate trials, thusly:

Courts order separate trials only when "clearly necessary." Wetherill v. University of

Chicago, 565 F. Supp. 1553, 1566-67 (N.D. Ill. 1983) (citing 5 James William Moore, Moore’s
Federal Practice at pp. 42-37 to 42-38 & n.4 (1982)). This is because a "single trial will
generally lessen the delay, expense, and inconvenience to the parties and the courts." 5 James
William Moore, Moore’s Federal Practice P. 42-03[1], at p. 42-43 (1994); Laitram Corp. v.
Hewlett-Packard Co., 791 F. Supp. 113, 115 (E.D. La. 1992); Willemijn Houdstermaatschaapij
BV. V. Apollo Computer, 707 F. Supp. 1429, 1433 (D. Del. 1989). The movant has the burden to
show prejudice. Moore at p. 42-48.

x x x A Colorado District Court found three factors to weigh in determining whether to order
separate trials for separate defendants. These are 1) whether separate trials would further the
convenience of the parties; 2) whether separate trials would promote judicial economy; and 3)
whether separate trials would avoid substantial prejudice to the parties.

Tri-R Sys. V. Friedman & Son, 94 F.R.D. 726, 727 (D. Colo. 1982).

In Miller v. American Bonding Company,25 the US Supreme Court has delimited the holding of
separate trials to only the exceptional instances where there were special and persuasive reasons
for departing from the general practice of trying all issues in a case at only one time, stating:

In actions at law, the general practice is to try all the issues in a case at one time; and it is only in
exceptional instances where there are special and persuasive reasons for departing from this
practice that distinct causes of action asserted in the same case may be made the subjects of
separate trials. Whether this reasonably may be done in any particular instance rests largely in
the court’s discretion.

Further, Corpus Juris Secundum26 makes clear that neither party had an absolute right to have a
separate trial of an issue; hence, the motion to that effect should be allowed only to avoid
prejudice, further convenience, promote justice, and give a fair trial to all parties, to wit:

Generally speaking, a lawsuit should not be tried piecemeal, or at least such a trial should be
undertaken only with great caution and sparingly. There should be one full and comprehensive
trial covering all disputed matters, and parties cannot, as of right, have a trial divided. It is the
policy of the law to limit the number of trials as far as possible, and
separate trials are granted only in exceptional cases. Even under a statute permitting trials of
separate issues, neither party has an absolute right to have a separate trial of an issue involved.
The trial of all issues together is especially appropriate in an action at law wherein the issues are
not complicated, x x x, or where the issues are basically the same x x x

x x x Separate trials of issues should be ordered where such separation will avoid prejudice,
further convenience, promote justice, and give a fair trial to all parties.

Bearing in mind the foregoing principles and parameters defined by the relevant US case law, we
conclude that the Sandiganbayan committed grave abuse of its discretion in ordering a separate
trial as to Asian Bank (Metrobank) on the ground that the issue against Asian Bank was distinct
and separate from that against the original defendants. Thereby, the Sandiganbayan veered away
from the general rule of having all the issues in every case tried at one time, unreasonably
shunting aside the dictum in Corrigan, supra, that a "single trial will generally lessen the delay,
expense, and inconvenience to the parties and the courts."27

Exceptions to the general rule are permitted only when there are extraordinary grounds for
conducting separate trials on different issues raised in the same case, or when separate trials of
the issues will avoid prejudice, or when separate trials of the issues will further convenience, or
when separate trials of the issues will promote justice, or when separate trials of the issues will
give a fair trial to all parties. Otherwise, the general rule must apply.

As we see it, however, the justification of the Sandiganbayan for allowing the separate trial did
not constitute a special or compelling reason like any of the exceptions. To begin with, the issue
relevant to Asian Bank was not complicated. In that context, the separate trial would not be in
furtherance of convenience. And, secondly, the cause of action against Asian Bank was
necessarily connected with the cause of action against the original defendants.1âwphi1 Should
the Sandiganbayan resolve the issue against Spouses Genito in a separate trial on the basis of the
evidence adduced against the original defendants, the properties would be thereby adjudged as
ill-gotten and liable to forfeiture in favor of the Republic without Metrobank being given the
opportunity to rebut or explain its side. The outcome would surely be prejudicial towards
Metrobank.

The representation by the Republic in its comment to the petition of Metrobank, that the latter
"merely seeks to be afforded the opportunity to confront the witnesses and documentary
exhibits," and that it will "still be granted said right during the conduct of the separate trial, if
proper grounds are presented therefor,"28 unfairly dismisses the objective possibility of leaving
the opportunity to confront the witnesses and documentary exhibits to be given to Metrobank in
the separate trial as already too late. The properties, though already registered in the name of
Asian Bank, would be meanwhile declared liable to forfeiture in favor of the Republic, causing
Metrobank to suffer the deprivation of its properties without due process of law. Only a joint trial
with the original defendants could afford to Metrobank the equal and efficient opportunity to
confront and to contest all the evidence bearing on its ownership of the properties. Hence, the
disadvantages that a separate trial would cause to Metrobank would far outweigh any good or
benefit that the Republic would seemingly stand to gain from the separation of trials.
We must safeguard Metrobank’s right to be heard in the defense of its registered ownership of
the properties, for that is what our Constitution requires us to do. Hence, the grant by the
Sandiganbayan of the Republic’s motion for separate trial, not being in furtherance of
convenience or would not avoid prejudice to a party, and being even contrary to the Constitution,
the law and jurisprudence, was arbitrary, and, therefore, a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of the Sandiganbayan.29

Third Issue:
Sandiganbayan has exclusive original jurisdiction
over the matter involving Metrobank

Presidential Decree No. 1606,30 as amended by Republic Act No. 797531 and Republic Act No.
8249,32 vests the Sandiganbayan with original exclusive jurisdiction over civil and criminal
cases instituted pursuant to and in connection with Executive Orders No. 1, No. 2, No. 14 and
No. 14-A, issued in 1986 by then President Corazon C. Aquino.

Executive Order No. 1 refers to cases of recovery and sequestration of ill-gotten wealth amassed
by the Marcoses their relatives, subordinates, and close associates, directly or through nominees,
by taking undue advantage of their public office and/or by using their powers, authority,
influence, connections or relationships. Executive Order No. 2 states that the ill-gotten wealth
includes assets and properties in the form of estates and real properties in the Philippines and
abroad. Executive Orders No. 14 and No. 14-A pertain to the Sandiganbayan’s jurisdiction over
criminal and civil cases relative to the ill-gotten wealth of the Marcoses and their cronies.

The amended complaint filed by the Republic to implead Asian Bank prays for reversion,
reconveyance, reconstitution, accounting and damages. In other words, the Republic would
recover ill-gotten wealth, by virtue of which the properties in question came under sequestration
and are now, for that reason, in custodia legis.33

Although the Republic has not imputed any responsibility to Asian Bank for the illegal
accumulation of wealth by the original defendants, or has not averred that Asian Bank was a
business associate, dummy, nominee, or agent of the Marcoses, the allegation in its amended
complaint in Civil Case No. 0004 that Asian Bank acted with bad faith for ignoring the
sequestration of the properties as ill-gotten wealth has made the cause of action against Asian
Bank incidental or necessarily connected to the cause of action against the original defendants.
Consequently, the Sandiganbayan has original exclusive jurisdiction over the claim against Asian
Bank, for the Court has ruled in Presidential Commission on Good Government v.
Sandiganbayan,34 that "the Sandiganbayan has original and exclusive jurisdiction not only over
principal causes of action involving recovery of ill-gotten wealth, but also over all incidents
arising from, incidental to, or related to such cases." The Court made a similar pronouncement
sustaining the jurisdiction of the Sandiganbayan in Republic of the Philippines (PCGG) v.
Sandiganbayan (First Division),35 to wit:

We cannot possibly sustain such a puerile stand. Peña itself already dealt with the matter when it
stated that under Section 2 of Executive Order No. 14, all cases of the Commission regarding
alleged illgotten properties of former President Marcos and his relatives, subordinates, cronies,
nominees and so forth, whether civil or criminal, are

lodged within the exclusive and original jurisdiction of the Sandiganbayan, "and all incidents
arising from, incidental to, or related to such cases necessarily fall likewise under the
Sandiganbayan’s exclusive and original jurisdiction, subject to review on certiorari exclusively
by the Supreme Court."

WHEREFORE, the Court PARTIALLY GRANTS the petition for certiorari.

Let the writ of certiorari issue: (a) ANNULLING AND SETTING ASIDE the Resolution

dated June 25, 2004 and the Resolution dated July 13, 2005 issued by the Sandiganbayan in Civil
Case No. 0004 granting the motion for separate trial of the Republic of the Philippines as to
Metropolitan Bank and Trust Company; and (b), DIRECTING the Sandiganbayan to hear Civil
Case No. 0004 against Metropolitan Bank and Trust Company in the same trial conducted
against the original defendants in Civil Case No. 0004.

The Court DECLARES that the Sandiganbayan has original exclusive jurisdiction over the
amended complaint in Civil Case No. 0004 as against Asian Bank Corporation/Metropolitan
Bank and Trust Company.

No pronouncements on costs of suit.

SO ORDERED.

.R. No. L-18148             February 28, 1963

DEOGRACIAS BERNARDO, executor of the testate estate of the deceased EUSEBIO

CAPILI; and the instituted heirs, namely: ARMANDO CAPILI and ARTURO
BERNARDO, ET AL., petitioners,
vs.
HON. COURT OF APPEALS and THE HEIRS OF THE LATE HERMOGENA REYES,
namely: FRANCISCO REYES, ET AL., and JOSE ISIDORO, ET AL., respondents.

Ambrosio Padilla Law Offices for petitioners.

Romerico F. Flores for respondents.

BARRERA, J.:

This is a petition by certiorari for the review of the decision of the Court of Appeals affirming
that of the Court of First Instance of Bulacan holding that the probate court in Special Proceeding
1101 had jurisdiction to determine the validity of the deed of donation in question and to pass
upon the question of title or ownership of the properties mentioned therein.

The facts are briefly stated in the appealed decision of the Court of Appeals as follows:
Eusebio Capili and Hermogena Reyes were husband and wife. The first died on July 27,
1958 and a testate proceeding for the settlement of his estate was instituted in the Court
of the Fist Instance of Bulacan. His will was admitted to probate on October 9, 1958,
disposing of his properties in favor of his widow; his cousins Armando, Ursula, and
Buenaventura, all surnamed Capili; and Arturo, Deogracias and Eduardo, all surnamed
Bernardo. Hermogena Reyes herself died on April 24, 1959. Upon petition of Deogracias
Bernardo, executor of the estate of the deceased Eusebio Capili, she was substituted by
her collateral relatives and intestate heirs, namely, Marcos, Vicente, Francisco and
Dominga, all surnamed Reyes; and Jose, Constancia, Raymunda and Elena, all surnamed
Isidoro.

On June 12, 1959, the executor filed a project of partition in the testate proceeding in
accordance with the terms of the will, adjudicating the estate of Eusebio Capili among the
testamentary heirs with the exception of Hermogena Reyes, whose share was alloted to
her collateral relatives aforementioned. On June 16, 1959 these relatives filed an
opposition to the executor's project of partition and submitted a counter-project of
partition of their own, claiming 1/2 of the properties mentioned in the will of the
deceased Eusebio Capili on the theory that they belonged not to the latter alone but to the
conjugal partnership of the spouses.

The probate court, in two orders dated June 24, 1959 and February 10, 1960,
respectively, set the two projects of partition for hearing, at which evidence was
presented by the parties, followed by the submission of memoranda discussing certain
legal issues. In the memorandum for the executor and the instituted heirs it was
contended: (1) that the properties disposed of in the will of the deceased Eusebio Capili
belonged to him exclusively and not to the conjugal partnership, because Hermogena
Reyes had donated to him her half share of such partnership; (2) that the collateral heirs
of Hermogena Reyes had no lawful standing or grounds to question the validity of the
donation; and (3) that even assuming that they could question the validity of the donation,
the same must be litigated not in the testate proceeding but in a separate civil action.

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted
and approved by this Honorable Court, without prejudice to the parties adducing other
evidence to prove their case not covered by this stipulation of facts. 1äwphï1.ñët

The oppositors and heirs of Hermogena Reyes, on their part, argued that the deed of
donation itself was determinative of the original conjugal character to the properties,
aside from the legal presumption laid down in Article 160 of the Civil Code, and that
since the donation was null and void the deceased Eusebio Capili did not become owner
of the share of his wife and therefore could not validly dispose of it in his will.

On September 14, 1960, the probate court, the Honorable M. Mejia presiding, issued an
order declaring the donation void without making any specific finding as to its juridical
nature, that is, whether it was inter vivos or mortis causa, for the reason that, considered
under the first category, it falls under Article 133 of the Civil Code, which prohibits
donations between spouses during the marriage; and considered under the second
 category, it does not comply with the formalities of a will as required by Article 728 in
relation to Article 805 of the same Code, there being no attestation clause. In the same
order the court disapproved both projects of partition and directed the executor to file
another," dividing the property mentioned in the last will and testament of the deceased
Eusebio Capili and the properties mentioned in the deed of donation, Exhibit B, between
the instituted heirs of the deceased Eusebio Capili and the legal heirs of the deceased
Hermogena Reyes, upon the basis that the said properties were conjugal properties of the
deceased spouses." On September 27, 1960, the executor filed a motion for new trial,
reiterating and emphasizing the contention previously raised in their memorandum that
the probate court had no jurisdiction to take cognizance of the claim of the legal heirs of
Hermogena Reyes involving title to the properties mentioned in the will of Eusebio
Capili and taking exception to the court's declaration of the nullity of the donation
"without stating facts or provision of law on which it was based." The motion for new
trial was denied in an order dated October 3, 1960.

On appeal to the Court of Appeals the order appealed from being affirmed, petitioners filed this
present petition for review by certiorari.

The petitioners-appellants contend that the appellate court erred in not declaring that the probate
court, having limited and special jurisdiction, had generally no power to adjudicate title and erred
in applying the exception to the rule.

In a line of decisions, this Court consistently held that as a general rule, question as to title to
property cannot be passed upon on testate or intestate proceedings,"1 except where one of the
parties prays merely for the inclusion or exclusion from the inventory of the property, in which
case the probate court may pass provisionally upon the question without prejudice to its final
determination in a separate action.2 However, we have also held that when the parties interested
are all heirs of the deceased, it is optional to them to submit to the probate court a question as to
title to property, and when so submitted, said probate court may definitely pass judgment thereon
(Pascual v. Pascual, 73 Phil. 561; Manalac v. Ocampo, et al., 73 Phil. 661); and that with the
consent of the parties, matters affecting property under judicial administration may be taken
cognizance of by the court in the course of intestate proceeding, provided interests of third
persons are not prejudiced (Cunanan v. Amparo, 80 Phil. 229, 232).

In the light of this doctrine, may it be said correctly that the trial court as well as the Court of
Appeals erred in upholding the power of the probate court in this case to adjudicate in the testate
proceedings, the question as to whether the properties herein involved belong to the conjugal
partnership of Eusebio Capili and Hermogena Reyes, or to the deceased husband exclusively?

At the outset, let it be clarified that the matter at issue is not a question of jurisdiction, in the
sense advanced by appellants that the trial court had completely no authority to pass upon the
title to the lands in dispute, and that its decision on the subject is null and void and does not bind
even those who had invoked its authority and submitted to its decision because, it is contended,
jurisdiction is a creature of law and parties to an action can not vest, extend or broaden it. If
appellants' contention is correct, then there can be no exception to the no-jurisdiction theory. But
as has been stated in the case of Cunanan v. Amparo (supra) the Supreme Court speaking
through Mr. Justice Pedro Tuason: "Determination of title to property is within the jurisdiction of
Courts of First Instance. The responding Soriano's objection (that the probate court lacked
jurisdiction to order the delivery of the possession of the lots to the estate) relates exclusively to
the procedure, which is distinct from jurisdiction. It affects only personal rights to a mode of
practice (the filing of an independent ordinary action) which may be waived". Strictly speaking,
it is more a question of jurisdiction over the person, not over the subject matter, for the
jurisdiction to try controversies between heirs of a deceased person regarding the ownership of
properties alleged to belong to his estate, has been recognized to be vested in probate courts. This
is so because the purpose of an administration proceeding is the liquidation of the estate and
distribution of the residue among the heirs and legatees. Liquidation means determination of all
the assets of the estate and payment of all the debts and expenses.3 Thereafter, distribution is
made of the decedent's liquidated estate among the persons entitled to succeed him. The
proceeding is in the nature of an action of partition, in which each party is required to bring into
the mass whatever community property he has in his possession. To this end, and as a necessary
corollary, the interested parties may introduce proofs relative to the ownership of the properties
in dispute. All the heirs who take part in the distribution of the decedent's estate are before the
court, and subject to the jurisdiction thereof, in all matters and incidents necessary to the
complete settlement of such estate, so long as no interests of third parties are affected.4

In the case now before us, the matter in controversy is the question of ownership of certain of the
properties involved — whether they belong to the conjugal partnership or to the husband
exclusively. This is a matter properly within the jurisdiction of the probate court which
necessarily has to liquidate the conjugal partnership in order to determine the estate of the
decedent which is to be distributed among his heirs who are all parties to the proceedings,
including, of course, the widow, now represented because of her death, by her heirs who have
been substituted upon petition of the executor himself and who have appeared voluntarily. There
are no third parties whose rights may be affected. It is true that the heirs of the deceased widow
are not heirs of the testator-husband, but the widow is, in addition to her own right to the
conjugal property. And it is this right that is being sought to be enforced by her substitutes.
Therefore, the claim that is being asserted is one belonging to an heir to the testator and,
consequently, it complies with the requirement of the exception that the parties interested (the
petitioners and the widow, represented by dents) are all heirs claiming title under the testator.

Petitioners contend additionally that they have never submitted themselves to the jurisdiction of
the probate court, for the purpose of the determination of the question of ownership of the
disputed properties. This is not borne by the admitted facts. On the contrary, it is undisputed that
they were the ones who presented the project of partition claiming the questioned properties as
part of the testator's asset. The respondents, as representatives or substitutes of the deceased
widow opposed the project of partition and submitted another. As the Court of Appeals said, "In
doing so all of them must be deemed to have submitted the issue for resolution in the same
proceeding. Certainly, the petitioners can not be heard to insist, as they do, on the approval of
their project of partition and, thus, have the court take it for granted that their theory as to the
character of the properties is correct, entirely without regard to the opposition of the
respondents". In other words, by presenting their project of partition including therein the
disputed lands (upon the claim that they were donated by the wife to her husband), petitioners
themselves put in issue the question of ownership of the properties — which is well within the
competence of the probate court — and just because of an opposition thereto, they can not
thereafter withdraw either their appearance or the issue from the jurisdiction of the court.
Certainly, there is here a waiver where the parties who raise the objection are the ones who set
the court in motion.5 They can not be permitted to complain if the court, after due hearing,
adjudges question against them.6

Finally, petitioners-appellants claim that appellees are estopped to raise the question of
ownership of the properties involved because the widow herself, during her lifetime, not only did
not object to the inclusion of these properties in the inventory of the assets of her deceased
husband, but also signed an extra-judicial partition of those inventoried properties. But the very
authorities cited by appellants require that to constitute estoppel, the actor must have knowledge
of the facts and be appraised of his rights at the time he performs the act constituting estoppel,
because silence without knowledge works no estoppel.7 In the present case, the deceased widow
acted as she did because of the deed of donation she executed in favor of her husband not
knowing that such deed was illegal, if inter-vivos, and ineffectual if mortis-causa, as it has not
been executed with the required formalities similar to a will.

WHEREFORE, the decision of the Court of Appeals being in accordance with law, the same is
hereby affirmed with costs against appellants. So ordered.

G.R. No. 138739               July 6, 2000

RADIOWEALTH FINANCE COMPANY, petitioner,

vs.
Spouses VICENTE and MA. SUMILANG DEL ROSARIO, respondents.

DECISION

PANGANIBAN, J.:

When a demurrer to evidence granted by a trial court is reversed on appeal, the reviewing court
cannot remand the case for further proceedings. Rather, it should render judgment on the basis of
the evidence proffered by the plaintiff. Inasmuch as defendants in the present case admitted the
due execution of the Promissory Note both in their Answer and during the pretrial, the appellate
court should have rendered judgment on the bases of that Note and on the other pieces of
evidence adduced during the trial.

The Case

Before us is a Petition for Review on Certiorari of the December 9, 1997 Decision1 and the May
3, 1999 Resolution2 of the Court of Appeals in CA-GR CV No. 47737. The assailed Decision
disposed as follows:

"WHEREFORE, premises considered, the appealed order (dated November 4, 1994) of the
Regional Trial Court (Branch XIV) in the City of Manila in Civil Case No. 93-66507 is hereby
REVERSED and SET ASIDE. Let the records of this case be remanded to the court a quo for
further proceedings. No pronouncement as to costs."3

The assailed Resolution denied the petitioner’s Partial Motion for Reconsideration.4

The Facts

The facts of this case are undisputed. On March 2, 1991, Spouses Vicente and Maria Sumilang
del Rosario (herein respondents), jointly and severally executed, signed and delivered in favor of
Radiowealth Finance Company (herein petitioner), a Promissory Note5 for ₱138,948. Pertinent
provisions of the Promissory Note read:

"FOR VALUE RECEIVED, on or before the date listed below, I/We promise to pay jointly and
severally Radiowealth Finance Co. or order the sum of ONE HUNDRED THIRTY EIGHT
THOUSAND NINE HUNDRED FORTY EIGHT Pesos (₱138,948.00) without need of notice or
demand, in installments as follows:

₱11,579.00 payable for 12 consecutive months starting on ________ 19__ until the amount of
₱11,579.00 is fully paid. Each installment shall be due every ____ day of each month. A late
payment penalty charge of two and a half (2.5%) percent per month shall be added to each
unpaid installment from due date thereof until fully paid.

x x x           x x x          x x x

It is hereby agreed that if default be made in the payment of any of the installments or late
payment charges thereon as and when the same becomes due and payable as specified above, the
total principal sum then remaining unpaid, together with the agreed late payment charges
thereon, shall at once become due and payable without need of notice or demand.

x x x           x x x          x x x

If any amount due on this Note is not paid at its maturity and this Note is placed in the hands of
an attorney or collection agency for collection, I/We jointly and severally agree to pay, in
addition to the aggregate of the principal amount and interest due, a sum equivalent to ten (10%)
per cent thereof as attorney’s and/or collection fees, in case no legal action is filed, otherwise, the
sum will be equivalent to twenty-five (25%) percent of the amount due which shall not in any
case be less than FIVE HUNDRED PESOS (P500.00) plus the cost of suit and other litigation
expenses and, in addition, a further sum of ten per cent (10%) of said amount which in no case
shall be less than FIVE HUNDRED PESOS (P500.00), as and for liquidated damages."6

Thereafter, respondents defaulted on the monthly installments. Despite repeated demands, they
failed to pay their obligations under their Promissory Note.

On June 7, 1993, petitioner filed a Complaint7 for the collection of a sum of money before the
Regional Trial Court of Manila, Branch 14.8 During the trial, Jasmer Famatico, the credit and
collection officer of petitioner, presented in evidence the respondents’ check payments, the
demand letter dated July 12, 1991, the customer’s ledger card for the respondents, another
demand letter and Metropolitan Bank dishonor slips. Famatico admitted that he did not have
personal knowledge of the transaction or the execution of any of these pieces of documentary
evidence, which had merely been endorsed to him.

On July 4, 1994, the trial court issued an Order terminating the presentation of evidence for the
petitioner.9 Thus, the latter formally offered its evidence and exhibits and rested its case on July
5, 1994.

Respondents filed on July 29, 1994 a Demurrer to Evidence10 for alleged lack of cause of action.
On November 4, 1994, the trial court dismissed11 the complaint for failure of petitioner to
substantiate its claims, the evidence it had presented being merely hearsay.

On appeal, the Court of Appeals (CA) reversed the trial court and remanded the case for further
proceedings.

Hence, this recourse.12

Ruling of the Court of Appeals

According to the appellate court, the judicial admissions of respondents established their
indebtedness to the petitioner, on the grounds that they admitted the due execution of the
Promissory Note, and that their only defense was the absence of an agreement on when the
installment payments were to begin. Indeed, during the pretrial, they admitted the genuineness
not only of the Promissory Note, but also of the demand letter dated July 12, 1991. Even if the
petitioner’s witness had no personal knowledge of these documents, they would still be
admissible "if the purpose for which [they are] produced is merely to establish the fact that the
statement or document was in fact made or to show its tenor[,] and such fact or tenor is of
independent relevance."

Besides, Articles 19 and 22 of the Civil Code require that every person must -- in the exercise of
rights and in the performance of duties -- act with justice, give all else their due, and observe
honesty and good faith. Further, the rules on evidence are to be liberally construed in order to
promote their objective and to assist the parties in obtaining just, speedy and inexpensive
determination of an action.

Issue

The petitioner raises this lone issue:

"The Honorable Court of Appeals patently erred in ordering the remand of this case to the trial
court instead of rendering judgment on the basis of petitioner’s evidence."13

For an orderly discussion, we shall divide the issue into two parts: (a) legal effect of the
Demurrer to Evidence, and (b) the date when the obligation became due and demandable.
 The Court’s Ruling

The Petition has merit. While the CA correctly reversed the trial court, it erred in remanding the
case "for further proceedings."

Consequences of a Reversal, on Appeal, of a Demurrer to Evidence

Petitioner contends that if a demurrer to evidence is reversed on appeal, the defendant should be
deemed to have waived the right to present evidence, and the appellate court should render
judgment on the basis of the evidence submitted by the plaintiff. A remand to the trial court "for
further proceedings" would be an outright defiance of Rule 33, Section 1 of the 1997 Rules of
Court.

On the other hand, respondents argue that the petitioner was not necessarily entitled to its claim,
simply on the ground that they lost their right to present evidence in support of their defense
when the Demurrer to Evidence was reversed on appeal. They stress that the CA merely found
them indebted to petitioner, but was silent on when their obligation became due and demandable.

The old Rule 35 of the Rules of Court was reworded under Rule 33 of the 1997 Rules, but the
consequence on appeal of a demurrer to evidence was not changed. As amended, the pertinent
provision of Rule 33 reads as follows:

"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 is granted but on appeal the order of dismissal is reversed he shall be
deemed to have waived the right to present evidence."14

Explaining the consequence of a demurrer to evidence, the Court in Villanueva Transit v.

Javellana15 pronounced:

"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 plaintiff’s 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 plaintiff’s 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 defendant’s 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 losses his right to present evidence in his behalf and he shall
have been deemed to have elected to stand on the insufficiency of plaintiff’s 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 plaintiff’s evidence." (Underscoring supplied)

In other words, defendants who present a demurrer to the plaintiff’s evidence retain the right to
present their own evidence, if the trial court disagrees with them; if the trial court agrees with
them, but on appeal, the appellate court disagrees with both of them and reverses the dismissal
order, the defendants lose the right to present their own evidence.16 The appellate court shall, in
addition, resolve the case and render judgment on the merits, inasmuch as a demurrer aims to
discourage prolonged litigations.17

In the case at bar, the trial court, acting on respondents’ demurrer to evidence, dismissed the
Complaint on the ground that the plaintiff had adduced mere hearsay evidence. However, on
appeal, the appellate court reversed the trial court because the genuineness and the due execution
of the disputed pieces of evidence had in fact been admitted by defendants.

Applying Rule 33, Section 1 of the 1997 Rules of Court, the CA should have rendered judgment
on the basis of the evidence submitted by the petitioner. While the appellate court correctly ruled
that "the documentary evidence submitted by the [petitioner] should have been allowed and
appreciated xxx," and that "the petitioner presented quite a number of documentary exhibits xxx
enumerated in the appealed order,"18 we agree with petitioner that the CA had sufficient evidence
on record to decide the collection suit. A remand is not only frowned upon by the Rules, it is also
logically unnecessary on the basis of the facts on record.

Due and Demandable Obligation

Petitioner claims that respondents are liable for the whole amount of their debt and the interest
thereon, after they defaulted on the monthly installments.

Respondents, on the other hand, counter that the installments were not yet due and demandable.
Petitioner had allegedly allowed them to apply their promotion services for its financing business
as payment of the Promissory Note. This was supposedly evidenced by the blank space left for
the date on which the installments should have commenced.19 In other words, respondents
theorize that the action for immediate enforcement of their obligation is premature because its
fulfillment is dependent on the sole will of the debtor. Hence, they consider that the proper court
should first fix a period for payment, pursuant to Articles 1180 and 1197 of the Civil Code.

This contention is untenable. The act of leaving blank the due date of the first installment did not
necessarily mean that the debtors were allowed to pay as and when they could. If this was the
intention of the parties, they should have so indicated in the Promissory Note. However, it did
not reflect any such intention.

On the contrary, the Note expressly stipulated that the debt should be amortized monthly in
installments of ₱11,579 for twelve consecutive months. While the specific date on which each
installment would be due was left blank, the Note clearly provided that each installment should
be payable each month.

Furthermore, it also provided for an acceleration clause and a late payment penalty, both of
which showed the intention of the parties that the installments should be paid at a definite date.
Had they intended that the debtors could pay as and when they could, there would have been no
need for these two clauses.

Verily, the contemporaneous and subsequent acts of the parties manifest their intention and
knowledge that the monthly installments would be due and demandable each month.20 In this
case, the conclusion that the installments had already became due and demandable is bolstered
by the fact that respondents started paying installments on the Promissory Note, even if the
checks were dishonored by their drawee bank. We are convinced neither by their avowals that
the obligation had not yet matured nor by their claim that a period for payment should be fixed
by a court.

Convincingly, petitioner has established not only a cause of action against the respondents, but
also a due and demandable obligation. The obligation of the respondents had matured and they
clearly defaulted when their checks bounced. Per the acceleration clause, the whole debt became
due one month (April 2, 1991) after the date of the Note because the check representing their
first installment bounced.

As for the disputed documents submitted by the petitioner, the CA ruling in favor of their
admissibility, which was not challenged by the respondents, stands. A party who did not appeal
cannot obtain affirmative relief other than that granted in the appealed decision.21

It should be stressed that respondents do not contest the amount of the principal
obligation.1âwphi1 Their liability as expressly stated in the Promissory Note and found by the
CA is "₱13[8],948.0022 which is payable in twelve (12) installments at ₱11,579.00 a month for
twelve (12) consecutive months." As correctly found by the CA, the "ambiguity" in the
Promissory Note is clearly attributable to human error.23

Petitioner, in its Complaint, prayed for "14% interest per annum from May 6, 1993 until fully
paid." We disagree.1âwphi1 The Note already stipulated a late payment penalty of 2.5 percent
monthly to be added to each unpaid installment until fully paid. Payment of interest was not
expressly stipulated in the Note. Thus, it should be deemed included in such penalty.

In addition, the Note also provided that the debtors would be liable for attorney’s fees equivalent
to 25 percent of the amount due in case a legal action was instituted and 10 percent of the same
amount as liquidated damages. Liquidated damages, however, should no longer be imposed for
being unconscionable.24 Such damages should also be deemed included in the 2.5 percent
monthly penalty. Furthermore, we hold that petitioner is entitled to attorney’s fees, but only in a
sum equal to 10 percent of the amount due which we deem reasonable under the proven facts.25
The Court deems it improper to discuss respondents' claim for moral and other damages. Not
having appealed the CA Decision, they are not entitled to affirmative relief, as already explained
earlier.26

WHEREFORE, the Petition is GRANTED. The appealed Decision is MODIFIED in that the
remand is SET ASIDE and respondents are ordered TO PAY ₱138,948, plus 2.5 percent penalty
charge per month beginning April 2, 1991 until fully paid, and 10 percent of the amount due as
attorney’s fees. No costs.

SO ORDERED.

G.R. No. 186001               October 2, 2009

ANTONIO CABADOR, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, Respondent.

DECISION

ABAD, J.:

Before the Court is a petition for review on certiorari, assailing the Court of Appeals’ (CA)
Decision of August 4, 20081 and Resolution of October 28, 20082 in CA-G.R. SP 100431 that
affirmed the August 31, 2006 Order3 of the Regional Trial Court (RTC) of Quezon City.

The facts are not disputed.

On June 23, 2000 the public prosecutor accused petitioner Antonio Cabador before the RTC of
Quezon City in Criminal Case Q-00-93291 of murdering, in conspiracy with others, Atty. Jun N.
Valerio.4 On February 13, 2006, after presenting only five witnesses over five years of
intermittent trial, the RTC declared at an end the prosecution’s presentation of evidence and
required the prosecution to make a written or formal offer of its documentary evidence within 15
days from notice.5 But the public prosecutor asked for three extensions of time, the last of which
was to end on July 28, 2006. Still, the prosecution did not make the required written offer.

On August 1, 2006 petitioner Cabador filed a motion to dismiss the case,6 complaining of a

turtle-paced proceeding in the case since his arrest and detention in 2001 and invoking his right
to a speedy trial. Further, he claimed that in the circumstances, the trial court could not consider
any evidence against him that had not been formally offered. He also pointed out that the
prosecution witnesses did not have knowledge of his alleged part in the crime charged.

Unknown to petitioner Cabador, however, four days earlier or on July 28, 2006 the prosecution
asked the RTC for another extension of the period for its formal offer, which offer it eventually
made on August 1, 2006, the day Cabador filed his motion to dismiss.7
On August 31, 2006 the RTC issued an Order treating petitioner Cabador’s August 1, 2006
motion to dismiss as a demurrer to evidence. And, since he filed his motion without leave of
court, the RTC declared him to have waived his right to present evidence in his defense. The trial
court deemed the case submitted for decision insofar as he was concerned. Cabador filed a
motion for reconsideration of this Order but the RTC denied it on February 19, 2007.8 Cabador
questioned the RTC’s actions before the CA but on August 4, 2008 the latter denied his petition
and affirmed the lower court’s actions.9 With the CA’s denial of his motion for reconsideration,
on October 28, 2008 petitioner came to this Court via a petition for review on certiorari.

The issue in this case is whether or not petitioner Cabador’s motion to dismiss before the trial
court was in fact a demurrer to evidence filed without leave of court, with the result that he
effectively waived his right to present evidence in his defense and submitted the case for
decision insofar as he was concerned.

The trial proper in a criminal case usually has two stages: first, the prosecution’s presentation of
evidence against the accused and, second, the accused’s presentation of evidence in his defense.
If, after the prosecution has presented its evidence, the same appears insufficient to support a
conviction, the trial court may at its own initiative or on motion of the accused dispense with the
second stage and dismiss the criminal action.10 There is no point for the trial court to hear the
evidence of the accused in such a case since the prosecution bears the burden of proving his guilt
beyond reasonable doubt. The order of dismissal amounts to an acquittal.

But because some have in the past used the demurrer in order to delay the proceedings in the
case, the remedy now carries a caveat. When the accused files a demurrer without leave of court,
he shall be deemed to have waived the right to present evidence and the case shall be considered
submitted for judgment.11 On occasions, this presents a problem such as when, like the situation
in this case, the accused files a motion to dismiss that, to the RTC, had the appearance of a
demurrer to evidence. Cabador insists that it is not one but the CA, like the lower court, ruled
that it is.

This Court held in Enojas, Jr. v. Commission on Elections12 that, to determine whether the
pleading filed is a demurer to evidence or a motion to dismiss, the Court must consider (1) the
allegations in it made in good faith; (2) the stage of the proceeding at which it is filed; and (3) the
primary objective of the party filing it.

Here, the pertinent portions of petitioner Cabador’s motion to dismiss read as follows:

2. On November 9, 2001, the accused was arrested and subsequently brought to the
Quezon City jail through a commitment order dated November 21, 2001 where he had
been detained during the course of this case.

3. The accused was arraigned on January 8, 2002 and trial began soon after.

4. UP-OLA entered its appearance as counsel for the accused on January 20, 2005.
5. On February 10, 2006, the Honorable Court terminated the presentation of evidence for
the prosecution considering that the case has been going on for 5 years already and
during that period the prosecution has only presented 5 witnesses. Moreover, xxx there
had been numerous postponements due to failure of the prosecution to ensure the
presence of its witnesses.

6. In an order dated March 31, 2006, the Honorable court required the public prosecutor
to submit its formal offer of evidence within fifteen (15) days from receipt of such order.

7. On April 17, 2006, the public prosecutor was again absent so the presentation of
evidence for the accused was reset to June 6, 2006.

8. During the same hearing, the Prosecution was again granted an additional fifteen (15)
days within which to file their formal offer of evidence.

9. On June 6, 2006, the public prosecutor again failed to appear and to file their formal
offer of evidence. In an order, the Honorable Court again extended to the prosecution an
additional fifteen (15) days from receipt of the order within which to file their formal
offer of evidence.

10. On June 28, 2006, the Honorable Court issued an order granting the prosecution a
thirty-day extension, or until July 28, 2006 within which to file their formal offer of
evidence since the public prosecutor was on leave.

11. Upon the expiration of the extension granted by the Honorable Court, the prosecution
failed to file their formal offer of evidence.

10. (Sic) Despite three (3) extensions, the prosecution failed to file formal offer of
evidence.

11. (Sic) Sec. 34, Rule 132 of the Rules of Court provides that "the court shall consider
no evidence which has not been formally offered." A formal offer is necessary, since
judges are required to base their findings of fact and their judgment solely and strictly
upon the evidence offered by the parties at the trial (Ong vs. CA, GR No. 117103).
Hence, without any formal offer of evidence, this Honorable Court has no evidence to
consider.

12. The charge against the accused has no leg to stand on. The witnesses that had been
presented by the prosecution testified mainly on the occurrences on the night of the
incident and had no knowledge of any connection with or any participation by the
accused in the incident.

13. The hearings of the case have been delayed since 2001 through no fault of the defense
to the prejudice of the rights of the accused to a speedy trial, mandated by no less than
Art. III, Sec. 16 of the Constitution.
 14. Since UP-OLA had entered its appearance in 2005, the case had been reset for twelve
(12) times, most of which are due to the fault or absence of the prosecution. For the five
year duration of the case, the prosecution still has not presented any evidence to prove the
guilt of the accused beyond reasonable doubt. Meanwhile, the accused has been unduly
stripped of this liberty for more than five (5) years upon an unsubstantiated charge.

15. The accused was injured and debilitated in the course of his arrest which resulted in
the amputation of his left leg. His movement is severely hampered and his living
conditions are less adequate. To subject him to further delays when there is no substance
to the charge against him would tantamount to injustice.13

It can be seen from the above that petitioner Cabador took pains to point out in paragraphs 2, 3,
5, 6, 7, 8, 9, 10, 11, "10 (sic)," 13, 14, and 15 above how trial in the case had painfully dragged
on for years. The gaps between proceedings were long, with hearings often postponed because of
the prosecutor’s absence. This was further compounded, Cabador said, by the prosecution’s
repeated motions for extension of time to file its formal offer and its failure to file it within such
time. Cabador then invoked in paragraph 13 above his right to speedy trial. But the RTC and the
CA simply chose to ignore these extensive averments and altogether treated Cabador’s motion as
a demurrer to evidence because of a few observations he made in paragraphs "11 (sic)" and 12
regarding the inadequacy of the evidence against him.

In criminal cases, a motion to dismiss may be filed on the ground of denial of the accused’s right
to speedy trial.14 This denial is characterized by unreasonable, vexatious, and oppressive delays
without fault of the accused, or by unjustified postponements that unreasonably prolonged the
trial.15 This was the main thrust of Cabador’s motion to dismiss and he had the right to bring this
up for a ruling by the trial court.

Cabador of course dropped a few lines in his motion to dismiss in paragraphs "11 (sic)" and 12,
saying that the trial court "has no evidence to consider," "the charge has no leg to stand on," and
that "the witnesses x x x had no knowledge of any connection with or any participation by the
accused in the incident." But these were mere conclusions, highlighting what five years of trial
had accomplished.

The fact is that Cabador did not even bother to do what is so fundamental in any demurrer. He
did not state what evidence the prosecution had presented against him to show in what respects
such evidence failed to meet the elements of the crime charged. His so-called "demurrer" did not
touch on any particular testimony of even one witness. He cited no documentary exhibit. Indeed,
he could not because, he did not know that the prosecution finally made its formal offer of
exhibits on the same date he filed his motion to dismiss.16 To say that Cabador filed a demurrer
to evidence is equivalent to the proverbial blind man, touching the side of an elephant, and
exclaiming that he had touched a wall.

Besides, a demurrer to evidence assumes that the prosecution has already rested its case. Section
23, Rule 119 of the Revised Rules of Criminal Procedure, reads:
Demurrer to evidence. – After the prosecution rests its case, the court may dismiss the action on
the ground of insufficiency of evidence (1) on its own initiative after giving the prosecution the
opportunity to be heard or (2) upon demurrer to the evidence filed by the accused with or without
leave of court. (Emphasis supplied)1awphi1

Here, after the prosecution filed its formal offer of exhibits on August 1, 2006, the same day
Cabador filed his motion to dismiss, the trial court still needed to give him an opportunity to
object to the admission of those exhibits. It also needed to rule on the formal offer. And only
after such a ruling could the prosecution be deemed to have rested its case. Since Cabador filed
his motion to dismiss before he could object to the prosecution’s formal offer, before the trial
court could act on the offer, and before the prosecution could rest its case, it could not be said
that he had intended his motion to dismiss to serve as a demurrer to evidence.

In sum, tested against the criteria laid down in Enojas, the Court finds that petitioner Cabador
filed a motion to dismiss on the ground of violation of his right to speedy trial, not a demurrer to
evidence. He cannot be declared to have waived his right to present evidence in his defense.

On a final note, a demurrer to evidence shortens the proceedings in criminal cases. Caution must,
however, be exercised17 in view of its pernicious consequence on the right of the accused to
present evidence in his defense, the seriousness of the crime charged, and the gravity of the
penalty involved.

WHEREFORE, the petition is GRANTED, the August 4, 2008 Decision and the October 28,
2008 Resolution of the Court of Appeals in CA-G.R. SP 100431 are REVERSED and SET
ASIDE, and the August 31, 2006 Order of the Regional Trial Court of Quezon City, Branch 81 is
NULLIFIED. The latter court is DIRECTED to resolve petitioner Antonio Cabador’s motion to
dismiss based on the circumstances surrounding the trial in the case.

SO ORDERED.

G.R. No. 213286, August 26, 2015

MAMERTA LOPEZ CLAUDIO, EDUARDO L. CLAUDIO, ASUNCION CLAUDIO-

CONTEGINO, ANA CLAUDIO-ISULAT, DOLORES CLAUDIO-MABINI, AND
FERMIN L. CLAUDIO, Petitioners, v. SPOUSES FEDERICO AND NORMA
SARAZA, Respondent.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari seeking to reverse and set aside the October 24, 2013
Decision1 and the July 1, 2014 Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No.
96051, which affirmed in toto the January 21, 2011 Order of the Regional Trial Court of Pasay
City, Branch 108 (RTC), in Civil Case No. 04-0661-CFM, a case of annulment of sale, power of
attorney and mortgage.
The Facts

The case traces its roots to Civil Case No. 04-0661-CFM, for annulment of sale, power of
attorney and mortgage with prayer for damages filed before the RTC on September 28, 2004 by
petitioners Mamerta Lopez Claudio (Mamerta), Eduardo L. Claudio, Asuncion Claudio-
Contegino (Asuncion), Ana Claudio-Isulat, Dolores Claudio-Mabini, and Fermin L. Claudio
(Fermin) against respondents Florentino Claudio (Florentino) and Spouses Federico and Norma
Saraza (Spouses Saraza).

The complaint alleged that Porfirio Claudio (Porfirio) and his wife, Mamerta, during their
marriage, acquired ten (10) parcels of land in Pasay City including the property covered by
Transfer Certificate of Title (TCT) No. 142989; that on June 18, 2004, Florentino made it appear
that his parents, Porfirio and Mamerta Claudio, sold to him the lot covered by TCT No. 142989
for P500,000.00 thru a deed of absolute sale sometime in October 2003; that the said deed of sale
was void because the signatures of the vendors were forged and there was no consideration for
the sale; that the signatures of petitioners Fermin and Asuncion appearing in the same deed of
sale, expressing their conformity to the conveyance, were likewise forged; and that subsequently,
Florentino sought the registration of the said property in his name before the Register of Deeds
of Pasay City.

It was further averred in the complaint that on June 22, 2004, Florentino executed a deed of real
estate mortgage over the subject lot with special power to sell the mortgaged property without
judicial proceedings, in favor of Spouses Saraza to secure the payment of a loan in the aggregate
amount of P1,000,000.00; that Spouses Saraza were mortgagees in bad faith because they knew
fully well that Florentino could not have acquired the subject property from his parents because
Porfirio had long been deceased on May 31, 1997 while Mamerta was in the United States of
America at the time of the alleged sale; that Spouses Saraza did not conduct a credit investigation
on Florentino to ascertain the validity of his title and his authority to mortgage the subject lot;
that the real estate mortgage was void because it emanated from a falsified deed of absolute sale
and void title; that the registration of the real estate mortgage, together with the special power of
attorney and deed of conveyances, before the Register of Deeds was procured through fraud; that
it was only on June 28, 2004 that TCT No. 142989 was cancelled and, in lieu thereof, TCT No.
145979 was issued in the name of Florentino; and that for failure of mortgagor Florentino to
redeem the subject property, it was consolidated in the name of Spouses Saraza.

Spouses Saraza moved for the dismissal of the complaint contending that the issue as to whether
or not the petitioners had the legal right to proceed against them could be resolved even without
a trial. On May 18, 2005, the RTC issued an order denying the motion to dismiss for lack of
merit.

In their answer, Spouses Saraza interposed the defense that the lot now covered by TCT No.
145979, which was used as collateral in the real estate mortgage contract, was valid and that the
mortgage was enforceable.

After the presentation of the petitioners' evidence in chief, Spouses Saraza moved for leave of
court to file a demurrer to evidence. On December 15, 2009, they filed their Demurrer to
Evidence praying for the dismissal of the civil case anchored on the ground of insufficiency of
evidence.

On January 21, 2010, the RTC issued the assailed order, the dispositive portion of which as
quoted by the CA, reads:cralawlawlibrary

WHEREFORE, the Demurrer to Evidence with Leave filed by defendants Sarazas is hereby
GRANTED and the Complaint against them is hereby Dismissed without prejudice.

SO ORDERED.3
The petitioners filed a motion for reconsideration of the January 21, 2010 Order, but it was
denied by the RTC in its June 4, 2010 Order.4cralawrednad

Not in conformity, the petitioners appealed the order of dismissal of Civil Case No. 04-0661-
CFM before the CA.

In its assailed decision, dated October 24, 2013, the CA found no cogent reason to disturb the
findings and conclusions of the RTC. It held that Spouses Saraza had the right to rely in good
faith on TCT No. 145979, which covered the lot given as security by Florentino, considering that
there was no showing of any sign to excite suspicion. Thus, they were under no obligation to
look beyond what appeared on the face of the certificate of title and investigate it. The appellate
court deemed Spouses Saraza as innocent mortgagees for value and as such, the petitioners had
shown no right to relief against them. Thus, Spouses Saraza and their mortgage lien were entitled
to protection. The fallo of its decision states:cralawlawlibrary
WHEREFORE, the 21 January 2011 Order of the Regional Trial Court of Pasay City, Branch
108 in Civil Case No. 04-0661-CFM is hereby AFFIRMED in toto.

Cost against appellants.

SO ORDERED.5
Unfazed, the petitioners filed the subject petition and presented for the Court's review the
following
ISSUES

WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE

RESPONDENTS ARE MORTGAGEES IN GOOD FAITH BECAUSE WHEN THE
MORTGAGE WAS ALLEGEDLY EXECUTED ON AUGUST 11, 2004 THE TITLE HAS
BEEN TRANSFERRED TO FLORENTINO CLAUDIO ON JUNE 28, 2004.

II

WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT EVEN

IF THE REAL ESTATE MORTGAGE WAS ENTERED INTO BETWEEN THE
MORTGAGOR AND THE MORTGAGEE ON JUNE 22, 2004, THERE WAS A DEED
OF ABSOLUTE SALE WHICH DESCRIBED THE PROPERTY INVOLVED AND WAS
EXECUTED ON JUNE 10, 2004 BETWEEN VENDOR PORFIRIO CLAUDIO AND
VENDEE FLORENTINO CLAUDIO.

III

WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE

RESPONDENTS ARE NO LONGER DUTY BOUND TO LOOK BEYOND THE
TRANSFER CERTIFICATE OF TITLE AS THE LAND WAS REGISTERED IN THE
NAME OF FLORENTINO CLAUDIO.

IV

WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT THE

RESPONDENTS ARE MORTGAGEES IN GOOD FAITH BECAUSE THE
AGREEMENT WAS REGISTERED IN THE TITLE A FEW DAYS AFTER THE
AGREEMENT WAS EXECUTED.6
It is the position of the petitioners that Florentino had no title to the mortgaged property, that he
was not its registered owner at the time he entered into a real estate mortgage agreement with
Spouses Saraza on June 22, 2004; and that it was only on June 28, 2004 or six (6) days after the
execution of the mortgage contract that TCT No. 145979 was issued to Florentino. The
petitioners argue that the principle that a mortgagee for value need not look beyond the face of
the certificate of title finds no application where the mortgagor is not the registered owner and
has no certificate of title at the time of the execution of the mortgage agreement. They contend
that the failure of Spouses Saraza to ascertain if there was any flaw in the mortgagor's ownership
over the subject property, to examine its status and to determine the mortgagor's right to
mortgage the property as collateral of the loan would hardly make them mortgagees in good
faith.

Spouses Saraza, on the other hand, criticize the present petition as a mere reiteration or rehash of
the arguments set forth by the petitioners in their pleadings filed before the RTC and the CA.
Other than these issues already judiciously considered and squarely passed upon, the petitioners
failed to advance any compelling reason for the modification, much less reversal, of the assailed
October 24, 2013 Decision of the CA.7cralawrednad

The petitioners, in reply, theorize that Spouses Saraza did not offer any counter-argument in their
comment because they failed to grasp the gravity and substance of the issues raised in the subject
petition, notably the issue that the CA overlooked and misappreciated material facts which, if
properly taken into account would alter the outcome of the case.8cralawrednad

The Court's Ruling

The issue before this Court now is whether the RTC erred in granting Spouses Saraza's demurrer
to evidence. Corollary to this is the issue of whether or not they were mortgagees in good faith.

The petition is meritorious. The Court finds that Spouses Saraza are not mortgagees in good
faith.

Preliminarily, the Court notes that the issue of whether a mortgagee is in good faith generally
cannot be entertained in a petition filed under Rule 45 of the Rules of Court. This is because the
ascertainment of good faith or the lack thereof, and the determination of negligence are factual
matters which lie outside the scope of a petition for review on certiorari.9 A recognized
exception to this rule, however, is when there is a misapprehension of facts or when the inference
drawn from the facts is manifestly mistaken and, hence, a review of factual issues is
allowed.10 The case at bench falls under the exception.

In Cavite Development Bank v. Lim,11 the Court explained the doctrine of mortgagee in good
faith, thus:cralawlawlibrary
There is, however, a situation where, despite the fact that the mortgagor is not the owner of the
mortgaged property, his title being fraudulent, the mortgage contract and any foreclosure sale
arising therefrom are given effect by reason of public policy. This is the doctrine of "the
mortgagee in good faith" based on the rule that all persons dealing with property covered by a
Torrens Certificate of Title, as buyers or mortgagees, are not required to go beyond what appears
on the face of the title. The public interest in upholding the indefeasibility of a certificate of title,
as evidence of the lawful ownership of the land or of any encumbrance thereon, protects a buyer
or mortgagee who, in good faith, relied upon what appears on the face of the certificate of title.12
Verily, a mortgagee has a right to rely in good faith on the certificate of title of the mortgagor
and, in the absence of any sign that might arouse suspicion, has no obligation to undertake
further investigation. Accordingly, even if the mortgagor is not the rightful owner of, or does not
have a valid title to, the mortgaged property, the mortgagee in good faith is entitled to
protection.13 This doctrine presupposes, however, that the mortgagor, who is not the rightful
owner of the property, has already succeeded in obtaining a Torrens title over the property in his
name and that, after obtaining the said title, he succeeds in mortgaging the property to another
who relies on what appears on the said title.14cralawrednad

In the assailed decision, the CA stated that as borne by the records, TCT No. 145979 had been
issued days before Florentino and Spouses Saraza executed a mortgage agreement on August 11,
2004. It was of the view that Spouses Saraza had the right to rely on the correctness of TCT No.
145979 and, in the absence of any sign that might arouse suspicion, they were no longer required
to look beyond the certificate or obligated to undertake further investigation to determine the
actual owner or the real property.

The conclusion of the CA is specious as it is baseless and contrary to the evidence on record.

Evidence shows that the real estate mortgage, constituted on the subject property, was executed
on June 22, 2004, while TCT No. 145979, in the name of Florentino, was issued by the Register
of Deeds only six (6) days later or on June 28, 2004. Evidently, the property, offered as collateral
to the loan of P1 Million, was not in Florentino's name yet when he entered into a mortgage
agreement with Spouses Saraza.

A careful perusal of the special power to sell mortgaged property without judicial
proceedings,15 adduced by the petitioners before the RTC, would readily reveal that the same
mortgage contract was actually executed on June 22, 2004. It appears that the date June 22, 2004
was twice superimposed across "11th day of August 2004" which immediately preceded the
signatures of the parties as well as in the acknowledgment portion of the mortgage contract. The
fact that the mortgage contract was executed on June 22, 2004 was clearly shown in the
annotation of the mortgage deed at the dorsal portion of TCT No. 145979, herein reproduced for
ready reference, to wit:cralawlawlibrary
(MEMORANDUM OF ENCUMBRANCES)16

ENTRY NO. 2004-4039/T-145979 - REAL ESTATE MORTGAGE - In favor of SPS.

FEDERICO and NORMA J. SARAZA (Mortgagees), covering the property described herein to
guarantee the credit facility or principal loan obligation in the amount of ONE MILLION PESOS
(P1,000,000.00), Philippine Currency, upon terms and conditions setforth in Doc. No. 422; Page
No. 85; Book No. 33; Series of 2004 acknowledged before Notary Public Jesus B. Bongon for
Pasay City.

Date of Instrument - June 22, 2004.

Date of Inscription - June 28, 2004 - 9:50 a.m.

ROBERT M. GUILLERMO,
Registrar of Deeds17     [Emphases supplied]
Further, the Court finds it unusual that Florentino did not indicate the TCT number in the
mortgage contract, if indeed, one had already been issued in his favor. The TCT number is
essential to identify the title covering the mortgaged land. Notwithstanding the said omission,
Spouses Saraza still allowed the loan and entered into a mortgage agreement with Florentino.
Considering the substantial loan involved in the agreement, Spouses Saraza should have
undertaken the necessary steps to ascertain any flaw in the title of Florentino or to check his
capacity to transfer any interest in the mortgaged land. Instead, Spouses Saraza closed their eyes
on a fact which should put a reasonable man on guard as to the ownership of the property being
presented as security for a loan. A person who deliberately ignores a significant fact that would
create suspicion in an otherwise reasonable person is not an innocent purchaser (mortgagee) for
value.18cralawrednad

The Court also notes that the CA seemed perplexed in the latter part of its ponencia as to what
date it should declare as the date of execution of the mortgage deed. The CA
wrote:cralawlawlibrary
Certainly, defendant Florentino Claudio, as the mortgagor, is the owner of the subject property
when it was mortgaged to the appellees. In conformity with good faith and as a matter of regular
procedure, the Real Estate Mortgage was registered and annotated in the title of the mortgagor
a few days after the Real Estate Mortgage Agreement was executed, hence, it is valid and
binding against the whole world. x x x.19 [Italics supplied]
The foregoing observation of the CA is not only contrary to the evidence on record but also
vague as it had previously declared that the mortgage agreement was executed on August 11,
2004. It bears stressing that the annotation of the mortgage contract on the back of TCT No.
145979 was placed on June 28, 2004 which is definitely not "a few days after" August 11, 2004.
Indeed, the above finding of the CA created an absurd scenario wherein a mortgage contract
was first annotated on the title even before its execution by the parties on a much later
date. Curiously, Spouses Saraza never questioned or asked for the correction of the entries
pertaining to the date of the instrument and the date of annotation considering that they were the
ones who caused the mortgage encumbrance to be annotated on TCT No. 145979.

The doctrine of mortgagee in good faith only applies when the mortgagor has already obtained a
certificate of title in his or her name at the time of the mortgage.20 Accordingly, an innocent
mortgagee for value is one who entered into a mortgage contract with a mortgagor bearing a
certificate of title in his name over the mortgaged property. Such was not the situation of
Spouses Saraza. They cannot claim the protection accorded by law to innocent mortgagees for
value considering that there was no certificate of title yet in the name of Florentino to rely on
when the mortgaged contract was executed.

Good faith connotes an honest intention to abstain from taking unconscientious advantage of
another.21 Spouses Saraza could not be deemed to have acted in good faith because they knew
that they were not dealing with the registered owner of the property when it was mortgaged and
that the subject land had yet to be titled in the name of mortgagor Florentino. To repeat, the
protection accorded to a mortgagee in good faith cannot be extended to a mortgagee who
knowingly entered into a mortgage agreement wherein the title to the mortgaged property
presented was still in the name of the rightful owner and the mortgagor has no legal authority yet
to mortgage the same.

The CA went on to explain that even if the mortgagor had no title to the property at the time of
the execution of the mortgage contract, Spouses Saraza would still be considered mortgagees in
good faith because a deed of sale had already been executed prior thereto which made mortgagor
Florentino the absolute owner of the mortgaged lot, thus;
xxx And even if We would follow appellants' arguments that the Real Estate Mortgage was
entered into between the mortgagor and the mortgagees on 22 June 2004, there was the Deed of
Absolute Sale which described the property involved and was executed on 10 June 2004 between
vendor Porfirio Claudio and vendee Florentino Claudio and which was the same property
described in the Real Estate Mortgage. Eventually, the Transfer Certificate of Title in the name
of Florentino Claudio was issued on 28 June 2004 and the Real Estate Mortgage was duly
registered in the office of the Registry of Deeds of Pasay City.22
Apparently, the CA wrongly applied the doctrine of mortgagee in good faith. This doctrine has
been allowed in many instances but in situations dissimilar from the case at bench. It is based on
the rule that persons dealing with properties covered by a Torrens certificate of title are not
required to go beyond what appears on the face of the title. It is not applicable, however, to a
situation where what the mortgagor presented to the mortgagee was a mere deed of sale. In Abad
v. Guimba,23 the Court elucidated:cralawlawlibrary
The main purpose of land registration, covered by PD 1529, is to facilitate transactions relative
to real estate by giving the public the right to rely upon the face of the Torrens certificate of title.
Therefore, as a rule, the purchaser is not required to explore further than what the Certificate
indicates on its face. This rule, however, applies only to innocent purchasers for value and in
good faith; it excludes a purchaser who has knowledge of a defect in the title of the vendor, or of
facts sufficient to induce a reasonably prudent man to inquire into the status of the property.
Under Section 32 of PD 1529, an innocent purchaser for value is deemed to include an innocent
mortgagee for value.24
Besides, the evidence proffered by the petitioners tends to show that the deed of absolute sale
was a forgery because the alleged vendor, Porfirio, was already dead at the time of the
purported sale on June 10, 2004. In the certificate of death25cralawred submitted by the
petitioners, it appears that Porfirio died on May 31, 1997 in Glendora, Los Angeles, U.S.A. It is a
well-entrenched rule that a forged or fraudulent deed is a nullity and conveys no title. Moreover,
where the deed of sale states that the purchase price has been paid but, in fact, has never been
paid, the deed of sale is void ab initio for lack of consideration.26 Consequently, the purported
buyer, Florentino, could not have validly mortgaged the subject property. In a real estate
mortgage contract, it is essential that the mortgagor be the absolute owner of the property to be
mortgaged; otherwise, the mortgage is void.27cralawrednad

A demurrer to evidence is a motion to dismiss on the ground of insufficiency of evidence and is

filed after the plaintiff rests his case. It is an objection by one of the parties in an action to the
effect that the evidence, which his adversary produced, is insufficient in point of law, whether
true or not, to make out a case or sustain the issue.28 In the case at bench, the petitioners'
evidence, together with such inferences and conclusions as may be reasonably drawn therefrom,
amply supports the allegations in their complaint necessary to their claim against Spouses
Saraza. The evidence in chief of the petitioner clearly made out a very strong case against them
which would warrant recovery from them.

All told, the Court holds that the petitioners' evidence, standing alone and in the absence of
controverting evidence, would afford sufficient basis for a judgment in their favor and against
Spouses Saraza. Despite the fact that Spouses Saraza are deemed to have waived their right to
present evidence before the RTC pursuant to Section 1, Rule 3329 of the Rules of Court, still this
disposition is without prejudice to the judgment on the merits to be handed down by the RTC.

WHEREFORE, the petition is GRANTED. The October 24, 2013 Decision and the July 1,
2014 Resolution of the Court of Appeals in CA-G.R. CV No. 96051 are REVERSED and SET
ASIDE. Civil Case No. 04-0661-CFM is ordered REINSTATED as against Spouses Federico
and Norma Saraza.

Let the case be REMANDED to the Regional Trial Court, Branch 108, Pasay City, for further
proceedings.

SO ORDERED.chanrobles virtuallawlibrary

G.R. No. 191849, September 23, 2015

FREDERICK F. FELIPE, Petitioner, v. MGM MOTOR TRADING CORPORATION,

DOING BUSINESS UNDER THE NAME AND STYLE NISSAN GALLERY-ORTIGAS,
AND AYALA GENERAL INSURANCE CORPORATION, Respondents.

RESOLUTION

PEREZ, J.:
This Petition for Review on Certiorari assails the 14 January 2010 Decision1 of the Court of
Appeals and its 16 March 2010 Resolution2 in CA-G.R. CV No. 89665 affirming the 22
February 2005 Order3 of the Regional Trial Court (RTC) of Quezon City, Branch 80 which
dismissed the case for specific performance and damages on demurrer to evidence.

In his Complaint for Specific Performance and Damages against respondents MGM Motors, Inc.
(MGM Motors) and Ayala General Insurance Corporation (Ayala Insurance), petitioner
Frederick Felipe claimed that he purchased on installment basis a Nissan Terrano Wagon
through MGM Motors' authorized representative Jane Sarmiento (Sarmiento). Petitioner
allegedly gave a P200,000.00 downpayment and P5,000.00 reservation fee to Sarmiento. He
further issued seven (7) Allied Bank checks, each bearing the amount of P24,165.00 payable to
MGM Motors. On 14 May 1997, MGM Motors delivered the subject vehicle to petitioner. He
then insured the vehicle with Ayala Insurance under Policy No. PC970000440001-00-000 and
paid a premium of P40,220.67. On 15 November 1997, the subject vehicle, while parked along
Adriatico Street in Manila, was reportedly lost. He tried to claim from Ayala Insurance but the
latter refused to pay its liability causing damages to petitioner. On the other hand, MGM Motors
refused to produce, despite repeated demands, the document of sale by installment covering the
vehicle. Petitioner allegedly paid additional P200,000.00 on 7 May 1998 as partial payment for
the vehicle. The refusal of MGM Motors to produce the document and its renouncement of the
existence of the installment sale; and the subsequent unlawful insistence on a cash transaction
agreement, had caused damages to petitioner.4

In its Answer, MGM Motors denied receiving the down payment of P200,000.00 and P5,000.00
reservation fee paid through Sarmiento. The following is its version of the
controversy:chanRoblesvirtualLawlibrary

MGM Motors offered Petitioner a discount of P220,000.00 if the latter would pay in cash. MGM
Motors averred that the vehicle was delivered to petitioner on 14 May 1997 but the latter failed
to pay in cash, thus MGM Motors did not give the registration papers to petitioner. MGM Motors
sent two letters to petitioner demanding the payment for the said vehicle but the latter refused or
failed to pay. MGM Motors stated that petitioner was able to fraudulently register the vehicle
with the Land Transportation Office in his name and insure the same with Ayala Insurance.
During a negotiation, the parties agreed that petitioner's obligation amounted to P1,020,000.00.
In an effort to settle petitioner's obligation, his mother Purificacion issued a postdated check for
P1,020,000.00 as full payment for the subject vehicle but, upon maturity, the check bounced.
Consequently, MGM Motors filed a case for violation of Batas Pambansa Bilang 22 (BP 22)
against petitioner's mother. In order to settle the civil aspect of the BP 22 case, petitioner paid
P200,00.00 to MGM Motors. MGM Motors counterclaimed for damages.5

Ayala Insurance, for its part, contended that petitioner had no valid cause of action against it.
Ayala Insurance asserted that petitioner had no insurable interest because he is not the owner of
the vehicle that he had insured with it. Ayala Insurance also counterclaimed for damages.6

Trial proceeded with petitioner and his father Alberto Felipe (Alberto) testifying on the behalf of
the former. Petitioner's testimony was however stricken off the record because he failed to return,
despite numerous opportunities, to the witness stand for cross-examination. Only two pieces of
evidence were admitted by the trial court: (1) the Official Receipt dated 7 May 1998 issued by
MGM Motors wherein it acknowledged receipt of P200,000.00 from petitioner; and (2) the
testimony of his father Alberto that he was present when petitioner paid P200,000.00 to MGM
Motors.

MGM Motors and Ayala Insurance filed their respective Motions to Dismiss on demurrer to
evidence.

On 22 February 2005, the RTC dismissed the case. The trial court reasoned that the evidence
admitted by the trial court do not prove the material allegations of petitioner's complaint, as well
as the alleged liability of Ayala Insurance.

Petitioner filed a motion for reconsideration from said Order but it was denied by the trial court
on 23 May 2005.7

Meanwhile, the trial, with respect to MGM Motor's counterclaim, subsisted.

On 6 June 2007, the trial court awarded P25,000.00 in attorney's fees to MGM Motors.8

Petitioner elevated the matter to the Court of Appeals. On 14 January 2010, the appellate court
gave weight to the factual findings of the trial court and found no reason to reverse its
ruling.9 Petitioner filed a motion for reconsideration but it was likewise denied by the Court of
Appeals.

In the instant petition for review on certiorari, petitioner raises a lone argument, to wit:

THE COURT OF APPEALS HAS DISPOSED OF PETITIONER'S (PLAINTIFF-APPELLANT

THEREIN) APPEAL IN A WAY NOT IN ACCORD WITH LAW OR WITH THE
APPLICABLE DECISIONS OF THIS HONORABLE TRIBUNAL, THUS COMMITTING
ERRORS THAT WARRANT REVERSAL BY THIS HONORABLE TRIBUNAL. THIS
HAPPENED WHEN:
THE COURT OF APPEALS AFFIRMED THE RULING OF THE TRIAL COURT THAT
FAILED/REFUSED TO GRANT PETITIONER THE RELIEFS PRAYED FOR IN THE
COMPLAINT DESPITE THE FACT THAT WITH THE EVIDENCE THAT HE ADDUCED
HE HAS CLEARLY, CONVINCINGLY AND PREPONDERANTLY PROVEN HIS CAUSES
OF ACTION AGAINST THE RESPONDENTS (DEFENDANTS). THIS IS TRUE EVEN IF A
CONSIDERABLE PORTION OF HIS EVIDENCE WAS DENIED ADMISSION BY THE
TRIAL COURT.10
Petitioner insists that the two pieces of evidence admitted by the trial court are sufficient to
substantiate the material allegations of the complaint. Petitioner stresses that Alberto's testimony
established that the purchase of. the subject vehicle was on installment basis from MGM Motors;
that Petitioner paid additional P200,000.00; and that MGM Motors failed and refused to deliver
the promised documents, of sale on installment despite payments having been made. The fact of
sale on installment, according to petitioner, was further proved by the receipt issued by MGM
Motors. Petitioner highlights the fact that the vehicle was actually delivered to him, thus
ownership was transferred to him upon delivery thereof. Proceeding from the same line of
argument, petitioner states that with respect to Ayala Insurance, he is already the owner of the
subject vehicle when the insurance on it was taken and when the subject vehicle was lost.
Assuming arguendo that title to the subject vehicle remained with MGM Motors, petitioner adds
that his insurable interest on the vehicle consisted of the substantial amount that he had paid on
the purchase price of the vehicle.

MGM Motors cites the Municipal Trial Court's (MTC) finding in the criminal complaint for BP
22 against petitioner's mother that the agreement. for the purchase of the subject vehicle was on
cash basis and not installment, MGM Motors echoes the trial court's ruling that petitioner failed
to substantiate the material allegations in his complaint.

On its part, Ayala Insurance puts up the argument that the only evidence submitted by petitioner
against it was the receipt of the P200,000.00 that he paid to MGM Motors. The evidence does
not constitute proof of the insurable interest. Moreover, Ayala Insurance asserts that petitioner
also failed to establish the following proof: (1) premium payment; (2) that the insurable interest
existed at the time of the loss; (3) deed of sale; (4) proximate cause of the loss is one of the perils
insured against; (5) existence of the original insurance policy. Ayala Insurance maintains that
Petitioner failed to establish his case by preponderance of evidence.

The basic issue is whether the trial court correctly granted the demurrer to evidence and
subsequently dismissed the complaint.

We agree.

A demurrer to evidence is a motion to dismiss on the ground of insufficiency of evidence and is

presented after the plaintiff rests his case. It is an objection by one of the parties in an action, to
the effect that the evidence which his adversary produced is insufficient in point of law, whether
true or not, to make out a case or sustain the issue.11

Rule 33, Section 1 of the 1997 Rules of Civil Procedure provides:

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 is granted but on appeal the order of dismissal is reversed he shall be
deemed to have waived the right to present evidence.
The essential question to be resolved in a demurrer to evidence is whether the plaintiff has been
able to show that he is entitled to his claim, and it is incumbent upon the trial court judge to
make such a determination.12

A review of the dismissal of the complaint naturally entails a calibration of the evidence to
determine whether the material allegations of the complaint were sufficiently backed by
evidence. We have repeatedly stressed that the remedy of appeal by certiorari under Rule 45 of
the Rules of Court contemplates only questions of law, not of fact.
A question of law exists when there is doubt or controversy as to what the law is on a certain
state of facts. There is a question of fact when doubt. arises as to the truth or falsity of the
statement of facts. The resolution of a question of fact necessarily involves a calibration of the
evidence, the credibility of the witnesses, the existence and the relevance of surrounding
circumstances, and the probability of specific situations. It is for this reason that this Court defers
to the factual findings of a trial judge, who has had the distinct advantage of directly observing
the witnesses on the stand and determining from their demeanor whether they were speaking or
distorting the truth.13

The questions on whether the sale was on cash or installment basis and whether petitioner had
insurable interest on the subject car are evidently questions of fact which are beyond the purview
of the instant petition.

In any event, a perusal of the records show that the trial court correctly dismissed petitioner's
complaint on demurrer to evidence.

Well-established is the rule that the burden of proof lies on the party who makes the
allegations.14 There is no dispute that the only pieces of evidence admitted in court are the
testimony of Alberto and the receipt showing MGM Motors receiving P200,000.00 from
petitioner as partial payment of the subject car. The allegation that the purchase of the vehicle
was on an installment basis was not supported by any evidence. The receipt of a partial payment
does not suffice to prove that the purchase was made on an installment basis. Petitioner did not
present any document to prove said allegation while MGM Motors produced a sales invoice
wherein it was stated that the mode of payment is "COD" or cash on delivery.

In the same vein, petitioner failed to substantiate his allegation against Ayala Insurance.
Petitioner has the burden of proof to show that a loss occurred and said loss was covered by his
insurance policy. Considering that the trial court only admitted two pieces of evidence in
petitioner's favor and none of those tend to prove loss of the subject car and coverage thereof
under the insurance policy, petitioner is not entitled to the reliefs he had prayed for.

BASED ON THE FOREGOING, the Petition is DENIED. The 14 January 2010 Decision of
the Court of Appeals and its 16 March 2010 Resolution in CA-G.R. CV No. 89665
are AFFIRMED.

SO ORDERED.ch

G.R. No. 174673

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
FE ROA GIMENEZ AND IGNACIO B. GIMENEZ, Respondents.

DECISION
LEONEN, J.:

Rules of procedure are not ends in themselves. The object of these rules is to assist and facilitate
a trial court's function to be able to receive all the evidence of the parties, and evaluate their
admissibility and probative value in the context of the issues presented by the parties' pleadings
in order to arrive at a conclusion as to the facts that transpired. Having been able to establish the
facts, the trial court will then be able to apply the law and determine whether a complainant is
deserving of the reliefs prayed for in the pleading.

Dismissal on the basis of a very strict interpretation of procedural rules without a clear
demonstration of the injury to a substantive right of the defendant weighed against 19 years of
litigation actively participated in by both parties should not be encouraged.

There is likewise serious reversible error, even grave abuse of discretion, when the
Sandiganbayan dismisses a case on demurrer to evidence without a full statement of its
evaluation of the evidence presented and offered and the interpretation of the relevant law. After
all, dismissal on the basis of demurrer to evidence is similar to a judgment. It is a final order
ruling on the merits of a case.

This is a Petition1 for Review on Certiorari assailing the Sandiganbayan Resolutions dated May
25, 20062 and September 13, 2006.3 The Sandiganbayan deemed petitioner Republic of the
Philippines (Republic) to have waived the filing of its Formal Offer of Evidence4 and granted the
Motion to Dismiss of respondents Spouses Ignacio Gimenez and Fe Roa Gimenez (Gimenez
Spouses) based on demurrer to evidence.5

The Republic, through the Presidential Commission on Good Government (PCGG), instituted a
Complaint6 for Reconveyance, Reversion, Accounting, Restitution and Damages against the
Gimenez Spouses before the Sandiganbayan.7 "The Complaint seeks to recover . . . ill-gotten
wealth . . . acquired by [the Gimenez Spouses] as dummies, agents[,] or nominees of former
President Ferdinand E. Marcos and Imelda Marcos[.]"8

During trial, the Republic presented documentary evidence attesting to the positions held,
business interests, income, and pertinent transactions of the Gimenez Spouses.9 The Republic
presented the testimonies of Atty. Tereso Javier, Head of the Sequestered Assets Department of
PCGG, and of Danilo R.V. Daniel, Director of the Research and Development Department of
PCGG.10 Witnesses testified on the bank accounts and businesses owned or controlled by the
Gimenez Spouses.11

On February 27, 2006, the Sandiganbayan denied a motion to recall Danilo R.V. Daniel’s
testimony.12 The Republic then manifested that it was "no longer presenting further
evidence."13 Accordingly, the Sandiganbayan gave the Republic 30 days or until March 29, 2006
"to file its formal offer of evidence."14

On March 29, 2006, the Republic moved "for an extension of thirty (30) days or until April 28,
2006, within which to file [its] formal offer of evidence."15 This Motion was granted by the
Sandiganbayan in a Resolution of the same date.16
On April 27, 2006, the Republic moved for an additional 15 days or until May 13, 2006 within
which to file its Formal Offer of Evidence.17 This Motion was granted by the Sandiganbayan in a
Resolution dated May 8, 2006.18 Following this, no additional Motion for extension was filed by
the Republic.

In the first assailed Resolution dated May 25, 2006, the Sandiganbayan noted that the Republic
failed to file its Formal Offer of Evidence notwithstanding repeated extensions and the lapse of
75 days from the date it terminated its presentation of evidence.19 Thus, it declared that the
Republic waived the filing of its Formal Offer of Evidence.20

The first assailed Resolution provides:

It appearing that the plaintiff has long terminated the presentation of its evidence on February 27,
2006, and it appearing further that it failed or otherwise neglected to file its written formal offer
of evidence for an unreasonable period of time consisting of 75 days (i.e., 30 days original period
plus two extension periods totaling 45 days), the filing of said written formal offer of evidence is
hereby deemed WAIVED.

WHEREFORE, the reception of the defendants’ evidence shall proceed on June 22 and 23, 2006,
both at 8:30 o’clock [sic] in the morning as previously scheduled.21

Ignacio Gimenez filed a Motion to Dismiss on Demurrer to Evidence dated May 30, 2006.22 He
argued that the Republic showed no right to relief as there was no evidence to support its cause
of action.23 Fe Roa Gimenez filed a Motion to Dismiss dated June 13, 2006 on the ground of
failure to prosecute.24 Through her own Motion to Dismiss, she joined Ignacio Gimenez’s
demurrer to evidence.25

Two days after Fe Roa Gimenez’s filing of the Motion to Dismiss or on June 15, 2006, the
Republic filed a Motion for Reconsideration [of the first assailed Resolution] and to Admit
Attached Formal Offer of Evidence.26 The pertinent portions of the Republic’s offer of
documentary exhibits attached to the Motion are summarized as follows:

Exhibits A to G and series consist of the Income Tax Returns, Certificate of Income Tax
Withheld On Compensation, Statement of Tax Withheld At Source, Schedule of Interest Income,
Royalties and Withholding Tax, Statement of Assets, Liabilities & Net Worth of Ignacio B.
Gimenez from 1980-1986 proving his legitimate income during said period. Exhibits H -J and
series refer to the Deeds of Sale and Transfer Certificates of Title proving that spouses
Gimenezes acquired several real properties.

Exhibits K and series (K-1-K-4) pertain to Checking Statements Summary issued by the

Bankers Trust Company (BTC) proving that Fe Roa Gimenez maintained a current account
under Account Number 34-714-415 with BTC. Exhibits L and series (L1-L-114) are several
BTC checks, proving that from June 1982 to April 1984, Fe Roa Gimenez issued several checks
against her BTC Current Account No. 34-714-415 payable to some individuals and entities such
as Erlinda Oledan, Vilma Bautista, The Waldorf Towers, Cartier, Gliceria Tantoco, Bulgari,
Hammer Galleries and Renato Balestra, involving substantial amount of money in US
Dollars. Exhibits M and series (M1-M-25) are several The Chase Manhattan Bank (TCMB)
checks drawn against the account of Fe Roa Gimenez under Account Number 021000021,
proving that she issued several checks drawn against her TCMB account, payable to individuals
and entities such as Gliceria Tantoco, Vilma Bautista and The Waldorf Towers, involving
substantial sums in US Dollars. Exhibit N is the Philippine National Bank (PNB), New York
Branch Office Charge Ticket No. FT 56880 dated December 9, 1982 in the amount of
US$30,000.00 for Fe Roa Gimenez proving that she received said enormous amount from the
PNB, New York Branch Office, with clearance from the Central Bank, which amount was
charged against PNB Manila. Exhibit N-1 is the PNB New York Branch Advice to Payee No.
FT 56535 dated November 12, 1982 in the amount of US$10,990.00 for Fe Roa Gimenez
proving her receipt of such amount as remitted from California Overseas Bank, Los
Angeles. Exhibits O and series (O1-O-8) refer to several Advices made by Bankers Trust AG
Zurich-Geneve Bank in Switzerland to respondent Fe Roa Gimenez proving that she maintained
a current account with said bank under Account Number 107094.50 and that from July 30, 1984
to August 30, 1984, she placed a substantial amount on time deposit in several banks, namely,
Hypobank, Luzemburg, Luxemburg, Societe Generale, Paris and Bank of Nova Scotia, London.

Exhibit P is the Certification dated March 19, 2002 issued by Director Florino O. Ibanez of the
Office of the President proving that Fe Roa Gimenez, from January 1, 1966 to April 1, 1986,
worked with the Office of the President under different positions, the last of which as
Presidential Staff Director with a salary of P87,072.00 per annum.

Exhibit Q and series (Q-1-Q-18) is the Affirmation of Ralph Shapiro filed with the United
States Court of Appeals in the case entitled, "The Republic of the Philippines vs. Ferdinand E.
Marcos, et al." which discussed certain acts of Fe Roa Gimenez and Vilma Bautista, among
others, in relation to the funds of the Marcoses.

Exhibits R and S and series (R-1, R-9; S-1-S-10) refer to the Certificate of Filing of Amended
Articles of Incorporation of GEI Guaranteed Education, Inc., the Amended Articles of
Incorporation of GEI Guaranteed Education, Inc., the Treasurer’s Affidavit executed by Ignacio
Gimenez and the Director’s Certificate executed by Roberto B. Olanday, Ignacio Gimenez and
Roberto Coyuto, Jr. proving Ignacio Gimenez and Roberto Olanday’s interests in GEl
Guaranteed Education, Inc.

Exhibits T and series (T-1-T-8) are the Advices made by the Bankers Trust AG Zurich-Geneve
Bank in Switzerland to Ignacio Gimenez proving that he maintained a current account with said
bank under Account Number 101045.50 and that from March to June, 1984, he placed a
substantial amount on time deposit in several banks, namely, Credit Lyonnais, Brussels, Societe
Generale, Paris, Credit Commercial De France, Paris and Bank of Nova Scotia, London.

Exhibits U and V and series (U-1-U-5; V1-V-18) consist of the Affidavit dated April 25, 1986
and the Declaration dated June 23, 1987 including the attachments, of Oscar Carino, Vice-
President and Manager of the PNB New York Branch, narrating in detail how the funds of the
PNB New York Branch were disbursed outside regular banking business upon the instructions of
former President Ferdinand E. Marcos and Imelda Marcos using Fe Roa Gimenez and others as
conduit.
Exhibits W and series (W-1-W-4) are the Debit memos from the PNB to Fe Roa Gimenez
while Exhibits X and X-1 are the Acknowledgments of said respondent, proving that she
received substantial amounts of money which were coursed through the PNB to be used by the
Marcos spouses for state visits and foreign trips.

Exhibit Y and series (Y-1-Y-2) is the Letter dated August 25, 1986 of Juan C. Gatmaitan,
Assistant Chief Legal Counsel of PNB to Charles G. LaBella, Assistant United States Attorney
regarding the ongoing investigation of irregular transactions at the PNB, New York Branch
proving that PNB cooperated with the United States government in connection with the
investigation on the irregular transactions of Oscar Carino at PNB New York Branch.

Exhibit Z is the service record of Fe Roa Gimenez issued by Florino O. Ibanez of the Office of
the President which proves that she worked with the Office of the President from 1966-1986
holding different positions, the last of which was Presidential Staff Director.1âwphi1

Exhibits AA and series (AA-1 –AA-2) are the several Traders Royal Bank checks drawn
against Account No. 74-702836-9 under the account name of Fe Roa Gimenez which prove that
she issued said checks payable to individuals and entities involving substantial amount of money.

Exhibits BB and CC and series (BB-1–BB-17; CC-1-CC-3) are the several Transfer of Funds
Advice from Traders Royal Bank Statements of Account of Fe Roa Gimenez, proving that she
maintained a current account under Account No. 74-7028369 at Traders Royal Bank.

Exhibits HH and series (HH-1-HH-3) are the Certification dated October 3, 2002 of Lamberto
R. Barbin, Officer-in-Charge, Malacanang Records Office, that the Statement of Assets and
Liabilities of spouses Marcoses for the years 1965 up to 1986 are not among the records on file
in said Office except 1965, 1967 and 1969; the Statement of Assets and Liabilities as of
December 31, 1969 and December 31, 1967 of former President Ferdinand Marcos; and the
Sworn Statement of Financial Condition, Assets, Income and Liabilities as of December 31,
1965 of former President Ferdinand Marcos. These documentary exhibits prove the assets and
liabilities of former President Marcos for the years 1965,1967 and 1969.

Exhibit II and series is [sic] the Statement of Assets and Liabilities as of December 31,1969
submitted by Fe Roa Gimenez which prove that her assets on that period amounted only to
P39,500.00.

Exhibit KK is the Table of Contents of Civil Case No. [0]007 before the Sandiganbayan entitled
"Republic of the Philippines vs. Ignacio B. Gimenez and Fe Roa Gimenez, et. al.", including its
Annexes which prove the assets and liabilities of spouses Gimenezes.

Exhibits KK-1 up to KK-12 are several transfer certificates of title and tax declarations in the
names of spouses Gimenezes, proving their acquisition of several real properties.

Exhibits KK-15, KK-18, KK-20 up to KK-27, KK-30, KK-32 up to KK-38 and KK-40 are
the General Information Sheet, Certificate of Filing of Amended Articles of Incorporation, and
Amended Articles of Incorporation of various corporations. These prove the corporations in
which Ignacio B. Gimenez has substantial interests.

Exhibits KK-41 up to KK-44 are the Writs and Letters of Sequestration issued by the PCGG
which prove that the shares of stocks of Ignacio Gimenez in Ignacio B. Gimenez, Securities, Inc.
and the real properties covered by Transfer Certificates of Title Nos. 137638, 132807, 126693
and 126694 located in San Fabian, Pangasinan, were sequestered by the PCGG.

Exhibit KK-45 is the Memorandum dated August 1, 1988 of Atty. Ralph S. Lee and Alexander
M. Berces, Team Supervisor and Investiogator, [sic] respectively, of IRD, PCGG, proving that
the PCGG conducted an investigation on New City Builders, Inc., Transnational Construction
Corporation, and OTO Construction and Development Corporation in relation to Ignacio B.
Gimenez and Roberto O. Olanday.

Exhibits KK-48, KK-49 and KK-50 are certain Lis Pendens from the PCGG addressed to the
concerned Register of Deeds informing that the real properties mentioned therein had been
sequestered and are the subject of Civil Case No. [0]007 before the Sandiganbayan.

Exhibits KK-51, KK-51-A, KK-52 and KK-52-A are the Letter and Writ of Sequestration
issued by the PCGG on Allied Banking Corporation and Guaranteed Education Inc. pursuant to
its mandate to go after ill-gotten wealth.

Exhibits NN, OO, PP, QQ and QQ-1 refer to the Memorandum To All Commercial Banks
dated March 14, 1986 issued by then Central Bank Governor Jose B. Fernandez and the Letter
dated March 13, 1986 of Mary Concepcion Bautista, PCGG Commissioner addressed to then
Central Bank Governor Fernandez requesting that names be added to the earlier request of
PCGG Chairman Jovito Salonga to instruct all commercial banks not to allow any withdrawal or
transfer of funds from the market placements under the names of said persons, to include spouses
Gimenezes, without authority from PCGG.

Exhibits KK and series, NN, OO, PP, QQ and QQ-1 which prove the various real properties,
business interests and bank accounts owned by spouses Gimenezes were part of the testimony of
Atty. Tereso Javier.

Exhibit RR and series (RR-1-RR-23) are the Affidavit dated July 24, 1987 of Dominador
Pangilinan, Acting President and President of Trader’s Royal Bank, and the attached
Recapitulation, Status of Banker’s Acceptances, Status of Funds and Savings Account Ledger
wherein he mentioned that Malacanang maintained trust accounts at Trader’s Royal Bank, the
balance of which is approximately 150-175 million Pesos, and that he was informed by Mr.
Rivera that the funds were given to him (Rivera) by Fe Roa Gimenez for deposit to said
accounts.

Exhibits SS and series (SS-1-SS-29) are the Affidavit dated July 23, 1987 of Apolinario K.
Medina, Executive Vice President of Traders Royal Bank and attachments, which include
Recapitulation, Status of Funds, and Messages from Traders Royal Bank Manila to various
foreign banks. In his Affidavit, Medina divulged certain numbered confidential trust accounts
maintained by Malacanang with the Trader’s Royal Bank. He further stated that the deposits
were so substantial that he suspected that they had been made by President Marcos or his family.

Exhibit TT and series (TT-1-TT-3) is [sic] the Memorandum dated July 19, 2005 of Danilo
R.V. Daniel, then Director of the Research and Development Department of PCGG regarding the
investigation conducted on the ill-gotten wealth of spouses Gimenezes, the subject matter of
Civil Case No. [0]007. He revealed that during the investigation on the ill-gotten wealth of
spouses Gimenezes, it was found out that from 1977 to 1982, several withdrawals, in the total
amount of P75,090,306.42 were made from Trust Account No. 128 (A/C 76-128) in favor of I.B.
Gimenez, I.B. Gimenez Securities and Fe Roa Gimenez.

Exhibits RR, SS, TT and their series prove that spouses Gimenez maintained bank accounts of
substantial amounts and gained control of various corporations.1âwphi1 These are also being
offered as part of the testimony of Danilo R.V. Daniel.27 (Emphasis in the original, citations
omitted)

In the second assailed Resolution dated September 13, 2006, the Sandiganbayan denied the
Republic’s Motion for Reconsideration and granted the Gimenez Spouses’ Motion to
Dismiss.28 According to the Sandiganbayan:

While it is true that litigation is not a game of technicalities and that the higher ends of
substantial justice militate against dismissal of cases purely on technical grounds, the
circumstances of this case show that the ends of justice will not be served if this Court allows the
wanton disregard of the Rules of Court and of the Court’s orders. Rules of procedure are
designed for the proper and prompt disposition of cases. . . .

The reasons invoked by the plaintiff to justify its failure to timely file the formal offer of
evidence fail to persuade this Court. The missing exhibits mentioned by the plaintiff’s counsel
appear to be the same missing documents since 2004, or almost two (2) years ago. The plaintiff
had more than ample time to locate them for its purpose. . . . Since they remain missing after
lapse of the period indicated by the Court, there is no reason why the search for these documents
should delay the filing of the formal offer of evidence.

[Petitioner’s] counsel . . . admits that faced with other pressing matters, he lost track of the time.
We cannot just turn a blind eye on the negligence of the parties and in their failure to observe the
orders of this Court. The carelessness of [petitioner’s] counsel in keeping track of the deadlines
is an unacceptable reason for the Court to set aside its Order and relax the observance of the
period set for filing the formal offer of evidence.29 (Citation omitted)

The Sandiganbayan also found that the Republic failed to prosecute its case for an unreasonable
length of time and to comply with the court’s rules.30 The court also noted that the documentary
evidence presented by the Republic consisted mostly of certified true copies.31 However, the
persons who certified the documents as copies of the original were not presented.32 Hence, the
evidence lacked probative value.33 The dispositive portion of the assailed Resolution reads:
ACCORDINGLY, there being no valid and cogent justification shown by the plaintiff for the
Court to Grant its Motion for Reconsideration and admit its Formal Offer of Evidence, the
plaintiff’s Motion for Reconsideration and to Admit Attached Formal Offer of Evidence
is DENIED. The Motion to Dismiss on Demurrer to Evidence filed by the defendant Ignacio B.
Gimenez and adopted by defendant Fe Roa Gimenez is GRANTED. The case is
then DISMISSED.

SO ORDERED.34 (Emphasis in the original)

The Republic filed its Petition for Review on Certiorari dated November 3, 2006 before this
court.35

The Gimenez Spouses were required to comment on the Petition.36 This court noted the separate
Comments37 filed by the Gimenez Spouses.38 The Republic responded to the Comments through
a Consolidated Reply39 dated June 22, 2007.

In the Resolution40 dated August 29, 2007, this court required the parties to submit their
memoranda.41

On February 18, 2008, this court resolved to require the parties to "move in the premises[.]"42

On March 2, 2012, the Republic filed a Motion for Leave to Re-open Proceedings, to File and
Admit Attached Supplement to the Petition for Certiorari.43 In this Supplement, the Republic
argued that the second assailed Resolution dated September 13, 2006 was void for failing to state
the facts and the law on which it was based.44 This Motion was granted, and the Gimenez
Spouses were required to file their Comment on the Supplement to the Petition.45 Thereafter, the
Republic filed its Reply.46

Fe Roa Gimenez filed a Rejoinder47 dated December 19, 2012 which was expunged by this court
in a Resolution48 dated January 23, 2013. Ignacio Gimenez’s Motion for Leave to File and Admit
Attached Rejoinder49 was denied.50

The Republic raised the following issues:

Whether or not the Sandiganbayan gravely erred in dismissing the case in the light of the
allegations in the Complaint which were substantiated by overwhelming evidence presented vis-
a-vis the material admissions of spouses Gimenezes as their answer failed to specifically deny
that they were dummies of former President Ferdinand E. Marcos and that they acquired illegal
wealth grossly disproportionate to their lawful income in a manner prohibited under the
Constitution and Anti-Graft Statutes.

Whether or not the Sandiganbayan gravely erred in denying petitioner’s Motion to Admit Formal
Offer of Evidence on the basis of mere technicalities, depriving petitioner of its right to due
process.
Whether or not the Sandiganbayan gravely erred in making a sweeping pronouncement that
petitioner’s evidence do not bear any probative value.51

The issues for consideration of this court are:

First, whether a Petition for Review on Certiorari was the proper remedy to assail the
Sandiganbayan Resolutions; and

Second, whether the Sandiganbayan erred in holding that petitioner Republic of the Philippines
waived the filing of its Formal Offer of Evidence and in granting respondents Ignacio Gimenez
and Fe Roa Gimenez’s Motion to Dismiss on demurrer to evidence.

We grant the Petition.

Respondent Ignacio Gimenez pictures petitioner as being confused as to the proper mode of
review of the Sandiganbayan Resolutions. According to him, petitioner claims that the
Sandiganbayan committed grave abuse of discretion.52 Hence, petitioner should have filed a
petition for certiorari under Rule 65 and not a petition for review under Rule 45 of the Rules of
Court.53 Nevertheless, the Sandiganbayan did not commit any error, and petitioner has to show
that the Sandiganbayan committed grave abuse of discretion amounting to lack of or in excess of
jurisdiction.54

Observance of the proper procedure before courts, especially before the Sandiganbayan, cannot
be stressed enough. Due process is enshrined in the Constitution, specifically the Bill of
Rights.55 "Due process [in criminal cases] guarantees the accused a presumption of innocence
until the contrary is proved[.]"56 "Mere suspicion of guilt should not sway judgment."57

To determine whether a petition for review is the proper remedy to assail the Sandiganbayan
Resolutions, we review the nature of actions for reconveyance, revision, accounting, restitution,
and damages.

Actions for reconveyance, revision, accounting, restitution, and damages for ill-gotten wealth are
also called civil forfeiture proceedings.

Republic Act No. 137958 provides for the procedure by which forfeiture proceedings may be
instituted against public officers or employees who "[have] acquired during his [or her]
incumbency an amount of property which is manifestly out of proportion to his [or her] salary as
such public officer or employee and to his [or her] other lawful income and the income from
legitimately acquired property, [which] property shall be presumed prima facie to have been
unlawfully acquired."59

This court has already settled the Sandiganbayan’s jurisdiction over civil forfeiture cases:
. . . violations of R.A. No. 1379 are placed under the jurisdiction of the Sandiganbayan, even
though the proceeding is civil in nature, since the forfeiture of the illegally acquired property
amounts to a penalty.60

In Garcia v. Sandiganbayan, et al.,61 this court re-affirmed the doctrine that forfeiture

proceedings under Republic Act No. 1379 are civil in nature.62 Civil forfeiture proceedings were
also differentiated from plunder cases:

. . . a forfeiture case under RA 1379 arises out of a cause of action separate and different from a
plunder case. . . . In a prosecution for plunder, what is sought to be established is the commission
of the criminal acts in furtherance of the acquisition of ill-gotten wealth. . . . On the other hand,
all that the court needs to determine, by preponderance of evidence, under RA 1379 is the
disproportion of respondent’s properties to his legitimate income, it being unnecessary to prove
how he acquired said properties. As correctly formulated by the Solicitor General, the forfeitable
nature of the properties under the provisions of RA 1379 does not proceed from a determination
of a specific overt act committed by the respondent public officer leading to the acquisition of
the illegal wealth.63 (Citation omitted)

To stress, the quantum of evidence required for forfeiture proceedings under Republic Act No.
1379 is the same with other civil cases — preponderance of evidence.64

When a criminal case based on demurrer to evidence is dismissed, the dismissal is equivalent to
an acquittal.65

As a rule, once the court grants the demurrer, the grant amounts to an acquittal; any further
prosecution of the accused would violate the constitutional proscription on double jeopardy.66

Hence, the Republic may only assail an acquittal through a petition for certiorari under Rule 65
of the Rules of Court:

Accordingly, a review of a dismissal order of the Sandiganbayan granting an accused’s demurrer

to evidence may be done via the special civil action of certiorari under Rule 65, based on the
narrow ground of grave abuse of discretion amounting to lack or excess of
jurisdiction.67 (Citation omitted)

In this case, a civil forfeiture under Republic Act No. 1379, petitioner correctly filed a Petition
for Review on Certiorari under Rule 45 of the Rules of Court. Section 1 of the Rule provides the
mode of appeal from judgments, final orders, or resolutions of the Sandiganbayan:

SECTION 1. Filing of petition with Supreme Court.— A party desiring to appeal by certiorari
from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the
Regional Trial Court or other courts whenever authorized by law, may file with the Supreme
Court a verified petition for review on certiorari. The petition shall raise only questions of law
which must be distinctly set forth.

II
Petitioner argues that substantial justice requires doing away with the procedural
technicalities.68 Loss of vital documentary proof warranted extensions to file the Formal Offer of
Evidence.69 Honest efforts to locate several missing documents resulted in petitioner’s inability
to file the pleading within the period granted by the Sandiganbayan.70

Respondent Ignacio Gimenez argues that petitioner cannot fault the Sandiganbayan for its
incompetence during trial.71 Even if the evidence were formally offered within the prescribed
period, PCGG’s evidence still had no probative value.72 It is solely petitioner’s fault "that the
persons who certified to the photocopies of the originals were not presented to testify[.]"73 It is
also misleading to argue that the pieces of documentary evidence presented are public
documents.74 "The documents are not public in the sense that these are official issuances of the
Philippine government."75 "The bulk consists mainly of notarized, private documents that have
simply been certified true and faithful."76

According to respondent Fe Roa Gimenez, petitioner tries to excuse its non-filing of the Formal
Offer of Evidence within the prescribed period by raising its efforts to locate the 66 missing
documents.77 However, the issue of the missing documents was laid to rest during the hearing on
November 16, 2004.78 The Sandiganbayan gave petitioner until March 2005 to produce the
documents; otherwise, these would be excluded.79 The testimonies of the witnesses related to the
missing documents would also be expunged from the case records.80

Moreover, respondent Fe Roa Gimenez claims that "[t]he Sandiganbayan did not err when it
ruled that the great bulk of the documentary evidence offered by the PCGG have no probative
value."81 Aside from the 66 missing documents it failed to present, almost all of petitioner’s
pieces of documentary evidence were mere photocopies.82 The few that were certified true copies
were not testified on by the persons who certified these documents.83

Our Rules of Court lays down the procedure for the formal offer of evidence. Testimonial
evidence is offered "at the time [a] witness is called to testify."84 Documentary and object
evidence, on the other hand, are offered "after the presentation of a party’s testimonial
evidence."85 Offer of documentary or object evidence is generally done orally unless permission
is given by the trial court for a written offer of evidence.86

More importantly, the Rules specifically provides that evidence must be formally offered to be
considered by the court. Evidence not offered is excluded in the determination of the
case.87 "Failure to make a formal offer within a considerable period of time shall be deemed a
waiver to submit it."88

Rule 132, Section 34 provides:

SEC. 34. Offer of evidence.— The court shall consider no evidence which has not been formally
offered. The purpose for which the evidence is offered must be specified.

The rule on formal offer of evidence is intertwined with the constitutional guarantee of due
process. Parties must be given the opportunity to review the evidence submitted against them and
take the necessary actions to secure their case.89 Hence, any document or object that was marked
for identification is not evidence unless it was "formally offered and the opposing counsel [was]
given an opportunity to object to it or cross-examine the witness called upon to prove or identify
it."90

This court explained further the reason for the rule:

The Rules of Court provides that "the court shall consider no evidence which has not been
formally offered." A formal offer is necessary because judges are mandated to rest their findings
of facts and their judgment only and strictly upon the evidence offered by the parties at the trial.
Its function is to enable the trial judge to know the purpose or purposes for which the proponent
is presenting the evidence. On the other hand, this allows opposing parties to examine the
evidence and object to its admissibility. Moreover, it facilitates review as the appellate court will
not be required to review documents not previously scrutinized by the trial court.91 (Emphasis
supplied, citations omitted)

To consider a party’s evidence which was not formally offered during trial would deprive the
other party of due process. Evidence not formally offered has no probative value and must be
excluded by the court.92

Petitioner’s failure to file its written Formal Offer of Evidence of the numerous documentary
evidence presented within the prescribed period is a non-issue. In its first assailed Resolution
dated May 25, 2006, the Sandiganbayan declared that petitioner waived the filing of its Formal
Offer of Evidence when it failed to file the pleading on May 13, 2006, the deadline based on the
extended period granted by the court. Petitioner was granted several extensions of time by the
Sandiganbayan totalling 75 days from the date petitioner terminated its presentation of evidence.
Notably, this 75-day period included the original 30-day period. Subsequently, petitioner filed a
Motion for Reconsideration and to Admit Attached Formal Offer of Evidence, and the Formal
Offer of Evidence.

In resolving petitioner’s Motion for Reconsideration and to Admit Attached Formal Offer of
Evidence, the Sandiganbayan found the carelessness of petitioner’s counsel unacceptable.
According to the Sandiganbayan, it could not countenance the non-observance of the court’s
orders.

This court has long acknowledged the policy of the government to recover the assets and
properties illegally acquired or misappropriated by former President Ferdinand E. Marcos, his
wife Mrs. Imelda R. Marcos, their close relatives, subordinates, business associates, dummies,
agents or nominees.93 Hence, this court has adopted a liberal approach regarding technical rules
of procedure in cases involving recovery of ill-gotten wealth:

In all the alleged ill-gotten wealth cases filed by the PCGG, this Court has seen fit to set aside
technicalities and formalities that merely serve to delay or impede judicious resolution. This
Court prefers to have such cases resolved on the merits at the Sandiganbayan. But substantial
justice to the Filipino people and to all parties concerned, not mere legalisms or perfection of
form, should now be relentlessly and firmly pursued. Almost two decades have passed since the
government initiated its search for and reversion of such ill-gotten wealth. The definitive
resolution of such cases on the merits is thus long overdue. If there is proof of illegal acquisition,
accumulation, misappropriation, fraud or illicit conduct, let it be brought out now. Let the
ownership of these funds and other assets be finally determined and resolved with dispatch, free
from all the delaying technicalities and annoying procedural sidetracks.94 (Emphasis supplied,
citation omitted)

To be clear, petitioner was able to file its Formal Offer of Evidence, albeit, belatedly. Petitioner
hurdled 19 years of trial before the Sandiganbayan to present its evidence as shown in its
extensive Formal Offer of Evidence. As petitioner argues:

Undeniable from the records of the case is that petitioner was vigorous in prosecuting the case.
The most tedious and crucial stage of the litigation and presentation of evidence has been
accomplished. Petitioner completed its presentation of evidence proving the ill-gotten nature and
character of the funds and assets sought to be recovered in the present case. It presented vital
testimonial and documentary evidence consisting of voluminous record proving the gross
disparity of the subject funds to spouses Gimenezes’ combined declared income which must be
reconveyed to the Republic for being acquired in blatant violation of the Constitution and the
Anti-Graft statutes.95

This court is not unmindful of the difficulty in gathering voluminous documentary evidence in
cases of forfeiture of ill-gotten wealth acquired throughout the years. It is never easy to prosecute
corruption and take back what rightfully belongs to the government and the people of the
Republic.

This is not the first time that this court relaxed the rule on formal offer of evidence.

Tan v. Lim96 arose from two civil Complaints: one for injunction and another for legal
redemption, which were heard jointly before the trial court.97 The defendant did not file a Formal
Offer of Evidence in the injunction case98 and merely adopted the evidence offered in the legal
redemption case.99 The trial court held that the defendant’s failure to file his Formal Offer of
Evidence in the injunction case rendered the plaintiff’s evidence therein as
uncontroverted.100 The Court of Appeals reversed the Decision and was affirmed by this
court.101 This court ruled that while the trial court’s reasoning in its Decision was technically
sound, a liberal interpretation was more appropriate and in line with substantial justice:

It may be true that Section 34, Rule 132 of the rules directs the court to consider no evidence
which has not been formally offered and that under Section 35, documentary evidence is offered
after presentation of testimonial evidence. However, a liberal interpretation of these Rules would
have convinced the trial court that a separate formal offer of evidence in Civil Case No. 6518
was superfluous because not only was an offer of evidence made in Civil Case No. 6521 that was
being jointly heard by the trial court, counsel for Jose Renato Lim had already declared he was
adopting these evidences for Civil Case No. 6518. The trial court itself stated that it would freely
utilize in one case evidence adduced in the other only to later abandon this posture. Jose Renato
Lim testified in Civil Case No. 6518. The trial court should have at least considered his
testimony since at the time it was made, the rules provided that testimonial evidence is deemed
offered at the time the witness is called to testify. Rules of procedure should not be applied in a
very rigid, technical case as they are devised chiefly to secure and not defeat substantial justice.

....

The logic of the Court of Appeals is highly persuasive. Indeed, apparently, the trial court was
being overly technical about the nonsubmission of Jose Renato Lim’s formal offer of evidence.
This posture not only goes against Section 6, Rule 1 of the Rules of Civil Procedure decreeing a
liberal construction of the rules to promote a just, speedy and inexpensive litigation but ignores
the consistent rulings of the Court against utilizing the rules to defeat the ends of substantial
justice. Despite the intervening years, the language of the Court in Manila Railroad Co. vs.
Attorney-General, still remains relevant:

"x x x. The purpose of procedure is not to thwart justice. Its proper aim is to facilitate the
application of justice to the rival claims of contending parties. It was created not to hinder and
delay but to facilitate and promote the administration of justice. It does not constitute the thing
itself which courts are always striving to secure to litigants. It is designed as the means best
adapted to obtain that thing. In other words, it is a means to an end. It is the means by which the
powers of the court are made effective in just judgments. When it loses the character of the one
and takes on that of the other the administration of justice becomes incomplete and
unsatisfactory and lays itself open to grave criticism."102 (Emphasis supplied, citations omitted)

Furthermore, "subsequent and substantial compliance . . . may call for the relaxation of the rules
of procedure."103

Weighing the amount of time spent in litigating the case against the number of delays petitioner
incurred in submitting its Formal Offer of Evidence and the state’s policy on recovering ill-
gotten wealth, this court is of the belief that it is but only just that the Rules be relaxed and
petitioner be allowed to submit its written Formal Offer of Evidence. The Sandiganbayan’s
Resolutions should be reversed.

III

According to petitioner, the Sandiganbayan erred when it granted the demurrer to evidence filed
by respondents and dismissed the case despite a "prima facie foundation [based on the pleadings
and documents on record] that spouses Gimenezes amassed enormous wealth grossly
disproportionate to their lawful income or declared lawful assets."104

Similarly, the Complaint alleged specific acts committed by respondent Ignacio Gimenez:

[T]aking undue advantage of his relationship, influence, and connection, by himself and/or in
unlawful concert and active collaboration with former President Ferdinand E. Marcos and Imelda
R. Marcos for the purpose of mutually enriching themselves and preventing the disclosure and
recovery of assets illegally obtained: (a) acted as the dummy, nominee or agent of former
President Ferdinand E. Marcos and Imelda R. Marcos in several corporations such as, the Allied
Banking Corporation, Acoje Mining Corporation, Baguio Gold Mining, Multi National
Resources, Philippine Oversees, Inc. and Pioneer Natural Resources; (b) unlawfully obtained,
through corporations organized by them such as the New City Builders, Inc. (NCBI), multi-
million peso contracts with the government buildings, such as the University of Life Sports
Complex and Dining Hall as well as projects of the National Manpower Corporation, Human
Settlements, GSIS, and Maharlika Livelihood, to the gross and manifest disadvantage of the
Government and the Filipino people; and (c) in furtherance of the above stated illegal purposes,
organized several establishments engaged in food, mining and other businesses such as the
Transnational Construction Corporation, Total Systems Technology, Inc., Pyro Control
Technology Corporation, Asian Alliance, Inc., A & T Development Corporation, RBO Agro
Forestry Farm Development Corporation, Bathala Coal Mining Corporation, Coal Basis Mining
Corporation, Titan Coal Mining Corporation, GEI Guaranteed Education, Inc., and I.B. Gimenez
Securities, Inc.105

Despite the specific allegations in the Complaint, petitioner contends that respondents merely
gave general denials to the allegations in the Complaint.106 "[N]o specific denial [was] made on
the material allegations [in] the [C]omplaint."107

Respondents, on the other hand, assert that the Sandiganbayan was correct in granting the
Motion to Dismiss on demurrer to evidence.

Respondent Ignacio Gimenez claims that petitioner cannot be excused from filing its Formal
Offer of Evidence considering the numerous extensions given by the Sandiganbayan. Petitioner
had all the resources and time to gather, collate, and secure the necessary evidence to build its
case.108 Petitioner’s presentation of evidence took 19 years to complete, and yet it failed to
submit the necessary documents and pleading.109

Similarly, respondent Fe Roa Gimenez argues that petitioner was negligent in failing to comply
with the Sandiganbayan’s orders considering the inordinate amount of time given to petitioner to
present evidence, which resulted in only five witnesses in 19 years.110

To determine the propriety of granting respondents’ Motion to Dismiss based on Demurrer to

Evidence, we review the nature of demurrer.

Rule 33, Section 1 of the Rules of Court provides:

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 is granted but on appeal the order of dismissal is reversed he shall be
deemed to have waived the right to present evidence.

In Oropesa v. Oropesa111 where this court affirmed the dismissal of the case on demurrer to
evidence due to petitioner’s non-submission of the Formal Offer of Evidence,112 demurrer to
evidence was defined as:
. . . "an objection by one of the parties in an action, to the effect that the evidence which his
adversary produced is insufficient in point of law, whether true or not, to make out a case or
sustain the issue." We have also held that a demurrer to evidence "authorizes a judgment on the
merits of the case without the defendant having to submit evidence on his part, as he would
ordinarily have to do, if plaintiff’s evidence shows that he is not entitled to the relief
sought."113 (Citations omitted)

This court has laid down the guidelines in resolving a demurrer to evidence:

A demurrer to evidence may be issued when, upon the facts and the law, the plaintiff has shown
no right to relief. Where the plaintiff’s evidence together with such inferences and conclusions as
may reasonably be drawn therefrom does not warrant recovery against the defendant, a demurrer
to evidence should be sustained. A demurrer to evidence is likewise sustainable when, admitting
every proven fact favorable to the plaintiff and indulging in his favor all conclusions fairly and
reasonably inferable therefrom, the plaintiff has failed to make out one or more of the material
elements of his case, or when there is no evidence to support an allegation necessary to his claim.
It should be sustained where the plaintiff’s evidence is prima facie insufficient for a recovery.114

Furthermore, this court already clarified what the trial court determines when acting on a motion
to dismiss based on demurrer to evidence:

What should be resolved in a motion to dismiss based on a demurrer to evidence is whether the
plaintiff is entitled to the relief based on the facts and the law. The evidence contemplated by the
rule on demurrer is that which pertains to the merits of the case, excluding technical aspects such
as capacity to sue. . . .115 (Emphasis supplied, citation omitted)

Petitioner, in its Supplement to the Petition, argued that the testimonial evidence it had presented
and offered during trial warranted consideration and analysis.116 The Sandiganbayan erroneously
excluded these testimonies in determining whether to grant the motion to dismiss or not, hence:

. . . even assuming that the Sandiganbayan denied petitioner’s formal offer of evidence,
petitioner still had testimonial evidence in its favor which should [have] been considered. It
behoved then upon the Sandiganbayan to discuss or include in its discussion, at the very least, an
analysis of petitioner’s testimonial evidence.117

With our ruling reversing the Sandiganbayan’s Resolutions on petitioner’s Formal Offer of
Evidence, what should be determined now by the Sandiganbayan is whether petitioner’s
evidence is sufficient to entitle it to the relief it seeks after the Sandiganbayan rested its case.
Petitioner is required to establish preponderance of evidence.

In the second assailed Resolution, the Sandiganbayan granted respondents’ Motion to Dismiss
based on the lack of Formal Offer of Evidence of petitioner. At the same time, it observed that
the pieces of documentary evidence presented by petitioner were mostly certified true copies of
the original. In passing upon the probative value of petitioner’s evidence, the Sandiganbayan
held:
On another note, the evidence presented by the plaintiff consisted mainly of certified true copies
of the original. These certified copies of documentary evidence presented by the plaintiff were
not testified on by the person who certified them to be photocopies of the original. Hence, these
evidence do not appear to have significant substantial probative value.118

Petitioner faults the Sandiganbayan for making "a general and sweeping statement that the
evidence presented by petitioner lacked probative value for the reason that they are mainly
certified true copies which had not been testified on by the person who certified [them]."119 Thus,
its right to due process was violated when the Sandiganbayan rejected petitioner’s documentary
evidence in the same Resolution which dismissed the case.120

Petitioner argues that: a) respondents unqualifiedly admitted the identity and authenticity of the
documentary evidence presented by petitioner;121 and b) the documents it presented were public
documents, and there was no need for the identification and authentication of the original
documentary exhibits.122 Petitioner relies on the Sandiganbayan Order123 dated August 6, 2002.
The Order reads:

Considering the manifestation of Atty. Reno Gonzales, counsel for plaintiff/PCGG, that
the defendant Fe Roa Gimenez, through counsel, is willing to stipulate that the documents to be
presented and identified by the witness are in her custody as Records Officer of the PCGG, the
parties agreed to dispense with the testimony of Ma. Lourdes Magno.

WHEREFORE, and as prayed for, the continuation of the presentation of plaintiff’s evidence is
set on October 9 and 10, 2002, both at 8:30 o’clock [sic] in the morning.

SO ORDERED.124 (Emphasis supplied)

Petitioner claims that the following exhibits were acquired in relation to the PCGG’s functions
prescribed under Executive Order No. 1, Section 3(b),125 and form part of the official records of
the PCGG:126 "Certifications as to the various positions held in Government by Fe Roa-Gimenez,
her salaries and compensation during her stint as a public officer, the BIR Income Tax Returns
and Statement of Assets and Liabilities showing the declared income of spouses Gimenezes; the
Articles of Incorporation of various corporations showing spouses Gimenezes’ interests on
various corporations; and several transactions involving huge amounts of money which prove
that they acted as conduit in the disbursement of government funds."127

On the other hand, respondent Ignacio Gimenez argues that petitioner’s documents are not
"official issuances of the Philippine government."128 They are mostly notarized private
documents.129 Petitioner’s evidence has no probative value; hence, a dismissal on demurrer to
evidence is only proper.130 Respondent Fe Roa Gimenez claims that the Sandiganbayan did not
err in holding that the majority of petitioner’s documentary evidence has no probative value,
considering that most of these documents are only photocopies.131

The evidence presented by petitioner before the Sandiganbayan deserves better treatment.
For instance, the nature and classification of the documents should have been ruled upon. Save
for certain cases, the original document must be presented during trial when the subject of the
inquiry is the contents of the document.132 This is the Best Evidence Rule provided under Rule
130, Section 3 of the Rules of Court:

SEC. 3. Original document must be produced; exceptions.— When the subject of inquiry is the
contents of a document, no evidence shall be admissible other than the original document itself,
except in the following cases:

(a) When the original has been lost or destroyed, or cannot be produced in court, without
bad faith on the part of the offeror;

(b) When the original is in the custody or under the control of the party against whom the
evidence is offered, and the latter fails to produce it after reasonable notice;

(c) When the original consists of numerous accounts or other documents which cannot be
examined in court without great loss of time and the fact sought to be established from
them is only the general result of the whole; and

(d) When the original is a public record in the custody of a public officer or is recorded in
a public office.

In case of unavailability of the original document, secondary evidence may be presented133 as

provided for under Sections 5 to 7 of the same Rule:

SEC. 5. When original document is unavailable.— When the original document has been lost or
destroyed, or cannot be produced in court, the offeror, upon proof of its execution or existence
and the cause of its unavailability without bad faith on his part, may prove its contents by a
copy, or by a recital of its contents in some authentic document, or by the testimony of witnesses
in the order stated.

SEC. 6. When original document is in adverse party's custody or control. — If the document is in
the custody or under the control of adverse party, he must have reasonable notice to produce it. If
after such notice and after satisfactory proof of its existence, he fails to produce the document,
secondary evidence may be presented as in the case of its loss. (5a)

SEC. 7. Evidence admissible when original document is a public record.— When the original of
a document is in the custody of a public officer or is recorded in a public office, its contents may
be proved by a certified copy issued by the public officer in custody thereof. (Emphasis supplied)

In Citibank, N.A. v. Sabeniano,134 citing Estrada v. Hon. Desierto,135 this court clarified the

applicability of the Best Evidence Rule:

As the afore-quoted provision states, the best evidence rule applies only when the subject of the
inquiry is the contents of the document. The scope of the rule is more extensively explained thus
—
But even with respect to documentary evidence, the best evidence rule applies only when the
content of such document is the subject of the inquiry. Where the issue is only as to whether
such document was actually executed, or exists, or on the circumstances relevant to or
surrounding its execution, the best evidence rule does not apply and testimonial evidence is
admissible (5 Moran, op. cit., pp. 76-66; 4 Martin, op. cit., p. 78). Any other substitutionary
evidence is likewise admissible without need for accounting for the original.

Thus, when a document is presented to prove its existence or condition it is offered not as
documentary, but as real, evidence. Parol evidence of the fact of execution of the documents is
allowed (Hernaez, et al. vs. McGrath, etc., et al., 91 Phil[.] 565). x x x

In Estrada v. Desierto, this Court had occasion to rule that —

It is true that the Court relied not upon the original but only [a] copy of the Angara Diary as
published in the Philippine Daily Inquirer on February 4-6, 2001. In doing so, the Court, did not,
however, violate the best evidence rule. Wigmore, in his book on evidence, states that:

"Production of the original may be dispensed with, in the trial court’s discretion, whenever in the
case in hand the opponent does not bona fide dispute the contents of the document and no other
useful purpose will be served by requiring production.

"x x x x x x x x x

"In several Canadian provinces, the principle of unavailability has been abandoned, for certain
documents in which ordinarily no real dispute arised [sic]. This measure is a sensible and
progressive one and deserves universal adoption (post, sec. 1233). Its essential feature is that a
copy may be used unconditionally, if the opponent has been given an opportunity to inspect it."

This Court did not violate the best evidence rule when it considered and weighed in evidence the
photocopies and microfilm copies of the PNs, MCs, and letters submitted by the petitioners to
establish the existence of respondent’s loans. The terms or contents of these documents were
never the point of contention in the Petition at bar. It was respondent’s position that the PNs in
the first set (with the exception of PN No. 34534) never existed, while the PNs in the second set
(again, excluding PN No. 34534) were merely executed to cover simulated loan transactions. As
for the MCs representing the proceeds of the loans, the respondent either denied receipt of
certain MCs or admitted receipt of the other MCs but for another purpose. Respondent further
admitted the letters she wrote personally or through her representatives to Mr. Tan of petitioner
Citibank acknowledging the loans, except that she claimed that these letters were just meant to
keep up the ruse of the simulated loans. Thus, respondent questioned the documents as to their
existence or execution, or when the former is admitted, as to the purpose for which the
documents were executed, matters which are, undoubtedly, external to the documents, and which
had nothing to do with the contents thereof.

Alternatively, even if it is granted that the best evidence rule should apply to the evidence
presented by petitioners regarding the existence of respondent’s loans, it should be borne in mind
that the rule admits of the following exceptions under Rule 130, Section 5 of the revised Rules of
Court[.]136 (Emphasis supplied, citation omitted)

Furthermore, for purposes of presenting these as evidence before courts, documents are classified
as either public or private. Rule 132, Section 19 of the Rules of Court provides:

SEC. 19. Classes of Documents.— For the purpose of their presentation in evidence, documents
are either public or private.

Public documents are:

(a) The written official acts, or records of the official acts of the sovereign authority,
official bodies and tribunals, and public officers, whether of the Philippines, or of a
foreign country;

(b) Documents acknowledge before a notary public except last wills and testaments; and

(c) Public records, kept in the Philippines, of private documents required by law to be
entered therein.

All other writings are private.

The same Rule provides for the effect of public documents as evidence and the manner of proof
for public documents:

SEC. 23. Public documents as evidence.— Documents consisting of entries in public records
made in the performance of a duty by a public officer are prima facie evidence of the facts
therein stated. All other public documents are evidence, even against a third person, of the fact
which gave rise to their execution and of the date of the latter.

SEC. 24. Proof of official record.— The record of public documents referred to in paragraph (a)
of Section 19, when admissible for any purpose, may be evidenced by an official publication
thereof or by a copy attested by the officer having the legal custody of the record, or by his
deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that such
officer has the custody. If the office in which the record is kept is in a foreign country, the
certificate may be made by a secretary of the embassy or legation, consul general, consul, vice
consul, or consular agent or by any officer in the foreign service of the Philippines stationed in
the foreign country in which the record is kept, and authenticated by the seal of his office.

SEC. 25. What attestation of copy must state.— Whenever a copy of a document or record is
attested for the purpose of evidence, the attestation must state, in substance, that the copy is a
correct copy of the original, or a specific part thereof, as the case may be. The attestation must be
under the official seal of the attesting officer, if there be any, or if he be the clerk of a court
having a seal, under the seal of such court.

....
SEC. 27. Public record of a private document.— An authorized public record of a private
document may be proved by the original record, or by a copy thereof, attested by the legal
custodian of the record, with an appropriate certificate that such officer has the custody.

....

SEC. 30. Proof of notarial documents.— Every instrument duly acknowledged or proved and
certified as provided by law, may be presented in evidence without further proof, the certificate
of acknowledgment being prima facie evidence of the execution of the instrument or document
involved. (Emphasis supplied)

Emphasizing the importance of the correct classification of documents, this court pronounced:

The nature of documents as either public or private determines how the documents may be
presented as evidence in court. A public document, by virtue of its official or sovereign
character, or because it has been acknowledged before a notary public (except a notarial will) or
a competent public official with the formalities required by law, or because it is a public record
of a private writing authorized by law, is self-authenticating and requires no further
authentication in order to be presented as evidence in court. In contrast, a private document is
any other writing, deed, or instrument executed by a private person without the intervention of a
notary or other person legally authorized by which some disposition or agreement is proved or
set forth. Lacking the official or sovereign character of a public document, or the solemnities
prescribed by law, a private document requires authentication in the manner allowed by law or
the Rules of Court before its acceptance as evidence in court.137 (Emphasis supplied)

The distinction as to the kind of public document under Rule 132, Section 19 of the Rules of
Court is material with regard to the fact the evidence proves. In Philippine Trust Company v.
Hon. Court of Appeals, et al.,138 this court ruled that:

. . . not all types of public documents are deemed prima facie evidence of the facts therein stated:

....

"Public records made in the performance of a duty by a public officer" include those specified as
public documents under Section 19(a), Rule 132 of the Rules of Court and the acknowledgement,
affirmation or oath, or jurat portion of public documents under Section 19(c). Hence, under
Section 23, notarized documents are merely proof of the fact which gave rise to their
execution (e.g., the notarized Answer to Interrogatories . . . is proof that Philtrust had been
served with Written Interrogatories), and of the date of the latter (e.g., the notarized Answer to
Interrogatories is proof that the same was executed on October 12, 1992, the date stated
thereon), but is not prima facie evidence of the facts therein stated. Additionally, under Section
30 of the same Rule, the acknowledgement in notarized documents is prima facie evidence of the
execution of the instrument or document involved (e.g., the notarized Answer to Interrogatories
is prima facie proof that petitioner executed the same).
The reason for the distinction lies with the respective official duties attending the execution of
the different kinds of public instruments. Official duties are disputably presumed to have been
regularly performed. As regards affidavits, including Answers to Interrogatories which are
required to be sworn to by the person making them, the only portion thereof executed by the
person authorized to take oaths is the jurat. The presumption that official duty has been regularly
performed therefore applies only to the latter portion, wherein the notary public merely attests
that the affidavit was subscribed and sworn to before him or her, on the date mentioned thereon.
Thus, even though affidavits are notarized documents, we have ruled that affidavits, being self-
serving, must be received with caution.139 (Emphasis supplied, citations omitted)

In Salas v. Sta. Mesa Market Corporation,140 this court discussed the difference between mere
copies of audited financial statements submitted to the Bureau of Internal Revenue (BIR) and
Securities and Exchange Commission (SEC), and certified true copies of audited financial
statements obtained or secured from the BIR or the SEC which are public documents under Rule
132, Section 19(c) of the Revised Rules of Evidence:

The documents in question were supposedly copies of the audited financial statements of
SMMC. Financial statements (which include the balance sheet, income statement and statement
of cash flow) show the fiscal condition of a particular entity within a specified period. The
financial statements prepared by external auditors who are certified public accountants (like
those presented by petitioner) are audited financial statements. Financial statements, whether
audited or not, are, as [a] general rule, private documents. However, once financial statements
are filed with a government office pursuant to a provision of law, they become public documents.

Whether a document is public or private is relevant in determining its admissibility as evidence.

Public documents are admissible in evidence even without further proof of their due execution
and genuineness. On the other hand, private documents are inadmissible in evidence unless they
are properly authenticated. Section 20, Rule 132 of the Rules of Court provides:

....

Petitioner and respondents agree that the documents presented as evidence were mere copies of
the audited financial statements submitted to the BIR and SEC. Neither party claimed that copies
presented were certified true copies of audited financial statements obtained or secured from the
BIR or the SEC which under Section 19(c), Rule 132 would have been public documents. Thus,
the statements presented were private documents. Consequently, authentication was a
precondition to their admissibility in evidence.

During authentication in court, a witness positively testifies that a document presented as

evidence is genuine and has been duly executed or that the document is neither spurious nor
counterfeit nor executed by mistake or under duress. In this case, petitioner merely presented a
memorandum attesting to the increase in the corporation’s monthly market revenue, prepared by
a member of his management team. While there is no fixed criterion as to what constitutes
competent evidence to establish the authenticity of a private document, the best proof available
must be presented. The best proof available, in this instance, would have been the testimony of a
representative of SMMC’s external auditor who prepared the audited financial statements.
Inasmuch as there was none, the audited financial statements were never
authenticated.141 (Emphasis supplied, citations omitted)

Indeed, in Republic v. Marcos-Manotoc,142 this court held that mere collection of documents by

the PCGG does not make such documents public documents per se under Rule 132 of the Rules
of Court:

The fact that these documents were collected by the PCGG in the course of its investigations
does not make them per se public records referred to in the quoted rule.

Petitioner presented as witness its records officer, Maria Lourdes Magno, who testified that these
public and private documents had been gathered by and taken into the custody of the PCGG in
the course of the Commission’s investigation of the alleged ill-gotten wealth of the Marcoses.
However, given the purposes for which these documents were submitted, Magno was not a
credible witness who could testify as to their contents. To reiterate, "[i]f the writings have
subscribing witnesses to them, they must be proved by those witnesses." Witnesses can testify
only to those facts which are of their personal knowledge; that is, those derived from their own
perception. Thus, Magno could only testify as to how she obtained custody of these documents,
but not as to the contents of the documents themselves.

Neither did petitioner present as witnesses the affiants of these Affidavits or Memoranda
submitted to the court. Basic is the rule that, while affidavits may be considered as public
documents if they are acknowledged before a notary public, these Affidavits are still classified as
hearsay evidence. The reason for this rule is that they are not generally prepared by the affiant,
but by another one who uses his or her own language in writing the affiant’s statements, parts of
which may thus be either omitted or misunderstood by the one writing them. Moreover, the
adverse party is deprived of the opportunity to cross-examine the affiants. For this reason,
affidavits are generally rejected for being hearsay, unless the affiants themselves are placed on
the witness stand to testify thereon.143 (Citations omitted)

Notably, the Sandiganbayan’s evaluation of the evidence presented by petitioner was cursory. Its
main reason for granting the Motion to Dismiss on Demurrer to Evidence was that there was no
evidence to consider due to petitioner’s failure to file its Formal Offer of Evidence. It brushed off
the totality of evidence on which petitioner built its case.

Even assuming that no documentary evidence was properly offered, this court finds it clear from
the second assailed Resolution that the Sandiganbayan did not even consider other evidence
presented by petitioner during the 19 years of trial. The Sandiganbayan erred in ignoring
petitioner’s testimonial evidence without any basis or justification. Numerous exhibits were
offered as part of the testimonies of petitioner’s witnesses.

Petitioner presented both testimonial and documentary evidence that tended to establish a
presumption that respondents acquired ill-gotten wealth during respondent Fe Roa Gimenez’s
incumbency as public officer and which total amount or value was manifestly out of proportion
to her and her husband’s salaries and to their other lawful income or properties.
Petitioner presented five (5) witnesses, two (2) of which were Atty. Tereso Javier and Director
Danilo R.V. Daniel, both from the PCGG:

Petitioner presented as witnesses Atty. Tereso Javier, then Head of the Sequestered Assets
Department of PCGG, and Danilo R.V. Daniel, then Director of the Research and Development
Department of PCGG, who testified on the bank accounts and businesses owned and/ or under
the control of spouses Gimenezes.144

Several exhibits excluded by the Sandiganbayan were offered as part of petitioner’s testimonial
evidence:

1) Exhibit "KK"145 was offered "for the purpose of proving the assets or properties of the
spouses Ignacio B. Gimenez and Fe Roa Gimenez, and as part of the testimony of Tereso
Javier."146

2) Exhibits "KK-1" to "KK-12"147 inclusive of sub-markings, were offered "for the

purpose of proving the real properties acquired by the spouses Ignacio B. Gimenez and
Fe Roa Gimenez, and as part of the testimony of Tereso Javier."148

3) Exhibits "KK-15," "KK-18," "KK-20," "KK-27," "KK-30," "KK-32" to "KK-38" and

"KK-40"149 were offered "for the purpose of proving the corporations in which Ignacio B.
Gimenez has interest, and as part of the testimony of Tereso Javier."150

4) Exhibit "KK-45"151 was offered "for the purpose of proving that the PCGG conducted
an investigation of New City Builders, Inc., Transnational Construction Corporation, and
OTO Construction and Development Corporation in relation to Ignacio B. Gimenez and
Roberto O. Olanday, and as part of the testimony of Tereso Javier."152

5) Exhibits "KK-48" to "KK-50"153 were offered "for the purpose of proving that the
PCGG formally filed notices of lis pendens with the Registers of Deeds of Taytay, Rizal,
Lucena City, Quezon and San Fabian, Pangasinan over the properties mentioned in said
notices in connection with Civil Case No. [0]007 pending with the Sandiganbayan, and as
part of the testimony of Tereso Javier."154

6) Exhibits "KK-51" to "KK-52"155 and their sub-markings were offered "for the purpose
of proving that the PCGG sequestered the shares of stock in Allied Banking Corporation
and Guaranteed Education, Inc. as stated in the said writ/letter of sequestration, and as
part of the testimony of Tereso Javier."156

7) Exhibits "NN" to "QQ"157 and their sub-markings were offered "for the purpose of
proving that the PCGG formally requested the Central Bank to freeze the bank accounts
of the spouses Igancio [sic] B. Gimenez and Fe Roa Gimenez and that the Central Bank,
acting on said request, issued a memorandum to all commercial banks relative thereto.
They are also being offered as part of the testimony of Tereso Javier."158
 8) Exhibits "RR" to "RR-23"159 were offered "for the purpose of proving that Dominador
Pangilinan, former Acting President and President of Traders Royal Bank, executed an
affidavit on July 24, 1987 wherein he mentioned Malacanang trust accounts maintained
with the Traders Royal Bank the balance of which was very high, approximately 150-175
million pesos, as indicated in the monthly statements attached to his affidavit. They are
also being offered as part of the testimony of Danilo R.V. Daniel."160

9) Exhibits "SS" to "SS-29"161 were offered "for the purpose of proving that Apolinario
K. Medina, Executive Vice President of Traders Royal Bank, executed an Affidavit on
July 23, 1987 wherein he mentioned about certain numbered (confidential) trust accounts
maintained with the Traders Royal Bank, the deposits to which ‘were so substantial in
amount that (he) suspected that they had been made by President Marcos or his family.
They are also being offered as part of the testimony of Danilo R.V. Daniel."162

10) Exhibits "TT" to "TT-3"163 were offered "for the purpose of proving that Director
Danilo R.V. Daniel of the Research and Development Department of the PCGG
conducted an investigation on the ill-gotten wealth of the spouses Ignacio and Fe Roa
Gimenez and found that from 1977 to 1982, the total sum of P75,090,306.42 was
withdrawn from the account No. 128 (A/C 76-128) in favor of I.B Gimenez, I.B.
Gimenez Securities and Fe Roa Gimenez. They are also being offered as part of the
testimony of Director Danilo R.V. Daniel."164

The court cannot arbitrarily disregard evidence especially when resolving a demurrer to evidence
which tests the sufficiency of the plaintiff’s evidence.

The difference between the admissibility of evidence and the determination of its probative
weight is canonical.165

Admissibility of evidence refers to the question of whether or not the circumstance (or evidence)
is to [be] considered at all. On the other hand, the probative value of evidence refers to the
question of whether or not it proves an issue. Thus, a letter may be offered in evidence and
admitted as such but its evidentiary weight depends upon the observance of the rules on
evidence. Accordingly, the author of the letter should be presented as witness to provide the
other party to the litigation the opportunity to question him on the contents of the letter. Being
mere hearsay evidence, failure to present the author of the letter renders its contents suspect. As
earlier stated, hearsay evidence, whether objected to or not, has no probative value.166 (Citations
omitted)

The Sandiganbayan should have considered Atienza v. Board of Medicine, et al.167 where this

court held that it is better to admit and consider evidence for determination of its probative value
than to outright reject it based on very rigid and technical grounds.168

Although trial courts are enjoined to observe strict enforcement of the rules of evidence, in
connection with evidence which may appear to be of doubtful relevancy, incompetency, or
admissibility, we have held that:
[I]t is the safest policy to be liberal, not rejecting them on doubtful or technical grounds, but
admitting them unless plainly irrelevant, immaterial or incompetent, for the reason that their
rejection places them beyond the consideration of the court, if they are thereafter found relevant
or competent; on the other hand, their admission, if they turn out later to be irrelevant or
incompetent, can easily be remedied by completely discarding them or ignoring
them.169 (Emphasis supplied, citations omitted)

A liberal application of the Rules is in line with the state’s policy to recover ill-gotten wealth. In
case of doubt, courts should proceed with caution in granting a motion to dismiss based on
demurrer to evidence. An order granting demurrer to evidence is a judgment on the
merits.170 This is because while a demurrer "is an aid or instrument for the expeditious
termination of an action,"171 it specifically "pertains to the merits of the case."172

In Cabreza, Jr., et al. v. Cabreza,173 this court defined a judgment rendered on the merits:

A judgment may be considered as one rendered on the merits "when it determines the rights and
liabilities of the parties based on the disclosed facts, irrespective of formal, technical or dilatory
objections"; or when the judgment is rendered "after a determination of which party is right, as
distinguished from a judgment rendered upon some preliminary or formal or merely technical
point."174 (Citations omitted)

To reiterate, "[d]emurrer to evidence authorizes a judgment on the merits of the case without the
defendant having to submit evidence on his [or her] part, as he [or she] would ordinarily have to
do, if plaintiff’s evidence shows that he [or she] is not entitled to the relief sought."175 The order
of dismissal must be clearly supported by facts and law since an order granting demurrer is a
judgment on the merits:

As it is settled that an order dismissing a case for insufficient evidence is a judgment on the
merits, it is imperative that it be a reasoned decision clearly and distinctly stating therein the
facts and the law on which it is based.176 (Citation omitted)

To erroneously grant a dismissal simply based on the delay to formally offer documentary
evidence essentially deprives one party of due process.

IV

Respondents did not fail to specifically deny material averments in the Complaint.

Under Rule 8, Section 10 of the Rules of Court, the "defendant must specify each material
allegation of fact the truth of which he does not admit and, whenever practicable, shall set forth
the substance of the matters upon which he relies to support his denial."177 There are three modes
of specific denial provided for under the Rules:

1) by specifying each material allegation of the fact in the complaint, the truth of which the
defendant does not admit, and whenever practicable, setting forth the substance of the matters
which he will rely upon to support his denial; (2) by specifying so much of an averment in the
complaint as is true and material and denying only the remainder; (3) by stating that the
defendant is without knowledge or information sufficient to form a belief as to the truth of a
material averment in the complaint, which has the effect of a denial.178

In paragraph 14 of the Complaint, the PCGG, through the Office of the Solicitor General,
averred that:

14. Defendant Fe Roa Gimenez, by herself and/or in unlawful concert with Defendants
Ferdinand E. Marcos and Imelda R. Marcos, taking undue advantage of her position, influence
and connection and with grave abuse of power and authority, in order to prevent disclosure and
recovery of assets illegally obtained:

(a) actively participated in the unlawful transfer of millions of dollars of government

funds into several accounts in her name in foreign countries;

(b) disbursed such funds from her various personal accounts for Defendants’ own use[,]
benefit and enrichment;

(c) acted as conduit of the Defendants Ferdinand E. Marcos and Imelda R. Marcos in
purchasing the New York properties, particularly, the Crown Building, Herald Center, 40
Wall Street, 200 Wall Street, Lindenmere Estate and expensive works of arts;179

In their Answer, respondents claimed that;

9. Defendants Spouses Gimenez and Fe Roa specifically deny the allegations contained in
paragraphs 14(a), 14(b) and 14(c), the truth being that defendant Fe Roa never took advantage of
her position or alleged connection and influence to allegedly prevent disclosure and recovery of
alleged illegally obtained assets, in the manner alleged in said paragraphs.180

Similarly, the PCGG made material allegations in paragraph 16 of the Complaint:

16. Defendant Ignacio B. Gimenez, taking undue advantage of his relationship, influence, and
connection, by himself and/or in unlawful concert and active collaboration with Defendants
Ferdinand E. Marcos and Imelda R. Marcos, for the purpose of mutually enriching themselves
and preventing the disclosure and recovery of assets illegally obtained, among others:

(a) acted as the dummy, nominee or agent of Defendants Ferdinand E. Marcos and
Imelda R. Marcos, in several corporations such as, the Allied Banking Corporation,
Acoje Mining Corporation, Baguio Gold Mining, Multi National Resources, Philippine
Overseas, Inc. and Pioneer Natural Resources;

(b) unlawfully obtained, through corporations organized by them such as the the [sic]
New City Builders, Inc. (NCBI), multimillion peso contracts with the government for the
construction of government buildings, such as the University of Life Sports Complex and
Dining Hall as well as projects of the National Manpower Corporation, Human
 Settlements, GSIS, and Maharlika Livelihood, to the gross and manifest disadvantage to
Plaintiff and the Filipino people.

(c) in furtherance of the above stated illegal purposes, organized several establishments
engaged in food, mining and other businesses such as the Transnational Construction
Corporation, Total Systems Technology, Inc., Pyro Control Technology Corporation,
Asian Alliance, Inc., A & T Development Corporation, RBO Agro Forestry Farm
Development Corporation, Bathala Coal Mining Corporation, Coal Basis Mining
Corporation, Titan Coal Mining Corporation, GEI Guaranteed Education, Inc., and I.B.
Gimenez Securities, Inc.181

To which respondents specifically denied through the following paragraph:

11. Defendants Spouses Gimenez and Fe Roa specifically deny the allegations contained in
paragraphs 16, 16(a), 16(b) and 16(c) that defendant Gimenez allegedly took advantage of his
alleged relationship, influence and connection, and that by himself or in alleged unlawful concert
with defendants Marcos and Imelda, for the alleged purpose of enriching themselves and
preventing the discovery of alleged illegally obtained assets: (1) allegedly acted as dummy,
nominee or agent of defendants Marcos and Imelda; (2) allegedly obtained multi-million peso
projects unlawfully; and (3) allegedly organized several establishments, the truth being: (1) that
defendant Gimenez never acted as dummy, nominee or agent of defendants Marcos and Imelda;
(2) that defendant Gimen[e]z never once obtained any contract unlawfully; and (3) that
defendant Gimenez is a legitimate businessman and organized business establishments legally
and as he saw fit, all in accordance with his own plans and for his own purposes.182

In Aquintey v. Spouses Tibong,183 this court held that using "specifically" in a general denial does
not automatically convert that general denial to a specific one.184 The denial in the answer must
be so definite as to what is admitted and what is denied:

A denial is not made specific simply because it is so qualified by the defendant. A general denial
does not become specific by the use of the word "specifically." When matters of whether the
defendant alleges having no knowledge or information sufficient to form a belief are plainly and
necessarily within the defendant’s knowledge, an alleged "ignorance or lack of information" will
not be considered as a specific denial. Section 11, Rule 8 of the Rules also provides that material
averments in the complaint other than those as to the amount of unliquidated damages shall be
deemed admitted when not specifically denied. Thus, the answer should be so definite and
certain in its allegations that the pleader’s adversary should not be left in doubt as to what is
admitted, what is denied, and what is covered by denials of knowledge as sufficient to form a
belief.185 (Emphasis supplied, citations omitted)

However, the allegations in the pleadings "must be contextualized and interpreted in relation to
the rest of the statements in the pleading."186 The denials in respondents’ Answer comply with
the modes provided for under the Rules. We have held that the purpose of requiring specific
denials from the defendant is to make the defendant disclose the "matters alleged in the
complaint which he [or she] succinctly intends to disprove at the trial, together with the matter
which he [or she] relied upon to support the denial."187 The denials proffered by respondents
sufficiently disclosed the matters they wished to disprove and those they would rely upon in
making their denials.

To summarize, the Sandiganbayan erred in granting the Motion to Dismiss on demurrer to

evidence. It erred in making a sweeping declaration on the probative value of the documentary
evidence offered by petitioner and in excluding other evidence offered during trial without full
evaluation based on reasons grounded in law and/or jurisprudence.

The third part of Rule 33, Section 1 of the Rules of Court provides that "[i]f the motion [to
dismiss] is granted but on appeal the order of dismissal is reversed [the movant] shall be deemed
to have waived the right to present evidence." As this court held:

[I]f a demurrer to evidence is granted but on appeal the order of dismissal is reversed, the movant
shall be deemed to have waived the right to present evidence. The movant who presents a
demurrer to the plaintiff’s evidence retains the right to present their own evidence, if the trial
court disagrees with them; if the trial court agrees with them, but on appeal, the appellate court
disagrees with both of them 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.188 (Citations omitted)

This procedure, however, does not apply.

In this case, we principally nullify the assailed Resolutions that denied the admission of the
Formal Offer of Evidence. It only follows that the Order granting demurrer should be denied.
This is not the situation contemplated in Rule 33, Section 1.189 Respondents were not able to even
comment on the Formal Offer of Evidence. Due process now requires that we remand the case to
the Sandiganbayan. Respondents may, at their option and through proper motion, submit their
Comment. The Sandiganbayan should then rule on the admissibility of the documentary and
object evidence covered by the Formal Offer submitted by petitioner. Respondents then may
avail themselves of any remedy thereafter allowed by the Rules.

WHEREFORE, the Petition is GRANTED. The assailed Resolutions dated May 25, 2006 and
September 13, 2006 of the Sandiganbayan Fourth Division in Civil Case No. 0007
are REVERSED and SET ASIDE. The case is remanded to the. Sandiganbayan for further
proceedings with due and deliberate dispatch in accordance with this Decision.

SO ORDERED.

MARVIC M.V.F. LEONE

G.R. No. 220598

GLORIA MACAPAGAL-ARROYO, Petitioner,
vs
PEOPLE OF THE PHILIPPINES AND THE SANDIGANBAYAN (First
Division), Respondents.

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

G.R. No. 220953

BENIGNO B. AGUAS, Petitioner,
vs.
SANDIGANBAYAN (First Division), Respondent.

DECISION

BERSAMIN, J.:

We resolve the consolidated petitions for certiorari separately brought to assail and annul the
resolutions issued on April 6, 20151 and September 10, 2015,2 whereby
the Sandiganbayan respectively denied their demurrer to evidence, and their motions for
reconsideration, asserting such denials to be tainted with grave abuse of discretion amounting to
lack or excess of jurisdiction.

Antecedents

On July 10, 2012, the Ombudsman charged in the Sandiganbayan former President Gloria

Macapagal-Arroyo (GMA); Philippine Charity Sweepstakes Office (PCSO) Budget and
Accounts Officer Benigno Aguas; PCSO General Manager and Vice Chairman Rosario C.
Uriarte; PCSO Chairman of the Board of Directors Sergio 0. Valencia; Members of the PCSO
Board of Directors, namely: Manuel L. Morato, Jose R. Taruc V, Raymundo T. Roquero, and
Ma. Fatima A.S. Valdes; Commission on Audit (COA) Chairman Reynaldo A. Villar; and COA
Head of Intelligence/Confidential Fund Fraud Audit Unit Nilda B. Plaras with plunder. The case
was docketed as Criminal Case No. SB-12-CRM-O 174 and assigned to the First Division of
the Sandiganbayan.

The information3 reads:

The undersigned Assistant Ombudsman and Gratl Investigation and Prosecution Officer III,
Office of the Ombudsman, hereby accuse GLORIA MACAPAGAL-ARROYO, ROSARIO C.
URIARTE, SERGIO O. VALENCIA, MANUEL L. MORA TO, JOSE R. TARUC V,
RAYMUNDO T. ROQUERO, MA. FATIMA A.S. V ALOES, BENIGNO B. AGUAS,
REYNALDO A. VILLAR and NILDA B. PLARAS, of the crime of PLUNDER, as defined by,
and penalized under Section 2 of Republic Act (R.A.) No. 7080, as amended by R.A. No. 7659,
committed, as follows:
That during the period from January 2008 to June 2010 or sometime prior or subsequent thereto,
in Quezon City, Philippines, and within the jurisdiction of this Honorable Court, accused
GLORIA MA CAP A GAL-ARROYO, then the President of the Philippines, ROSARIO C.
URIARTE, then General Manager and Vice Chairman, SERGIO O. VALENCIA, then Chairman
of the Board of Directors, MANUEL L. MORA TO, JOSE R. TARUC V, RAYMUNDO T.
ROQUERO, MA. FATIMA A.S. V ALOES, then members of the Board of Directors,
BENIGNO B. AGUAS, then Budget and Accounts Manager, all of the Philippine Charity
Sweepstakes Office (PCSO), REYNALDO A. VILLAR, then Chairman, and NILDA B.
PLARAS, then Head of Intelligence/Confidential Fund Fraud Audit Unit, both of the
Commission on Audit, all public officers committing the offense in relation to their respective
offices and taking undue advantage of their respective official positions, authority, relationships,
connections or influence, conniving, conspiring and confederating with one another, did then and
there willfully, unlawfully and criminally amass, accumulate and/or acquire. Directly or
indirectly, ill-gotten wealth in the aggregate amount or total value of THREE HUNDRED
SIXTY FIVE MILLION NINE HUNDRED NINETY SEVEN THOUSAND NINE HUNDRED
FIFTEEN PESOS (PHP365,997,915.00), more or less, through any or a combination or a series
of overt or criminal acts, or similar schemes or means, described as follows:

(a) diverting in several instances, funds from the operating budget of PCSO to its
Confidential/Intelligence Fund that could be accessed and withdrawn at any time with
minimal restrictions, and converting, misusing, and/or illegally conveying or transferring
the proceeds drawn from said fund in the aforementioned sum, also in several instances,
to themselves, in the guise of fictitious expenditures, for their personal gain and benefit;

(b) raiding the public treasury by withdrawing and receiving, in several instances, the
above-mentioned amount from the Confidential/Intelligence Fund from PCSO's accounts,
and or unlawfully transferring or conveying the same into their possession and control
through irregularly issued disbursement vouchers and fictitious expenditures; and

(c) taking advantage of their respective official positions, authority, relationships,

connections or influence, in several instances, to unjustly enrich themselves in the
aforementioned sum, at the expense of, and the damage and prejudice of the Filipino
people and the Republic of the Philippines.

CONTRARY TO LAW.

By the end of October 2012, the Sandiganbayan already acquired jurisdiction over GMA,

Valencia, Morato and Aguas. Plaras, on the other hand, was able to secure a temporary
restraining order (TRO) from this Court in Plaras v. Sandiganbayan docketed as G.R. Nos.
203693-94. Insofar as Roquero is concerned, the Sandiganbayan acquired jurisdiction as to him
by the early part of 2013. Uriarte and Valdes remained at large.

Thereafter, several of the accused separately filed their respective petitions for bail. On June 6,
2013, the Sandiganbayan granted the petitions for bail of Valencia, Morato and Roquero upon
finding that the evidence of guilt against them was not strong.4 In the case of petitioners GMA
and Aguas, the Sandiganbayan, through the resolution dated November 5, 2013, denied their
petitions for bail on the ground that the evidence of guilt against them was strong.5 The motions
for reconsideration filed by GMA and Aguas were denied by the Sandiganbayan on February
19, 2014.6 Accordingly, GMA assailed the denial of her petition for bail in this Court, but her
challenge has remained pending and unresolved todate.

Personal jurisdiction over Taruc and Villar was acquired by the Sandiganbayan in 2014.
Thereafter, said accused sought to be granted bail, and their motions were granted on different
dates, specifically on March 31, 20147 and May 9, 2014,8 respectively.

The case proceeded to trial, at which the State presented Atty. Aleta Tolentino as its main
witness against all the accused. The Sandiganbayan rendered the following summary of her
testimony and evidence in its resolution dated November 5, 2013 denying the petitions for bail of
GMA and Aguas, to wit:

She is a certified public accountant and a lawyer. She is a member of the Philippine Institute of
Certified Public Accountants and the Integrated Bar of the Philippines. She has been a CPA for
30 years and a lawyer for 20 years. She has practiced accountancy and law. She became
accounting manager of several companies. She has also taught subjects in University of Santo
Tomas, Manuel L. Quezon University, Adamson University and the Ateneo de Manila Graduate
School. She currently teaches Economics, Taxation and Land Reform.

Presently, she is a Member of the Board of Directors of the PCSO. The Board appointed her as
Chairman of an Audit Committee. The audit review proceeded when she reviewed the COA
Annual Reports of the PCSO for 2006 2007 2008 and 2009 (Exhibits "D" "E" "F" and "G"
respectively), and the annual financial statements contained therein for the years 2005 to 2009.
The reports were given to them by the COA. These are transmitted to the PCSO annually after
the subject year of audit.

One of her major findings was that the former management of the PCSO was commingling the
charity fund, the prize fund and the operating fund. By commingling she means that the funds
were maintained in only one main account. This violates Section 6 of Republic Act 1169 (PCSO
Charter) and generally accepted accounting principles.

The Audit Committee also found out that there was excessive disbursement of the Confidential
and Intelligence Fund (CIF). There were also excessive disbursements for advertising expenses.
The internal audit department was also merged with the budget and accounting department,
which is a violation of internal audit rules.

There was excessive disbursement of the CIF because the PCSO was given only P10 million in
2002, i.e. P5 million for the Office of the Chairman and P5 million for the Office of the General
Manager. Such allocation was based on the letters of then Chairman Lopez (Exh. "I") and then
General Manager Golpeo (Exh. "J"), asking for P5 million intelligence fund each. Both were
dated February 21, 2000, and sent to then President Estrada, who approved them. This allocation
should have been the basis for the original allocation of the CIF in the PCSO, but there were
several subsequent requests made by the General Manager during the time of, and which were
approved by, former President Arroyo.
The allocation in excess of P10 million was in violation of the PCSO Charter. PCSO did not
have a budget for this. They were working on a deficit from 2004 to 2009. The charter allows
only 15% of the revenue as operating fund, which was already exceeded. The financial
statements indicate that they were operating on a deficit in the years 2006 to 2009.

It is within the power of the General Manager to ask for additional funds from the President, but
there should be a budget for it. The CIF should come from the operating fund, such that, when
there is no more operating fund, the other funds cannot be used.

The funds were maintained in a commingled main account and PCSO did not have a registry of
budget utilization. The excess was not taken from the operating fund, but from the prize fund and
the charity fund.

In 2005, the deficit was P916 million; in 2006, Pl,000,078,683.23. One of the causes of the
deficit for 2006 was the CIF expense of P215 million, which was in excess of the approved
allocation of P10 million. The net cash provided by operating expenses in 2006 is negative,
which means that there were more expenses than what was received.

In the 2007 COA report, it was found that there was still no deposit to the prize and charity
funds. The COA made a recommendation regarding the deposits in one main account. There
were also excessive disbursements of CIF amounting to P77,478,705.

She received a copy of the PCSO corporate operating budget (COB) for the year 2008 in 2010
because she was already a member of its Board of Directors. The 2008 approved COB has a
comparative analysis of the actual budget for 2007 (Exh. "K"). It is stated there that the budget
for CTF in 2007 is only P25,480,550. But the financial statements reflect P77 million. The
budget was prepared and signed by then PCSO General Manager Rosario Uriarte. It had
accompanying Board Resolution No. 305, Series of 2008, which was approved by then
Chairperson Valencia, and board members Valdes, Morato, Domingo, and attested to by Board
Secretary Atty. Ronald T. Reyes.

In the 2008 COA report, it was noted that there was still no deposit to the prize and charity
funds, adverted in the 2007 COA report. There was already a recommendation by the COA to
separate the deposits or funds in 2007. But the COA noted that this was not followed. The
financial statements show the Confidential and the Extra-Ordinary Miscellaneous Expenses
account is P38,293,137, which is more than the P10 million that was approved.

In the Comparative Income Statement (Exh. "K"), the 2008 Confidential/Intelligence Expense
budget was approved for P28 million. The Confidential and Extra-Ordinary Miscellaneous
Expenses is the account being used for confidential and intelligence expenses. The amount in the
financial statements is over the budgeted amount of P28 million. Further, the real disbursement is
more than that, based on a summary of expenditures she had asked the treasurer to prepare.

In the Comparative Income Statement for 2009 Budget against the 2008 Actual Budget (Exh.
"L"), the budget for CIF and expenses was P60 million.
In the 2009 COA report, it was noted that there was still no deposit to the prize and charity
funds, despite the instruction or recommendation of COA. The funds were still deposited in one
account. The COA observation in 2007 states that there is juggling or commingling of funds.

After she had concluded the audit review, she reported her findings to the Board of Directors in
one of their executive meetings. The Board instructed her to go in-depth in the investigation of
the disbursements of CIF.

The Audit Committee also asked Aguas why there were disbursements in excess of P10 million.
He explained that there were board resolutions confirming additional CIF which were approved
by former President Arroyo. Aguas mentioned this in one of their meetings with the directors and
corporate secretary. The board secretary, Atty. Ed Araullo, gave them the records of those
resolutions.

In the records that Araullo submitted to her, it appears that Uriarte would ask for additional CIF,
by letter and President Arroyo approves it by affixing her signature on that same letter-request.
There were seven letters or memoranda to then President Arroyo, with the subject "Request for
Intelligence Fund."

She then asked their Treasurer, Mercy Hinayon, to give her a summary of all the disbursements
from CIF from 2007 to 2010. The total of all the amounts in the summaries for three years is
P365,997,915.

After receiving the summaries of the disbursed checks, she asked Hinayon to give her the checks
or copies thereof. She also asked Dorothy Robles, Budget and Accounting Manager, to give her
the corresponding vouchers. Only two original checks were given to her, as the rest were with
the bank. She asked her to request certified true copies of the checks.

They were then called to the Senate Blue Ribbon Committee, which was then investigating the
operation of PCSO, including the CIF. She was invited as a resource speaker in an invitation
from Chairman Teofisto Guingona III (Exh. "DD"). Before the hearing, the Committee
Chairman went to the PCSO and got some documents regarding the subject matter being
investigated. Araullo was tasked to prepare all the documents needed by the Committee. These
documents included the CIF summary of disbursements, letters of Uriarte and the approval of the
former president.

She attended whenever there were committee hearings. Among those who also attended were the
incoming members if the PCSO Board Directors and the directors. Accused Valencia and Aguas
were also present in some hearings as resources speakers. They were invited in connection with
the past disbursements of PCSO related to advertising expenses, CIF, vehicles for the bishops,
and the commingling of funds.

The proceedings in the Committee were recorded and she secured a copy of the transcript of
stenographic notes from the Office of the Blue Ribbon Committee. In the proceeding on June 7,
2011 (Exh. ''EE"), Uriarte testified. The witness was about two to three meters away from Uriarte
when the latter testified, and using a microphone.
According to the witness, Uriarte testified that all the confidential intelligence projects she had
proposed were approved by President Arroyo; all the requests she gave to the President were
approved and signed by the latter personally in her (Uriarte's) presence; and all the documents
pertaining to the CIF were submitted to President Arroyo. On the other hand, Valencia and Taruc
said they did not know about the projects. Statements before the Committee are under oath.

After the Committee hearings, she then referred to the laws and regulations involved to check
whether the disbursements were in accordance with law. One of the duties and responsibilities of
the audit committee was to verify compliance with the laws.

She considered the following laws: R.A. 1169, as amended (PCSO Charter); P.D. 1445 (COA
Code); LOI 1282; COA Circular 92-385, as amended by Circular 2003-002, which provides the
procedure for approval of disbursements and liquidation of confidential intelligence funds. She
made a handwritten flowchart (Exh. "II") of the allocations/disbursements/liquidation and audit
of the CIF, based on LOI 1282 and the COA Circulars. A digital presentation of this flowchart
was made available.

The first step is the provision or allotment of a budget because no CIF fund can be disbursed
without the allocation. This is provided in the second whereas clause of Circular 92-385. For
GOCCs, applying Circular 2003-002, there must be allocation or budget for the CIF and it
should be specifically in the corporate operating budget or would be taken from savings
authorized by special provisions.

This was not followed in the PCSO CIF disbursement in 2008. The disbursement for that year
was P86,555,060. The CIF budget for that year was only P28 million, and there were no savings
because they were on deficit. This was also not followed for the year 2009. The CIF
disbursement for that year was P139,420,875. But the CIF budget was only P60 million, and
there was also no savings, as they were in deficit. For the year 2010, the total disbursement, as of
June 2010, was P141,021,980. The budget was only P60 million.

The requirements in the disbursement of the CIF are the budget and the approval of the
President. If the budget is correct, the President will approve the disbursement or release of the
CIF. In this case, the President approved the release of the fund without a budget and savings.
Also, the President approved the same in violation of LOI 1282, because there were no detailed
specific project proposals and specifications accompanying the request for additional CIF. The
requests for the year 2008, 2009 and 2010 were uniform and just enumerated the purposes, not
projects. They did not contain what was required in the LOI.

The purpose of this requirement is stated in the LOI itself. The request for allocations must
contain full details and specific purposes for which the fund will be used. A detailed presentation
is made to avoid duplication of expenditures, as what had happened in the past, because of a lack
of centralized planning and organization or intelligence fund.

There was no reason for each additional intelligence fund that was approved by then President
Arroyo.
The third step is the designation of the disbursing officer. In this case, the Board of Directors
designated Uriarte as Special Disbursing Officer (SDO) for the portion of the CIF that she
withdrew. For the portion withdrawn by Valencia, there was no special disbursing officer
designated on record.

The designation of Uriarte was in violation of internal control which is the responsibility of the
department head, as required by Section 3 of Circular 2003-002. When she went through copies
of the checks and disbursement vouchers submitted to her, she found out that Uriarte was both
the SDO and the authorized officer to sign the vouchers and checks. She was also the payee of
the checks. All the checks withdrawn by Uriarte were paid to her and she was also the signatory
of the checks.

Aside from Uriarte, Valencia also disbursed funds in the CIF. For the funds withdrawn by
Valencia, he was also the authorized officer to sign the vouchers and checks. He was also the
payee of the checks.

The confidential funds were withdrawn through cash advance. She identified the vouchers and
checks pertaining to the disbursements made by Uriarte and Valencia in 2008, 2009 and 2010.

The checks of Uriarte and Valencia had the treasurer as cosignatory. The treasurer who signed
depends on when the checks were issued

She knows the signatures of Uriarte, Valencia and Aguas because they have their signatures on
the records.

Uriarte and Valencia signed the vouchers to certify to the necessity and legality of the vouchers;
they also signed to approve the same, signify they are "okay" for payment and claim the amount
certified and approved as payee. Gloria P. Araullo signed as releasing officer, giving the checks
to the claimants.

Accused Aguas signed the vouchers to certify that there are adequate funds and budgetary
allotment, that the expenditures were properly certified and supported by documents, and that the
previous cash advances were liquidated and accounted for. This certification means that the cash
advance voucher can be released. This is because the COA rule on cash advance is that before
any subsequent cash advance is released, the previous cash advance must be liquidated first. This
certification allowed the requesting party and payee to get the cash advance from the voucher.
Without this certification, Uriarte and Valencia could not have been able to get the cash advance.
Otherwise, it was a violation of P.D. 1445 (Government Auditing Code).

The third box in the flowchart is the designation of the SDO. Board Resolutions No. 217, Series
of2009 (Exh."M"), No. 2356, Series of 2009 (Exh."N"), and No. 029, Series of 2010 (Exh. "O"),
resolved to designate Uriarte as SDO for the CIF. These resolutions were signed and approved
by Valencia, Taruc, Valdes, Uriarte, Roquero and Morato. The witness is familiar with these
persons' signature because their signatures appear on PCSO official records.
Valencia designated himself as SDO upon the recommendation of COA Auditor Plaras. There
was no board resolution for this designation. There was just a certification dated February 2,
2009 (Exh. "Z4"). This certification was signed by Valencia himself and designates himself as the
SDO since he is personally taking care of the funds which are to be handled with utmost
confidentiality. The witness is familiar with Valencia's signature because it appears on PCSO
official documents. Under COA rules, the Board of Directors has authority to designate the SDO.
The chairman could not do this by himself.

Plaras wrote a letter dated December 15, 2008 to Valencia. It appears in the letter that to
substantiate the liquidation report, Plaras told Valencia to designate himself as SDO because
there was no disbursing officer. It was the suggestion of Plaras. Plaras is the head of the CIF Unit
under then COA Chairman Villar. Liquidation vouchers and supporting papers were submitted to
them, with corresponding fidelity bond.

COA Circulars 92-385 and 2003-002 indicate that to disburse CIF, one must be a special
disbursing officer or SDO. All disbursing officers of the government must have fidelity bonds.
The bond is to protect the government from and answer for misappropriation that the disbursing
officer may do. The bond amount required is the same as the amount that may be disbursed by
the officer. It is based on total accountability and not determined by the head of the agency as a
matter of discretion. The head determines the accountability which will be the basis of the bond
amount.

The Charter states that the head of the agency is the Board of Directors, headed by the Chairman.
But now, under the Governance of Government Corporation law, it is the general manager.

Plaras should have disallowed or suspended the cash advances because there was no fidelity
bond and the disbursing officer was not authorized. There was no bond put up for Valencia. The
records show that the bond for Uriarte was only for the amount of Pl.5 million. This is shown in
a letter dated August 23, 2010, to COA Chairman Villar through Plaras from Aguas (Exh. "B5"),
with an attachment from the Bureau of Treasury, dated March 2, 2009. It appears there that the
bond for Uriarte for the CIF covering the period February 2009 to February 2010 was only Pl.5
million.

Aguas submitted this fidelity bond certification, which was received on August 24, 2010, late,
because under the COA Circulars, it should have been submitted when the disbursing officer was
designated. It should have been submitted to COA because a disbursing officer cannot get cash
advances if they do not have a fidelity bond.

Once an SDO is designated, the specimen signature must be submitted to COA, together with the
fidelity bond and the signatories for the cash advances.

The approval of the President pertains to the release of the budget, not its allocation. She thinks
the action of the Board was done because there was no budget. The Board's confirmation was
needed because it was in excess of the budget that was approved. They were trying to give a
color of legality to them approval of the CIF in excess of the approved corporate operating
budget. The Board approval was required for the amount to be released, which amount was
approved in excess of the allotted budget for the year. The President cannot approve an
additional amount, unless there is an appropriation or a provision saying a particular savings will
be used for the CIF. The approvals here were all in excess of the approved budget.

Cash advances can be given on a per project basis for CIF. For one to get a cash advance, one
must state what the project is as to that cash advance. No subsequent cash advance should be
given, until previous cash advances have been liquidated and accounted for. If it is a continuing
project, monthly liquidation reports must be given. The difference in liquidation process between
CIF and regular cash advances is that for CIF, the liquidation goes to the Chair and not to the
resident auditor of the agency or the GOCC. All of the liquidation papers should go to the COA
Chair, given on a monthly basis.

In this case, the vouchers themselves are couched generally and just say cash advance from CIF
of the Chairman or from the GM's office in accordance with her duties. There is no particular
project indicated for the cash advance. Also, the requirement that prior advances be liquidated
first for subsequent advances to be given was not followed. The witness prepared a summary of
the cash advances withdrawn by the two disbursing officers covering the years 2008, 2009 and
2010 (Exh. "D5"). The basis for this summary is the record submitted to them by Aguas, which
were supposedly submitted to COA. It shows that there were subsequent cash advances, even if a
prior advance has not yet been liquidated. Valencia submitted liquidation reports to Villar, which
consists of a letter, certification and schedule of cash advances, and liquidation reports. One is
dated July 24, 2008 (Exh. "G5") and another is dated February 13, 2009 (Exh. "H5").

When she secured Exhibit "G5", together with the attached documents, she did not find any
supporting documents despite the statement in Exhibit "G5" that the supporting details of the
expenses that were incurred from the fund can be made available, if required. Aguas, the person
who processed the cash advances said he did not have the details or suppmiing details of
documents of the expenditures.

Normally, when liquidating CIF, the certification of the head of the agency is necessary. If there
were vouchers or receipts involved, then all these should be attached to the liquidation report.
There should also be an accomplishment report which should be done on a monthly basis. All of
these should be enclosed in a sealed envelope and sent to the Chairman of the COA, although the
agency concerned must retain a photocopy of the documents. The report should have a
cover/transmittal letter itemizing the documents, as well as liquidation vouchers and other
supporting papers. If the liquidation voucher and the supporting papers are in order, then the
COA Chairman or his representative shall issue a credit memorandum. Supporting papers consist
of receipts and sales invoices. The head of the agency would have to certify that those were all
actually incurred and are legal. In this case, there were no supporting documents submitted with
respect to Valencia's cash advances in 2008. Only the certifications by the SDO were submitted.
These certifications stated that he has the documents in his custody and they can be made
available, if and when necessary.

When she reviewed the CIF, she asked Aguas to produce the supporting documents which were
indicated in Valencia's certification and Aguas's own certification in the cash advance vouchers,
where he also certified that the documents supporting the cash advance were in their possession
and that there was proper liquidation. Aguas replied that he did not have them.

She identified the letter of Uriarte to Villar dated July 24, 2008 as well as a transmittal letter by
Uriarte for August 1, 2008, a certification and schedule of cash advances and an undetailed
liquidation report. Among the attachments is Board Resolution 305, a copy of the COB for 2008,
a document for the second half of 2008, a document dated April 2, 2009, and a document for
liquidation of P2,295,000. She also identified another letter for P50 million, dated February 13,
2009, attached to the transmittal letter. There is a certification attached to those two letters
amounting to P2,295,000. Also attached is the schedule of cash advances by Aguas and a
liquidation report where Aguas certified that the supporting documents are complete and proper
although the supporting documents and papers are not attached to the liquidation report, only the
general statement. These documents were submitted to them by Aguas.

She was shown the four liquidation reports (Exhibits "M5", "N5", "05" and "P5") attached to the
transmittal letter and was asked whether they were properly and legally accomplished. She
replied that they were couched in general terms and the voucher for which the cash advance was
liquidated is not indicated and only the voucher number is specified. She adds that the form of
the liquidation is correct, but the details are not there and neither are the supporting papers.

The liquidation report was dated July 24, 2008, but it was submitted only on August 1, 2008 to
COA, and it supposedly covered the cash advances of Uriarte from January to May 2008. This is
stated in her summary of liquidation that was earlier marked. There were no supporting papers
stated on or attached to the liquidation report.

She identified a set of documents to liquidate the cash advances from the CIF for the second
semester of 2008 by Uriarte. The transmittal letter of Uriarte was received by the COA on April
2, 2009. Upon inquiry with Aguas, he said that he did not have any of the supporting papers that
he supposedly had according to the certification. According to him, they are with Uriarte.
Uriarte, on the other hand, said, during the Senate hearing, that she gave them to President
Arroyo.

When Plaras wrote Valencia on December 15, 2008, Aguas wrote back on behalf of Valencia,
who had designated himself as SDO. However, their designations, or in what capacity they
signed the voucher are not stated. Among the attachments is also a memorandum dated April 2,
2008 (Exhibit "P5"), containing the signature of Arroyo, indicating her approval to the utilization
of funds. Another memorandum, dated August 13, 2008, indicating the approval of Arroyo was
also attached to the transmittal letter of Aguas on April 4, 2009. These two memoranda bear the
reasons for the cash advances, couched in general terms. The reasons were donated medicines
that were sold and authorized expenditures on endowment fund. The reasons stated in the
memoranda are practically the same. Uriarte did not submit any accomplishment reports
regarding the intelligence fund. Aguas submitted an accomplishment report, but the
accomplishments were not indicated in definite fashion or with specificity.

The witness narrated, based on her Summary of Liquidation Reports in 2009, that the total cash
advance made by Uriarte was P132,760,096. Arroyo approved P90 million for release. P10
million in January 2009 and April 27, 2009, and then P50 million in May 6, 2009.In July 2,
2009, P10 million or a total of P70 million. In October 2009, P20 million or a total of P90
million. The amount that was cash advanced by Valencia was P5,660,779. Therefore, the total
cash advances by these two officials were P138,420,875, but all of these were never liquidated in
2009. Uriarte and Valencia only submitted a liquidation voucher and a report to COA on April
I2, 2010. For the January 22, 2009 disbursements, the date of the liquidation voucher was June
30, 2009, but it was submitted to COA on April 12, 2010. Witness identified the transmittal letter
for P28 million by Uriarte, dated October 19, 2009, which was received by the COA only on
April 12, 2010, with an accompanying certification from Uriarte as to some of the documents
from which the witness's Summary of Liquidation was based.

The cash advances made by Uriarte and Valencia violated par. I, Sec. 4 and Sec. 84 of P.D. I445
and par. 2, III, COA Circular No. 92-385.

Since these cash advances were in excess of the appropriation, in effect, they were disbursed
without any appropriation. These cash advances were also made without any specific project, in
violation of par. 2 of COA Circular No. 92-385. In this case, the cash advances were not for a
specific project. The vouchers only indicate the source of the fund. The vouchers did not specify
specific projects.

The total cash advances for the years 2008, 2009 and 2010 to accused Uriarte and Valencia is
more than P366,000,000. Valencia cash advanced PI 3.3 million. The rest was made by Uriarte.

The memoranda to President Arroyo stated only the problems encountered by the PCSO. These
problems, as stated in each memorandum, included donated medicines sometimes ending up in
store for sale, unofficial use of ambulances, rise of expenditures of endowment fund, lotto
sweepstakes scams, fixers for programs of the PCSO, and other fraudulent schemes. No projects
were mentioned.

As regards the sixth step - the credit notice, the same was not validly issued by the COA. The
credit notice is a settlement or an action made by the COA Auditors and is given once the
Chairman, in the case of CIF Fund, finds that the liquidation report and all the supporting papers
are in order. In this case, the supporting papers and the liquidation report were not in order,
hence, the credit notice should not have been issued. Further, the credit notice has to follow a
specific form. The COA Chairman or his representative can: 1) settle the cash advance when
everything is in order; 2) suspend the settlement if there are deficiencies and then ask for
submission of the deficiencies; or 3) out rightly disallow it in case said cash advances are illegal,
irregular or unconscionable, extravagant or excessive. Instead of following this form, the COA
issued a document dated January 10, 2011, which stated that there is an irregular use of the price
fund and the charity fund for CIF Fund. The document bears an annotation which says, "wait for
transmittal, draft" among others. The document was not signed by Plaras, who was the Head of
the Confidential and Intelligence Fund Unit under COA Chairman Villar. Instead, she instructed
her staff to "please ask Aguas to submit the supplemental budget." This document was not
delivered to PCSO General Manager J.M. Roxas. They instead received another letter dated
January 13, 2011 which was almost identical to the first document, except it was signed by
Plaras, and the finding of the irregular use of the prize fund and the charity fund was omitted.
Instead, the work "various" was substituted and then the amount of P137,5000,000. Therefore,
instead of the earlier finding of irregularity, suddenly, the COA issued a credit notice as regards
the total of P140,000,000. The credit notice also did not specify that the transaction had been
audited, indicating that no audit was made.

A letter dated May 11, 2009 from the COA and signed by Plaras, states that the credit notice is
hereby issued. Thus, it is equivalent to the credit notice, although it did not come in the required
form. It merely stated that the credit notice is issued for P29,700,000, without specifying for
which vouchers and for which project the credit notice was being given. It merely says "First
Semester of 2008". In other words, it is a "global" credit notice that she issued and it did not state
that she made an audit.

Another letter, dated July 14, 2010 and signed by Plaras, supposedly covers all the cash advances
in 2009, but only up to the amount of P116,386,800. It also did not state that an audit was made.

There were no supporting papers attached to the voucher, and the certification issued is not in
conformity with the required certification by COA Circular 2003-002. The certification dated
July 24, 2008 by Valencia was not in conformity with the certification required by COA. The
required form should specify the project for which the certification was being issued, and file
code of the specific project. The certification dated July 24, 2008, however, just specified that it
was to certify that the P2 million from the 2008 CIF Fund was incurred by the undersigned, in
the exercise of his functions as PCSO Chairman for the various projects, projects and activities
related to the operation of the office, and there was no specific project or program or file code of
the intelligence fund, as required by COA. Furthermore, the certification also did not contain the
last paragraph as required by COA. Instead, the following was stated in the certification: "He
further certifies that the details and supporting documents and papers on these highly
confidential missions and assignments are in our custody and kept in our confidential file which
can be made available if circumstances so demand." No details or supporting documents were
reviewed by the witness, and though she personally asked Aguas, the latter said that he did not
have the supporting papers, and they were not in the official files of the PCSO. Two people
should have custody of the papers, namely, The Chairman of COA and the PCSO or its Special
Disbursing Officer. The witness asked Aguas because Valencia was not there, and also because
Aguas was the one who made the certification and was in-charge of accounting. The vouchers,
supposedly certified by Aguas, as Budget and Accounting Department Manager, each time cash
advances were issued, stated that the supporting documents are complete, so the witness went to
him to procure the documents.

A certification dated February 13, 2009, stating that P2,857,000 was incurred by Valencia in the
exercise of his function as PCSO Chairman, related to the operations of his office without the
specific intelligence project. In the same document, there is a certification similar to one in the
earlier voucher. No details of this certification were submitted by Aguas.

Another certification dated July 24, 2008 was presented, and it also did not specify the
intelligence and confidential project, and it did not contain any certification that the amount was
disbursed legally or that no benefits was given to any person. Similarly, the fourth paragraph of
the same document states that Uriarte certified that details and supporting papers of the cash
advance that she made of P27,700,000 are "kept in their confidential" (sic). The same were not in
the PCSO official records.

The certification dated October 19, 2009 for the amount of P2,498,300, was submitted to the
witness by Aguas. It also did not conform to the COA requirements, as it also did not specify the
use of the cash advance, did not contain any certification that the cash advance was incurred for
legal purposes, or that no benefits to other people were paid out of it. Again, no supporting
documents were found and none were given by Aguas. Similarly, a certification dated February
8, 2010 for the amount of P2,394,654 was presented, and it also does not conform with the COA
circular, as it only stated that the amount was spent or incurred by Valencia for projects covering
the period of July 1 to December 31, 2009 to exercise his function as PCSO Chairman, thus no
particular intelligence fund or project was stated. As in the other certifications, though it was
stated that the details were in the confidential file, it appeared that these were not in the
possession of PCSO. Another certification dated October 19, 2009 submitted by Uriarte was
examined by the witness in the course of her audit, and found that it also did not conform to the
requirements, as it only stated that the P25 million and P10 million intelligence and confidential
fund dated January 29, 2009 and April 27, 2009 were used in the exercise of her function as
PCSO Vice Chairman and General Manager.

All the documents were furnished by Aguas during the course of the audit of the financial
transactions of PCSO. Other documents given by Aguas include a letter by Valencia to COA
Chairman Villar, which was attached to the letter dated July 24, 2008. For the Certification
issued by Valencia for P2,857,000, there was also a certification attached dated February 13,
2009. As to Exhibit "J5", together with the certification, there was a letter but no other documents
were submitted. Similarly, as to Exhibit "M6", it was attached to a letter dated October 19, 2009
and was submitted to the witness by Aguas. Exhibit "N6" was attached to the letter of Valencia
dated February 8, 2010, the October 19, 2009 certification was attached to the October 19, 2009
letter to Chairman Villar.

The certification dated June 29, 2010, signed by Valencia in the amount of P2,075,000, also does
not conform with the COA requirement as it only specifies that the fund was disbursed by
Valencia under his office for various programs in the exercise of his function as Chairman.
Though there was a certification that the supporting papers were kept in the office, these papers
were not found in the records of the PCSO and Aguas did not have any of the records. The
certification was attached to the letter of Valencia to Villar dated June 29, 2010.

In the certification dated June 29, 2010 signed by Uriarte in the amount of P137 ,500,000, the
witness also said that the certification did not conform to the COA Circular because it only stated
that the amount was disbursed from a special intelligence fund, authorized and approved by the
President under the disposition of the Office of the Vice Chairman. Despite the statement
certifying that there were documents for the audit, no documents were provided and the same
were not in the official files of PCSO . The certification was attached to a letter by Uriarte dated
July 1, 2010 addressed to Villar.

In the certification dated October 19, 2009 signed by Uriarte in the amount of P2,500,000, the
witness made the same finding that it also did not conform to the COA Circular, as it did not
specify the project for which the cash advance was obtained and there were also no records in the
PCSO. It was attached to the letter dated October 19, 2009.

Finally, in the certification dated February 9, 2010 signed by Uriarte in the amount of
P73,993,846, the witness likewise found that it did not conform with the requirements of the
COA, as all it said was the amount was used for the exercise of the functions of the PCSO
Chairman and General Manager. The documents related to this were also not in the PCSO
records and Aguas did not submit the same. It was attached to a letter dated February 8, 2010
from Uriarte to Villar.

There are two kinds of audit on disbursements of government funds: pre-audit and post-audit.
Both are defined in COA Circular 2009-002. Pre-audit is the examination of documents
supporting the transaction, before these are paid for and recorded. The auditor determines
whether: (1) the proposed expenditure was in compliance with the appropriate law, specific
statutory authority or regulations; (2) sufficient funds are available to enable payment of the
claim; (3) the proposed expenditure is not illegal, irregular, extravagant, unconscionable or
unnecessary, and (4) the transaction is approved by the proper authority and duly supported by
authentic underlying evidence. On the other hand, the post-audit requirement is the process
where the COA or the auditor will have to do exactly what was done in the pre-audit, and in
addition, the auditor must supplement what she did by tracing the transaction under audit to the
books of accounts, and that the transaction is all recorded in the books of accounts. The auditor,
in post-audit, also makes the final determination of whether the transaction was not illegal,
irregular, extravagant, excessive, unconscionable or unnecessary.

In this case, no audit was conducted. In a letter dated May 11, 2009 signed by Plaras, it was
stated that a credit advice was given. However, the letter did not conform to the requirements or
form of a credit notice. Such form was in COA Circular 2003-002, and should specify the
liquidation report number, the amount, check numbers, and the action taken by the auditor. The
auditor should also include a certification that these have been audited. In this instance, no
certification that the transaction was audited was given by Plaras. Other similar letters did not
conform with the COA Circular. All transactions of the government must be subject to audit in
accordance with the provisions of the Constitution. Nevertheless, the requirements for audit are
the same.

The effect of the issuance of the credit notice by the COA was that the agency will take it up in
the books and credit the cash advance. This is the seventh step in the flowchart. Once there is a
cash advance, the liability of the officers who obtained the cash advance would be recorded in
the books. The credit notice, when received, would indicate that the account was settled. The
agency will credit the receivable or the cash advance, and remove from the books as a liability of
the person liable for the cash advance. The effect of this was that the financial liabilities of
Uriarte and Valencia were removed from the books, but they could still be subject to criminal
liability based on Sec. 10 of COA Circular 91-368 (Government Accounting and Auditing
Manuals, Vol. 1, implementing P.O. 1445), which states: "The settlement of an account whether
or not on appeal has been made within the statutory period is no bar to criminal prosecution
against persons liable." From the 2008 COA Annual Audited Financial Statements of PCSO, it
was seen that the procedure was not followed because the liability of the officers was already
credited even before the credit notice was received. In the financial statements, it was stated that
the amount due from officers and employees, which should include the cash advances obtained
by Uriarte and Valencia, were not included because the amount stated therein was P35 million,
while the total vouchers of Uriarte and Valencia was P86 million.

The witness also related that she traced the records of the CIF fund (since such was no longer
stated as a receivable), and reviewed whether it was recorded as an expense in 2008. She found
out that the recorded CIF fund expense, as recorded in the corporate operating budget as actually
disbursed, was only P21,102,000. As such, she confronted her accountants and asked them "Saan
tinago itong amount na to?" The personnel in the accounting office said that the balance of the
P86 million or the additional P21 million was not recorded in the operating fund budget because
they used the prize fund and charity fund as instructed by Aguas. Journal Entry Voucher No.
8121443 dated December 31, 2008, signed by Elmer Camba, Aguas (Head of the Accounting
Department), and Hutch Balleras (one of the staff in the Accounting Department), showed that
this procedure was done.

The contents of the Journal Entry Voucher are as follows:

(a) Accounts and Explanation: Due to other funds. This means that the amount of P63,750,000
was credited as confidential expense from the operating fund. The amount was then removed
from the operating fund, and it was passed on to other funds.

(b) PF Miscellaneous, Account No. 424-1-L P41,250,000 and CF Miscellaneous for 424-2-G for
P22,500,000. PF Miscellaneous means Prize Fund Miscellaneous and CF stands for Charity
Fund Miscellaneous. This means that funds used to release the cash advances to Uriarte and
Valencia were from the prize fund and charity.

Attached to the Journal Entry Voucher was a document which reads "Allocation of Confidential
and Intelligence Fund Expenses", and was the basis of Camba in doing the Journal Entry
Voucher. In the same document, there was a written annotation dated 12-31-2008 which reads
that the adjustment of CIF, CF and IF, beneficiary of the fund is CF and PF and signed by Aguas.

The year 2009 was a similar case, as the witness traced the recording of the credit notice at the
end of 2009, and despite the absence of the credit notice, the Accounting Department removed
from the books of PCSO the liability of Uriarte and Valencia, corresponding to the cash
advances obtained in 2009. She based this finding on the COA Annual Audit Report on the
PCSO for the year ended December 31, 2009. It was stated in the Audit Report that the total
liability due from officers and employees was only P87,747,280 and it was less than the total
cash advances of Uriarte and Valencia, which was P138 million. As a result, the witness checked
the corresponding entry for the expenses in the corporate operating budget and found out that the
same was understated. The CIF expenses were only P24,968,300, as against the actual amount
per vouchers, which was P138,420,875. Upon checking with the Accounting Department, the
department showed her another Journal Entry Voucher No. 9121157, dated December 29, 2009,
where the personnel removed immediately the expense and recorded it as expense for the prize
fund and charity fund by the end of December 31.
The contents of the Journal Entry Voucher, especially the notation "due from'', means the
accountability of those who had cash advance was instead credited. It was removed, and the
amount was P106 million. The entry was confidential expense for P15,958,020 and then the due
to other funds was P90,428,780. The explanation for "424" was found in the middle part, stating:
"424-1-L" of miscellaneous prize fund was used in the amount of P58,502,740 and the charity
fund was used in the amount of P31, 916,040. The total amount of the receivables from Uriarte
and Valencia that was removed was P106,386,800 and P90,428,780 respectively which came
from the prize fund and charity fund.

The witness reported the discrepancy because there were violations of R.A. 1169, Sec. 6, which
provides for the different funds of PCSO namely: prize fund (55% of the net receipts), charity
fund (30% of the net receipts), and operating fund (15% ). The proceeds of the lotto and
sweepstakes ticket sales provide the money for these different funds, removing first the printing
cost and the net proceeds (98%) is divided among the three funds mentioned. The prize fund is
the fund set aside to be used to pay the prizes for the winnings in the lotto or sweepstakes draws,
whether they are jackpot or consolation prizes. Incentives to the lotto operators or horse owners
are also drawn from this fund, as all of the expenses connected to the winnings of the draw. On
the other hand, the charity fund is reserved for charity programs approved by the board of PCSO,
and constitutes hospital and medical assistance to individuals, or to help facilities and other
charities of national character. Operating expenses are charged to the expenses to operate,
personnel services, and MOOE. One kind of fund cannot be used for another kind, as they
become a trust fund which should only be used for the purpose for which it was authorized, not
even with the approval of the board.

The amounts obtained from the charity fund and prize fund for 2008 was P63,750,000, and in
2009 P90,428,780. The Board of Directors was given a copy of the COA Audit Reports for years
2008 and 2009. The Board of Directors for both years was composed of: Chairman Valencia, and
Board Members Morato, Roquero, Taruc and Valdez. Uriarte was the Vice Chairman of the
Board of Directors. The witness did not know whether the Board checked the COA reports, but
there was no action on their part, and neither did they question the correctness of the statements.
They also had the Audit Committee (which was composed of members of the board) at that time,
and one of the duties of the Audit Committee was to verify the balances.

The witness identified the documents referring to the confirmation by the Board of Directors of
PCSO of the CIF. Board Resolution No. 217, approved on February 18, 2009, confirms the CIF
approved by the President. It did not state which CIF they were approving. They also assigned
Uriarte as the Special Disbursing Officer of the CIF, but it did say for what year. The signatories
to the same Board Resolution were Valencia, Taruc, Valdes, Uriarte, Roquero and Morato. The
same were the witness's findings for Board Resolution No. 2356 S. 2009, approved on December
9, 2009. As for Board Resolution No. 29, S. 2010, approved on January 6, 2010, the Board
confirmed the fund approved by the President for 2010, though the approval of the President was
only received on August 13, 2010 as shown in the Memorandum dated January 4. In effect, the
Board was aware of the requests, and because they ratified the cash advances, they agreed to the
act of obtaining the same.
Apart from the President violating LOI 1282, the witness also observed that the President
directly dealt with the PCSO, although the President, by Executive Order No. 383 dated
November 14, 2004, and Executive Order No. 455 dated August 22, 2005, transferred the direct
control and supervision of the PCSO to the Department of Social Welfare and Development
(DSWD), and later to the Department of Health (DOH). A project should first be approved by
the Supervising and Controlling Secretary of the Secretary of Health; that the President had
transferred her direct control and supervision, and lost the same. The witness said her basis was
administrative procedure. In this regard, President Aquino now has transferred the control and
supervision of the PCSO back to the Office of the President through Executive Order No. 14, S.
2010, dated November 19, 2010.

Uriarte should not have gone directly to the President to ask for the latter's approval for
allocation. Nonetheless, the release of the CIF must still be approved by the President.9

The State also presented evidence consisting in the testimonies of officers coming from different
law enforcement agencies10 to corroborate Tolentino's testimony to the effect that the PCSO had
not requested from their respective offices any intelligence operations contrary to the liquidation
report submitted by Uriarte and Aguas.

To complete the evidence for the Prosecution, Atty. Anamarie Villaluz Gonzales, Office-in-
Charge and Department Manager of the Human Resources of PCSO; Flerida Africa Jimenez,
Head of the Intelligence and Confidential Fund Audit Unit of the COA; and Noel Clemente,
Director of COA were presented as additional witnesses.

After the Prosecution rested its case, GMA, Aguas, Valencia, Morato, Taruc V, Roquero and
Villar separately filed their demurrers to evidence asserting that the Prosecution did not establish
a case for plunder against them.

On April 6, 2015, the Sandiganbayan  granted the demurrers to evidence of Morato, Roquero,

Taruc and Villar, and dismissed the charge against them. It held that said accused who were
members of the PCSO Board of Directors were not shown to have diverted any PCSO funds to
themselves, or to have raided the public treasury by conveying and transferring into their
possession and control any money or funds from PCSO account; that as to Villar, there had been
no clear showing that his designation of Plaras had been tainted with any criminal design; and
that the fact that Plaras had signed "by authority" of Villar as the COA Chairman could not
criminally bind him in the absence of any showing of conspiracy.

However, the Sandiganbayan denied the demurrers of GMA, Aguas and Valencia, holding that
there was sufficient evidence showing that they had conspired to commit plunder; and that the
Prosecution had sufficiently established a case of malversation against Valencia, pertinently
saying:

Demurrer to evidence is an objection by one of the parties in an action, to the effect that the
evidence which his adversary produced is insufficient in point of law, whether true or not, to
make out a case or sustain the issue. The party demurring challenges the sufficiency of the
whole evidence to sustain a verdict. The court then ascertains whether there is a competent
or sufficient evidence to sustain the indictment or to support a verdict of guilt.

xxxx

Sufficient evidence for purposes of frustrating a demurrer thereto is such evidence in character,
weight or amount as will legally justify the judicial or official action demanded to accord to
circumstances. To be considered sufficient therefore, the evidence must prove (a) the
commission of the crime, and (b) the precise degree of paiiicipation therein by the
accused (Gutib v. CA, 110 SCAD 743, 312 SCRA 365 [1999]).

x x x           x x x          x x x

A. Demurrer filed by Arroyo and Aguas:

It must be remembered that in Our November 5, 2013 Resolution, We found strong evidence of
guilt against Arroyo and Aguas, only as to the second predicate act charged in the
Information, which reads:

(b) raiding the public treasury by withdrawing and receiving, in several instances, the above-
mentioned amount from the Confidential/Intelligence Fund from PCSO's accounts, and/or
unlawfully transferring or conveying the same into their possession and control through
irregularly issued disbursement vouchers and fictitious expenditures.

In the November 5, 2013 Resolution, We said:

It should be noted that in both R.A. No. 7080 and the PCGG rules, the enumeration of the
possible predicate acts in the commission of plunder did not associate or require the concept of
personal gain/benefit or unjust enrichment with respect to raids on the public treasury, as a
means to commit plunder. It would, therefore, appear that a "raid on the public treasury" is
consummated where all the acts necessary for its execution and accomplishment are present.
Thus a "raid on the public treasury" can be said to have been achieved thru the pillaging or
looting of public coffers either through misuse, misappropriation or conversion, without need of
establishing gain or profit to the raider. Otherwise stated, once a "raider" gets material
possession of a government asset through improper means and has free disposal of the
same, the raid or pillage is completed. x x x

xxxx

Clearly, the improper acquisition and illegal use of CIF funds, which is obviously a government
asset, will amount to a raid on the public treasury, and therefore fall into the category of ill-
gotten wealth.

xxxx
xxx It is not disputed that Uriarte asked for and was granted authority by Arroyo to use
additional CIF funds during the period 2008-2010. Uriarte was able [to] accumulate during
that period CIF funds in the total amount of P.352,681,646. This was through a series of
withdrawals as cash advances of the CIF funds from the PCSO coffers, as evidenced by the
disbursement vouchers and checks issued and encashed by her, through her authorized
representative.

These flagrant violations of the rules on the use of CIF funds evidently characterize the series of
withdrawals by and releases to Uriarte as "raids" on the PCSO coffers, which is part of the
public treasury. These were, in every sense, "pillage," as Uriarte looted government funds
and appears to have not been able to account for it. The monies came into her possession and,
admittedly, she disbursed it for purposes other than what these were intended for, thus,
amounting to "misuse" of the same. Therefore, the additional CIF funds are ill-gotten, as defined
by R.A. 7080, the PCGG rules, and Republic v. Sandiganbayan. The encashment of the checks,
which named her as the "payee," gave Uriarte material possession of the CIF funds which
she disposed of at will.

As to the determination whether the threshold amount of P50million was met by the
prosecution's evidence, the Court believes this to have been established. Even if the computation
is limited only to the cash advances/releases made by accused Uriarte alone AFTER Arroyo had
approved her requests and the PCSO Board approved CIF budget and the "regular" P5million
CIF budget accorded to the PCSO Chairman and Vice Chairman are NOT taken into account,
still the total cash advances through accused Uriarte's series of withdrawals will total
P189,681,646. This amount surpasses the P50million threshold.

The evidence shows that for the year 2010 alone, Uriarte asked for P150 million additional CIF
funds, and Arroyo granted such request and authorized its use. From January 8, 2010 up to June
18, 2010, Uriarte made a series of eleven (11) cash advances in the total amount of
P138,223,490. According to Uriarte's testimony before the Senate, the main purpose for these
cash advances was for the "roll-out" of the small town lottery program. However, the
accomplishment report submitted by Aguas shows that P137,500,000 was spent on non-related
PCSO activities, such as "bomb threat, kidnapping, terrorism and bilateral and security
relations." All the cash advances made by Uriarte in 2010 were made in violation of LOI 1282,
and COA Circulars 2003-002 and 92-385. These were thus improper use of the additional Cff
funds amounting to raids on the PCSO coffers and were ill-gotten because Uriarte had encashed
the checks and came into possession of the monies, which she had complete freedom to dispose
of but was not able to properly account for.

These findings of the Court clearly point out the commission by Uriarte of the crime of
Plunder under the second predicate act charged in the Information. As to Arroyo's
participation, the Court stated in its November 5, 2013 Resolution that:

The evidence shows that Arroyo approved not only Uriarte's request for additional CIF funds in
2008-2010, but also authorized the latter to use such funds. Arroyo's "OK" notation and
signature on Uriartc's letter-requests signified unqualified approval of Uriarte's request to
use the additional CIF funds because the last paragraph of Uriarte's requests uniformly
ended with this phrase: "With the use of intelligence fund, PCSO can protect its image and
integrity of its operations.

The letter-request of Uriarte in 2010 was more explicit because it categorically asked for: "The
approval on the use of the fifty percent of the PR Fund as PCSO Intelligence Fund will greatly
help PCSO in the disbursement of funds to immediately address urgent issues."

Arroyo cannot, therefore, successfully argue that what she approved were only the request for the
grant or allocation of additional CIF funds, because Arroyo's "OK" notation was unqualified
and, therefore, covered also the request to use such funds, through releases of the same in
favor of Uriarte. 11

The Sandiganbayan later also denied the respective Motions for Reconsideration of GMA and
Aguas, observing that:

In this case, to require proof that monies went to a plunderer's bank account or was used to
acquire real or personal properties or used for any other purpose to personally benefit the
plunderer, is absurd. Suppose a plunderer had already illegally amassed, acquired or
accumulated P50 Million or more of government funds and just decided to keep it in his vault
and never used such funds for any purpose to benefit him, would that not be plunder? Or, if
immediately right after such amassing, the monies went up in flames or recovered by the police,
negating any opportunity for the person to actually benefit, would that not still be plunder?
Surely, in such cases, a plunder charge could still prosper and the argument that the fact of
personal benefit should still be evidence-based must fail.

Also, accused Arroyo insists that there was no proof of the fact of amassing the ill-gotten wealth,
and that the "overt act" of approving the disbursement is not the "overt act" contemplated by law.
She further stresses that there was no proof of conspiracy between accused Arroyo and her co-
accused and that the Prosecution was unable to prove their case against accused Arroyo. What
accused Arroyo forgets is that although she did not actually commit any "overt act" of
illegally amassing CIF funds, her act of approving not only the additional CIF funds but
also their releases, aided and abetted accused Uriarte's successful raids on the public
treasury. Accused Arroyo is therefore rightly charged as a coconspirator of Uriarte who
accumulated the CIF funds. Moreover, the performance of an overt act is not indispensable
when a conspirator is the mastermind.12

Considering that the Sandiganbayan denied the demurrers to evidence of GMA and Aguas, they
have come to the Court on certiorari  to assail and set aside said denial, claiming that the denial
was with grave abuse of discretion amounting to lack or excess of jurisdiction.

Issues

GMA pleads that the denial of her demurrer to evidence was in patent and flagrant violation of
Republic Act No. 7080, the law on plunder, and was consequently arbitrary and oppressive, not
only in grave abuse of discretion but rendered without jurisdiction because:
First Ground

On the basis of the above Resolutions, the Sandiganbayan has denied petitioner Arroyo's
Demurrer to Evidence and considering the reasons for doing so, would find petitioner
Arroyo guilty of the offense of plunder under Republic Act No. 7080 as charged in the
Information notwithstanding the following:

a. While the gravamen, indeed corpus delicti  of the offense of plunder under R.A. No. 7080,
and as charged in the Information, is that the public officer ... "amasses, accumulates or
acquires ill-gotten wealth through a combination or series of overt or criminal acts as
described in Section l(d) hereof, in the aggregate amount or total value of at least Fifty
million pesos (P50,000,000.00)", the Sandiganbayan Resolutions extirpate this vital element
of the offense of plunder;

b. In point of fact, not a single exhibit of the 637 exhibits offered by the prosecution nor a
single testimony of the 21 witnesses of the prosecution was offered by the prosecution to
prove that petitioner amassed, accumulated or acquired even a single peso of the alleged ill-
gotten wealth amounting to P365,997,915.00 or any part of that amount alleged in the
Information;

c. Implicitly confirming the above, and aggravating its error, on the basis solely of
petitioner Arroyo's authorization of the release of the Confidential/Intelligence Fund from
PCSO's accounts, the Sandiganbayan ruled that she has committed the offense of plunder
under R.A. No. 7080 for the reason that her release of CIF funds to the PCSO amount to a
violation of Sec. l(d) [11 of R.A. No. 7080 which reads, as follows:

1) Through misappropriation, conversion, misuse, or malversation of public funds or raids

on the public treasury;

which, "did not associate or require the concept of personal gain/benefit or un.just
enrichment with respect to raids on the public treasury", thereby disregarding the
gravamen or the corpus delicti of the offense of plunder under R.A. No. 7080.

Second Ground

Worsening the above error of the Sandiganbayan, the Resolutions, with absolutely no
justification in law or in the evidence, purportedly as the "mastermind" of a conspiracy,
and without performing any overt act, would impute to petitioner Arroyo the "series of
withdrawals as cash advances of the CIF funds from the PCSO coffers" by Uriarte as
"raids on the PCSO coffers, which is part of the public treasury" and "in every sense,
'pillage' as Uriarte looted government funds and appears to have not been able to account
for it". Parenthetically, Uriarte has not been arrested, was not arraigned and did not
participate in the trial of the case.

Third Ground
That as an obvious consequence of the above, denial of petitioner Arroyo's Demurrer To
Evidence for the reasons stated in the Sandiganbayan Resolutions, amounting no less to
convicting her on the basis of a disjointed reading of the crime of plunder as defined in
R.A. No. 7080, aggravated by the extirpation in the process of its "corpus delicti"  - the
amassing, accumulation or acquisition of ill-gotten wealth, hence, of a crime that docs not
exist in law and consequently a blatant deprivation of liberty without due process of law.

Fourth Ground

The Information alleges that the ten (10) persons accused in Crim. Case No. SB-12-CRM-
0174, namely: Gloria Macapagal-Arroyo, Rosario C. Uriarte, Sergio 0. Valencia, Manuel L.
Morato, Jose R. Taruc V, Raymundo T. Roquero, [M]a. Fatima A.S. Valdes, Benigno B.
Aguas, Reynaldo A. Villar and Nilda B. Plaras" ... all public officers committing the offense
in relation to their respective offices and taking undue advantage of their respective official
positions, authority, relationships, connections or influence, conniving, conspiring and
confederating with one another, did then and there willfully, unlawfully and criminally
amass, accumulate and/or acquire, directly or indirectly, ill-gotten wealth in the aggregate
amount or total value of THREE HUNDRED SIXTY FIVE MILLION NINE HUNDRED
NINETY SEVEN THOUSAND NINE HUNDRED FIFTEEN PESOS (PHP365,997,915.00),
more or less, through any or a combination or a series of overt or criminal acts, or similar
schemes or means, described as follows ... " or each of them, P36,599,791.50 which would
not qualify the offense charged as "plunder" under R.A. No. 7080 against all ten (10)
accused together, for which reason the Information docs not charge the offense of plunder
and, as a consequence, all proceedings thereafter held under the Information arc void.13

On his part, Aguas contends that:

A. In light of the factual setting described above and the evidence offered and admitted,
docs proof beyond reasonable doubt exist to warrant a holding that Prosecution proved the
guilt of the accused such that there is legal reason to deny Petitioner's Demurrer'?

B. Did the Prosecution's offered evidence squarely and properly support the allegations in
the Information'?

PETITIONER STRONGLY SUBMITS THAT PROSECUTION FAILED TO

ESTABLISH BY PROOF BEYOND REASONABLE DOUBT THE EXISTENCE OF THE
CORE ELEMENTS OF THE CRIME OF PLUNDER.14

On the other hand, the Prosecution insists that the petitions for certiorari should be dismissed
upon the following grounds, namely:

A. CERTIORARI IS NOT THE PROPER REMEDY FROM AN ORDER OR

RESOLUTION DENYING DEMURRER TO EVIDENCE.

B. THERE IS NO GRAVE ABUSE OF DISCRETION BECAUSE THE

SANDIGANBAYAN MERELY INTERPRETED WHAT CONSTITUTES PLUNDER
UNDER LAW AND JURISPRUDENCE IN LIGHT OF FACTS OF THE CASE. IT DID
NOT JUDICIALLY LEGISLATE A "NEW" OFFENSE.

1. ACTUAL PERSONAL GAIN, BENEFIT OR ENRICHMENT IS NOT AN ELEMENT

OF PLUNDER UNDER R.A. No. 7080.

2. EVIDENCE SHOWS THAT ARROYO, BY INDISPENSABLE COOPERATION,

CONSPIRED WITH HER CO-ACCUSED AND PARTICIPATED IN THE COMPLEX,
ILLEGAL SCHEME WHICH DEFRAUDED PCSO IN HUNDREDS OF MILLIONS OF
PESOS, WHICH CONSTITUTES PLUNDER.

3. ARROYO IS NOT SIMILARLY SITUATED WITH ACCUSED PCSO BOARD

MEMBERS AND CANNOT THUS DEMAND THAT THE SANDIGANBA YAN
DISMISS THE PLUNDER CASE AGAINST HER.

C. ARROYO'S BELATED, COLLATERAL ATTACK ON THE INFORMATION

CHARGING HER AND CO-ACCUSED FOR PLUNDER IS HIGHLY IMPROPER,
ESPECIALLY AT THIS LA TE STAGE OF THE PROCEEDING.

1. THE FACTS CONSTITUTING THE OFFENSE ARE CLEARLY ALLEGED IN THE

INFORMATION.

2. ARROYO'S ACTIVE PARTICIPATION IN THE PROCEEDINGS ARISING FROM

OR RELATING TO SB-12-CRM-0174 PROVES THAT SHE HAS ALWAYS KNOWN
AND UNDERSTOOD THE NATURE AND SCOPE OF THE ACCUSATIONS AGAINST
HER.

D. ARROYO IS NOT ENTITLED TO A TEMPORARY RESTRAINING ORDER

BECAUSE THE CRIMINAL PROSECUTION IN SB-12-CRM-0174 CANNOT BE
ENJOINED.15

Based on the submissions of the parties, the Court synthesizes the decisive issues to be
considered and resolved, as follows:

Procedural Issue:

1. Whether or not the special civil action for certiorari is proper to assail the denial of the
demurrers to evidence.

Substantive Issues:

1. Whether or not the State sufficiently established the existence of conspiracy among GMA,
Aguas, and Uriarte;

2. Whether or not the State sufficiently established all the elements of the crime of plunder:
a. Was there evidence of amassing, accumulating or acquiring ill-gotten wealth in the total
amount of not less than P50,000,000.00?

b. Was the predicate act of raiding the public treasury alleged in the information proved by the
Prosecution?

Ruling of the Court

The consolidated petitions for certiorari  are meritorious.

I.
The Court cannot be deprived of its jurisdiction
to correct grave abuse of discretion

The Prosecution insists that the petition for certiorari  of GMA was improper to challenge the
denial of her demurrer to evidence; that she also thereby failed to show that there was grave
abuse of discretion on the part of the Sandiganbayan in denying her demurrer to evidence; and
that, on the contrary, the Sandiganbayan only interpreted what constituted plunder under the law
and jurisprudence in light of the established facts, and did not legislate a new offense, by
extensively discussing how she had connived with her co-accused to commit plunder.16

The Court holds that it should take cognizance of the petitions for certiorari because
the Sandiganbayan, as shall shortly be demonstrated, gravely abused its discretion amounting to
lack or excess of jurisdiction.

The special civil action for certiorari is generally not proper to assail such an interlocutory order
issued by the trial court because of the availability of another remedy in the ordinary course of
law.17 Moreover, Section 23, Rule 119 of the Rules of Court expressly provides that "the order
denying the motion for leave of court to file demurrer to evidence or the demurrer itself shall not
be reviewable by appeal or by certiorari before judgment." It is not an insuperable obstacle to
this action, however, that the denial of the demurrers to evidence of the petitioners was an
interlocutory order that did not terminate the proceedings, and the proper recourse of the
demurring accused was to go to trial, and that in case of their conviction they may then appeal
the conviction, and assign the denial as among the errors to be reviewed.18 Indeed, it is doctrinal
that the situations in which the writ of certiorari may issue should not be limited,19 because to do
so –

x x x would be to destroy its comprehensiveness and usefulness. So wide is the discretion of the
court that authority is not wanting to show that certiorari  is more discretionary than either
prohibition or mandamus. In the exercise of our superintending control over other courts, we
are to be guided by all the circumstances of each particular case 'as the ends of justice may
require.' So it is that the writ will be granted where necessary to prevent a substantial
wrong or to do substantial justice.20
The Constitution itself has imposed upon the Court and the other courts of justice the duty to
correct errors of jurisdiction as a result of capricious, arbitrary, whimsical and despotic exercise
of discretion by expressly incorporating in Section 1 of Article VIII the following provision:

Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as
may be established by law.

Judicial power includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government.

The exercise of this power to correct grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government cannot be thwarted
by rules of procedure to the contrary or for the sake of the convenience of one side. This is
because the Court has the bounden constitutional duty to strike down grave abuse of
discretion whenever and wherever it is committed. Thus, notwithstanding the interlocutory
character and effect of the denial of the demurrers to evidence, the petitioners as the accused
could avail themselves of the remedy of certiorari when the denial was tainted with grave abuse
of discretion.21 As we shall soon show, the Sandiganbayan as the trial court was guilty of grave
abuse of discretion when it capriciously denied the demurrers to evidence despite the absence of
competent and sufficient evidence to sustain the indictment for plunder, and despite the absence
of the factual bases to expect a guilty verdict.22

II.
The Prosecution did not properly allege and prove
the existence of conspiracy among GMA, Aguas and Uriarte

Conspiracy exists when two or more persons come to an agreement concerning the commission
of a felony, and decide to commit it.23 In this jurisdiction, conspiracy is either a crime in itself or
a mere means to commit a crime.

As a rule, conspiracy is not a crime unless the law considers it a crime, and prescribes a penalty
for it.24 The exception is exemplified in Article 115 (conspiracy and proposal to commit
treason),  Article 136 (conspiracy and proposal to commit coup d'etat, rebellion or
insurrection) and Article 141 (conspiracy to commit sedition) of the Revised Penal Code. When
conspiracy is a means to commit a crime, it is indispensable that the agreement to commit the
crime among all the conspirators, or their community of criminal design must be alleged and
competently shown.

We also stress that the community of design to commit an offense must be a conscious
one.25 Conspiracy transcends mere companionship, and mere presence at the scene of the crime
does not in itself amount to conspiracy. Even knowledge of, or acquiescence in, or agreement to
cooperate is not enough to constitute one a party to a conspiracy, absent any active participation
in the commission of the crime with a view to the furtherance of the common design and
purpose.26 Hence, conspiracy must be established, not by conjecture, but by positive and
conclusive evidence.

In terms of proving its existence, conspiracy takes two forms. The first is the express form,
which requires proof of an actual agreement among all the co-conspirators to commit the crime.
However, conspiracies are not always shown to have been expressly agreed upon. Thus, we have
the second form, the implied conspiracy. An implied conspiracy exists when two or more
persons are shown to have aimed by their acts towards the accomplishment of the same unlawful
object, each doing a part so that their combined acts, though apparently independent, were in fact
connected and cooperative, indicating closeness of personal association and a concurrence of
sentiment.27 Implied conspiracy is proved through the mode and manner of the commission of
the offense, or from the acts of the accused before, during and after the commission of the crime
indubitably pointing to a joint purpose, a concert of action and a community of interest.28

But to be considered a part of the conspiracy, each of the accused must be shown to have
performed at least an overt act in pursuance or in furtherance of the conspiracy, for without being
shown to do so none of them will be liable as a co-conspirator, and each may only be held
responsible for the results of his own acts. In this connection, the character of the overt act has
been explained in People v. Lizada:29

An overt or external act is defined as some physical activity or deed, indicating the intention to
commit a particular crime, more than a mere planning or preparation, which if carried out to its
complete termination following its natural course, without being frustrated by external obstacles
nor by the spontaneous desistance of the perpetrator, will logically and necessarily ripen into a
concrete offense. The raison d'etre for the law requiring a direct overt act is that, in a
majority of cases, the conduct of the accused consisting merely of acts of preparation has
never ceased to be equivocal; and this is necessarily so, irrespective of his declared intent. It
is that quality of being equivocal that must be lacking before the act becomes one which
may be said to be a commencement of the commission of the crime, or an overt act or
before any fragment of the crime itself has been committed, and this is so for the reason
that so long as the equivocal quality remains, no one can say with certainty what the intent
of the accused is. It is necessary that the overt act should have been the ultimate step towards the
consummation of the design. It is sufficient if it was the "first or some subsequent step in a direct
movement towards the commission of the offense after the preparations are made." The act done
need not constitute the last proximate one for completion. It is necessary, however, that the
attempt must have a causal relation to the intended crime. In the words of Viada, the overt
acts must have an immediate and necessary relation to the offense. (Bold underscoring
supplied for emphasis)

In her case, GMA points out that all that the State showed was her having affixed her unqualified
"OK" on the requests for the additional CIFs by Uriarte. She argues that such act was not even an
overt act of plunder because it had no immediate and necessary relation to plunder by virtue of
her approval not being per se illegal or irregular. However, the Sandiganbayan, in denying the
Motions for Reconsideration of GMA and Aguas vis-a-vis the denial of the demurrers, observed
that:
xxxx accused Arroyo insists that there was no proof of the fact of amassing the ill-gotten wealth,
and that the "overt act" of approving the disbursement is not the "overt act" contemplated by
Jaw. She further stresses that there was no proof of conspiracy between accused Arroyo and her
co-accused and that the Prosecution was unable to prove their case against accused Arroyo. What
accused Arroyo forgets is that although she did not actually commit any "overt act" of illegally
amassing CIF funds, her act of approving not only the additional CIF funds but also their
releases, aided and abetted accused Uriarte's successful raids on the public treasury. Accused
Arroyo is therefore rightly charged as a co-conspirator of Uriarte who accumulated the CIF
funds. Moreover, the performance of an overt act is not indispensable when a conspirator is the
mastermind.30

It is in this regard that the Sandigabayan gravely abused its discretion amounting to lack or

excess of its jurisdiction. To start with, its conclusion that GMA had been the mastermind of
plunder was plainly conjectural and outrightly unfounded considering that the information did
not aver at all  that she had been the mastermind; hence, the Sandigabayan thereby acted
capriciously and arbitrarily. In the second place, the treatment by the Sandiganbayan of her
handwritten unqualified "OK" as an overt act of plunder was absolutely unwarranted considering
that such act was a common legal and valid practice of signifying approval of a fund release by
the President. Indeed, pursuant to People v. Lizada, supra,  an act or conduct becomes an overt
act of a crime only when it evinces a causal relation to the intended crime because the act or
conduct will not be an overt act of the crime if it does not have an immediate and necessary
relation to the offense.

In Estrada v. Sandiganbayan,31the Court recognized two nuances of appreciating conspiracy as a

means to commit a crime, the wheel conspiracy and the chain conspiracy.

The wheel conspiracy occurs when there is a single person or group (the hub) dealing
individually with two or more other persons or groups (the spokes). The spoke typically interacts
with the hub rather than with another spoke. In the event that the spoke shares a common
purpose to succeed, there is a single conspiracy. However, in the instances when each spoke is
unconcerned with the success of the other spokes, there are multiple conspiracies.32

An illustration of wheel conspiracy wherein there is only one conspiracy involved was the
conspiracy alleged in the information for plunder filed against former President Estrada and his
co-conspirators. Former President Estrada was the hub while the spokes were all the other
accused individuals. The rim that enclosed the spokes was the common goal in the overall
conspiracy, i.e., the amassing, accumulation and acquisition of ill-gotten wealth.

On the other hand, the American case of Kotteakos v. United States33 illustrates a wheel
conspiracy where multiple conspiracies were established instead of one single conspiracy. There,
Simon Brown, the hub, assisted 31 independent individuals to obtain separate fraudulent loans
from the US Government. Although all the defendants were engaged in the same type of illegal
activity, there was no common purpose or overall plan among them, and they were not liable for
involvement in a single conspiracy. Each loan was an end in itself, separate from all others,
although all were alike in having similar illegal objects. Except for Brown, the common figure,
no conspirator was interested in whether any loan except his own went through. Thus, the US
Supreme Court concluded that there existed 32 separate conspiracies involving Brown rather
than one common conspiracy.34

The chain conspiracy recognized in Estrada v. Sandiganbayan exists when there is successive

communication and cooperation in much the same way as with legitimate business operations
between manufacturer and wholesaler, then wholesaler and retailer, and then retailer and
consumer.35

This involves individuals linked together in a vertical chain to achieve a criminal

objective.36 Illustrative of chain conspiracy was that involved in United States v. Bruno,37of the
US Court of Appeals for the Second Circuit. There, 88 defendants were indicted for a conspiracy
to import, sell, and possess narcotics. This case involved several smugglers who had brought
narcotics to retailers who, in turn, had sold the narcotics to operatives in Texas and Louisiana for
distribution to addicts. The US Court of Appeals for the Second Circuit ruled that what
transpired was a single chain conspiracy in which the smugglers knew that the middlemen must
sell to retailers for distribution to addicts, and the retailers knew that the middle men must
purchase drugs from smugglers. As reasoned by the court, "the conspirators at one end of the
chain knew that the unlawful business would not and could not, stop with their buyers; and those
at the other end knew that it had not begun with their sellers." Each conspirator knew that "the
success of that part with which he was immediately concerned was dependent upon success of
the whole." This means, therefore, that "every member of the conspiracy was liable for every
illegal transaction carried out by other members of the conspiracy in Texas and in Louisiana."38

Once the State proved the conspiracy as a means to commit a crime, each co-conspirator is as
criminally liable as the others, for the act of one is the act of all. A co-conspirator does not have
to participate in every detail of the execution; neither does he have to know the exact part
performed by the co-conspirator in the execution of the criminal act.39 Otherwise, the criminal
liability of each accused is individual and independent.

The Prosecution insisted that a conspiracy existed among GMA, Uriarte, Valencia and the
Members of the PCSO Board of Directors, Aguas, Villar and Plaras. The Sandiganbayan agreed
with the Prosecution as to the conspirators involved, declaring that GMA, Aguas, and Uriarte
had conspired and committed plunder.

A review of the records of the case compels us to reject the Sandiganbayan's  declaration in light
of the information filed against the petitioners, and the foregoing exposition on the nature, forms
and extent of conspiracy. On the contrary, the Prosecution did not sufficiently allege the
existence of a conspiracy among GMA, Aguas and Uriarte.

A perusal of the information suggests that what the Prosecution sought to show was an implied
conspiracy to commit plunder among all of the accused on the basis of their collective actions
prior to, during and after the implied agreement. It is notable that the Prosecution did not allege
that the conspiracy among all of the accused was by express agreement, or was a wheel
conspiracy or a chain conspiracy.

This was another fatal flaw of the Prosecution.

In its present version, under which the petitioners were charged, Section 2 of Republic Act No.
7080 (Plunder Law) states:

Section 2. Definition of the Crime of Plunder; Penalties.  – Any public officer who, by himself or
in connivance with members of his family, relatives by affinity or consanguinity, business
associates, subordinates or other persons, amasses, accumulates or acquires ill-gotten wealth
through a combination or series of overt criminal acts as described in Section 1 (d) hereof in the
aggregate amount or total value of at least Fifty million pesos (P50,000,000.00) shall be guilty of
the crime of plunder and shall be punished by reclusion perpetua to death. Any person who
participated with the said public officer in the commission of an offense contributing to the crime
of plunder shall likewise be punished for such offense. In the imposition of penalties, the degree
of participation and the attendance of mitigating and extenuating circumstances, as provided by
the Revised Penal Code, shall be considered by the court. The court shall declare any and all ill-
gotten wealth and their interests and other incomes and assets including the properties and shares
of stocks derived from the deposit or investment thereof forfeited in favor of the State. [As
Amended by Section 12, Republic Act No. 7659 (The Death Penalty Law)]

Section l(d) of Republic Act No. 7080 provides:

Section 1. Definition of terms. - As used in this Act, the term:

xxxx

d. "Ill-gotten wealth" means any asset, property, business enterprise or material possession of

any person within the purview of Section two (2) hereof, acquired by him directly or indirectly
through dummies, nominees, agents, subordinates and/or business associates by any combination
or series of the following means or similar schemes:

1. Through misappropriation, conversion, misuse, or malversation of public funds or raids on the

public treasury;

2. By receiving, directly or indirectly, any commission, gift, share, percentage, kickbacks or

any/or entity in connection with any government contract or project or by reason of the office or
position of the public officer concerned;

3. By the illegal or fraudulent conveyance or disposition of assets belonging to the National

Government or any of its subdivisions, agencies or instrumentalities or government-owned or
controlled corporations and their subsidiaries;

4. By obtaining, receiving or accepting directly or indirectly any shares of stock, equity or any
other form of interest or participation including the promise of future employment in any
business enterprise or undertaking;

5. By establishing agricultural, industrial or commercial monopolies or other combinations

and/or implementation of decrees and orders intended to benefit particular persons or special
interests; or
6. By taking undue advantage of official position, authority, relationship, connection or influence
to unjustly enrich himself or themselves at the expense and to the damage and prejudice of the
Filipino people and the Republic of the Philippines.

The law on plunder requires that a particular public officer must be identified as the one who
amassed, acquired or accumulated ill-gotten wealth because it plainly states that plunder is
committed by any public officer who, by himself or in connivance with members of his family,
relatives by affinity or consanguinity, business associates, subordinates or other persons,
amasses, accumulates or acquires ill-gotten wealth in the aggregate amount or total value of at
least P50,000,000.00 through a combination  or series of overt criminal acts as described in
Section l(d) hereof. Surely, the law requires in the criminal charge for plunder against several
individuals that there must be a main plunderer and her co-conspirators, who may be members of
her family, relatives by affinity or consanguinity, business associates, subordinates or other
persons. In other words, the allegation of the wheel conspiracy or express conspiracy in the
information was appropriate because the main plunderer would then be identified in either
manner. Of course, implied conspiracy could also identify the main plunderer, but that fact must
be properly alleged and duly proven by the Prosecution.

This interpretation is supported by Estrada v. Sandiganbayan,40where the Court explained the

nature of the conspiracy charge and the necessity for the main plunderer for whose benefit the
amassment, accumulation and acquisition was made, thus:

There is no denying the fact that the "plunder of an entire nation resulting in material damage to
the national economy" is made up of a complex and manifold network of crimes. In the crime of
plunder, therefore, different parties may be united by a common purpose. In the case at bar, the
different accused and their different criminal acts have a commonality - to help the former
President amass, accumulate or acquire ill-gotten wealth. Sub-paragraphs (a) to (d) in the
Amended Information alleged the different participation of each accused in the conspiracy. The
gravamen of the conspiracy charge, therefore, is not that each accused agreed to receive
protection money from illegal gambling, that each misappropriated a portion of the tobacco
excise tax, that each accused ordered the GSIS and SSS to purchase shares of Belle Corporation
and receive commissions from such sale, nor that each unjustly enriched himself from
commissions, gifts and kickbacks; rather, it is that each of them, by their individual acts,
agreed to participate, directly or indirectly, in the amassing, accumulation and acquisition
of ill-gotten wealth of and/or for former President Estrada. [bold underscoring supplied for
emphasis]

Here, considering that 10 persons have been accused of amassing, accumulating and/or acquiring
ill-gotten wealth aggregating P365,997,915.00, it would be improbable that the crime charged
was plunder if none of them was alleged to be the main plunderer. As such, each of the 10
accused would account for the aliquot amount of only P36,599,791.50, or exactly 1/10 of the
alleged aggregate ill-gotten wealth, which is far below the threshold value of ill-gotten wealth
required for plunder.

We are not unmindful of the holding in Estrada v. Sandiganabayan41 to the effect that an
information alleging conspiracy is sufficient if the information alleges conspiracy either: (1) with
the use of the word conspire, or its derivatives or synonyms, such as confederate, connive,
collude, etc; or (2) by allegations of the basic facts constituting the conspiracy in a manner that a
person of common understanding would know what is being conveyed, and with such precision
as would enable the accused to competently enter a plea to a subsequent indictment based on the
same facts. We are not talking about the sufficiency of the information as to the allegation of
conspiracy, however, but rather the identification of the main plunderer sought to be prosecuted
under R.A. No. 7080 as an element of the crime of plunder. Such identification of the main
plunderer was not only necessary because the law required such identification, but also because
it was essential in safeguarding the rights of all of the accused to be properly informed of the
charges they were being made answerable for. The main purpose of requiring the various
elements of the crime charged to be set out in the information is to enable all the accused to
suitably prepare their defense because they are presumed to have no independent knowledge of
the facts that constituted the offense charged.42

For sure, even the Sandiganbayan was at a loss in this respect. Despite the silence of the
information on who the main plunderer or the mastermind was, the Sandiganbayan readily
condemned GMA in its resolution dated September 10, 2015 as the mastermind despite the
absence of the specific allegation in the information to that effect. Even worse, there was no
evidence that substantiated such sweeping generalization.

In fine, the Prosecution's failure to properly allege the main plunderer should be fatal to the cause
of the State against the petitioners for violating the rights of each accused to be informed of the
charges against each of them.

Nevertheless, the Prosecution insists that GMA, Uriarte and Aguas committed acts showing the
existence of an implied conspiracy among themselves, thereby making all of them the main
plunderers. On this score, the Prosecution points out that the sole overt act of GMA to become a
part of the conspiracy was her approval via the marginal note of "OK" of all the requests made
by Uriarte for the use of additional intelligence fund. The Prosecution stresses that by approving
Uriaiie's requests in that manner, GMA violated the following:

a. Letter of Instruction 1282, which required requests for additional confidential and intelligence
funds (CIFs) to be accompanied with detailed, specific project proposals and specifications; and

b.  COA Circular No. 92-385, which allowed the President to approve the release of additional
CIFs only if there was an existing budget to cover the request.

The insistence of the Prosecution is unwarranted. GMA's approval of Uriarte's requests for
additional CIFs did not make her part of any  design to raid the public treasury as the means to
amass, accumulate and acquire ill-gotten wealth. Absent the specific allegation in the
information to that effect, and competent proof thereon, GMA' s approval of Uriarte' s requests,
even if unqualified, could not make her part of any criminal conspiracy to commit plunder or any
other crime considering that her approval was not by any means irregular or illegal.

The Prosecution takes GMA to task for approving Uriarte's request despite the requests failing to
provide "the full detail [ ofJ the specific purposes for which said funds shall be spent and shall
explain the circumstances giving rise to the necessity for the expenditure and the particular aims
to be accomplished." It posits that the requests were not specific enough, contrary to what is
required by LOI 1282.

LOI 1282 reads:

LETTER OF INSTRUCTION No. 1282

To: All Ministries and Offices Concerned

In recent years intelligence funds appropriated for the various ministries and certain offices have
been, as reports reaching me indicate, spent with less than full regard for secrecy and prudence.
On the one hand, there have been far too many leakages of information on expenditures of said
funds; and on the other hand, where secrecy has been observed, the President himself was often
left unaware of how these funds had been utilized.

Effective immediately, all requests for the allocation or release of intelligence funds shall
indicate in full detail the specific purposes for which said funds shall be spent and shall explain
the circumstances giving rise to the necessity for the expenditure and the particular aims to be
accomplished.

The requests and the detailed explanations shall be submitted to the President personally.

It is imperative that such detailed presentations be made to the President in order to avoid such
duplication of expenditures as has taken place in the past because of the lack of centralized
planning and organized disposition of intelligence funds.

Full compliance herewith is desired.

Manila, January 12, 1983.

(Sgd.) FERDINANDE. MARCOS

President of the Philippines

However, an examination of Uriarte' s several requests indicates their compliance with LOI No.
1282. The requests, similarly worded, furnished: (a) the full details of the specific purposes for
which the funds would be spent; (b) the explanations of the circumstances giving rise to the
necessity of the expenditure; and (c) the particular aims to be accomplished.

The specific purposes and circumstances for the necessity of the expenditures were laid down as
follows:

In dispensing its mandate, PCSO has been constantly encountering a number of fraudulent
schemes and nefarious activities on a continuing basis which affect the integrity of our
operations, to wit:
1. Donated medicines sometimes end up in drug stores for sale even if they were
labeled "Donated by PCSO- Not for Sale";

2. Unwarranted or unofficial use of ambulances by beneficiarydonees;

3. Unauthorized expenditures of endowment fund for charity patients and organizations;

4. Lotto and sweepstakes scams victimizing innocent people of winning the jackpot and selling
tampered tickets as winning tickets;

5. Fixers for the different programs of PCSO such as Ambulance Donation Project, Endowment
Fund Program and Individual Medical Assistance Program;

6. Other fraudulent schemes and activities which put the PCSO in bad light.43

A reading of the requests also reveals that the additional CIFs requested were to be used to
protect PCSO's image and the integrity of its operations. The Court thus cannot share the
Prosecution's dismissiveness of the requests for not being compliant with LOI No. 1282.
According to its terms, LOI No. 1282 did not detail any qualification as to how specific the
requests should be made. Hence, we should not make any other pronouncement than to rule that
Uriarte's requests were compliant with LOI No. 1282.

COA Circular No. 92-385 required that additional request for CIFs would be approved only
when there was available budget. In this regard, the Prosecution suggests that there was no
longer any budget when GMA approved Uriarte's requests because the budget had earmarked
intelligence funds that had already been maxed out and used. The suggestion is not acceptable,
however, considering that the funds of the PCSO were comingled into one account as early as
2007. Consequently, although only 15% of PCSO's revenues was appropriated to an operation
fund from which the CIF could be sourced, the remaining 85% of PCSO's revenues, already co-
mingled with the operating fund, could still sustain the additional requests. In short, there was
available budget from which to draw the additional requests for CIFs.

It is notable that the COA, although frowning upon PCSO's co-mingling of funds, did not rule
such co-mingling as illegal. As such, sourcing the requested additional CIFs from one account
was far from illegal.

Lastly, the Prosecution's effort to show irregularities as badges of bad faith has led it to claim
that GMA had known that Uriarte would raid the public treasury, and would misuse the amounts
disbursed. This knowledge was imputed to GMA by virtue of her power of control over PCSO.

The Prosecution seems to be relying on the doctrine of command responsibility to impute the
actions of subordinate officers to GMA as the superior officer. The reliance is misplaced, for
incriminating GMA under those terms was legally unacceptable and incomprehensible. The
application of the doctrine of command responsibility is limited, and cannot be true for all
litigations. The Court ruled in Rodriguez v. Macapagal-Arroyo44that command responsibility
pertains to the responsibility of commanders for crimes committed by subordinate members of
the armed forces or other persons subject to their control in international wars or domestic
conflict. The doctrine has also found application in civil actions for human rights abuses. But this
case involves neither a probe of GMA' s actions as the Commander-in-Chief of the Armed
Forces of the Philippines, nor of a human rights issue. As such, it is legally improper to impute
the actions of Uriarte to GMA in the absence of any conspiracy between them.

On the part of Aguas, the Sandiganbayan pronounced him to be as much a member of the

implied conspiracy as GMA was, and detailed his participation in this manner:

In all of the disbursement vouchers covering the cash advances/releases to Uriarte of the CIF
funds, Aguas certified that:

CERTIFIED: Adequate available funds/budgetary allotment in the amount of P___________ ;

expenditure properly certified; supported by documents marked (X) per checklist and back
hereof; account codes proper; previous cash advance liquidated/accounted for.

These certifications, after close scrutiny, were not true because: 1.) there were no documents
which lent support to the cash advances on a per project basis. The particulars of payment simply
read: "To draw cash advance form the CIF Fund of the Office of the Vice-Chairman and General
Manager". No particular purpose or project was specified contrary to the requirement under
COA Circular 2003-002 that cash advances must be on a per project basis. Without specifics on
the project covered by each cash advance. Aguas could not certify that supporting documents
existed simply because he would not know what project was being funded by the cash advances;
and 2.) There were no previous liquidations made of prior cash advances when Aguas made the
certifications. COA circular 2003-002 required that cash advances be liquidated within one (1)
month from the date the purpose of the cash advance was accomplished. If the completion of the
projects mentioned were for more than one month, a monthly progress liquidation report was
necessary. In the case of Uriarte' s cash advances certified to by Aguas, the liquidation made was
wholesale, i.e. these were done on a semi-annual basis without a monthly liquidation or at least a
monthly liquidation progress report. How then could Aguas correctly certify that previous
liquidations were accounted for? Aguas's certification also violated Sec. 89 of P.D. 1445 which
states:

Limitations on cash advance. No cash advance shall be given unless for a legally authorized
specific purpose. A cash advance shall be reported on and liquidated as soon as the purpose for
which it was given has been served. No additional cash advance shall be allowed to any official
or employee unless the previous cash advance given to him is first settled or a proper accounting
thereof is made.

There is a great presumption of guilt against Aguas, as his action aided and abetted Uriarte's
being able to draw these irregular CIF funds in contravention of the rules on CIF funds. Without
Aguas's certification, the disbursement vouchers could not have been processed for payment.
Accordingly, the certification that there were supporting documents and prior liquidation paved
the way for Uriarte to acquire ill-gotten wealth by raiding the public coffers of the PCSO.
By just taking cognizance of the series and number of cash advances and the staggering amounts
involved, Aguas should have been alerted that something was greatly amiss and that Uriarte was
up to something. If Aguas was not into the scheme, it would have been easy for him to refuse to
sign the certification, but he did not. The conspiracy "gravamen" is therefore present in the case
of Aguas. Moreover, Aguas's attempt to cover-up Uriarte's misuse of these CIF funds in his
accomplishment report only contributed to unmasking the actual activities for which these funds
were utilized. Aguas' s accomplishment report, which was conformed to by Uriarte, made it self-
evidence that the bulk of the CIF funds in 2009 and 2010 were allegedly spend for non-PCSO
related activities, e.g. bomb threats, kidnapping, terrorism, and others.45

Thus, the Sandiganbayan concluded that Aguas became a part of the implied conspiracy when
he signed the disbursement vouchers despite the absence of certain legal requirements, and
issued certain certifications to the effect that the budgetary allotment/funds for cash advance to
be withdrawn were available; that the expenditures were supported by documents; and that the
previous cash advances had been liquidated or accounted for.

We opine and declare, however, that Aguas' certifications and signatures on the disbursement
vouchers were insufficient bases to conclude that he was into any conspiracy to commit plunder
or any other crime. Without GMA's participation, he could not release any money because there
was then no budget available for the additional CIFs. Whatever irregularities he might have
committed did not amount to plunder, or to any implied conspiracy to commit plunder.

Under the circumstances, the Sandiganbayan's finding on the existence of the conspiracy to

commit plunder was unsustainable. It then becomes unavoidable for the Court to rule that
because the Prosecution failed to properly allege the elements of the crime, as well as to prove
that any implied conspiracy to commit plunder or any other crime existed among GMA, Aguas
and Uriarte there was no conspiracy to commit plunder among them. As a result, GMA and
Aguas could be criminally responsible only for their own respective actions, if any.

III.
No proof of amassing, or accumulating, or acquiring
ill-gotten wealth of at least P50 Million
was adduced against GMA and Aguas

The Sandiganbayan sustained the sufficiency of the evidence to convict the petitioners for

plunder on the basis that the Prosecution established all the elements of plunder.

After a review of the records, we find and rule that the Prosecution had no case for plunder
against the petitioners.

To successfully mount a criminal prosecution for plunder, the State must allege and establish the
following elements, namely:

1. That the offender is a public officer who acts by herself or in connivance with members of her
family, relatives by affinity or consanguinity, business associates, subordinates or other persons;
2. That the offender amasses, accumulates or acquires ill-gotten wealth through a combination or
series of the following overt or criminal acts: (a) through misappropriation, conversion, misuse,
or malversation of public funds or raids on the public treasury; (b) by receiving, directly or
indirectly, any commission, gift, share, percentage, kickback or any other form of pecuniary
benefits from any person and/or entity in connection with any government contract or project or
by reason of the office or position of the public officer; (c) by the illegal or fraudulent
conveyance or disposition of assets belonging to the National Government or any of its
subdivisions, agencies or instrumentalities of Government owned or controlled corporations or
their subsidiaries; (d) by obtaining, receiving or accepting directly or indirectly any shares of
stock, equity or any other form of interest or participation including the promise of future
employment in any business enterprise or undertaking; (e) by establishing agricultural, industrial
or commercial monopolies or other combinations and/or implementation of decrees and orders
intended to benefit particular persons or special interests; or (f) by taking advantage of official
position, authority, relationship, connection or influence to unjustly enrich himself or themselves
at the expense and to the damage and prejudice of the Filipino people and the Republic of the
Philippines; and,

3. That the aggregate amount or total value of the ill-gotten wealth amassed, accumulated or
acquired is at least P50,000,000.00.46

The corpus delicti of plunder is the amassment, accumulation or acquisition of ill-gotten wealth

valued at not less than P50,000,000.00. The failure to establish the corpus delicti should lead to
the dismissal of the criminal prosecution.

As regards the element that the public officer must have amassed, accumulated or acquired ill-
gotten wealth worth at least P50,000,000.00, the Prosecution adduced no evidence showing that
either GMA or Aguas or even Uriarte, for that matter, had amassed, accumulated or acquired ill-
gotten wealth of any amount. There was also no evidence, testimonial or otherwise, presented by
the Prosecution showing even the remotest possibility that the CIFs of the PCSO had been
diverted to either GMA or Aguas, or Uriarte.

The absolute lack of evidence on this material but defining and decisive aspect of the criminal
prosecution was explicitly noted in the concurring and partial dissenting opinion of Justice
Rodolfo A. Ponferrada of the Sandiganbayan, to wit:

Here the evidence of the prosecution failed to show the existence of the crime of plunder as no
evidence was presented that any of the accused, accumulated and/or acquired ill-gotten wealth.
In fact, the principal witness of the prosecution when asked, said that she does not know the
existence or whereabouts of the alleged ill-gotten wealth, to wit:

Q: Of course, you don't know where is this ill-gotten wealth are (sic) now?

A: Yes, Your Honors. We don't know whether they saved it, squandered it or what? We
don't know, Your Honor.47 [bold emphasis supplied]
After Atty. Tolentino, as the Prosecution's main witness, conceded lack of any knowledge of the
amassing, accumulating or acquiring of ill-gotten wealth of at least P50,000,000.00, nothing
more remained of the criminal prosecution for plunder. Hence, the Sandiganbayan should have
granted the demurrers of GMA and Aguas, and dismissed the criminal action against them.

IV.
The Prosecution failed to prove the
predicate act of raiding the public treasury

The Sandiganbayan observed that the Prosecution established the predicate act of raiding the
public treasury, to wit:

Secondly, the terms "unjust enrichment," "benefit," and "pecuniary benefit" are only mentioned
in the predicate acts mentioned in par. 2, 5 and 6 of Section 1 (d) of the Plunder Law. Paragraph
1 of the same section where "raids on the public treasury" is mentioned did not mention "unjust
enrichment" or "personal benefit". Lastly, the predicate act covering "raids on the public
treasury" is lumped up with the phrases misappropriation, conversion, misuse and malversation
of public funds. Thus, once public funds, as in the case of CIF funds, are illegally accumulated,
amassed or acquired. To the tune of PSO Million or more, there will be no need to establish any
motive to gain, or much more establish where the money eventually ended up. As stated in Our
Resolution dated November 5, 2013:

It should be noted that in both R.A. No. 7080 and the PCGG rules, the enumeration of the
possible predicate acts in the commission of plunder did not associate or require the concept of
personal gain/benefit or unjust enrichment with respect to raids on the public treasury, as a
means to commit plunder. It would, therefore, appear that a "raid on the public treasury" is
consummated where all the acts necessary for its execution and accomplishment are present.
Thus a "raid on the public treasury" can be said to have been achieved thru the pillaging or
looting of public coffers either through misuse, misappropriation or conversion, without need of
establishing gain or profit to the "raider" gets material possession of a government asset through
improper means and has free disposal of the same, the raid or pillage is completed.

xxxx

Clearly, the improper acquisition and illegal use of CIF funds, which is obviously a government
asset, will amount to a raid on the public treasury, and therefore fall into the category of ill-
gotten wealth.

xxxx

x x x It is not disputed that Uriarte asked for and was granted authority by Arroyo to use
additional CIF funds during the period 2008 - 2010. Uriarte was able to accumulate during that
period CIF funds in the total amount of P352,681,646. This was through a series of withdrawals
as cash advances of the CIF funds from the PCSO coffers, as evidenced by the disbursement
vouchers and checks issued and encashed by her, through her authorized representatives.
These flagrant violations of the rules on the use of CIF funds evidently characterize the series of
withdrawals by and releases to Uriarte as "raids" on the PCSO coffers, which is part of the public
treasury. These were, in every sense, "pillage," as Uriarte looted government funds and appears
to have not been able to account for it. The monies came into her possession and, admittedly, she
disbursed it for purposes other than what these were intended for, thus amounting to "misuse" of
the same. xxx

In this case, to require proof that monies went to a plunderer's bank account or was used to
acquire real or personal properties or used for any other purpose to personally benefit the
plunderer, is absurd. Suppose a plunderer had already amassed, acquired or accumulated P50
Million or more of government funds and just decide to keep it in his vault and never used such
funds for any purpose to benefit him, would that not be plunder? Or, if immediately right after
such amassing, the monies went up in flames or recovered by the police, negating any
opportunity for the purpose to actually benefit, would that not still be plunder? Surely, in such
cases, a plunder charge could still prosper and the argument that the fact of personal benefit
should still be evidence-based must fail.48

The Sandiganbayan contended that in order to prove the predicate act of raids of the public
treasury,  the Prosecution need not establish that the public officer had benefited from such act;
and that what was necessary was proving that the public officer had raided the public coffers. In
support of this, it referred to the records of the deliberations of Congress to buttress its
observation.

We do not share the Sandiganbayan' s contention.

The phrase raids on the public treasury  is found in Section 1 (d) of R.A. No. 7080, which
provides:

Section I .Definition of Terms.  - x x x

xxxx

d) Ill-gotten wealth means any asset, property, business enterprise or material possession of any
person within the purview of Section Two (2) hereof, acquired by him directly or indirectly
through dummies, nominees, agents, subordinates and/or business associates by any combination
or series of the following means or similar schemes:

1) Through misappropriation, conversion, misuse, or malversation of public funds or raids on the

public treasury;

xxxx

To discern the proper import of the phrase raids on the public treasury, the key is to look at the
accompanying words: misappropriation, conversion, misuse or malversation of public
funds.  This process is conformable with the maxim of statutory construction noscitur a sociis,  by
which the correct construction of a particular word or phrase that is ambiguous in itself or is
equally susceptible of various meanings may be made by considering the company of the words
in which the word or phrase is found or with which it is associated. Verily, a word or phrase in a
statute is always used in association with other words or phrases, and its meaning may, therefore,
be modified or restricted by the latter.49

To convert connotes the act of using or disposing of another's property as if it were one's own; to
misappropriate  means to own, to take something for one's own benefit;50 misuse means "a good,
substance, privilege, or right used improperly, unforeseeably, or not as
intended;"51 and malversation  occurs when "any public officer who, by reason of the duties of
his office, is accountable for public funds or property, shall appropriate the same or shall take or
misappropriate or shall consent, through abandonment or negligence, shall permit any other
person to take such public funds, or property, wholly or partially."52 The common thread that
binds all the four terms together is that the public officer used the property taken. Considering
that raids on the public treasury is in the company of the four other terms that require the use of
the property taken, the phrase raids on the public treasury similarly requires such use of the
property taken. Accordingly, the Sandiganbayan gravely erred in contending that the mere
accumulation and gathering constituted the forbidden act of raids on the public
treasury.  Pursuant to the maxim of noscitur a sociis, raids on the public treasury requires the
raider to use the property taken impliedly for his personal benefit.

The Prosecution asserts that the Senate deliberations removed personal benefit as a requirement
for plunder. In not requiring personal benefit, the Sandiganbayan quoted the following
exchanges between Senator Enrile and Senator Tañada, viz.:

Senator Emile. The word here, Mr. President, "such public officer or person who conspired or
knowingly benefited". One does not have to conspire or rescheme. The only element needed
is that he "knowingly benefited". A candidate for the Senate for instance, who received a
political contribution from a plunderer, knowing that the contributor is a plunderer and therefore,
he knowingly benefited from the plunder, would he also suffer the penalty, Mr. President, for life
imprisonment?

Senator Tañada. In the committee amendments, Mr. President, we have deleted these lines 1 to 4
and part ofline 5, on page 3. But, in a way, Mr. President, it is good that the Gentleman is
bringing out these questions, I believe that under the examples he has given, the Court will have
to ...

Senator Emile. How about the wife, Mr. President, he may not agree with the plunderer to
plunder the country but because she is a dutiful wife or a faithful husband, she has to keep her or
his vow of fidelity to the spouse. And, of course, she enjoys the benefits out of the plunder.
Would the Gentleman now impute to her or him the crime of plunder simply because she or he
knowingly benefited out of the fruits of the plunder and, therefore, he must suffer or he must
suffer the penalty of life imprisonment?

The President. That was stricken out already in the Committee amendment.
Senator Tañada. Yes, Mr. President. Lines l to 4 and part of line 5 were stricken out in the
Committee amendment. But, as I said, the eamples of the Minority Floor Leader are still worth
spreading the Record. And, I believe that in those examples, the Court will have just to take into
consideration all the other circumstances prevailing in the case and the evidence that will be
submitted.

The President. In any event, 'knowingly benefited' has already been stricken off."53

The exchanges between Senator Enrile and Senator Tañada reveal, therefore, that what was
removed from the coverage of the bill and the final version that eventually became the law was a
person who was not the main plunderer or a co-conspirator, but one who personally benefited
from the plunderers' action. The requirement of personal benefit on the part of the main
plunderer or his co-conspirators by virtue of their plunder was not removed.

As a result, not only did the Prosecution fail to show where the money went but, more
importantly, that GMA and Aguas had personally benefited from the same. Hence, the
Prosecution did not prove the predicate act of raids on the public treasury beyond reasonable
doubt.

V.
Summation

In view of the foregoing, the Court inevitably concludes that the Sandiganbayan completely

ignored the failure of the information to sufficiently charge conspiracy to commit plunder against
the petitioners; and ignored the lack of evidence establishing the corpus delicti of amassing,
accumulation and acquisition of ill-gotten wealth in the total amount of at least P50,000,000.00
through any or all of the predicate crimes. The Sandiganbayan thereby acted capriciously, thus
gravely abusing its discretion amounting to lack or excess of jurisdiction.

Grave abuse of discretion means such capricious or whimsical exercise of judgment which is

equivalent to lack of jurisdiction.54 To justify the issuance of the writ of certiorari, the abuse of
discretion must be grave, as when the power is exercised in an arbitrary or despotic manner by
reason of passion or personal hostility, and the abuse must be so patent and gross as to amount to
an evasion of a positive duty or to a virtual refusal to perform the duty enjoined, or to act at all,
in contemplation of law, as to be equivalent to having acted without jurisdiction.55

WHEREFORE, the Court GRANTS the petitions for certiorari; ANNULS and SETS

ASIDE the resolutions issued in Criminal Case No. SB-12-CRM-0174 by the Sandiganbayan on
April 6, 2015 and September 10, 2015; GRANTS the petitioners' respective demurrers to
evidence; DISMISSES Criminal Case No. SB-12-CRM-0174 as to the petitioners GLORIA
MACAPAGAL-ARROYO and BENIGNO AGUAS for insufficiency of
evidence; ORDERS the immediate release from detention of said petitioners; and MAKES no
pronouncements on costs of suit.

SO ORDERED.
 THIRD DIVISION

G.R. No. 209324, December 09, 2015

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE BUREAU OF

CUSTOMS, Petitioner, v. PILIPINAS SHELL PETROLEUM
CORPORATION, Respondent.

DECISION

VILLARAMA, JR., J.:

Assailed in this petition for review under Rule 45 are the Decision1 dated February 13, 2013 and
Resolution2 dated June 3, 2013 of the Court of Appeals (CA) in CA-G.R. CV No. 95436 which
affirmed the Orders3 dated April 28, 2010 and July 2, 2010 of the Regional Trial Court (RTC) of
Manila, Branch 49 in Civil Case No. 02-103191.

Factual Antecedents

Pilipinas Shell Petroleum Corporation (PSPC), a domestic corporation registered with the Board
of Investments (BOI), is engaged in the importation, refining and sale of petroleum products in
the country. For its importations, PSPC was assessed and required to pay customs duties and
internal revenue taxes.

Under Deed of Assignment4 dated May 7, 1997, Filipino Way Industries (FWI) assigned the
following Tax Credit Certificates5 (TCCs) to PSPC:
TCC# 006889 P 2,542,918.00
TCC # 006977 2,573,422.00
TCC# 006978 2,559,493.00
TCC # 006979 2,413,079.00
TOTAL P10,088,912.006
On the belief that the TCCs were actually good and valid, the Bureau of Customs (BOC)
accepted and allowed PSPC to use the above TCCs to pay the customs duties and taxes due on its
oil importations.

The One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center7 ("center") undertakes
the processing of TCCs and approval of their transfers. It is composed of a representative from
the Department of Finance (DOF) as its chairperson; and the members thereof are representatives
of the BOI, BOC and Bureau of Internal Revenue (BIR).

On November 3, 1999 the Center, through then Finance Secretary Edgardo B. Espiritu, informed
BIR Commissioner Beethoven L. Rualo that pursuant to EXCOM Resolution No. 03-05-99, it
has cancelled various Tax Debit Memos (TDMs) issued to PSPC and Petron Corporation against
their TCCs which were found to have been fraudulently issued and transferred. These include the
subject TCCs sold by FWI to PSPC. The Center thus advised that it will be demanding from the
said oil companies payment corresponding to the amount of the TCCs as evidenced by the
TDMs, and accordingly directed the BIR to collect the amount utilized on the TCCs, including
the related penalties, surcharges and interests.8 A similar letter was sent to Customs
Commissioner Nelson Tan regarding the cancellation of TDMs issued to PSPC based on the
Center's finding that the TCCs utilized by PSPC have been fraudulently issued and transferred.9

On April 3, 2002, the Republic of the Philippines represented by the BOC filed the present
collection suit in the RTC (Civil Case No. 02-103191) for the payment of P10,088,912.00 still
owed by PSPC after the invalidation of the subject TCCs.

Meanwhile, PSPC filed with the Court of Tax Appeals (CTA Case No. 6484) a petition for
review questioning the factual and legal bases of BOC's collection efforts.

Subsequently, PSPC moved to dismiss Civil Case No. 02-103191 on the ground that the RTC
had no jurisdiction over the subject matter and that the complaint for collection was prematurely
filed in view of its pending petition for review in the CTA. The RTC denied the motion to
dismiss and PSPC eventually filed its answer questioning the RTC's jurisdiction. When the RTC
issued a notice of pre-trial, PSPC moved for reconsideration of the order denying its motion to
dismiss. The RTC denied the motion for reconsideration, prompting PSPC to elevate the matter
to the CA via a petition for certiorari (CA-G.R. SP No. 71756). On October 23, 2003, the CA
rendered decision denying PSPC's petition. With the denial of its motion for reconsideration,
PSPC sought recourse from this Court in a petition for review on certiorari (G.R. No. 161953). In
a Decision10 dated March 6, 2008, this Court denied PSPC's petition, viz.:
Inasmuch as the present case did not involve a decision of the Commissioner of Customs in any
of the instances enumerated in Section 7(2) of RA 1125, the CTA had no jurisdiction over the
subject matter. It was the RTC that had jurisdiction under Section 19(6) of the Judiciary
Reorganization Act of 1980, as amended:chanRoblesvirtualLawlibrary

xxxx

In view of the foregoing, the RFC should forthwith proceed with Civil Case No. 02-103191 and
determine the extent of petitioner's liability.

We are not unmindful of petitioner's pending petition for review in the CTA where it is
questioning the validity of the cancellation of the TCCs. However, respondent cannot and should
not await the resolution of that case before it collects petitioner's outstanding customs duties and
taxes for such delay will unduly restrain the performance of its functions. Moreover, if the
ultimate outcome of the CTA case turns out to be favorable to petitioner, the law affords it the
adequate remedy of seeking a refund.

WHEREFORE, this petition is hereby DENIED. The Regional Trial Court of Manila, Branch
19 is ordered to proceed expeditiously with the pre-trial conference and trial of Civil Case No.
02-103191.
Costs against petitioner.

SO ORDERED.11 (Emphasis supplied)
As to CTA Case No. 6484, the CTA denied BOC's motion to dismiss on the ground of
prescription. When the CTA denied the BOC's motion for reconsideration, the BOC appealed to
the CA, which reversed the questioned CTA resolutions. PSPC again sought recourse from this
Court via a petition for review on certiorari (G.R. No. 176380). By Decision12 dated June 18,
2009, we denied the petition and held that the present case does not involve a tax protest case
within the jurisdiction of the CTA to resolve. Citing our previous ruling in Pilipinas Shell
Petroleum Corporation v. Republic13 we ruled that the appropriate forum to resolve the issues
raised by PSPC before the CTA, which were all related to the fact and efficacy of the payments
made, should be the collection case before the RTC where PSPC can put up the fact of its
payment as a defense.

With the resumption of proceedings in the RTC, the BOC filed an Amended Complaint, to which
PSPC filed a Second Amended Answer. Pre-trial was terminated and the RTC summarized the
issues in its Pre-Trial Order14 dated September 9, 2009, to wit:
The following issues raised by the plaintiffs:

a. Whether or not plaintiff Republic has cause of action against defendants;

b. Whether or not defendant Pilipinas Shell is [a] transferee in good faith [of] Tax Credit
Certificates;

c. Whether or not defendants are liable to pay the Republic the amount of Phpl0,088,912.00
represents unpaid taxes;

d. Whether or not the Tax Credit Certificate was spurious and fraudulent.

The following issues raised by the defendant Pilipinas Shell:

a. Whether the defendants PSPC is liable for the amount of Php10,088,912.00 in customs
duties and taxes covered by cancelled subject Tax Credit Certificates, However, there are
sub-issues. These are include[d] in our pre-trial brief;

b. Whether or not plaintiff is liable for moral and exemplary and Attorney's fees; and

c. Whether or not defendant Filipino Way is liable to defendant PSPC in case of successful
collection of customs taxes against PSPC.15

On November 16, 2009, PSPC filed a motion for summary judgment arguing that there is no
basis for the Republic's claims considering that the subject TCCs were already fully utilized for
the payment of PSPC's customs duties and taxes, and that EXCOM Resolution No. 03-05-99, the
basis of the cancellation of the TCCs, was declared void and invalid in Pilipinas Shell Petroleum
Corporation v. CIR,16 where this Court likewise ruled that the subject TCCs cannot be cancelled
on the basis of post-audit since a post-audit is not allowed and not a suspensive condition. PSPC
further contended that the Republic's cause of action had already prescribed when it attempted to
collect PSPC's customs duties and taxes only four years later, beyond the one-year prescriptive
period to file a collection case. Lastly, PSPC asserted that even assuming the TCCs were
fraudulently obtained by FWI, an innocent purchaser for value like PSPC cannot be prejudiced
as held in the aforementioned case.

In its Comment/Opposition, BOC argued that rendition of summary judgment is inappropriate in

this case in view of disputed facts that necessitate a full-blown trial where both parties can
present evidence on their respective claims. BOC pointed out that PSPC cannot rely on the Deed
of Assignment as proof that it had no participation in the issuance of the TCCs. PSPC should
prove at the trial that there was a valid transfer in good faith and for value of the subject TCCs.
As to the rulings in the case of Pilipinas Shell Petroleum Corporation v. CIR,17 these are
inapplicable here because first, what is involved therein are taxes owed to the BIR and there was
no finding of fraud against PSPC whereas in the present case the BOC can readily prove during
trial that PSPC committed fraud.

On February 22, 2010, the RTC denied the motion for summary judgment in view of factual
disputes which can only be resolved by trial on the merits. Specifically, it stated that presentation
of evidence is necessary to determine if PSPC is a mere transferee in good faith and for value of
the subject TCCs and that there was a valid transfer/assignment between PSPC and FWI.18

However, on motion for reconsideration by PSPC, the RTC reversed its earlier ruling and
granted the motion for summary judgment under its Order19 dated April 28, 2010. The RTC
cited Pilipinas Shell Corporation v. Republic20 which supposedly settled factual and legal issues
raised by BOC in its pleadings and arguments, specifically PSPC's not having committed fraud.
As there are no more disputed matters, the RTC held that there is no more need for a trial to
prove that the subject TCCs have been fully utilized by PSPC and that they were cancelled due
to an invalid post-audit under the authority of EXCOM Resolution No. 03-05-99.

The RTC thus decreed:

WHEREFORE, premises considered, the Order dated February 22, 2010 is hereby REVERSED
and SET ASIDE. The instant case against defendant PSPC is DISMISSED. However, the case
against defendant Filipino Way still SUBSISTS.

Let the trial of this case continue against the other Defendant namely, Filipino Way Industries, as
previously scheduled on May 19, 2010 at 1:00 o'clock in the afternoon.

SO ORDERED.21ChanRoblesVirtualawlibrary
With the denial of its motion for reconsideration, BOC appealed to the CA. By Decision dated
February 13, 2013, the CA denied the appeal and affirmed the questioned orders of the RTC.
BOC's motion for reconsideration was likewise denied by the CA.

According to the CA, BOC adopted a wrong mode of appeal because whether the RTC erred in
rendering summary judgment is purely a legal issue, jurisdiction over which is vested only in this
Court. Even assuming that the CA can entertain BOC's appeal, the CA said it found no genuine
issues raised by the parties' pleadings and arguments that necessitate a fullblown trial. The CA
further held that the rule on stare decisis applies in the present case considering that the legal and
factual issues have been previously discussed and resolved by this Court in Pilipinas Shell
Petroleum Corporation v. CIR.22

Issues

The following issues clearly emerge from the present controversy: (1) Does the Republic's
(petitioner) appeal involve purely questions of law and hence a wrong remedy from the assailed
RTC orders?; (2) Wliether or not summary judgment is proper; (3) Does the ruling in Pilipinas
Shell Petroleum Corporation v. CIR23 apply to this case under the doctrine of stare decisis; and
(4) Whether or not petitioner's claim is barred by prescription.

Petitioner's Arguments

Citing the cases of Nocom v. Camerino24 and Heirs of Baldomero Roxas v. Garcia25 petitioner

argues that since a summary judgment has the effect of adjudication on the merits, appeal under
Rule 41 of the Rules of Court is the proper remedy.

As to the propriety of summary judgment rendered by the RTC, petitioner underscores that the
collection case it filed against PSPC is founded on the fact that the latter utilized the
fraudulently-secured TCCs for payment of customs duties and taxes that arose from its various
oil importations, and their cancellation did not extinguish its liability to the government. The
matter of whether or not PSPC is a transferee in good faith and for value is a genuine issue to be
resolved, and must be ventilated in a full trial. The issue of whether or not PSPC is guilty of
fraud likewise calls for the presentation of evidence at the trial.

Petitioner mentions other factual inquiries which it said arose in this case, such as the manner by
which FWI acquired the subject TCCs; the legality of their transfer to PSPC; the results of the
post-audit conducted on the subject TCCs; whether PSPC claimed a return of the consideration
from FWI upon the cancellation of the TCCs; the veracity of the letter from Equitable Banking
Corporation stating that the credit memos, supposedly used by FWI in securing the TCCs, do not
conform to the bank's records; and what are the company papers and export documents submitted
for the claim of tax credits.

Petitioner also argues that Pilipinas Shell Petroleum Corporation v. CIR26 is not applicable as
said case involves the assessment of deficiency taxes which was filed before the CTA, hence a
tax case, whereas here it is a civil case for collection of sum of money which was filed in a
regular court. More important, the facts in the aforesaid case did not clearly establish the
fraudulent acts committed by the original grantees of tax credits in the procurement of TCCs
from the Center, whereas in the present case, petitioner can sufficiently prove that the documents
submitted by the original grantee (FWI) for the claim of tax credits were forgeries and the TCCs
subsequently issued had absolutely no monetary value to back up their issuance. Thus, where the
facts in the two cases under consideration are different, stare decisis finds no application.
On other legal issues that were previously settled in Pilipinas Shell Petroleum Corporation v.
CIR,27 petitioner submits there is an extreme urgency to revisit this Court's ruling —
x x x because of the great danger and prejudice it had caused to the several collection cases filed
by the government which are pending before several regular courts involving TCCs in the
hundreds of millions of pesos. Most defendants in these cases assert to be "buyers or transferees
in good faith" and capitalize on the ruling of this Honorable Court in the Shell case. However, if
the only basis for finding good faith on the part of the transferee of TCCs is the mere approval of
the transfer by the DOF One Stop Shop Center, then all these pending cases, as above-
mentioned, must be dismissed, since all the transfers of the TCCs were approved by the Center.
This is precisely the very reason why the government filed several cases before the Office of the
Ombudsman against the personnel and officers of the One Stop Shop Center, including private
individuals, because of the collusion and conspiracy they contrived in order to defraud the
government of several billions of pesos involving the issuance and transfers of TCCs. This is
now infamously known as the "tax credit scam" because it was committed in grandiose style by a
crime syndicate.

In the final analysis, the ultimate victim in this scheme is not the Republic but the Filipino people
who did not commit mistake or wrongdoing, but rather, its agents. Hence, the State cannot be
made to bear the loss of revenues on account of scheming individuals or entities that are out to
defraud the government or evade the payment of tax liabilities.28ChanRoblesVirtualawlibrary
Respondent's Arguments

PSPC contends that the assailed orders of the RTC granting summary judgment has already
attained finality since petitioner availed of the wrong remedy before the CA. It asserts that the
CA did not err in upholding the RTC's ruling that there exists no genuine issues of fact in the
present case.

On the alleged fraudulent issuance of the subject TCCs, PSPC maintains that it cannot be
prejudiced by such fraud which, by petitioner's own admission, was committed by FWI. Being a
transferee in good faith and for value of the subject TCCs, these matters raised by petitioner are
thus irrelevant. That PSPC is a transferee in good faith and for value was admitted by petitioner
during the pre-trial hearing held on September 9, 2009.

PSPC argues that, contrary to petitioner's claims, the CA correctly applied this Court's rulings
in Pilipinas Shell Petroleum Corporation v. CIR29 under the doctrine of stare decisis. In any
event, it asserts that petitioner's cause of action had already prescribed since the subject TCCs
were already fully utilized as payment for PSPC's customs duties and taxes on November 17,
1997, while petitioner attempted to collect only on February 15, 2002 or four years later, beyond
the one year period to file the present case.

Our Ruling

The petition is meritorious.

Propriety of Summary Judgment a Question of Law, hence, the Remedy is a Petition for
Review Under Rule 45
Section 2, Rule 41 of the 1997 Rules of Civil Procedure, as amended, provides for two remedies
from the final orders or judgments of the RTC in the exercise of its original jurisdiction, viz.:
Section 2. Modes of appeal. -

(a) Ordinary appeal. - The appeal to the Court of Appeals in cases decided by the Regional Trial
Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the
court which rendered the judgment or final order appealed from and serving a copy thereof upon
the adverse party. No record on appeal shall be required except in special proceedings and other
cases of multiple or separate appeals where the law or these Rules so require. In such cases, the
record on appeal shall be filed and served in like manner.

(b) Petition for review. - The appeal to the Court of Appeals in cases decided by the Regional
Trial Court in the exercise of its appellate jurisdiction shall be by petition for review in
accordance with Rule 42.

(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.

(Emphasis supplied)
Thus, when an appeal raises only pure questions of law, it is this Court that has the sole
jurisdiction to entertain the same. On the other hand, appeals involving both questions of law and
fact fall within the exclusive appellate jurisdiction of the CA.30

A question of law arises when there is doubt as to what the law is on a certain state of facts,
while there is a question of fact when the doubt arises as to the truth or falsity of the alleged
facts. For a question to be one of law, the same must not involve an examination of the probative
value of the evidence presented by the litigants or any of them. The resolution of the issue must
rest solely on what the law provides on the given set of circumstances. Once it is clear that the
issue invites a review of the evidence presented, the question posed is one of fact. Thus, the test
of whether a question is one of law or of fact is not the appellation given to such question by the
party raising the same; rather, it is whether the appellate court can determine the issue raised
without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise it
is a question of fact.31

We have held that the question of whether the RTC erred in rendering summary judgment is one
of law, thus:
Any review by the appellate court of the propriety of the summary judgment rendered by the trial
court based on these pleadings would not involve an evaluation of the probative value of any
evidence, but would only limit itself to the inquiry of whether the law was properly applied given
the facts and these supporting documents. Therefore, what would inevitably arise from such a
review are pure questions of law, and not questions of fact, which are not proper in an ordinary
appeal under Rule 41, but should be raised by way of a petition for review on certiorari under
Rule 45.32ChanRoblesVirtualawlibrary
Petitioner raised as sole issue in its brief filed with the CA the RTC's erroneous grant of
summary judgment in favor of PSPC based on its finding that there exists no genuine factual
issue. Obviously, it availed of the wrong mode of appeal when it filed a notice of appeal in the
RTC under Section 2(a), Rule 41, instead of a petition for review on certiorari in this Court under
Rule 45.

Relaxation of the Rule on Appeal

However, despite such lapse, a relaxation of the rule on appeal is justified under the
circumstances. The CA found no reversible error in the grant of summary judgment in favor of
PSPC. Accordingly, it affirmed the assailed orders of the RTC.

Considering the Republic's stake in the outcome of the proceedings in Civil Case No. 02-103191,
among the several collection suits it has instituted in the drive to recover huge revenue losses
from spurious tax credit certificates that proliferated in the 1990s, we cannot accede to PSPC's
contention that petitioner's erroneous appeal has rendered the Orders dated April 28, 2010 and
July 2, 2010 of the RTC final and executory.

In Barangay Sangalang v. Barangay Maguihan33 we ratiocinated:

In any case, as in the past, this Court has recognized the emerging trend towards a liberal
construction of the Rules of Court. In Ong him Sing, Jr. v. FEB Leasing and Finance
Corporation, this Court stated:
Courts have the prerogative to relax procedural rules of even the most mandatory character,
mindful of the duty to reconcile both the need to speedily put an end to litigation and the parties'
right to due process. In numerous cases, this Court has allowed liberal construction of the rules
when to do so would serve the demands of substantial justice and equity. In Aguam v. Court of
Appeals, the Court explained:
The court has the discretion to dismiss or not to dismiss an appellant's appeal. It is a power
conferred on the court, not a duty. The "discretion must be a sound one, to be exercised in
accordance with the tenets of justice and fair play, having in mind the circumstances obtaining in
each case." Technicalities, however, must be avoided. The law abhors technicalities that impede
the cause of justice. The court's primary duty is to render or dispense justice. "A litigation is not
a game of technicalities." "Lawsuits, unlike duels, are not to be won by a rapier's thrust.
Technicality, when it deserts its proper office as an aid to justice and becomes its great hindrance
and chief enemy, deserves scant consideration from courts." Litigations must be decided on their
merits and not on technicality. Every party-litigant must be afforded the amplest opportunity for
the proper and just determination of his cause, free from the unacceptable plea of technicalities.
Thus, dismissal of appeals purely on technical grounds is frowned upon where the policy of the
court is to encourage hearings of appeals on their merits and the rules of procedure ought not to
be applied in a very rigid, technical sense; rules of procedure are used only to help secure, not
override substantial justice. It is a far better and more prudent course of action for the court to
excuse a technical lapse and afford the parties a review of the case on appeal to attain the ends
ol" justice rather than dispose of the case on technicality and cause a grave injustice to the
parties, giving a false impression of speedy disposal of cases while actually resulting in more
delay, if not a miscarriage of justice.
Thus, notwithstanding petitioner's wrong mode of appeal, the CA should not have so easily
dismissed the petition, considering that the parties involved are local government units and that
what is involved is the determination of their respective territorial jurisdictions. x x
x34ChanRoblesVirtualawlibrary
Summary Judgment Not Proper

Under Rule 35 of the 1997 Rules of Civil Procedure, as amended, except as to the amount of
damages, when there is no genuine issue as to any material fact and the moving party is entitled
to a judgment as a matter of law, summary judgment may be allowed:
Section 1. Summary Judgment for claimant. - A party seeking to recover upon a claim,
counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the pleading
in answer thereto has been served, move with supporting affidavits, depositions or admissions
for a summary judgment in his favor upon all or any part thereof.
Summary judgment is a procedural device resorted to in order to avoid long drawn out litigations
and useless delays. When the pleadings on file show that there are no genuine issues of fact to be
tried, the Rules allow a party to obtain immediate relief by way of summary judgment, that is,
when the facts are not in dispute, the court is allowed to decide the case summarily by applying
the law to the material facts.35 Even if on their face the pleadings appear to raise issues, when the
affidavits, depositions and admissions show that such issues are not genuine, then summary
judgment as prescribed by the Rules must ensue as a matter of law. The determinative factor,
therefore, in a motion for summary judgment, is the presence or absence of a genuine issue as to
any material fact.36

For a full-blown trial to be dispensed with, the party who moves for summary judgment has the
burden of demonstrating clearly the absence of genuine issues of fact, or that the issue posed is
patently insubstantial as to constitute a genuine issue. Genuine issue means an issue of fact
which calls for the presentation of evidence as distinguished from an issue which is fictitious or
contrived.37

Petitioner's complaint is premised mainly on the alleged fraudulent issuance and transfer of the
subject TCCs. As stated in the pre-trial order, petitioner submitted for trial the issue of whether
or not PSPC is a transferee in good faith.

In Pilipinas Shell Petroleum Corporation v. CIR,38 we ruled that "[t]he transferee in good faith
and for value may not be unjustly prejudiced by the fraud committed by the claimant or
transferor in the procurement or issuance of the TCC from the Center."
A transferee in good faith and for value of a TCC who has relied on the Center's representation
of the genuineness and validity of the TCC transferred to it may not be legally required to pay
again the tax covered by the TCC which has been belatedly declared null and void, that is, after
the TCCs have been fully utilized through settlement of internal revenue tax liabilities.
Conversely, when the transferee is party to the fraud as when it did not obtain the TCC for value
or was a party to or has knowledge of its fraudulent issuance, said transferee is liable for the
taxes and for the fraud committed as provided for by law.39ChanRoblesVirtualawlibrary
The RTC found no genuine factual issue as far as PSPC's status as innocent purchaser in good
faith and for value, relying on the following underlined portion of this Court's decision
in Pilipinas Shell Petroleum Corporation v. Republic40 (March 6, 2008):
THE FILING OF THE COLLECTION CASE WAS A PROPER REMEDY

Assessments inform taxpayers of their tax liabilities. Under the TCCP, the assessment is in the
form of a liquidation made on the face of the import entry return and approved by the Collector
of Customs. Liquidation is the final computation and ascertainment by the Collector of
Customs of the duties due on imported merchandise based on official reports as to the
quantity, character and value thereof, and the Collector of Customs' own finding as to the
applicable rate of duty. A liquidation is considered to have been made when the entry is
officially stamped "liquidated."

Petitioner claims that it paid the duties due on its importations. Section 1603 of the old TCCP
stated:
Section 1603. Finality of Liquidation. When articles have been entered and passed free of duty or
final adjustments of duties made, with subsequent delivery, such entry and passage free of duty
or settlement of duties will, after the expiration of one year from the date of the final payment of
duties, in the absence of fraud or protest, be final and conclusive upon all parties, unless the
liquidation of the import entry was merely tentative.
An assessment or liquidation by the BoC attains finality and conclusiveness one year from the
date of the final payment of duties except when:
(a) there was fraud;

(b) there is a pending protest or

(c) the liquidation of import entry was merely tentative.

None of the foregoing exceptions is present in this case. There was no fraud as petitioner claimed
(and was presumed) to be in good faith. Respondent does not, dispute this. Moreover, records
show that petitioner paid those duties without protest using its TCCs. Finally, the liquidation was
not a tentative one as the assessment had long become final and incontestable. Consequently,
pursuant to Yabes and because of the cancellation of the TCCs, respondent had the right to file a
collection case. (Underscoring supplied)
Upon reading the entire text of the above decision, it can be gleaned that PSPC (petitioner
therein) had questioned the jurisdiction of the RTC, arguing that said court has no jurisdiction
over Civil Case No. 02-103191 (collection case) in view of the pendency of PSPC's petition for
review in the CTA challenging the BOC's assessment of the customs duties and taxes covered by
the same TCCs involved in this case. Citing Yabes v. Flojo,41 PSPC contended that the RTC
acquires jurisdiction over a collection case only if an assessment made by the CIRhas become
final and incontestable.

Addressing the issue of prematurity of BOC's collection case in the RTC, we cited three
exceptions from the rule that an assessment becomes final and conclusive one year from the date
of final payment of duties: among which is when there is fraud. The decision then declares that
none of the cited exceptions are present, specifically stating that there was no fraud as petitioner
claimed (and was presumed) to be in good faith, and the BOC does not dispute it. It is this
statement which the RTC deemed as establishing PSPC's status as transferee in good faith and
for value of the subject TCCs. However, we find the RTC's reliance on this statement in the
earlier case involving the issue of jurisdiction of the RTC as misplaced and erroneous. Such
statement pertained to fraud in the computation or accuracy of the customs duties and taxes due
on the subject importations, which concerns the correctness of the quantity and class of goods
declared by the importer PSPC as basis for the assessment by the BOC. There may have been
preconceived courses of action purposely adopted by importers to evade the payment of the
correct customs duties. Clearly, the fraud mentioned in the said decision does not refer to the
fraud in the issuance and transfer of TCCs for which the petitioner seeks to recover unpaid
customs duties and taxes, subject matter of the present controversy. The latter has to do with
presentation of spurious documents that would render the TCCs worthless, resulting in non-
payment of the assessed customs duties and taxes.

It bears stressing also that the collection case is not based on any revised or new assessment of
customs duties and taxes on PSPC's oil importations. As we noted in Pilipinas Shell Petroleum
Corporation v. Commissioner of Customs42 BOC's demand letters to PSPC merely reissued the
original assessments that were previously settled by it with the use of the TCCs. But since the
TCCs were cancelled, the tax liabilities of PSPC under the original assessments were considered
unpaid; hence, the demand letters and actions for collection.

Moreover, it would be absurd to interpret such statement in our decision in Pilipinas Shell
Petroleum Corporation v. Republic43 (March 6, 2008) as a judicial declaration of PSPC's status
as a transferee in good faith and for value of the subject TCCs when in the same decision we
ordered the case remanded to the RTC for proceeding with the pre-trial where issues for trial still
have to be determined by the parties. Neither should such statement be regarded as an admission
by petitioner because the latter's complaint was anchored chiefly on the alleged fraud and
irregularity in the issuance and transfer of the TCCs, with both the transferee (PSPC) and
transferor (FWI) impleaded as defendants.

In its Comment, PSPC claims that during the pre-trial hearing, the Solicitor General's
representative admitted that PSPC had no participation in the issuance of the subject TCCs.
However, perusal of the transcript of stenographic notes (TSN) reveals that what was admitted
by petitioner was only the fact of issuance and eventual transfer/assignment to PSPC of the
TCCs. The succeeding portions of the TSN, omitted in the Comment, clearly showed that Sr.
State Solicitor Bustria repeatedly denied Atty. Lopez's (PSPC's counsel) proposed stipulations on
the valuable consideration for the TCCs, the approval by the concerned agencies of the deed of
the said assignment/transfer and related matters.44

Fraud, in its general sense, is deemed to comprise anything calculated to deceive, including all
acts, omissions, and concealment involving a breach of legal or equitable duty, trust or
confidence justly reposed, resulting in the damage to another, or by which an undue and
unconscionable advantage is taken of another. It is a question of fact and the circumstances
constituting it must be alleged and proved in the court below.45 Petitioner's allegations of fraud
and irregularity in the issuance to FWI and eventual transfer to PSPC of the subject TCCs require
presentation of evidence in a full-blown trial. PSPC, in turn, can present its own evidence to
prove the status of a purchaser or transferee in good faith and for value. The solidary liability of
PSPC and FWI for the amount covered by the TCCs depends on the good faith or lack of it on
the part of PSPC.
In ascertaining good faith, or the lack of it, which is a question of intention, courts are
necessarily controlled by the evidence as to the conduct and outward acts by which alone the
inward motive may, with safety, be determined.46 Good faith connotes an honest intention to
abstain from taking undue advantage of another, even though the forms and technicalities of law,
together with the absence of all information or belief of facts, would render the transaction
unconscientious.47 The ascertainment of good faith, or lack of it, and the determination of
whether due diligence and prudence were exercised or not, are questions of fact.48

Trial courts have limited authority to render summary judgments and may do so only when there
is clearly no genuine issue as to any material fact. When the facts as pleaded by the parties are
disputed or contested, proceedings for summary judgment cannot take the place of trial.49 As
certain facts pleaded are contested by the parties in this case, rendition of summary judgment is
not proper.

Prescription

As already mentioned, BOC's collection suit is not based on any new or revised assessment
because the original assessments which had long become final and uncontestable, were already
settled by PSPC with the use of the subject TCCs.

With the cancellation of the TCCs, the tax liabilities of PSPC under the original assessments
were considered unpaid, hence BOC's demand letters and the action for collection in the RTC.
To repeat, these assessed customs duties and taxes were previously assessed and paid by the
taxpayer, only that the TCCs turned out to be spurious and hence worthless certificates that did
not extinguish PSPC's tax liabilities.

The applicable provision is Section 1204 of the Tariff and Customs Code, which states:
Section 1204. Liability of Importer for Duties. — Unless relieved by laws or regulations, the
liability for duties, taxes, fees and other charges attaching on importation constitutes a personal
debt due from the importer to the government which can be discharged only by payment in
full of all duties, taxes, fees and other charges legally accruing. It also constitutes a lien upon the
articles imported which may be enforced while such articles are in the custody or subject to the
control of the government. (Emphasis supplied)
As we held in Pilipinas Shell Petroleum Corporation v. Republic50:
Under this provision, import duties constitute a personal debt of the importer that must be paid in
full. The importer's liability therefore constitutes a lien on the article which the government may
choose to enforce while the imported articles are either in its custody or under its control.

When respondent released petitioner's goods, its (respondent's) lien over the imported goods was
extinguished. Consequently, respondent could only enforce the payment of petitioner's import
duties in full by filing a case for collection against petitioner.51ChanRoblesVirtualawlibrary
Stare Decisis

The doctrine of stare decisis is based on the principle that once a question of law has been
examined and decided, it should be deemed settled and closed to further
argument.52 Accordingly, when a court has laid down a principle of law as applicable to a certain
state of facts, it will adhere to that principle and apply it to all future cases in which the facts are
substantially the same. Thus, where the same questions relating to the same event have been put
forward by the parties similarly situated as in a previous case litigated and decided by a
competent court, the rule of stare decisis is a bar to any attempt to relitigate the same issue.53

The RTC and CA both ruled that Pilipinas Shell Petroleum Corporation v. CIR54 applies to the
present case, stating that the legal issues have already been settled by this Court such as the
ineffective cancellation by the Center of TCCs which have been fully utilized by the
importer/taxpayer and the sole responsibility under the Liability Clause in the TCC of the
original grantee for its fraudulent issuance by the Center.

We disagree.

Pilipinas Shell Petroleum Corporation v. CIR55 involved TCCs used by PSPC that were also
cancelled for alleged fraud in their issuance and transfer. However, in the said case, there was a
finding, on the basis of evidence presented before the CTA, that PSPC is a transferee in good
faith and for value and that no evidence was adduced that it participated in any way in the
issuance of the TCCs to the corporations who in turn conveyed the same to PSPC.

PSPC's status as transferee in good faith of the TCCs assigned to it by FWI is yet to be
established or proven at the trial. In fact, this Court in upholding the jurisdiction of the RTC
directed it to proceed with the pre-trial and trial proper. Petitioner should be given the
opportunity to substantiate its allegations of fraud in the issuance and transfer of the TCCs which
PSPC used to pay for the customs duties and taxes due on its oil importations. Whether Pilipinas
Shell Petroleum Corporation v. CIR56 applies squarely to the present case may be determined
only after such trial. If it is shown that PSPC was a party to the fraud as when it did not obtain
the TCC for value or has knowledge of its fraudulent issuance, it will be liable for the taxes and
for the fraud committed as provided for by law.

As to the full utilization of the TCCs being claimed by PSPC, our ruling in Pilipinas Shell
Petroleum Corporation v. CIR is clear that the taxpayer must have no participation in the
fraud, viz.:
Sec. 3, letter 1. of AO 266, in relation to letters a. and g., does give ample authority to the Center
to cancel the TCCs it issued. Evidently, the Center cannot carry out its mandate if it cannot
cancel the TCCs it may have erroneously issued or those that were fraudulently issued. It is
axiomatic that when the law and its implementing rules are silent on the matter of cancellation
while granting explicit authority to issue, an inherent and incidental power resides on the issuing
authority to cancel that which was issued. A caveat however is required in that while the Center
has authority to do so, it must bear in mind the nature of the TCCs immediate effectiveness and
validity for which cancellation may only be exercised before a transferred TCC has been
fully utilized or cancelled by the BIR after due application of the available tax credit to the
internal revenue tax liabilities of an innocent transferee for value, unless of course the claimant
or transferee was involved in the perpetration of the fraud in the TCCs issuance, transfer,
or utilization. The utilization of the TCC will not shield a guilty party from the
consequences of the fraud committed.57 (Emphasis supplied)
In sum, the CA erred in affirming the RTC orders granting summary judgment in favor of PSPC
considering that there exists a genuine issue of fact and that stare decisis finds no application in
this case.

WHEREFORE, the petition is GRANTED. The Decision dated February 13, 2013 and
Resolution dated June 3, 2013 of the Court of Appeals in CA-G.R. CV No. 95436
are REVERSED and SET ASIDE.

The case is hereby REMANDED to the Regional Trial Court of Manila, Branch 49 for the
conduct of trial proceedings in Civil Case No. 02-103191 with utmost DELIBERATE
DISPATCH.

No pronouncement as to costs.

SO ORDERED.chanroblesvirtuallaw

G.R. No. 202989, March 25, 2015

COMGLASCO CORPORATION/AGUILA GLASS, Petitioner, v. SANTOS CAR CHECK

CENTER CORPORATION, Respondent.

DECISION

REYES, J.:

On August 16, 2000, respondent Santos Car Check Center Corporation (Santos), owner of a
showroom located at 75 Delgado Street, in Iloilo City, leased out the said space to petitioner
Comglasco Corporation (Comglasco), an entity engaged in the sale, replacement and repair of
automobile windshields, for a period of five years at a monthly rental of P60,000.00 for the first
year, P66,000.00 on the second year, and P72,600.00 on the third through fifth years.1

On October 4, 2001, Comglasco advised Santos through a letter2 that it was pre-terminating their
lease contract effective December 1, 2001.  Santos refused to accede to the pre-termination,
reminding Comglasco that their contract was for five years.  On January 15, 2002, Comglasco
vacated the leased premises and stopped paying any further rentals.  Santos sent several demand
letters, which Comglasco completely ignored.  On September 15, 2003, Santos sent its final
demand letter,3 which Comglasco again ignored.  On October 20, 2003, Santos filed suit for
breach of contract.4

Summons and a copy of the complaint, along with the annexes, were served on Comglasco on
January 21, 2004, but it moved to dismiss the complaint for improper service.  The Regional
Trial Court (RTC) of Iloilo City, Branch 37, dismissed the motion and ordered the summons
served anew.  On June 28, 2004, Comglasco filed its Answer.5  Santos moved for a judgment on
the pleadings, which the RTC granted.  On August 18, 2004, the trial court rendered its
judgment,6 the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of [Santos] and against [Comglasco]:

1. Ordering [Comglasco] to faithfully comply with [its] obligation under the Contract of Lease
and pay its unpaid rentals starting January 16, 2002 to August 15, 2003 in the total amount of
Php1,333,200.00, plus 12% interest per annum until fully paid;

2. To pay [Santos]:
a) Php200,000.00 as attorney’s fees;
b) [Php]50,000.00 as litigation expenses;
c) [Php]400,000.00 as exemplary damages.
3. Costs of the suit.

SO ORDERED.7

On February 14, 2005, Santos moved for execution pending Comglasco’s appeal, which the trial
court granted on May 12, 2005.  In its appeal, Comglasco interposed the following issues for
resolution:

1. Whether or not judgment on the pleadings was properly invoked by the trial court as 
basis for rendering its decision;
2. Whether or not material issues were raised in [Comglasco’s] Answer;
3. Whether or not damages may be granted by the trial court without proof and legal basis.8

In its Decision9 dated August 10, 2011, the Court of Appeals (CA) affirmed the judgment of the
RTC but reduced the award of attorney’s fees to P100,000.00 and deleted the award of litigation
expenses and exemplary damages.

Petition for Review to the Supreme Court

In this petition, Comglasco raises the following issues:

1. Whether or not judgment on the pleadings was properly invoked by the trial court as
basis for rendering its decision?
2. Whether or not material issues were raised in [Comglasco’s] answer?
3. Whether or not summary judgment or judgment on the pleadings is the proper remedy for
[Santos] under the circumstances of the present case?
4. Whether or not the amount deposited for advance rental and deposit should be credited to
[Comglasco’s] account?
5. Whether or not attorney’s fees may be granted by the trial court without proof and legal
basis?10

Paragraph 15 of the parties’ lease contract11 permits pre-termination with cause in the first three
years and without cause after the third year. Citing business reverses which it ascribed to the
1997 Asian financial crisis, Comglasco insists that under Article 1267 of the Civil Code it is
exempted from its obligation under the contract, because its business setback is the “cause”
contemplated in their lease which authorized it to pre-terminate the same.  Article 1267 provides:

Art. 1267. When the service has become so difficult as to be manifestly beyond the
contemplation of the parties, the obligor may also be released therefrom, in whole or in part.

Comglasco argues that it cannot be said to have admitted in its Answer the material allegations
of the complaint precisely because it invoked therein a valid cause for its decision to pre-
terminate the lease before the lapse of three years; that therefore, in view of its pleaded “cause”
for reneging on its rentals (the 1997 Asian financial crisis), the RTC should have ordered the
reception of evidence for this purpose, after which a summary judgment would then have been
proper, not a judgment on the pleadings.  After all, Santos has claimed in its Motion for
Summary Judgment that Comglasco’s cited “cause” for pre-termination was fictitious or a sham,
whereas in truth the prevailing business climate which ensued after the 1997 currency crisis
resulted in great difficulty on its part to comply with the terms of the lease “as to be manifestly
beyond the contemplation of the parties”; thus, Comglasco should be deemed released from the
lease.

Next, Comglasco insists that its advance rentals and deposit totaling P309,000.00 should be
deducted from any sum awarded to Santos while it also insists that there is no factual and legal
basis for the award of damages.

Ruling of the Court

The petition is denied.

The first three issues being related will be discussed together.

Comglasco maintains that the RTC was wrong to rule that its answer to Santos’ complaint
tendered no issue, or admitted the material allegations therein; that the court should have heard it
out on the reason it invoked to justify its action to pre-terminate the parties’ lease; that therefore
a summary judgment would have been the proper recourse, after a hearing.

In Philippine National Construction Corporation v. CA12 (PNCC), which also involves the

termination of a lease of property by the lessee “due to financial, as well as technical,
difficulties,”13 the Court ruled:

The obligation to pay rentals or deliver the thing in a contract of lease falls within the prestation
“to give”; hence, it is not covered within the scope of Article 1266.  At any rate, the unforeseen
event and causes mentioned by petitioner are not the legal or physical impossibilities
contemplated in said article.  Besides, petitioner failed to state specifically the circumstances
brought about by “the abrupt change in the political climate in the country” except the alleged
prevailing uncertainties in government policies on infrastructure projects.

The principle of rebus sic stantibus neither fits in with the facts of the case.  Under this theory,
the parties stipulate in the light of certain prevailing conditions, and once these conditions cease
to exist, the contract also ceases to exist.  This theory is said to be the basis of Article 1267 of the
Civil Code, which provides:
Art. 1267. When the service has become so difficult as to be manifestly beyond the
contemplation of the parties, the obligor may also be released therefrom, in whole or in part.
This article, which enunciates the doctrine of unforeseen events, is not, however, an absolute
application of the principle of rebus sic stantibus, which would endanger the security of
contractual relations.  The parties to the contract must be presumed to have assumed the risks of
unfavorable developments.  It is therefore only in absolutely exceptional changes of
circumstances that equity demands assistance for the debtor.

In this case, petitioner wants this Court to believe that the abrupt change in the political climate
of the country after the EDSA Revolution and its poor financial condition “rendered the
performance of the lease contract impractical and inimical to the corporate survival of the
petitioner.”

This Court cannot subscribe to this argument.  As pointed out by private respondents:

xxxx

Anent petitioner’s alleged poor financial condition, the same will neither release petitioner from
the binding effect of the contract of lease. As held in Central Bank v. Court of Appeals, cited by
private respondents, mere pecuniary inability to fulfill an engagement does not discharge a
contractual obligation, nor does it constitute a defense to an action for specific performance.14

Relying  on  Article  1267  of  the  Civil  Code  to  justify  its  decision to pre-terminate its lease
with Santos, Comglasco invokes the 1997 Asian currency crisis as causing it much difficulty in
meeting its obligations.  But in PNCC,15 the Court held that the payment of lease rentals does not
involve a prestation “to do” envisaged in Articles 1266 and 1267 which has been rendered 
legally  or  physically  impossible  without  the  fault  of  the obligor-lessor.  Article 1267 speaks
of a prestation involving service which has been rendered so difficult by unforeseen subsequent
events as to be manifestly beyond the contemplation of the parties.  To be sure, the Asian
currency crisis befell the region from July 1997 and for sometime thereafter, but Comglasco
cannot be permitted to blame its difficulties on the said regional economic phenomenon because
it entered into the subject lease only on August 16, 2000, more than three years after it began,
and by then Comglasco had known what business risks it assumed when it opened a new shop in
Iloilo City.

This situation is no different from the Court’s finding in PNCC wherein PNCC cited the
assassination of Senator Benigno Aquino Jr. (Senator Aquino) on August 21, 1983 and the
ensuing national political and economic crises as putting it in such a difficult business climate
that it should be deemed released from its lease contract.  The Court held that the political
upheavals, turmoils, almost daily mass demonstrations, unprecedented inflation, and peace and
order deterioration which followed Senator Aquino’s death were a matter of judicial notice, yet
despite this business climate, PNCC knowingly entered into a lease with therein respondents on
November 18, 1985, doing so with open eyes of the deteriorating conditions of the country.  The
Court rules now, as in PNCC, that there are no “absolutely exceptional changes of circumstances
that equity demands assistance for the debtor.”16

As found by the CA, Comglasco’s Answer admitted the material allegations in the complaint, to
wit: a) that Santos holds absolute title to a showroom space; b) that Comglasco leased the said
showroom from Santos; c) that after a little over a year, Comglasco pre-terminated the lease; d)
that, disregarding Santos’ rejection of the pre-termination of their lease, Comglasco vacated the
leased premises on January 15, 2002; e) that Comglasco never denied the existence and validity
of the parties’ lease contract.  Specifically, the CA noted that Paragraph 2 of the Answer
admitted the allegations in Paragraphs 2, 3 and 4 of the complaint that the lease was for five
years, starting on August 16, 2000 and to expire on August 15, 2005, at a monthly rental of
P60,000.00 on the first year, P66,000.00 on the second year, and P72,600.00 on the third up to
the fifth year.

The RTC acted correctly in resorting to Section 1 of Rule 34, on Judgment on the Pleadings, to
cut short a needless trial.  This Court agrees with the CA that Comglasco cannot cite Article
1267 of the Civil Code, and that it must be deemed to have admitted the material allegations in
the complaint. Section 1, Rule 34 reads:

Sec. 1. Judgment on the pleadings. - Where an answer fails to tender an issue, or otherwise
admits the material allegations of the adverse party’s pleading, the court may, on motion of that
party, direct judgment on such pleading.  However, in actions for declaration of nullity or
annulment of marriage or for legal separation, the material facts alleged in the complaint shall
always be proved.

A judgment on the pleadings is a judgment on the facts as pleaded,17 and is based exclusively

upon the allegations appearing in the pleadings of the parties and the accompanying annexes.18  It
is settled that the trial court has the discretion to grant a motion for judgment on the pleadings
filed by a party if there is no controverted matter in the case after the answer is filed.19 A genuine
issue of fact is that which requires the presentation of evidence, as distinguished from a sham,
fictitious, contrived or false issue.20  Come to think of it, under Rule 35, on Summary Judgments,
Comglasco had recourse to move for summary judgment, wherein it could have adduced
supporting evidence to justify its action on the parties’ lease, but it did not do so.  Section 2 of
Rule 35 provides:

Sec. 2. Summary judgment for defending party. - A party against whom a claim, counterclaim, or
cross-claim is asserted or a declaratory relief is sought may, at any time, move with supporting
affidavits, depositions or admissions for a summary judgment in his favor as to all or any part
thereof.

Concerning, now, whether Comglasco’s alleged rental deposit and advance rentals of
P309,000.00 should be credited to Comglasco’s account, let it suffice to state that it never raised
this matter in its answer to the complaint, nor in its appeal to the CA.  Certainly, it cannot do so
now.

Finally, as to whether attorney’s fees may be recovered by Santos, Article 2208(2) of the Civil
Code justifies the award thereof, in the absence of stipulation, where the defendant’s act or
omission has compelled the plaintiff to incur expenses to protect his interest.  The pre-
termination of the lease by Comglasco was not due to any fault of Santos, and Comglasco
completely ignored all four demands of Santos to pay the rentals due from January 16, 2002 to
August 15, 2003, thereby compelling Santos to sue to obtain relief.  It is true that the policy of
the Court is that no premium should be placed on the right to litigate,21 but it is also true that
attorney’s fees are in the nature of actual damages, the reason being that litigation costs
money.22  But the Court agrees with the CA that the lesser amount of P100,000.00 it awarded to
Santos instead of P200,000.00 adjudged by the RTC, is more reasonable.

WHEREFORE, premises considered, the petition is DENIED for lack of merit.

SO ORDERED.

G.R. No. 175514               February 14, 2011

PHILIPPINE BANK OF COMMUNICATIONS, Petitioner,

vs.
SPOUSES JOSE C. GO and ELVY T. GO, Respondents.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 filed by petitioner Philippine Bank of
Communications (PBCom) seeking to set aside the July 28, 2006 Decision,1 and the November
27, 2006 Resolution2 of the Court of Appeals (CA) in CA G.R. CV No. 77714. The CA decision
reversed and set aside the January 25, 2002 Decision of the Regional Trial Court, Branch 42,
Manila (RTC), which granted the motion for summary judgment and rendered judgment on the
basis of the pleadings and attached documents.

THE FACTS

On September 30, 1999, respondent Jose C. Go (Go) obtained two loans from PBCom,
evidenced by two promissory notes, embodying his commitment to pay ₱17,982,222.22 for the
first loan, and ₱80 million for the second loan, within a ten-year period from September 30, 1999
to September 30, 2009.3

To secure the two loans, Go executed two (2) pledge agreements, both dated September 29,
1999, covering shares of stock in Ever Gotesco Resources and Holdings, Inc. The first pledge,
valued at ₱27,827,122.22, was to secure payment of the first loan, while the second pledge,
valued at ₱70,155,100.00, was to secure the second loan.4

Two years later, however, the market value of the said shares of stock plunged to less than ₱0.04
per share. Thus, PBCom, as pledgee, notified Go in writing on June 15, 2001, that it was
renouncing the pledge agreements.5
Later, PBCom filed before the RTC a complaint6 for sum of money with prayer for a writ of
preliminary attachment against Go and his wife, Elvy T. Go (Spouses Go), docketed as Civil
Case No. 01-101190. PBCom alleged that Spouses Go defaulted on the two (2) promissory
notes, having paid only three (3) installments on interest payments—covering the months of
September, November and December 1999. Consequently, the entire balance of the obligations
of Go became immediately due and demandable. PBCom made repeated demands upon Spouses
Go for the payment of said obligations, but the couple imposed conditions on the payment, such
as the lifting of garnishment effected by the Bangko Sentral ng Pilipinas (BSP) on Go’s
accounts.7

Spouses Go filed their Answer with Counterclaim8 denying the material allegations in the
complaint and stating, among other matters, that:

8. The promissory note referred to in the complaint expressly state that the loan obligation is
payable within the period of ten (10) years. Thus, from the execution date of September 30,
1999, its due date falls on September 30, 2009 (and not 2001 as erroneously stated in the
complaint). Thus, prior to September 30, 2009, the loan obligations cannot be deemed due and
demandable.

In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those
already acquired, shall depend upon the happening of the event which constitutes the condition.
(Article 1181, New Civil Code)

9. Contrary to the plaintiff’s proferrence, defendant Jose C. Go had made substantial payments in
terms of his monthly payments. There is, therefore, a need to do some accounting works (sic) to
reconcile the records of both parties.

10. While demand is a necessary requirement to consider the defendant to be in delay/default,

such has not been complied with by the plaintiff since the former is not aware of any demand
made to him by the latter for the settlement of the whole obligation.

11. Undeniably, at the time the pledge of the shares of stock were executed, their total value is
more than the amount of the loan or at the very least, equal to it. Thus, plaintiff was fully secured
insofar as its exposure is concerned.

12. And even assuming without conceding, that the present value of said shares x x x went down,
it cannot be considered as something permanent since the prices of stocks in the market either
increases (sic) or decreases (sic) depending on the market forces. Thus, it is highly speculative
for the plaintiff to consider said shares to have suffered tremendous decrease in its value. More
so, it is unfair for the plaintiff to renounce or abandon the pledge agreements.

On September 28, 2001, PBCom filed a verified motion for summary judgment9 anchored on the
following grounds:

I. MATERIAL AVERMENTS OF THE COMPLAINT ADMITTED BY DEFENDANT-

SPOUSES IN THEIR ANSWER TO OBVIATE THE NECESSITY OF TRIAL
 II. NO REAL DEFENSES AND NO GENUINE ISSUES AS TO ANY MATERIAL
FACT WERE TENDERED BY THE DEFENDANT-SPOUSES IN THEIR ANSWER

III. PLANTIFF’S CAUSES OF ACTIONS ARE SUPPORTED BY VOLUNTARY

ADMISSIONS AND AUTHENTIC DOCUMENTS WHICH MAY NOT BE
CONTRADICTED.10

PBCom contended that the Answer interposed no specific denials on the material averments in
paragraphs 8 to 11 of the complaint such as the fact of default, the entire amount being already
due and demandable by reason of default, and the fact that the bank had made repeated demands
for the payment of the obligations.11

Spouses Go opposed the motion for summary judgment arguing that they had tendered genuine
factual issues calling for the presentation of evidence.12

The RTC granted PBCom’s motion in its Judgment13 dated January 25, 2002, the dispositive
portion of which states:

WHEREFORE, in view of all the foregoing, judgment is rendered for the plaintiff and against
the defendants ordering them to pay plaintiff jointly and severally the following:

1. The total amount of ₱117,567,779.75, plus interests and penalties as stipulated in the
two promissory notes;

2. A sum equivalent to 10% of the amount involved in this case, by way of attorney’s
fees; and

3. The costs of suit.

SO ORDERED.14

Spouses Go moved for a reconsideration but the motion was denied in an order15 dated March 20,
2002.

RULING OF THE COURT OF APPEALS

In its Decision dated July 28, 2006, the CA reversed and set aside the assailed judgment of the
RTC, denied PBCom’s motion for summary judgment, and ordered the remand of the records to
the court of origin for trial on the merits. The dispositive portion of the decision states:

WHEREFORE, premises considered, the assailed judgment of the Regional Trial Court, Branch
42 of Manila in Civil Case No. 01-101190 is hereby REVERSED and SET ASIDE, and a new
one entered denying plaintiff-appellee’s motion for summary judgment. Accordingly, the records
of the case are hereby remanded to the court of origin for trial on the merits.

SO ORDERED.16
The CA could not agree with the conclusion of the RTC that Spouses Go admitted paragraphs 3,
4 and 7 of the complaint. It found the supposed admission to be insufficient to justify a rendition
of summary judgment in the case for sum of money, since there were other allegations and
defenses put up by Spouses Go in their Answer which raised genuine issues on the material facts
in the action.17

The CA agreed with Spouses Go that paragraphs 3 and 4 of the complaint merely dwelt on the
fact that a contract of loan was entered into by the parties, while paragraph 7 simply emphasized
the terms of the promissory notes executed by Go in favor of PBCom. The fact of default, the
amount of the outstanding obligation, and the existence of a prior demand, which were all
material to PBCom’s claim, were "hardly admitted"18 by Spouses Go in their Answer and were,
in fact, effectively questioned in the other allegations in the Answer.19

PBCom’s motion for reconsideration was denied in a resolution20 dated November 27, 2006.

Thus, this petition for review.

THE ISSUES

WHETHER THE COURT OF APPEALS ERRED OR ACTED IN GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK, OR EXCESS OF JURISDICTION IN RULING
THAT THERE EXISTS A GENUINE ISSUE AS TO MATERIAL FACTS IN THE
ACTION IN SPITE OF THE UNEQUIVOCAL ADMISSIONS MADE IN THE
PLEADINGS BY RESPONDENTS; AND

II

WHETHER THE COURT OF APPEALS ERRED OR ACTED IN GRAVE ABUSE OF

JURISDICTION [DISCRETION] IN HOLDING THAT ISSUES WERE RAISED ABOUT
THE FACT OF DEFAULT, THE AMOUNT OF THE OBLIGATION, AND THE
EXISTENCE OF PRIOR DEMAND, EVEN WHEN THE PLEADING CLEARLY
POINTS TO THE CONTRARY.

Petitioner PBCom’s Position: Summary judgment was proper, as there were no genuine
issues raised as to any material fact.

PBCom argues that the material averments in the complaint categorically admitted by Spouses
Go obviated the necessity of trial. In their Answer, Spouses Go admitted the allegations in
paragraphs 3 and 4 of the Complaint pertaining to the security for the loans and the due
execution of the promissory notes,21 and those in paragraph 7 which set forth the acceleration
clauses in the promissory note. Their denial of paragraph 5 of the Complaint pertaining to the
Schedules of Payment for the liquidation of the two promissory notes did not constitute a
specific denial required by the Rules.22
Even in the Comment23 of Spouses Go, the clear, categorical and unequivocal admission of
paragraphs 3, 4, and 7 of the Complaint had been conceded.24

PBCom faults the CA for having formulated non-existent issues pertaining to the fact of default,
the amount of outstanding obligation and the existence of prior demand, none of which is borne
by the pleadings or the records.25

The Spouses Go, PBCom argues, cannot negate or override the legal effect of the acceleration
clauses embodied in each of the two promissory notes executed by Go. Moreover, the non-
payment of arrearages constituting default was admitted by Go in his letters to PBCom dated
March 3 and April 7, 2000, respectively.26 Therefore, by such default, they have lost the benefit
of the period in their favor, pursuant to Article 119827 of the Civil Code.

Further, PBCom claims that its causes of action are supported by authentic documents and
voluntary admissions which cannot be contradicted. It cites the March 3 and April 7, 2000 letters
of Go requesting deferment of interest payments on his past due loan obligations to PBCom, as
his assets had been placed under attachment in a case filed by the BSP.28 PBCom emphasizes that
the said letters, in addition to its letters of demand duly acknowledged and received by Go,
negated their claim that they were not aware of any demand having been made.29

Respondent spouses’ position: Summary judgment was not proper.

The core contention of Spouses Go is that summary judgment was not proper under the attendant
circumstances, as there exist genuine issues with respect to the fact of default, the amount of the
outstanding obligation, and the existence of prior demand, which were duly questioned in the
special and affirmative defenses set forth in the Answer. Spouses Go agree with the CA that the
admissions in the pleadings pertained to the highlight of the terms of the contract. Such
admissions merely recognized the existence of the contract of loan and emphasized its terms and
conditions.30 Moreover, although they admitted paragraphs 3, 4, and 7, the special and
affirmative defenses contained in the Answer tendered genuine issues which could only be
resolved in a full-blown trial.31

On the matter of specific denial, Spouses Go posit that the Court decisions cited by PBCom32 do
not apply on all fours in this case. Moreover, the substance of the repayment schedule was not
set forth in the complaint. It, therefore, follows that the act of attaching copies to the complaint is
insufficient to secure an implied admission. Assuming arguendo that it was impliedly admitted,
the existence of said schedule and the promissory notes would not immediately make private
respondents liable for the amount claimed by PBCom.33 Before respondents may be held liable, it
must be established, first, that they indeed defaulted; and second, that the obligations has
remained outstanding.34

Spouses Go also state that although they admitted paragraphs 3, 4 and 7 of the Complaint, the
fact of default, the amount of outstanding obligation and the existence of prior demand were
fully questioned in the special and affirmative defenses.35

RULING OF THE COURT

The Court agrees with the CA that "[t]he supposed admission of defendants-appellants on the x x
x allegations in the complaint is clearly not sufficient to justify the rendition of summary
judgment in the case for sum of money, considering that there are other allegations embodied
and defenses raised by the defendants-appellants in their answer which raise a genuine issue as to
the material facts in the action."36

The CA correctly ruled that there exist genuine issues as to three material facts, which have to be
addressed during trial: first, the fact of default; second, the amount of the outstanding obligation,
and third, the existence of prior demand.

Under the Rules, following the filing of pleadings, if, on motion of a party and after hearing, the
pleadings, supporting affidavits, depositions and admissions on file show that, "except as to the
amount of damages, there is no genuine issue as to any material fact, and that the moving party is
entitled to a judgment as a matter of law,"37 summary judgment may be rendered. This rule was
expounded in Asian Construction and Development Corporation v. Philippine Commercial
International Bank,38 where it was written:

Under Rule 35 of the 1997 Rules of Procedure, as amended, except as to the amount of damages,
when there is no genuine issue as to any material fact and the moving party is entitled to a
judgment as a matter of law, summary judgment may be allowed.39 Summary or accelerated
judgment is a procedural technique aimed at weeding out sham claims or defenses at an early
stage of litigation thereby avoiding the expense and loss of time involved in a trial.40

Under the Rules, summary judgment is appropriate when there are no genuine issues of fact
which call for the presentation of evidence in a full-blown trial. Even if on their face the
pleadings appear to raise issues, when the affidavits, depositions and admissions show that such
issues are not genuine, then summary judgment as prescribed by the Rules must ensue as a
matter of law. The determinative factor, therefore, in a motion for summary judgment, is the
presence or absence of a genuine issue as to any material fact.

A "genuine issue" is an issue of fact which requires the presentation of evidence as distinguished
from a sham, fictitious, contrived or false claim. When the facts as pleaded appear uncontested or
undisputed, then there is no real or genuine issue or question as to the facts, and summary
judgment is called for. The party who moves for summary judgment has the burden of
demonstrating clearly the absence of any genuine issue of fact, or that the issue posed in the
complaint is patently unsubstantial so as not to constitute a genuine issue for trial. Trial courts
have limited authority to render summary judgments and may do so only when there is clearly no
genuine issue as to any material fact. When the facts as pleaded by the parties are disputed or
contested, proceedings for summary judgment cannot take the place of trial.41 (Underscoring
supplied.)

Juxtaposing the Complaint and the Answer discloses that the material facts here
are not undisputed so as to call for the rendition of a summary judgment. While the denials of
Spouses Go could have been phrased more strongly or more emphatically, and the Answer more
coherently and logically structured in order to overthrow any shadow of doubt that such denials
were indeed made, the pleadings show that they did in fact raise material issues that have to be
addressed and threshed out in a full-blown trial.

PBCom anchors its arguments on the alleged implied admission by Spouses Go resulting from
their failure to specifically deny the material allegations in the Complaint, citing as
precedent Philippine Bank of Communications v. Court of Appeals,42 and Morales v. Court of
Appeals. Spouses Go, on the other hand, argue that although admissions were made in the
Answer, the special and affirmative defenses contained therein tendered genuine issues.

Under the Rules, every pleading must contain, in a methodical and logical form, a plain, concise
and direct statement of the ultimate facts on which the party pleading relies for his claim or
defense, as the case may be, omitting the statement of mere evidentiary facts.43

To specifically deny a material allegation, a defendant must specify each material allegation of
fact the truth of which he does not admit, and whenever practicable, shall set forth the substance
of the matters upon which he relies to support his denial. Where a defendant desires to deny only
a part of an averment, he shall specify so much of it as is true and material and shall deny only
the remainder. Where a defendant is without knowledge or information sufficient to form a belief
as to the truth of a material averment made in the complaint, he shall so state, and this shall have
the effect of a denial.44

Rule 8, Section 10 of the Rules of Civil Procedure contemplates three (3) modes of specific
denial, namely: 1) by specifying each material allegation of the fact in the complaint, the truth of
which the defendant does not admit, and whenever practicable, setting forth the substance of the
matters which he will rely upon to support his denial; (2) by specifying so much of an averment
in the complaint as is true and material and denying only the remainder; (3) by stating that the
defendant is without knowledge or information sufficient to form a belief as to the truth of a
material averment in the complaint, which has the effect of a denial.45

The purpose of requiring the defendant to make a specific denial is to make him disclose the
matters alleged in the complaint which he succinctly intends to disprove at the trial, together with
the matter which he relied upon to support the denial. The parties are compelled to lay their cards
on the table.46

Again, in drafting pleadings, members of the bar are enjoined to be clear and concise in their
language, and to be organized and logical in their composition and structure in order to set forth
their statements of fact and arguments of law in the most readily comprehensible manner
possible. Failing such standard, allegations made in pleadings are not to be taken as stand-alone
catchphrases in the interest of accuracy. They must be contextualized and interpreted in relation
to the rest of the statements in the pleading.

In Spouses Gaza v. Lim, the Court ruled that the CA erred in declaring that the petitioners therein
impliedly admitted respondents' allegation that they had prior and continuous possession of the
property, as petitioners did in fact enumerate their special and affirmative defenses in their
Answer. They also specified therein each allegation in the complaint being denied by them. The
Court therein stated:
The Court of Appeals held that spouses Gaza, petitioners, failed to deny specifically, in their
answer, paragraphs 2, 3 and 5 of the complaint for forcible entry quoted as follows:

x x x           x x x          x x x

2. That plaintiffs are the actual and joint occupants and in prior continuous physical possession
since 1975 up to Nov. 28, 1993 of a certain commercial compound described as follows:

A certain parcel of land situated in Bo. Sta. Maria, Calauag, Quezon. Bounded on the N., & E.,
by Julian de Claro; on the W., by Luis Urrutia. Containing an area of 5,270 square meters, more
or less. Declared under Ramon J. Lim's Tax Dec. No. 4576 with an Ass. Value of P26,100.00

3. That plaintiffs have been using the premises mentioned for combined lumber and copra
business. Copies of plaintiffs' Lumber Certificate of Registration No. 2490 and PCA Copra
Business Registration No. 6265/76 are hereto attached as Annexes "A" and "B" respectively; the
Mayor's unnumbered copra dealer's permit dated Dec. 31, 1976 hereto attached as Annex "C";

x x x           x x x          x x x

5. That defendants' invasion of plaintiffs' premises was accomplished illegally by detaining

plaintiffs' caretaker Emilio Herrera and his daughter inside the compound, then proceeded to saw
the chain that held plaintiffs' padlock on the main gate of the compound and then busted or
destroyed the padlock that closes the backyard gate or exit. Later, they forcibly opened the lock
in the upstairs room of plaintiff Agnes J. Lim's quarters and defendants immediately filled it with
other occupants now. Copy of the caretaker's (Emilio Herrera) statement describing in detail is
hereto attached as Annex "D";

x x x           x x x          x x x7

The Court of Appeals then concluded that since petitioners did not deny specifically in their
answer the above-quoted allegations in the complaint, they judicially admitted that Ramon and
Agnes Lim, respondents, "were in prior physical possession of the subject property, and the
action for forcible entry which they filed against private respondents (spouses Gaza) must be
decided in their favor. The defense of private respondents that they are the registered owners of
the subject property is unavailing."

We observe that the Court of Appeals failed to consider paragraph 2 of petitioners' answer

quoted as follows:

2. That defendants specifically deny the allegations in paragraph 2 and 3 of the complaint for
want of knowledge or information sufficient to form a belief as to the truth thereof, the truth of
the matter being those alleged in the special and affirmative defenses of the defendants;"8

Clearly, petitioners specifically denied the allegations contained in paragraphs 2 and 3 of the
complaint that respondents have prior and continuous possession of the disputed property which
they used for their lumber and copra business. Petitioners did not merely allege they have no
knowledge or information sufficient to form a belief as to truth of those allegations in the
complaint, but added the following:

SPECIAL AND AFFIRMATIVE DEFENSES

That defendants hereby reiterate, incorporate and restate the foregoing and further allege:

5. That the complaint states no cause of action;

"From the allegations of plaintiffs, it appears that their possession of the subject property was not
supported by any concrete title or right, nowhere in the complaint that they alleged either as an
owner or lessee, hence, the alleged possession of plaintiffs is questionable from all aspects.
Defendants Sps. Napoleon Gaza and Evelyn Gaza being the registered owner of the subject
property has all the right to enjoy the same, to use it, as an owner and in support thereof, a copy
of the transfer certificate of title No. T-47263 is hereto attached and marked as Annex "A-Gaza"
and a copy of the Declaration of Real Property is likewise attached and marked as Annex "B-
Gaza" to form an integral part hereof;

6. That considering that the above-entitled case is an ejectment case, and considering further that
the complaint did not state or there is no showing that the matter was referred to a Lupon for
conciliation under the provisions of P.D. No. 1508, the Revised Rule on Summary Procedure of
1991, particularly Section 18 thereof provides that such a failure is jurisdictional, hence subject
to dismissal;

7. That the Honorable Court has no jurisdiction over the subject of the action or suit;

The complaint is for forcible entry and the plaintiffs were praying for indemnification in the sum
of ₱350,000.00 for those copra, lumber, tools, and machinery listed in par. 4 of the complaint
and ₱100,000.00 for unrealized income in the use of the establishment, considering the foregoing
amounts not to be rentals, Section 1 A (1) and (2) of the Revised Rule on Summary Procedure
prohibits recovery of the same, hence, the Honorable Court can not acquire jurisdiction over the
same. Besides, the defendants Napoleon Gaza and Evelyn Gaza being the owners of those
properties cited in par. 4 of the complaint except for those copra and two (2) live carabaos
outside of the subject premises, plaintiffs have no rights whatsoever in claiming damages that it
may suffer, as and by way of proof of ownership of said properties cited in paragraph 4 of the
complaint attached herewith are bunche[s] of documents to form an integral part hereof;

8. That plaintiffs' allegation that Emilio Herrera was illegally detained together with his daughter
was not true and in support thereof, attached herewith is a copy of said Herrera's statement and
marked as Annex "C-Gaza."

x x x           x x x          x x x9

The above-quoted paragraph 2 and Special and Affirmative Defenses contained in petitioners'
answer glaringly show that petitioners did not admit impliedly that respondents have been in
prior and actual physical possession of the property. Actually, petitioners are repudiating
vehemently respondents' possession, stressing that they (petitioners) are the registered owners
and lawful occupants thereof.

Respondents' reliance on Warner Barnes and Co., Ltd. v. Reyes10 in maintaining that petitioners
made an implied admission in their answer is misplaced. In the cited case, the defendants' answer
merely alleged that they were "without knowledge or information sufficient to form a belief as to
the truth of the material averments of the remainder of the complaint" and "that they hereby
reserve the right to present an amended answer with special defenses and counterclaim."11 In the
instant case, petitioners enumerated their special and affirmative defenses in their answer. They
also specified therein each allegation in the complaint being denied by them. They particularly
alleged they are the registered owners and lawful possessors of the land and denied having
wrested possession of the premises from the respondents through force, intimidation, threat,
strategy and stealth. They asserted that respondents' purported possession is "questionable from
all aspects." They also averred that they own all the personal properties enumerated in
respondents' complaint, except the two carabaos. Indeed, nowhere in the answer can we discern
an implied admission of the allegations of the complaint, specifically the allegation that
petitioners have priority of possession.

Thus, the Court of Appeals erred in declaring that herein petitioners impliedly admitted
respondents' allegation that they have prior and continuous possession of the
property.47 (Underscoring supplied.)

In this case, as in Gaza, the admissions made by Spouses Go are to be read and taken together
with the rest of the allegations made in the Answer, including the special and affirmative
defenses.

For instance, on the fact of default, PBCom alleges in paragraph 8 of the Complaint that Go
defaulted in the payment for both promissory notes, having paid only three interest installments
covering the months of September, November, and December 1999.

In paragraph 6 of the Answer, Spouses Go denied the said allegation, and further alleged in
paragraphs 8 to 13 that Go made substantial payments on his monthly loan amortizations.

The portions of the pleadings referred to are juxtaposed below:

Complaint
8. The defendant defaulted in the payment of the
obligations on the two (2) promissory notes
(Annexes "A" and "B" hereof) as he has paid
only three (3) installments on interests (sic)
payments covering the months of September,
November and December, 1999, on both
promissory notes, respectively. As a
consequence of the default, the entire balance
due on the obligations of the defendant to
Answer
6. Defendants deny the allegations in paragraphs
8, 9, 10 and 11 of the Complaint;
xxx
8. The promissory notes referred to in the
complaint expressly state that the loan obligation
is payable within the period of ten (10) years.
Thus, from the execution date of September 30,
plaintiff on both promissory notes immediately
became due and demandable pursuant to the
terms and conditions embodied in the two (2)
promissory notes;48
1999, its due date falls on September 3o, 2009
(and not 2001 as erroneously stated in the
complaint). Thus, prior to September 30, 2009,
the loan obligations cannot be deemed due and
demandable.
In conditional obligations, the acquisition of
rights, as well as the extinguishment or loss of
those already acquired, shall depend upon the
happening of the event which constitutes the
condition. (Article 1181, New Civil Code)
9. Contrary to the plaintiff’s preference,
defendant Jose C. Go has made substantial
payments in terms of his monthly payments.
There is therefore, a need to do some accounting
works (sic) just to reconcile the records of both
parties.
10. While demand is a necessary requirement to
consider the defendant to be in delay/default,
such has not been complied with by the plaintiff
since the former is not aware of any demand
made to him by the latter for the settlement of
the whole obligation.
11. Undeniably, at the time the pledge of the
shares of stocks were executed, their total value
is more than the amount of the loan, or at the
very least, equal to it. Thus, plaintiff was fully
secured insofar as its exposure is concerned.49
12. And even assuming without conceding, that
the present value of said shares has went (sic)
down, it cannot be considered as something
permanent since, the prices of stocks in the
market either increases (sic) or (sic) decreases
depending on the market forces. Thus, it is
highly speculative for the plaintiff to consider
said shares to have suffered tremendous decrease
in its value. Moreso (sic), it is unfair for the
plaintiff to renounce or abandon the pledge
agreements.
13. As aptly stated, it is not aware of any
 termination of the pledge agreement initiated by
the plaintiff.

Moreover, in paragraph 10 of the Answer, Spouses Go also denied the existence of prior demand
alleged by PBCom in paragraph 10 of the Complaint. They stated therein that they were not
aware of any demand made by PBCom for the settlement of the whole obligation. Both sections
are quoted below:

Complaint Answer
10. Plaintiff made repeated demands from (sic)
defendant for the payment of the obligations
which the latter acknowledged to have incurred
however, defendant imposed conditions such as
10. While demand is a necessary requirement to
[that] his [effecting] payments shall depend upon
consider the defendant to be in delay/default,
the lifting of garnishment effected by the
such has not been complied with by the plaintiff
Bangko Sentral on his accounts. Photocopies of
since the former is not aware of any demand
defendant’s communication dated March 3, 2000
made to him by the latter for the settlement of
and April 7, 2000, with plaintiff are hereto
the whole obligation.
attached as Annexes "F" and "G" hereof, as
well as its demand to pay dated April 18, 2000.
Demand by plaintiff is hereto attached as Annex
"H" hereof.50 [Emphases supplied]

Finally, as to the amount of the outstanding obligation, PBCom alleged in paragraph 9 of the
Complaint that the outstanding balance on the couples’ obligations as of May 31, 2001 was
₱21,576,668.64 for the first loan and ₱95,991,111.11, for the second loan or a total of
₱117,567,779.75.

In paragraph 9 of the Answer, however, Spouses Go, without stating any specific amount,
averred that substantial monthly payments had been made, and there was a need to reconcile the
accounting records of the parties.

Complaint Answer
9. Defendants’ outstanding obligations under the
9. Contrary to the plaintiff’s preference,
two (2) promissory notes as of May 31, 2001
defendant Jose C. Go has made substantial
are: P21,576,668.64 (Annex "A") and
payments in terms of his monthly payments.
P95,991,111.11 (Annex "B"), or a total of
There is therefore, a need to do some accounting
P117,567,779.75. Copy of the Statement of
works just to reconcile the records of both
Account is hereto attached as Annex
parties.52
"E" hereof.51

Clearly then, when taken within the context of the entirety of the pleading, it becomes apparent
that there was no implied admission and that there were indeed genuine issues to be addressed.
As to the attached March 3, 2000 letter, the Court is in accord with the CA when it wrote:

The letter dated March 3, 2000 is insufficient to support the material averments in PBCom’s
complaint for being equivocal and capable of different interpretations. The contents of the letter
do not address all the issues material to the bank’s claim and thus do not conclusively establish
the cause of action of PBCom against the spouses Go. As regards the letter dated April 7, 2000,
the trial court itself ruled that such letter addressed to PBCom could not be considered against
the defendants-appellants simply because it was not signed by defendant-appellant Jose Go.

Notably, the trial court even agreed with the defendant-appellants on the following points:

The alleged default and outstanding obligations are based on the Statement of Account. This
Court agrees with the defendants that since the substance of the document was not set forth in the
complaint although a copy thereof was attached thereto, or the said document was not set forth
verbatim in the pleading, the rule on implied admission does not apply.53

It must also be pointed out that the cases cited by PBCom do not apply to this
case.1avvphi1 Those two cases involve denial of lack of knowledge of facts "so plainly and
necessarily within [the knowledge of the party making such denial] that such averment of
ignorance must be palpably untrue."54 Also, in both cases, the documents denied were the same
documents or deeds sued upon or made the basis of, and attached to, the complaint.

In Philippine Bank of Communications v. Court of Appeals,55 the Court ruled that the defendant’s
contention that it had no truth or information sufficient to form a belief as to the truth of the deed
of exchange was an invalid or ineffectual denial pursuant to the Rules of Court,56 as it could have
easily asserted whether or not it had executed the deed of exchange attached to the petition.
Citing Capitol Motors Corporations v. Yabut,57 the Court stated that:

x x x The rule authorizing an answer to the effect that the defendant has no knowledge or
information sufficient to form a belief as to the truth of an averment and giving such answer the
effect of a denial, does not apply where the fact as to which want of knowledge is asserted, is so
plainly and necessarily within the defendant’s knowledge that his averment of ignorance must be
palpably untrue.58

The Warner Barnes case cited above sprung from a suit for foreclosure of mortgage, where the
document that defendant denied was the deed of mortgage sued upon and attached to the
complaint. The Court then ruled that it would have been easy for the defendants to specifically
allege in their answer whether or not they had executed the alleged mortgage.

Similarly, in Capitol Motors, the document denied was the promissory note sued upon and
attached to the complaint. In said case, the Court ruled that although a statement of lack of
knowledge or information sufficient to form a belief as to the truth of a material averment in the
complaint was one of the modes of specific denial contemplated under the Rules, paragraph 2 of
the Answer in the said case was insufficient to constitute a specific denial.59 Following the ruling
in the Warner Barnes case, the Court held that it would have been easy for defendant to
specifically allege in the Answer whether or not it had executed the promissory note attached to
the Complaint.60

In Morales v. Court of Appeals,61 the matter denied was intervenor’s knowledge of the plaintiff’s
having claimed ownership of the vehicle in contention. The Court therein stated:

Yet, despite the specific allegation as against him, petitioner, in his Answer in Intervention with
Counterclaim and Crossclaim, answered the aforesaid paragraph 11, and other paragraphs,
merely by saying that "he has no knowledge or information sufficient to form a belief as to its
truth." While it may be true that under the Rules one could avail of this statement as a means of a
specific denial, nevertheless, if an allegation directly and specifically charges a party to have
done, performed or committed a particular act, but the latter had not in fact done, performed or
committed it, a categorical and express denial must be made. In such a case, the occurrence or
non-occurrence of the facts alleged may be said to be within the party’s knowledge. In short, the
petitioner herein could have simply expressly and in no uncertain terms denied the allegation if it
were untrue. It has been held that when the matters of which a defendant alleges of having no
knowledge or information sufficient to form a belief, are plainly and necessarily within his
knowledge, his alleged ignorance or lack of information will not be considered as specific denial.
His denial lacks the element of sincerity and good faith, hence, insufficient.62

Borrowing the phraseology of the Court in the Capitol Motors case, clearly, the fact of the
parties’ having executed the very documents sued upon, that is, the deed of exchange, deed or
mortgage or promissory note, is so plainly and necessarily within the knowledge of the denying
parties that any averment of ignorance as to such fact must be palpably untrue.

In this case, however, Spouses Go are not disclaiming knowledge of the transaction or the
execution of the promissory notes or the pledge agreements sued upon. The matters in contention
are, as the CA stated, whether or not respondents were in default, whether there was prior
demand, and the amount of the outstanding loan. These are the matters that the parties disagree
on and by which reason they set forth vastly different allegations in their pleadings which each
will have to prove by presenting relevant and admissible evidence during trial.

Furthermore, in stark contrast to the cited cases where one of the parties disclaimed knowledge
of something so patently within his knowledge, in this case, respondents Spouses Go
categorically stated in the Answer that there was no prior demand, that they were not in default,
and that the amount of the outstanding loan would have to be ascertained based on official
records.

WHEREFORE, the petition is DENIED.

SO ORDERED.

G.R. No. 201427

TEOFILO B. ADOLFO, Petitioner,
vs.
FE T. ADOLFO, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 seeks to set aside: 1) the October 6, 2009 Decision2 of
the Court of Appeals (CA) in CA-G.R. CV No. 01783 reversing the October 2, 2006 Order3 of
the Regional Trial Court, 7th Judicial Region, Mandaue City (RTC Mandaue), Branch 55 in
Civil Case No. MAN-4821; as well as 2) the CA's March 2, 2012 Resolution4 denying
petitioner's Motion for Reconsideration5 and Supplement6 thereto.

Civil Case No. MAN-4821

On April 14, 2004, petitioner Teofilo B. Adolfo filed with the RTC Mandaue a Petition7 for
judicial separation of property against his estranged wife, respondent Fe Adolfo, nee Tudtud.
Docketed as Civil Case No. MAN-4821 and assigned to Branch 55, the petition alleged that the
parties were married on November 26, 1966; that the union bore one child; that during the
marriage, they acquired through conjugal funds Lot 1087-A-2-E, a 3,652-square meter property
in Brgy. Cabancalan, Mandaue City, Cebu (the subject property) covered by Transfer Certificate
of Title No. (TCT) 18368; that later on, the parties separated due to irreconcilable differences;
that since reunion was no longer feasible, petitioner suggested a separation of the conjugal
property, but respondent adamantly refused; that respondent denied petitioner’s co-ownership of
the subject property, claiming the same as her paraphernal property; that several earnest efforts
to amicably settle the matter between them proved unavailing; and that a judicial separation of
property is proper under the circumstances and pursuant to Article 135(6) of the Family
Code.8 Petitioner thus prayed that judgment be rendered decreeing a separation of the conjugal
property and the subdivision or sale thereof, to the end of dividing the same or the proceeds
thereof; and ordering respondent to pay petitioner P50,000.00 as attorney’s fees, appearance fees
(P2,000.00 per hearing), and P20,000.00 litigation costs.

In her Answer9 with counterclaim, respondent contended that while she remained married to
petitioner, she is the sole owner of the subject property, the same being her paraphernal property
which she inherited from her mother; that petitioner is a lazy bum, gambler, drunkard, wife
abuser, and neglectful father; that respondent found all means to support the family even as
petitioner neglected it; that respondent bought on installment a tricycle for the petitioner’s use in
business, but he kept the proceeds thereof to himself and used the same in his gambling and
drinking sprees; that respondent alone took the initiative to support the family and found ways to
take care of the daily needs of her child; that she caused to be built on a portion of her mother’s
land a house even while petitioner was bumming around; that one day, petitioner destroyed the
roof of the house that was then being built; that petitioner subsequently abandoned her and their
child in 1968, and transferred to Davao City where he took a mistress and begot four children by
her; that in 1986, petitioner returned to Cebu City seeking reconciliation with respondent; that
respondent took petitioner back, but in 1987 they once more separated; that thereafter,
respondent never again saw or heard from petitioner.

Respondent claimed in her Answer that the subject property was a portion of a bigger lot (mother
lot) owned by her mother Petronila Tudtud which was covered by TCT T-15941. On October 11,
1967, her mother executed a quitclaim deed transferring a portion of the mother lot – the subject
property – to respondent. The mother title TCT T-15941 was then cancelled and a new one, TCT
(17216)- 5415, was issued in respondent’s name. Respondent then sold the subject property to
her brother on January 19, 1968, and a new TCT (17833)-5515 was issued in her brother’s name.
Her brother then mortgaged the property to Development Bank of the Philippines (DBP), which
foreclosed on the same. TCT 18231 was issued in DBP’s name. DBP then sold the property to
the spouses Antonio and Lucy Garcia (the Garcias), and TCT 18266 was in turn issued in their
name. Finally, on May 25, 1983, the Garcias sold back the subject property to respondent, and a
new title – TCT 1836810 – was then issued in the name of respondent "FE M. TUDTUD, x x x
married to Teofilo Adolfo."

Respondent argued that she is the sole owner of the subject property, the same being her
paraphernal property which she alone redeemed from the Garcias; that the inclusion of
petitioner’s name in TCT 18368 does not make him a co- owner of the property, but was merely
necessary to describe respondent’s civil status; and that under Article 13511 of the Civil Code, all
property brought by the wife to the marriage as well as all property she acquires during the
marriage in accordance with Article 14812 of the same Code constitutes paraphernal property.

Respondent thus prayed that the petition be dismissed. By way of counterclaim, she sought the
payment of moral, exemplary, and nominal damages, attorney’s fees, and litigation expenses.

Civil Case No. MAN-2683

In 1996, respondent’s sister Florencia Tudtud and her husband Juanito Gingoyon (the
Gingoyons) filed a case for partition with damages against respondent. The case was docketed as
Civil Case No. MAN-2683 and raffled to Branch 55 of the RTC Mandaue. The
Complaint13 therein alleged that in 1988, respondent executed a deed of sale in favor of the
Gingoyons over a 300-square meter portion of the subject property, but that respondent refused
to partition/subdivide the same even after the Gingoyons paid the taxes, fees and expenses of the
sale. For her defense, respondent claimed in her Answer14 that when the sale to the Gingoyons
was made, the subject property constituted conjugal property of her marriage with petitioner; that
as early as 1983, or when the Garcias executed the deed of sale in her favor, the subject property
became a conjugal asset; since petitioner did not sign the deed of sale in favor of the Gingoyons
as he was in Davao at the time and knew nothing about the sale, the sale was null and void.

On May 15, 2002, the trial court rendered its Decision15 in Civil Case No. MAN-2683, declaring
that the subject property constituted conjugal property of the marriage. It thus nullified the 1988
deed of sale executed by respondent in favor of the Gingoyons for lack of consent on the part of
petitioner, citing Article 124 of the Family Code.16 The trial court likewise awarded moral and
exemplary damages, attorney's fees and litigation expenses in favor of the respondent in the total
amount of P107,000.00.
The Gingoyons filed an appeal with the CA, which was docketed as CA- G.R. CV No. 78971.

Motion for Judgment Based on the Pleadings in Civil Case No. MAN-4821

Meanwhile, during the pre-trial conference in Civil Case No. MAN-4821, petitioner submitted as
part of his evidence and for marking certified true copies of the Gingoyons’ Complaint in Civil
Case No. MAN-2683, respondent’s Answer thereto, and the trial court’s May 15, 2002 Decision
in said case.

On August 1, 2005, petitioner filed a Request for Admission17 of 1) the genuineness of the duly
marked certified true copies of the Complaint, Answer, and Decision in Civil Case No. MAN-
2683 (Exhibits "F," "G" and "H," respectively); 2) respondent’s declaration in said Answer that
the subject property constituted conjugal property of the marriage; and 3) the trial court’s
pronouncement in said case that the subject property forms part of the conjugal estate.

Respondent failed to file her answer or response to the request for admission.

On September 5, 2005, petitioner filed a Motion for Judgment Based on the Pleadings,18 stating
that since respondent failed to answer his request for admission, the matters contained in the
request are deemed admitted pursuant to Rule 26, Section 2 of the 1997 Rules of Civil
Procedure19 (1997 Rules); that as a consequence of the application of the rule, respondent is in
effect considered to have admitted that the subject property is a conjugal asset of their subsisting
marriage which may thus be the subject of his petition for judicial separation of property; and
that on account of said admission, a hearing on the merits becomes unnecessary and, instead,
Rule 3420 of the 1997 Rules on judgments on the pleadings should apply. Petitioner thus prayed
that the trial court render judgment in his favor based on the pleadings.

Respondent filed an Opposition.21 In her Opposition to Plaintiff’s Memorandum,22 respondent

argued among others that the request for admission was premature considering that the decision
in Civil Case No. MAN-2683 was the subject of an appeal, and thus not yet final.

In an October 11, 2005 Order,23 the trial court directed the transfer of Civil Case No. MAN-4821
to Branch 55 of the RTC Mandaue, since it is said court which decided the closely related Civil
Case No. MAN-2683.

On October 2, 2006, Branch 55 issued an Order24 granting petitioner’s motion for judgment on

the pleadings. It held as follows:

This court has painstakingly exerted effort in going over the record and took serious note of all
the pleadings, documents and others on file. After serious consideration, the court believes and
so holds that there is basis in rendering judgment. The Motion for Judgment Based on the
Pleadings though denominated as such but [sic] shall be treated as a move to seek summary
judgment. x x x

xxxx
The court in arriving at this resolution was guided by the following pronouncements by the
Supreme Court in the case of Diman vs. Alumbres, G.R. No. 131466, November 27, 1998, 299
SCRA 459 x x x:

xxxx

In the same case, it was held –

"It is also the law which determines when a summary judgment is proper. It declares that
although the pleadings on their face appear to raise issues of fact – e.g., there are denials of, or a
conflict in, factual allegations – if it is shown by admissions, depositions or affidavits, that those
issues are sham, fictitious, or not genuine, or, in the language of the Rules, that ‘except as to the
amount of damages, there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law, the Court shall render a summary judgment for the
plaintiff or the defendant, as the case may be. (Italics and underscoring supplied)

On the other hand, in the case of a summary judgment[,] issues apparently exist – i.e.. facts are
asserted in the complaint regarding which there is as yet no admission, disavowal or
qualification; or specific denials or affirmative defenses are in truth set out in the answer – but
the issues thus arising from the pleadings are sham, fictitious, not genuine, as shown by
[affidavits], depositions or admissions. In other words, as a noted authority remarks, a judgment
on the pleadings is a judgment on the facts as pleaded, while a summary judgment is a judgment
on the facts as summarily proven by affidavits, depositions or admissions." (Italics and
underscoring supplied)

xxxx

Defendant25 did not file any verified answer or a pleading denying under oath the genuineness
and authenticity of the documents attached to the Request for Admission and of the other matters
therein set forth. This failure has far reaching implications in that the following are deemed
admitted: a) the genuineness of Exhibits F, G and H, all attached to the Request for Admission;
b) that she admitted in paragraph 10 in her Answer to Civil Case No. MAN-2683 that Lot 1087-
A-2-E was no longer paraphernal property but rather a conjugal property of Spouses Teofilo and
Fe Adolfo and; c) that RTC, Branch 55, Mandaue City, sustained and/or held the view of
defendant (Fe Tudtud) that Lot 1087-A-2-E is a conjugal property of Spouses Teofilo and Fe
Adolfo, thus, dismissed Civil Case No. MAN-2683 and awarded damages to the defendant.

Judicial admissions may be made in (a) the pleadings filed by the parties,

(b) in the course of the trial either by verbal or written manifestations or stipulations, or (c) in
other stages of the judicial proceeding, as in the pre-trial of the case. Admissions obtained
through depositions, written interrogatories or requests for admission are also considered judicial
admissions." Page 686, Remedial Law Compendium, Vol. II, 9th Rev. Ed., Regalado

With the admission that Lot 1087-A-2-E is a conjugal property, it follows as its necessary and
logical consequence, that plaintiff26 is entitled to the relief demanded.
 xxxx

A DECISION in Civil Case No. MAN-2683 had already been rendered by RTC, Branch 55, on
the 15th day of May 2002 with the court finding that Lot 1087-A-2-E is a conjugal property x x x
–

xxxx

For reason[s] of expediency and convenience, the court may even take judicial notice of its
earlier decision finding Lot 1087-A-2-E as a conjugal property.27

xxxx

Under the circumstances, judicial separation of property is proper. Aware that the separation has
the effect of a dissolution of the conjugal partnership property regime, the presumptive legitime
of Nilo Adolfo (the only common child of the spouses) has to be delivered in accordance with
Article 51 in relation to paragraph (8) Article 127 and Article 137 of the Family Code of the
Philippines.

WHEREFORE, premises considered, judgment is hereby rendered directing the partition of Lot
1087-A-2-E between the plaintiff and the defendant in equal share of what remains after
allocating to Nilo Adolfo a portion of Nine hundred thirteen (913) square meters representing his
presumptive legitime.

The plaintiff is directed to submit to this court the proposed subdivision plan for its consideration
before submitting the same for approval to the Bureau of Lands.

In case of disagreement as to their respective location, the same shall be done through raffle to be
conducted by the sheriff who shall see to it that judgment in this case shall be fully implemented.

SO ORDERED.28

Respondent instituted an appeal with the CA, which was docketed as CA- G.R. CV No. 01783.

Court of Appeals Decision in CA-G.R. CV No. 78971

Meanwhile, on May 30, 2007, the CA rendered its Decision29 in CA-G.R. CV No. 78971. It
reversed the May 15, 2002 Decision of the trial court in Civil Case No. MAN-2683. It declared,
among others, that the subject property was respondent’s paraphernal property. Thus, it held:

Proceeding from the foregoing consideration, the finding that Lot No. 1087-A-2-E is a conjugal
property does not have any basis, hence, does not have any merit at all. On the contrary,
plaintiffs-appellants30 sufficiently proved that the aforesaid lot was defendant-
appellee’s31 paraphernal property as the latter even admitted that she inherited the same from her
mother although she claimed it as a conjugal property based on the TCT’s attached to her
answer. Another strong indication that Lot No. 1087-A-2-E is solely owned by defendant-
appellee is the fact that in another case (Civil Case No. MAN-2008) involving the same property
and the same parties but for a different issue (road right of way), defendant-appellee alone signed
the compromise agreement ceding a portion of the subject lot as a right of way perpetually open
and unobstructed for the benefit of plaintiffs-appellants, defendant-appellee, their respective
heirs, assigns and transferees and guests. The same compromise agreement which became the
decision of the case attained finality without defendant-appellee questioning the absence of her
husband’s signature.

xxxx

WHEREFORE, prescinding from the foregoing premises, the appeal is hereby GRANTED and
the Decision of the Regional Trial Court of Mandaue City, Branch 55, dated 15 May 2002, in
Civil Case No. MAN-2683 is REVERSED and SET ASIDE.

Let the partition of Lot No. 1087-A-2-E consisting of 300 square meters bought by plaintiffs-
appellants from defendant-appellee be done in accordance to [sic] the sketch plan executed for
that purpose.

SO ORDERED.32

On June 23, 2007, the above CA decision became final and executory.33

Ruling of the Court of Appeals in CA-G.R. CV No. 01783

In CA-G.R. CV No. 01783, respondent filed her Appellant’s Brief,34 where she argued that the
trial court erred in issuing its October 2, 2006 Order directing the partition or sale of the subject
property; that it was error for the trial court to take judicial notice of its own judgment in Civil
Case No. MAN-2683 and thus declare that the subject property is conjugal, since the issue of
whether it constitutes conjugal or paraphernal property was still pending in the appeal in CA-
G.R. CV No. 78971; that since the proceedings in Civil Case No. MAN-2683 have not been
terminated and the issue regarding the character of the subject property has not been resolved
with finality, then petitioner’s resort to a request for admission and motion for judgment on the
pleadings was premature; and that with the May 30, 2007 Decision in CA-G.R. CV No. 78971,
petitioner and the trial court should submit to the finding therein that the subject property is her
paraphernal property.

In his Appellee’s Brief,35 petitioner insisted that the trial court did not err in treating his motion
for judgment on the pleadings as one for summary judgment; that respondent’s Answer in Civil
Case No. MAN-2683 constituted a judicial admission that the subject property was a conjugal
asset, which required no further proof; that respondent’s failure to reply to his written request for
admission also resulted in the acknowledgment that the subject property is a conjugal asset; that
the trial court correctly took judicial notice of the proceedings in Civil Case No. MAN-2683, as
they were relevant and material to the resolution of Civil Case No. MAN-4821; that since it was
not respondent who appealed the May 15, 2002 decision in Civil Case No. MAN-2683, then the
finding therein that the subject property is conjugal should bind her; and that the CA’s eventual
finding in CA- G.R. CV No. 78971 that the subject lot was respondent’s paraphernal property
cannot bind him because he was not a party to Civil Case No. MAN-2683.

On October 6, 2009, the CA issued the assailed Decision containing the following decretal
portion:

WHEREFORE, based from the foregoing premises, the Order of the Regional Trial Court,
Branch 55, Mandaue City, in Civil Case No. MAN-4821, is hereby REVERSED and SET
ASIDE and the records of this case are remanded to RTC (Branch 55), Mandaue City, for further
proceedings.

SO ORDERED.36

In arriving at the above conclusion, the CA held that the trial court cannot treat petitioner’s
motion for judgment on the pleadings as one for summary judgment. It stated that in a proper
case for judgment on the pleadings, there are no ostensible issues at all on account of the
defending party’s failure to raise an issue in his answer, while in a proper case for summary
judgment, such issues exist, although they are sham, fictitious, or not genuine as shown by
affidavits, depositions or admissions. In other words, a judgment on the pleadings is a judgment
on the facts as pleaded, while a summary judgment is a judgment on the facts as summarily
proved by affidavits, depositions, or admissions.37 It added that respondent’s Answer appeared
on its face to tender an issue; it disputed petitioner’s claim that the subject property is their
conjugal property. The next thing to be determined is whether this issue is fictitious or sham as to
justify a summary judgment.

The CA added that although respondent was bound by the resulting admission prompted by her
failure to reply to petitioner’s request for admission, her claims and documentary exhibits clearly
contradict what petitioner sought to be admitted in his request; that the trial court disregarded the
fact that the issue of whether the subject property is conjugal was still unresolved as CA-G.R.
CV No. 78971 was still pending; and that finally, the trial court should have been guided by the
principles that trial courts have but limited authority to render summary judgments and that
summary judgments should not be rendered hastily.38

Petitioner moved to reconsider, but in a March 2, 2012 Resolution, he was rebuffed. Hence, the
present Petition was filed on April 30, 2012.

In a March 20, 2013 Resolution,39 the Court resolved to give due course to the instant
Petition.1âwphi1

Issue

Petitioner now claims that the Court of Appeals erred in deciding the case on a question of
substance not in accord with law, Rule 26 of the 1997 Rules, and applicable jurisprudence.40

Petitioner’s Arguments
In his Petition seeking to reverse and set aside the assailed CA dispositions and thus reinstate the
October 2, 2006 Order of the trial court, petitioner insists that respondent’s failure to reply to his
written request for admission resulted in her admitting that the subject property is a conjugal
asset, applying Rule 26, Section 2 of the 1997 Rules; that the CA grossly erred in disregarding
the rule; that with the resulting admission, there remains no genuine issue to be resolved in Civil
Case No. MAN-4821, such that judgment based on the pleadings is proper. Finally, petitioner
adds that respondent’s trifling with the law and rules of procedure – by conveniently claiming in
one case that the subject property is conjugal, and then in another that it is paraphernal – should
not be countenanced; she should be held to her original declaration that the subject property is
conjugal.

Respondent’s Arguments

In her Comment,41 respondent counters that, as correctly ruled by the CA, petitioner elected the
wrong remedy in filing a motion for judgment on the pleadings when he should have moved for
summary judgment; that in a motion for judgment on the pleadings, the movant is deemed to
admit the truth of all of the opposing party’s material and relevant allegations, and rest his
motion on those allegations taken together with that of his own as are admitted in the
pleadings;42 that the effect of this is that petitioner is deemed to have admitted that the subject
property is paraphernal, as claimed in her Answer; that with the final and executory May 30,
2007 Decision of the CA in CA-G.R. CV No. 78971, the subject property should now be
considered as her paraphernal property, and petitioner’s case for partition on the claim that the
subject property is conjugal should be dismissed for being moot and academic.

Our Ruling

The Court denies the Petition.

Judgment on the pleadings is proper "where an answer fails to tender an issue, or otherwise
admits the material allegations of the adverse party’s pleading."43 Summary judgment, on the
other hand, will be granted "if the pleadings, supporting affidavits, depositions, and admissions
on file, show that, except as to the amount of damages, there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a matter of law."44

We have elaborated on the basic distinction between summary judgment and judgment on the
pleadings, thus:

The existence or appearance of ostensible issues in the pleadings, on the one hand, and their
sham or fictitious character, on the other, are what distinguish a proper case for summary
judgment from one for a judgment on the pleadings. In a proper case for judgment on the
pleadings, there is no ostensible issue at all because of the failure of the defending party’s answer
to raise an issue. On the other hand, in the case of a summary judgment, issues apparently exist-
i.e. facts are asserted in the complaint regarding which there is as yet no admission, disavowal or
qualification; or specific denials or affirmative defenses are in truth set out in the answer-but the
issues thus arising from the pleadings are sham, fictitious or not genuine, as shown by affidavits,
depositions, or admissions.45
An answer would "fail to tender an issue" if it "does not deny the material allegations in the
complaint or admits said material allegations of the adverse party’s pleadings by confessing the
truthfulness thereof and/or omitting to deal with them at all. Now, if an answer does in fact
specifically deny the material averments of the complaint and/or asserts affirmative defenses
(allegations of new matter which, while admitting the material allegations of the complaint
expressly or impliedly, would nevertheless prevent or bar recovery by the plaintiff), a judgment
on the pleadings would naturally be improper."46

On the other hand, "whether x x x the issues raised by the Answer are genuine is not the crux of
inquiry in a motion for judgment on the pleadings. It is so only in a motion for summary
judgment. In a case for judgment on the pleadings, the Answer is such that no issue is raised at
all. The essential question in such a case is whether there are issues generated by the
pleadings."47 "A ‘genuine issue’ is an issue of fact which requires the presentation of evidence as
distinguished from a sham, fictitious, contrived or false claim. When the facts as pleaded appear
uncontested or undisputed, then there is no real or genuine issue or question as to the facts, and
summary judgment is called for."48

In rendering summary judgment, the trial court relied on respondent’s failure to reply to
petitioner’s request for admission, her admission in Civil Case No. MAN-2683, as well as its
May 15, 2002 Decision declaring that the subject property is a conjugal asset. It took judicial
notice of the proceedings in said case. While there is nothing irregular with this – as courts may
"take judicial notice of a decision or the facts prevailing in another case sitting in the same court
if (1) the parties present them in evidence, absent any opposition from the other party; or (2) the
court, in its discretion, resolves to do so"49 – the trial court however disregarded the fact that its
decision was then the subject of a pending appeal in CA-G.R. CV No. 78971. It should have
known that until the appeal is resolved by the appellate court, it would be premature to render
judgment on petitioner’s motion for judgment on the pleadings; that it would be presumptuous to
assume that its own decision would be affirmed on appeal. One of the issues raised in the appeal
is precisely whether the subject property is conjugal, or a paraphernal asset of the respondent.
Thus, instead of resolving petitioner’s motion for judgment on the pleadings, the trial court
should have denied it or held it in abeyance. It should have guided petitioner to this end, instead
of aiding in the hasty resolution of his case. In the first place, Civil Case No. MAN-4821 was
transferred to it from Branch 56 precisely for the reason that it was the court which tried the
closely related Civil Case No. MAN-2683.

Even if respondent is deemed to have admitted the matters contained in petitioner’s request for
admission by her failure to reply thereto, the trial court should have considered the pending
appeal in CA-G.R. CV No. 78971. It cannot take judicial notice solely of the proceedings in
Civil Case No. MAN-2683, and ignore the appeal in CA-G.R. CV No. 78971. After all, CA-G.R.
CV No. 78971 is merely a continuation of Civil Case No. MAN-2683; an appeal is deemed a
continuation of the same case commenced in the lower court.50

On the part of petitioner, it must be said that he could not have validly resorted to a motion for
judgment on the pleadings or summary judgment. While it may appear that under Rules 34 and
35 of the 1997 Rules, he may file a motion for judgment on the pleadings or summary judgment
as a result of the consequent admission by respondent that the subject property is conjugal, this is
not actually the case. Quite the contrary, by invoking the proceedings and decision in Civil Case
No. MAN-2683, petitioner is precluded from obtaining judgment while the appeal in said case is
pending, because the result thereof determines whether the subject property is indeed conjugal or
paraphernal. He may not preempt the appeal in CA-G.R. CV No. 78971.

While it is true that a judgment cannot bind persons who are not parties to the action,51 petitioner
cannot, after invoking the proceedings in Civil Case No. MAN-2683 to secure affirmative relief
against respondent and thereafter failing to obtain such relief, be allowed to repudiate or question
the CA’s ruling in CA-G.R. CV No. 78971. The principle of estoppel bars him from denying the
resultant pronouncement by the appellate court, which became final and executory, that the
subject property is respondent’s paraphernal property. "In estoppel, a person, who by his deed or
conduct has induced another to act in a particular manner, is barred from adopting an
inconsistent position, attitude or course of conduct that thereby causes loss or injury to another. It
further bars him from denying the truth of a fact which has, in the contemplation of law, become
settled by the acts and proceeding of judicial or legislative officers or by the act of the party
himself, either by conventional writing or by representations, express or implied or in pais."52

Finally, the Court notes that the appellate court overlooked the May 30, 2007 Decision in CA-
G.R. CV No. 78971, which became final and executory on June 23 , 2007. The respondent
included this development in her appellee's brief, but the CA did not take it into account. As an
unfortunate consequence, the case was not appreciated and resolved completely.

Thus, with the development in Civil Case No. MAN-2683 brought upon by the final and
executory decision in CA-G.R. CV No. 78971 , petitioner's case is left with no leg to stand on.
There being no conjugal property to be divided between the parties, Civil Case No. MAN-4821
must be dismissed.

WHEREFORE, the Petition is DENIED. The October 6, 2009 Decision and March 2, 2012
Resolution of the Court ofAppeals in CA-G.R. CV No. 01783 are AFFIRMED WITH
MODIFICATION in that Civil Case No. MAN-4821 is ordered DISMISSED.

SO ORDERED.

G.R. No. 178083

FLIGHT ATTENDANTS AND STEWARDS ASSOCIATION OF THE PHILIPPINES

(FASAP), Petitioner
vs.
PHILIPPINE AIRLINES, INC., PATRIA CHIONG and THE COURT OF APPEALS,
Respondents

IN RE: LETTERS OF ATTY. ESTELITO P. MENDOZA RE: G.R. NO. 178083 - FLIGHT
ATTENDANTS AND STEWARDS ASSOCIATION OF THE PHILIPPINES (F ASAP) vs.
PHILIPPINE AIRLINES, INC., ETAL.

RESOLUTION
BERSAMIN, J.:

In determining the validity of a retrenchment, judicial notice may be taken of the financial losses
incurred by an employer undergoing corporate rehabilitation. In such a case, the presentation of
audited financial statements may not be necessary to establish that the employer is suffering from
severe financial losses.

Before the Court are the following matters for resolution, namely:

(a) Motion for Reconsideration of the Resolution of October 2, 2009 and Second Motion
for Reconsideration of the Decision of July 22, 2008 filed by respondents Philippine
Airlines, Inc. (PAL) and Patria Chiong;1 and

(b) Motion for Reconsideration [Re: The Honorable Court’s Resolution dated 13 March
2012 ]2 of petitioner Flight Attendants and Stewards Association of the Philippines
(FASAP).

Antecedents

To provide a fitting backgrounder for this resolution, we first lay down the procedural
antecedents.

Resolving the appeal of F ASAP, the Third Division of the Court3 promulgated its decision on
July 22, 2008 reversing the decision promulgated on August 23, 2006 by the Court of Appeals
(CA) and entering a new one finding PAL guilty of unlawful retrenchment,4 disposing:

WHEREFORE, the instant petition is GRANTED. The assailed Decision of the Court of

Appeals in CA-G.R. SP No. 87956 dated August 23, 2006, which affirmed the Decision of the
NLRC setting aside the Labor Arbiter's findings of illegal retrenchment and its Resolution of
May 29, 2007 denying the motion for reconsideration, are REVERSED and SET ASIDE and a
new one is rendered:

1. FINDING respondent Philippine Airlines, Inc. GUILTY of illegal dismissal;

2. ORDERING Philippine Airlines, Inc. to reinstate the cabin crew personnel who were covered
by the retrenchment and demotion scheme of June 15, 1998 made effective on July 15, 1998,
without loss of seniority rights and other privileges, and to pay them full backwages, inclusive of
allowances and other monetary benefits computed from the time of their separation up to the
time of their actual reinstatement, provided that with respect to those who had received their
respective separation pay, the amounts of payments shall be deducted from their backwages.
Where reinstatement is no longer feasible because the positions previously held no longer exist,
respondent Corporation shall pay backwages plus, in lieu of reinstatement, separation pay equal
to one (1) month pay for every year of service;

3. ORDERING Philippine Airlines, Inc. to pay attorney's fees equivalent to ten percent (10%) of
the total monetary award.
Costs against respondent PAL.

SO ORDERED. 5

The Third Division thereby differed from the decision of the Court of Appeals (CA), which had
pronounced in its appealed decision promulgated on August 23, 20066 that the remaining issue
between the parties concerned the manner by which PAL had carried out the retrenchment
program.7 Instead, the Third Division disbelieved the veracity of PAL’s claim of severe financial
losses, and concluded that PAL had not established its severe financial losses because of its non-
presentation of audited financial statements. It further concluded that PAL had implemented the
retrenchment program in bad faith, and had not used fair and reasonable criteria in selecting the
employees to be retrenched.

After PAL filed its Motion for Reconsideration, 8 the Court, upon motion,9 held oral arguments
on the following issues:

WHETHER THE GROUNDS FOR RETRENCHMENT WERE ESTABLISHED

II

WHETHER PAL RESORTED TO OTHER COST-CUTTING MEASURES BEFORE

IMPLEMENTING ITS RETRENCHMENT PROGRAM

III

WHETHER FAIR AND REASONABLE CRITERIA WERE FOLLOWED IN

IMPLEMENTING THE RETRECHMENT PROGRAM

IV

WHETHER THE QUITCLAIMS WERE VALIDLY AND VOLUNTARILY EXECUTED

Upon conclusion of the oral arguments, the Court directed the parties to explore a possible
settlement and to submit their respective memoranda.10 Unfortunately, the parties did not reach
any settlement; hence, the Court, through the Special Third Division,11 resolved the issues on the
merits through the resolution of October 2, 2009 denying PAL’s motion for
reconsideration,12 thus:

WHEREFORE, for lack of merit, the Motion for Reconsideration is

hereby DENIED with FINALITY. The assailed Decision dated July 22, 2008
is AFFIRMED with MODIFICATION in that the award of attorney's fees and expenses of
litigation is reduced to ₱2,000,000.00. The case is hereby REMANDED to the Labor Arbiter
solely for the purpose of computing the exact amount of the award pursuant to the guidelines
herein stated.
No further pleadings will be entertained.

SO ORDERED.13

The Special Third Division was unconvinced by PAL’s change of theory in urging the June 1998
Association of Airline Pilots of the Philippines (ALP AP) pilots' strike as the reason behind the
immediate retrenchment; and observed that the strike was a temporary occurrence that did not
require the immediate and sweeping retrenchment of around 1,400 cabin crew.

Not satisfied, PAL filed the Motion for Reconsideration of the Resolution of October 2, 2009
and Second Motion for Reconsideration of the Decision of July 22, 2008.14

On October 5, 2009, the writer of the resolution of October 2, 2009, Justice Consuelo Ynares-
Santiago, compulsorily retired from the Judiciary. Pursuant to A.M. No. 99-8-09-SC,15 G.R. No.
178083 was then raffled to Justice Presbitero J. Velasco, Jr., a Member of the newly-constituted
regular Third Division.16 Upon the Court's subsequent reorganization,17 G.R. No. 178083 was
transferred to the First Division where Justice Velasco, Jr. was meanwhile re-assigned. Justice
Velasco, Jr. subsequently inhibited himself from the case due to personal reasons.18 Pursuant to
SC Administrative Circular No. 84-2007, G.R. No. 178083 was again re-raffled to Justice Arturo
D. Brion, whose membership in the Second Division resulted in the transfer of G.R. No. 178083
to said Division.19

On September 7, 2011, the Second Division denied with finality PAL’s Second Motion for
Reconsideration of the Decision of July 22, 2008.20

Thereafter, PAL, through Atty. Estelito P. Mendoza, its collaborating counsel, sent a series of
letters inquiring into the propriety of the successive transfers of G.R. No. 178083.21 His letters
were docketed as A.M. No. 11- 10-1-SC.

On October 4, 2011, the Court En Banc issued a resolution:22 (a) assuming jurisdiction over G.R.

No. 178083; (b) recalling the September 7, 2011 resolution of the Second Division; and
(c) ordering the re-raffle of G.R. No. 178083 to a new Member-in-Charge.

Resolving the issues raised by Atty. Mendoza in behalf of PAL, as well as the issues raised
against the recall of the resolution of September 7, 2011, the Court En Banc promulgated its
resolution in A.M. No. 11-10-1-SC on March 13, 2012,23 in which it summarized the intricate
developments involving G.R. No. 178083, viz.:

To summarize all the developments that brought about the present dispute--expressed in a format
that can more readily be appreciated in terms of the Court en bane's ruling to recall the
September 7, 2011 ruling - the F ASAP case, as it developed, was attended by special and
unusual circumstances that saw:

(a) the confluence of the successive retirement of three Justices (in a Division of
five Justices) who actually participated in the assailed Decision and Resolution;
 (b) the change in the governing rules-from the A.M.s to the IRSC regime-which
transpired during the pendency of the case;

(c) the occurrence of a series of inhibitions in the course of the case (Justices
Ruben Reyes, Leonardo-De Castro, Corona, Velasco, and Carpio), and the
absences of Justices Sereno and Reyes at the critical time, requiring their
replacement; notably, Justices Corona, Carpio, Velasco and Leonardo-De Castro
are the four most senior Members of the Court;

(d) the three re-organizations of the divisions, which all took place during the
pendency of the case, necessitating the transfer of the case from the Third
Division, to the First, then to the Second Division;

(e) the unusual timing of Atty. Mendoza’s letters, made after the ruling Division
had issued its Resolution of September 7, 2011, but before the parties received
their copies of the said Resolution; and

(t) finally, the time constraint that intervened, brought about by the parties’ receipt
on September 19, 2011 of the Special Division’s Resolution of September 7,
2011, and the consequent running of the period for finality computed from this
latter date; and the Resolution would have lapsed to finality after October 4, 2011,
had it not been recalled by that date.

All these developments, in no small measure, contributed in their own peculiar way to the
confusing situations that attended the September 7, 2011 Resolution, resulting in the recall of this
Resolution by the Court en banc.24

In the same resolution of March 13, 2012, the Court En Banc directed the re-raffle of G.R. No.
178083 to the remaining Justices of the former Special Third Division who participated in
resolving the issues pursuant to Section 7, Rule 2 of the Internal Rules of the Supreme
Court, explaining:

On deeper consideration, the majority now firmly holds the view that Section 7, Rule 2 of the
IRSC should have prevailed in considering the raffle and assignment of cases after the 2nd MR
was accepted, as advocated by some Members within the ruling Division, as against the general
rule on inhibition under Section 3, Rule 8. The underlying constitutional reason, of course, is the
requirement of Section 4(3), Article VIII of the Constitution already referred to above.

The general rule on statutory interpretation is that apparently conflicting provisions should be
reconciled and harmonized, as a statute must be so construed as to harmonize and give effect to
all its provisions whenever possible. Only after the failure at this attempt at reconciliation should
one provision be considered the applicable provision as against the other.

Applying these rules by reconciling the two provisions under consideration, Section 3, Rule 8 of
the IRSC should be read as the general rule applicable to the inhibition of a Member-in-
Charge. This general rule should, however, yield where the inhibition occurs at the late
stage of the case when a decision or signed resolution is assailed through an MR. At that
point, when the situation calls for the review of the merits of the decision or the signed resolution
made by a ponente (or writer of the assailed ruling), Section 3, Rule 8 no longer applies and must
yield to Section 7, Rule 2 of the IRSC which contemplates a situation when the ponente is no
longer available, and calls for the referral of the case for raffle among the remaining
Members of the Division who acted on the decision or on the signed resolution. This latter
provision should rightly apply as it gives those who intimately know the facts and merits of the
case, through their previous participation and deliberations, the chance to take a look at the
decision or resolution produced with their participation.

To reiterate, Section 3, Rule 8 of the IRSC is the general rule on inhibition, but it must yield to
the more specific Section 7, Rule 2 of the IRSC where the obtaining situation is for the
review on the merits of an already issued decision or resolution and the ponente or writer is no
longer available to act on the matter. On this basis, the ponente, on the merits of the case on
review, should be chosen from the remaining participating Justices, namely, Justices Peralta and
Bersamin.25

This last resolution impelled F ASAP to file the Motion for Reconsideration [Re: The Honorable
Court’s Resolution dated 13 March 2012], praying that the September 7, 2011 resolution in G.R.
No. 178083 be reinstated.26

We directed the consolidation of G.R. No. 178083 and A.M. No. 11- 10-1-SC on April 17,
2012.27

Issues

PAL manifests that the Motion for Reconsideration of the Resolution of October 2, 2009 and
Second Motion for Reconsideration of the Decision of July 22, 2008 is its first motion for
reconsideration vis-a-vis the October 2, 2009 resolution, and its second as to the July 22, 2008
decision. It states therein that because the Court did not address the issues raised in its previous
motion for reconsideration, it is re-submitting the same, viz.:

xxx THE HONORABLE COURT ERRED IN NOT GIVING CREDENCE TO THE

FOLLOWING COMPELLING EVIDENCE AND CIRCUMSTANCES CLEARLY SHOWING
PALS; DIRE FINANCIAL CONDITION AT THE TIME OF THE RETRENCHMENT: (A)
PETITIONER'S ADMISSIONS OF PAL'S FINANCIAL LOSSES; (B) THE UNANIMOUS
FINDINGS OF THE SECURITIES AND EXCHANGE COMMISSION (SEC), THE LABOR
ARBITER, THE NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND THE
COURT OF APPEALS CONFIRMING PAL'S FINANCIAL CRISIS; (C) PREVIOUS CASES
DECIDED BY THE HONORABLE COURT RECOGNIZING PAL'S DIRE FINANCIAL
STATE; AND (D) PAL BEING PLACED BY THE SEC UNDER SUSPENSION OF
PAYMENTS AND CORPORATE REHABILITATION AND RECEIVERSHIP

II
xxx THERE IS NO SUFFICIENT BASIS FOR THE HONORABLE COURT'S CONCLUSION
THAT PAL DID NOT EXERCISE GOOD FAITH [IN] ITS PREROGATIVE TO RETRENCH
EMPLOYEES

III

THE HONORABLE COURT'S RULING THAT PAL DID NOT USE FAIR AND
REASONABLE CRITERIA IN ASCERTAINING WHO WOULD BE RETRENCHED IS
CONTRARY TO ESTABLISHED FACTS, EVIDENCE ON RECORD AND THE FINDINGS
OF THE NLRC AND THE COURT OF APPEALS28

PAL insists that FASAP, while admitting PAL’s serious financial condition, only questioned
before the Labor Arbiter the alleged unfair and unreasonable measures in retrenching the
employees;29 that F ASAP categorically manifested before the NLRC, the CA and this Court that
PAL’s financial situation was not the issue but rather the manner of terminating the 1,400 cabin
crew; that the Court's disregard of FASAP's categorical admissions was contrary to the dictates
of fair play;30 that considering that the Labor Arbiter, the NLRC and the CA unanimously found
PAL to have experienced financial losses, the Court should have accorded such unanimous
findings with respect and finality;31 that its being placed under suspension of payments and
corporate rehabilitation and receivership already sufficiently indicated its grave financial
condition;32 and that the Court should have also taken judicial notice of the suspension of
payments and monetary claims filed against PAL that had reached and had been consequently
resolved by the Court.33

PAL describes the Court's conclusion that it was not suffering from tremendous financial losses
because it was on the road to recovery a year after the retrenchment as a mere obiter dictum that
was relevant only in rehabilitation proceedings; that whether or not its supposed "stand-alone"
rehabilitation indicated its ability to recover on its own was a technical issue that the SEC was
tasked to determine in the rehabilitation proceedings; that at any rate, the supposed track to
recovery in 1999 and the capital infusion of $200,000,000.00 did not disprove the enormous
losses it was sustaining; that, on the contrary, the capital infusion accented the severe financial
losses suffered because the capital infusion was a condition precedent to the approval of the
amended and restated rehabilitation plan by the Securities and Exchange Commission (SEC)
with the conformity of PAL's creditors; and that PAL took nine years to exit from
rehabilitation.34

As regards the implementation of the retrenchment program in good faith, PAL argues that it
exercised sound management prerogatives and business judgment despite its critical financial
condition; that it did not act in due haste in terminating the services of the affected employees
considering that FASAP was being consulted thereon as early as February 17, 1998; that it
abandoned "Plan 14" due to intervening events, and instead proceeded to implement "Plan 22"
which led to the recall/rehire of some of the retrenched employees;35 and that in selecting the
employees to be retrenched, it adopted a fair and reasonable criteria pursuant to the collective
bargaining agreement (CBA) where performance efficiency ratings and inverse seniority were
basic considerations.36
With reference to the Court's resolution of October 2, 2009, PAL maintains that:

PAL HAS NOT CHANGED ITS POSITION THAT THE REDUCTION OF PAL'S LABOR
FORCE OF ABOUT 5,000 EMPLOYEES, INCLUDING THE 1,423 FASAP MEMBERS,
WAS THE RESULT OF A CONFLUENCE OF EVENTS, THE EXPANSION OF PAL’S
FLEET, THE ASIAN FINANCIAL CRISIS OF 1997, AND ITS CONSEQUENCES ON PAL'S
OPERATIONS, AND THE PILOT’S STRIKE OF JUNE 1998, AND THAT PAL SURVIVED
BECAUSE OF THE IMPLEMENTATION OF ITS REHABILITATION PLAN (LATER
"AMENDED AND RESTATED REHABILITATION PLAN") WHICH INCLUDED AMONG
ITS COMPONENT ELEMENTS, THE REDUCTION OF LABOR FORCE

II

THE HONORABLE COURT SHOULD HAVE UPHELD PAL'S REDUCTION OF THE

NUMBER OF CABIN CREW IN ACCORD WITH ITS ENTRY INTO REHABILITATION
AND THE CONSEQUENT TERMINATION OF EMPLOYMENT OF CABIN CREW
PERSONNEL AS A VALID EXERCISE OF MANAGEMENT PREROGATIVE

III

PAL HAS SUFFICIENTLY ESTABLISHED THE SEVERITY OF ITS FINANCIAL LOSSES,

SO AS TO JUSTIFY THE ENTRY INTO REHABILITATION AND THE CONSEQUENT
REDUCTION OF CABIN CREW PERSONNEL

IV

THE HONORABLE COURT ERRED IN HOLDING THAT THERE WAS NO SUFFICIENT

BASIS FOR PAL TO IMPLEMENT THE RETRENCHMENT OF CABIN CREW
PERSONNEL

UNDER THE CIRCUMSTANCES, THE PRIOR IMPLEMENTATION OF LESS DRASTIC

COST-CUTTING MEASURES WAS NO LONGER POSSIBLE AND SHOULD NOT BE
REQUIRED FOR A VALID RETRENCHMENT; IN ANY EVENT, PAL HAD
IMPLEMENTED LESS DRASTIC COST-CUTTING MEASURES BEFORE
IMPLEMENTING THE DOWNSIZING PROGRAM

VI

QUITCLAIMS WERE VALIDLY EXECUTED37

PAL contends that the October 2, 2009 resolution focused on an entirely new basis - that of
PAL’s supposed change in theory. It denies having changed its theory, however, and maintains
that the reduction of its workforce had resulted from a confluence of several events, like the
flight expansion; the 1997 Asian financial crisis; and the ALP AP pilots’ strike.38 PAL explains
that when the pilots struck in June 1998, it had to decide quickly as it was then facing closure in
18 days due to serious financial hemorrhage; hence, the strike came as the final blow.

PAL posits that its business decision to downsize was far from being a hasty, knee-jerk reaction;
that the reduction of cabin crew personnel was an integral part of its corporate rehabilitation,
and, such being a management decision, the Court could not supplant the decision with its own
judgment’ and that the inaccurate depiction of the strike as a temporary disturbance was
lamentable in light of its imminent financial collapse due to the concerted action.39

PAL submits that the Court’s declaration that PAL failed to prove its financial losses and to
explore less drastic cost-cutting measures did not at all jibe with the totality of the circumstances
and evidence presented; that the consistent findings of the Labor Arbiter, the NLRC, the CA and
even the SEC, acknowledging its serious financial difficulties could not be ignored or
disregarded; and that the challenged rulings of the Court conflicted with the pronouncements
made in Garcia v. Philippine Airlines, Inc. 40 and related cases41 that acknowledged PAL’s grave
financial distress.

In its comment,42 FASAP counters that a second motion for reconsideration was a prohibited
pleading; that PAL failed to prove that it had complied with the requirements for a valid
retrenchment by not submitting its audited financial statements; that PAL had immediately
terminated the employees without prior resort to less drastic measures; and that PAL did not
observe any criteria in selecting the employees to be retrenched.

FASAP stresses that the October 4, 2011 resolution recalling the September 7, 2011 decision was
void for failure to comply with Section 14, Article VIII of the 1987 Constitution; that the
participation of Chief Justice Renato C. Corona who later on inhibited from G.R. No. 178083
had further voided the proceedings; that the 1987 Constitution did not require that a case should
be raffled to the Members of the Division who had previously decided it; and that there was no
error in raffling the case to Justice Brion, or, even granting that there was error, such error was
merely procedural.

The issues are restated as follows:

Procedural

IS THE RESOLUTION DATED OCTOBER 4, 2011 IN A.M. NO. 11-10- 1-SC (RECALLING
THE SEPTEMBER 7, 2011 RESOLUTION) VOID FOR FAIL URE TO COMPLY WITH
SECTION 14, RULE VIII OF THE 1987 CONSTITUTION?

II
MAY THE COURT ENTERTAIN THE SECOND MOTION FOR RECONSIDERATION
FILED BY THE RESPONDENT PAL?

Substantive

DID PAL LAWFULLY RETRENCH THE 1,400 CABIN CREW PERSONNEL?

DID PAL PRESENT SUFFICIENT EVIDENCE TO PROVE THAT IT INCURRED SERIOUS

FINANCIAL LOSSES WHICH JUSTIFIED THE DOWNSIZING OF ITS CABIN CREW?

DID PAL OBSERVE GOOD FAITH IN IMPLEMENTING THE RETRENCHMENT

PROGRAM?

DID PAL COMPLY WITH SECTION 112 OF THE PALF ASAP CBA IN SELECTING THE
EMPLOYEES TO BE RETRENCHED?

III

ASSUMING THAT PAL VALIDLY IMPLEMENTED ITS RETRENCHMENT PROGRAM,

DID THE RETRENCHED EMPLOYEES SIGN VALID QUITCLAIMS?

Ruling of the Court

After a thorough review of the records and all previous dispositions, we GRANT the Motion for
Reconsideration of the Resolution of October 2, 2009 and Second Motion for Reconsideration of
the Decision of July 22, 2008 filed by PAL and Chiong; and DENY the Motion for
Reconsideration [Re: The Honorable Court’s Resolution dated 13 March 2012]43 of FASAP.

Accordingly, we REVERSE the July 22, 2008 decision and the October 2, 2009 resolution;
and AFFIRM the decision promulgated on August 23, 2006 by the CA.

The resolution of October 4, 2011

was a valid issuance of the Court
The petitioner urges the Court to declare as void the October 4, 2011 resolution promulgated in
A.M. No. 11-10-1-SC for not citing any legal basis in recalling the September 7, 2011 resolution
of the Second Division.

The urging of the petitioner is gravely flawed and mistaken.

The requirement for the Court to state the legal and factual basis for its decisions is found in
Section 14, Article VIII of the 1987 Constitution, which reads:

Section 14. No decision shall be rendered by any court without expressing therein clearly and
distinctly the facts and the law on which it is based.

The constitutional provision clearly indicates that it contemplates only a decision, which is the
judgment or order that adjudicates on the merits of a case. This is clear from the text and tenor of
Section 1, Rule 36 of the Rules of Court, the rule that implements the constitutional provision, to
wit:

Section 1. Rendition of judgments and final orders. A judgment or final order determining the
merits of the case shall be in writing personally and directly prepared by the judge, stating
clearly and distinctly the facts and the law on which it is based, signed by him, and filed with
the clerk of court.

The October 4, 2011 resolution did not adjudicate on the merits of G.R. No. 178083. We
explicitly stated so in the resolution of March 13, 2012. What we thereby did was instead to
exercise the Court's inherent power to recall orders and resolutions before they attain finality. In
so doing, the Court only exercised prudence in order to ensure that the Second Division was
vested with the appropriate legal competence in accordance with and under the Court's prevailing
internal rules to review and resolve the pending motion for reconsideration. We rationalized the
exercise thusly:

As the narration in this Resolution shows, the Court acted on its own pursuant to its power to
recall its own orders and resolutions before their finality. The October 4, 2011 Resolution
was issued to determine the propriety of the September 7, 2011 Resolution given the facts
that came to light after the ruling Division's examination of the records. To point out the
obvious, the recall was not a ruling on the merits and did not constitute the reversal of the
substantive issues already decided upon by the Court in the FASAP case in its previously
issued Decision (of July 22, 2008) and Resolution (of October 2, 2009). In short, the October
4, 2011 Resolution was not meant and was never intended to favor either party, but to simply
remove any doubt about the validity of the ruling Division's action on the case. The case, in the
ruling Division's view, could be brought to the Court en banc since it is one of "sufficient
importance"; at the very least, it involves the interpretation of conflicting provisions of the IRSC
with potential jurisdictional implications.

At the time the Members of the ruling Division went to the Chief Justice to recommend a recall,
there was no clear indication of how they would definitively settle the unresolved legal questions
among themselves. The only matter legally certain was the looming finality of the September 7,
2011 Resolution if it would not be immediately recalled by the Court en banc by October 4,
2011. No unanimity among the Members of the ruling Division could be gathered on the
unresolved legal questions; thus, they concluded that the matter is best determined by the
Court en banc as it potentially involved questions of jurisdiction and interpretation of conflicting
provisions of the IRSC. To the extent of the recommended recall, the ruling Division was
unanimous and the Members communicated this intent to the Chief Justice in clear and
unequivocal terms.44 (Bold underscoring for emphasis)

It should further be clear from the same March 13, 2012 resolution that the factual considerations
for issuing the recall order were intentionally omitted therefrom in obeisance to the prohibition
against public disclosure of the internal deliberations of the Court.45

Still, F ASAP assails the impropriety of the recall of the September 7, 2011 resolution. It
contends that the raffle of G.R. No. 178083 to the Second Division had not been erroneous but
in "full and complete consonance with Section 4(3) Article VIII of the Constitution;"46 and that
any error thereby committed was only procedural, and thus a mere "harmless error" that did not
invalidate the prior rulings made in G.R. No. 178083.47

The contention of F ASAP lacks substance and persuasion.

The Court carefully expounded in the March 13, 2012 resolution on the resulting jurisdictional
conflict that arose from the raffling of G.R. No. 178083 resulting from the successive retirements
and inhibitions by several Justices who at one time or another had been assigned to take part in
the case. The Court likewise highlighted the importance of referring the case to
the remaining Members who had actually participated in the deliberations, for not only did such
participating Justices intimately know the facts and merits of the parties' arguments but doing so
would give to such Justices the opportunity to review their decision or resolution in which they
had taken part. As it turned out, only Justice Diosdado M. Peralta and Justice Lucas P. Bersamin
were the remaining Members of the Special Third Division, and the task of being in charge
procedurally fell on either of them.48 As such, it is fallacious for FASAP to still insist that the
previous raffle had complied with Section 4(3), Article VIII of the 1987 Constitution just
because the Members of the Division actually took part in the deliberations.

FASAP is further wrong to insist on the application of the harmless error rule. The rule is
embodied in Section 6, Rule 51 of the Rules of Court, which states:

Section 6. Harmless error. No error in either the admission or the exclusion of evidence and no
error or defect in any ruling or order or in anything done or omitted by the trial court or by any of
the parties is ground for granting a new trial or for setting aside, modifying, or otherwise
disturbing a judgment or order, unless refusal to take such action appears to the court
inconsistent with substantial justice. The court at every stage of the proceedings must disregard
any error or defect which does not affect the substantial rights of the parties.

The harmless error rule obtains during review of the things done by either the trial court or by
any of the parties themselves in the course of trial, and any error thereby found does not affect
the substantial rights or even the merits of the case. The Court has had occasions to apply the
rule in the correction of a misspelled name due to clerical error;49 the signing of the decedents'
names in the notice of appeal by the heirs;50 the trial court's treatment of the testimony of the
party as an adverse witness during cross-examination by his own counsel;51 and the failure of the
trial court to give the plaintiffs the opportunity to orally argue against a motion.52 All of the
errors extant in the mentioned situations did not have the effect of altering the dispositions
rendered by the respective trial courts. Evidently, therefore, the rule had no appropriate
application herein.

The Court sees no justification for the urging of FASAP that the participation of the late Chief
Justice Corona voided the recall order. The urging derives from FASAP’s failure to distinguish
the role of the Chief Justice as the Presiding Officer of the Banc. In this regard, we advert to the
March 13, 2012 resolution, where the Court made the following observation:

A final point that needs to be fully clarified at this juncture, in light of the allegations of the
Dissent is the role of the Chief Justice in the recall of the September 7, 2011 Resolution. As can
be seen from the xxx narration, the Chief Justice acted only on the recommendation of the
ruling Division, since he had inhibited himself from participation in the case long before.
The confusion on this matter could have been brought about by the Chief Justice's role as
the Presiding Officer ofthe Court en banc (particularly in its meeting of October 4, 2011),
and the fact that the four most senior Justices of the Court (namely, Justices Corona,
Carpio, Velasco and Leonardo-De Castro) inhibited from participating in the case. In the
absence of any clear personal malicious participation, it is neither correct nor proper to
hold the Chief Justice personally accountable for the collegial ruling of the Court en
banc.53 (Bold underscoring supplied for emphasis)

To reiterate, the Court, whether sitting En Banc or in Division, acts as a collegial body. By virtue
of the collegiality, the Chief Justice alone cannot promulgate or issue any decisions or orders.
In Complaint of Mr. Aurelio Jndencia Arrienda Against SC Justices Puna, Kapunan, Pardo,
YnaresSantiago, 54 the Court has elucidated on the collegial nature of the Court in relation to the
role of the Chief Justice, viz.:

The complainant’s vituperation against the Chief Justice on account of what he perceived was
the latter's refusal "to take a direct positive and favorable action" on his letters of appeal
overstepped the limits of proper conduct. It betrayed his lack of understanding of a fundamental
principle in our system of laws. Although the Chief Justice is primus inter pares, he cannot
legally decide a case on his own because of the Court's nature as a collegial body. Neither can
the Chief Justice, by himself, overturn the decision of the Court, whether of a division or the en
banc.

There is only one Supreme Court from whose decisions all other courts are required to take their
bearings.While most of the Court's work is performed by its three divisions, the Court remains
one court-single, unitary, complete and supreme. Flowing from this is the fact that, while
individual justices may dissent or only partially concur, when the Court states what the law is, it
speaks with only one voice. Any doctrine or principle of law laid down by the court may be
modified or reversed only by the Court en banc.55
Lastly, any lingering doubt on the validity of the recall order should be dispelled by the fact that
the Court upheld its issuance of the order through the March 13, 2012 resolution, whereby the
Court disposed:

WHEREFORE, premises considered, we hereby confirm that the Court en bane has

assumed jurisdiction over the resolution of the merits of the motions for reconsideration of
Philippine Airlines, Inc., addressing our July 22, 2008 Decision and October 2, 2009
Resolution; and that the September 7, 2011 ruling of the Second Division has been
effectively recalled. This case should now be raffled either to Justice Lucas P. Bersamin or
Justice Diosdado M. Peralta (the remaining members of the case) as Member-in-Charge in
resolving the merits of these motions.

xxxx

The Flight Attendants and Stewards Association of the Philippines’ Motion for
Reconsideration of October 17, 2011 is hereby denied; the recall of the September 7, 2011
Resolution was made by the Court on its own before the ruling’s finality pursuant to the
Court’s power of control over its orders and resolutions. Thus, no due process issue ever
arose.

SO ORDERED.

II

PAL's Second Motion for Reconsideration

| of the Decision of July 22, 2008
| could be allowed in the higher interest of justice

FASAP asserts that PAL’s Second Motion for Reconsideration of the Decision of July 22,
2008 was a prohibited pleading; and that the July 22, 2008 decision was not anymore subject to
reconsideration due to its having already attained finality.

FASAP’s assertions are unwarranted.

With the Court’s resolution of January 20, 2010 granting PAL’s motion for leave to file a second
motion for reconsideration,56 PAL's Second Motion for Reconsideration of the Decision of July
22, 2008 could no longer be challenged as a prohibited pleading. It is already settled that the
granting of the motion for leave to file and admit a second motion for reconsideration authorizes
the filing of the second motion for reconsideration.57 Thereby, the second motion for
reconsideration is no longer a prohibited pleading, and the Court cannot deny it on such basis
alone.58

Nonetheless, we should stress that the rule prohibiting the filing of a second motion for
reconsideration is by no means absolute. Although Section 2, Rule 52 of the Rules of
Court disallows the filing of a second motion for reconsideration,59 the Internal Rules of the
Supreme Court (IRSC) allows an exception, to wit:
Section 3. Second motion for reconsideration. - The Court shall not entertain a second motion for
reconsideration, and any exception to this rule can only be granted in the higher interest of
justice by the Court en bane upon a vote of at least two-thirds of its actual
membership. There is reconsideration "in the higher interest of justice" when the assailed
decision is not only legally erroneous, but is likewise patently unjust and potentially capable of
causing unwarranted and irremediable injury or damage to the parties. A second motion for
reconsideration can only be entertained before the ruling sought to be reconsidered
becomes final by operation of law or by the Court's declaration.

In the Division, a vote of three Members shall be required to elevate a second motion for
reconsideration to the Court en banc.

The conditions that must concur in order for the Court to entertain a second motion for
reconsideration are the following, namely:

1. The motion should satisfactorily explain why granting the same would be in the higher
interest of justice;

2. The motion must be made before the ruling sought to be reconsidered attains finality;

3. If the ruling sought to be reconsidered was rendered by the Court through one of its
Divisions, at least three members of the Division should vote to elevate the case to the
Court En Banc; and

4. The favorable vote of at least two-thirds of the Court En Bane’s actual membership

must be mustered for the second motion for reconsideration to be granted.60

Under the IRSC, a second motion for reconsideration may be allowed to prosper upon a showing
by the movant that a reconsideration of the previous ruling is necessary in the higher interest of
justice. There is higher interest of justice when the assailed decision is not only legally
erroneous, but is likewise patently unjust and potentially capable of causing unwarranted and
irremediable injury or damage to the parties.61

PAL maintains that the July 22, 2008 decision contravened prevailing jurisprudence62 that had
recognized its precarious financial condition;63 that the decision focused on PAL’s inability to
prove its financial losses due to its failure to submit audited financial statements; that the
decision ignored the common findings on the serious financial losses suffered by PAL made by
the Labor Arbiter, the NLRC, the CA and even the SEC;64 and that the decision and the
subsequent resolution denying PAL’s motion for reconsideration would negate whatever
financial progress it had achieved during its rehabilitation.65

These arguments of PAL sufficed to show that the assailed decision contravened settled
jurisprudence on PAL’s precarious financial condition. It cannot be gainsaid that there were
other businesses undergoing rehabilitation that would also be bound or negatively affected by the
July 22, 2008 decision. This was the higher interest of justice that the Court sought to address,
which the dissent by Justice Leonen is adamant not to accept.66 Hence, we deemed it just and
prudent to allow PAL’s Second Motion for Reconsideration of the Decision of July 22, 2008.

It is timely to note, too, that the July 22, 2008 decision did not yet attain finality. The October 4,
2011 resolution recalled the September 7, 2011 resolution denying PAL’s first motion for
reconsideration. Consequently, the July 22, 2008 decision did not attain finality.

The dissent by Justice Leonen nonetheless proposes a contrary view- that both the July 22, 2008
decision and the October 2, 2009 resolution had become final on November 4, 2009 upon the
lapse of 15 days following PAL’s receipt of a copy of the resolution. To him, the grant of leave
to PAL to file the second motion for reconsideration only meant that the motion was no longer
prohibited but it did not stay the running of the reglementary period of 15 days. He submits that
the Court’s grant of the motion for leave to file the second motion for reconsideration did not
stop the October 2, 2009 resolution from becoming final because a judgment becomes final by
operation of law, not by judicial declaration.67

The proposition of the dissent is unacceptable.

In granting the motion for leave to file the second motion for reconsideration, the Court could
not have intended to deceive the movants by allowing them to revel in some hollow victory. The
proposition manifestly contravened the basic tenets of justice and fairness.

As we see it, the dissent must have inadvertently ignored the procedural effect that a second
motion for reconsideration based on an allowable ground suspended the running of the period for
appeal from the date of the filing of the motion until such time that the same was acted upon and
granted.68 Correspondingly, granting the motion for leave to file a second motion for
reconsideration has the effect of preventing the challenged decision from attaining finality. This
is the reason why the second motion for reconsideration should present extraordinarily persuasive
reasons. Indeed, allowing pro forma motions would indefinitely avoid the assailed judgment
from attaining finality.69

By granting PAL’s motion for leave to file a second motion for reconsideration, the Court
effectively averted the July 22, 2008 decision and the October 2, 2009 resolution from attaining
finality. Worthy of reiteration, too, is that the March 13, 2012 resolution expressly recalled the
September 7, 2011 resolution.

Given the foregoing, the conclusion stated in the dissent that the Banc was divested of the
jurisdiction to entertain the second motion for reconsideration for being a "third motion for
reconsideration;"70 and the unfair remark in the dissent that "[t]he basis of the supposed residual
power of the Court En Banc to, take on its own, take cognizance of Division cases is therefore
suspect"71 are immediately rejected as absolutely legally and factually unfounded.

To start with, there was no "third motion for reconsideration" to speak of. The September 11,
2011 resolution denying PAL’s second motion for reconsideration had been recalled by the
October 4, 2011 resolution. Hence, PAL’s motion for reconsideration remained unresolved,
negating the assertion of the dissent that the Court was resolving the second motion for
reconsideration "for the second time."72

Also, the dissent takes issue against our having assumed jurisdiction over G.R. No. 178083
despite the clear reference made in the October 4, 2011 resolution to Sections 3(m) and (n), Rule
2 of the IRSC. Relying largely on the Court's construction of Section 4(3), Article VIII of the
1987 Constitution in Fortich v. Corona,73 the dissent opines that the Banc could not act as an
appellate court in relation to the decisions of the Division;74 and that the Banc could not take
cognizance of any case in the Divisions except upon a prior consulta from the ruling Division
pursuant to Section 3(m), in relation to Section 3(1), Rule 2 of the IRSC.75

The Court disagrees with the dissent’s narrow view respecting the residual powers of the Banc.

Fortich v. Corona, which has expounded on the authority of the Banc to accept cases from the
Divisions, is still the prevailing jurisprudence regarding the construction of Section 4(3), Article
VIII of the 1987 Constitution. However, Fortich v. Corona does not apply herein. It is notable
that Fortich v. Corona sprung from the results of the voting on the motion for reconsideration
filed by the Sumilao Farmers. The vote ended in an equally divided Division ("two-two"). From
there, the Sumilao Farmers sought to elevate the matter to the Banc based on Section 4(3),
Article VIII because the required three-member majority vote was not reached. However, the
factual milieu in Fortich v. Corona is not on all fours with that in this case.

In the March 13, 2012 resolution, the Court recounted the exigencies that had prompted
the Banc to take cognizance of the matter, to wit:

On September 28, 2011, the Letters dated September 13 and 20, 2011 of Atty. Mendoza to Atty.
Vidal (asking that his inquiry be referred to the relevant Division Members who took part on the
September 7, 2011 Resolution) were "NOTED" by the regular Second Division. The Members of
the ruling Division also met to consider the queries posed by Atty. Mendoza. Justice Brion met
with the Members of the ruling Division (composed of Justices Brion, Peralta, Perez, Bersamin,
and Mendoza), rather than with the regular Second Division (composed of Justices Carpio,
Brion, Perez, and Sereno), as the former were the active participants in the September 7, 2011
Resolution.

In these meetings, some of the Members of the ruling Division saw the problems pointed out
above, some of which indicated that the ruling Division might have had no authority to rule on
the case. Specifically, their discussions centered on the application of A.M. No. 99-8-09-SC for
the incidents that transpired prior to the effectivity of the IRSC, and on the conflicting rules
under the IRSC - - Section 3, Rule 8 on the effects of inhibition and Section 7, Rule 2 on the
resolution of MRs.

A.M. No. 99-8-09-SC indicated the general rule that the re-raffle shall be made among the other
Members of the san1e Division who participated in rendering the decision or resolution and who
concurred therein, which should now apply because the ruling on the case is no longer final after
the case had been opened for review on the merits. In other words, after acceptance by the Third
Division, through Justice Velasco, of the 2nd MR, there should have been a referral to raffle
because the excepting qualification that the Clerk of Court cited no longer applied; what was
being reviewed were the merits of the case and the review should be by the same Justices who
had originally issued the original Decision and the subsequent Resolution, or by whoever of
these Justices are still left in the Court, pursuant to the same A.M. No. 99-8-09- SC.

On the other hand, the raffle to Justice Brion was made by applying AC No. 84-2007 that had
been superseded by Section 3, Rule 8 of the IRSC. Even the use of this IRSC provision,
however, would not solve the problem, as its use still raised the question of the provision that
should really apply in the resolution of the MR: should it be Section 3, Rule 8 on the inhibition
of a Member-in-Charge, or Section 7, Rule 2 of the IRSC on the inhibition of the ponente when
an MR of a decision and a signed resolution was filed. xxx

x x x           x x x          x x x

A comparison of these two provisions shows the semantic sources of the seeming conflict:
Section 7, Rule 2 refers to a situation where the ponente has retired, is no longer a Member of the
Court, is disqualified, or has inhibited himself from acting on the case; while Section 3, Rule 8
generally refers to the inhibition of a Member-in-Charge who does not need to be the writer of
the decision or resolution under review.

Significantly, Section 7, Rule 2 expressly uses the word ponente (not Member-in-Charge) and

refers to a specific situation where the ponente (or the writer of the Decision or the Resolution) is
no longer with the Court or is otherwise unavailable to review the decision or resolution he or
she wrote. Section 3, Rule 8, on the other hand, expressly uses the term Member-in-Charge and
generally refers to his or her inhibition, without reference to the stage of the proceeding when the
inhibition is made.

Under Section 7, Rule 2, the case should have been re-raffled and assigned to anyone of Justices
Nachura (who did not retire until June 13, 2011), Peralta, or Bersamin, either (1) after the
acceptance of the 2nd MR (because the original rulings were no longer final); or (2) after Justice
Velasco's inhibition because the same condition existed, i.e., the need for a review by the same
Justices who rendered the decision or resolution. As previously mentioned, Justice Nachura
participated in both the original Decision and the subsequent Resolution, and all three Justices
were the remaining Members who voted on the October 2, 2009 Resolution. On the other hand,
if Section 3, Rule 8 were to be solely applied after Justice Velasco' s inhibition, the Clerk of
Court would be correct in her assessment and the raffle to Justice Brion, as a Member outside of
Justice Velasco’s Division, was correct.

These were the legal considerations that largely confronted the ruling Division in late September
2011 when it deliberated on what to do with Atty. Mendoza’s letters.

The propriety of and grounds for

the recall of the September 7,

2011 Resolution
Most unfortunately, the above unresolved questions were even further compounded in the course
of the deliberations of the Members of the ruling Division when they were informed that the
parties received the ruling on September 19, 2011, and this ruling would lapse to finality after the
15th day, or after October 4, 2011.

Thus, on September 30, 2011 (a Friday), the Members went to Chief Justice Corona and
recommended, as a prudent move, that the September 7, 2011 Resolution be recalled at the very
latest on October 4, 2011, and that the case be referred to the Court en bane for a ruling on the
questions Atty. Mendoza asked. The consequence, of course, of a failure to recall their ruling
was for that Resolution to lapse to finality. After finality, any recall for lack of jurisdiction of the
ruling Division might not be understood by the parties and could lead to a charge of flip-flopping
against the Court. The basis for the referral is Section 3(n), Rule 2 of the IRSC, which provides:

RULE 2.

OPERATING STRUCTURES

Section 3. Court en bane matters and eases.-The Court en bane shall act on the following matters
and cases:

xxxx

(n) cases that the Court en bane deems of sufficient importance to merit its attention[.]"

Ruling positively, the Court en bane duly issued its disputed October 4, 2011 Resolution
recalling the September 7, 2011 Resolution and ordering the re-raffle of the case to a new
Member-in-Charge. Later in the day, the Court received PAL's Motion to Vacate (the September
7, 2011 ruling) dated October 3, 2011. This was followed by FASAP's MR dated October 17,
2011 addressing the Court Resolution of October 4, 2011. The F ASAP MR mainly invoked the
violation of its right to due process as the recall arose from the Court’s ex parte consideration of
mere letters from one of the counsels of the parties.

As the narration in this Resolution shows, the Court acted on its own pursuant to its power to
recall its own orders and resolutions before their finality. The October 4, 2011 Resolution was
issued to determine the propriety of the September 7, 2011 Resolution given the facts that came
to light after the ruling Division’s examination of the records. To point out the obvious, the recall
was not a ruling on the merits and did not constitute the reversal of the substantive issues already
decided upon by the Court in the F ASAP case in its previously issued Decision (of July 22,
2008) and Resolution (of October 2, 2009). In short, the October 4, 2011 Resolution was not
meant and was never intended to favor either party, but to simply remove any doubt about the
validity of the ruling Division's action on the case. The case, in the ruling Division's view, could
be brought to the Court en banc since it is one of "sufficient importance"; at the very least, it
involves the interpretation of conflicting provisions of the IRSC with potential jurisdictional
implications.
At the time the Members of the ruling Division went to the Chief Justice to recommend a recall,
there was no clear indication of how they would definitively settle the unresolved legal questions
among themselves. The only matter legally certain was the looming finality of the September 7,
2011 Resolution if it would not be immediately recalled by the Court en bane by October 4,
2011. No unanimity among the Members of the ruling Division could be gathered on the
unresolved legal questions; thus, they concluded that the matter is best determined by the
Court en bane as it potentially involved questions of jurisdiction and interpretation of conflicting
provisions of the IRSC. To the extent of the recommended recall, the ruling Division was
unanimous and the Members communicated this intent to the Chief Justice in clear and
unequivocal terms.76 (Bold scoring supplied for emphasis)

It is well to stress that the Banc could not have assumed jurisdiction were it not for the initiative
of Justice Arturo V. Brion who consulted the Members of the ruling Division as well as Chief
Justice Corona regarding the jurisdictional implications of the successive retirements, transfers,
and inhibitions by the Members of the ruling Division. This move by Justice Brion led to the
referral of the case to the Banc in accordance with Section 3(1), Rule 2 of the IRSC that
provided, among others, that any Member of the Division could request the Court En Banc to
take cognizance of cases that fell under paragraph (m). This referral by the ruling Division
became the basis for the Banc to issue its October 4, 2011 resolution.

For sure, the Banc, by assuming jurisdiction over the case, did not seek to act as appellate body
in relation to the acts of the ruling Division, contrary to the dissent's position.77 The Bane's
recall of the resolution of September 7, 2011 should not be so characterized, considering that
the Banc did not thereby rule on the merits of the case, and did not thereby reverse the July 22,
2008 decision and the October 2, 2009 resolution. The referral of the case to the Banc was done
to address the conflict among the provisions of the IRSC that had potential jurisdictional
implications on the ruling made by the Second Division.

At any rate, PAL constantly raised in its motions for reconsideration that the ruling Division had
seriously erred not only in ignoring the consistent findings about its precarious financial situation
by the Labor Arbiter, the NLRC, the CA and the SEC, but also in disregarding the
pronouncements by the Court of its serious fiscal condition. To be clear, because the serious
challenge by PAL against the ruling of the Third Division was anchored on the Third Division’s
having ignored or reversed settled doctrines or principles of law, only the Banc could assume
jurisdiction and decide to either affirm, reverse or modify the earlier decision. The rationale for
this arrangement has been expressed in Lu v. Lu Ym78 thuswise:

It is argued that the assailed Resolutions in the present cases have already become final, since
a second motion for reconsideration is prohibited except for extraordinarily persuasive reasons
and only upon express leave first obtained; and that once a judgment attains finality, it thereby
becomes immutable and unalterable, however unjust the result of error may appear.

The contention, however, misses an important point. The doctrine of immutability of

decisions applies only to final and executory decisions. Since the present cases may involve a
modification or reversal of a Court-ordained doctrine or principle, the judgment rendered by the
Special Third Division may be considered unconstitutional, hence, it can never become final. It
finds mooring in the deliberations of the framers of the Constitution:

On proposed Section 3(4), Commissioner Natividad asked what the effect would be of a decision
that violates the proviso that "no doctrine or principle of law laid down by the court in a decision
rendered en bane or in division may be modified or reversed except by the court en bane." The
answer given was that such a decision would be invalid. Following up, Father Bernas
asked whether the decision, if not challenged, could become final and binding at least on the
parties. Romulo answered that, since such a decision would be in excess of jurisdiction, the
decision on the case could be reopened anytime. (emphasis and underscoring supplied)

A decision rendered by a Division of this Court in violation of this constitutional provision

would be in excess of jurisdiction and, therefore, invalid. Any entry of judgment may thus be
said to be "inefficacious" since the decision is void for being unconstitutional.

While it is true that the Court en bane exercises no appellate jurisdiction over its Divisions,
Justice Minerva Gonzaga-Reyes opined in Firestone and concededly recognized that "[t]he only
constraint is that any doctrine or principle of law laid down by the Court, either rendered en
bane or in division, may be overturned or reversed only by the Court sitting en banc."

That a judgment must become final at some definite point at the risk of occasional error cannot
be appreciated in a case that embroils not only a general allegation of "occasional error" but also
a serious accusation of a violation of the Constitution, viz., that doctrines or principles of law
were modified or reversed by the Court's Special Third Division August 4, 2009 Resolution.

The law allows a determination at first impression that a doctrine or principle laid down by the
court en bane or in division may be modified or reversed in a case which would warrant a
referral to the Court En Banc. The use of the word "may" instead of "shall" connotes probability,
not certainty, of modification or reversal of a doctrine, as may be deemed by the Court.
Ultimately, it is the entire Court which shall decide on the acceptance of the referral and, if so,
"to reconcile any seeming conflict, to reverse or modify an earlier decision, and to declare the
Court's doctrine."

The Court has the power and prerogative to suspend its own rules and to exempt a case from
their operation if and when justice requires it, as in the present circumstance where movant filed
a motion for leave after the prompt submission of a second motion for reconsideration but,
nonetheless, still within 15 days from receipt of the last assailed resolution.79

Lastly, the dissent proposes that a unanimous vote is required to grant PAL’s Second Motion for
Reconsideration of the Decision of July 22, 2008.80 The dissent justifies the proposal by stating
that "[a] unanimous court would debate and deliberate more fully compared with a non-
unanimous court. "81

The radical proposal of the dissent is bereft of legal moorings. Neither the 1987 Constitution nor
the IRSC demands such unanimous vote. Under Section 4(2), Article VIII of the 1987
Constitution, decisions by the Banc shall be attained by a "concurrence of a majority of the
Members who actually took part in the deliberations on the issues in the case and voted thereon."
As a collegial body, therefore, the Court votes after deliberating on the case, and only
a majority vote is required,82 unless the 1987 Constitution specifies otherwise. In all the
deliberations by the Court, dissenting and concurring opinions are welcome, they being seen as
sound manifestations of "the license of individual Justices or groups of Justices to separate
themselves from "the Court’s" adjudication of the case before them,"83 thus:

[C]oncurring and dissenting opinions serve functions quite consistent with a collegial
understanding of the Court. Internally within the Court itself---dissent promotes and improves
deliberation and judgment. Arguments on either side of a disagreement test the strength of their
rivals and demand attention and response. The opportunity for challenge and response afforded
by the publication of dissenting and concurring opinions is a close and sympathetic neighbor of
the obligation of reasoned justification.

Externally for lower courts, the parties, and interested bystanders-concurring and dissenting
opinions are important guides to the dynamic "meaning" of a decision by the Court. From a
collegial perspective, dissenting and concurring opinions offer grounds for understanding how
individual Justices, entirely faithful to their Court's product, will interpret that product. The
meaning each Justice brings to the product of her Court will inevitably be shaped by elements of
value and judgment she brings to the interpretive endeavor; her dissent from the Court's
conclusions in the case in question is likely to be dense with insight into these aspects of her
judicial persona.84

III

PAL implemented a valid retrenchment program

Retrenchment or downsizing is a mode of terminating employment initiated by the employer

through no fault of the employee and without prejudice to the latter, resorted to by management
during periods of business recession, industrial depression or seasonal fluctuations or during lulls
over shortage of materials. It is a reduction in manpower, a measure utilized by an employer to
minimize business losses incurred in the operation of its business.85

Anent retrenchment, Article 29886 of the Labor Code provides as follows:

Article 298. Closure of Establishment and Reduction of Personnel. - The employer may also

terminate the employment of any employee due to the installation of labor saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof. In case of termination due
to the installation of labor saving devices or redundancy, the worker affected thereby shall be
entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1)
month pay for every year of service, whichever is higher. In case of retrenchment to prevent
losses and in cases of closure or cessation of operations of establishment or undertaking not due
to serious business losses or financial reverses, the separation pay shall be equivalent to one (1)
month pay or to at least one-half (1/2) month pay for every year of service, whichever is higher.
A fraction of at least six (6) months shall be considered one (1) whole year.

Accordingly, the employer may resort to retrenchment in order to avert serious business losses.
To justify such retrenchment, the following conditions must be present, namely:

1. The retrenchment must be reasonably necessary and likely to prevent business losses;

2. The losses, if already incurred, are not merely de minimis, but substantial, serious,
actual and real, or, if only expected, are reasonably imminent;

3. The expected or actual losses must be proved by sufficient and convincing evidence;

4. The retrenchment must be in good faith for the advancement of its interest and not to
defeat or circumvent the employees' right to security of tenure; and

5. There must be fair and reasonable criteria m ascertaining who would be dismissed and
who would be retained among the employees, such as status, efficiency, seniority,
physical fitness, age, and financial hardship for certain workers.87

Based on the July 22, 2008 decision, PAL failed to: (1) prove its financial losses because it did
not submit its audited financial statements as evidence; (2) observe good faith in implementing
the retrenchment program; and (3) apply a fair and reasonable criteria in selecting who would be
terminated.

Upon a critical review of the records, we are convinced that PAL had met all the standards in
effecting a valid retrenchment.

PAL’s serious financial losses were duly established

PAL was discharged of the

| burden to prove serious
| financial losses in view of
| F ASAP's admission

PAL laments the unfair and unjust conclusion reached in the July 22, 2008 decision to the effect
that it had not proved its financial losses due to its non-submission of audited financial
statements. It points out that the matter of financial losses had not been raised as an issue before
the Labor Arbiter, the NLRC, the CA, and even in the petition in G.R. No. 178083 in view of
FASAP’s admission of PAL having sustained serious losses; and that PAL’s having been placed
under rehabilitation sufficiently indicated the financial distress that it was suffering.

It is quite notable that the matter of PAL’s financial distress had originated from the complaint
filed by F ASAP whereby it raised the sole issue of "Whether or not respondents committed
Unfair Labor Practice."88 F ASAP believed that PAL, in terminating the 1,400 cabin crew
members, had violated Section 23, Article VII and Section 31, Article IX of the 1995- 2000 P
AL-FASAP CBA. Interestingly, FASAP averred in its position paper therein that it was not
opposed to the retrenchment program because it understood PAL’s financial troubles; and that it
was only questioning the manner and lack of standard in carrying out the retrenchment, thus:

At the outset, it must be pointed out that complainant was never opposed to the retrenchment
program itself, as it understands respondent PAL’s financial troubles. In fact, complainant
religiously cooperated with respondents in their quest for a workable solution to the company-
threatening problem. Attached herewith as Annexes "A" to "D" are the minutes of its meetings
with respondent PAL’s representatives showing complainant's active participation in the
deliberations on the issue.

What complainant vehemently objects to are the manner and the lack of criteria or standard by
which the retrenchment program was implemented or carried out, despite the fact that there are
available criteria or standard that respondents could have utilized or relied on in reducing its
workforce. In adopting a retrenchment program that was fashioned after the evil prejudices and
personal biases of respondent Patria Chiong, respondent PAL grossly violated at least two
important provisions of its CBA with complainant - Article VII, Section 23 and Article IX,
Sections 31and 32.89

These foregoing averments of F ASAP were echoed in its reply90 and memorandum91 submitted

to the Labor Arbiter.

Evidently, FASAP’s express recognition of PAL’s grave financial situation meant that such
situation no longer needed to be proved, the same having become a judicial admission92 in the
context of the issues between the parties. As a rule, indeed, admissions made by parties in the
pleadings, or in the course of the trial or other proceedings in the same case are conclusive, and
do not require further evidence to prove them.93 By FASAP’s admission of PAL’s severe
financial woes, PAL was relieved of its burden to prove its dire financial condition to justify the
retrenchment. Thusly, PAL should not be taken to task for the non-submission of its audited
financial statements in the early part of the proceedings inasmuch as the non-submission had
been rendered irrelevant.

Yet, the July 22, 2008 decision ignored the judicial admission and unfairly focused on the lack of
evidence of PAL’s financial losses. The Special Third Division should have realized that PAL
had been discharged of its duty to prove its precarious fiscal situation in the face of FASAP’s
admission of such situation. Indeed, PAL did not have to submit the audited financial statements
because its being in financial distress was not in issue at all.

Nonetheless, the dissent still insists that PAL should be faulted for failing to prove its substantial
business losses, and even referred to several decisions of the Court94 wherein the employers had
purportedly established their serious business losses as a requirement for a valid retrenchment.
Unfortunately, the cases cited by the dissent obviously had no application herein because they
originated from either simple complaints of illegal retrenchment, or unfair labor practice, or
additional separation pay.95

LVN Pictures originated from a complaint for unfair labor practice (ULP) based on Republic Act
No. 874 (Industrial Peace Act). The allegations in the complaint concerned interference,
discrimination and refusal to bargain collectively. The Court pronounced therein that the
employer (L VN Pictures) did not resort to ULP because it was able to justify its termination,
closure and eventual refusal to bargain collectively through the financial statements showing that
it continually incurred serious financial losses. Notably, the Court did not interfere with the
closure and instead recognized LVN’s management prerogative to close its business and dismiss
its employees.

North Davao Mining was a peculiar case, arising from a complaint for additional separation pay,
among others. The Court therein held that separation pay was not required if the reason for the
termination was due to serious business losses. It clarified that Article 283 (now Art. 298)
governed payment of separation benefits in case of closure of business not due to serious
business losses. When the reason for the closure was serious business losses, the employer shall
not be required to grant separation pay to the terminated employees.

In Manatad, the complaint for illegal dismissal was based on the allegation that the retrenchment
program was illegal because the employer was gaining profits. Hence, the core issue revolved
around the existence (or absence) of grave financial losses that would justify retrenchment.

In the cited cases, the employers had to establish that they were incurring serious business losses
because it was the very issue, if not intricately related to the main issue presented in the original
complaints. In contrast, the sole issue herein as presented by F ASAP to the Labor Arbiter was
the "manner of retrenchment," not the basis for retrenchment. F ASAP itself, in representation of
the retrenched employees, had admitted in its position paper, as well as in its reply and
memorandum submitted to the Labor Arbiter the fact of serious financial losses hounding PAL.
In reality, PAL was not remiss by not proving serious business losses. FASAP’s admission of
PAL’s financial distress already established the latter's precarious financial state.

Judicial notice could be taken

of the financial losses
incurred; the presentation of
audited financial statements
was not required in such
circumstances

The July 22, 2008 decision recognized that PAL underwent corporate rehabilitation. In seeming
inconsistency, however, the Special Third Division refused to accept that PAL had incurred
serious financial losses, observing thusly:

The audited financial statements should be presented before the Labor Arbiter who is in
the position to evaluate evidence. They may not be submitted belatedly with the Court of
Appeals, because the admission of evidence is outside the sphere of the appellate
court's certiorari jurisdiction. Neither can this Court admit in evidence audited financial
statements, or make a ruling on the question of whether the employer incurred substantial losses
justifying retrenchment on the basis thereof, as this Court is not a trier of facts. Even so, this
Court may not be compelled to accept the contents of said documents blindly and without
thinking.

xxxx

In the instant case, PAL failed to substantiate its claim of actual and imminent substantial losses
which would justify the retrenchment of more than 1,400 of its cabin crew personnel. Although
the Philippine economy was gravely affected by the Asian financial crisis, however, it
cannot be assumed that it has likewise brought PAL to the brink of bankruptcy. Likewise,
the fact that PAL underwent corporate rehabilitation does not automatically justify the
retrenchment of its cabin crew personnel.96 (Emphasis supplied)

Indeed, that a company undergoes rehabilitation sufficiently indicates its fragile financial
condition. lt is rather unfortunate that when PAL petitioned for rehabilitation the term "corporate
rehabilitation" still had no clear definition. Presidential Decree No. 902-A,97 the law then
applicable, only set the remedy.98 Section 6(c) and (d) of P.D. No. 902-A gave an insight into the
precarious state of a distressed corporation requiring the appointment of a receiver or the creation
of a management committee, viz.:

xxxx

c) To appoint one or more receivers of the property, real and personal, which is the subject of the
action pending before the Commission in accordance with the pertinent provisions of the Rules
of Court in such other cases whenever necessary in order to preserve the rights of the parties-
litigants and/or protect the interest of the investing public and creditors: Provided, however,
That the Commission may, in appropriate cases, appoint a rehabilitation receiver of corporations,
partnerships or other associations not supervised or regulated by other government agencies who
shall have, in addition to the powers of a regular receiver under the provisions of the Rules of
Court, such functions and powers as are provided for in the succeeding paragraph d)
hereof: Provided, further, That the Commission may appoint a rehabilitation receiver of
corporations, partnerships or other associations supervised or regulated by other government
agencies, such as banks and insurance companies, upon request of the government agency
concerned: Provided, finally, That upon appointment of a management committee,
rehabilitation receiver, board or body, pursuant to this Decree, all actions for claims
against corporations, partnerships or associations under management or receivership
pending before any court, tribunal, board or body shall be suspended accordingly.

d) To create and appoint a management committee, board, or body upon petition or moto
propio to undertake the management of corporations, partnerships or other associations not
supervised or regulated by other government agencies in appropriate cases when there is
imminent danger of dissipation, loss, wastage or destruction of assets or other properties of
paralyzation of business operations of such corporations or entities which may be
prejudicial to the interest of minority stockholders, parties-litigants or the general
public: Provided, further, That the Commission may create or appoint a management committee,
board or body to undertake the management of corporations, partnerships or other associations
supervised or regulated by other government agencies, such as banks and insurance companies,
upon request of the government agency concerned.

The management committee or rehabilitation receiver, board or body shall have the power to
take custody of, and control over, all the existing assets and property of such entities under
management; to evaluate the existing assets and liabilities, earnings and operations of such
corporations, partnerships or other associations; to determine the best way to salvage and
protect the interest of the investors and creditors; to study, review and evaluate the feasibility
of continuing operations and restructure and rehabilitate such entities if determined to be feasible
by the Commission. It shall report and be responsible to the Commission until dissolved by order
of the Commission: Provided, however, That the Commission may; on the basis of the findings
and recommendation of the management committee, or rehabilitation receiver, board or body, or
on its own findings; determine that the continuance in business of such corporation or entity
would not be feasible or profitable nor work to the best interest of the stockholders,
parties-litigants, creditors, or the general public, order the dissolution of such corporation
entity and its remaining assets liquidated accordingly. The management committee or
rehabilitation receiver, board or body may overrule or revoke the actions of the previous
management and board of directors of the entity or entities under management notwithstanding
any provision of law, articles of incorporation or by-laws to the contrary.

The management committee, or rehabilitation receiver, board or body shall not be subject to any
action, claim or demand for, or in connection with, any act done or omitted to be done by it in
good faith in the exercise of its functions, or in connection with the exercise of its power herein
conferred. (Bold underscoring supplied for emphasis)

After having been placed under corporate rehabilitation and its rehabilitation plan having been
approved by the SEC on June 23, 2008, PAL’s dire financial predicament could not be doubted.
Incidentally, the SEC’s order of approval came a week after PAL had sent out notices of
termination to the affected employees. It is thus difficult to ignore the fact that PAL had then
been experiencing difficulty in meeting its financial obligations long before its rehabilitation.

Moreover, the fact that airline operations were capital intensive but earnings were volatile
because of their vulnerability to economic recession, among others.99 The Asian financial crisis
in 1997 had wrought havoc among the Asian air carriers, PAL included.100 The peculiarities
existing in the airline business made it easier to believe that at the time of the Asian financial
crisis, PAL incurred liabilities amounting to ₱90,642,933,919.00, which were way beyond the
value of its assets that then only stood at ₱85,109,075,35l.

Also, the Court cannot be blind and indifferent to current events affecting the society101 and the
country’s economy,102 but must take them into serious consideration in its adjudication of
pending cases. In that regard, Section 2, Rule 129 of the Rules of Court recognizes that the courts
have discretionary authority to take judicial notice of matters that are of public knowledge, or are
capable of unquestionable demonstration, or ought to be known to judges because of their
judicial functions.103 The principle is based on convenience and expediency in securing and
introducing evidence on matters that are not ordinarily capable of dispute and are not bona
fide disputed.104

Indeed, the Labor Arbiter properly took cognizance of PAL’s substantial financial losses during
the Asian financial crisis of 1997.105 On its part, the NLRC recognized the grave financial
distress of PAL based on its ongoing rehabilitation/receivership.106 The CA likewise found that
PAL had implemented a retrenchment program to counter its tremendous business losses that the
strikes of the pilot's union had aggravated.107 Such recognitions could not be justly ignored or
denied, especially after PAL's financial and operational difficulties had attracted so much public
attention that even President Estrada had to intervene in order to save PAL as the country’s flag
carrier.108

The Special Third Division also observed that PAL had submitted a "stand-alone" rehabilitation
program that was viewed as an acknowledgment that it could "undertake recovery on its own and
that it possessed enough resources to weather the financial storm." The observation was
unfounded considering that PAL -had been constrained to submit the "stand-alone" rehabilitation
plan on December 7, 1998 because of the lack of a strategic partner.109

We emphasize, too, that the presentation of the audited financial statements should not the sole
means by Which to establish the employer's serious financial losses. The presentation of audited
financial statements, although convenient in proving the unilateral claim of financial losses, is
not required for all cases of retrenchment. The evidence required for each case of retrenchment
really depends on the particular circumstances obtaining. The Court has cogently opined in that
regard:

That petitioners were not able to present financial statements for years prior to 2005 should not
be automatically taken against them. Petitioner BEMI was organized and registered as a
corporation in 2004 and started business operations in 2005 only. While financial statements
for previous years may be material in establishing the financial trend for an employer,
these are not indispensable in all cases of retrenchment. The evidence required for each
case of retrenchment will still depend on its particular circumstances. In fact, in Revidad v.
National Labor Relations Commission, the Court declared that "proof of actual financial
losses incurred by the company is not a condition sine qua non for retrenchment," and
retrenchment may be undertaken by the employer to prevent even future losses:

In its ordinary connotation, the phrase "to prevent losses" means that retrenchment or termination
of the services of some employees is authorized to be undertaken by the employer sometime
before the anticipated losses are actually sustained or realized. It is not, in other words, the
intention of the lawmaker to compel the employer to stay his hand and keep all his employees
until after losses shall have in fact materialized. If such an intent were expressly written into the
law, that law may well be vulnerable to constitutional attack as unduly taking property from one
man to be given to another.110 (Bold underscoring supplied for emphasis)

In short, to require a distressed corporation placed under rehabilitation or receivership to still

submit its audited financial statements may become unnecessary or superfluous.
Under P.D. No. 902-A, the SEC was empowered during rehabilitation proceedings to thoroughly
review the corporate and financial documents submitted by PAL. Hence, by the time when the
SEC ordered PAL’s rehabilitation, suspension of payments and receivership, the SEC had
already ascertained PAL’s serious financial condition, and the clear and imminent danger of its
losing its corporate assets. To require PAL in the proceedings below to still prove its financial
losses would only trivialize the SEC’s order and proceedings. That would be unfortunate because
we should not ignore that the SEC was then the competent authority to determine whether or not
a corporation experienced serious financial losses. Hence, the SEC's order - presented as
evidence in the proceedings below - sufficiently established PAL’s grave financial status.

Finally, PAL argues that the Special Third Division should not have deviated from the
pronouncements made in Garcia v. Philippine Airlines, Inc., Philippine Airlines, Inc. v.
Kurangking, Philippine Airlines v. Court of Appeals, Philippine Airlines v. Zamora, Philippine
Airlines v. PALEA, and Philippine Airlines v. National Labor Relations Commission, all of
which judicially recognized PAL’s dire financial condition.

The argument of PAL is valid and tenable.

Garcia v. Philippine Airlines, Inc. discussed the unlikelihood of reinstatement pending appeal

because PAL had been placed under corporate rehabilitation, explaining that unlike the ground of
substantial losses contemplated in a retrenchment case, the state of corporate rehabilitation was
judicially pre-determined by a competent court and not formulated for the first time by the
employer, viz.:

While reinstatement pending appeal aims to avert the continuing threat or danger to the survival
or even the life of the dismissed employee and his family, it does not contemplate the period
when the employer-corporation itself is similarly in a judicially monitored state of being
resuscitated in order to survive.

The parallelism between a judicial order of corporation rehabilitation as a justification for the
non-exercise of its options, on the one hand, and a claim of actual and imminent substantial
losses as ground for retrenchment, on the other hand, stops at the red line on the financial
statements. Beyond the analogous condition of financial gloom, as discussed by Justice Leonardo
Quisumbing in his Separate Opinion, are more salient distinctions. Unlike the ground of
substantial losses contemplated in a retrenchment case, the state of corporate rehabilitation was
judicially pre-determined by a competent court and not formulated for the first time in this case
by respondent.

More importantly, there are legal effects arising from a judicial order placing a corporation under
rehabilitation. Respondent was, during the period material to the case, effectively deprived of the
alternative choices under Article 223 of the Labor Code, not only by virtue of the statutory
injunction but also in view of the interim relinquishment of management control to give way to
the full exercise of the powers of the rehabilitation receiver. Had there been no need to
rehabilitate, respondent may have opted for actual physical reinstatement pending appeal to
optimize the utilization of resources. Then again, though the management may think this wise,
the rehabilitation receiver may decide otherwise, not to mention the subsistence of the injunction
on claims.111

In Philippine Airlines v. Kurangking; Philippine Airlines v. Court of Appeals, Philippine

Airlines v. PALEA and Philippine Airlines v. National Labor Relations Commission, the Court
uniformly upheld the suspension of monetary claims against PAL because of the SEC’s order
placing it under receivership. The Court emphasized the need to suspend the payment of the
claims pending the rehabilitation proceedings in order to enable the management
committee/receiver to channel the efforts towards restructuring and rehabilitation. Philippine
Airlines v. Zamora reiterated this rule and deferred to the prior judicial notice taken by the Court
in suspending the monetary claims of illegally dismissed employees.112

Through these rulings, the Court consistently recognized PAL’s financial troubles while
undergoing rehabilitation and suspension of payments. Considering that the ruling related to
conditions and circumstances that had occurred during the same period as those obtaining in
G.R. No. 178083, the Court cannot take a different view.

It is also proper to indicate that the Court decided the other cases long before the promulgation of
the assailed July 22, 2008 decision. Hence, the Special Third Division should not have regarded
the financial losses as an issue that still required determination. Instead, it should have just
simply taken judicial notice of the serious financial losses being suffered by PAL.113 To still rule
that PAL still did not prove such losses certainly conflicted with the antecedent judicial
pronouncements about PAL’s dire financial state.

As such, we cannot fathom the insistence by the dissent that the Court had not taken judicial
notice but merely "recognized" that PAL was under corporate rehabilitation. Judicial notice is the
cognizance of certain facts that judges may properly take and act on without proof because they
already know them. It is the manner of recognizing and acknowledging facts that no longer need
to be proved in court. In other words, when the Court "recognizes" a fact, it inevitably takes
judicial notice of it.

For sure, it would not have been the first time that the Court would have taken judicial notice of
the findings of the SEC and of antecedent jurisprudence recognizing the fact of rehabilitation by
the employer. The Court did so in the 2002 case of Clarion Printing House, Inc. v. National
Labor Relations Commission, 114 to wit:

Sections 5 and 6 of Presidential Decree No. 902-A (P.D. 902-A) ("REORGANIZATION OF

THE SECURITIES AND EXCHANGE COMMISSION WITH ADDITIONAL POWERS AND
PLACING SAID AGENCY UNDER THE ADMINISTRATIVE SUPERVISION OF THE
OFFICE OF THE PRESIDENT"), as amended, read:

SEC. 5. In addition to the regulatory and adjudicative functions of THE SECURITIES AND
EXCHANGE COMMISSION over corporations, partnerships and other forms of associations
registered with it as expressly granted under existing laws and decrees, it shall have original and
exclusive jurisdiction to hear and decide cases involving:
 x x x           x x x          x x x

(d) Petitions of corporations, partnerships or associations declared in the state of

suspension of payments in cases where the corporation, partnership or association possesses
sufficient property to cover all debts but foresees the impossibility of meeting them when
they respectively fall due or in cases where the corporation, partnership, association has no
sufficient assets to cover its liabilities, but is under the management of a Rehabilitation
Receiver or Management Committee created pursuant to this Decree.

SEC. 6. In order to effectively exercise such jurisdiction, the Commission shall possess the
following powers:

x x x           x x x          x x x

(c) To appoint one or more receivers of the property, real and personal, which is the subject of
the action pending before the Commission in accordance with the provisions of the Rules of
Court in such other cases whenever necessary in order to preserve the rights of the parties-
litigants and/or protect the interest of the investing public and creditors: Provided, however,
That the Commission may in appropriate cases, appoint a rehabilitation receiver of
corporations, partnerships or other associations not supervised or regulated by other
government agencies who shall have, in addition to powers of the regular receiver under
the provisions of the Rules of Court, such functions and powers as are provided for in the
succeeding paragraph (d) hereof: ...

(d) To create and appoint a management committee, board or body upon petition
or motupropio to undertake the management of corporations, partnership or other associations
not supervised or regulated by other government agencies in appropriate cases when there is
imminent danger of dissipation,· loss, wastage or destruction of assets or other properties or
paralization of business operations of such corporations or entities which may be prejudicial
to the interest of minority stockholders, parties-litigants of the general public: ... (Emphasis
and underscoring supplied).

From the above-quoted provisions of P.D. No. 902-A, as amended, the appointment of a receiver
or management committee by the SEC presupposes a finding that, inter alia, a company
possesses sufficient property to cover all its debts but "foresees the impossibility of meeting
them when they respectively fall due" and "there is imminent danger of dissipation, loss, wastage
or destruction of assets of other properties or paralization of business operations."

That the SEC, mandated by law to have regulatory functions over corporations, partnerships or
associations, appointed an interim receiver for the EYCO Group of Companies on its petition in
light of, as quoted above, the therein enumerated "factors beyond the control and anticipation of
the management" rendering it unable to meet its obligation as they fall due, and thus resulting to
"complications and problems ... to arise that would impair and affect [its] operations ... " shows
that CLARION, together with the other member-companies of the EYCO Group of Companies,
was suffering business reverses justifying, among other things, the retrenchment of its
employees.
This Court in fact takes judicial notice of the Decision of the Court of Appeals dated June 11,
2000 in CA-G.R. SP No. 55208, "Nikon Industrial Corp., Nikolite Industrial Corp., et al.
[including CLARION], otherwise known as the EYCO Group of Companies v. Philippine
National Bank, Solidbank Corporation, et al., collectively known and referred as the
'Consortium of Creditor Banks,"' which was elevated to this Court via Petition for Certiorari and
docketed as G.R. No. 145977, but which petition this Court dismissed by Resolution dated May
3, 2005:

Considering the joint manifestation and motion to dismiss of petitioners and respondents dated
February 24, 2003, stating that the parties have reached a final and comprehensive settlement of
all the claims and counterclaims subject matter of the case and accordingly, agreed to the
dismissal of the petition for certiorari, the Court Resolved to DISMISS the petition
for certiorari (Underscoring supplied).

The parties in G.R. No. 145977 having sought, and this Court having granted, the dismissal of
the appeal of the therein petitioners including CLARION, the CA decision which affirmed in
toto the September 14, 1999 Order of the SEC, the dispositive portion of which SEC Order
reads:

WHEREFORE, premises considered, the appeal is as it is hereby, granted and the Order dated 18
December 1998 is set aside. The Petition to be Declared in State of Suspension of payments is
hereby disapproved and the SAC Plan terminated. Consequently, all committee,
conservator/receivers created pursuant to said Order are dissolved and discharged and all acts
and orders issued therein are vacated.

The Commission, likewise, orders the liquidation and dissolution of the appellee

corporations. The case is hereby remanded to the hearing panel below for that purpose.

x x x           x x x          x x x (Emphasis and underscoring supplied),

has now become final and executory. Ergo, the SEC's disapproval of the EYCO Group of
Companies' "Petition for the Declaration of Suspension of Payment ... " and the order for the
liquidation and dissolution of these companies including CLARION, must be deemed to have
been unassailed.

That judicial notice can be taken of the above-said case of Nikon Industrial Corp. et al. v. PNB et
al., there should be no doubt.

As provided in Section 1, Rule 129 of the Rules of Court:

SECTION 1. Judicial notice, when mandatory. - A court shall take judicial notice, without the
introduction of evidence, of the existence and territorial extent of states, their political history,
forms of government and symbols of nationality, the law of nations, the admiralty and maritime
courts of the world and their seals, the political constitution and history of the Philippines,
the official acts of the legislative, executive and judicial departments of the Philippines, the
laws of nature, the measure of time, and the geographical divisions. (Emphasis and underscoring
supplied)

which Mr. Justice Edgardo L. Paras interpreted as follows:

A court will take judicial notice of its own acts and records in the same case, of facts established
in prior proceedings in the same case, of the authenticity of its own records of another case
between the same parties, of the files of related cases in the same court, and of public records
on file in the same court. In addition judicial notice will be taken of the record, pleadings or
judgment of a case in another court between the same parties or involving one of the same
parties, as well as of the record of another case between different parties in the same court.
Judicial notice will also be taken of court personnel. (Emphasis and underscoring supplied)

In fine, CLARION's claim that at the time it terminated Miclat it was experiencing business
reverses gains more light from the SEC's disapproval of the EYCO Group of Companies' petition
to be declared in state of suspension of payment, filed before Miclat’stermination, and of the
SEC’s consequent order for the group of companies’ dissolution and liquidation.115

At any rate, even assuming that serious business losses had not been proved by PAL, it would
still be justified under Article 298 of the Labor Code to retrench employees to prevent the
occurrence of losses or its closing of the business, provided that the projected losses were not
merely de minimis, but substantial, serious, actual, and real, or, if only expected, were reasonably
imminent as perceived objectively and in good faith by the employer.116 In the latter case, proof
of actual financial losses incurred by the employer would not be a condition sine qua non for
retrenchment,117 viz.:

Third, contrary to petitioner’s asseverations, proof of actual financial losses incurred by the

company is not a condition sine qua non for retrenchment. Retrenchment is one of the economic
grounds to dismiss employees, which is resorted to by an employer primarily to avoid or
minimize business losses. The law recognize this under Article 283 of the Labor Code x x x

xxxx

In its ordinary connotation, the phrase "to prevent losses" means that retrenchment or termination
of the services of some employees is authorized to be undertaken by the employer sometime
before the anticipated losses are actually sustained or realized. It is not, in other words, the
intention of the lawmaker to compel the employer to stay his hand and keep all his employees
until after losses shall have in fact materialized. If such an intent were expressly written into the
law, that law may well be vulnerable to constitutional attack as unduly taking property from one
man to be given to another.

At the other end of the spectrum, it seems equally clear that not every asserted possibility of loss
is sufficient legal warrant for the reduction of personnel. In the nature of things, the possibility of
incurring the losses is constantly present, in greater or lesser degree, in the carrying on of
business operations, since some, indeed many, of the factors which impact upon the profitability
or viability of such operations may be substantially outside the control of the employer.
On the bases of these consideration, it follows that the employer bears the burden to prove his
allegation of economic or business reverses with clear and satisfactory evidence, it being in the
nature of an affirmative defense. As earlier discussed, we are fully persuaded that the private
respondent has been and is besieged by a continuing downtrend in both its business operations
and financial resources, thus amply justifying its resort to drastic cuts in personnel and costs.118

PAL retrenched in good faith

The employer is burdened to observe good faith in implementing a retrenchment program. Good
faith on its part exists when the retrenchment is intended for the advancement of its interest and
is not for the purpose of defeating or circumventing the rights of the employee under special laws
or under valid agreements.119

The July 22, 2008 decision branded the recall of the retrenched employees and the
implementation of "Plan 22" instead of "Plan 14" as badges of bad faith on the part of PAL. On
the other hand, the October 2, 2009 resolution condemned PAL for changing its theory by
attributing the cause of the retrenchment to the ALP AP pilots’ strike.

PAL refutes the adverse observations, and maintains that its position was clear and consistent -
that the reduction of its labor force was an act of survival and a less drastic measure as compared
to total closure and liquidation that would have otherwise resulted; that downsizing had been an
option to address its financial losses since 1997;120 that the reduction of personnel was necessary
as an integral part of the means to ensure the success of its corporate rehabilitation plan to
restructure its business;121 and that the downsizing of its labor force was a sound business
decision undertaken after an assessment of its financial situation and the remedies available to
it.122

A hard look at the records now impels the reconsideration of the July 22, 2008 decision and the
resolution of October 2, 2009.

PAL could not have been motivated by ill will or bad faith when it decided to terminate
FASAP’s affected members. On the contrary, good faith could be justly inferred from PAL’s
conduct before, during and after the implementation of the retrenchment plan.

Notable in this respect was PAL’s candor towards FASAP regarding its plan to implement the
retrenchment program. This impression is gathered from PAL’s letter dated February 11, 1998
inviting FASAP to a meeting to discuss the matter, thus:

Roberto D. Anduiza
President

Flight Attendants’ and Stewards' Association of the Philippines (FASAP)

xxxx
Mr. Anduiza:

Due to critical business losses and in view of severe financial reverses, Philippine Airlines must
undertake drastic measures to strive at survival. In order to meet maturing obligations amidst the
present regional crisis, the Company will implement major cost-cutting measures in its fleet plan,
operating budget, routes and frequencies. These moves include the closure of stations,
downsizing of operations and reducing the workforce through layoff/retrenchment or retirement.

In this connection, the Company would like to meet with the Flight Attendants' and Stewards’
Association of the Philippines (FASAP) to discuss the implementation of the lay-
off/retrenchment or retirement of F ASAP-covered employees. The meeting shall be at the Allied
Bank Center (81h Floor-Board Room) on February 12, 1998 at 4:00 p.m.

This letter serves as notice in compliance with Article 283 of the Labor Code, as amended and
DOLE Orders Nos[.] 9 and 10, Series of 1997.

Very truly yours,

(Sgd.)
JOSE ANTONIO GARCIA
President & Chief Operating Officer123

The records also show that the parties met on several occasions124 to explore cost-cutting
measures, including the implementation of the retrenchment program. PAL likewise manifested
that the retrenchment plan was temporarily shelved while it implemented other measures (like
termination of probationary cabin attendant, and work-rotations).125 Obviously, the dissent
missed this part as it stuck to the belief that PAL did not implement other cost-cutting measures
prior to retrenchment.126

Given PAL’s dire financial predicament, it becomes understandable that PAL was constrained to
finally implement the retrenchment program when the ALPAP pilots strike crippled a major part
of PAL’s operations.127 In Rivera v. Espiritu, 128 we observed that said strike wrought "serious
losses to the financially beleaguered flag carrier;" that "PAL’s financial situation went from bad
to worse;" and that "[f]aced with bankruptcy, PAL adopted a rehabilitation plan and downsized
its labor force by more than one-third." Such observations sufficed to show that retrenchment
became a last resort, and was not the rash and impulsive decision that F ASAP would make it out
to be now.

As between maintaining the number of its flight crew and PAL’s survival, it was reasonable for
PAL to choose the latter alternative. This Court cannot legitimately force PAL as a distressed
employer to maintain its manpower despite its dire financial condition. To be sure, the right of
PAL as the employer to reasonable returns on its investments and to expansion and growth is
also enshrined in the 1987 Constitution.129 Thus, although labor is entitled to the right to security
of tenure, the State will not interfere with the employer's valid exercise of its management
prerogative.
Moreover, PAL filed its Petition for Appointment of Interim Rehabilitation Receiver and
Approval of a Rehabilitation Plan with the SEC on June 19, 1998, before the retrenchment
became effective.130 PAL likewise manifested that:

x x x The Rehabilitation Plan and Amended Rehabilitation Plan submitted by PAL in pursuance
of its corporate rehabilitation, and which obtained the joint approval of PAL’s creditors and the
SEC, had as a primary component, the downsizing of PAL’s labor force by at least 5,000,
including the 1,400 flight attendants. As conceptualized by a team of industry experts, the
cutting down of operations and the consequent reduction of work force, along with the
restructuring of debts with significant "haircuts" and the capital infusion of Mr. Lucio Tan
amounting to US$200 million, were the key components of PAL's rehabilitation. The
Interim Rehabilitation Receiver was replaced by a Permanent Rehabilitation Receiver on June 7,
1999.131 (Bold underscoring supplies for emphasis)

Being under a rehabilitation program, PAL had no choice but to implement the measures
contained in the program, including that of reducing its manpower. Far from being an impulsive
decision to defeat its employees’ right to security of tenure, retrenchment resulted from a
meticulous plan primarily aimed to resuscitate PAL’s operations.

Good faith could also be inferred from PAL’s compliance with the basic requirements under-
Article 298 of the Labor Code prior to laying-off its affected employees. Notably, the notice of
termination addressed to the Department of Labor and Employment (DOLE) identified the
reasons behind the massive termination, as well as the measures PAL had undertaken to prevent
the situation, to wit:

June 15, 1998

HON. MAXIMO B. LIM

THE REGIONAL DIRECTOR
Department of Labor and Employment
Regional Office No. NCR

Dear Sir:

This is to inform you that Philippine Air Lines, Inc. (PAL) will be implementing a retrenchment
program one (1) month from notice hereof in order to prevent bankruptcy.

PAL is forced to take this action because of continuous losses it has suffered over the years
which losses were aggravated by the PALEA strike in October 1996, peso depreciation,
Asian currency crisis, causing a serious drop in our yield and the collapse of passenger
traffic in the region. Specifically, PAL suffered a net loss of ₱2.18 Billion during the fiscal
year 1995-1996, ₱2.50 Billion during the fiscal year 1996-1997 and ₱8.08 Billion for the
period starting April 1, 1997 to March 31, 1998.

These uncontrolled heavy losses have left PAL with no recourse but to reduce its fleet and its
flight frequencies both in the domestic and international sectors to ensure its survival.
In an effort to avoid a reduction of personnel, PAL has resorted to other measures, such as
freeze on all hiring, no salary increase for managerial and confidential staff (even for
promotions), reduction of salaries of senior management personnel, freeze on staff
movements, pre-termination of temporary staff contracts and negotiations with foreign
investors. But all these measures failed to avert the continued losses.

Finally, all the efforts of PAL to preserve the employment of its personnel were shattered
by the illegal strike of its pilots which has cause irreparable damage to the company's cash
flow. Consequently, the company is now no longer able to meet its maturing obligations
and is not about to go into default in all its major loans. It is presently under threat of
receiving a barrage of suits from its creditors who will go after the assets of the
corporation.

Under the circumstances, PAL is left with no recourse but to reduce its fleet and its flight
frequencies both in the domestic and international sectors to ensure its survival. Consequently, a
reduction of personnel is inevitable.

All affected employees in the attached list will be given the corresponding benefits which they
may be entitled to.

Very truly yours,

(Sgd)

JOSE ANTONIO GARCIA

President & Chief Operating Officer132

As regards the observation made in the decision of July 22, 2008 to the effect that the recall of
the flight crew members indicated bad faith, we hold to the contrary.

PAL explained how the recall process had materialized, as follows:

During this time, the Company was slowly but steadily recovering. Its finances were improving
and additional planes were flying. Because of the Company's steady recovery, necessity dictated
more employees to man and service the additional planes and flights. Thus, instead of taking in
new hires, the Company first offered employment to employees who were previously retrenched.
A recall/rehire plan was initiated.

The recall/rehire plan was a success. A majority of retrenched employees were recalled/rehired
and went back to work including the members of petitioner union. In the process of recall/rehire,
many employees who could not be recalled for various reasons (such as, among others, being
unfit for the job or the employee simply did not want to work for the Company anymore)
decided to accept separation benefits and executed, willingly and voluntarily, valid quitclaims.
Those who received separation packages included a good number of the members of the
petitioner union.133
Contrary to the statement in the dissent that the implementation of Plan 22 instead of Plan 14
indicated bad faith,134 PAL reasonably demonstrated that the recall was devoid of bad faith or of
an attempt on its part to circumvent its affected employees’ right to security of tenure. Far from
being tainted with bad faith, the recall signified PAL’s reluctance to part with the retrenched
employees. Indeed, the prevailing unfavorable conditions had only compelled it to implement the
retrenchment.

The rehiring of previously retrenched employees should not invalidate a retrenchment program,
the rehiring being an exercise of the employer's right to continue its business. Thus, we pointed
out in one case:

We likewise cannot sustain petitioners' argument that their dismissal was illegal on the basis that
Lapanday did not actually cease its operation, or that they have rehired some of the dismissed
employees and even hired new set of employees to replace the retrenched employees.

The law acknowledges the right of every business entity to reduce its workforce if such measure
is made necessary or compelled by economic factors that would otherwise endanger its stability
or existence. In exercising its right to retrench employees, the firm may choose to close all, or a
part of, its business to avoid further losses or mitigate expenses. In Caffco International Limited
v. Office of the Minister-Ministry of Labor and Employment, the Court has aptly observed that -

Business enterprises today are faced with the pressures of economic recession, stiff competition,
and labor unrest. Thus, businessmen are always pressured to adopt certain changes and programs
in order to enhance their profits and protect their investments. Such changes may take various
forms. Management may even choose to close a branch, a department, a plant, or a shop.

In the same manner, when Lapanday continued its business operation and eventually hired some
of its retrenched employees and new employees, it was merely exercising its right to continue its
business. The fact that Lapanday chose to continue its business does not automatically make the
retrenchment illegal. We reiterate that in retrenchment, the goal is to prevent impending losses or
further business reversals - it therefore does not require that there is an actual closure of the
business. Thus, when the employer satisfactorily proved economic or business losses with
sufficient supporting evidence and have complied with the requirements mandated under the law
to justify retrenchment, as in this case, it cannot be said that the subsequent acts of the employer
to rehire the retrenched employees or to hire new employees constitute bad faith. It could have
been different if from the beginning the retrenchment was illegal and the employer subsequently
hired new employees or rehired some of the previously dismissed employees because that would
have constituted bad faith. Consequently, when Lapanday continued its operation, it was merely
exercising its prerogative to streamline its operations, and to rehire or hire only those who are
qualified to replace the services rendered by the retrenched employees in order to effect more
economic and efficient methods of production and to forestall business losses. The rehiring or
reemployment of retrenched employees does not necessarily negate the presence or imminence
of losses which prompted Lapanday to retrench.

In spite of overwhelming support granted by the social justice provisions of our Constitution in
favor of labor, the fundan1ental law itself guarantees, even during the process of tilting the scales
of social justice towards workers and employees, "the right of enterprises to reasonable returns of
investment and to expansion and growth." To hold otherwise would not only be oppressive and
inhuman, but also counter-productive and ultimately subversive of the nation's thrust towards a
resurgence in our economy which would ultimately benefit the majority of our people. Where
appropriate and where conditions are in accord with law and jurisprudence, the Court has
authorized valid reductions in the workforce to forestall business losses, the hemorrhaging of
capital, or even to recognize an obvious reduction in the volume of business which has rendered
certain employees redundant.135

Conselquently, we cannot pass judgment on the motive behind PAL's initiative to implement
"Plan 22" instead of "Plan 14." The prerogative thereon belonged to the management alone due
to its being in the best position to assess its own financial situation and operate its own business.
Even the Court has no power to interfere with such exercise of the prerogative.

PAL used fair and reasonable criteria in selecting the

employees to be retrenched pursuant to the CBA

The July 22, 2008 decision agreed with the holding by the CA that PAL was not obligated to
consult with F ASAP on the standards to be used in evaluating the performance of its employees.
Nonetheless, PAL was found to be unfair and unreasonable in selecting the employees to be
retrenched by doing away with the concept of seniority, loyalty, and past efficiency by solely
relying on the employees' 1997 performance rating; and that the retrenchment of employees due
to "other reasons," without any details or specifications, was not allowed and had no basis in fact
and in law.136

PAL contends that it used fair and reasonable criteria in accord with Sections 23, 30 and 112 of
the 1995-2000 CBA;137 that the NLRC’s use of the phrase "other reasons" referred to the varied
grounds (i.e. excess sick leaves, previous service of suspension orders, passenger complains,
tardiness, etc.) employed in conjunction with seniority in selecting the employees to be
terminated;138 that the CBA did not require reference to performance rating of the previous years,
but to the use of an efficiency rating for a single year;139 and that it adopted both efficiency rating
and inverse seniority as criteria in the selection pursuant to Section 112 of the CBA.140

PAL’s contentions are meritorious.

In selecting the employees to be dismissed, the employer is required to adopt fair and reasonable
criteria, taking into consideration factors like: (a) preferred status; (b) efficiency; and (c)
seniority, among others.141 The requirement of fair and reasonable criteria is imposed on the
employer to preclude the occurrence of arbitrary selection of employees to be retrenched. Absent
any showing of bad faith, the choice of who should be retrenched must be conceded to the
employer for as long as a basis for the retrenchment exists.142

We have found arbitrariness in terminating the employee under the guise of a retrenchment
program wherein the employer discarded the criteria it adopted in terminating a particular
employee;143 when the termination discriminated the employees on account of their union
membership without regard to their years of service;144 the timing of the retrenchment was made
a day before the employee may be regularized;145 when the employer disregarded altogether the
factor of seniority and choosing to retain the newly hired employees;146 that termination only
followed the previous retrenchment of two non-regular employees;147 and when there is no
appraisal or criteria applied in the selection.148

On the other hand, we have considered as valid the retrenchment of the employee based on work
efficiency,149 or poor performance;150 or the margins of contribution of the consultants to the
income of the company;151 or absenteeism, or record of disciplinary action, or efficiency and
work attitude;152 or when the employer exerted efforts to solicit the employees' participation in
reviewing the criteria to be used in selecting the workers to be laid off.153

In fine, the Court will only strike down the retrenchment of an employee as capricious,
whimsical, arbitrary, and prejudicial in the absence of a clear-cut and uniform guideline followed
by the employer in selecting him or her from the work pool. Following this standard, PAL
validly implemented its retrenchment program.

PAL resorted to both efficiency rating and inverse seniority in selecting the employees to be
subject of termination. As the NLRC keenly pointed out, the "ICCD Masterank 1997 Ratings -
Seniority Listing" submitted by PAL sufficiently established the criteria for the selection of the
employees to be laid off. To insist on seniority as the sole basis for the selection would be
unwarranted, it appearing that the applicable CBA did not establish such limitation. This
counters the statement in the dissent that the retrenchment program was based on unreasonable
standards without regard to service, seniority, 1oya1ty and performance.154

In this connection, we adopt the following cogent observations by the CA on the matter for being
fully in accord with law and jurisprudence:

FASAP insists that several CBA provisions have been violated by the retrenchment. They are the
provisions on seniority, performance appraisal, reduction in personnel and downgrading and
pem1anent OCARs. Seniority and performance stand out because these were the main
considerations of PAL in selecting workers to be retrenched. Under the CBA, seniority is
defined "to mean a measure of a regular Cabin Attendant’s claim in relation to other regular
Cabin Attendants holding similar positions, to preferential consideration whatever the Company
exercises its right to promote to a higher paying position of lay-off of any Cabin
Attendant." Seniority, however, is not the sole determinant of retention. This is clear under
Article XIII on performance appraisal of the CBA provisions.

Under the CBA, several factors are likewise taken into consideration like performance and
professionalism in addition to the seniority factor. However, the criteria for performance
and professionalism are not indicated in the CBA but are to be formulated by PAL in
consultation with FASAP. Where there is retrenchment, cabin attendants who fail to attain
at least 85% of the established criteria shall be demoted progressively. Domestic cabin
attendants, the occupants of lowest rung of the organizational hierarchy, are to be
retrenched once they fail to meet the required percentage.
We have painstakingly examined the records and We find no indication that these
provisions have been grossly disregarded as to taint the retrenchment with illegality. PAL
relied on specific categories of criteria, such as merit awards, physical appearance,
attendance and checkrides, to guide its selection of employees to be removed. We do not
find anything legally objectionable in the adoption of the foregoing norms. On the
contrary, these norms are most relevant to the nature of a cabin attendant's work.

However, the contention of FASAP that these criteria required its prior conformity before
adoption is not supported by Section 30, Article VIII of the CBA. Note should be taken that
this provision only mandates PAL to "meet and consult" the Association (FASAP) in the
formulation of the Performance and Professionalism Appraisal System." By the ordinary
import of this provision, PAL is only required to confer with FASAP; it is not at all
required to forge an addendum to the CBA, which will concretize the appraisal system as
basis for retrenchment or retention.155

To require PAL to further limit its criteria would be inconsistent with jurisprudence and the
principle of fairness. Instead, we hold that for as long as PAL followed a rational criteria defined
or set by the CBA and existing laws and jurisprudence in determining who should be included in
the retrenchment program., it sufficiently met the standards of fain1ess and reason in its
implementation of its retrenchment program.

The retrenched employees signed valid quitclaims

The July 22, 2008 decision struck down as illegal the quitclaims executed by the retrenched
employees because of the mistaken conclusion that the retrenchment had been unlawfully
executed.

We reverse.

In EDI Staffbuilders International, Inc. v. National Labor Relations Commission, 156 we laid

down the basic contents of valid and effective quitclaims and waivers, to wit:

In order to prevent disputes on the validity and enforceability of quitclaims and waivers of
employees under Philippine laws, said agreements should contain the following:

1. A fixedamount as full and final compromise settlement;

2. The benefits of the employees if possible with the corresponding amounts, which the

employees arc giving up in consideration of the fixed compromise amount;

3. A statement that the employer has dearly explained to the employee in English, Filipino,
or in the dialect known to the employees - that by signing the waiver or quitclaim, they are
forfeiting or relinquishing their right to receive the benefits which are due them under the law;
and
4. A statement that the employees signed and executed the document voluntarily, and had
fully understood the contents of the document and that their consent was freely
given without any threat, violence, duress, intimidation, or undue influence exerted on their
person.157 (Bold supplied for emphasis)

The release and quitclaim signed by the affected employees substantially satisfied the aforestated
requirements. The consideration was clearly indicated in the document in the English language,
including the benefits that the employees would be relinquishing in exchange for the amounts to
be received. There is no question that the employees who had occupied the position of flight
crew knew and understood the English language. Hence, they fully comprehended the terms used
in the release and quitclaim that they signed.

Indeed, not all quitclaims are per se invalid or against public policy.1a\^/phi1 A quitclaim is
invalid or contrary to public policy only: (1) where there is clear proof that the waiver was
wrangled from an unsuspecting or gullible person; or (2) where the terms of settlement are
unconscionable on their face.158 Based on these standards, we uphold the release and quitclaims
signed by the retrenched employees herein.

WHEREFORE, the Court:

(a) GRANTS the Motion for Reconsideration of the Resolution of October 2, 2009 and

Second Motion for Reconsideration of the Decision of July 22, 2008 filed by the
respondents Philippine Airlines, Inc. and Patria Chiong;

(b) DENIES the Motion for Reconsideration (Re: The Honorable Court's Resolution

dated March 13, 2012) filed by the petitioner Flight Attendants and Stewards Association
of the Philippines;

(c) SETSASIDE the decision dated July 22, 2008 and resolution dated October 2, 2009;
and

(d) AFFIRMS the decision of the Court of Appeals dated August 23, 2006.

No pronouncement on costs of still.

SO ORDERED.

G.R. No. 143370               February 6, 2002

MARIO J. MENDEZONA and TERESITA M. MENDEZONA, LUIS J. MENDEZONA

and MARICAR L. MENDEZONA and TERESITA ADAD VDA. DE
MENDEZONA, petitioners,
vs.
JULIO H. OZAMIZ, ROBERTO J. MONTALVAN, JOSE MA. OZAMIZ, CARMEN H.
OZAMIZ, PAZ O. MONTALVAN, MA. TERESA O.F. ZARRAGA, CARLOS O.
FORTICH, JOSE LUIS O. ROS, PAULITA O. RODRIGUEZ, and LOURDES O.
LON, respondents.

DECISION

DE LEON, JR., J.:

Before us is a petition for review on certiorari of the Decision1 and the Resolution2 of the Court
of Appeals dated July 27, 1998 and May 19, 2000, respectively, in CA-G.R. CV No. 39752
which reversed and set aside the Decision3 dated September 23, 1992 rendered in favor of the
petitioners by the Regional Trial Court (RTC) of Cebu City, Branch 6 in Civil Case No. CEB-
10766.

Civil Case No. CEB-10766 is a suit for quieting of title. It was instituted on September 25, 1991
by petitioner spouses Mario J. Mendezona and Teresita M. Mendezona as initial plaintiffs,4 and
in the amended complaint filed on October 7, 1991, herein co-petitioner spouses Luis J.
Mendezona and Maricar L. Mendezona and Teresita Adad Vda. de Mendezona joined as co-
plaintiffs.5

In their complaint, the petitioners, as plaintiffs therein, alleged that petitioner spouses Mario J.
Mendezona and Teresita M. Mendezona, petitioner spouses Luis J. Mendezona and Maricar L.
Mendezona, and petitioner Teresita Adad Vda. de Mendezona own a parcel of land each in the
Banilad Estate, Lahug, Cebu City with almost similar areas of 3,462 square meters, 3,466 square
meters and 3,468 square meters, covered and described in Transfer Certificate of Title (TCT)
Nos. 116834, 116835, and 116836 respectively, of the Registry of Deeds of Cebu City.6

The petitioners ultimately traced their titles of ownership over their respective properties from a
notarized Deed of Absolute Sale7 dated April 28, 1989 executed in their favor by Carmen
Ozamiz for and in consideration of the sum of One Million Forty Thousand Pesos
(₱1,040,000.00).

The petitioners initiated the suit to remove a cloud on their said respective titles caused by the
inscription thereon of a notice of lis pendens, which came about as a result of an incident in
Special Proceeding No. 1250 of the RTC of Oroquieta City. Special Proceeding No. 1250 is a
proceeding for guardianship over the person and properties of Carmen Ozamiz initiated by the
respondents Julio H. Ozamiz, Jose Ma. Ozamiz, Carmen H. Ozamiz,8 Paz O. Montalvan, Ma.
Teresa O.F. Zarraga, Carlos O. Fortich, Jose Luis O. Ros, Paulita O. Rodriguez and Lourdes O.
Lon.9

It appears that on January 15, 1991, the respondents instituted the petition for guardianship with
the Regional Trial Court of Oroquieta City, alleging therein that Carmen Ozamiz, then 86 years
old, after an illness in July 1987, had become disoriented and could not recognize most of her
friends; that she could no longer take care of herself nor manage her properties by reason of her
failing health, weak mind and absent-mindedness. Mario Mendezona and Luis Mendezona,
herein petitioners who are nephews of Carmen Ozamiz, and Pilar Mendezona, a sister of Carmen
Ozamiz, filed an opposition to the guardianship petition.
In the course of the guardianship proceeding, the petitioners and the oppositors thereto agreed
that Carmen Ozamiz needed a guardian over her person and her properties, and thus respondent
Paz O. Montalvan was designated as guardian over the person of Carmen Ozamiz while
petitioner Mario J. Mendezona, respondents Roberto J. Montalvan and Julio H. Ozamiz were
designated as joint guardians over the properties of the said ward.

As guardians, respondents Roberto J. Montalvan and Julio H. Ozamiz filed on August 6, 1991
with the guardianship court their "inventories and Accounts",10 listing therein Carmen Ozamiz’s
properties, cash, shares of stock, vehicles and fixed assets, including a 10,396 square meter
property known as the Lahug property. Said Lahug property is the same property covered by the
Deed of Absolute Sale dated April 28, 1989 executed by Carmen Ozamiz in favor of the
petitioners. Respondents Roberto J. Montalvan and Julio H. Ozamiz caused the inscription on the
titles of petitioners a notice of lis pendens,11 regarding Special Proceeding No. 1250, thus giving
rise to the suit for quieting of title, Civil Case No. CEB-10766, filed by herein petitioners.

In their Answer12 in Civil Case No. CEB-10766 the respondents opposed the petitioners’ claim of
ownership of the Lahug property and alleged that the titles issued in the petitioners names are
defective and illegal, and the ownership of the said property was acquired in bad faith and
without value inasmuch as the consideration for the sale is grossly inadequate and
unconscionable. Respondents further alleged that at the time of the sale on April 28, 1989
Carmen Ozamiz was already ailing and not in full possession of her mental faculties; and that her
properties having been placed in administration, she was in effect incapacitated to contract with
petitioners.

The issues for resolution were delimited in the pre-trial to: (a) the propriety of recourse to
quieting of title; (b) the validity or nullity of the Deed of Absolute Sale dated April 28, 1989
executed by Carmen Ozamiz in favor of herein petitioners; (c) whether the titles over the subject
parcel of land in plaintiffs’ names be maintained or should they be cancelled and the subject
parcels of land reconveyed; and (d) damages and attorney’s fees.13

Trial on the merits ensued with the parties presenting evidence to prove their respective
allegations. Petitioners Mario Mendezona, Teresita Adad Vda. de Mendezona and Luis
Mendezona, as plaintiffs therein, testified on the circumstances surrounding the sale. Carmencita
Cedeno and Martin Yungco, instrumental witnesses to the Deed of Absolute Sale dated April 28,
1989, and, Atty. Asuncion Bernades, the notary public who notarized the said document, testified
that on the day of execution of the said contract that Carmen Ozamiz was of sound mind and that
she voluntarily and knowingly executed the said deed of sale.

For the defendants, the testimonies of respondent Paz O. Montalvan, a sister of Carmen Ozamiz;
Concepcion Agac-ac, an assistant of Carmen Ozamiz; respondent Julio Ozamiz; Carolina
Lagura, a househelper of Carmen Ozamiz; Joselito Gunio, an appraiser of land; Nelfa Perdido, a
part-time bookkeeper of Carmen Ozamiz, and the deposition of Dr. Faith Go, physician of
Carmen Ozamiz, were offered in evidence.

The petitioners presented as rebuttal witnesses petitioners Mario Mendezona and Luis
Mendezona, to rebut the testimony of respondent Julio H. Ozamiz; and, Dr. William Buot, a
doctor of neurology to rebut aspects of the deposition of Dr. Faith Go on the mental capacity of
Carmen Ozamiz at the time of the sale.

During the trial, the trial court found that the following facts have been duly established:14

(1) On April 28, 1989, Carmen Ozamiz sold to her nephews, Mario, Antonio and Luis, all
surnamed Mendezona, three (3) parcels of residential land in Cebu City, per a Deed of
Absolute Sale (Exh. D) for a consideration of P1,040,000.00, in which deed the
usufructuary rights were reserved during her lifetime.

(2) The three parcels of land were subsequently transferred to the names of the three
vendees per TCTs Nos. 108729, 108730 and 108731 (Exhs. J, K & L, respectively). A
partition agreement was entered into by the three vendees (Exh. 3) and the parcels of land
are now titled in the names of the plaintiffs.

Mario Mendezona — TCT No. 116834 (Exh. A);

Luis Mendezona — TCT No. 116835 (Exh. B);

Antonio Mendezona — TCT No. 116836 (Exh. C);

(3) The reservation of the usufructuary rights to the vendor Carmen Ozamiz during her
lifetime was confirmed by the plaintiffs-spouses Mario Mendezona and Teresita Moraza
and plaintiffs spouses Luis Mendezona and Maricar Longa in a sworn statement (Exh. I)
executed on October 15, 1990, which was duly annotated on the titles of the property;

(4) The capital gains tax was paid (Exh. H) on May 5, 1989 and a certificate (Exh. H-1)
was issued by the Bureau of Internal Revenue authorizing the Register of Deeds to
transfer the property to the vendees;

(5) A petition for guardianship over the person and properties of Carmen Ozamiz (Exh.
E) was filed by all the defendants, (except the defendant Roberto Montalvan) on January
15, 1991 with the Regional Trial Court of Oroquieta City, denominated as Spec. Proc.
No. 1250 and subsequently, an "Inventories and Accounts" (Exh. F) was filed by court-
appointed guardians Roberto Montalvan and Julio Ozamiz, in which the property was
listed (Exh. F-1) and a Notice of Lis Pendens was filed with the Register of Deeds of
Cebu City on August 13, 1991 by said joint guardians. Plaintiff Mario Mendezona, as
another joint guardian over Carmen Ozamiz, filed his opposition (Exh. R) to the
"Inventories and Accounts", with the Oroquieta Court as to the inclusion of the property
(Exh.R-1).

(6) Prior to his death, the deceased husband of plaintiff Teresita Adad Mendezona was
granted a General Power of Attorney (Exh. 1) by Carmen Ozamiz on March 23, 1988 and
after his demise, Carmen Ozamiz granted Mario Mendezona a General Power of
Attorney (Exh. 2.) on August 11, 1990. Both powers of attorney relate to the
administration of the property, subject of this action, in Cebu City.
On September 23, 1992 the trial court rendered its decision in favor of the petitioners, the
dispositive portion of which reads, to wit:

Wherefore, premises considered, the Court is of the opinion and so declares that:

1. The property described in the complaint was sold, with reservation of usufructuary
rights by Carmen Ozamiz to the plaintiffs under a valid contract, voluntarily and
deliberately entered into while she was of sound mind, for sufficient and good
consideration, and without fraud, force, undue influence or intimidation having been
exercised upon her, and consequently, the Court orders the defendants herein to
acknowledge and recognize the plaintiffs’ title to the aforecited property and to refrain
from further clouding the same;

2. That the one-third (1/3) share erroneously titled to Antonio Mendezona should be titled
in the name of Teresita Adad vda. de Mendezona as her paraphernal property and the
Register of Deeds of Cebu City is hereby ordered to do so;

3. The Notice of Lis Pendens affecting the property should be eliminated from the record
and the Register of Deeds of Cebu City is ordered to expunge the same.

No pronouncement as to costs.

SO ORDERED.

On appeal to the Court of Appeals, the appellate court reversed the factual findings of the trial
court and ruled that the Deed of Absolute Sale dated April 28, 1989 was a simulated contract
since the petitioners failed to prove that the consideration was actually paid, and, furthermore,
that at the time of the execution of the contract the mental faculties of Carmen Ozamiz were
already seriously impaired. Thus, the appellate court declared that the Deed of Absolute Sale of
April 28, 1989 is null and void. It ordered the cancellation of the certificates of title issued in the
petitioners’ names and directed the issuance of new certificates of title in favor of Carmen
Ozamiz or her estate.

Petitioners filed a motion for reconsideration of the decision of the appellate court. Subsequent
thereto, the petitioners filed a motion for a new trial and/or for reception of evidence. They
contended, among other things, that the appellate court totally ignored the testimony of Judge
Teodorico Durias regarding the mental condition of Carmen Ozamiz a month before the
execution of the Deed of Absolute Sale in question. The said testimony was taken in the Special
Proceeding No. 1250 in the Regional Trial Court of Oroquieta City. However, Judge Durias was
not presented as a witness in Civil Case No. CEB-10766 in the Regional Trial Court of Cebu
City. Petitioners alleged that Judge Durias’s testimony is a newly-discovered evidence which
could not have been discovered prior to the trial in the court below by the exercise of due
diligence.

The appellate court denied both motions in its Resolution dated May 19, 2000. Hence, the instant
petition anchored on the following grounds:15
 I.

THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE APRIL 28, 1989
DEED OF ABSOLUTE SALE WAS A SIMULATED CONTRACT.

A.

THE COURT OF APPEALS GRAVELY ERRED IN IGNORING THE STATUTORY

PRESUMPTIONS OF ACTUAL AND SUFFICIENT CONSIDERATION FOR, AND
OF THE REGULARITY AND TRUTHFULNESS OF, THE NOTARIZED DEED OF
ABSOLUTE SALE.

B.

THE COURT OF APPEALS GRAVELY ERRED IN IMPOSING ON THE

PETITIONERS THE BURDEN OF PROVING PAYMENT, AND IN REFUSING TO
RECOGNIZE AND RULE THAT IT WAS THE RESPONDENTS - AS THE PARTIES
ASSAILING THE DEED OF ABSOLUTE SALE - WHO HAD FAILED TO
DISCHARGE THEIR BURDEN OF PROVING THAT THERE WAS NO
CONSIDERATION FOR THE TRANSACTION.

C.

THE COURT OF APPEALS GRAVELY ERRED IN REFUSING TO RECEIVE IN

EVIDENCE THE THREE (3) CHECKS, WHICH PROVED BEYOND ANY DOUBT
THAT THE PURCHASE PRICE FOR THE LAHUG PROPERTY HAD BEEN PAID
TO CARMEN OZAMIZ, AFTER ASKING FOR THEM AND HAVING THEM
PRESENTED TO IT IN OPEN COURT, THUS COOPERATING WITH
RESPONDENTS’ EFFORTS TO SUPPRESS THE CHECKS (WHICH THE COURT
ITSELF AND RESPONDENTS CHALLENGED PETITIONERS TO PRODUCE).

II.

THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT CARMEN OZAMIZ’S

MENTAL FACULTIES WERE SERIOUSLY IMPAIRED WHEN SHE EXECUTED THE
DEED OF ABSOLUTE SALE ON APRIL 28, 1989.

A.

THE COURT OF APPEALS GRAVELY ERRED IN IGNORING THE STATUTORY

PRESUMPTION THAT CARMEN OZAMIZ WAS OF SOUND MIND AND HAD
THE REQUISITE CAPACITY TO CONTRACT WHEN SHE EXECUTED THE DEED
OF ABSOLUTE SALE, AND IN REFUSING TO RULE THAT IT WAS THE
RESPONDENTS - AS THE PARTIES ALLEGING MENTAL INCAPACITY- WHO
HAD FAILED TO DISCHARGE THEIR BURDEN OF REBUTTING THAT
PRESUMPTION.
 B.

THE COURT OF APPEALS GRAVELY ERRED IN REFUSING TO ACCEPT AND

GIVE DUE AND PREPONDERANT WEIGHT TO UNREFUTED EVIDENCE,
INCLUDING THE UNREFUTED TESTIMONIES OF THE INSTRUMENTAL
WITNESSES AND OF THE NOTARY PUBLIC, THAT CARMEN OZAMIZ
EXECUTED THE DEED OF ABSOLUTE SALE FREELY, VOLUNTARILY,
KNOWINGLY, AND INTELLIGENTLY.

C.

THE COURT OF APPEALS GRAVELY ERRED IN GIVING WEIGHT TO THE

HEARSAY TESTIMONY OF DR. FAITH GO ON THE MENTAL CONDITION OF
CARMEN OZAMIZ ON THE DATE SHE EXECUTED THE DEED OF ABSOLUTE
SALE.

D.

THE COURT OF APPEALS GRAVELY ERRED IN IGNORING, AND IN REFUSING

TO RECEIVE IN EVIDENCE, JUDGE TEODORICO DURIAS’S TESTIMONY
(THAT CARMEN OZAMIZ WAS OF SOUND MIND WHEN SHE EXECUTED
ANOTHER CONTRACT BARELY A MONTH BEFORE SHE EXECUTED THE
DEED OF ABSOLUTE SALE) ON THE GROUND THAT THAT TESTIMONY WAS
FORGOTTEN EVIDENCE.

We shall first rule on the issue of whether to consider the testimony of Judge Durias as newly
discovered evidence. A motion for new trial upon the ground of newly discovered evidence is
properly granted only where there is concurrence of the following requisites, namely: (a) the
evidence had been discovered after trial; (b) the evidence could not have been discovered and
produced during trial even with the exercise of reasonable diligence; and (c) the evidence is
material and not merely corroborative, cumulative or impeaching and is of such weight that if
admitted, would probably alter the result. All three (3) requisites must characterize the evidence
sought to be introduced at the new trial.

We find that the requirement of reasonable diligence has not been met by the petitioners. As
early as the pre-trial of the case at bar, the name of Judge Durias has already cropped up as a
possible witness for the defendants, herein respondents. That the respondents chose not to
present him is not an indicia per se of suppression of evidence, since a party in a civil case is free
to choose who to present as his witness. Neither can Judge Durias’ testimony in another case be
considered as newly discovered evidence since the facts to be testified to by Judge Durias which
were existing before and during the trial, could have been presented by the petitioners at the trial
below.16 The testimony of Judge Durias has been in existence waiting only to be elicited from
him by questioning.17

It has been held that a lack of diligence is exhibited where the newly discovered evidence was
necessary or proper under the pleadings, and its existence must have occurred to the party in the
course of the preparation of the case, but no effort was made to secure it; there is a failure to
make inquiry of persons who were likely to know the facts in question, especially where
information was not sought from co-parties; there is a failure to seek evidence available through
public records; there is a failure to discover evidence that is within the control of the complaining
party; there is a failure to follow leads contained in other evidence; and, there is a failure to
utilize available discovery procedures.18 Thus, the testimony of Judge Durias cannot be
considered as newly discovered evidence to warrant a new trial.

In this petition at bench, herein petitioners essentially take exception to two (2) main factual
findings of the appellate court, namely, (a) that the notarized Deed of Absolute Sale dated April
28, 1989 was a simulated contract, and (b) that Carmen Ozamiz’s mental faculties were seriously
impaired when she executed the said contract on April 28, 1989. The petitioners allege that both
conclusions are contrary or opposed to well-recognized statutory presumptions of regularity
enjoyed by a notarized document and that a contracting party to a notarized contract is of sound
and disposing mind when she executes the contract.

The respondents posit a different view. They contend that clear and convincing evidence refuted
the presumptions on regularity of execution of the Deed of Absolute Sale and existence of
consideration thereof. Relying upon the testimonies of Paz O. Montalvan, Concepcion Agac-ac,
Carolina Lagura and Dr. Faith Go, they aver that they were able to show that Carmen Ozamiz
was already physically and mentally incapacitated since the latter part of 1987 and could not
have executed the said Deed of Absolute Sale on April 28, 1989 covering the disputed Lahug
property. They also alleged that no error is ascribable to the appellate court for not considering
the allegedly rehearsed testimonies of the instrumental witnesses and the notary public.

Factual findings of the appellate court are generally conclusive on this Court which is not a trier
of facts. It is not the function of the Supreme Court to analyze or weigh evidence all over again.
However, this rule is not without exception. If there is a showing that the appellate court’s
findings of facts complained of are totally devoid of support in the record or that they are so
glaringly erroneous as to constitute grave abuse of discretion, this Court must discard such
erroneous findings of facts.19 We find that the exception applies in the case at bench.

Simulation is defined as "the declaration of a fictitious will, deliberately made by agreement of

the parties, in order to produce, for the purposes of deception, the appearances of a juridical act
which does not exist or is different from what that which was really executed."20 The requisites of
simulation are: (a) an outward declaration of will different from the will of the parties; (b) the
false appearance must have been intended by mutual agreement; and (c) the purpose is to deceive
third persons.21 None of these were clearly shown to exist in the case at bar.

Contrary to the erroneous conclusions of the appellate court, a simulated contract cannot be
inferred from the mere non-production of the checks. It was not the burden of the petitioners to
prove so. It is significant to note that the Deed of Absolute Sale dated April 28, 1989 is a
notarized document duly acknowledged before a notary public. As such, it has in its favor the
presumption of regularity, and it carries the evidentiary weight conferred upon it with respect to
its due execution. It is admissible in evidence without further proof of its authenticity and is
entitled to full faith and credit upon its face.22
Payment is not merely presumed from the fact that the notarized Deed of Absolute Sale dated
April 28, 1989 has gone through the regular procedure as evidenced by the transfer certificates of
title issued in petitioners’ names by the Register of Deeds. In other words, whosoever alleges the
fraud or invalidity of a notarized document has the burden of proving the same by evidence that
is clear, convincing, and more than merely preponderant.23 Therefore, with this well-recognized
statutory presumption, the burden fell upon the respondents to prove their allegations attacking
the validity and due execution of the said Deed of Absolute Sale. Respondents failed to discharge
that burden; hence, the presumption in favor of the said deed stands. But more importantly, that
notarized deed shows on its face that the consideration of One Million Forty Thousand Pesos
(₱1,040,000.00) was acknowledged to have been received by Carmen Ozamiz.

Simulation cannot be inferred from the alleged absence of payment based on the testimonies of
Concepcion Agac-ac, assistant of Carmen Ozamiz, and Nelfa Perdido, part-time bookkeeper of
Carmen Ozamiz. The testimonies of these two (2) witnesses are unreliable and inconsistent.

While Concepcion Agac-ac testified that she was aware of all the transactions of Carmen
Ozamiz, she also admitted that not all income of Carmen Ozamiz passed through her since
Antonio Mendezona, as appointed administrator, directly reported to Carmen Ozamiz.24 With
respect to Nelfa Perdido, she testified that most of the transactions that she recorded refer only to
rental income and expenses, and the amounts thereof were reported to her by Concepcion Agac-
ac only, not by Carmen Ozamiz. She does not record deposits or withdrawals in the bank
accounts of Carmen Ozamiz.25 Their testimonies hardly deserve any credit and, hence, the
appellate court misplaced reliance thereon.

Considering that Carmen Ozamiz acknowledged, on the face of the notarized deed, that she
received the consideration at One Million Forty Thousand Pesos (₱1,040,000.00), the appellate
court should not have placed too much emphasis on the checks, the presentation of which is not
really necessary. Besides, the burden to prove alleged non-payment of the consideration of the
sale was on the respondents, not on the petitioners. Also, between its conclusion based on
inconsistent oral testimonies and a duly notarized document that enjoys presumption of
regularity, the appellate court should have given more weight to the latter. Spoken words could
be notoriously unreliable as against a written document that speaks a uniform language.26

Furthermore, the appellate court erred in ruling that at the time of the execution of the Deed of
Absolute Sale on April 28, 1989 the mental faculties of Carmen Ozamiz were already seriously
impaired.27 It placed too much reliance upon the testimonies of the respondents’ witnesses.
However, after a thorough scrutiny of the transcripts of the testimonies of the witnesses, we find
that the respondents’ core witnesses all made sweeping statements which failed to show the true
state of mind of Carmen Ozamiz at the time of the execution of the disputed document. The
testimonies of the respondents’ witnesses on the mental capacity of Carmen Ozamiz are far from
being clear and convincing, to say the least.

Carolina Lagura, a househelper of Carmen Ozamiz, testified that when Carmen Ozamiz was
confronted by Paz O. Montalvan in January 1989 with the sale of the Lahug property, Carmen
Ozamiz denied the same. She testified that Carmen Ozamiz understood the question
then.28 However, this declaration is inconsistent with her (Carolina’s) statement that since 1988
Carmen Ozamiz could not fully understand the things around her, that she was physically fit but
mentally could not carry a conversation or recognize persons who visited her.29 Furthermore, the
disputed sale occurred on April 28, 1989 or three (3) months after this alleged confrontation in
January 1989. This inconsistency was not explained by the respondents.

The revelation of Dr. Faith Go did not also shed light on the mental capacity of Carmen Ozamiz
on the relevant day - April 28, 1989 when the Deed of Absolute Sale was executed and
notarized. At best, she merely revealed that Carmen Ozamiz was suffering from certain
infirmities in her body and at times, she was forgetful, but there was no categorical statement that
Carmen Ozamiz succumbed to what the respondents suggest as her alleged "second childhood"
as early as 1987.1âwphi1 The petitioners’ rebuttal witness, Dr. William Buot, a doctor of
neurology, testified that no conclusion of mental incapacity at the time the said deed was
executed can be inferred from Dr. Faith Go’s clinical notes nor can such fact be deduced from
the mere prescription of a medication for episodic memory loss.

It has been held that a person is not incapacitated to contract merely because of advanced years
or by reason of physical infirmities. Only when such age or infirmities impair her mental
faculties to such extent as to prevent her from properly, intelligently, and fairly protecting her
property rights, is she considered incapacitated.30 The respondents utterly failed to show adequate
proof that at the time of the sale on April 28, 1989 Carmen Ozamiz had allegedly lost control of
her mental faculties.

We note that the respondents sought to impugn only one document, namely, the Deed of
Absolute Sale dated April 28, 1989, executed by Carmen Ozamiz. However, there are nine (9)
other important documents that were, signed by Carmen Ozamiz either before or after April 28,
1989 which were not assailed by the respondents.31 Such is contrary to their assertion of complete
incapacity of Carmen Ozamiz to handle her affairs since 1987. We agree with the trial court’s
assessment that "it is unfair for the [respondents] to claim soundness of mind of Carmen Ozamiz
when it benefits them and otherwise when it disadvantages them."32 A person is presumed to be
of sound mind at any particular time and the condition is presumed to continue to exist, in the
absence of proof to the contrary.33 Competency and freedom from undue influence, shown to
have existed in the other acts done or contracts executed, are presumed to continue until the
contrary is shown.34

All the foregoing considered, we find the instant petition to be meritorious and the same should
be granted.

WHEREFORE, the instant petition is hereby GRANTED and the assailed Decision and
Resolution of the Court of Appeals are hereby REVERSED and SET ASIDE. The Decision
dated September 23, 1992 of the Regional Trial Court of Cebu City, Branch 6, in Civil Case No.
CEB-10766 is REINSTATED. No pronouncement as to costs.

SO ORDERED.

G.R. No. 148586             May 25, 2004

PEOPLE OF THE PHILIPPINES, appellee,
vs.
LI KA KIM alias ED, appellant.

DECISION

VITUG, J.:

Faced with the grim scenario of having to suffer the extreme penalty of death, appellant is now
before this Court urging to overturn his conviction for violation of Section 15, Article III, of
Republic Act No. 6425, as so amended by Republic Act 7659.

The Information filed against appellant was to the following effect; viz:

"That on or about September 19, 1999, in Paranaque City, Philippines, and within the
jurisdiction of this Honorable Court, accused Li Ka Kim alias Ed, for the amount of Four
Hundred Thousand (P400,000.00) Pesos, Philippine currency, did then and there,
willfully, unlawfully and feloniously, sell, deliver and give away to a poseur-buyer,
NINE HUNDRED NINETY FOUR POINT SEVEN SEVEN THREE (994.773) grams of
Methamphetamine Hydrochloride commonly know as `Shabu,’ a regulated drug without
authority of law or the corresponding license therefor."1

Appellant, acting upon advice of counsel, did not enter any plea during his arraignment; the court
was thus constrained to enter a plea of "not guilty" in his behalf.

The prosecution presented its evidence.

At six o’clock on the morning of 19 September 1999, the Regional Intelligence and Investigation
Division (RIID) of the Philippine National Police, Region IV Office at Camp Vicente Lim,
Calamba, Laguna, received a report from an informer, named "Boy," that a certain alias "Ed,"
known to be a drug dealer operating in the southern part of Metro Manila, was looking for a
buyer of shabu. At seven-thirty that morning, PO2 Christian Trambulo, an officer of RIID, made
initial contact with Ed through a phone call using Boy’s cellular phone. Boy introduced PO2
Trambulo to Ed as "Rollie," a buyer of shabu.2 The parties agreed to meet at the parking space of
"McDonald’s" at Uniwide Coastal Mall in Parañaque City between four o’clock and five-thirty
in the afternoon where Ed was supposed to give PO2 Trambulo (a.k.a. Rollie) a kilo of shabu and
the latter to pay for it an amount of P400,000.00. After the phone call, PO2 Trambulo was
instructed by P/Chief Inspector Julius Caesar Mana to be the poseur-buyer and was given
P4,000.00 in four (4) P1,000.00 genuine bills which was arranged in such a way as to make it
appear to be the agreed amount of P400,000.00 in boodle money.3

At the agreed time and place of the transaction, PO2 Trambulo, together with sixteen (16) other
officers of the RIID, waited for appellant. PO2 Trambulo noticed a red Honda Civic car passing
several times in front of him. Finally, a Chinese-looking man alighted from the driver’s side of
the vehicle. "Boy" introduced PO2 Trambulo (a.k.a. Rollie) to appellant (a.k.a. Ed) who also
introduced himself to Rollie, using "broken" Tagalog language. Ed then gave Rollie a brown
paper bag containing a white crystalline substance wrapped in a Christmas wrapper. After
looking at the contents of the wrapper and pinching it to test the crispiness of the substance,
Rollie gave Ed the buy-bust money. When Ed reached for the money with his hands, Rollie
informed Ed that he was a police officer. Police Inspector Emerito Estrada came and informed
Ed of his constitutional rights. Appellant was arrested and the boodle money was recovered.4

At the trial, PO2 Trambulo pointed to appellant as being the seller of the confiscated shabu and
positively identified the brown paper bag given to him by appellant containing the prohibited
drug which he marked "CVT," his initials (Christian Ventura Trambulo).5

Appellant had a different story to tell.

Testifying through an interpreter, appellant claimed to be a Chinese, jobless, and born in

Fookien, China, unable to speak English or Filipino, who came to the Philippines on a tourist
visa on 13 May 1999, when invited by his friend Tan Eng Hong. According to appellant, he
stayed with Tang Eng Hong at Room 1003 Gotesco Building, Manila, up until 19 September
1999. He denied having been in Southern Tagalog. About two to three o’clock on the afternoon
of 19 September 1999, he and Tan Eng Hong went out and took a ride going to the airport. He
did not know the name of the commercial center but he was sure that it was leading to the
airport. Upon their arrival, Tan Eng Hong alighted from the car and went inside the mall. While
waiting for Tan Eng Hong and smoking a cigarette, five persons accosted him. At the point of a
gun, he was forced inside the car, which he and Tan Eng Hong used in going to the mall. The
police officers, who were all armed, brought him to a gasoline station where he was frisked but
they were not able to find anything on him except for a pack of cigarettes. He heard one of them
saying "wala" and one of them slapped him. He was asked things he did not understand. Later,
he was brought to the police station. A Chinese woman approached him while he was at the
police station, and he then explained what had happened. He denied that Trambulo was
introduced to him by Boy, the informer, whom he did not know. The Chinese woman told him in
the presence of three or four police officers that if he could produce P1,000,000.00 and give it to
the police officers who brought him there, he would be allowed to go home.

The court a quo adjudged the case for the prosecution.

The trial court debunked appellant’s defense of denial. The court found it hard to believe that
appellant would be singled out by the police officers from scores of people at the mall where he
was arrested and later indicted for selling shabu. Strangely, the court observed, appellant’s
friend, a certain Tan Eng Hong, did not appear in court to corroborate his testimony. The court
likewise noted that the car, as well as the license plate, used by appellant had been stolen, and
that appellant was an undocumented alien as so shown by the letter, dated 13 October 2000,6 of
then Commissioner on Immigration and Deportation Rufus B. Rodriguez, to State Prosecutor
Reynaldo J. Lugtu.

Finding the prosecution’s evidence far more credible than that of the defense and to have
overwhelmingly established the elements of the crime charged, the trial court convicted appellant
and decreed the penalty of death. In arriving at that penalty, the trial court considered the use of a
motor vehicle to be an aggravating circumstance.
Appellant assigned the following "errors" supposedly committed by the court a quo:

"THE TRIAL COURT ERRED IN FINDING ACCUSED-APPELLANT GUILTY

BEYOND REASONABLE DOUBT OF THE CRIME CHARGED.

"ASSUMING ARGUENDO THAT ACCUSED-APPELLANT IS GUILTY OF THE

CRIME CHARGED, NONETHELESS, THE TRIAL COURT ERRED IN IMPOSING
UPON HIM THE SUPREME PENALTY OF DEATH."7

Initially, appellant, in this appeal, was represented by Atty. Eldorado Lim, who filed a brief for
the defense. On 04 October 2002, Fernandez, Pacheco & Dizon Law Offices filed its entry of
appearance as being the new counsel for appellant only to be substituted later by Guzman,
Tanedo, & Acain Law Offices. On 10 June 2003, the Court noted and granted the request of the
law firm to be furnished with copies of all motions, orders, resolutions and judgment in
connection with the case. On 01 September 2003, appellant filed a motion to remand the case for
new trial. In his motion, appellant would attempt to overturn his conviction or, at the very least,
to be given a chance for a new trial, citing Section 14, Rule 121, of the Rules on Criminal
Procedure, because of newly discovered evidence, i.e., his passport which would establish his
true identity as Huang Xiao Wei, a Chinese National, and as having entered the Philippines as a
tourist. Invoking his constitutional right to an effective counsel, appellant chides his former
counsel for having failed to secure and present his travel documents.

The Court is not convinced.

The requisites of newly discovered evidence in order to justify a new trial are that - (a) the
evidence is discovered after trial; (b) such evidence could not have been discovered and
produced at the trial even with the exercise of reasonable diligence; and (c) the evidence is
material, not merely cumulative, corroborative, or impeaching, and of such weight that, if
admitted, would likely change the judgment.8

Not one of the requisites mentioned is attendant. Appellant’s passport could have easily been
presented and produced during the trial. Then, too, the presentation of appellant’s passport,
would hardly be material to the outcome of the case. Appellant was positively identified by the
prosecution witnesses as being the perpetrator of the crime. Most importantly, appellant even
identified himself as Li Ka Kim at the trial and not as Huang Xiao Wei,9 that bolsters the
conclusion that appellant deliberately concealed his true identity in the nefarious enterprise.

Now to the merits.

The totality of evidence presented is convincing and points to appellant as being a person
engaged in the sale of illegal drugs. The testimony of the prosecution witnesses identifying
appellant to be a seller of illegal drugs appears to be categorical and unfabricated. No ill motive
on the part of the witnesses has been shown to tarnish their testimony. Such positive evidence
certainly prevails over mere denial and alibi which, if not substantiated by clear and convincing
evidence, are negative and self-serving unworthy of credible weight in law.10
Appellant’s argument that a surveillance or a test buy should have first been conducted deserves
scant consideration. In a prosecution for illegal possession of dangerous drugs, it is enough to
show that - (1) the accused is in possession of an item or an object identified to be a prohibited or
a regulated drug; (2) such possession is not authorized by law; and (3) the accused has freely and
consciously possessed the prohibited drug.11 Neither a prior surveillance of the suspected
offender12 nor the presentation of the informant would be an indispensable requirement to the
successful prosecution of a drug case.13

Appellant was caught in flagrante delicto selling 994.773 grams of shabu to the poseur buyer on
the morning of 19 September 1999. He handed over the bag containing shabu to the poseur
buyer, in exchange of "P400,000.00" in buy bust money. He was promptly arrested and taken
into custody after being informed of his constitutional rights. Clearly, all the elements of the sale
of illegal drugs were established.

The Court has great respect for the judgment of the trial court in passing upon the credibility of
witnesses. It is often said that, unless there appears in the record some fact or circumstance of
weight and substance, and there is none, which has been overlooked or the significance of which
has been misinterpreted,14 an appellate court will not interfere in the factual findings of the trial
court.

There is merit, however, in appellant’s contention that the court a quo erred in imposing the
penalty of death. Rule 110 of the Rules on Criminal Procedure requires the recitation in the
information of aggravating or qualifying circumstances in order to be appreciated as such. The
use of a motor vehicle considered by the trial court in decreeing the death penalty is
inappropriate, that aggravating circumstance not having been aptly alleged in the Information.
The pertinent provisions of the rules read:

"Sec. 8 Designation of the offense. - The complaint of information shall state the

designation of the offense given by the statute, aver the acts or omissions constituting
the offense, and specify its qualifying and aggravating circumstances. If there is no
designation of the offense, reference shall be made to the section or subsection of the
statute punishing it.

"Sec. 9 Cause of the accusation. – The acts or omissions complained of as constituting

the offense and the qualifying and aggravating circumstances must be stated in
ordinary and concise language and not necessarily in the language used in the statute
but in terms sufficient to enable a person of common understanding to know what offense
is being charged as well as its qualifying and aggravating circumstances and for the court
to pronounce judgment." (underscoring supplied.)

The requirements are mandatory not only to afford the accused the right to object to the
presentation of evidence showing such aggravating circumstances not so alleged but also to
preclude the court from even taking such aggravating circumstances into account.15

Quite recently, the Court has held that the provisions of the Revised Rules on Criminal
Procedure, particularly Section 8, Rule 110, thereof, must be given retroactive effect in the light
of the well-settled rule that statutes or rules regulating the procedure of the court will be
construed as being applicable to actions pending and undetermined at the time of their passage.16

The quantity of the drugs seized from appellant, which is 994.773 grams of "shabu," warrants the
application of the penalty under Section 16, in relation to Section 17, of Republic Act No. 7659,
otherwise also known as "An Act to Impose the Death Penalty on Certain Heinous Crimes,"
of reclusion perpetua to death and a fine ranging from five hundred thousand pesos to ten
million pesos. Applying the provisions of Article 63 of the Revised Penal Code, the lesser
penalty should be imposed, there being neither mitigating nor aggravating circumstances that can
be considered, for the commission of the offense.17

WHEREFORE, the judgment of conviction against appellant Li Ka Kim, a.k.a. "Ed," is

AFFIRMED with modification in that the penalty of DEATH imposed by the trial court is
hereby reduced to RECLUSION PERPETUA. In other respects, the judgment of the court a
quo  is sustained. Costs de oficio.

SO ORDERED.

G.R. No. 166738               August 14, 2009

ROWENA PADILLA-RUMBAUA, Petitioner,
vs.
EDWARD RUMBAUA, Respondent.

DECISION

BRION, J.:

Petitioner Rowena Padilla-Rumbaua (petitioner) challenges, through her petition for review on
certiorari,1 the decision dated June 25, 20042 and the resolution dated January 18, 20053 of the
Court of Appeals (CA) in CA-G.R. CV No. 75095. The challenged decision reversed the
decision4 of the Regional Trial Court (RTC) declaring the marriage of the petitioner and
respondent Edward Rumbaua (respondent) null and void on the ground of the latter’s
psychological incapacity. The assailed resolution, on the other hand, denied the petitioner’s
motion for reconsideration.

ANTECEDENT FACTS

The present petition traces its roots to the petitioner’s complaint for the declaration of nullity of
marriage against the respondent before the RTC, docketed as Civil Case No. 767. The petitioner
alleged that the respondent was psychologically incapacitated to exercise the essential
obligations of marriage as shown by the following circumstances: the respondent reneged on his
promise to live with her under one roof after finding work; he failed to extend financial support
to her; he blamed her for his mother’s death; he represented himself as single in his transactions;
and he pretended to be working in Davao, although he was cohabiting with another woman in
Novaliches, Quezon City.
Summons was served on the respondent through substituted service, as personal service proved
futile.5 The RTC ordered the provincial prosecutor to investigate if collusion existed between the
parties and to ensure that no fabrication or suppression of evidence would take place.6 Prosecutor
Melvin P. Tiongson’s report negated the presence of collusion between the parties.7

The Republic of the Philippines (Republic), through the office of the Solicitor General (OSG),
opposed the petition.8 The OSG entered its appearance and deputized the Provincial Prosecutor
of Nueva Vizcaya to assist in all hearings of the case.9

The petitioner presented testimonial and documentary evidence to substantiate her charges.

The petitioner related that she and the respondent were childhood neighbors in Dupax del Norte,
Nueva Vizcaya. Sometime in 1987, they met again and became sweethearts but the respondent’s
family did not approve of their relationship. After graduation from college in 1991, the
respondent promised to marry the petitioner as soon as he found a job. The job came in 1993,
when the Philippine Air Lines (PAL) accepted the respondent as a computer engineer. The
respondent proposed to the petitioner that they first have a "secret marriage" in order not to
antagonize his parents. The petitioner agreed; they were married in Manila on February 23, 1993.
The petitioner and the respondent, however, never lived together; the petitioner stayed with her
sister in Fairview, Quezon City, while the respondent lived with his parents in Novaliches.

The petitioner and respondent saw each other every day during the first six months of their
marriage. At that point, the respondent refused to live with the petitioner for fear that public
knowledge of their marriage would affect his application for a PAL scholarship. Seven months
into their marriage, the couple’s daily meetings became occasional visits to the petitioner’s house
in Fairview; they would have sexual trysts in motels. Later that year, the respondent enrolled at
FEATI University after he lost his employment with PAL.10

In 1994, the parties’ respective families discovered their secret marriage. The respondent’s
mother tried to convince him to go to the United States, but he refused. To appease his mother,
he continued living separately from the petitioner. The respondent forgot to greet the petitioner
during her birthday in 1992 and likewise failed to send her greeting cards on special occasions.
The respondent indicated as well in his visa application that he was single.

In April 1995, the respondent’s mother died. The respondent blamed the petitioner, associating
his mother’s death to the pain that the discovery of his secret marriage brought. Pained by the
respondent’s action, the petitioner severed her relationship with the respondent. They eventually
reconciled through the help of the petitioner’s father, although they still lived separately.

In 1997, the respondent informed the petitioner that he had found a job in Davao. A year later,
the petitioner and her mother went to the respondent’s house in Novaliches and found him
cohabiting with one Cynthia Villanueva (Cynthia). When she confronted the respondent about it,
he denied having an affair with Cynthia.11 The petitioner apparently did not believe the
respondents and moved to to Nueva Vizcaya to recover from the pain and anguish that her
discovery brought.12
The petitioner disclosed during her cross-examination that communication between her and
respondent had ceased. Aside from her oral testimony, the petitioner also presented a certified
true copy of their marriage contract;13 and the testimony, curriculum vitae,14 and psychological
report15 of clinical psychologist Dr. Nedy Lorenzo Tayag (Dr. Tayag).

Dr. Tayag declared on the witness stand that she administered the following tests on the
petitioner: a Revised Beta Examination; a Bender Visual Motor Gestalt Test; a Rorschach
Psychodiagnostic Test; a Draw a Person Test; a Sach’s Sentence Completion Test; and
MMPI.16 She thereafter prepared a psychological report with the following findings:

TEST RESULTS AND EVALUATION

Psychometric tests data reveal petitioner to operate in an average intellectual level. Logic and
reasoning remained intact. She is seen to be the type of woman who adjusts fairly well into most
situations especially if it is within her interests. She is pictured to be faithful to her commitments
and had reservations from negative criticisms such that she normally adheres to social norms,
behavior-wise. Her age speaks of maturity, both intellectually and emotionally. Her one fault lies
in her compliant attitude which makes her a subject for manipulation and deception such that of
respondent. In all the years of their relationship, she opted to endure his irresponsibility largely
because of the mere belief that someday things will be much better for them. But upon the advent
of her husband’s infidelity, she gradually lost hope as well as the sense of self-respect, that she
has finally taken her tool to be assertive to the point of being aggressive and very cautious at
times – so as to fight with the frustration and insecurity she had especially regarding her failed
marriage.

Respondent in this case, is revealed to operate in a very self-centered manner as he believes

that the world revolves around him. His egocentrism made it so easy for him to deceitfully
use others for his own advancement with an extreme air of confidence and dominance. He
would do actions without any remorse or guilt feelings towards others especially to that of
petitioner.

REMARKS

Love happens to everyone. It is dubbed to be boundless as it goes beyond the expectations

people tagged with it. In love, "age does matter." People love in order to be secure that one will
share his/her life with another and that he/she will not die alone. Individuals who are in love had
the power to let love grow or let love die – it is a choice one had to face when love is not the love
he/she expected.

In the case presented by petitioner, it is very apparent that love really happened for her towards
the young respondent – who used "love" as a disguise or deceptive tactic for exploiting the
confidence she extended towards him. He made her believe that he is responsible, true, caring
and thoughtful – only to reveal himself contrary to what was mentioned. He lacked the
commitment, faithfulness, and remorse that he was able to engage himself to promiscuous acts
that made petitioner look like an innocent fool. His character traits reveal him to suffer
Narcissistic Personality Disorder - declared to be grave, severe and incurable.17 [Emphasis
supplied.]

The RTC Ruling

The RTC nullified the parties’ marriage in its decision of April 19, 2002. The trial court saw
merit in the testimonies of the petitioner and Dr. Tayag, and concluded as follows:

xxxx

Respondent was never solicitous of the welfare and wishes of his wife. Respondent imposed
limited or block [sic] out communication with his wife, forgetting special occasions, like
petitioner’s birthdays and Valentine’s Day; going out only on occasions despite their living
separately and to go to a motel to have sexual intercourse.

It would appear that the foregoing narration are the attendant facts in this case which show the
psychological incapacity of respondent, at the time of the celebration of the marriage of the
parties, to enter into lawful marriage and to discharge his marital responsibilities (See Articles 68
to 71, Family Code). This incapacity is "declared grave, severe and incurable."

WHEREFORE, in view of the foregoing, the marriage between petitioner Rowena Padilla
Rumbaua and respondent Edwin Rumbaua is hereby declared annulled.

SO ORDERED.18

The CA Decision

The Republic, through the OSG, appealed the RTC decision to the CA.19 The CA decision of
June 25, 2004 reversed and set aside the RTC decision, and denied the nullification of the
parties’ marriage.20

In its ruling, the CA observed that Dr. Tayag’s psychiatric report did not mention the cause of
the respondent’s so-called "narcissistic personality disorder;" it did not discuss the respondent’s
childhood and thus failed to give the court an insight into the respondent’s developmental years.
Dr. Tayag likewise failed to explain why she came to the conclusion that the respondent’s
incapacity was "deep-seated" and "incurable."

The CA held that Article 36 of the Family Code requires the incapacity to be psychological,
although its manifestations may be physical. Moreover, the evidence presented must show that
the incapacitated party was mentally or physically ill so that he or she could not have known the
marital obligations assumed, knowing them, could not have assumed them. In other words, the
illness must be shown as downright incapacity or inability, not a refusal, neglect, or difficulty to
perform the essential obligations of marriage. In the present case, the petitioner suffered because
the respondent adamantly refused to live with her because of his parents’ objection to their
marriage.
The petitioner moved to reconsider the decision, but the CA denied her motion in its resolution
of January 18, 2005. 21

The Petition and the Issues

The petitioner argues in the present petition that –

1. the OSG certification requirement under Republic v. Molina22 (the Molina case) cannot
be dispensed with because A.M. No. 02-11-10-SC, which relaxed the requirement, took
effect only on March 15, 2003;

2. vacating the decision of the courts a quo and remanding the case to the RTC to recall
her expert witness and cure the defects in her testimony, as well as to present additional
evidence, would temper justice with mercy; and

3. Dr. Tayag’s testimony in court cured the deficiencies in her psychiatric report.

The petitioner prays that the RTC’s and the CA’s decisions be reversed and set aside, and the
case be remanded to the RTC for further proceedings; in the event we cannot grant this prayer,
that the CA’s decision be set aside and the RTC’s decision be reinstated.

The Republic maintained in its comment that: (a) A.M. No. 02-11-10-SC was applicable
although it took effect after the promulgation of Molina; (b) invalidating the trial court’s decision
and remanding the case for further proceedings were not proper; and (c) the petitioner failed to
establish respondent’s psychological incapacity.23

The parties simply reiterated their arguments in the memoranda they filed.

THE COURT’S RULING

We resolve to deny the petition for lack of merit.

A.M. No. 02-11-10-SC is applicable

In Molina, the Court emphasized the role of the prosecuting attorney or fiscal and the OSG; they
are to appear as counsel for the State in proceedings for annulment and declaration of nullity of
marriages:

(8) The trial court must order the prosecuting attorney or fiscal and the Solicitor General to
appear as counsel for the state. No decision shall be handed down unless the Solicitor General
issues a certification, which will be quoted in the decision, briefly stating therein his reasons for
his agreement or opposition, as the case may be, to the petition. The Solicitor General, along
with the prosecuting attorney, shall submit to the court such certification within fifteen (15) days
from the date the case is deemed submitted for resolution of the court. The Solicitor General
shall discharge the equivalent function of the defensor vinculi contemplated under Canon 1095.
[Emphasis supplied.]
A.M. No. 02-11-10-SC24 -- which this Court promulgated on March 15, 2003 and duly published
-- is geared towards the relaxation of the OSG certification that Molina required. Section 18 of
this remedial regulation provides:

SEC. 18. Memoranda. – The court may require the parties and the public prosecutor, in
consultation with the Office of the Solicitor General, to file their respective memoranda in
support of their claims within fifteen days from the date the trial is terminated.lawphil.net It may
require the Office of the Solicitor General to file its own memorandum if the case is of
significant interest to the State. No other pleadings or papers may be submitted without leave of
court. After the lapse of the period herein provided, the case will be considered submitted for
decision, with or without the memoranda.

The petitioner argues that the RTC decision of April 19, 2002 should be vacated for prematurity,
as it was rendered despite the absence of the required OSG certification specified in Molina.
According to the petitioner, A.M. No. 02-11-10-SC, which took effect only on March 15, 2003,
cannot overturn the requirements of Molina that was promulgated as early as February 13, 1997.

The petitioner’s argument lacks merit.

The amendment introduced under A.M. No. 02-11-10-SC is procedural or remedial in character;
it does not create or remove any vested right, but only operates as a remedy in aid of or
confirmation of already existing rights. The settled rule is that procedural laws may be given
retroactive effect,25 as we held in De Los Santos v. Vda. de Mangubat:26

Procedural Laws do not come within the legal conception of a retroactive law, or the general rule
against the retroactive operation of statues - they may be given retroactive effect on actions
pending and undetermined at the time of their passage and this will not violate any right of a
person who may feel that he is adversely affected, insomuch as there are no vested rights in rules
of procedure.

A.M. No. 02-11-10-SC, as a remedial measure, removed the mandatory nature of an OSG
certification and may be applied retroactively to pending matters. In effect, the measure cures in
any pending matter any procedural lapse on the certification prior to its promulgation. Our
rulings in Antonio v. Reyes27 and Navales v. Navales28 have since confirmed and clarified that
A.M. No. 02-11-10-SC has dispensed with the Molina guideline on the matter of certification,
although Article 48 mandates the appearance of the prosecuting attorney or fiscal to ensure that
no collusion between the parties would take place. Thus, what is important is the presence of the
prosecutor in the case, not the remedial requirement that he be certified to be present. From this
perspective, the petitioner’s objection regarding the Molina guideline on certification lacks merit.

A Remand of the Case to the RTC is Improper

The petitioner maintains that vacating the lower courts’ decisions and the remand of the case to
the RTC for further reception of evidence are procedurally permissible. She argues that the
inadequacy of her evidence during the trial was the fault of her former counsel, Atty. Richard
Tabago, and asserts that remanding the case to the RTC would allow her to cure the evidentiary
insufficiencies. She posits in this regard that while mistakes of counsel bind a party, the rule
should be liberally construed in her favor to serve the ends of justice.

We do not find her arguments convincing.

A remand of the case to the RTC for further proceedings amounts to the grant of a new trial that
is not procedurally proper at this stage. Section 1 of Rule 37 provides that an aggrieved party
may move the trial court to set aside a judgment or final order already rendered and to grant a
new trial within the period for taking an appeal. In addition, a motion for new trial may be filed
only on the grounds of (1) fraud, accident, mistake or excusable negligence that could not have
been guarded against by ordinary prudence, and by reason of which the aggrieved party’s rights
have probably been impaired; or (2) newly discovered evidence that, with reasonable diligence,
the aggrieved party could not have discovered and produced at the trial, and that would probably
alter the result if presented.

In the present case, the petitioner cites the inadequacy of the evidence presented by her former
counsel as basis for a remand. She did not, however, specify the inadequacy. That the RTC
granted the petition for declaration of nullity prima facie shows that the petitioner’s counsel had
not been negligent in handling the case. Granting arguendo that the petitioner’s counsel had been
negligent, the negligence that would justify a new trial must be excusable, i.e. one that ordinary
diligence and prudence could not have guarded against. The negligence that the petitioner
apparently adverts to is that cited in Uy v. First Metro Integrated Steel Corporation where we
explained:29

Blunders and mistakes in the conduct of the proceedings in the trial court as a result of the
ignorance, inexperience or incompetence of counsel do not qualify as a ground for new trial. If
such were to be admitted as valid reasons for re-opening cases, there would never be an end to
litigation so long as a new counsel could be employed to allege and show that the prior counsel
had not been sufficiently diligent, experienced or learned. This will put a premium on the willful
and intentional commission of errors by counsel, with a view to securing new trials in the event
of conviction, or an adverse decision, as in the instant case.

Thus, we find no justifiable reason to grant the petitioner’s requested remand.

Petitioner failed to establish the

respondent’s psychological incapacity

A petition for declaration of nullity of marriage is anchored on Article 36 of the Family Code
which provides that "a marriage contracted by any party who, at the time of its celebration, was
psychologically incapacitated to comply with the essential marital obligations of marriage, shall
likewise be void even if such incapacity becomes manifest only after its solemnization."
In Santos v. Court of Appeals,30 the Court first declared that psychological incapacity must be
characterized by (a) gravity; (b) juridical antecedence; and (c) incurability. The defect should
refer to "no less than a mental (not physical) incapacity that causes a party to be truly incognitive
of the basic marital covenants that concomitantly must be assumed and discharged by the parties
to the marriage." It must be confined to "the most serious cases of personality disorders clearly
demonstrative of an utter insensitivity or inability to give meaning and significance to the
marriage."

We laid down more definitive guidelines in the interpretation and application of Article 36 of the
Family Code in Republic v. Court of Appeals where we said:

(1) The burden of proof to show the nullity of the marriage belongs to the plaintiff. Any
doubt should be resolved in favor of the existence and continuation of the marriage and
against its dissolution and nullity. This is rooted in the fact that both our Constitution and
our laws cherish the validity of marriage and unity of the family. Thus, our Constitution
devotes an entire Article on the Family, recognizing it "as the foundation of the nation." It
decrees marriage as legally "inviolable," thereby protecting it from dissolution at the
whim of the parties. Both the family and marriage are to be "protected" by the state.

The Family Code echoes this constitutional edict on marriage and the family and
emphasizes their permanence, inviolability and solidarity.

(2) The root cause of the psychological incapacity must be (a) medically or clinically
identified, (b) alleged in the complaint, (c) sufficiently proven by experts and (d) clearly
explained in the decision. Article 36 of the Family Code requires that the incapacity must
be psychological - not physical, although its manifestations and/or symptoms may be
physical. The evidence must convince the court that the parties, or one of them, was
mentally or psychically ill to such an extent that the person could not have known the
obligations he was assuming, or knowing them, could not have given valid assumption
thereof. Although no example of such incapacity need be given here so as not to limit the
application of the provision under the principle of ejusdem generis, nevertheless such
root cause must be identified as a psychological illness and its incapacitating nature fully
explained. Expert evidence may be given by qualified psychiatrists and clinical
psychologists.

(3) The incapacity must be proven to be existing at "the time of the celebration" of the
marriage. The evidence must show that the illness was existing when the parties
exchanged their "I do's." The manifestation of the illness need not be perceivable at such
time, but the illness itself must have attached at such moment, or prior thereto.

(4) Such incapacity must also be shown to be medically or clinically permanent or

incurable. Such incurability may be absolute or even relative only in regard to the other
spouse, not necessarily absolutely against everyone of the same sex. Furthermore, such
incapacity must be relevant to the assumption of marriage obligations, not necessarily to
those not related to marriage, like the exercise of a profession or employment in a job. x x
x

(5) Such illness must be grave enough to bring about the disability of the party to assume
the essential obligations of marriage. Thus, "mild characteriological peculiarities, mood
changes, occasional emotional outbursts" cannot be accepted as root causes. The illness
must be shown as downright incapacity or inability, not a refusal, neglect or difficulty,
 much less ill will. In other words, there is a natal or supervening disabling factor in the
person, an adverse integral element in the personality structure that effectively
incapacitates the person from really accepting and thereby complying with the
obligations essential to marriage.

(6) The essential marital obligations must be those embraced by Articles 68 up to 71 of

the Family Code as regards the husband and wife as well as Articles 220, 221 and 225 of
the same Code in regard to parents and their children. Such non-complied marital
obligation(s) must also be stated in the petition, proven by evidence and included in the
text of the decision.

(7) Interpretations given by the National Appellate Matrimonial Tribunal of the Catholic
Church in the Philippines, while not controlling or decisive, should be given great respect
by our courts…

(8) The trial court must order the prosecuting attorney or fiscal and the Solicitor General
to appear as counsel for the state. No decision shall be handed down unless the Solicitor
General issues a certification, which will be quoted in the decision, briefly stating therein
his reasons for his agreement or opposition, as the case may be, to the petition. The
Solicitor General, along with the prosecuting attorney, shall submit to the court such
certification within fifteen (15) days from the date the case is deemed submitted for
resolution of the court. The Solicitor General shall discharge the equivalent function of
the defensor vinculi contemplated under Canon 1095.

These Guidelines incorporate the basic requirements we established in Santos. To reiterate,

psychological incapacity must be characterized by: (a) gravity; (b) juridical antecedence; and (c)
incurability.31 These requisites must be strictly complied with, as the grant of a petition for
nullity of marriage based on psychological incapacity must be confined only to the most serious
cases of personality disorders clearly demonstrative of an utter insensitivity or inability to give
meaning and significance to the marriage. Furthermore, since the Family Code does not define
"psychological incapacity," fleshing out its terms is left to us to do so on a case-to-case basis
through jurisprudence.32 We emphasized this approach in the recent case of Ting v. Velez-
Ting33 when we explained:

It was for this reason that we found it necessary to emphasize in Ngo Te that each case involving
the application of Article 36 must be treated distinctly and judged not on the basis of a priori
assumptions, predilections or generalizations but according to its own attendant facts. Courts
should interpret the provision on a case-to-case basis, guided by experience, the findings of
experts and researchers in psychological disciplines, and by decisions of church tribunals.

In the present case and using the above standards and approach, we find the totality of the
petitioner’s evidence insufficient to prove that the respondent is psychologically unfit to
discharge the duties expected of him as a husband.

a. Petitioner’s testimony did not prove the root cause, gravity and incurability of respondent’s
condition
The petitioner’s evidence merely showed that the respondent: (a) reneged on his promise to
cohabit with her; (b) visited her occasionally from 1993 to 1997; (c) forgot her birthday in 1992,
and did not send her greeting cards during special occasions; (d) represented himself as single in
his visa application; (e) blamed her for the death of his mother; and (f) told her he was working
in Davao when in fact he was cohabiting with another woman in 1997.

These acts, in our view, do not rise to the level of the "psychological incapacity" that the law
requires, and should be distinguished from the "difficulty," if not outright "refusal" or "neglect"
in the performance of some marital obligations that characterize some marriages. In Bier v.
Bier,34 we ruled that it was not enough that respondent, alleged to be psychologically
incapacitated, had difficulty in complying with his marital obligations, or was unwilling to
perform these obligations. Proof of a natal or supervening disabling factor – an adverse integral
element in the respondent's personality structure that effectively incapacitated him from
complying with his essential marital obligations – had to be shown and was not shown in this
cited case.

In the present case, the respondent’s stubborn refusal to cohabit with the petitioner was
doubtlessly irresponsible, but it was never proven to be rooted in some psychological illness. As
the petitioner’s testimony reveals, respondent merely refused to cohabit with her for fear of
jeopardizing his application for a scholarship, and later due to his fear of antagonizing his family.
The respondent’s failure to greet the petitioner on her birthday and to send her cards during
special occasions, as well as his acts of blaming petitioner for his mother’s death and of
representing himself as single in his visa application, could only at best amount to forgetfulness,
insensitivity or emotional immaturity, not necessarily psychological incapacity. Likewise, the
respondent’s act of living with another woman four years into the marriage cannot automatically
be equated with a psychological disorder, especially when no specific evidence was shown that
promiscuity was a trait already existing at the inception of marriage. In fact, petitioner herself
admitted that respondent was caring and faithful when they were going steady and for a time
after their marriage; their problems only came in later.

To be sure, the respondent was far from perfect and had some character flaws. The presence of
these imperfections, however, does not necessarily warrant a conclusion that he had a
psychological malady at the time of the marriage that rendered him incapable of fulfilling his
duties and obligations. To use the words of Navales v. Navales:35

Article 36 contemplates downright incapacity or inability to take cognizance of and to assume

basic marital obligations. Mere "difficulty," "refusal" or "neglect" in the performance of marital
obligations or "ill will" on the part of the spouse is different from "incapacity" rooted on some
debilitating psychological condition or illness. Indeed, irreconcilable differences, sexual
infidelity or perversion, emotional immaturity and irresponsibility, and the like, do not by
themselves warrant a finding of psychological incapacity under Article 36, as the same may only
be due to a person's refusal or unwillingness to assume the essential obligations of marriage and
not due to some psychological illness that is contemplated by said rule.

b. Dr. Tayag’s psychological report and court testimony

We cannot help but note that Dr. Tayag’s conclusions about the respondent’s psychological
incapacity were based on the information fed to her by only one side – the petitioner – whose
bias in favor of her cause cannot be doubted. While this circumstance alone does not disqualify
the psychologist for reasons of bias, her report, testimony and conclusions deserve the
application of a more rigid and stringent set of standards in the manner we discussed
above.36 For, effectively, Dr. Tayag only diagnosed the respondent from the prism of a third
party account; she did not actually hear, see and evaluate the respondent and how he would have
reacted and responded to the doctor’s probes.

Dr. Tayag, in her report, merely summarized the petitioner’s narrations, and on this basis
characterized the respondent to be a self-centered, egocentric, and unremorseful person who
"believes that the world revolves around him"; and who "used love as a…deceptive tactic for
exploiting the confidence [petitioner] extended towards him." Dr. Tayag then incorporated her
own idea of "love"; made a generalization that respondent was a person who "lacked
commitment, faithfulness, and remorse," and who engaged "in promiscuous acts that made the
petitioner look like a fool"; and finally concluded that the respondent’s character traits reveal
"him to suffer Narcissistic Personality Disorder with traces of Antisocial Personality Disorder
declared to be grave and incurable."

We find these observations and conclusions insufficiently in-depth and comprehensive to

warrant the conclusion that a psychological incapacity existed that prevented the respondent
from complying with the essential obligations of marriage. It failed to identify the root cause of
the respondent's narcissistic personality disorder and to prove that it existed at the inception of
the marriage. Neither did it explain the incapacitating nature of the alleged disorder, nor show
that the respondent was really incapable of fulfilling his duties due to some incapacity of a
psychological, not physical, nature. Thus, we cannot avoid but conclude that Dr. Tayag’s
conclusion in her Report – i.e., that the respondent suffered "Narcissistic Personality Disorder
with traces of Antisocial Personality Disorder declared to be grave and incurable" – is an
unfounded statement, not a necessary inference from her previous characterization and portrayal
of the respondent. While the various tests administered on the petitioner could have been used as
a fair gauge to assess her own psychological condition, this same statement cannot be made with
respect to the respondent’s condition. To make conclusions and generalizations on the
respondent’s psychological condition based on the information fed by only one side is, to our
mind, not different from admitting hearsay evidence as proof of the truthfulness of the content of
such evidence.

Petitioner nonetheless contends that Dr. Tayag’s subsequent testimony in court cured whatever
deficiencies attended her psychological report.

We do not share this view.

A careful reading of Dr. Tayag’s testimony reveals that she failed to establish the fact that at the
time the parties were married, respondent was already suffering from a psychological defect that
deprived him of the ability to assume the essential duties and responsibilities of marriage.
Neither did she adequately explain how she came to the conclusion that respondent’s condition
was grave and incurable. To directly quote from the records:
ATTY. RICHARD TABAGO:

Q: I would like to call your attention to the Report already marked as Exh. "E-7", there is a
statement to the effect that his character traits begin to suffer narcissistic personality disorder
with traces of antisocial personality disorder. What do you mean? Can you please explain in
layman’s word, Madam Witness?

DR. NEDY LORENZO TAYAG:

A: Actually, in a layman’s term, narcissistic personality disorder cannot accept that there is
something wrong with his own behavioral manifestation. [sic] They feel that they can rule the
world; they are eccentric; they are exemplary, demanding financial and emotional support, and
this is clearly manifested by the fact that respondent abused and used petitioner’s love. Along the
line, a narcissistic person cannot give empathy; cannot give love simply because they love
themselves more than anybody else; and thirdly, narcissistic person cannot support his own
personal need and gratification without the help of others and this is where the petitioner set in.

Q: Can you please describe the personal [sic] disorder?

A: Clinically, considering that label, the respondent behavioral manifestation under personality
disorder [sic] this is already considered grave, serious, and treatment will be impossible [sic]. As
I say this, a kind of developmental disorder wherein it all started during the early formative years
and brought about by one familiar relationship the way he was reared and cared by the family.
Environmental exposure is also part and parcel of the child disorder. [sic]

Q: You mean to say, from the formative [years] up to the present?

A: Actually, the respondent behavioral manner was [present] long before he entered marriage.
[Un]fortunately, on the part of the petitioner, she never realized that such behavioral
manifestation of the respondent connotes pathology. [sic]

xxxx

Q: So in the representation of the petitioner that the respondent is now lying [sic] with somebody
else, how will you describe the character of this respondent who is living with somebody else?

A: This is where the antisocial personality trait of the respondent [sic] because an antisocial
person is one who indulge in philandering activities, who do not have any feeling of guilt at the
expense of another person, and this [is] again a buy-product of deep seated psychological
incapacity.

Q: And this psychological incapacity based on this particular deep seated [sic], how would you
describe the psychological incapacity? [sic]
A: As I said there is a deep seated psychological dilemma, so I would say incurable in nature and
at this time and again [sic] the psychological pathology of the respondent. One plays a major
factor of not being able to give meaning to a relationship in terms of sincerity and endurance.

Q: And if this psychological disorder exists before the marriage of the respondent and the
petitioner, Madam Witness?

A: Clinically, any disorder are usually rooted from the early formative years and so if it takes
enough that such psychological incapacity of respondent already existed long before he entered
marriage, because if you analyze how he was reared by her parents particularly by the mother,
there is already an unhealthy symbiosis developed between the two, and this creates a major
emotional havoc when he reached adult age.

Q: How about the gravity?

A: This is already grave simply because from the very start respondent never had an inkling that
his behavioral manifestation connotes pathology and second ground [sic], respondent will never
admit again that such behavior of his connotes again pathology simply because the disorder of
the respondent is not detrimental to himself but, more often than not, it is detrimental to other
party involved.

xxxx

PROSECUTOR MELVIN TIONGSON:

Q: You were not able to personally examine the respondent here?

DR. NEDY TAYAG:

A: Efforts were made by the psychologist but unfortunately, the respondent never appeared at
my clinic.

Q: On the basis of those examinations conducted with the petitioning wife to annul their
marriage with her husband in general, what can you say about the respondent?

A: That from the very start respondent has no emotional intent to give meaning to their
relationship. If you analyze their marital relationship they never lived under one room. From the
very start of the [marriage], the respondent to have petitioner to engage in secret marriage until
that time their family knew of their marriage [sic]. Respondent completely refused, completely
relinquished his marital obligation to the petitioner.

xxxx

COURT:
Q: Because you have interviewed or you have questioned the petitioner, can you really
enumerate the specific traits of the respondent?

DR. NEDY TAYAG:

A: One is the happy-go-lucky attitude of the respondent and the dependent attitude of the
respondent.

Q: Even if he is already eligible for employment?

A: He remains to be at the mercy of his mother. He is a happy-go-lucky simply because he never

had a set of responsibility. I think that he finished his education but he never had a stable job
because he completely relied on the support of his mother.

Q: You give a more thorough interview so I am asking you something specific?

A: The happy-go-lucky attitude; the overly dependent attitude on the part of the mother merely
because respondent happened to be the only son. I said that there is a unhealthy symbiosis
relationship [sic] developed between the son and the mother simply because the mother always
pampered completely, pampered to the point that respondent failed to develop his own sense of
assertion or responsibility particularly during that stage and there is also presence of the simple
lying act particularly his responsibility in terms of handling emotional imbalance and it is clearly
manifested by the fact that respondent refused to build a home together with the petitioner when
in fact they are legally married. Thirdly, respondent never felt or completely ignored the feelings
of the petitioner; he never felt guilty hurting the petitioner because on the part of the petitioner,
knowing that respondent indulge with another woman it is very, very traumatic on her part yet
respondent never had the guts to feel guilty or to atone said act he committed in their
relationship, and clinically this falls under antisocial personality. 37

In terms of incurability, Dr. Tayag’s answer was very vague and inconclusive, thus:

xxxx

ATTY. RICHARD TABAGO

Q: Can this personally be cured, madam witness?

DR. NEDY TAYAG

A: Clinically, if persons suffering from personality disorder curable, up to this very moment, no
scientific could be upheld to alleviate their kind of personality disorder; Secondly, again
respondent or other person suffering from any kind of disorder particularly narcissistic
personality will never admit that they are suffering from this kind of disorder, and then again
curability will always be a question. [sic]38
This testimony shows that while Dr. Tayag initially described the general characteristics of a
person suffering from a narcissistic personality disorder, she did not really show how and to what
extent the respondent exhibited these traits. She mentioned the buzz words that jurisprudence
requires for the nullity of a marriage – namely, gravity, incurability, existence at the time of the
marriage, psychological incapacity relating to marriage – and in her own limited way, related
these to the medical condition she generally described. The testimony, together with her report,
however, suffers from very basic flaws.

First, what she medically described was not related or linked to the respondent’s exact
condition except in a very general way. In short, her testimony and report were rich in
generalities but disastrously short on particulars, most notably on how the respondent can
be said to be suffering from narcissistic personality disorder; why and to what extent the
disorder is grave and incurable; how and why it was already present at the time of the
marriage; and the effects of the disorder on the respondent’s awareness of and his
capability to undertake the duties and responsibilities of marriage. All these are critical to
the success of the petitioner’s case.

Second, her testimony was short on factual basis for her diagnosis because it was wholly
based on what the petitioner related to her. As the doctor admitted to the prosecutor, she
did not at all examine the respondent, only the petitioner. Neither the law nor
jurisprudence requires, of course, that the person sought to be declared psychologically
incapacitated should be personally examined by a physician or psychologist as a
condition sine qua non to arrive at such declaration.39 If a psychological disorder can be
proven by independent means, no reason exists why such independent proof cannot be
admitted and given credit.40 No such independent evidence, however, appears on record
to have been gathered in this case, particularly about the respondent’s early life and
associations, and about events on or about the time of the marriage and immediately
thereafter. Thus, the testimony and report appear to us to be no more than a diagnosis that
revolves around the one-sided and meager facts that the petitioner related, and were all
slanted to support the conclusion that a ground exists to justify the nullification of the
marriage. We say this because only the baser qualities of the respondent’s life were
examined and given focus; none of these qualities were weighed and balanced with the
better qualities, such as his focus on having a job, his determination to improve himself
through studies, his care and attention in the first six months of the marriage, among
others. The evidence fails to mention also what character and qualities the petitioner
brought into her marriage, for example, why the respondent’s family opposed the
marriage and what events led the respondent to blame the petitioner for the death of his
mother, if this allegation is at all correct. To be sure, these are important because not a
few marriages have failed, not because of psychological incapacity of either or both of
the spouses, but because of basic incompatibilities and marital developments that do not
amount to psychological incapacity. The continued separation of the spouses likewise
never appeared to have been factored in. Not a few married couples have likewise
permanently separated simply because they have "fallen out of love," or have outgrown
the attraction that drew them together in their younger years.
Thus, on the whole, we do not blame the petitioner for the move to secure a remand of this case
to the trial courts for the introduction of additional evidence; the petitioner’s evidence in its
present state is woefully insufficient to support the conclusion that the petitioner’s marriage to
the respondent should be nullified on the ground of the respondent’s psychological incapacity.

The Court commiserates with the petitioner’s marital predicament. The respondent may indeed
be unwilling to discharge his marital obligations, particularly the obligation to live with one’s
spouse. Nonetheless, we cannot presume psychological defect from the mere fact that respondent
refuses to comply with his marital duties. As we ruled in Molina, it is not enough to prove that a
spouse failed to meet his responsibility and duty as a married person; it is essential that he must
be shown to be incapable of doing so due to some psychological illness. The psychological
illness that must afflict a party at the inception of the marriage should be a malady so grave and
permanent as to deprive the party of his or her awareness of the duties and responsibilities of the
matrimonial bond he or she was then about to assume.41

WHEREFORE, in view of these considerations, we DENY the petition and AFFIRM the
decision and resolution of the Court of Appeals dated June 25, 2004 and January 18, 2005,
respectively, in CA-G.R. CV No. 75095.

SO ORDERED.

G.R. No. 196853, July 13, 2015

ROBERT CHUA, Petitioner, v. PEOPLE OF THE PHILIPPINES, Respondent.

DECISION

DEL CASTILLO, J.:

Petitioner Robert Chua (Chua) was charged with 54 counts of violation of Batas Pambansa Blg.
22 (BP 22) for issuing checks which were dishonored for either being drawn against insufficient
funds or closed account.

Factual Antecedents

Chua and private complainant Philip See (See) were long-time friends and neighbors. On
different dates from 1992 until 1993, Chua issued several postdated PSBank checks of varying
amounts to See pursuant to their rediscounting arrangement at a 3% rate, to
wit:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary

PSBANK CHECK
  DATED AMOUNT
NO.
1 018062 December 25, 1993 Php300,000.00
2 018061 December 23, 1993 Php350,000.00
3 017996 December 16, 1993 Php100,000.00
 4 017992 December 14, 1993 Php200,000.00
5 017993 December 14, 1993 Php200,000.00
6 018138 November 22,1993 Php 6,000.00
7 018122 November 19, 1993 Php 13,000.00
8 018120 November 18, 1993 Php 6,000.00
9 018162 November 22, 1993 Php 10,800.00
10 018069 November 17, 1993 Php 9,744.25
11 018117 November 17, 1993 Php 8,000.00
12 018149 November 28, 1993 Php 6,000.00
13 018146 November 27, 1993 Php 7,000.00
14 006478 November 26, 1993 Php200,000.00
15 018148 November 26, 1993 Php300,000.00
16 018145 November 26, 1993 Php 7,000.00
17 018137 December 10, 1993 Php150,000.00
18 017991 December 10, 1993 Php150,000.00
19 018151 December 10, 1993 Php150,000.00
20 017962 December 08, 1993 Php150,000.00
21 018165 December 08, 1993 Php 14,000.00
22 018154 December 07, 1993 Php100,000.00
23 018164 December 07, 1993 Php 14,000.00
24 018157 December 07, 1993 Php600,000.00
25 018161 December 06, 1993 Php 12,000.00
26 018160 December 05, 1993 Php 12,000.00
27 018033 November 09, 1993 Php 3,096.00
28 018032 November 08, 1993 Php 12,000.00
29 018071 November 06, 1993 Php150,000.00
30 018070 November 06, 1993 Php150,000.00
31 006210 October 21, 1993 Php100,000.00
32 006251 October 18, 1993 Php200,000.00
33 006250 October 18, 1993 Php200,000.00
34 017971 October 13, 1993 Php400,000.00
35 017972 October 12, 1993 Php335,450.00
36 017973 October 11, 1993 Php464,550.00
37 006433 September 24, 1993 Php520,000.00
38 006213 August 30, 1993 Php100,000.00
39 017976 December 13, 1993 Php100,000.00
40 018139 December 13, 1993 Php125,000.00
41 018141 December 13, 1993 Php175,000.00
42 018143 December 13, 1993 Php300,000.00
43 018121 December 10, 1993 Php166,934.00
44 018063 November 12, 1993 Php 12,000.00
45 018035 November 11, 1993 Php 7,789.00
 46 017970 November 11, 1993 Php600,000.00
47 018068 November 18, 1993 Php 7,800.00
48 017956 November 10, 1993 Php800,000.00
49 018034 November 10, 1993 Php 7,116.00
50 017907 December 1, 1993 Php200,000.00
51 018152 November 30, 1993 Php 6,000.00
52 018067 November 30, 1993 Php 7,800.00
53 006490 November 29, 1993 Php100,000.00
54 018150 November 29, 1993 Php 6,000.001
However, See claimed that when he deposited the checks, they were dishonored either due to
insufficient funds or closed account. Despite demands, Chua failed to make good the checks.
Hence, See filed on December 23, 1993 a Complaint2 for violations of BP 22 before the Office of
the City Prosecutor of Quezon City. He attached thereto a demand letter3 dated December 10,
1993.

In a Resolution4 dated April 25, 1994, the prosecutor found probable cause and recommended the
filing of charges against Chua. Accordingly, 54 counts of violation of BP 22 were filed against
him before the Metropolitan Trial Court (MeTC) of Quezon City.

Proceedings before the Metropolitan Trial Court

During the course of the trial, the prosecution formally offered as its evidence5 the demand letter
dated December 10, 1993 marked as Exhibit "B."6 Chua, however, objected7 to its admissibility
on the grounds that it is a mere photocopy and that it does not bear any proof that he actually
received it. In view of these, Chua filed on April 14, 1999 a Motion to Submit Demurrer to
Evidence.8 Per Chua's allegation, however, the MeTC failed to act on his motion since the judge
of said court vacated his post.

Several years later, the prosecution filed a Motion to Re-Open Presentation of Prosecution's
Evidence and Motion to Allow Prosecution to Submit Additional Formal Offer of
Evidence9 dated March 28, 2003. It averred that while See was still trying to locate a demand
letter dated November 30, 1993 (which it alleged to Irave been personally served upon Chua),
the prosecution nevertheless decided to rest its case on February 24, 1999 so as not to further
delay the proceedings. However, sometime in February 2002, See decided to have his house
rented out such that he emptied it with all his belongings and had it cleaned. It was during this
time that he found the demand letter dated November 30, 1993.10 The prosecution thus prayed
that it be allowed to submit a supplemental offer of evidence to include said demand letter dated
November 30, 1993 as part of its evidence. Again, the records of the case bear no copy of an
MeTC Order or Resolution granting the aforesaid motion of the prosecution. Nevertheless, extant
on records is a Formal Offer of Evidence11 filed by the private prosecutor submitting the demand
letter dated November 30, 1993 as additional evidence. In his objection thereto,12 Chua averred
that the papers on which the demand letter dated November 30, 1993 are written were given to
him as blank papers. He affixed his signature thereon purportedly to give See the authority to
retrieve a car which was supposed to serve as payment for Chua's obligation to See. In an
Order13 dated November 18, 2005, the MeTC refused to take cognizance of the supplemental
formal offer on the ground that the same was filed by the private prosecutor without the
conformity of the public prosecutor. Be that as it may, the demand letter dated November 30,
1993 eventually found its way into the records of this case as Exhibit "SSS."14redarclaw

Later, the defense, with leave of court, filed a Demurrer to Evidence.15 It again pointed out that
the demand letter dated December 10, 1993 attached to See's affidavit-complaint is a mere
photocopy and not accompanied with a Post Office Registry Receipt and Registry Return
Receipt. Most importantly, it does not contain Chua's signature that would serve as proof of his
actual receipt thereof. In view of these, the defense surmised that the prosecution fabricated the
demand letter dated November 30, 1993 to remedy the lack of a proper notice of dishonor upon
Chua. At any rate, it argued that while the November 30, 1993 demand letter contains Chua's
signature, the same should not be given any probative value since it does not contain the date
when he allegedly received the same. Hence, there is simply no way of reckoning the crucial
five-day period that the law affords an issuer to make good the check from the date of his notice
of its dishonor.

In an Order16 dated January 12, 2007, the MeTC denied the defense's Demurrer to Evidence. The
Motion for Reconsideration thereto was likewise denied in an Order17 dated May 23, 2007.
Hence, the trial of the case proceeded.

In a Consolidated Decision18 dated May 12, 2008, the MeTC convicted Chua of 54 counts of
violation of BP 22 after it found all the elements of the offense obtaining in the case. Anent
Chua's receipt of the notice of dishonor, it ratiocinated, viz.:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
xxxx

The prosecution had proved also that private complainant personally sen[t] a written notice of
dishonor of the subject check to the accused and that the latter personally received the same. In
fact, the defense stipulated in open court the existence of the said demand letter and the signature
of the accused as reflected in the face of the demand letter, x x x In view of that stipulation, the
defense is now estopped [from] denying its receipt thereof. Although there was no date when
accused received the demand letter x x x the demand letter was dated, thus it is presumed that the
accused received the said demand letter on the date reflected on it. It has been said that
"admission verbal or written made by the party in the course of the proceedings in the same case
does not require proof." x xx

[In spite of] receipt thereof, the accused failed to pay the amount of the checks or make
arrangement for its payment [w]ithin five (5) banking days after receiving notice that the said
checks have not been paid by the drawee bank. As a result, the presumption of knowledge as
provided for in Section 2 of Batas Pambansa Bilang 22 which was the basis of reckoning the
crucial five (5) day period was established.19
Hence, the dispositive portion of the MeTC Decision:LawlibraryofCRAlaw
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WHEREFORE, premises considered, this court finds accused Robert Chua GUILTY, beyond
reasonable doubt, of fifty four (54) counts of Violation of Batas Pambansa Bilang 22 and hereby
sentence[s] him to suffer the penalty of six (6) months imprisonment for each case and to
restitute to the private complainant the total amount of the face value of all the subject checks in
these cases with legal interest of 12% per annum reckoned from the filing of the informations
until the full amount is fully paid and to pay the costs of suit.

SO ORDERED.20
Ruling of the Regional Trial Court (RTC)

Aggrieved, Chua appealed to the RTC where he argued that: (1) the complaint was prematurely
filed since the demand letter dated December 10, 1993 had not yet been sent to him at the time of
filing of the Complaint; (2) the demand letter dated November 30, 1993 has no probative value
since it lacked proof of the date when Chua received the same; and, (3) since Chua was acquitted
in two other BP 22 cases involving the same parties, facts and issues, he should likewise be
acquitted in the present case based on the principle of stare decisis.

In a Decision21 dated July 1, 2009, the RTC likewise found all the elements of BP 22 to have
been sufficiently established by the prosecution, to wit:LawlibraryofCRAlaw

(1) the making, drawing, and issuance of any check to apply for account or for value;

(2) the knowledge of the maker, drawer, or issuer that at the time of issue he does not have
sufficient funds in or credit with the drawee bank for the payment of the check in full upon its
presentment;

(3) the subsequent dishonor of the check by the drawee bank for insufficient funds or credit or
dishonor for the same reason had not the drawer, without any valid cause ordered the bank to
stop payment.

As to first element, the RTC held that the evidence shows that Chua issued the checks in
question. Next, on the basis of the demand letter dated November 30, 1993 bearing Chua's
signature as proof of receipt thereof, it was likewise established that he had knowledge of the
insufficiency of his funds with the drawee bank at the time he issued the checks, thus, satisfying
the second element. It expounded:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
Thus, in order to create the prima facie presumption that the issuer knew of the insufficiency of
funds, it must be shown that he or she received a notice of dishonor and, within five banking
days thereafter, failed to satisfy the amount of the check or make arrangement for its payment, x
xx

In the present case, a demand letter (Exh. "SSS") was sent to accused-appellant informing him of
the dishonor of the check and demanding he make good of the checks. The prosecution offered
this in evidence, and the accused's signature thereon evidences his receipt of the said demand
letter. Accused-appellant argues that there is no proof that he received the same considering that
there is no date on his signature appearing on the document. But as borne out by the records of
the proceedings, the defense even stipulated in open court the existence of the demand letter, x x
x
Thus, considering that the demand letter was dated November 30, 1993, the reckoning of the
crucial five day period was established. Accused failed to make arrangement for the payment of
the amount of check within five-day period from notice of the checks' dishonor.22
Finally, the RTC ruled that the prosecution was able to prove the existence of the third element
when it presented a bank employee who testified that the subject checks were dishonored due to
insufficiency of funds or closed account.

Anent the defense's invocation of the principle of stare decisis, the RTC found the same
inapplicable since there is a distinction between the present case and the other cases where Chua
was acquitted. In the instant case, the prosecution, as mentioned, was able to establish the second
element of the offense by way of the demand letter dated November 30, 1993 duly received by
Chua. Whereas in the other cases where Chua was acquitted, there was no proof that he received
a demand letter.

Hence, the dispositive portion of the RTC Decision:LawlibraryofCRAlaw

ChanRoblesVirtualawlibrary
WHEREFORE, the appealed decision dated May 12, 2008 is hereby AFFIRMED.

SO ORDERED.23
Ruling of the Court of Appeals (CA)

Before the CA, Chua argued against the probative value of the demand letter dated November
30, 1993 by pointing out that: (1) for more than 10 years from the time the case was filed, the
prosecution never adverted to its existence. He thus surmised that this was because the document
was not really missing but in fact inexistent - a mere afterthought as to make it appear that the
second element of the offense is obtaining in the case; (2) the subject demand letter is not a
newly discovered evidence as it could have been discovered earlier through the exercise of due
diligence; and, (3) his counsel's admission of the physical existence of the subject demand letter
and Chua's signature thereon does not carry with it the admission of its contents and his receipt
of the same.

Unpersuaded, the CA, in its November 11, 2010 Decision24 brushed aside Chua's arguments in
this wise:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
x x x [A]s aptly pointed out by the Solicitor General, See could not have waited for a decade just
to fabricate an evidence against petitioner. The contention that petitioner's counsel was tricked by
the prosecution into stipulating on the admissibility of the demand letter is without basis. Once
validly entered into, stipulations will not be set aside unless for good cause. They should be
enforced especially when they are not false, unreasonable or against good morals and sound
public policy. When made before the court, they are conclusive. And the party who validly made
them can be relieved therefrom only upon a showing of collusion, duress, fraud,
misrepresentation as to facts, and undue influence; or upon a showing of sufficient cause on such
terms as will serve justice in a particular case. Moreover, the power to relieve a party from a
stipulation validly made lies in the court's sound discretion which, unless exercised with grave
abuse, will not be disturbed on appeal.25
And just like the MeTC and the RTC, the CA concluded that the prosecution clearly established
all the elements of the offense of violation of BP 22. Ultimately, it ruled as
follows:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
WHEREFORE, the instant petition is hereby DENIED for lack of merit. The assailed decision
dated July 1, 2009 and order dated October 30, 2009 of the RTC of Quezon City, Branch 219,
are hereby AFFIRMED.

SO ORDERED.26
Chua filed a Motion for Reconsideration,27 but the same was denied in a Resolution28 dated May
4, 2011.

Hence, this Petition for Review on Certiorari.

ChanRoblesVirtualawlibrary
Issues

THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT UPHELD THE RULINGS OF

THE TRIAL COURTS THAT THE ACCUSED AT THE TIME OF THE ISSUANCE OF THE
DISHONORED CHECKS HAD KNOWLEDGE OF THE INSUFFICIENCY OF FUNDS FOR
THE PAYMENT OF THE CHECKS UPON THEIR PRESENTMENT, BASED MERELY ON
THE PRESUMPTION THAT THE DATE OF THE PREPARATION OF THE LETTER IS
THE DATE OF RECEIPT BY THE ADDRESSEE.

II

THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT CONSIDERED THE DEMAND

LETTER DATED 30 NOVEMBER 1993 AS A NEWLY-DISCOVERED EVIDENCE.29
The Parties y Arguments

Chua asserts that the second element of the offense charged, i.e., knowledge of the maker,
drawer, or issuer that at the time of issue there are no sufficient funds in or credit with the drawee
bank for the payment of such check in full upon its presentment, was not proved by the
prosecution. He argues that the presumption that the issuer had knowledge of the insufficiency of
funds only arises after it is proved that the issuer actually received a notice of dishonor and
within five days from receipt thereof failed to pay the amount of the check or make arrangement
for its payment. Here, the date when Chua allegedly received the demand letter dated November
30, 1993 was not established by the prosecution. Citing Danao v. Court of Appeals,30 he thus
contends that since there is no date of receipt from which to reckon the aforementioned five-day
period, the presumption that he has knowledge of the insufficiency of funds at the time of the
issuance of the checks did not arise.

In any case, Chua argues that the demand letter dated November 30, 1993 is not a newly
discovered evidence. He points out that a newly discovered evidence is one which could not have
been discovered even in the exercise of due diligence in locating the same. In this case, See
claims that he only found the letter after having his house cleaned. This means that he could have
found it early on had he exercised due diligence, which, however, was neither shown by the
prosecution.

On the other hand, respondent People of the Philippines, through the Office of the Solicitor
General (OSG), avers that Chua's contention that there is no proof of the date when he actually
received the demand letter dated November 30, 1993 involves a factual issue which is not within
the province of a certiorari petition. As to the matter of whether the subject demand letter is a
newly discovered evidence, the OSG calls attention to the fact that the MeTC, RTC and the CA
all considered the said document as a newly discovered evidence. Hence, such fir ding deserves
full faith and credence. Besides, Chua was correctly convicted for violation of BP 22 since all the
elements of the offense were sufficiently proven by the prosecution.

Our Ruling

The Petition is impressed with merit.

The issues raised by Chua involve questions of law.

The OSG argues that the issues raised by Chua involve questions of fact which are not within the
province of the present petition for review on certiorari. The Court, however, upon perusal of the
petition, finds that the issues raised and the arguments advanced by Chua in support thereof,
concern questions of law. "Jurisprudence dictates that there is a 'question of law' when the doubt
or difference arises as to what the law is on a certain set of facts or circumstances; on the other
hand, there is a 'question of fact' when the issue raised on appeal pertains to the truth or falsity of
the alleged facts. The test for determining whether the supposed error was one of 'law' or 'fact' is
not the appellation given by the parties raising the same; rather, it is whether the reviewing court
can resolve the issues raised without evaluating the evidence, in which case, it is a question of
law; otherwise, it is one of fact. In other words, where there is no dispute as to the facts, the
question of whether or not the conclusions drawn from these facts are correct is a question of
law. However, if the question posed requires a re-evaluation of the credibility of witnesses, or the
existence or relevance of surrounding circumstances and their relationship to each other, the
issue is factual."31redarclaw

Chua raises two issues in this petition, to wit: (1) whether the MeTC, RTC and the CA correctly
applied the legal presumption that Chua has knowledge of the insufficiency of funds at the time
he issued the check based on his alleged receipt of the demand letter dated November 30, 1993
and his failure to make good the checks five days from such receipt; and (2) whether the said
courts correctly considered the demand letter dated November 30, 1993 as newly discovered
evidence. As to the first issue, it is not disputed that the subject demand letter, while bearing the
signature of Chua, does not indicate any date as to his receipt thereof. There being no
disagreement as to this fact, the propriety of the conclusion drawn from the same by the courts
below, that is, the date of the said letter is considered as the date when Chua received the same
for the purpose of reckoning trie five-day period to make good the checks, clearly refers to a
question of law. Similarly, the second issue is one concerning a question of law because it
requires the application of the provision of the Rules of Court concerning a newly discovered
evidence.32redarclaw
Nevertheless, assuming that the questions posed before this Court are indeed factual, the rule that
factual findings of the lower courts are not proper subject of certiorari petition admits of
exceptions. One of these exceptions is when the lower courts failed to appreciate certain facts
and circumstances which, if taken into account, would materially affect the result of the case.
The Court finds the said exception applicable in the instant case. Clearly, the petition deserves
the consideration of this Court.

The prosecution failed to prove all the elements of the offenses charged.

In order to successfully hold an accused liable for violation of BP 22, the following essential
elements must be present: "(1) the making, drawing, and issuance of any check to apply for
account or for value; (2) the knowledge of the maker, drawer, or issuer that at the time of issue
he does not have sufficient funds in br credit with the drawee bank for the payment of the check
in full upon its presentment; and (3) the subsequent dishonor of the check by the drawee bank for
insufficiency of funds or credit or dishonor for the same reason had not the drawer, witjhout any
valid cause, ordered the bank to stop payment."33 "Of the three (3) elefrients, the second element
is the hardest to prove as it involves a state of mind. Thus, Section 2 of BP 22 creates a
presumption of knowledge of insufficiency of funds, which, however, arises only after it is
proved that the issuer had received a written notice of dishonor and that within five days from
receipt thereof, he failed to pay the amount of the check or to make arrangements for its
payment.34redarclaw

In the instant case, what is in dispute is the existence of the second element. Chua asserts that the
absence of the date of his actual receipt on the face of the demand letter dated November 30,
1993 prevented the legal presumption of knowledge of insufficiency of funds from arising. On
the other hand, the MeTC opined that while the date of Chua's actual receipt of the subject
demand letter is not affixed thereon, it is presumed that he received the same on the date of the
demand letter (November 30, 1993). Moreover, the lower courts banked on the stimulation
entered into by Chua's counsel as to the existence of the demand letter anki of Chua's signature
thereon. By reason of such stipulation, they all held that Cljiua could no longer impugn the said
demand letter.

In Danao v. Court of Appeals,35 the Court discussed the importance of proving the date of actual
receipt of the notice of dishonor, viz.:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
In King vs. People, this Court, through Justice Artemio V. Panganiban, held: "To hold a person
liable under B.P. Blg. 22, it is not enough to establish that a check issued was subsequently
dishonored. It must be shown further that the person who issued the check knew 'at the time of
issue that he does not have sufficient funds in or credit with the drawee bank for the payment of
such check in full upon its presentment.' Because this element involves a state of mind which is
difficult to establish, Section 2 of the law creates a prima facie presumption of such knowledge,
as follows:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
'SEC 2. Evidence of knowledge of insufficient funds - The making, drawing and issuance of a
check payment of which is refused by the drawee because of insufficient funds in or credit with
such bank, when presented within ninety (90) days from the date of the check, shall be prima
facie evidence of knowledge of such insufficiency of funds or credit unless such maker or drawer
pays the holder thereof the amount due thereon, or makes arrangements for payment in full by
the drawee of such check within five (5) banking days after receiving notice that such check has
not been paid by the drawee.
Thus, this Court further ruled in King, "in order to create the prima facie presumption that the
issuer knew of the insufficiency of funds, it must be shown that he or she received a notice of
dishonor and, within five banking days thereafter, failed to satisfy the amount of the check or
make arrangement for its payment."

Indeed, the prima facie presumption in Section 2 of B.P. Blg. 22 "gives the accused an

opportunity to satisfy the amount indicated in the check and thus avert prosecution. This
opportunity, as this Court stated in Lozano vs. Martinez, serves to mitigate the harshness of the
law in its application.

In other words, if such notice of non-payment by the drawee bank is not sent to the maker or
drawer of the bum check, or if there is no proof as to when such notice was received by the
drawer, then the presumption or prima facie evidence as provided in Section 2 of B.P. Blg.
22 cannot arise, since there would simply be no way of reckoning the crucial 5-day
period."36 (Italics in the original, emphasis supplied)
Similarly in the present case, there is no way to ascertain when the five-day period under Section
22 of BP 22 would start and end since there is no showing when Chua actually received the
demand letter dated November 30, 1993. The MeTC cannot simply presume that the date of the
demand letter was likewise the date of Chua's receipt thereof. There is simply no such
presumption provided in our rules on evidence. In addition, from the inception of this case Chua
has consistently denied having received subject demand letter. He maintains that the paper used
for the purported demand letter was still blank when presented to him for signature and that he
signed the same for another purpose. Given Chua's denial, it behooved upon the prosecution to
present proof of his actual receipt of the November 30, 1993 demand letter. However, all that the
prosecution did was to present it without, however, adducing any evidence as to the date of
Chua's actual receipt thereof. It must be stressed that [t]he prosecution must also prove actual
receipt of [the notice of dishonor] because the fact of service provided for in the law is reckoned
from receipt of such notice of dishonor by the accused.37 "The burden of proving notice rests
upon the party asserting its existence. Ordinarily, preponderance of evidence is sufficient to
prove notice. In criminal cases, however, the quantum of proof required is proof beyond
reasonable doubt. Hence, for B.P. Blg. 22 cases, there should be clear proof of notice"38 which
the Court finds wanting in this case.

Anent the stipulation entered into by Chua's counsel, the MeTC stated:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
In the course of the said proceedings, the defense counsel manifested that he is willing to
stipulate as to the existence of the demand letter and the signature of the accused as reflected on
the face of the demand letter, x x x

xxxx

The prosecution had proved also that private complainant personally sent a written notice of
dishonor of the subject checks to the accused and that the latter personally received the same. In
fact, the defense stipulated in open court the existence of the said demand letter and the signature
of the accused as reflected in the face of the demand letter, x x x. In view of that stipulation, the
defense is now estopped in denying its receipt thereof.39
As earlier mentioned, this ruling of the MeTC was affirmed by both the RTC and the CA.

The Court, however, disagrees with the lower courts. It is plain that the stipulation only refers to
the existence of the demand letter and of Chua's signature thereon. In no way can an admission
of Chua's receipt of the demand letter be inferred therefrom. Hence, Chua cannot be considered
estopped from claiming non-receipt. Also, the Court observes that Chua's admission with respect
to his signature on the demand letter is consistent with his claim that See made him sign blank
papers where the contents of the demand letter dated November 30, 1993 were later intercalated.

In view of the above discussion, the Court rules that the prosecution was not able to sufficiently
prove the existence of the second element of BP 22.

At any rate, the demand letter dated November 30, 1993 deserves no weight and credence not
only because it does not qualify as a newly discovered evidence within the purview of the law but
also because of its doubtful character.

As may be recalled, the prosecution had already long rested its case when it filed a Motion to Re-
Open Presentation of Prosecution's Evidence and Motion To Allow Prosecution To Submit
Additional Formal Ofifer of Evidence dated March 28, 2003. Intending to introduce the demand
letter dated November 30, 1993 as a newly discovered evidence, See attached to the said motion
an affidavit40 of even date where he stated the circumstances surrounding the fact of his location
of the same, viz.:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
2. When we initially presented our evidence in support of these criminal complaints, I was
already looking for a copy of the demand letter personally served by the affiant (See) and duly
received by [Chua];

3. That despite diligent efforts to locate the demand letter x x x dated November 30, 1993, the
same was not located until sometime in February 2002 when I was having our old house/office
located at C-5 Christian Street, Grace Village, Quezon City, cleaned and ready to be rented out;

4. x x x [upon] showing the same to the new handling public prosecutor, he advised the affiant to
have it presented in Court.41
In Ybiernas v. Tanco-Gabaldon,42 the Court held that:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
x x x The question of whether evidence is newly discovered has two aspects: a temporal one, i.e.,
when was the evidence discovered, and a predictive one, i.e., when should or could it have been
discovered. It is to the latter that the requirement of due diligence has relevance. We have held
that in order that a particular piece of evidence may be properly regarded as newly discovered to
justify new trial, what is essential is not so much the time when the evidence offered first sprang
into existence nor the time when it first came to the knowledge of the party now submitting it;
what is essential is that the offering party had exercised reasonable diligence in seeking to locate
such evidence before or during trial but had nonetheless failed to secure it.

The Rules do not give an exact definition of due diligence, and whether the movant has exercised
due diligence depends upon the particular circumstances of each case. Nonetheless, it has been
observed that the phrase is often equated with "reasonable promptness to avoid prejudice to the
defendant." In other words, the concept of due diligence has both a time component and a good
faith component. The movant for a new trial must not only act in a timely fashion in gathering
evidence in support of the motion; he must act reasonably and in good faith as well. Due
diligence contemplates that the defendant acts reasonably and in good faith to obtain the
evidence, in light of the totality of the circumstances and the facts known to him.43
"Under the Rules of Court, the requisites for newly discovered evidence are: (a) the evidence
was discovered after trial; (b) such evidence could not have been discovered and produced at the
trial with reasonable diligence; and (c) it is material, not merely cumulative, corroborative or
impeaching, and is of such weight that, if admitted, will probably change the
judgment."44redarclaw

In this case, the Court holds that the demand letter dated November 30, 1993 does not qualify as
a newly discovered evidence within the purview of the law. Per See's statements in his affidavit,
the said evidence was already known to him at the time he filed his complaint against Chua. It
was also apparently available considering that it was just kept in his house. Undeniably, had See
exercised reasonable diligence, he could have promptly located the said demand letter and
presented it during trial. However, the circumstances suggest otherwise.

Curiously, while See claims that the demand letter dated November 30, 1993 was already
existing at the time he filed the complaint, the same was not mentioned therein. Only the demand
letter dated December 10, 1993 was referred to in the complaint, which per See's own
allegations, was also not actually received by Chua. In addition, the prosecution failed to present
the original copy of the demand letter dated December 10, 1993 during trial. Clearly on the basis
of the demand letter dated December 10, 1993 alone, the prosecution cannot possibly establish
the existence of the second element of the offense. Indeed, the surrounding circumstances and
the doubtful character of the demand letter dated November 30, 1993 make it susceptible to the
conclusion that its introduction was a mere afterthought - a belated attempt to fill in a missing
component necessary for the existence of the second element of BP 22.

It may not be amiss to add at this point that out of the 54 cases for violation of BP 22 filed
against Chua, 22 involve checks issued on November 30, 1993 or thereafter. Hence, the lower
courts grievously erred in convicting Chua for those 22 cases on the basis of a purported demand
letter written and sent to Chua prior to the issuance of said 22 checks. Checks can only be
dishonored after they have been issued and presented for payment. Before that, dishonor cannot
take place. Thus, a demand letter that precedes the issuance of checks cannot constitute as
sufficient notice of dishonor within the contemplation of BP 22. It is likewise significant to note
that aside from the absence of a date, the signature of Chua appearing on the questioned
November 30, 1993 demand letter is not accompanied by any word or phrase indicating that he
affixed his signature thereon to signify his receipt thereof. Indeed, "conviction must rest upon the
strength of the evidence of the prosecution and not on the weakness of the evidence for the
defense."45 In view of the foregoing, the Court cannot accord the demand letter dated November
30, 1993 any weight and credence. Consequently, it cannot be used to support Chua's guilt of the
offenses charged.

All told, the Court cannot convict Chua for violation of BP 22 with moral certainty.

Chua's acquittal, however, does not entail the extinguishment of his civil liability for the
dishonored checks.46 "An acquittal based on lack of proof beyond reasonable doubt does not
preclude the award of civil damages."47 For this reason, Chua must be directed to restitute See
the total amount of the face value of all the checks subject of the case with legal interest at the
rate of 12% per annum reckoned from the time the said checks became due and demandable up
to June 30, 2013 and 6% per annum from July 1, 2013 until fully paid.48redarclaw

WHEREFORE, the Court GRANTS the Petition. The assailed Decision dated November 11,
2010 of the Court of Appeals in CA-GR. CR No. 33079 which affirmed the Decisions of the
Metropolitan Trial Court of Quezon City, Branch 36 and the Regional Trial Court of Quezon
City, Branch 219 finding petitioner Robert Chua guilty beyond reasonable doubt of 54 counts of
Violation of Batas Pambansa Blg. 22 is REVERSED and SET ASIDE. Petitioner Robert Chua
is hereby ACQUITTED on the ground that his guilt has not been established beyond reasonable
doubt and ordered RELEASED immediately unless he is detained for some other legal cause.
He is ordered, however, to indemnify the private complainant Philip See the total value of the 54
checks subject of this case plus legal interest of 12% per annum from the time the said sum
became due and demandable until June 30, 2013 and 6% per annum from July 1, 2013 until fully
paid.

SO ORDERED.cralawlawlibrary

G.R. No. 192914, January 28, 2016

NAPOLEON D. SENIT, Petitioner, v. PEOPLE OF THE PHILIPPINES, Respondent.

DECISION

REYES, J.:

Before the Court is a petition for review on certiorari1 under Rule 45 of the Rules of Court
assailing the Decision2 dated November 20, 2009 and the Resolution3 dated June 17, 2010 of the
Court of Appeals (CA) in CA-G.R. CR No. 00390-MIN which affirmed with modification the
Decision4 dated April 26, 2006 of the Regional Trial Court (RTC) of Malaybalay City,
Bukidnon, Branch 10, in Criminal Case No. 10717-00 convicting Napoleon D. Senit (petitioner)
guilty beyond reasonable doubt of Reckless Imprudence resulting to Multiple Serious Physical
Injuries and Damage to Property.chanRoblesvirtualLawlibrary

The Antecedents

The facts as narrated are culled from the Comments5 of the Office of the Solicitor General (OSG)
and from the assailed decision of the CA:
In the morning of September 2, 2000, private complainant Mohinder Toor, Sr. was driving north
along Aglayan from the direction of Valencia on board his Toyota pick-up with his wife
Rosalinda Toor, their three-year-old son Mohinder Toor, Jr., and househelper Mezelle Jane
Silayan. He turned left and was coming to the center of Aglayan when a speeding Super 5 bus
driven by petitioner and coming from Malaybalay headed south towards Valencia, suddenly
overtook a big truck from the right side. Petitioner tried to avoid the accident by swerving to the
right towards the shoulder of the road and applying the brakes, but he was moving too fast and
could not avoid a collision with the pick-up. The bus crashed into the right side of private
complainant's pick-up at a right angle.

All passengers of the pick-up were injured and immediately brought to Bethel Baptist Hospital,
Sumpong, Malaybalay City. However, because of lack of medical facilities, they were
transferred to the Bukidnon Doctor's Hospital in Valencia City, Bukidnon. Rosalinda Toor
sustained an open fracture of the humerus of the right arm and displaced, closed fracture of the
proximal and distal femur of the right lower extremity which required two surgical operations.
She was paralyzed as a result of the accident and was unable to return to her job as the Regional
Manager of COSPACHEM Product Laboratories. Mohinder Toor, Sr. spent about P580,000.00
for her treatment and P3,000.00 for Mezelle Jean Silayan, who suffered frontal area swelling as a
result of the accident. Mohinder Toor, Sr. suffered a complete fracture of the scapular'bone of his
right shoulder while his son Mohinder Toor, Jr. sustained abdominal injury and a wound on the
area of his right eye which required suturing. The damage sustained by the pick-up reached
P106,155.00.

Thus, on May 30, 2001, Carlo B. Mejia, City Prosecutor of Malaybalay City, charged petitioner
with Reckless Imprudence Resulting to Multiple Serious Physical Injuries and Damage to
Property in an Amended Information which was filed with Branch 10 of the [RFC] in
Malaybalay City. The information reads:ChanRoblesVirtualawlibrary
"That on or about September 2, 2000 in the morning at [sic] Barangay Aglayan, Malaybalay
City, Province of Bukidnon, Philippines and within the jurisdiction of this Honorable Court, the
above-named accused, did then and there willfully, unlawfully, and criminally in violation of the
Land Transportation and Traffic Code, in negligent, careless, imprudent manner and without
precaution to prevent accident [to] life and property, drive a Super Five Nissan Bus, color
white/red bearing plate No. MVD-776

owned by PAUL PADAYHAG of Rosario Heights, Iligan City, as a result hit and bumped the
[sic] motor vehicle, Toyota Pick-up color blue with plate No. NEF-266 driven and owned by
MOHINDER S. TOO[R,] SR., and with his wife Rosalinda Toor, son Mohinder Toor, Jr., 3
years old and househelp Mezelle Jane Silayan, 17 years old, riding with him. The Toyota pick-up
was damaged in the amount of [P] 105,300.00 and spouses Mohinder Toor[,] Sr. and Rosalinda
Toor, Mohinder Toor[,] Jr[.] and Mezelle Jane Silayan sustained the following injuries to wit:

MOHINDER TOORM SR.

= complete fracture of superior scapular bone right shoulder

MOHINDER TOORM JR.

= MPI secondary to MVA r/o Blunt abdominal injury
= Saturing [sic] right eye area

ROSALINDA TOOR

= Fracture, open type 11, supracondylar, humerus right

= Fracture, closed, Complete, displaced, subtrochanter
= and supracondylar femur right

MEZELLE JANE SILAYAN

= Frontal area swelling 20 vehicular accident

to the damage and prejudice of the complainant victim in such amount that they are entitled to
under the law.

CONTRARY TO and in Violation of Article 365 in relation to 263 of the Revised Penal
Code. IN RELATION TO THE FAMILY CODE."6 (Citations omitted)

Upon being arraigned on June 21, 2001, the petitioner, with the assistance of his counsel,
pleaded not guilty to the Information in this case.7chanroblesvirtuallawlibrary

Trial ensued. However, after the initial presentation of evidence for the petitioner, he resigned
from his employment and transferred residence. His whereabouts allegedly became unknown so
he was not presented as a witness by his new counsel.8chanroblesvirtuallawlibrary

On April 26, 2006, the RTC rendered its Decision in absentia convicting the petitioner of the
crime charged. The fallo of the decision reads:

WHEREFORE, premises considered and finding the .accused NAPOLEON SENIT y

Duhaylungsod guilty beyond reasonable doubt of the crime as charged, he is hereby sentenced to
an imprisonment of an indeterminate penalty of Four [4] months and One [1] day of Arresto
Mayor maximum as minimum and to Four [4] years and Two [2] months Prision Correctional
medium as maximum. The accused is further ordered to indemnify the private complainant the
amount of Fifty Thousand [P50,000.00] Pesos as moral damages, the amount of Four Hundred
Eighty Thousand [P480,000.00] [Pesos] for the expenses incurred in the treatment and
hospitalization of Rosalinda Toor, Mohinder Toor, Jr[.] and Mezelle Jean Silayan and the
amount of Eighty Thousand [P80,000.00] [Pesos] for the expenses incurred in the repair of the
damaged Toyota pick-up vehicle.

SO ORDERED.9chanroblesvirtuallawlibrary

The RTC issued a Promulgation10 dated August 4, 2006, which included an order for the arrest of
the petitioner.
The petitioner then filed a motion for new trial via registered mail on the ground that errors of
law or irregularities have been committed during trial that are allegedly prejudicial to his
substantial rights. He claimed that he was not able to present evidence during trial because he
was not notified of the schedule. Likewise, he mistakenly believed that the case against him has
been dismissed as private complainant Mohinder Toor, Sr. (Toor, Sr.) purportedly left the
country.11chanroblesvirtuallawlibrary

On September 22, 2006, the public prosecutor opposed the motion for new trial filed by the
petitioner.12chanroblesvirtuallawlibrary

On October 26, 2006, the motion for new trial was denied by the lower court pronouncing that
notices have been duly served the parties and that the reason given by the petitioner was self-
serving.13chanroblesvirtuallawlibrary

Dissatisfied with the RTC decision, the petitioner filed his Notice of Appeal dated November 6,
2006 by registered mail to the CA, on both questions of facts and
laws.14chanRoblesvirtualLawlibrary

Ruling of the CA

On November 20, 2009, the CA affirmed the decision of the RTC with modification as to the
penalty imposed, the dispositive portion thereof reads:

ACCORDINGLY, with MODIFICATION that [the petitioner] should suffer the penalty of three
(3) months and one (1) day of arresto mayor, the Court AFFIRMS in all other respects the
appealed 26 April 2006 Decision of the [RTC] of Malaybalay City, Branch 10, in Criminal Case
No. 10717-00.

No pronouncement as to costs.

SO ORDERED.15chanroblesvirtuallawlibrary

In affirming with modification the decision of the RTC, the CA ratiocinated as follows: first, the
evidence presented by OSG overwhelmingly points to the petitioner as the culprit. A scrutiny of
the records further reveals that the pictures taken after the accident and the Traffic Investigation
Report all coincide with the testimonies of the prosecution witnesses, which are in whole
consistent and believable thus, debunking the claim of the petitioner that he was convicted on the
mere basis of allegedly biased and hearsay testimonies which do not establish his guilt beyond
reasonable doubt. In addition, there was no existing evidence to show that there was an improper
motive on the part of the eyewitnesses.16chanroblesvirtuallawlibrary

Second, it found the arguments of the petitioner to move for a new trial as
baseless.17chanroblesvirtuallawlibrary

Lastly, it rendered that the proper imposable penalty is the maximum period of arresto mayor in
its minimum and medium periods that is -imprisonment for three (3) months and one (1) day
of arresto mayor since the petitioner has, by reckless imprudence, committed an act which, had
it been intentional, would have constituted a less grave felony, based on the first paragraph of
Article 365 in relation to Article 48 of the Revised Penal
Code(RPC).18chanroblesvirtuallawlibrary

The petitioner filed a motion for reconsideration which was denied by the CA, in its
Resolution19 dated June 17, 2010.

As a final recourse, the petitioner filed the petition for review before this Court, praying that the
applicable law on the matter be reviewed, and the gross misappreciation of facts committed by
the court a quo and by the CA be given a second look.chanRoblesvirtualLawlibrary

The Issues
I. WHETHER OR NOT THE RTC AND THE CA ERRED IN DENYING THE MOTION FOR
NEW TRIAL OR TO RE-OPEN THE SAME IN ORDER TO ALLOW THE PETITIONER TO
PRESENT EVIDENCE ON HIS BEHALF; AND

II. WHETHER OR NOT THE RTC ERRED IN CONVICTING THE PETITIONER DESPITE
THE APPARENT FAILURE ON THE PART OF THE PROSECUTION TO PROVE THE
GUILT OF THE PETITIONER BEYOND REASONABLE
DOUBT.20chanroblesvirtuallawlibrary

Ruling of the Court

The petition lacks merit.

The RTC and CA did not err in

denying the petitioner's motion for new
trial or to re-open the same.

The Court finds that no errors of law or irregularities, prejudicial to the substantial rights of the
petitioner, have been committed during trial.

The petitioner anchors his motion for new trial on Rule 121, Section 2(a) of the Revised Rules of
Criminal Procedure, to wit:

Sec. 2. Grounds for a new trial.  - The Court shall grant a new trial on any of the following
grounds:ChanRoblesVirtualawlibrary
(a) That errors of law or irregularities prejudicial to the substantial rights of the accused
have been committed during the trial;

(b) That new and material evidence has been discovered which the accused could not with
reasonable diligence have discovered and produced at the trial and which if introduced and
admitted would probably change the judgment. (Emphasis ours)

To sum up the claims of the petitioner, he theorizes that there was an error of law or irregularities
committed when the RTC promulgated a decision in absentia and deemed that he had waived his
right to present evidence resulting to denial of due process, a one-sided decision by the RTC, and
a strict and rigid application of the Revised Rules of Criminal Procedure against him.

First, it must be noted that the petitioner had already been arraigned and therefore, the court a
quo had already acquired jurisdiction over him. In fact, there was already an initial presentation
of evidence for the defense when his whereabouts became unknown.

The petitioner's claims that he had not testified because he did not know the schedule of the
hearings, and mistakenly believed that the case had already been terminated with the departure of
Toor, Sr., do not merit our consideration.21chanroblesvirtuallawlibrary

The holding of trial in absentia is authorized under Section 14(2), Article III of the 1987
Constitution which provides that after arraignment, trial may proceed notwithstanding the
absence of the accused provided that he has been duly notified and his failure to appear is
unjustifiable.22 It is established that notices have been served to the counsel of the petitioner and
his failure to inform his counsel of his whereabouts is the reason for his failure to appear on the
scheduled date. Thus, the arguments of the petitioner against the validity of the proceedings and
promulgation of judgment in absentia for being in violation of the constitutional right to due
process are doomed to fail.23chanroblesvirtuallawlibrary

In Estrada v. People,24 the Court ruled that:

Due process is satisfied when the parties arc afforded a fair and reasonable opportunity to
explain their respective sides of the controversy.

In the present case, petitioner was afforded such opportunity. The trial court set a hearing on
May 14, 1997 for reception of defense evidence, notice of which was duly sent to the addresses
on record of petitioner and her counsel, respectively. When they failed to appear at the May 14,
1997 hearing, they later alleged that they were not notified of said setting. Petitioner's counsel
never notified the court of any change in her address, while petitioner gave a wrong address from
the very beginning, eventually jumped bail and evaded court processes. Clearly, therefore,
petitioner and her counsel were given all the opportunities to be heard. They cannot now
complain of alleged violation of petitioner's right to due process when it was by their own fault
that they lost the opportunity to present evidence.25 (Citation omitted)

Similarly in the present case, the petitioner clearly had previous notice of the criminal case filed
against him and was given the opportunity to present evidence in his defense. The petitioner was
not in any way deprived of his substantive and constitutional right to due process as he was duly
accorded all the opportunities to be heard and to present evidence to substantiate his defense, but
he forfeited this right, through his own negligence, by not appearing in court at the scheduled
hearings.26chanroblesvirtuallawlibrary
The negligence of the petitioner in believing that the case was already terminated resulting to his
failure to attend the hearings, is inexcusable. The Court has ruled in many cases that:

It is petitioner's duty, as a client, to be in touch with his counsel so as to be constantly posted

about the case. It is mandated to inquire from its counsel about the status and progress of the case
from time to time and cannot expect that all it has to do is sit back, relax and await the outcome
of the case. It is also its responsibility, together with its counsel, to devise a system for the
receipt of mail intended for them.27 (Citations omitted)

The Court finds that the negligence exhibited by the petitioner, towards the criminal case against
him in which his liberty is at risk, is not borne of ignorance of the law as claimed by his counsel
rather, lack of concern towards the incident, and the people who suffered.from it. While there
was no showing in the case at bar that the counsel of the petitioner was grossly negligent in
failing to inform him of the notices served, the Court cannot find anyone to blame but the
petitioner himself in not exercising diligence in informing his counsel of his whereabouts.

The Court also agrees with the Comment of the OSG that there is neither rule nor law which
specifically requires the trial court to ascertain whether notices received by counsel are
sufficiently communicated with his client.28chanroblesvirtuallawlibrary

In GCP-Manny Transport Services, Inc. v. Judge Principe,29 the Court held that:

[W]hen petitioner is at fault or not entirely blameless, there is no reason to overturn well-settled
jurisprudence or to interpret the rules liberally in its favor. Where petitioner failed to act with
prudence and diligence, its plea that it was not accorded the right to due process cannot elicit this
Court's approval or even sympathy. It is petitioner's duty, as a client, to be in touch with his
counsel so as to be constantly posted about the case, x x x.30 (Citations omitted)

Even if the Court assumed that the petitioner anchors his claim on Section 2(b) of Rule 121 of
the Revised Rules of Criminal Procedure, the argument still has no merit.

"A motion for new trial based on newly-discovered evidence may be granted only if the
following requisites are met: (a) that the evidence was discovered after trial; (b) that said
evidence could not have been discovered and produced at the trial even with the exercise of
reasonable diligence; (c) that it is material, not merely cumulative, corroborative or impeaching;
and (d) that the evidence is of such weight that, if admitted, it would probably change the
judgment. It is essential that the offering party exercised reasonable diligence in seeking to locate
the evidence before or during trial but nonetheless failed to secure it."31 The Court agrees with
the CA in its decision which held that "a new trial may not be had on the basis of evidence which
was available during trial but was not presented due to its negligence. Likewise, the purported
errors and irregularities committed in the course of the trial against [the petitioner's] substantive
rights do not exist."32chanroblesvirtuallawlibrary

In Lustana v. Jimena-Lazo,33 the Court ruled that:

Rules of procedure are tools designed to promote efficiency and orderliness as well as to
facilitate attainment of justice, such that strict adherence thereto is required. Their application
may be relaxed only when rigidity would result in a defeat of equity and substantial justice,
which is not present here. Utter disregard of the Rules cannot just be rationalized by harking on
the policy of liberal construction.34 (Citations omitted and italics in the original)

In the instant case, the Court finds no reason to waive the procedural rules in order to grant the
motion for new trial of the petitioner. There is just no legal basis for the grant of the motion for
new trial. The Court believes that the petitioner was given the opportunity to be heard but he
chose to put this opportunity into waste by not being diligent enough to ask about the status of
the criminal case against him and inform his counsel of his whereabouts.

The RTC did not err in convicting the petitioner.

The law applicable to the case at bar is Article 365 of the RPC, which provides that:

Art. 365. Imprudence andnegligence. -x x x.

xxxx

Reckless imprudence consists in voluntary, but without malice, doing or failing to do an act from
which material damage results by reason of inexcusable lack of precaution on the part of the
person performing or failing to perform such act, taking into consideration his employment or
occupation, degree of intelligence, physical condition and other circumstances regarding persons,
time and place.

xxxx

The elements of reckless imprudence are: (1) that the offender does or fails to do an act; (2) that
the doing or the failure to do that act is voluntary; (3) that it be without malice; (4) that material
damage results from the reckless imprudence; and (5) that there is inexcusable lack of precaution
on the part of the offender, taking into consideration his employment or occupation, degree of
intelligence, physical condition, and other circumstances regarding persons, time, and
place.35chanroblesvirtuallawlibrary

All elements for the crime of reckless imprudence have been established in the present case.

The petitioner questions the credibility of the prosecution witnesses and claims that their
testimonies are biased. He also claims that Toor, Sr. is the real culprit when he turned left
without looking for an incoming vehicle, thus violating traffic rules resulting to the mishap.

The Court believes that the RTC and CA correctly appreciated the evidence and testimonies
presented in the instant case.

The Court agrees with the OSG that not only were the witnesses' narrations of the accident
credible and worthy of belief, their accounts were also consistent and tallied on all significant
and substantial points.36 These witnesses' testimonies are as follows:

PO3 Jesus Delfm testified that he investigated the accident at Aglayan. He made the following
findings in his accident report: the pick-up owned and driven by Toor, Sr., together with his
family and a househelper as his passengers, was turning left along Aglayan when it was hit at a
right angle position by a Super 5 bus driven by the petitioner. He noted skid marks made by the
bus and explained that the petitioner was overtaking but was not able to do so because of the
pick-up. The petitioner could not swerve to the left to avoid the pick-up because there was a ten-
wheeler truck. He swerved to the right instead and applied breaks to avoid the accident. The
investigator clearly testified that, on the basis of data gathered, the collision was due to the error
of the bus driver who was driving too fast, as evinced by the distance from the skid marks
towards the axle.37chanroblesvirtuallawlibrary

Albert Alon testified that he saw Toor, Sr.'s pick-up turn left along Aglayan. He also saw a big
truck and a Super 5 bus both coming from Malaybalay. The truck was running slowly while the
Super 5 bus was running fast and overtaking the big truck from the right side. The bus crashed
into the pick-up and pushed the smaller vehicle due to the force of the impact. He went nearer
the area of collision and saw that the four passengers of the pick-up were
unconscious.38chanroblesvirtuallawlibrary

Mezelle Jane Silayan testified that while moving towards the center of Aglayan on board her
employer's pick-up, she saw a Super 5 bus overtaking a big truck from the right side. Their
vehicle was hit by the bus. She was thrown out of the pick-up and hit her head on the
ground.39chanroblesvirtuallawlibrary

Toor, Sr. testified that while he was driving his pick-up at the corner of the center of Aglayan, a
Super 5 bus, moving fast, overtook a big truck from the right side. The bus then hit the pick up,
injuring him and all his passengers.40chanroblesvirtuallawlibrary

Taken all together, the testimonies of the witnesses conclusively suggest that: (1) the Super 5 bus
was moving fast; (2) the bus overtook a big truck which was moving slowly from the right side;
and (3) when the petitioner saw the pick-up truck turning left, he applied the brakes but because
he was moving fast, the collision became inevitable.

"Well-entrenched is the rule that the trial court's assessment of the credibility of witnesses is
entitled to great weight and is even conclusive and binding, if not tainted with arbitrariness or
oversight of some fact or circumstance of significance and influence. This rule is based on the
fact that the trial court had the opportunity to observe the demeanor and the conduct of the
witnesses."41 The Court finds in the instant case that there is no reason for this Court to deviate
from the rule.

The Court finds the testimonies of the witnesses not biased. There was no evidence of ill. motive
of the witnesses against the petitioner.

Lastly, the petitioner claims that Toor, Sr. committed a traffic violation and thus, he should be
the one blamed for the incident. The Court finds this without merit.
The prosecution sufficiently proved that the Super 5 bus driven by the petitioner recklessly drove
on the right shoulder of the road and overtook another south-bound ten-wheeler truck that slowed
at the intersection, obviously to give way to another vehicle about to enter the intersection. It was
impossible for him not to notice that the ten-wheeler truck in front and traveling in the same
direction had already slowed down to allow passage of the pick-up, which was then negotiating a
left turn to Aglayan public market. Seeing the ten-wheeler truck slow down, it was incumbent
upon the petitioner to reduce his speed or apply on the brakes of the bus in order to allow the
pick-up to safely make a left turn. Instead, he drove at a speed too fast for safety, then chose to
swerve to the right shoulder of the road and overtake the truck, entering the intersection and
directly smashing into the pick-up. In flagrantly failing to observe the necessary precautions to
avoid inflicting injury or damage to other persons and things, the petitioner was recklessly
imprudent in operating the Super 5 bus.42chanroblesvirtuallawlibrary

In Dumayag v. People,43 the Court held:

Section 37 of R.A. No. 4136, as amended, mandates all motorists to drive and operate vehicles
on the right side of the road or highway. When overtaking another, it should be made only if the
highway is clearly visible and is free from oncoming vehicle. Overtaking while approaching a
curve in the highway, where the driver's view is obstructed, is not allowed. Corollarily, drivers
of automobiles, when overtaking another vehicle, are charged with a high degree of care
and diligence to avoid collision. The obligation rests upon him to see to it that vehicles
coming from the opposite direction arc not taken unaware by his presence on the side of
the road upon which they have the right to pass.44 (Citations omitted and emphasis ours)

Thus, the petitioner cannot blame Toor, Sr. for not noticing a fast-approaching bus, as the cited
law provides that the one overtaking on the road has the obligation to let other cars in the
opposite direction know his presence and not the other way around as the petitioner suggests.

WHEREFORE, the petition is DENIED. Accordingly, the Decision dated November 20, 2009
and the Resolution dated June 17, 2010 of the Court of Appeals in CA-G.R. CRNo. 00390-MIN
are AFFIRMED.

SO ORDERED.cralawlawlibrary

G.R. No. 179457               June 22, 2015

WILFREDO DE VERA, EUFEMIO DE VERA, ROMEO MAPANAO, JR., ROBERTO

VALDEZ, HIROHITO ALBERTO, APARICIO RAMIREZ, SR., ARMANDO DE VERA,
MARIO DE VERA, RAMIL DE VERA, EVER ALMOGELA ALDA, JUANITO
RIBERAL, represented by PACITA PASENA CONDE, ANACLETO PASCUA, ISIDRO
RAMIREZ, represented by MARIANO BAINA, SPOUSES TRUDENCIO RAMIREZ and
ESTARLITA HONRADA, ARNEL DE VERA, ISABELO MIRETTE, and ROLANDO DE
VERA, Petitioners,
vs.
SPOUSES EUGENIO SANTIAGO, SR., and ESPERANZA H. SANTIAGO, SPOUSES
RAMON CAMPOS and WARLITA SANTIAGO, SPOUSES ELIZABETH SANTIAGO
and ALARIO MARQUEZ, SPOUSES EFRAEM SANTIAGO and GLORIA SANTIAGO,
SPOUSES EUGENIO SANTIAGO, JR. and ALMA CAASI, JUPITER SANTIAGO, and
JON-JON CAMOS, Respondents.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari of the Court of Appeals (CA)
Decision1 dated May 29, 2007 and its Resolution2 dated August 22, 2007 in CA-G.R. SP No.
79769. The dispositive portion of the CA Decision reads:

WHEREFORE, premises considered, the instant Petition is hereby GRANTED. The assailed
Decision dated 14 June 2002 of the Regional Trial Court, Branch 54, Alaminos City, Pangasinan
in Civil Case No. A-2750 and the Decision dated 09 November 2001 of the Municipal Trial
Court of Bolinao, Pangasinan in Civil Case No. 939 are hereby both ANNULLED and SET
ASIDE or lack of jurisdiction.

This decision, however, is without prejudice to the filing of an appropriate action before the
proper court by the contending parties herein.

No pronouncement as to costs.

SO ORDERED.3

The antecedent facts follow.

On February 14, 2000, petitioners filed an action for reconveyance of ownership or possession
with damages against respondents before the Municipal Trial Court (MTC) of Bolinao,
Pangasinan, which was docketed as Civil Case No. 939.

In their Complaint4 dated January 24, 2000, petitioners alleged that they are the owners of certain
portions5 of a subdivided land located at Barangay Patar, Bolinao, Pangasinan, denominated as
Lot No. 7303, Cad. 559-D, Bolinao Cadastre, with an area of about265,342 square meters. Along
with their predecessors-in-interest, petitioners have allegedly been in actual and continuous
possession and occupation of their respective portions of the land since 1967, without
disturbance from any third person. Later on, however, they discovered that their respective lots
covered by Lot 7303 were already covered by Free Patent Titles in the names of respondents,
except Eugenio Santiago, Sr., which were acquired through manipulation, misrepresentation,
fraud and deceit.

Petitioners also claimed that their open, continuous and exclusive possession of Lot 7303 for at
least a period of thirty (30) years prior to the issuance of the Free Patent Titles, ipso jure
converted it into a private property. Thus, the Bureau of Lands has no jurisdiction to issue the
said titles which are therefore null and void. In support of their claims, petitioners attached to
their complaint copies of their respective tax declarations. They also prayed to be declared as
absolute owners of Lot 7303, for respondents to reconvey to them the whole area of the same lot,
and for the award of actual, moral and exemplary damages and litigation expenses.

In their Answer6 dated March 21, 2000, respondents specifically denied the material allegations
in petitioners' complaint and countered that they are the owners of the land denominated as Lot
7303, Cad. 559-D, Bolinao Cadastre. They insisted that their acquisition of titles over the land
was regular and done in accordance with law. They also claimed that they and their
predecessors-in-interest are the actual possessors and owners of the disputed land as shown by
their titles7 and tax declarations.8

As part of their affirmative defenses, respondents alleged that the MTC has no jurisdiction over
the case. As the combined assessed value of the disputed land is more than ₱20,000.00, the case
is within the exclusive original jurisdiction of the RTC pursuant to Section 19, paragraph 2 of
Batas Pambansa Bilang 129 (B.P. Blg. 129), known as the Judiciary Reorganization Act of 1980,
as amended by Republic Act No. 7691. They also alleged that titles over the land denominated as
Lot No. 7303 has already acquired the status of indefeasibility as they were issued as early as
1996, and they were also issued tax declarations over their titled properties. They claimed to
have acquired the land from Eugenio Santiago, Sr., as shown in the Deeds of Sale which were all
duly registered with the Register of Deeds, Alaminos, Pangasinan in 1991 and 1992. They noted
that the only documents of petitioners are tax declarations which were issued as "new" in 1990
without any proof of acquisition, hence, inferior to the Original Certificate of Titles and Tax
Declarations issued to respondents. By way of counterclaim, respondents prayed for the award of
attorney's fees, appearance fees, litigation expenses, and moral and exemplary damages. They
also prayed for the dismissal of the complaint, and to be declared lawful owners and possessors
of the disputed land.

The issues having been joined and the pre-trial conference having been terminated, the MTC
went on to try the case upon the following issues agreed upon by the parties: (1) Who has a
better right to the disputed land? (2) Who are the lawful owners of Lot No. 7303? (3) Are
respondents guilty of fraud, deceit and misrepresentation in obtaining their free patents? (4) Who
between the parties are in prior continuous and actual possession of Lot 7303? And (5) Are the
parties entitled to damages?

On November 9, 2001, the MTC rendered a Decision, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the defendants [respondents herein]:

1. DISMISSING the above-entitled complaint;

2. DECLARING defendants [respondents] the lawful owners and possessors of the land
in question, Lot No. 7303, CAD 559-D, Bolinao Cadastre embraced by Certificate of
Title Nos. 15818, 15819, 15820, 15754, 15755, and 15756, inclusive;

3. ORDERING all the plaintiffs to jointly and solidarily pay the defendants [respondents]
the amount of ₱50,000.00 as Attorney's Fee and Litigation Expenses, and to pay cost of
suit.
SO ORDERED.9

Dissatisfied with the MTC Decision, petitioners filed an appeal with the Regional Trial Court
(RTC) of Alaminos City, Pangasinan, Branch 64.

On June 14, 2002, the RTC rendered a Decision10 in favor of petitioners, the dispositive portion
of which states:

WHEREFORE, in consideration of the foregoing, Judgment is hereby rendered REVERSING IN

TOTO the findings and decision of the Municipal Trial Court of Bolinao, Pangasinan, dated
November 9, 2001 and that therefore a SEPARATE JUDGMENT IS NOW RENDERED, to wit:

1. ORDERING THAT:

OCT (FP) No. 15820 – in the name of Jupiter Santiago, denominated as Lot 7303-E with an area
of 50,000 square meters, copy of which is hereto attached as Annex HH;

OCT (FP) No. 15819 – in the name Efraem Santiago and Gloria Santiago, denominated as Lot
7303-D, with an area of 50,000 square meters, copy of which is hereto attached as Annex II;
OCT (FP) No. 15765 – in the name of Sps. Elizabeth Santiago and Almario Marquez,
denominated as Lot 7303-F, with an area of 15,542 square meters, copy of which is hereto
attached as Annex JJ;

OCT (FP) No. 15755 – in the name of Sps. Eugenio Santiago Jr. and Alma Caasi with an area of
50,000 square meters, copy of which is hereto attached and marked as Annex KK;

OCT (FP) No. 15754 – in the name of Jonjon Santiago denominated as Lot 7303-B, with an area
of 50,000 square meters. Copy of which is hereto attached and marked as Annex LL;

OCT (FP) No. 15818 – in the name of Sps. Ramon Campos and Warlita Santiago, denominated
as Lot 7303-A, with an area of 50,000 square meters, copy of which is hereto attached and
marked as Annex MM;

to reconvey the entire area as stated in their free patent in favor of the plaintiffs, as the same
Free-Patent Titles to defendants [respondents herein] are now declared VOID and without legal
effect;

2. The plaintiffs [petitioners herein], commensurate with their land area which was lost as a
result of the issuance of free patent titles shall then proceed to divide their respective lands
possessed by each or any of them.

3. Ordering the defendants [respondents] to pay the following damages, jointly and severally in
favor of the plaintiffs [petitioners], to wit:

a. The reduced sum of TWENTY THOUSAND PESOS (₱20,000.00) each for moral
damages;
 b. The reduced sum of TWENTY THOUSAND PESOS (₱20,000.00) each for exemplary
damages; and

c. The sum of FIVE THOUSAND PESOS (₱5,000.00 each as actual damages.

IT IS SO ORDERED.11

Aggrieved by the RTC Decision, respondents filed with the CA a petition for review under Rule
42 of the Rules of Court.

On May 29, 2007, the CA granted the petition for review, and annulled and set aside the
Decisions of both the RTC and the MTC on the ground of lack of jurisdiction. For the same
reason, the CA declined to resolve and deemed as moot and academic the other factual issues
raised in the petition.

The CA also ruled that assuming arguendo that the RTC had jurisdiction over the case, it
nonetheless has no authority to declare as null and void the Original Certificates of Title (Free
Patents) registered in the name of respondents because the said titles were issued four (4) years
prior to the filing of the petitioners' complaint for reconveyance. In support of its ruling, the CA
cited the following basic principles in land registration: (a) that a certificate of title serves as
evidence of an indefeasible and incontrovertible title to the land in favor of the person whose
name appeared thereon; (b) such indefeasibility commences after the lapse of one (1) year from
date of entry of the decree of registration; (c) the act of registration is considered a constructive
notice to all persons respecting title to land, and such title can no longer be contested after the
lapse of one (1) year from registration; and (d) a certificate of title cannot be subject to collateral
attack, and can be altered, modified or cancelled only in a direct proceeding in accordance with
law.

On August 22, 2007, the CA denied petitioners' motion for reconsideration of its Decision.
Hence, the petition for review on certiorari, raising the sole issue:

WHETHER THE COURT OF APPEALS GRAVELY ERRED IN ANNULLING THE

DECISION OF THE REGIONAL TRIAL COURT OF ALAMINOS CITY, PANGASINAN,
BRANCH 54 FOR LACK OF JURISDICTION.12

Petitioners contend that while the MTC of Bolinao, Pangasinan, is without jurisdiction to act
upon the action for reconveyance of ownership and possession with damages, involving a land
with an assessed value of more than ₱20,000.00, the RTC of Alaminos, Pangasinan, nonetheless
correctly assumed jurisdiction thereon on appeal pursuant to Section 8, Rule 40 of the Rules of
Court, as amended. Thus, the RTC Decision should not have been nullified as a result of the
MTC's lack of jurisdiction over the case. They also point out that even if the CA ruled that the
nullification of the Decisions of both the MTC and the RTC is without prejudice to the filing of
an appropriate action before the proper court, such would result in multiplicity of suits. This is
because the trial court where such action will be filed anew will just repeat the task already done
competently by the RTC.
As to the issue of indefeasibility of respondents' free patent titles, petitioners argue that an action
for reconveyance is still an available remedy, as the disputed land has not yet passed to an
innocent purchaser for value. They add that the rule on incontrovertibility of a certificate of title
upon the lapse of 1 year after the entry of the decree of registration does not apply when an
action for the cancellation of free patent title is instituted on the ground that it is null and void for
having been issued with respect to a private property.

Citing the rule that a free patent issued over a private land is null and void, and produces no legal
effects, petitioners contend that the presentation of either a duly-registered possessory
information or a clear showing of their open, continuous, exclusive and notorious possession of
the disputed land, suffices to strip it of its public character, and render it unavailable for
application for a free patent title. Petitioners assert that since both parties claimed that they have
been in possession of the subject land for more than thirty (30) years prior to the issuance of the
disputed free patent titles, their claims have the effect of establishing the private character of the
same property. Thus, the only question that remains is who between petitioners and respondents
adequately proved their claim. In this regard, petitioners posit that the RTC correctly concluded
that their evidence is more persuasive than that of respondents. As to the issue of the immunity
of the disputed titles from collateral attack, petitioners submit that their action for reconveyance
of ownership and possession with damages, is an appropriate action to directly assail such titles.

For their part, respondents counter that Section 8, Rule 40 of the Rules of Court is not applicable
in the case at bar, as it refers only to cases where the lower court (MTC) dismissed a case filed
with it without trial on the merits, and an appeal to the RTC was taken from the order of
dismissal. In which case, according to respondents, the RTC may reverse the dismissal and, if it
has jurisdiction, shall try the case on the merits as if the case were originally filed with it.
Respondents further argue that if petitioners were indeed unlawfully deprived of their real right
of possession and ownership of the disputed property, they should have filed an accion
publiciana or reivindicatoria with the RTC, and not before the MTC. Theyalso insist that the
RTC has no jurisdiction to declare as null and void the free patent titles in their names because of
the principle of indefeasibility and incontrovertibility of titles after the lapse of one (1) year from
the issuance of a decree of registration.

The petition is meritorious.

In resolving the issue of whether the CA erred in annulling the RTC Decision for lack of
jurisdiction, the Court is guided by the well-settled rule that "jurisdiction over the subject matter
of a case is conferred by law and determined by the allegations in the complaint which comprise
a concise statement of the ultimate facts constituting the plaintiff's cause of action. The nature of
an action, as well as which court or body has jurisdiction over it, is determined based on the
allegations contained in the complaint of the plaintiff, irrespective of whether or not the plaintiff
is entitled to recover upon all or some of the claims asserted therein. The averments in the
complaint and the character of the relief sought are the ones to be consulted. Once vested by the
allegations in the complaint, jurisdiction also remains vested irrespective of whether or not the
plaintiff is entitled to recover upon all or some of the claims asserted therein."13
The jurisdictions of the RTC and the MTC over civil actions involving title to, or possession of
real property or interest therein, like petitioners' action for reconveyance of ownership and
possession with damages, are distinctly set forth under Section 19 (2) and Section 33 (3) of B.P.
Blg. 129, as amended:

Section 19. Jurisdiction in civil cases.– Regional Trial Courts shall exercise exclusive original
jurisdiction:

(2) In all civil actions which involve the title to, or possession of, real property, or any interest
therein, where the assessed value of the property involved exceeds Twenty thousand pesos
(₱20,000.00) or for civil actions in Metro Manila, where such the value exceeds Fifty thousand
pesos (₱50,000.00) except actions for forcible entry into and unlawful detainer of lands or
buildings, original jurisdiction over which is conferred upon Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts;

Section 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal
Circuit Trial Courts in civil cases.– Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts shall exercise:

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real
property, or any interest therein where the assessed value of the property or interest therein does
not exceed Twenty thousand pesos (₱20,000.00) or, in civil actions in Metro Manila, where such
assessed value does not exceed Fifty thousand pesos (₱50,000.00) exclusive of interest, damages
of whatever kind, attorney's fees, litigation expenses and costs: Provided, That value of such
property shall be determined by the assessed value of the adjacent lots. (as amended by R.A. No.
7691)

A careful perusal of the allegations in their complaint for reconveyance of ownership and
possession with damages, would show that petitioners failed to indicate the assessed value of the
subject real property. At any rate, based on the Tax Declarations14 attached to their complaint,
the disputed land located in Bolinao, Pangasinan, has a total assessed value of ₱54,370.00. In
line with the above-quoted statutory provisions, therefore, the RTC has jurisdiction over
petitioners' civil action involving title to a real property outside Metro Manila with a total
assessed value in excess of ₱20,000.00.

Thus, while the CA is correct in ruling that the MTC has no jurisdiction over the case for
reconveyance and recovery of ownership and possession of a land with an assessed value over
₱20,000.00, the same cannot be said of its ruling with respect to the RTC. Under Section 8, Rule
40 of the Rules of Court, if the MTC tried a case on the merits despite having no jurisdiction
over the subject matter, its decision may be reviewed on appeal by the RTC, to wit:

Sec. 8. Appeal from orders dismissing case without trial; lack of jurisdiction.

If an appeal is taken from an order of the lower court dismissing the case without a trial on the
merits, the Regional Trial Court may affirm or reverse it, as the case may be. Incase of
affirmance and the ground of dismissal is lack of jurisdiction over the subject matter, the
Regional Trial Court, if it has jurisdiction thereover, shall try the case on the merits as if the case
was originally filed with it. In case of reversal, the case shall be remanded for further
proceedings.

If the case was tried on the merits by the lower court without jurisdiction over the subject matter,
the Regional Trial Court on appeal shall not dismiss the case if it has original jurisdiction
thereof, but shall decide the case in accordance with the preceding section, without prejudice to
the admission of amended pleadings and additional evidence in the interest of justice.15

In Serrano v. Spouses Gutierrez,16 the Court explained that the first paragraph of Section 8, Rule
40 contemplates an appeal from an order of dismissal issued without trial of the case on the
merits, while the second paragraph deals with an appeal from an order of dismissal but the case
was tried on the merits. Both paragraphs, however, involve the same ground for dismissal, i.e.,
lack of jurisdiction. Verily, the second paragraph refutes respondents' contention that Section 8,
Rule 40 refers solely to cases where the MTC dismissed a case filed therein without a trial on the
merits and an appeal to the RTC was taken from the order of dismissal. Therefore, the RTC
correctly proceeded to decide the case on the merits despite the MTC's lack of jurisdiction over
the subject matter.

In contrast, the CA erroneously reversed and set aside the RTC Decision for lack of
jurisdiction.1âwphi1 Indeed, the RTC has appellate jurisdiction over the case and its decision
should be deemed promulgated in the exercise of that jurisdiction. The RTC’s appellate
jurisdiction, as contrasted to its original jurisdiction, is provided in Section 22 of B.P. Blg.129, as
amended, thus:

SECTION 22. Appellate jurisdiction.–Regional Trial Courts shall exercise appellate jurisdiction
over all cases decided by Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts in their respective territorial jurisdictions. Such cases shall be decided on the
basis of the entire record of the proceedings had in the court of origin such memoranda and/or
briefs as may be submitted by the parties or

The above-quoted provision vests upon the RTC the exercise of appellate jurisdiction over all
cases decided by the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit
Trial Courts in their respective territorial jurisdictions. Clearly then, the amount involved is
immaterial for purposes of the RTC’s appellate jurisdiction; all cases decided by the MTC are
generally appealable to the RTC irrespective of the amount involved.17 Hence, the CA grossly
erred in nullifying the RTC Decision for lack of jurisdiction, and in declaring as moot and
academic the factual issues raised in the respondents' petition for review when it should have
proceeded to review on appeal the factual findings of the RTC. This is because the RTC not only
has exclusive original jurisdiction over petitioners' action for reconveyance of ownership and
possession with damages, but also appellate jurisdiction over the MTC Decision itself.

On a final note, it bears emphasis that in a petition for review on certiorari under Rule 45 of the
Rules of Court, only questions of law may be raised by the parties and passed upon by this Court.
This restriction of the review to questions of law has been institutionalized in Section 1, Rule 45
of the Rules of Court, the second sentence of which provides that the petition shall raise only
questions of law which must be distinctly set forth. Indeed, in the exercise of its power of review,
the Court is not a trier of facts and, subject to certain exceptions, it does not normally undertake
the reexamination of the evidence presented by the parties during trial.18 In certain exceptional
cases, however, the Court may be urged to probe and resolve factual issues, viz.: (a) When the
findings are grounded entirely on speculation, surmises, or conjectures;

(b) When the inference made is manifestly mistaken, absurd, or impossible;

(c) When there is grave abuse of discretion;

(d) When the judgment is based on a misapprehension of facts;

(e) When the findings of facts are conflicting;

(f) When in making its findings the CA went beyond the issues of the case, or its findings
are contrary to the admissions of both the appellant and the appellee;

(g) When the CA’s findings are contrary to those by the trial court;

(h) When the findings are conclusions without citation of specific evidence on which they
are based;

(i) When the facts set forth in the petition, as well as in the petitioner’s main and reply
briefs, are not disputed by the respondent;

(j) When the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record; or

(k) When the CA manifestly overlooked certain relevant facts not disputed by the parties,
which, if properly considered, would justify a different conclusion.19

Not one of those exceptions was shown to obtain in the instant case as would justify a liberal
interpretation of procedural rules and a determination of factual issues by the Court. A perusal of
petitioners' sole assigned error would readily show that the only issue raised is one of law. There
is a question of law when the doubt or difference arises as to what the law is on certain state of
facts and which does not call for an existence of the probative value of the evidence presented by
the parties-litigants.20 Undeniably, the issue whether the CA erred in annulling the RTC Decision
for lack of jurisdiction is a question of law. The resolution of such issue rests solely on what the
law [B.P. Blg. 129, as amended] provides on the given set of circumstances as alleged in
petitioners' complaint for reconveyance of ownership and possession with damages. Meanwhile,
the factual questions necessitating a review of the evidence presented by the parties are raised in
the respondents' petition for review filed with the CA. An issue is factual when the doubt or
difference arises as to the truth or falsehood of alleged facts, or when the query invites
calibration of the whole evidence, considering mainly the credibility of witnesses, existence and
relevancy of specific surrounding circumstances, their relation to each other and to the whole,
and the probabilities of the situation.21 Without doubt, the following issues duly raised before the
CA but it failed to resolve are all questions of fact which are beyond the province of a petition
for review on certiorari under Rule 45:

I. THE REGIONAL TRIAL COURT, BR. 54, ALAMINOS CITY, PANGASINAN,

ERRED IN ORDERING OCT (FP) NO. 15820 IN THE NAME OF JUPITER
SANTIAGO, OCT (FP) NO. 15819 IN THE NAME OF EFRAEM SANTIAGO AND
GLORIA SANTIAGO; OCT NO. 15765 IN THE NAME OF SPS. ELIZABETH
SANTIAGO AND ALMARIO MARQUEZ; OCT (FP) 15755 IN THE NAME OF SPS.
EUGENIO SANTIAGO, JR. AND ALMACAASI; OCT (FP) NO 15754 IN THE NAME
OF JON-JON SANTIAGO AND OCT (FP) NO. 15818 IN THE NAME OF RAMON
CAMPOS, NULL AND VOID, AND ORDERING THEM TO RECONVEY THE
AREA INDICATED IN THEIR FREE PATENTS TITLES TO RESPONDENTS
(DEFENDANTS IN THE RTC CIVIL CASE NO. A-2750) AND FOR RESPONDENTS
TO DIVIDE AMONG THEMSELVES SAID PROPERTY;

II – THE REGIONAL TRIAL COURT ERRED IN DECLARING THAT FREE

PATENT TITLES OF HEREIN PETITIONERS WERE ACQUIRED THRU FRAUD,
HENCE, NULL AND VOID;

III – THE REGIONAL TRIAL COURT ERRED IN UPHOLDING THE VALIDITY OF

TAX DECLARATIONS OF RESPONDENTS (PLAINTIFFS IN CIVIL CASE NO.
939-MTC, BOLINAO, PANGASINAN) OVER THE PROPERTIES IN QUESTION
AND DID NOT GIVE DUE CREDENCE OF (SIC) THE TAX DECLARATION OF
PETITIONERS;

IV - THE REGIONAL TRIAL COURT ERRED IN ORDERING PETITIONERS TO

PAY RESPONDENTS DAMAGES AS SPECIFIED IN SAID DECISION;

V - THE REGIONAL TRIAL COURT ERRED IN REVERSING IN TOTO THE

DECISION OF THE MUNICIPAL TRIAL COURT OF BOLINAO, PANGASINAN
AND DECIDING THAT PETITIONERS ARE NOT THE OWNERS OF THE
PROPERTIES SUBJECT MATTER OF THIS CASE (CIVIL CASE NO. 939-MTC,
BOLINAO, PANGASINAN.22

In view of the foregoing discussion, the Court no longer finds any necessity to delve into the
parties' contentions relative to the principles of indefeasibility and incontrovertibility of Torrens
Titles, and immunity of such titles from collateral attack. However, a remand of the case to the
CA is necessary in order to fully resolve all the above-quoted factual issues raised in the
respondents' petition for review.

WHEREFORE, premises considered, the petition for review on certiorari is GRANTED. The
Court of Appeals Decision dated May 29, 2007 and its Resolution dated August 22, 2007 in CA-
G.R. SP No. 79769 are REVERSED and SET ASIDE, The case is REMANDED to the Court of
Appeals for the prompt resolution of the factual issues raised in the respondents' petition for
review of the Decision dated June 14, 2002 of the Regional Trial Court of Alaminos City,
Pangasinan, Branch 64.
This Decision is immediately executory.

SO ORDERED.

G.R. No. 162217, July 22, 2015

HEIRS OF ARTURO GARCIA I, (IN SUBSTITUTION OF HEIRS OF MELECIO

BUENO), Petitioners, v. MUNICIPALITY OF IBA, ZAMBALES, Respondent.

DECISION

BERSAMIN, J.:

For review are the resolutions promulgated on October 28, 20031 and February 10,
2004,2 whereby the Court of Appeals (CA) respectively “dismissed” the petitioners’ petition for
review under Rule 42 of the Rules of Court, and denied their motion for reconsideration.

At issue is the correct remedy of a party aggrieved by the decision rendered by the Regional
Trial Court (RTC) in the special civil action for certiorari  brought by the defendant in an
ejectment suit to assail the refusal of the Municipal Trial Court (MTC) to give due course to the
latter’s notice of appeal vis-à-vis the judgment in favor of the plaintiff.

Antecedents

The late Melecio R. Bueno was the tenant-farmer beneficiary of an agricultural land located in
Poblacion, Iba, Zambales. On October 18, 1999, he brought an ejectment suit in the MTC of Iba
against the Municipality of Iba, Province of Zambales,3claiming that in 1983, the Municipality of
Iba had constructed the public market on a substantial portion of his land without his consent;
and that his repeated demands for the Municipality of Iba to vacate the property had remained
unheeded.

After due proceedings, the MTC ruled in favor of Bueno.4 Thence, the Municipality of Iba filed
its notice of appeal, but the MTC denied due course to the notice of appeal. Thus, the
Municipality of Iba filed its petition for certiorari in the RTC in Iba, Zambales to assail the denial
of due course by the MTC. The case was assigned to Branch 69 which ultimately granted the
petition for certiorari.5redarclaw

The petitioners, who meanwhile substituted Bueno upon his death, moved for the reconsideration
of the judgment granting the petition for certiorari, but the RTC denied their motion for
reconsideration.6redarclaw

Aggrieved, the petitioners appealed to the CA by petition for review under Rule 42 of the Rules
of Court.

As earlier mentioned, the CA “dismissed” the petitioners’ petition for review on October 28,
2003 for not being the proper mode of appeal, observing that the assailed orders had been issued
by the RTC in the exercise of its original jurisdiction.7redarclaw

The motion for reconsideration of the petitioners was ultimately denied by the CA.8redarclaw

Issue

Although admitting that their petition for review under Rule 42 was inappropriate, the petitioners
maintain that they substantially complied with the requirements of an ordinary appeal under Rule
41, and pray that the Court exercise its equity jurisdiction because a stringent application of
the Rules of Court would not serve the demands of substantial justice.

Ruling of the Court

We affirm.

An appeal brings up for review any error of judgment committed by a court with jurisdiction
over the subject of the suit and over the persons of the parties, or any error committed by the
court in the exercise of its jurisdiction amounting to nothing more than an error of judgment.9 It
was, therefore, very crucial for the petitioners and their counsel to have been cognizant of the
different modes to appeal the adverse decision of the RTC in the special civil action
for certiorari brought by the Municipality of Iba. Such modes of appeal were well delineated in
the Rules of Court, and have been expressly stated in Section 2, Rule 41 of the Rules of
Court since July 1, 1997,10 to wit:LawlibraryofCRAlaw

ChanRoblesVirtualawlibrary
Section 2. Modes of appeal.—

(a) Ordinary appeal.— The appeal to the Court of Appeals in cases decided by the Regional
Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal
with the court which rendered the judgment or final order appealed from and serving a copy
thereof upon the adverse party. No record on appeal shall be required except in special
proceedings and other cases of multiple or separate appeals where the law or these Rules so
require. In such cases, the record on appeal shall be filed and served in like manner.

(b) Petition for review.— The appeal to the Court of Appeals in cases decided by the Regional
Trial Court in the exercise of its appellate jurisdiction shall be by petition for review in
accordance with Rule 42.

(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. (n)
Pursuant to this rule, in conjunction with Section 311 and Section 412 of Rule 41, the petitioners
should have filed a notice of appeal in the RTC within the period of 15 days from their notice of
the judgment of the RTC, and within the same period should have paid to the clerk of the RTC
the full amount of the appellate court docket and other lawful fees. The filing of the notice of
appeal within the period allowed by Section 3 sets in motion the remedy of ordinary appeal
because the appeal is deemed perfected as to the appealing party upon his timely filing of the
notice of appeal. It is upon the perfection of the appeal filed in due time, and the expiration of the
time to appeal of the other parties that the RTC shall lose jurisdiction over the case.13 On the
other hand, the non-payment of the appellate court docket fee within the reglementary period as
required by Section 4, is both mandatory and jurisdictional, the non-compliance with which is
fatal to the appeal, and is a ground to dismiss the appeal under Section 1,14 (c), Rule 50 of
the Rules of Court. The compliance with these requirements was the only way by which they
could have perfected their appeal from the adverse judgment of the RTC.

In contrast, an appeal filed under Rule 42 is deemed perfected as to the petitioner upon the timely
filing of the petition for review before the CA, while the RTC shall lose jurisdiction upon
perfection thereof and the expiration of the time to appeal of the other parties.15redarclaw

The distinctions between the various modes of appeal cannot be taken for granted, or easily
dismissed, or lightly treated. The appeal by notice of appeal under Rule 41 is a matter or right,
but the appeal by petition for review under Rule 42 is a matter of discretion. An appeal as a
matter of right, which refers to the right to seek the review by a superior court of the judgment
rendered by the trial court, exists after the trial in the first instance. In contrast, the discretionary
appeal, which is taken from the decision or final order rendered by a court in the exercise of its
primary appellate jurisdiction, may be disallowed by the superior court in its discretion.16 Verily,
the CA has the discretion whether to due course to the petition for review or not.17redarclaw

The procedure taken after the perfection of an appeal under Rule 41 also significantly differs
from that taken under Rule 42. Under Section 10 of Rule 41, the clerk of court of the RTC is
burdened to immediately undertake the transmittal of the records by verifying the correctness
and completeness of the records of the case; the transmittal to the CA must be made within 30
days from the perfection of the appeal.18 This requirement of transmittal of the records does not
arise under Rule 42, except upon order of the CA when deemed necessary.19redarclaw

As borne out in the foregoing, the petitioners’ resort to the petition for review under Rule 42 was
wrong. Hence, the CA did not err in denying due course to the petition for review.

Yet, the petitioners plead for liberality, insisting that their petition for review, albeit the wrong
mode, was a substantial compliance with the proper mode of appeal.

The plea for liberality is unworthy of any sympathy from the Court. We have always looked at
appeal as not a matter of right but a mere statutory privilege. As the parties invoking the
privilege, the petitioners should have faithfully complied with the requirements of the Rules of
Court. Their failure to do so forfeited their privilege to appeal. Indeed, any liberality in the
application of the rules of procedure may be properly invoked only in cases of some excusable
formal deficiency or error in a pleading, but definitely not in cases like now where a liberal
application would directly subvert the essence of the proceedings or results in the utter disregard
of the Rules of Court.20redarclaw

Moreover, the petitioners did not give any good reason or cause that could warrant the relaxation
of the rules in their favor. Their bare plea for substantial justice was not enough ground to
suspend the rules. Acceding to their plea would conceal their shortcomings in procedure, and
thereby belittle the lofty objectives of instituting rules of procedure. We cannot allow that to
happen, for doing so would sacrifice the smooth administration of justice guaranteed to every
litigant. We have allowed exceptions only for the most persuasive of reasons, like relieving the
litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying
with the procedure prescribed.21redarclaw

WHEREFORE, the Court AFFIRMS the resolutions of the Court of Appeals promulgated on

October 28, 2003 and February 10, 2004 in C.A. G.R. SP No. 78706; and ORDERS the
petitioners to pay the costs of suit.

SO ORDERED.

G.R. No. 196875, August 19, 2015

TEDDY MARAVILLA, Petitioner, v. JOSEPH RIOS, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 seeks to set aside the July 25,2008 Resolution2 of the
Court of Appeals (CA) in CA-G.R. CEB SP No. 03594 dismissing herein petitioner's Petition for
Review, as well as the CA's April 4, 2011 Resolution3 denying petitioner's Motion for
Reconsideration.4redarclaw

Factual Antecedents

In 2:003, respondent Joseph Rios filed a criminal case against petitioner Teddy Maravilla for
reckless imprudence resulting in serious physical injuries before the Municipal Trial Court in
Cities (MTCC) of Himamaylan City, Negros Occidental, docketed as Criminal Case No. 2168-
MTCC. Respondent accused petitioner of recklessly driving his jeep which caused it to collide
with the motorcycle he (respondent) was then driving; as a result, respondent was injured and
incapacitated to work for more than ninety days.

After trial, the MTCC rendered judgment5 on December 14, 2006, pronouncing as
follows:LawlibraryofCRAlaw
WHEREFORE, premises considered, the Quantum of proof necessary for the conviction of the
accused not having been clearly established beyond any reasonable doubt, accused Teddy
Maravilla is hereby acquitted of the crime charged. However, as the court finds preponderance of
evidence to hold the accused liable in damages for the injuries sustained by the private
complainant as a result of the lack of proof or lack [sic] basis and, as adverted to above, the
accused is hereby ordered to pay private complainant the sum of P20,000.00 as temperate
damages.

Other claim for damages is hereby ordered dismissed either for lack of basis and/or the same not
proper [sic] in this case.

SO ORDERED.6

Respondent interposed an appeal before the trial court. On May 19, 2008, the Regional Trial
Court of Negros Occidental, 6th Judicial Region, Branch 56 issued its Decision7 in the appealed
case - Criminal Case No. 2049 - decreeing as follows:LawlibraryofCRAlaw

WHEREFORE, viewed in the light of all the foregoing considerations, the decision of the
Municipal Trial Court in Cities of Himamaylan City, Negros Occidental dated December 14,
2006, is hereby modified as follows:LawlibraryofCRAlaw

1. The award of temperate damages in the amount of P20,000.00 is hereby deleted; and

2. Accused-appellee is hereby held liable to pay private complainant Joseph Rios the
amount of Two Hundred Fifty Six Thousand Three Hundred Eighty Six Pesos and
Twenty Five Centavos (P256,386.25) as actual and compensatory
damages;chanRoblesvirtualLawlibrary

3. No award for moral damages and Attorney's Fees and no costs.

SO ORDERED.8

Ruling of the Court of Appeals

Petitioner filed a Petition for Review with the CA, docketed as CA-G.R. CEB SP No. 03594.
However, in its assailed July 25, 2008 Resolution, the CA dismissed the Petition, decreeing
thus:LawlibraryofCRAlaw

Filed before Us is a petition for review under Rule 42 filed by the petitioner on June 19, 2008
seeking to reverse/set aside the assailed Decision of the Regional Trial Court, Branch 56 of
Himamaylan City, Negros Occidental dated 19 May 2008.

As viewed, the instant petition is defective in substance:LawlibraryofCRAlaw

a. It failed to incorporate a written explanation why the preferred personal mode of filing
under Section 11, Rule 13, Revised Rules of Court, was not availed
of;chanRoblesvirtualLawlibrary
 b. Some relevant and pertinent pleadings and documents, which are necessary for a better
understanding and resolution of the instant petition, were not attached therein, in
violation of Section 2(d), Rule 429 of the Revised Rules of Court, to
wit:LawlibraryofCRAlaw

i. Copy of the information filed before the municipal trial court;

ii. Copy of the appellant's brief filed before the RTC;
iii. Copy of the appellee's brief, if any;
iv. Other pieces of evidence/documents adduced before the lower court.

While it is true that litigation is not a game of technicalities and that the rules of procedure
should not be strictly enforced at the cost of substantial justice, this does not mean that the Rules
of Court may be ignored at will and at random to the prejudice of the orderly presentation and
assessment of the issues and their just resolution. Justice eschews anarchy.
Thus, for failure of the petitioner to comply with pertinent provisions of the Rules, the petition is
hereby DISMISSED.

SO ORDERED.10

Petitioner moved for reconsideration, but in its second assailed Resolution, the C A stood its
ground, stating -

The petitioner subsequently filed a motion for reconsideration of the aforesaid Resolution by
invoking the rule on liberal application of procedural laws. In trying to rectify the dearth in his
petition, the petitioner attached to his motion certain portions of the record of the case in the
court a quo.

A perusal of petitioner's motion for reconsideration, as well as the attachments thereto, shows
that the petitioners [sic] still failed to comply with Section 2(d), Rule 42 of the Revised Rules of
Court. There are allegations in the petition that draw support from the transcripts of stenographic
notes, formal offer of evidence by the respondent, and the Order of the trial court that admitted
said formal offer of evidence. The petitioner, however, had not appended the aforesaid
documents to the petition. Thus, with such deficiency, the Court resolves to deny petitioner's
motion for reconsideration.

WHEREFORE, premises considered, the petitioner's motion for reconsideration is hereby

denied.

SO ORDERED.11

Hence, the instant Petition.

Issues

Petitioner raises the following issues for resolution:LawlibraryofCRAlaw

1.
THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE PETITION FOR
REVIEW UNDER RULE 42 DUE TO TECHNICALITIES.
2.

PETITIONER HAS A MERITORIOUS CASE AND [THE] PETITION IS NOT FRIVOLOUS

AND DILATORY.12

Petitioner's Arguments

In his Petition and Reply13 seeking reversal of the assailed CA dispositions and a remand of the
case to the CA for consideration on its merits, petitioner argues that while the CA has discretion
to dismiss the appeal, its discretion must be a sound one, and it must consider the circumstances
of the case, the tenets of justice and fair play, and the fact that an appeal is an essential part of the
judicial process, to the end that technicalities should be avoided.14 Petitioner asserts that the
courts must afford every party litigant the amplest opportunity for the just and proper
determination of his case free from the constraints of technicalities. He claims that Ms failure to
submit pertinent documents required by the CA was due to misapprehension of Section 2(d) of
Rule 42, as the said section mentions only copies of the judgments or orders of the lower courts,
which brought him to the realization that other pleadings or documents may be submitted later
on, as the need arises or as may be necessary. He argues that the Revised Internal Rules of the
CA (Section 3[d], Rule 3) states that when a petition does not contain the complete annexes of
the required number of copies, "the Chief of the Judicial Records Division shall require the
petitioner to complete the annexes or file the necessary number of copies of the petition before
docketing the case;" thus, the defect was cured when he submitted the required
pleadings/documents together with his motion for reconsideration with the CA. Moreover, he
insists that he has a meritorious case since there is no basis for the trial court's award of actual
damages because respondent failed to prove and testify as to the same -respondent failed to
present actual receipts of his hospital expenses, but merely relied on the hospital's statement of
account (Exhibit "N") containing the amount of expenses allegedly incurred by him, which does
not qualify as proof of actual expenses incurred; respondent failed to identify the said statement
of account at the trial; and finally, respondent's other exhibits do not prove that he incurred
medical expenses.

Respondent's Arguments

In his Comment,16 respondent supports the dismissal of the Petition by the CA. He contends that
while petitioner submitted additional pleadings and documents when he filed his Motion for
Reconsideration, still the same was insufficient. The CA may not be expected to rule properly on
the petition without said pleadings and documents, since - unlike in an ordinary appeal - the trial
court record is not automatically elevated to the appellate court in a petition for review.
Respondent insists that petitioner may not invoke liberality in the application of the Rules.  The
cases he cited are not applicable because the parties complied wholly with their duty to attach all
the relevant pleadings and documents necessary for the consideration of their petition whereas in
his case, there was no complete compliance with the Rules because he failed to attach all the
required pleadings and documents. Besides, petitioner has not given a valid excuse for failing to
complete the required documents. In any case, while the phrase "of the pleadings and other
material portions of the record" in Section 2 (d), Rule 42 -followed by the phrase "as would
support the allegations of the petition" - means that petitioner has the discretion to select the
documents that must be annexed to the petition, it is still the CA that will ultimately determine if
the supporting documents are sufficient to even make out a prima facie case.17 Moreover, there is
no question of law involved in the instant case, which justifies the denial of the petition.
Respondent also avers that petitioner's plea for a re-examination of the evidence to justify his
recourse is not allowed at this stage; and that just the same, respondent has sufficiently proved
his entitlement to actual damages through the various pieces of evidence submitted and admitted
in the court below.

Our Ruling

The Court denies the Petition.

Under Section 2, Rule 42 of the 1997 Rules of Civil Procedure (1997 Rules), a petition for
review shall be accompanied by, among others, copies of the pleadings and other material
portions of the record as would support the allegations of the petition. Section 3 of the same rule
states that failure of the petitioner to comply with any of the requirements regarding the contents
of and the documents which should accompany the petition shall be sufficient ground for the
dismissal thereof.

In Galvez v. Court of Appeals,18 this Court held that there are three guideposts in determining the
necessity of attaching pleadings and portions of the record to petitions under Rules 42 and 65 of
the 1997 Rules, to wit:LawlibraryofCRAlaw

First, not all pleadings and parts of case records are required to be attached to the petition. Only
those which are relevant and pertinent must accompany it. The test of relevancy is whether
the document in question will support the material allegations in the petition, whether said
document will make out a prima facie case of grave abuse of discretion as to convince the court
to give due course to the petition.

Second, even if a document is relevant and pertinent to the petition, it need not be appended if
it is shown that the contents thereof can also [be] found in another document already
attached to the petition. Thus, if the material allegations in a position paper are summarized in
a questioned judgment, it will suffice that only a certified true copy of the judgment is attached.

Third, a petition lacking an essential pleading or part of the case record may still be given due
course or reinstated (if earlier dismissed) upon showing that petitioner later submitted the
documents required, or that it will serve the higher interest of justice that the case be
decided on the merits.

The guideposts, which equally apply to a petition for review filed in the CA under Rule 42,
reflect that the significant determinant of the sufficiency of the attached documents is whether
the accompanying documents support the allegations of the petition.19 (Emphasis supplied)

It is true that in the case of Spouses Espejo v. Ito,20 which petitioner cites, the petitioners therein
rectified their mistake by submitting the necessary pleading - in this case a copy of the complaint
- to the CA, thus completing the attachments to their petition for review. The Court in said case
held:LawlibraryofCRAlaw

It should be noted that in this case, petitioners immediately acted to rectify their earlier
procedural lapse by submitting, together with their Motion for Reconsideration of the 19
December 2006 Resolution of the Court of Appeals, a Motion to Admit a copy of their
Complaint for Unlawful Detainer. Submission of a document together with the motion for
reconsideration constitutes substantial compliance with the requirement that relevant or pertinent
documents be submitted along with the petition, and calls for the relaxation of procedural rules.

Moreover, the Court held in Spouses Lanaria v. Planta that under Section 3(d), Rule 3 of the
Revised Internal Rules of the Court of Appeals, the Count of Appeals is with authority to require
the parties to submit additional documents as may be necessary to promote the interests of
substantial justice. Therefore, the appellate court, instead of dismissing outright the Petition,
could just as easily have required petitioners to submit the necessary document, i.e., a copy of
petitioners' Complaint for Unlawful Detainer filed with the MeTC.21

In petitioner's case, however, while he submitted additional necessary attachments along with his
Motion for Reconsideration, he left out important parts of the record - excerpts of the transcript
of stenographic notes, the respondent's formal offer of evidence, and the trial court's Order
admitting said formal offer of evidence - that would support his claim that the trial court erred in
awarding damages to respondent since the latter failed to testify as to his hospital expenses and
identify particular exhibits.

Since petitioner was acquitted of the criminal charge, the only issue left in the appealed case
(Criminal Case No. 2049) is the matter of damages. In disposing of this issue, the trial court
held:LawlibraryofCRAlaw

This court, after a considered and exhaustive review and perusal of the records of this case
resolves to disagree with the findings of the lower court. It has concluded that, indeed, as
correctly pointed [out] by herein appellant, prosecution has proffered competent and [sic]
documentary proof sustaining private complainant's plea for an award of actual and
compensatory damages including the basis thereof.

It is evident that in this case prosecution has sufficiently established the injuries sustained by
private complainant consequent to the vehicular mishap. The evidence on record has shown that
Joseph Rios was admitted at the Doctor's Hospital, Inc., Bacolod City from October 28, 2001 to
February 4, 2002 per Admission and Discharge Record issued by said hospital (Exh. "F"). He
underwent a surgical operation on October 28, 2001 and was diagnosed for [sic] a) fracture open
type II middle femur left; b) laceration left knee; c) fracture open II, distal tibia, repair of
laceration (Exh. "D"). While being admitted at the hospital, he incurred expenses in the amount
of P203,343.00 per certification (Exh. "E") and the Statement of Account (Exh. "N") issued by
the said hospital in the amount of P256,386.25.

True it is, prosecution in its presentation of evidence failed to identify said exhibit in court.
Nonetheless, said defect had been waived no less by accused-appellee in failing to seasonably
object to its authenticity and its eventual admission in evidence by the court a quo. In the order
dated August 12, 2005, the court a quo admitted in evidence said Exhibits "E" and "N" formally
offered by the prosecution. Said order has already become final and likewise unassailable as
herein accused-appellee never questioned the admission in evidence of said exhibits. The
adverted order thus binds the parties. It is too late in a [sic] day at this stage for accused-appellee
to claim that said exhibits have not been identified.

The mere fact that private complainant was admitted in the hospital from October 28, 2001 to
February 4, 2002 and had undergone a surgical operation provides sufficient basis for the award
of compensatory damages. The amount of the award could hardly be concluded as proceeding
from sheer conjectures and guesswork as the same has been detailed in the Statement of Account
(Exh. "N") issued no less by the hospital which naturally keeps records of expenses incurred to
be made payable by the patient.

While the law and jurisprudence obviously require competent proof for an award of
compensatory damages, such competent proof does not limit itself to the presentation of receipts.
Other documentary proof as in this case the Certification (Exh. "E") and the Statement of
Account (Exh. "N") would suffice as they are the best evidence to prove hospital expenses. The
absence of receipts was duly elucidated and justified by private complainant as the hospital bill
at the time said Statement of Account was issued, had no[t] been paid and satisfied and still
remains the accountability of private complainant.

To the mind of this court, Exhibits "E" and "N" presented by the private complainant and clearly
unrebutted by the accused-appellee provides the plainest, easiest and most accurate measure in
determining the amount of actual damages with reasonable certainty. Accordingly, an award in
this case for actual damages in the amount of P256,386.25 as shown in Exh. "N" would surely
subserve the ends of justice.22

Nowhere in the trial court's recitations above may be found any reference to the transcript
covering respondent's testimony, which petitioner assails. The same is true with the MTCC's
Decision; a perusal thereof generates the same conclusion. In the absence of such reference, it
was incumbent upon petitioner to attach to his CA Petition such portions of the evidence and
transcript as are relevant to and supportive of his claim. Without them, the appellate court could
not have any factual basis to resolve the case or, at the very least, make out a prima facie case for
him.

Thus, going by the ruling in Galvez, petitioner's failure to attach relevant portions of the evidence
and transcript of stenographic notes - to his Petition, initially, and Motion for Reconsideration,
subsequently - which were not tackled in the decisions of the courts below, but which are
material to his claim that respondent failed to testify as to and prove actual damages, is fatal to
his Petition for Review before the CA. In short, none of the three guideposts spelled out
in Galvez were observed in petitioner's case.

In Magsino v. de Ocampo,23 the Court articulated the reason for requiring -through Section 2 of
Rule 42 - that pleadings and other material portions of the record as would support the
allegations must be attached to the Petition, in the following manner:LawlibraryofCRAlaw
It is worth mentioning that pursuant to the third guidepost recognized in Galvez the petitioner
could still have submitted the omitted documents at the time he filed his motion for
reconsideration vis-a-vis the first assailed resolution of the CA. Yet, he did not do so. Instead, he
boldly proposed in his motion for reconsideration vis-a-vis the first assailed resolution that the
CA should have bowed to the "greater imperative of doing substantial justice" by not hampering
the appeal "sticking unflaggingly to such rules," to wit:LawlibraryofCRAlaw

If this Honorable Court would really want to inform itself more, it is submitted that all that it has
to do is to order the elevation of all the records to it. The Rules of Court, and for that matter all
rules of procedure should bow to the greater imperative of doing substantial justice. Rather,
routinely applying a rule of procedure when the same is not necessary in order to arrive at an
intelligent resolution of the issues, it is submitted, would hamper or repress rather than promote
the search for truth.

xxxx

It may be cliche, but it is still true today as when it first found its way into the human mind, that
when technical rules of procedure already serve to hamper justice they must be left to the dustbin
of the legally forgettable, and at the cost of setting them aside, should unobtrusively pursue the
ends of justice and the search for truth.

xxxx

Now must this Honorable Court sacrifice the law for technical rules of procedure? Must it
countenance mediocrity, nay, ignorance, by sticking unflaggingly to such rules? Can this
honorable Court afford to pass up the rare opportunity to decide a constitutional issue with right
of a party to due process of law on the line?

xxxx

ONCE AGAIN, we ask: Is it necessary for this Honorable Court to still pursue those pleadings
when the issues confronting them are legal issues which even lesser legal intellects can resolve?

This Honorable Court is respectfully reminded the law is made for man, not man for the law.
We cannot agree with the petitioner's arrogant but unworthy proposition. The CA was only just
in denying his motion for reconsideration through the second assailed resolution on the following
terms, viz[.]:LawlibraryofCRAlaw

A careful perusal of the said provision would reveal that the documents or annexes therein
mentioned are required to be appended to the petition and the mandatory character of such
requirement may be inferred from Section 3 of Rule 42 x x x.

The petitioner's further argument that it is the Court which should get all the records from
the court a quo if it really wants to be more informed of the issues, is not well-taken.
Precisely, the annexes mentioned in Section 2(d) of Rule 42 are required to be appended to
the petition in order to enable this Court to determine even without consulting the record if
the petition is patently without merit or the issues raised therein are too insubstantial to
require consideration, in which case the petition should be dismissed outright, or whether
there is a need to require the respondent to comment on the petition. In short, the mere fact
that a petition for review is filed does not call for the elevation of the record, which means
that until this Court finds that the elevation of the record is necessary, such record should
remain with the trial court during the pendency of the appeal in accordance with Section 2
of Rule 39, let alone the fact that in ejectment cases the decision of the RTC is immediately
executory pursuant to Section 21 of the Revised Rule on Summary Procedure. Thus, more
often than not, this Court has resolved petitions for review under Rule 42 without
unnecessary movement of the original record of the case which could entail not only undue
delay but also the possibility of the record being lost in transit.

The petitioner urged us to rely on the documents and pleadings he appended in his petition which
merely consisted of the MTC Judgment, the assailed RTC Order, the Motion for
Reconsideration, and the questioned Order dated November 6, 2003 denying his Motion for
Reconsideration. None of the aforementioned documents set out the factual milieu of his claims.

Instead of manifesting that he would submit the additional documentary evidence, the petitioner
remained [adamant] in his stand not to submit the additional pleadings and other material
portions of the record. He maintained that what he has submitted based on his discretion, are all
that are necessary to support his allegations in his petition. As we have already mentioned, the
accompanying documents were insufficient to support the petition. Also, the petitioner could
have easily ended his debacle by merely attaching the supplemental documents in his Motion for
Reconsideration. Instead, the petitioner stubbornly chose to insist that this Court direct the
elevation of the records of the case if we deem that the relevant documents were not appended to
the petition.

xxxx

It is not disputed that it is petitioner who knows best what pleadings or material portions of the
record of the case would support the allegations in the petition. The petitioner's discretion in
choosing the documents to be attached to the petition is however not unbridled. The Court has
the duty to check the exercise of this discretion, to see to it that the submission of supporting
documents is not merely perfunctory. The practical aspect of this duty is to enable us to
determine at the earliest possible time the existence of prima facie merit in the petition.
Moreover, Section 3 of Rule 42 of the Revised Rules of Court provides that if petitioner fails to
comply with the submission of "documents which should accompany the petition", it "shall be
sufficient ground for the dismissal thereof."

In this case, the insufficiency of the supporting documents coupled with the unjustified refusal of
the petitioner to even attempt to substantially comply with the attachment requirement justified
the dismissal of his petition. (Emphasis supplied)

Thus, even though petitioner exercises the initiative to select what will be attached to his Petition
for Review, it is the CA that ultimately determines the  sufficiency of these attachments. As held
in Atillo v. Bombay.24redarclaw
The phrase "of the pleadings and other material portions of the record" in Section 2 (d), Rule 42
x x x followed by the phrase "as would support the allegations of the petition" clearly
contemplates the exercise of discretion on the part of the petitioner in the selection of documents
that are deemed to be relevant to the petition. However, while it is true that it is petitioner who
initially exercises the discretion in selecting the relevant supporting documents that will be
appended to the petition, it is the CA that will ultimately determine if the supporting documents
are sufficient to even make out a prima facie case. It can be fairly assumed that the CA took
pains in the case at bar to examine the documents attached to the petition so that it could discern
whether on the basis of what have been submitted it could already judiciously determine the
merits of the petition. The crucial issue to consider then is whether x x x the documents
accompanying the petition before the CA sufficiently supported the allegations therein.

xxxx

As mentioned earlier, it is not disputed that it is petitioner who knows best what pleadings or
material portions of the record of the case would support the allegations in the petition.
Petitioner's discretion in choosing the documents to be attached to the petition is however not
unbridled. The CA has the duty to check the exercise of this discretion, to see to it that the
submission of supporting documents is not merely perfunctory. The practical aspect of this duty
is to enable the CA to determine at the earliest possible time the existence of prima facie merit in
the petition. Moreover, Section 3 of Rule 42 of the Rules of Court provides that if petitioner fails
to comply with the submission of "documents which should accompany the petition," it "shall be
sufficient ground for the dismissal thereof." In this case, the insufficiency of the supporting
documents combined with the unjustified refusal of petitioner to even attempt to substantially
comply with the attachment requirement justified the dismissal of [his] petition.

As for petitioner's claim that based on the evidence on record, his case is meritorious, it must be
said that this Court may not consider such claim. In the absence of recognized exceptional
circumstances,25 the Court will not analyze or weigh such evidence all over again, its jurisdiction
being limited to reviewing errors of law that might have been committed below.

WHEREFORE, the Petition is DENIED. The July 25, 2008 and April 4, 2011 Resolutions of
the Court of Appeals in CA-G.R. CEB SP No. 03594 are AFFIRMED.

SO ORDERED.cralawlawlibrary

G.R. No. 187186, June 06, 2018

ALICIA C. GALINDEZ, Petitioner, v. SALVACION FIRMALAN; THE HON. OFFICE

OF THE PRESIDENT THROUGH THE HON. OFFICE OF THE EXECUTIVE
SECRETARY; AND THE REGIONAL EXECUTIVE DIRECTOR, DENR-REGION
IV, Respondent.

DECISION

LEONEN, J.:
Findings of fact by the Director of Lands shall be conclusive when approved by the Department
of Environment and Natural Resources Secretary and supported by substantial evidence.

This resolves the Petition for Review on Certiorari1 filed by Alicia C. Galindez (Alicia) assailing
the Court of Appeals November 27, 2008 Decision2 and March 13, 2009 Resolution3 in CA-G.R.
SP No. 95114, which upheld the Office of the President's January 31, 2006 Decision4 in O.P.
Case No. 05-D-118.

On May 16, 1949, Salvacion Firmalan (Firmalan) filed an application with the Bureau of Lands
for a 150-m2 parcel of land in Barrio Capaclan, Romblon, Romblon. Her application was
docketed as Miscellaneous Sales Application (MSA) No. V-7861.5

The District Land Office reported that the vacant lot which Firmalan applied for was suited for
residential purposes and recommended the approval of her application.6

On February 23, 1950, the Chief of the Public Land Division directed the District Land Office to
re-appraise the lot covered by Firmalan's application. Records showed that no action was taken
on the order for reappraisal of Firmalan's application.7

On April 25, 1967, or almost 18 years after filing her first application, Firmalan filed another
application. Her second application was for Lot No. 915 Cad-311-D in Romblon Cadastre and
was docketed as MSA No. (V-6) 23. Lot No. 915 had an area of 325 m2 and included the 150-
m2 lot subject of Firmalan's first application.8

The Acting District Land Officer recommended the approval of Firmalan's second application.9

Alicia filed a protest to Firmalan's second application. She claimed that from November 1951,
she and her family had been in constant possession of a portion of the 325-m2 lot covered by
Firmalan's second application. She also claimed that she had built a house and planted coconut
trees on the lot which Firmalan applied for.10

Alicia stated that on February 20, 1964, she filed an application over the lot occupied by her
family and that her application was docketed as MSA No. (V-6) 44.11

On June 23, 1968, the Acting District Land Officer requested that all actions on Firmalan's
second application be held in abeyance due to the protest filed against it.12 The Director of Lands
then ordered the Regional Land Director to conduct a formal investigation on the matter.13

On July 11, 1978, Land Inspector Mabini Fabreo (Inspector Fabreo) reported to the Director of
Lands that after conducting an ocular inspection and investigation, he discovered that the lot
covered by Firmalan's second application was occupied by Firmalan and Felipe Gaa, Sr. (Gaa),
with the lot equally divided between them. Inspector Fabreo recommended that the area occupied
by Gaa be excluded from Firmalan's application.14

On March 20, 1981, Inspector Fabreo submitted a second report15 where he corrected his earlier
statement that Firmalan occupied the lot covered by her second application. He clarified that
when he made his ocular inspection, it was Elmer Galindez (Elmer), son of Alicia,16 he saw
occupying the lot beside Gaa, not Firmalan.17

On May 5, 1982, Firmalan filed a complaint for forcible entry against Elmer. This was docketed
as Civil Case No. 110 before the Municipal Trial Court of Romblon, Romblon.18

On February 1, 1984, the Municipal Trial Court19 dismissed the complaint and declared that it
was only the Bureau of Lands that could determine who between Firmalan and Elmer had the
better right over the disputed lot:

On the decisional rules and jurisprudence of our Supreme Court already cited, this Court is
legally powerless really to determine as to who is entitled or as to who has the right to occupy
the lot in question – this, according to It, is committed to the Bureau of Lands.

FOR ALL THE FOREGOING, this Court hereby orders this case DISMISSED. Let a copy of
this decision be also furnished the Bureau of Lands with the suggestion that the applications of
the parties be determined as soon as possible. Without pronouncement as to costs.

IT IS SO ORDERED.20 (Emphasis in the original)

On March 11, 1985, after receiving testimonies and documentary evidence from the parties,
Supervising Land Examiner Dionico F. Gabay (Examiner Gabay) of the Bureau of Lands
submitted a report21 where he wrote that there was no dispute as regards the area occupied by
Gaa.22 Nonetheless, Examiner Gabay opined that between Firmalan and Alicia, Firmalan had the
superior right over the lot in question because she was the rightful applicant, while Alicia
obtained possession of the lot through trickery and willful defiance of the law.23

Examiner Gabay then recommended that the portion occupied by Gaa be segregated from the
area subject of the conflicting claims between Firmalan and Elmer, and for Firmalan's claims and
that of Alicia, through Elmer, to be resolved.24 His report was elevated to the Department of
Environment and Natural Resources.25

On August 27, 1990,26 the Department of Environment and Natural Resources Regional

Executive Director (the Regional Executive Director) concluded that Firmalan filed her
miscellaneous sales application over the disputed portion of Lot No. 915 earlier than Alicia. The
Regional Executive Director upheld Firmalan's right to acquire the portion of Lot No. 915,
reasoning out that Firmalan's first application on May 16, 1949 was given due course even if
records showed that no subsequent actions were taken. On the other hand, Alicia was informed
that the lot which she was applying for was already covered by a subsisting application. The
Regional Executive Director emphasized that a claim of actual ownership, no matter how long an
occupant has possessed a public land, will never ripen into ownership since public land can only
be acquired under the provisions of the Public Land Act.27

Alicia moved for the reconsideration of the Regional Executive Director's August 27, 1990
Order, but her motion was denied in the subsequent Regional Executive Director's November 15,
1991 Order.28
Alicia then appealed her case before the Department of Environment. and Natural Resources, but
on June 29, 1998,29 the Department of Environment and Natural Resources Secretary affirmed
the Regional Executive Director's Orders.

The dispositive portion of the Department of Environment and Natural Resources June 29, 1998
Decision read:

WHEREFORE, Miscellaneous Lease Application No. (IV-A-9) 35 of Alicia Galindez is hereby,

as it is ordered REJECTED and whatever amount paid on account thereof is forfeited in favor of
the Government. Alicia Galindez and/or Elmer Galindez is/are hereby ordered to vacate the
premises. The Miscellaneous Lease Application No. V-1612 of Felipe Gaa, Sr. is ordered
REINSTATED and given due course. The Miscellaneous Sales Application No. . . . V-7861 of
Salvacion Firmalan is ordered REJECTED and her other Miscellaneous Sales Application No.
(V-6) 23 is ordered amended to cover the other half-portion of Lot 915 and is hereby given due
course. Both applications, the M.L.A. V-1612 of Felipe Gaa, Sr. and M.S.A. No. (V-6) 23 of
Salvacion Firmalan are subject to the road-right-of-way as suggested by the Department of
Public Works and Highways.30

Alicia moved for the reconsideration of this Decision, but on March 28, 2005,31 the Department
of Environment and Natural Resources Secretary denied her motion.

On April 19, 2005,32 Alicia appealed the Department of Environment and Natural Resources'
decisions before the Office of the President.

On January 31, 2006, the Office of the President denied the appeal and affirmed the Department
of Environment and Natural Resources' decisions.33

The Office of the President brushed aside Alicia's claim that she was denied due process. It noted
that she was represented by counsel during the proceedings and that she was able to present her
evidence during the hearings.34

The Office of the President then upheld the findings of fact of the Department of Environment
and Natural Resources and of its field officers that Firmalan filed her application over Lot No.
915 ahead of Alicia.35 The fallo of the Office of the President's Decision read:

WHEREFORE, in view of all the foregoing, the instant appeal is hereby DENIED.

Accordingly, the appealed Decisions of the Department of Environment and Natural Resources
are hereby AFFIRMED.36 (Emphasis in the original)

Alicia moved for the reconsideration of the Office of the President's January 31, 2006 Decision,
but on June 1, 2006,37 the Office of the President denied her motion for reconsideration.

Alicia filed an appeal38 before the Court of Appeals.

On November 27, 2008, the Court of Appeals39 denied her appeal and upheld the decision of the
Office of the President.
The Court of Appeals found that Firmalan filed her application over Lot No. 915 ahead of Alicia.
It held that Firmalan's failure to occupy the lot should not be taken against her because she did so
in compliance with the terms of the miscellaneous sales application.40

The Court of Appeals indicated that Alicia's lengthy possession of the disputed lot could not be
taken in her favor and could not vest her with preferential status on her application because it
violated the terms of the miscellaneous sales application.41

The fallo of the Court of Appeals November 27, 2008 Decision read:

WHEREFORE, the petition is denied and the decision of the Office of the President is affirmed.

SO ORDERED.42 (Emphasis in the original)

Alicia moved for the reconsideration of this decision, but her motion was denied in the Court of
Appeals March 13, 2009 Resolution.43

On May 4, 2009, Alicia filed a Petition for Review on Certiorari before this Court.44

Petitioner Alicia does not deny that respondent Firmalan filed a miscellaneous sales application
over a portion of Lot No. 915 on May 16, 1949, but she insists that the application was treated as
if it was never filed because the lot had not yet been surveyed or appraised, and the order for its
appraisal was not complied with.45

Petitioner asserts that her family has freely and openly occupied the lot as early as November 1,
1950 and has declared it for taxation purposes in 1956. Furthermore, on February 20, 1964, as
the true occupants of the lot, petitioner even filed a miscellaneous sales application over a
portion of Lot No. 915 with the Bureau of Lands.46

Petitioner also maintains that respondent's daughter admitted that respondent and her family
entered the disputed lot and fenced it after her mother filed an application, thereby violating the
terms of the miscellaneous sales application.47

Petitioner concedes to also violating the miscellaneous sales application when she and her family
entered the lot before their application was approved. Nonetheless, she contends that between
respondent, who admitted occupying the lot at one time, and herself, who possessed the same
continuously for more than 50 years, her application should have been given preference over that
of respondent's.48

Petitioner likewise draws attention to her long years of continued and uninterrupted stay over the
disputed lot and states that as its actual occupant, she should have been given preferential status,
as mandated by the Public Land Act.49

Petitioner accuses respondent of applying for as many lots as she could, regardless of whether
there were actual occupants on the lots being applied for and of having "unlawful support from
some elements in the Bureau of Lands and the [Department of Environment and Natural
Resources]."50 Hence, their support led to the approval of her applications.51

In her Comment,52 respondent stresses that the Department of Environment and Natural

Resources, the Office of the President, and the Court of Appeals made unanimous factual
findings that she adhered to the terms of her miscellaneous sales application. She points out that
the administrative bodies and the Court of Appeals all ruled that petitioner acted in bad faith
when she occupied the disputed lot; hence, her possession of the lot will not ripen into
ownership.53

In her Reply,54 petitioner underscores that the conclusion contained in the Bureau of Lands
Report submitted by Examiner Gabay—that respondent never entered into or possessed the lot—
contradicts the testimony of respondent's own daughter. She avers that the testimony of
respondent's daughter was mentioned in Examiner Gabay's report, yet he still concluded that
respondent never occupied the disputed lot, showing his undeniable bias in Firmalan's favor.55

Petitioner repeats that as the long-time occupant of the lot, she has a preferential status over it.56

The sole issue for this Court's resolution is whether or not petitioner Alicia Galindez's
application should have been given preference over respondent Salvacion Firmalan's application,
in light of the former's long-time possession of the disputed lot.

The Petition must fail.

Commonwealth Act No. 141, or the Public Land Act, enumerates the ways in which the State
may dispose of agricultural lands:

Section 11. Public lands suitable for agricultural purposes can be disposed of only as follows,
and not otherwise:

(1) For homestead settlement;

(2) By sale;
(3) By lease;
(4) By confirmation of imperfect or incomplete titles:

(a) By judicial legalization;

(b) By administrative legalization (free patent).

When it comes to the sale of public land, the Public Land Act provides that the following persons
are eligible to purchase agricultural and disposable land:

1) Filipino citizen of lawful age;

2) Filipino citizen not of lawful age but is the head of a family;
3) A corporation or association organized and constituted under the Philippine laws with at least
60% of its capital stock or interest in its capital belonging wholly to Filipino citizens; and
4) Corporations organized and constituted under Philippine laws who are allowed by their
charters to purchase tracts of public agricultural and disposable land.57

The Public Land Act further provides that the Director of Lands, under the immediate control of
the Secretary of Agriculture and Commerce, now the Department of Environment and Natural
Resources Secretary, has executive control over the survey, classification, lease, concession,
disposition, and management of lands under the public domain.58 In pursuance of its functions,
the Director of Lands is empowered to put in place such rules and regulations, which would best
carry out the provisions of the Public Land Act.59

The Public Land Act also states that the decisions of the Director of Lands "as to questions of
fact shall be conclusive when approved by the Secretary of Agriculture and Commerce."60 This
respect accorded to the factual findings of an administrative body is echoed in Rule 43, Section
10 of the Rules of Civil Procedure, which provides:

Section 10. Due course. — If upon the filing of the comment or such other pleadings or
documents as may be required or allowed by the Court of Appeals or upon the expiration of the
period for the filing thereof, and on the basis of the petition or the records the Court of Appeals
finds prima facie that the court or agency concerned has committed errors of fact or law that
would warrant reversal or modification of the award, judgment, final order or resolution sought
to be reviewed, it may give due course to the petition; otherwise, it shall dismiss the same. The
findings of fact of the court or agency concerned, when supported by substantial evidence, shall
be binding on the Court of Appeals. (Emphasis supplied)

II

Petitioner faults the Court of Appeals for upholding the ruling of the Office of the President
when it supposedly showed bias and was unsubstantiated by evidence.

Petitioner fails to convince.

Bureau of Lands Examiner Gabay, after an ocular inspection of Lot No. 915 and a formal
hearing between the parties, who were then represented by counsels and were given the
opportunity to present their evidence,61 concluded that there was no conflicting claim as to the
portion of the lot occupied by Gaa. The conflict was limited to the northern side of Lot No. 915,
or the portion occupied by petitioner.62 Examiner Gabay then opined that between petitioner and
respondent, respondent was the rightful applicant over the disputed lot:

The conflict between Salvacion Firmalan and Alicia Galindez thru her son Elmer Galindez is a ...
case of an applicant as Salvacion Firmalan, who did no[t] exercise actual occupation or
possession of the lot in question because of her sincere compliance and faithful obedience of the
conditions set forth by the Public Land Law, providing among others, that, ''Unless and until
your application is approved, you are not authorized to enter upon the land and introduced (sic)
valuable improvements thereon as any improvements that you may introduced (sic) will be at
your own risk."

And here comes another claimant, thru trickery and scheme and willful defiance of such
provisions of the law introduces his own improvements at his own risk and who succeeded in
actually exercising occupation of the land in question despite the vehement objection and protest
of the applicant, as it is shown from the letter-protests of Salvacion Firmalan addressed to the
Provincial Commander, Ministry of Public Works & Highways and to the Ministry of Natural
Resources, requesting for assistance regarding the alleged entry and construction of a house on
the lot in question by certain P.C. Sgt. Elmer Galindez.

It is also worthy (sic) mentioning that on May 7, 1968, Atty. Sydicious Panoy, the Actg. [District
Land Officer] of this Office had wrote (sic) a letter to the father of Elmer Galindez, a certain
Adriatico Galindez, informing him of his liability under the provisions of RA 947, providing
among others as follows: Sec. 1. "It shall be unlawful for any person, corporation or association
to enter or occupy through force, intimidation, threat, strategy or stealth any public agricultural
land including such public land as are granted to private individual[s] under the provis[i]ons of
the Public Land Act. ..."63

The Bureau of Lands Report was elevated to the Regional Executive Director who found that
respondent filed two (2) applications for the same lot in 1949 and 1967, and paid the required
guaranty fees for both applications. Respondent's applications were both acknowledged and
recommended for approval by the District Land Officer.64

As for petitioner, the Regional Executive Director pointed out that the records belied her
assertion that she filed a miscellaneous sales application on February 20, 1964. Petitioner was
advised to file an application, which she did on July 16, 1970. However, she was informed that
the lot she was applying for was already covered by respondent's application and that even if her
application was converted into a miscellaneous lease application, it would still conflict with
respondent's miscellaneous sales application.65

The Regional Executive Director then concluded that petitioner never occupied the disputed lot
continuously, as she claimed, because in 1971, petitioner sold to Margie Royo the house that her
husband built in 1951. Thus, petitioner vacated the premises. The house was then sold to
Florentino Mendez who, thereafter, sold it to Toribio Firmalan, respondent's husband.66

Sometime in 1982, Elmer built a house on the disputed lot.67 The Regional Executive Director
held that this was made in bad faith, since possession of the lot. had, by then, passed on to
respondent. The construction of the house also violated the terms of petitioner's application.68

The Regional Executive Director confirmed that respondent had a better right than petitioner
over the disputed lot because respondent filed her miscellaneous sales application ahead of
petitioner and complied with the rules and regulations governing her application.69

On appeal, the Department of Environment and Natural Resources Secretary affirmed the
Regional Executive Director's Orders and denied petitioner's motion for reconsideration.70
The Office of the President likewise upheld the findings of fact of the Department of
Environment and Natural Resources officers, which, it emphasized, were arrived at after
conducting "ocular inspections, investigations and hearings on the subject land."71 The Office of
the President stated:

At any rate, the findings of fact of the DENR and its field offices, admittedly an administrative
agency which have acquired expertise because [of] their jurisdiction is confined to specific
matters like the processing, inspections and/or investigation of public land sale applications, are
generally accorded respect, if not finality....

It must be borne in mind that this Office is persuaded strongly by the principle that findings of
fact of administrative bodies charged with specific field[s] of expertise are afforded great weight
in the absence of substantial showing that such findings are patently erroneous. Considering
therefore that the findings of facts by the DENR as well as the justifications made thereon are
given weight and respect, and absent any error of abuse of discretion, this Office finds the same
to be in order.72

In Solid Homes v. Payawal,73 this Court explained that administrative agencies are considered
specialists in the fields assigned to them; hence, they can resolve problems in their respective
fields "with more expertise and dispatch than can be expected from the legislature or the courts
of justice."74 Thus, this Court has consistently accorded respect and even finality to the findings
of fact of administrative bodies, in recognition of their expertise and technical knowledge over
matters falling within their jurisdiction.75

Moreover, Rule 43, Section 10 of the Rules of Civil Procedure provides that findings of fact of a
quasi-judicial agency, when supported by substantial evidence, shall be binding on the Court of
Appeals. Consequently, the Court of Appeals did not err in upholding the findings of fact of the
Department of Environment and Natural Resources and of the Office of the President.

Petitioner likewise faults the Court of Appeals for ruling in respondent's favor despite admission
from respondent's daughter that respondent occupied and fenced in the lot after filing her first
application in 1949, thereby contradicting the Department of Environment and Natural
Resources' finding that respondent never entered or introduced improvements on the lot she
applied for.76

Petitioner further claims that since she and respondent both did not abide with the undertakings
in their respective applications, her application should be given preference as she was the first to
occupy the lot and has continuously done so with her family.77

Again, petitioner fails to convince.

There is nothing in the miscellaneous sales application which forbade the applicant from entering
into or occupying the lot being applied for. Instead, what the miscellaneous sales application
provides is an acknowledgment from the applicant that he or she has no right over the lot while
the application is still pending and while the lease contract has not yet been executed:
6. I understand that this application conveyed no right to me to enter upon, occupy, cultivate, to
make clearing on the land until the same has been finally approved and a lease contract
executed, and that any lease applicant who shall willfully and knowingly submit false statements
or execute false affidavit in connection with the foregoing application shall be deemed guilty of
perjury and punished by a fine of not more than two thousand pesos and ... by imprisonment for
not more than five years, in addition there, his application shall be cancelled and all amount paid
on account thereof forfeited to the Government, and they shall not be entitled to apply for any
public land in the Philippines.78 (Emphasis supplied)

The miscellaneous sales application warns the applicant that submission of a false statement or
false affidavit in support of an application may cause the cancellation of the application,
forfeiture of all amounts paid and prohibition from applying for any public land. However, there
is no similar warning or an equally dire consequence for applicants who prematurely enter or
occupy the lot applied for. At most, it is merely implied that applicants bear the risk of
introducing improvements to a lot that has not yet been awarded to them since the application
may be denied or the lot may be awarded to some other applicant.

As it is, the facts are not disputed that respondent filed her application for a portion of Lot No.
915 on May 16, 1949. Meanwhile, petitioner only built a house on that same portion of Lot No.
915 on November 1, 1950 and filed her own application on February 20, 1964.79 Clearly, the
Bureau of Lands did not err in favorably endorsing respondent's applications:

Based on the foregoing factual backdrop, the [Regional Executive Director] pointed out that
Firmalan filed her Miscellaneous Sales Application (MSA No. 7861) on May 16, 1949 and paid
the corresponding Guaranty Fee in the amount of P5.00 under Postal Money Order No. 1064-
8820 dated May 18, 1949; that on February 23, 1950, the former Chief of the Public Lands
Division (Vicente Tordesillas), Bureau of Lands, Manila, directed the District Land Officer in
Bacolod City, to reappraise the land covered by the said application, and referred on June 26,
1950 to the Provincial Land Officer in Capiz, Capiz for compliance. According to the [Regional
Executive Director], this is a clear indication that the said application of Firmalan was given
due recognition; however, records do not show that subsequent actions were taken thereon.

Moreover the [Regional Executive Director] noted that on April 25, 1967, Firmalan again filed a
Miscellaneous Sales Application (MSA No. (V-6) 23) covering Lot 915, Cad-311-D, Romblon
Cadastre with an area of 325 square meters which included the area first applied for by her; that
the investigation of the lot was conducted and a report was submitted by the Public Land
Inspector (Alexander M. Diola), and attested to by the Municipal Treasurer of Romblon, Casareo
Mangao; that another report of appraisal was submitted on August 22, 1967 by the same Land
Inspector and also attested to by the same Municipal Treasurer; and that the said report of
appraisal was favorably endorsed to the Director of Lands by then Acting District Land Officer
in Odiongan, Romblon, Sudicious F. Panoy, per 1st Indorsement dated November 18,
1967.80 (Emphasis supplied)

In Castillo v. Rodriguez,81 this Court affirmed the ruling of the Director of Lands and of the
Department of Environment and Natural Resources Secretary upholding Elias L. Casals'
miscellaneous sales application over that of Andres Castillo, because the facts showed that the
former filed his application ahead of the latter:

As a matter of fact, the very numbers and dates of the contestants' miscellaneous sales
applications conclusively show that Elias L. Casals filed his application way ahead of the
petitioner. The former filed his M.S.A. No. 16888 on June 4, 1952 while the latter's application,
M.S.A. No. 19124, was filed only on May 19, 1953. Neither has Elias L. Casals been shown by
the petitioner or the records to be suffering from any legal disqualification to be awarded the lot
in dispute. Consequently, and conformably with settled jurisprudence, We shall not disturb the
decisions of the Director of Lands and the Secretary of Agriculture and Natural Resources on the
matter.82 (Emphasis supplied)

WHEREFORE, premises considered, the Petition is DISMISSED. The Court of Appeals

November 27, 2008 Decision and March 13, 2009 Resolution in CA-G.R. SP No. 95114
are AFFIRMED.

SO ORDERED.

G.R. No. 215659, March 19, 2018

ANALYN DE LOS SANTOS AND SPOUSES RAPHAEL LOPEZ AND ANALYN DE

LOS SANTOS-LOPEZ, Petitioners, v. JOEL LUCENIO AND ALL OTHER PERSONS
CLAIMING RIGHTS AND AUTHORITY UNDER HIM, Respondents.

DECISION

DEL CASTILLO, J.:

A judgment or decision of the appellate court that goes beyond the issues raised before the trial
court must be set aside for lack of jurisdiction.1

Before the Court is a Petition for Review on Certiorari2 filed under Rule 45 of the Rules of
Court assailing the September 29, 2014 Decision3 and the December 1, 2014 Resolution4 of the
Court of Appeals (CA) in CA-G.R. SP No. 130384.

Factual Antecedents

On October 1, 2010, petitioners Teresita de los Santos (petitioner Teresita) and spouses Analyn
de los Santos-Lopez and Raphael Lopez (petitioner spouses) filed before the Municipal Trial
Court (MTC) of Biñan, Laguna, a Complaint5 for Ejectment/Unlawful Detainer with Damages,
docketed as Civil Case No. 4086, against respondents Joel Lucenio (respondent Joel) and all
persons claiming rights and authority under him.6 Petitioners alleged that, in December 2009,
petitioner Teresita lent her name and credit standing in favor of her daughter and son-in-law,
petitioner spouses, as an accommodation party thru a Deed of Assignment7 dated August 31,
2010 to enable them to purchase a property from the list of assets for sale by the Government
Service Insurance System (GSIS);8 that on January 19, 2010, the GSIS issued a Notice of
Approval9 granting petitioner Teresita's application to purchase the property located, at Block 8,
Lot 14, Juana I Complex, Biñan, covered by Transfer Certificate of Title (TCT) No. T-
12913610 issued under the name of the GSIS;11 that on March 5, 2010, petitioner spouses paid the
required deposit in the amount of P87,255.00 and a front end service fee in the amount of
P7,852.97;12 that on May 12, 2010, a Deed of Conditional Sale13 was executed by the GSIS over
the subject property in favor of petitioner Teresita;14 that despite demand by petitioners,
respondent Joel refused to vacate the subject property;15 and that petitioners filed a complaint
against respondent Joel before the Barangay Lupong Tagapamayapa but the same was
unavailing as the parties failed to reach an amicable settlement.16

In his Answer,17 respondent Joel raised as a defense lack of cause of action. He alleged, that in
1995, his sister obtained a housing loan from the GSIS to purchase the subject property;18 that his
sister has already acquired ownership over the subject property;19 that in 2005, his sister executed
in his favor a Deed of Transfer of Rights20 over the subject property;21 that he then availed of the
condonation or amnesty program offered by the GSIS for the unpaid amortizations of his
sister;22 that he paid the required 10 percent (10%) down payment and applied for the
restructuring of the loan;23 that he was not able to pay the amortization due to the failure of the
GSIS to recompute the total balance of the loan;24 that he was deprived of due process as the
GSIS executed a Deed of Conditional Sale in favor of petitioners without first acting on his offer
to purchase the property;25 and that the Deed of Conditional Sale executed by the GSIS in favor
of petitioner Teresita was void because the conditional sale in favor of his sister cannot be
unilaterally terminated.26

Ruling of the Municipal Trial Court

On March 20, 2012, the MTC rendered a Decision27 in favor of petitioners. The Court found that
petitioners had a better right over the subject property as they acquired an inchoate right of
ownership by virtue of the Deed of Conditional Sale executed by GSIS.28 Thus, the MTC
disposed of the case in this wise:

WHEREFORE, in view of the foregoing, Judgment is hereby rendered in. favor of [petitioners]
and against [respondent Joel], as follows:

1. Ordering the [respondent Joel] and all persons claiming rights under him to immediately
vacate the subject property and to peacefully turn over possession of the same to [petitioners];

2. Ordering [respondent Joel] to pay [petitioners] the sum of FIVE THOUSAND PESOS
(P5,000.00) per month as reasonable compensation for the continued use and occupation of the
premises beginning May 16, 2010 until the line the [respondent Joel] vacates the property; and

3. Ordering [respondent Joel] to pay the amount of TWENTY THOUSAND PESOS

(P20,000.00) as and for attorney's fees;

4. Ordering [respondent Joel] to pay the costs of suit.

SO ORDERED.29
Ruling of the Regional Trial Court

Respondent Joel appealed the MTC Decision to the Regional Trial Court (RTC).

On February 4, 2013, the RTC rendered a Judgment30 affirming the findings of the MTC that
petitioners, as successors-in-interest of GSIS, were legally entitled to the full control and
possession of the subject property.31 It pointed out that from the time the Deed of Transfer of
Rights was executed on January 20, 2005, respondent Joel never made any payment on the
delinquencies.32

Respondent Joel moved for reconsideration but the RTC denied the same in its May 20, 2013
Order.33

Thereafter, the RTC issued Orders granting petitioners' Motion for Immediate Execution and
Urgent Motion for Issuance of Break Open Order.34

Ruling of the Court of Appeals

Unfazed, respondent Joel elevated the matter to the CA via a Petition for Review35 under Rule 42
of the Rules of Court, docketed, as CA-G.R. SP No. 130384.

For the first time, respondent Joel raised, as an issue the alleged failure of the GSIS to comply
with the provisions under Republic Act (RA) No. 6552, otherwise known as the Maceda Law.
He alleged that his sister's contract had not been cancelled and that she had not received the cash
surrender value of the payments made on the subject property.

On September 29, 2014, the CA reversed the ruling of the RTC. The CA dismissed the complaint
for unlawful detainer for failure of the GSIS to issue a notarized notice of cancellation and to
refund the cash surrender value of the payments made on the subject property.36

Petitioners moved for reconsideration37 arguing that the CA erred in allowing respondent Joel to
change his theory on appeal. In any case, petitioners attached a copy of the notarized cancellation
of the contract38 from the GSIS to dispute the allegation of respondent Joel. As to the cash
surrender value, petitioners alleged that, under the law, it would be released only upon the
retirement of respondent Joel's sister.

On December 1, 2014, the CA issued a Resolution denying petitioners’ Motion for

Reconsideration for lack of merit. Hence, petitioners filed the instant Petition for Review on
Certiorari, raising the following errors:

I.

THE HONORABLE [CA] ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION

WHEN IT ALLOWED RESPONDENT [JOEL] TO CHANGE HIS THEORY FOR THE FIRST
TIME IN HIS PETITION FOR REVIEW AND GRANTED THE SAME, THE CHANGE OF
THEORY MADE BY RESPONDENT IS PROHIBITED BY THE RULES OF COURT.
 II.

THE HONORABLE [CA] ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION

WHEN IT RULED THAT [RA] NO. 6552 COMMONLY KNOWN AS MACEDA LAW
APPLIES TO BOTH PARTIES DESPITE THE FACT THAT THE PROVISIONS OF THE
MACEDA LAW APPLIES ONLY TO SELLER AND BUYER OF A REAL ESTATE
PROPERT[Y]. HEREIN PARTIES ARE BOTH BUYERS OF THE SUBJECT PROPERTY
FROM [GSIS].

III.

ASSUMING ARGUENDO THAT MACEDA LAW APPLIES TO THE PARTIES HEREIN,

THE HONORABLE [CA] ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION
WHEN IT ALLOWED RESPONDENT [JOEL] TO CHANGE HIS THEORY WHILE
TOTALLY DISREGARDING THE DOCUMENTARY PIECES OF EVIDENCE PRESENTED
BY PETITIONERS IN RESPONSE, WHICH IS OFFENSIVE TO THE RULES OF FAIR
PLAY, JUSTICE, AND DUE PROCESS.39

Petitioners' Arguments

Petitioners contend that the CA erred in allowing respondent Joel to change his theory on appeal
as this is prohibited by the Rules of Court and prevailing jurisprudence.40 Petitioners point out
that respondent Joel never raised as a defense the non-compliance by GSIS with the Maceda Law
before the MTC and the RTC.41 Thus, the CA in considering this on appeal violated petitioners'
constitutional right to due process.42 Petitioners further argue that the CA also erred in applying
the Maceda Law to the instant case as it is applied only between a real estate seller and a
buyer.43 In any case, even if said law applied, the CA still erred in ruling that the GSIS failed to
comply with the provisions of the Maceda Law considering that the GSIS sent a notarized letter
of cancellation.44 As to the cash surrender value, petitioners claim that respondent Joel failed to
show that his sister filed a claim with the GSIS.45

Respondent’s Argument

Respondents, on the other hand, fault the MTC and the RTC in not taking judicial notice of the
Maceda Law in deciding the instant case.46 They maintain that the Maceda Law applies to the
instant case and that the conditional sale in favor of respondent Joel's sister remains valid due to
the failure of GSIS to return the cash surrender value of the payments made by her on the subject
property.47 Accordingly, petitioners have no possessory right over the subject property.48

Our Ruling

The Petition is meritorious.

Section 15, Rule 44 of the Rules of Court provides:

Section 15. Questions that may be raised an appeal. – Whether or not the appellant has filed a
motion for new trial in the court below, he may include in his assignment of errors any question
of law or fact that has been raised in the court below and which is within the issues framed by the
parties.

This provision embodies the settled principle that, on appeal, the parties are not allowed to
change their "theory of the case," which is defined in Black's Law Dictionary as:

A comprehensive and orderly menial arrangement of principle and facts, conceived and
constructed for the purpose of securing a judgment or decree of a court in favor of a litigant; the
particular line of reasoning of either party to a suit, the purpose being to bring together certain
facts of the case in a logical sequence and to correlate them in a way that produces in the
decision maker's mind a definite result or conclusion favored by the advocate.49

In other words, an issue not alleged in the complaint nor raised before the trial court cannot be
raised for the first time on appeal as this goes against the basic rules of fair play, justice, and due
process.50 In the same way, a defense not pleaded in the answer cannot also be raised for the first
time on appeal.51

In  Peña v. Spouses Tolentino,52 the Court explained that –

x x x a party cannot change his theory of the case or his cause of action on appeal. This rule
affirms that 'courts of justice have no jurisdiction or power to decide a question not in issue.'
Thus, a judgment that goes beyond the issues and purports to adjudicate something on which the
court did not hear the parties is not only irregular but also extrajudicial and invalid. The legal
theory under which the controversy was heard and decided in the dial, court should be
the same theory under which the review on appeal is conducted. Otherwise, prejudice will result
to the adverse party. We stress that points of law, theories, issues, and arguments not adequately
brought to the attention of the lower court will not be ordinarily considered by a reviewing court,
inasmuch as they cannot be raised for the first time on appeal. This would be offensive to the
basic rules of fair play, justice, and due process.

In this case, respondent Joel in his Answer53 averred:

7. The subject property was originally awarded to [respondent's] sister, Beaulah L. Aguillon
(Aguillon, for brevity), by the GSIS through a housing loan. Aguilion's monthly loan
amortizations were dutifully deducted through her salary and remitted to GSIS from year 1985 to
2000. xxx

8. Since Aguilion's place of work was in Bacolod City, she requested [respondent's] family to
stay in the subject property. In 1994, the GSIS informed Aguillon, through defendant, that she
was delinquent on her payment of amortizations. To prove payments and reconcile with her
records, Aguillon requested GSIS (Manila and Iloilo branches) to furnish her with copies of
remittances of amortization. She even went to Manila to request statement of payment/remittance
but to no avail. Later on, defendant would do the following up with GSIS Manila regarding the
request for issuance of statement of remittance which efforts suffered the same fate as Aguillon.
xxx

9. Burdened by the continued inaction of GSIS, Aguillon executed a Deed of Transfer of Rights
in favor of [respondent] which was approved by the former. [Respondent] then availed of
condonation/amnesty of whatever unpaid amortization the former owner of the subject property
incurred after paying ten (10%) percent of the computed balance subject to proper computations
of the total remittance made by Aguillon. xxx

10. [Respondent] paid the ten (10%) percent down payment and requested anew for the proper
computation of the total remittance made by Aguillon in order to determine the correct and
proper balance payable. Like the previous ones, GSIS failed to address the concern of
[respondent]. xxx

11. On May 16, 2010, [respondent] was shocked when [petitioners] went to his house and
informed him that they had bought the subject property from GSIS.

12. [Petitioner] has no cause of action against herein [respondent.] [Respondent is entitled to the
possession of the subject property as buyer thereof. His failure to pay the amortization was due
to the fault of GSIS arising from the latter's continued disregard of the repeated request for
computation of the total remittance/amortization made for the purpose of ascertaining the correct
and proper balance of the loan. This mess could be attributed to the absence of ledger of the
account as noticed by [respondent] or perhaps caused by the complete computerization program
GSIS has introduced in its system which bugged down resulting in confusion of its records and
its consequent filing of a case against the contractor – IBM.

13. Moreover, the sale made by GSIS in favor of [petitioners] is void. GSIS cannot unilaterally
terminate the deed of [conditional] sale without violating due process. Besides, subject property
was not mortgage[d] as security for the loan. Even if it was, no foreclosure proceeding was
initiated to date.

14. Having paid since 1985, Aguillon acquired ownership over the subject property. The effect
of the blunder in the computerization program of GSIS should not be tossed to [respondent].

15. Assuming for the sake of argument that the termination of the deed of conditional sale was
legal, [petitioners,] did not exhaust administrative remedies. [Petitioner Teresita], a neighbor,
acted in bad faith in purchasing [the] subject property from GSIS. She was aware that [the]
subject property is owned by [respondent]. On the other hand, GSIS did not act on the offer
proposal of [respondent ] to purchase the property.54

In his Pre-Trial Brief,55 respondent Joel raised two issues, to wit:

1. Whether x x x [petitioners] are legitimate buyer[s] and legally entitled to the possession
of the subject property?
 2. Whether x x x [respondent Joel] has superior right over [petitioners] as transferee of the
subject property and are entitled to its possession as well as to the compulsory
counterclaim?56

On appeal to the RTC, respondent Joel raised the following issues:

I.

THE LOWER COURT'S FINDING THAT THE [PETITIONERS] ARE BUYERS IN GOOD
FAITH IS HIGHLY ERRONEOUS FOR BEING CONTRARY TO ATTENDANT FACTS
AND CIRCUMSTANCES.

II.

THE LOWER COURT REGRETTABLY CLOSED ITS EYES ON THE APPARENT LACK
OF DUE PROCESS, WHICH UNJUSTLY DEPRIVED [RESPONDENT JOEL] OF HIS
CONSTITUTIONAL RIGHT TO PROPERTY.57

From the foregoing, it is apparent that the issue of whether the GSIS complied with the Maceda
Law or not was never brought to the attention of the MTC and the RTC. Respondents’
contention that the MTC and the RTC should have taken judicial notice of the Maceda Law is
untenable as the issue of compliance with the Maceda Law is a factual matter, which should have
been alleged or raised as a defense in the Answer. And since respondent Joel failed to allege such
matters in his Answer, there was no reason for the MTC, as well as the RTC, to resolve the issue
and apply the Maceda Law.

Moreover, records show that it was only before the CA that respondent Joel alleged that the
GSIS failed to send a notarized notice of cancellation and a refund of the cash surrender value to
his sister. The CA, therefore, should not have considered these belated allegations, as these are
factual matters, which would require the presentation of additional evidence on the part of
petitioners.

Furthermore, these belated allegations likewise changed the theory of his case, which is not
allowed under the Rules as it goes against the basic rules of fair play, justice, and due process.

All told, the Court finds that the CA gravely erred in resolving the issue of GSIS' compliance
with the Maceda Law, as it had no jurisdiction to resolve an issue not raised before the lower
courts. Accordingly, the CA Decision must be set aside and the RTC Decision affirming the
MTC Decision must be reinstated.

Respondents, therefore, must vacate the premises and pay petitioners the amount of P5,000.00
per month as reasonable compensation for the continued use and occupation of the subject
property from May 16, 2010, the date of the demand to vacate, until respondents actually vacate
the subject property and the amount of P20,000.00 as and for attorney's fees, plus costs of suit.
In addition, the reasonable compensation for the use and occupation of the subject property shall
incur a legal rate of interest of 6% per annum from May 16, 2010, when the demand to vacate
was made, up to the finality of this Decision. Thereafter, an interest, of 6% per annum shall be
imposed on the total amount due until full payment is made in accordance with Nacar v. Gallery
Frames58 and Bangko Sentral ng Pilipinas-Monetary Board Circular No. 799, Series of 2013.

WHEREFORE, the Petition is hereby GRANTED. The assailed September 29, 2014 Decision
and the December 1, 2014 Resolution of the Court of Appeals in CA-G.R. SP No. 130384 are
hereby REVERSED and SET ASIDE. The February 4, 2013 Judgment and the May 20, 2013
Order of the Regional Trial Court of Biñan, Laguna, Branch 25, in Civil Case No. B-8784,
affirming the March 20, 2012 Decision of the Municipal Trial Court of Biñan, Laguna, in Civil
Case No. 4086, are hereby REINSTATED.

In addition, the reasonable compensation for the use and occupation of the subject property shall
incur a legal rate of interest of 6%  per annum from May 16, 2010 up to the finality of this
decision. Thereafter, an interest of 6% per annum shall be imposed on the total amount due until
full payment is made.

SO ORDERED.

G.R. No. 220517, June 20, 2018

LOLITA ESPIRITU SANTO MENDOZA AND SPS. ALEXANDER AND ELIZABETH

GUTIERREZ, Petitioners, v. SPS. RAMON, SR. AND NATIVIDAD
PALUGOD, Respondents.

DECISION

CAGUIOA, J.:

Before the Court is a petition for review on certiorari (Petition) under Rule 45 of the Rules of
Court assailing the Decision1 dated April 29, 2015 (Decision) of the Court of Appeals2 (CA) in
CA-G.R. CV No. 102904, denying the appeal of petitioners for lack of merit, and the
CA3 Resolution4 dated September 10, 2015, denying petitioners' motion for reconsideration. The
CA Decision affirmed the Decision5 dated March 14, 2013 in favor of respondents and
Order6 dated May 8, 2014, denying petitioners' motion for reconsideration, of the Regional Trial
Court of Bacoor, Cavite, Branch 19 (RTC) in Civil Case No. BCV 2004-217.

The Facts and Antecedent Proceedings

The CA Decision's brief narration of facts and proceedings before the RTC follows:

[Petitioner] Lolita Espiritu Santo Mendoza (Lolita, for brevity) and Jasminia Palugod (Jasminia,
for brevity) were close friends. Lolita was a businesswoman engaged in selling commodities and
houses and lots, while Jasminia was then working as a Supervisor in the Philippine Long
Distance Telephone Company (PLDT). In 1991, Lolita and Jasminia bought the subject lot [with
an area of 120 sq. m.7] on installment for one (1) year until they decided to pay the balance in
full. [The lot is located in Sagana Remville8 Homes, Habay, Bacoor, Cavite.9 In 1995, Jasminia
became afflicted with breast cancer. Sometime in 1996, Lolita and Jasminia constructed a
residential house on the subject lot. Although Lolita has no receipts, she shared in the cost of the
construction of the house from her income in the catering business and selling of various
products. [Jasminia, based on a certification10, was separated from employment on December 30,
1998, and on January 18, 1999, she received her retirement pay11 in the amount of
P1,383,773.59.12] On May 11, 2004, Jasminia executed a Deed of [Absolute] Sale in favor of
Lolita, who eventually mortgaged [on November 19, 200413] the subject property to [petitioner]
Elizabeth Gutierrez as a security for a loan in the amount of Php800,000.00.

On the other hand, [respondents spouses Ramon, Sr. and Natividad Palugod] alleged that their
daughter, the late Jasminia, acquired the property located in Sagana Homes, Habay, Bacoor[,]
Cavite. Prior to and after the said acquisition of the subject property, Jasminia was living with
[petitioner] Lolita, a lesbian. Jasminia was an employee of PLDT who rose to the rank of Traffic
Supervisor before her separation from service. [Petitioner] Lolita has no work or means of
livelihood of her own and was fully dependent on Jasminia. Unfortunately, Jasminia was
afflicted with Stage IV breast cancer with multiple bone metastasis. When she was nearing her
death, she told her mother, [respondent] Natividad Palugod, that her house and lot shall go to her
brother Ramonito Palugod, but [petitioner] shall be allowed to stay therein. [Jasminia died on
September 26, 2004 at the Philippine General Hospital.14] Meanwhile, Lolita, taking advantage
of her relationship with Jasminia, caused the latter to sign a Deed of Absolute Sale in her favor.
Thereafter, Lolita, aided by her brother Wilfredo Mendoza as witness, entered it for registration
with the Office of the Registry of Deeds. Thus, TCT (Torrens [sic] Certificate of Title) No. T-
308560 in the name of Jasminia was cancelled and TCT No. T-1077041 was issued in the name
of Lolita.

[Respondents], upon learning from the Office of the Registry of Deeds that Jasminia's certificate
of title has been cancelled, executed an Affidavit of Adverse Claim of their right and interest over
the property as the only compulsory and legitimate heirs of Jasminia. However, [petitioner]
Lolita, knowing fully well of the impending suit, made it appear that she mortgaged the property
to [petitioners] Spouses Gutierrez as a security for a loan amounting to Php800,000.00.

Thus, [respondents] filed a complaint for Declaration of Nullity of the Deed of Absolute Sale and
the Deed of Real Estate Mortgage with the RTC of Bacoor[,] Cavite.

On March 14, 2013, the RTC of Bacoor, Cavite, Branch 19, rendered the assailed Decision in
favor of [respondents]. The RTC declared that there can be no contract unless the following
concur: (a) consent; (2) object certain; and (3) cause of the obligation. [Respondents] were able
to prove by preponderance of evidence that the Deed of Sale involved no actual monetary
consideration. [Petitioner] Lolita, in her testimony, admitted that the sale was without monetary
consideration. The RTC ruled that the Deed of Sale is void for being simulated, hence, the Deed
of Real Estate Mortgage executed therein by [petitioner] Lolita in favor of [petitioners] Spouses
Gutierrez is likewise void, since, in a real estate mortgage, it is essential that the mortgagor be
the absolute owner of the property to be mortgaged.
[The dispositive portion of the RTC Decision states:
WHEREFORE, premises considered, the judgment is hereby rendered in favor of the
[respondents] Sps. Ramon, Sr. and Natividad Palugod and against the [petitioners] Lolita
Espiritu Santo Mendoza and Sps. Alexander and Elizabeth Gutierrez as follows:

1. That the Deed of Absolute Sale dated May 11, 2004 purportedly executed by x x
x Jasminia Palugod in favor of [petitioner] Lolita Espiritu Santo Mendoza as null
and void;

2. That the Deed of Real Estate Mortgage dated November 19, 2004 executed by
[petitioner] Lolita Espiritu Santo Mendoza in favor of [petitioners] Spouses
Alexander and Elizabeth Gutierrez as null and void;

3. To cancel the Transfer Certificate of Title No. T-1077041 in the name of

[petitioner] Lolita Espiritu Santo Mendoza and to reinstate Transfer Certificate of
Title No. 308560 in the name of Jasminia P. Palugod;

4. Declaring [respondents] as the lawful owner[s] of the subject property by

succession as the only and compulsory heirs of the late Jasminia P. Palugod; and

5. Ordering [petitioners], jointly and severally, to pay [respondents] the amount of

Php200,000.00 in attorney's fees.

SO ORDERED.15]
[Petitioners] filed [a] motion for reconsideration, but the RTC, in the assailed Order dated May
8, 2014, denied the same for lack of merit.

Aggrieved, [petitioners] interposed [an] appeal [before the CA].16

The CA Ruling

The CA denied petitioners' appeal for lack of merit. The CA ruled that respondents, being the
only surviving heirs of Jasminia17 Paloma Palugod (Jasminia), have the legal personality to
question the validity of the deed of sale between Jasminia and petitioner Lolita Espiritu Santo
Mendoza (petitioner Lolita).18 The CA found no cogent reason to deviate from the finding of the
RTC that the deed of sale is null and void for being absolutely simulated since it did not involve
any actual monetary consideration.19 The CA likewise agreed with the RTC's finding that the real
estate mortgage between petitioner Lolita and petitioners spouses Alexander and Elizabeth
Gutierrez is null and void because the mortgagor was not the absolute owner of the mortgaged
property.20 The dispositive portion of the CA Decision reads as follows:
WHEREFORE, the appeal is DENIED for lack of merit. The assailed March 14,
2013 Decision and May 8, 2014 Order of the RTC of Bacoor, Cavite, Branch 19, in Civil Case
No. BCV 2004-217, are AFFIRMED.

SO ORDERED.21
Petitioners filed a motion for reconsideration, which was denied by the CA in its
Resolution22 dated September 10, 2015.
Hence, the present Petition. The Court in its Resolution23 dated January 13, 2016 denied the
Petition for failure to sufficiently show any reversible error in the challenged CA Decision and
Resolution as to warrant the exercise of the Court's appellate jurisdiction. Petitioners filed a
Motion for Reconsideration24 dated March 28, 2016. Respondents opposed the Motion for
Reconsideration and filed an Opposition/Comment25 dated April 20, 2016. In its
Resolution26 dated October 3, 2016, the Court granted petitioners' Motion for Reconsideration,
reinstated the Petition and required respondents to comment on the Petition. Respondents filed
their Comment27 dated February 4, 2017. Petitioners filed a Reply28 dated July 10, 2017.

Issues

The Petition raises the following issues:

1. Whether the CA erred in not upholding as applicable to the case the legal principle that a
written contract is for a valuable consideration despite the utter failure to prove beyond a
selective appreciation of the transcript of stenographic notes that there was indeed no
consideration;

2. Whether the CA erred in not upholding as applicable to this case the legal principle that
inadequacy of monetary consideration does not render a conveyance null and void; and

3. Whether the CA erred when it affirmed the finding of the RTC that petitioners-
mortgagees are jointly liable with petitioner-mortgagor despite the lack of evidence
against their innocence contrary to the legal principle that innocent parties must not be
held liable for damages.29

The Court's Ruling

The Petition is meritorious.

While petitioners couch the issues based on erroneous application of certain legal principles -
presumption and adequacy of consideration of contracts, they inherently involve a determination
of the correctness of the finding by both the CA and the RTC that respondents have established
by preponderance of evidence the lack of consideration of the disputed deed of sale. Necessarily,
questions of fact must be hurdled in the resolution of the issues raised by petitioners.

As a rule, the factual findings of the CA affirming those of the RTC are final and conclusive, and
they cannot be reviewed by the Court which has jurisdiction to rule only on questions of law in
Rule 45 petitions to review.30

The Court in Pascual v. Burgos31 reiterated that:

A question of fact requires this [C]ourt to review the truthfulness or falsity of the allegations of
the parties.32 This review includes assessment of the "probative value of the evidence
presented."33 There is also a question of fact when the issue presented before this [C]ourt is the
correctness of the lower courts' appreciation of the evidence presented by the parties.34
There are, however, recognized exceptions where the Court may review questions of fact. These
are: (1) when the factual conclusion is a finding grounded entirely on speculations, surmises and
conjectures; (2) when the inference is manifestly mistaken, absurd or impossible; (3) when there
is abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when
the findings of fact are conflicting; (6) when the CA went beyond the issues of the case in
making its findings, which are further contrary to the admissions of both the appellant and the
appellee; (7) when the CA's findings are contrary to those of the trial court; (8) when the
conclusions do not cite the specific evidence on which they are based; (9) when the facts set
forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the
respondents; (10) when the CA's findings of fact, supposedly premised on the absence of
evidence, are contradicted by the evidence on record;35 or (11) when the CA manifestly
overlooked certain relevant facts not disputed by the parties, which, if properly considered,
would justify a different conclusion.36

As will be demonstrated below, the Court's review of the factual findings of the courts below is
justified by the fourth, tenth and eleventh exceptions the assailed judgments of the CA and the
RTC are based on a misapprehension of facts; the findings of fact of the CA and the RTC,
supposedly premised on the absence of evidence, are contradicted by the evidence on record; and
the CA as well as the RTC manifestly overlooked certain relevant facts not disputed by the
parties, which, if properly considered, would justify a different conclusion.

At the heart of the present controversy between respondents spouses Ramon, Sr. (respondent
Ramon) and Natividad Palugod (respondent Natividad), the parents of the late Jasminia and her
"close friend"37 petitioner Lolita is the (unilateral) Deed of Absolute Sale38 (DAS) notarized on
May 11, 2004 executed by Jasminia in favor of petitioner Lolita, the validity of which is the
central issue in this case. The DAS partly states:
I, JASMINIA PALOMA PALUGOD x x x hereinafter referred to as the VENDOR, FOR
AND IN CONSIDERATION of the sum of FOUR HUNDRED THOUSAND PESOS
(P400,000.00) Philippine Currency, receipt of which is hereby acknowledged and confessed,
have SOLD, TRANSFERRED, and CONVEYED, absolutely and perpetually to LOLITA
ESPIRITU SANTO MENDOZA x x x hereinafter referred to as the VENDEE, her heirs,
successors, and assigns, my ONE HUNDRED TWENTY (120) SQUARE METERS lot
located at Habay, Bacoor, Cavite, including all improvements found therein x x x.39
Both the RTC and the CA declared the DAS void on the ground that it was fictitious or simulated
on account of lack of consideration. According to the RTC, petitioner Lolita "admitted that she
has no receipts showing the staggered payment of P400,000.00 or any agreement made between
her and Jasminia as to the consideration of the subject property."40 On the other hand, the CA
stated that:
Although, on its face, the Deed of Sale appears to be supported by valuable consideration, since
it states that Lolita paid the purchase price of Php400,000.00 for the subject property. However,
based on the testimony of [petitioner] Lolita, it has been proven that she gave no consideration
therefor. Having proven that the price, as reflected in the Deed of Sale is simulated, it is beyond
doubt that the sale is null and void. Article 1471 of the New Civil Code provides that "If the
price is simulated, the sale is void, x x x." Thus, [respondents] are the lawful owners of the
subject property by intestate succession as the only and compulsory heirs of the late Jasminia.41
Both the RTC and the CA relied on the following testimony of petitioner Lolita:
ATTY. ARANDIA: Also, in the presence of Atty. Bongon [the notary public], did you pay
Jasminia the consideration on the Deed of Absolute Sale?

WITNESS: No, sir.

ATTY. ARANDIA: There was none?

WITNESS: Yes, sir.42

To the lower courts, the above-quoted testimony of petitioner Lolita, plus the absence of receipts,
is the unrebutted proof of the DAS' lack of consideration.

In their motion for reconsideration before the CA and in their Petition, petitioners argue,
however, that petitioner Lolita's principal proof that she did purchase the subject property is the
DAS itself while the evidence against her by respondents are all verbal averments, which are
mere conjectures and even hearsay.43

While petitioner Lolita concedes that she did not pay the consideration for the purchase of the
subject property before Notary Public Atty. Jesus Bongon44, she asserts that the payment was
made prior to the notarization of the DAS as shown in her testimony taken on February 23,
2010.45 She likewise argued this point before the CA in petitioners' motion for reconsideration.46

The lower courts, as will be explained below, failed to properly consider the foregoing argument
and evidence that petitioner Lolita raised and adduced. The outcome of the case would have been
different had the lower courts given them the due consideration they deserved.

As correctly pointed out by petitioner Lolita, the DAS is itself the proof that the sale of the
property is supported by sufficient consideration. This is anchored on the disputable presumption
of consideration inherent in every contract. Thus, Article 1354 of the Civil Code provides:
"Although the cause is not stated in the contract, it is presumed that it exists and is lawful, unless
the debtor proves the contrary."

This disputable presumption is reiterated in the Rules of Court (Rules). Section 3, Rule 131 of
the Rules provides:
SEC. 3. Disputable presumptions. - The following presumptions are satisfactory if
uncontradicted, but may be contradicted and overcome by other evidence:

xxxx

(r) That there was a sufficient consideration for a contract[.]

In Mangahas v. Brobio,47 the Court explained how the presumption of sufficient consideration
can be overcome, to wit:
A contract is presumed to be supported by cause or consideration.48 The presumption that a
contract has sufficient consideration cannot be overthrown by a mere assertion that it has no
consideration. To overcome the presumption, the alleged lack of consideration must be shown by
preponderance of evidence.49 The burden to prove lack of consideration rests upon whoever
alleges it, which, in the present case, is respondent.50
Guided by the above provisions of the Civil Code and the Rules as well as jurisprudence,
petitioners stand to benefit from the disputable presumption of consideration with the
presentation of the DAS. Indeed, they can rely on the DAS as proof that it has consideration -
"FOR AND IN CONSIDERATION of the sum of FOUR HUNDRED THOUSAND PESOS
(P400,000.00) Philippine Currency, receipt of which is hereby acknowledged and
confessed."51

With the presumption in favor of petitioner Lolita who is the vendee, it became incumbent upon
respondents to present preponderant evidence to prove lack of consideration. Respondents' mere
assertion that the DAS has no consideration is inadequate.

Regarding the determination of preponderance of evidence, Section 1, Rule 133 of the Rules
provides:
SECTION 1. Preponderance of evidence, how determined. - In civil cases, the party having the
burden of proof must establish his case by a preponderance of evidence. In determining where
the preponderance or superior weight of evidence on the issues involved lies, the court may
consider all the facts and circumstances of the case, the witnesses' manner of testifying, their
intelligence, their means and opportunity of knowing the facts to which they are testifying, the
nature of the facts to which they testify, the probability or improbability of their testimony, their
interest or want of interest, and also their personal credibility so far as the same may legitimately
appear upon the trial. The court may also consider the number of witnesses, though the
preponderance is not necessarily with the greater number.
The basic rule in civil cases is:
x x x that "the party having the burden of proof must establish his case by a preponderance of
evidence."52 By "preponderance of evidence is meant simply evidence which is of greater weight,
or more convincing than that which is offered in opposition to it."53 x x x

xxxx

"Where the evidence on an issue of fact is in equipoise or there is doubt on which side the
evidence preponderates[,] the party having the burden of proof fails upon that issue."54 Therefore,
as "neither party was able to make out a case, neither side could establish its cause of action and
prevail with the evidence it had. They are thus no better off than before they proceeded to
litigate, and, as a consequence thereof, the courts can only leave them as they are. In such cases,
courts have no choice but to dismiss the complaints/petitions."55
While the RTC ruled that "[respondents] established by a preponderance of evidence that the
Deed of Sale dated May 11, 2004 involved no actual monetary consideration, executed by
Jasminia in favor of [petitioner] Lolita,"56 it relied not on the testimony of the lone witness for
respondents, respondent Natividad, but on the testimony of petitioner Lolita admitting that "in
the presence of the Notary Public, Atty. Bongon, the sale was in fact without
consideration"57 and "she has no receipts showing the staggered payment of P400,000.00 or any
agreement made between her and Jasminia as to the consideration of the subject
property."58 Thus, the RTC Decision made no mention of the pertinent testimony of respondent
Natividad wherein she controverted the presumption of consideration.

The CA echoed the finding of the RTC and stated: "A perusal of the records of the case reveals
that [respondents] were able to establish by a preponderance of evidence that the Deed of Sale is
absolutely simulated, since, it did not involved (sic) any actual monetary consideration."59 The
CA then quoted the testimony of petitioner Lolita where she admitted that the consideration of
the DAS was not paid in the presence of Atty. Bongon. The CA, like the RTC, did not advert to
the testimonial evidence adduced by respondents through respondent Natividad.

Since preponderance of evidence is the required quantum of proof in this case, the evidence of
respondents, who are the plaintiffs before the RTC, must be weighed against the petitioners'
evidence, and a determination of which one has superior weight must be made.

As mentioned earlier, respondents relied solely on the testimony of respondent Natividad. A

careful reading of the testimony of respondent Natividad, the mother of Jasminia, reveals that
respondents' evidence on the lack of consideration of the DAS can be inferred from the
following:
[Atty. Edgardo Arandia, respondents' counsel, to witness respondent Natividad]
ATTY. ARANDIA
Q
Why did you say that they were living as if they were husband and wife?
WITNESS
A
They were living in that house and Lolita Mendoza is a lesbian "tomboy", sir.
ATTY. ARANDIA
Q
And who was spending for their everyday living?
WITNESS
A
Jasminia, sir.
ATTY. ARANDIA
Q
Why? Was (sic) Lolita has no income of her own?
WITNESS
A
No, sir. She has none.
ATTY. ARANDIA
Q
What was the occupation or job of Jasminia at that time?
WITNESS
A
My daughter is a Supervisor at the PLDT, sir.
ATTY. ARANDIA
Q
You are telling us that Lolita was purely dependent from Jasminia?
WITNESS
A
Yes, sir.
xxxx
ATTY. ARANDIA
Q
What did you talk about?
WITNESS
A
She [Jasminia] told me that the house and lot is for Ramonito and she requested not to evict
Lolita from the house and I said "yes" we will not asked (sic) Lolita to leave the house, sir.60
Respondent Natividad further testified as follows:
ATTY.
ARANDIA:
Mrs. Palugod, what can you say on this Deed of Absolute Sale marked as Exhibit "F"?
WITNESS:
That's not true because in fact my daughter when she's still alive had been telling me that the said
house and lot will be given to her brother Ronnie and we will not ask Lolita Mendoza to vacate
or to leave the place, sir.
xxxx
ATTY. ARANDIA:
Mrs. Palugod, what else did you discover with the Office of the Register of Deeds for the
Province of Cavite in connection with this property of Jasmina in addition to its transfer from the
name of your daughter to the name of Lolita?
WITNESS:
We also discovered that the Deed of Sale is not true and that is a fake "gawa-gawa lang po", sir.61
In fine, respondent Natividad simply reiterated the allegations in the "Sinumpaang Salaysay ng
Paghahabol (Affidavit of Adverse Claim)" dated November 24, 2004 that she and her husband,
respondent Ramon, executed, to wit:
Nalagay sa pangalan ni Lolita Espiritu Santo Mendoza ang titulong lupa't-bahay sang-ayon sa
isang Deed of Absolute Sale na lumalabas ay binili niya iyon sa aming namayapang anak na si
Jasminia sa halagang P400,000.00 piso daw;

Wala pong katotohanan ang nasabing bilihan sapagkat iyon ay isang hindi tatoo at isang
simulated or fictitious na bilihan lamang dahil imposibleng bayaran [ni] Lolita ang anak [namin]
dahil sila ay nagsasama bilang mag-asawa (tomboy po si Lolita) at si Lolita ay walang
hanapbuhay at umaasa lamang sa aming anak nasi Jasminia. Ang katotohanan pa nga, ay na[n]g
magkasakit ang aming anak, lahat ng ginagastos sa pagpapagamot sa kanya ay galing sa kanyang
mga kapatid na ibinibigay [namin] kay Lolita. Bukod pa doon, bago siya namatay ay ibinilin
niya sa amin n[a] huwag paaalisin si Lolita sa bahay kung iyon ay manahin [namin] at hindi
kailanman iyon ay ipinagbili sa kanya;

Kung kaya[']t bilang tanging tagapagmana at sa ilalim ng batas ay kami na ang may-ari ng
nasabing lupa[']t bahay, ay aming isinasagawa ang sinumpaang salaysay na ito upang
patunayang lahat ang nakasaad sa itaas x x x.62
On the other hand, petitioner Lolita disputed the assertion that she has no income and means of
livelihood, and presented documents in support thereof, to wit:
[Atty. Lawrence63 Rubio, petitioners' counsel, to petitioner Lolita]
ATTY. RUBIO:
Miss witness, can you tell us your occupation?
WITNESS:
I am a businesswoman, sir.
ATTY. RUBIO:
Can you tell us what kind of business are you engaged into?
WITNESS:
I am engaged in selling food, catering services. I am also engaged in selling house and lot, sir.
ATTY. RUBIO:
Your (sic) are telling us that you are engaged into selling as agent. Do you have any proof to
show that you are engaged in such business?
WITNESS:
Yes sir, I have.
ATTY. RUBIO:
What are those documents, madame witness?
WITNESS:
I have documents coming from the offices wherein I was able to sell house and lot and also
documents coming from other offices wherein I transacted business catering with them, sir.
ATTY. RUBIO:
Madame witness, I am showing to you Exhibit "3["]64 and "3-A",65 is this the one that I am (sic)
referring to?
WITNESS:
Yes sir.
xxxx
ATTY. RUBIO:
When we say occupation, we are talking of income. Can you tell us if you receive any income
from this occupation?
WITNESS:
Yes sir.
ATTY. RUBIO:
Can you show us any proof that you had received any income from this business or occupation
that you mentioned?
WITNESS:
I have a statement of account, I invested the money with the bank. I also bought a house and lot
and I invested money with MMG, sir.
ATTY. RUBIO:
I am showing to you a document previously marked as Exhibit "4"66. Can you tell us if you are
referring to this document that you mentioned?
WITNESS:
Yes sir.
ATTY. RUBIO:
How about Exhibits "5"67 & "6"68?
WITNESS:
Yes sir.
xxxx
COURT:
By the way, what are those properties owned by the defendants?
ATTY. RUBIO:
Your honor, these are savings accounts from banks.
COURT:
How many savings accounts does she have?
ATTY. RUBIO:
She has one from China Bank and the Memorandum of Agreement which the witness identified
were investments from holdings company which she has invested, your honor.
COURT:
How much was her investments in those companies and what are those companies? She
mentioned that she invested with the MMG, is it not? So, how much was she invested (sic) with
MMG?
WITNESS:
Four Hundred Thousand Pesos (PhP400,000.00) and another Two Hundred Thousand pesos
(PhP200,00.00) (sic), your honor.
COURT:
What else? Aside from MMG, do you invest your money to other investing company?
WITNESS:
At China Bank, your honor.
COURT:
Was it investment or deposit?
WITNESS:
Deposit, your honor.69
The foregoing testimony of petitioner Lolita and the documentary evidence in support thereof
show that she had income and the means to pay the consideration stated in the DAS. These
documentary evidence - (1) Certification from E.B. Loredo Realty Corporation dated January 6,
2005 that petitioner Lolita had been a sales agent of the said realty corporation from January
2001 up to December 2002 (Exh. "3"); (2) Certification from Cesar C. Cruz & Partners Law
Offices dated December 22, 2004 that petitioner Lolita was supplying food consisting of lunch
and snacks to the employees of the said law office from 1982 to 1988 (Exh. "3-A"); (3)
Certification from Chinabank, SM City Bacoor Branch dated December 16, 2004 that since 1998
petitioner Lolita maintained accounts with the said bank under TD#168020017540,
TD#168020018239, SA#2680029315 and SA#2680873817 (Exh. "4"); (4) Notarized
Memorandum of Agreement between MMG International Holdings Co., Ltd. (MMG) and
Jasminia Palugod &/or Lolita Mendoza (Capitalist) dated June 26, 2002 wherein the Capitalist
turned over P800,000.00 for MMG to use as capital for six months at 2.5% monthly
compensation, expiring on December 26, 2002 (Exh. "5"); and (6) Notarized Memorandum of
Agreement between MMG and Lolita Mendoza (Capitalist) dated June 26, 2002 wherein the
Capitalist turned over P200,000.00 for MMG to use as capital for six months at 2.5% monthly
compensation, expiring on December 26, 2002 (Exh. "6") - were all unrebutted by respondents.
For their part, both the CA and the RTC totally ignored them.

As to the consideration of the DAS, both the RTC and the CA concluded that since Lolita
admitted in her testimony, as quoted earlier, that she did not pay the consideration of the DAS
before the notary public, the DAS lacks consideration. However, petitioner Lolita offered the
following explanation:
RE-DIRECT-
 EXAMINATION:
[Atty. Rubio to petitioner Lolita]
ATTY. RUBIO:
During the hearing last June 30, 2009 you were asked by the counsel or (sic) the plaintiff "Did
you pay Jasminia for the consideration of the Deed of Absolute Sale? You answered, No, sir." As
appearing on the Transcript of Stenographic Notes of the same date. My question madame
witness is, can you clarify why you were not able to pay the consideration?
xxxx
ATTY. RUBIO:
My question madame witness is, since you were not able to pay her at that time, when did you
pay her?
xxxx
WITNESS:
I paid in 2002, sir.
xxxx
ATTY. RUBIO:
Madame witness, you answered 2002, can you tell us when the Deed of Absolute Sale was
executed?
WITNESS:
May 11, 2004, sir.
ATTY. RUBIO:
You paid Jasminia the consideration of the property before the execution of the Deed of
Absolute Sale?
WITNESS:
Yes sir.
ATTY. RUBIO:
Can you tell us the circumstances how you paid Jasminia the consideration of the property
subject of this case?
xxxx
ATTY. RUBIO:
Can you tell us the manner of payment, madame witness?
xxxx
WITNESS:
Whenever Jasminia needs money since she's having her treatment so I gave her the amount of
TWENTY THOUSAND PESOS (Php20,000.00) sometimes FORTY THOUSAND PESOS
(Php40,000.00) until it reached the amount of TWO HUNDRED THOUSAND PESOS
(Php200,000.00), sir.
xxxx
ATTY. RUBIO:
You only paid Php200,000.00 that time[.]
WITNESS:
Because that's the only money left with me and the other Php200,000.00 was borrowed by
Jasminia from my sister in Australia, sir.
xxxx
COURT:
What transpired during the meeting between your sister and Jasminia when you said you were
present?
WITNESS:
That my sister will lend money to Jasminia, you honor.
COURT:
Do you know how much money is she going to lend to Jasminia?
WITNESS:
Two Hundred Thousand Pesos (Php200,000.00), your honor.
xxxx
ATTY. RUBIO:
After agreeing to let Jasminia borrow money from your sister, what happened next?
WITNESS:
She was given first Fifty thousand Pesos (Php50,000.00), sir.
COURT:
When was that?
WITNESS:
That was also in the year 2002, you honor.
COURT:
Was it during the meeting wherein Jasminia and your sister talked about this loan?
WITNESS:
Yes your honor.
COURT:
So, immediately your sister lend her Php50,000.00?
WITNESS:
Yes your honor.
ATTY. RUBIO:
What about the balance of Php150,000.00?
WITNESS:
When she returned to Australia she's sending money to my mother including the money that
Jasmin[ia] is (sic) asking, sir.
xxxx
COURT:
By the way, when your sister gave Jasminia the amount of Php50,000.00, was there any receipt
prepared to show that your sister indeed lend (sic) money in the amount of Php50,000.00?
WITNESS:
There's none, your honor.
COURT:
How about the other money that your sister sent to your mother in order to give to Jasminia,
were there any receipts?
WITNESS:
None also you honor.
xxxx
RE-CROSS EXAMINATION:
[Atty. Arandia to petitioner Lolita]
ATTY. ARANDIA:
Miss. (sic) Mendoza, you mentioned that you paid Jasminia Palugod Php200,000.00 in partial
payment of the property the subject matter in this case and according to you the payment was on
a staggered basis way back in 2002. Now, my question is, do you have receipts showing that you
paid Jasminia Php200,000.00 on staggered basis?
WITNESS:
None, sir.70
From the foregoing, it is evident to the Court that petitioner Lolita's proof of payment of the
DAS' consideration was her sworn testimony. Testimony, given under oath, and subjected to
cross-examination is proof.71 Unfortunately, both the CA and the RTC brushed this aside only
because the RTC zeroed in on the lack of receipts.

Since the evidence of the parties are mainly testimonial, it behooved the RTC, as well as the CA,
to weigh the version of respondents against that of petitioners. The Court is called upon to do the
same in order to determine which evidence preponderates.

Before the narrations of respondent Natividad and petitioner Lolita are pitted against each other
to determine which one preponderates over the other, the Court notes the glaring inconsistencies
in respondent Natividad's testimony:

1. According to respondent Natividad, Jasminia used her retirement pay to buy the lot and
constructed the house in Sagana Remville, Habay, Bacoor, Cavite, to wit:
[Atty. Arandia to respondent Natividad]
ATTY. ARANDIA
Q
Was Jasminia able to retire from PLDT before her death?
WITNESS
A
Yes, sir.
xxxx
ATTY. ARANDIA
xxxx
Q
Do you know if Jasminia able (sic) to get her retirement benefit from PLDT?
xxxx
WITNESS
A
Yes, sir. She was able to receive it.
ATTY. ARANDIA
Q
Do you know what Jasminia did on her retirement benefit?
WITNESS
A
Yes, sir.
ATTY. ARANDIA
Q
What?
WITNESS
A
She bought a lot and constructed a house, sir.
ATTY. ARANDIA
Q
And that property or lot you are saying now is the same property located in Sagana Remville,
Habay, Bacoor, Cavite?
WITNESS
A
Yes, sir.72
Respondent Natividad's account could not have happened because Jasminia received her
retirement pay equivalent to P1,383,773.59 on January 18, 1999 based on the Receipt, Release
and Quitclaim (Exh. "8"73) that Jasminia executed on even date, which was after the purchase
of the subject lot and the construction of the subject house.

Indeed, petitioner Lolita disputed respondent Natividad's version, to wit:

[Atty. Rubio to petitioner Lolita]
ATTY. RUBIO:
x x x Madame witness, during the hearing dated November 27, 2007, when the plaintiff testified
you were present in Court?
WITNESS:
Yes sir.
ATTY. RUBIO:
So, when the witness was asked: "Do you know what Jasminia did on her retirement benefit?["]
And the witness answered: "Yes, sir.". "What?["], asked by counsel and the witness answered:
"She bought a lot and constructed a house, sir." Can you tell us, what can you say about this
testimony?
WITNESS:
That's not true, sir.
ATTY. RUBIO:
Why?
WITNESS:
Because we bought that lot in 1991 and the house was constructed in February of 1996, sir.74
2. According to respondent Natividad, Jasminia's retirement pay was used by Jasminia and
petitioner Lolita for their trips to Hong Kong, Norway and Australia, to wit:
[Atty. Arandia to respondent Natividad]
ATTY. ARANDIA
Q
Do you know if Jasminia and Lolita went abroad from that retirement benefit?
xxxx
WITNESS
A
They went to Hong Kong, Australia and Norway, sir.
COURT
Q
Why do you know that they went to those places?
WITNESS
A
Because we were living in the same house and I was with them when they went to Hong Kong,
Your Honor.
COURT
Q
So, do you mean to say that you were living with Lolita and Jasminia in their house at Sagana
Remville, Habay, Bacoor, Cavite?
WITNESS
A
Not me, only the two of them, Your Honor.75
On the other hand, petitioner Lolita's version is as follows:
ATTY.
ARANDIA:
And from this separation benefit which Jasminia received from PLDT you even went wither (sic)
in Europe, in Hong Kong and in Australia?
WITNESS:
That's not true, sir. At the time we went to Europe and Hong Kong, Jasminia had not yet
separated from PLDT and in fact we went together with her mother at the time we went in those
places, sir.
COURT:
Do you still recall what year was that when you, Jasminia and together with her mother went to
Europe?
WITNESS:
In Europe, that was May, 1997, you honor.
COURT:
How about in Hong Kong?
WITNESS:
In Hong Kong, that was September, 1995, your honor.
COURT:
How about in Australia?
WITNESS:
In Australia, that was in March, 1999, your honor.
COURT:
So, that was after her separation?
WITNESS:
Yes your honor.
ATTY. ARANDIA:
With all these tours and trips with these countries which you mentioned, it was Jasminia who
spent for the travel?
WITNESS:
In Hong Kong, it was her mother who paid. In Norway, the three (3) tickets were sent by her
brother because we had an invitation to go to Norway so that we will (sic) be able to get a Visa.
COURT:
In other words, the expenses came from the brother of Jasminia?
WITNESS:
Yes you honor, but I paid my ticket when we reached Norway.
ATTY. ARANDIA:
And what is the name of the brother of Jasminia in Norway?
WITNESS:
Ramonito Palugod, sir.
ATTY. ARANDIA:
And according to you, you reimbursed the ticket given to you upon arrival in Norway?
WITNESS:
Yes sir, I paid it in dollar.
ATTY. ARANDIA:
To whom did you pay?
WITNESS:
To Ramonito, sir.
ATTY. ARANDIA:
How much did you pay Ramonito?
WITNESS:
One Thousand Dollars ($1,000.00), sir.
ATTY. ARANDIA:
Do you have receipt that you have actually reimbursed Ramonito for that ticket?
WITNESS:
None, sir.76
3. According to respondent Natividad, her daughter Jasminia could not possibly travel from
Bacoor to Pasay City where the DAS was notarized because she had a brace and her bone is
"napupulbos na."77 Her testimony in this aspect is reproduced below:
ATTY.
ARANDIA:
On the second page of this Exhibit "F" is the acknowledgment portion wherein it is stated here
that it was allegedly acknowledged before the Notary Public in Pasay City and this Deed of
Absolute Sale appears to have been executed on May 11, 2004. My question is, during the time,
May 11, 2004 can Jasmina travel from Bacoor to Pasay City to acknowledge this Deed of Sale
before a Notary Public?
xxxx
WITNESS:
On the said date and time my daughter cannot possibly travel from Bacoor in going to Pasay City
because during that time she already had a bone cancer and she had a brace and her bone is
"napupulbos na", sir.78
To dispute respondent Natividad's account, petitioner Lolita presented Dr. Teresa Sy Ortin (Dr.
Ortin), a Radiation Oncologist at Makati Medical Center, who issued a Medical
Certificate79 dated December 20, 2004. Dr. Ortin's testimony follows:
[Atty. Lawrence Rubio to Dr. Ortin]      
ATTY. RUBIO:       
Madam witness, can you recall your employment in the year May 11, 2004? Where were you
employed at that time?       
WITNESS:   
I'm a Radiation Oncologist at Makati Medical Center. I'm a cancer specialist, sir.  
x x x x       
ATTY. RUBIO:   
x x x Can you remember a patient by the name of Jasminia Palugod?       
WITNESS:   
Yes, sir. I have her records with me.       
ATTY. RUBIO:   
Can you tell us what is the nature of her illness?      
WITNESS:   
She had breast cancer. I treated her for several times and the last treatment was on April 16, 2004
for which she received treatment for the period April 16 to May 13, 2004, sir.       
ATTY. RUBIO:   
I have here a Medical Certificate dated December 20, 2004. I am showing to you this document.
Can you tell us what is the relation of this document to the one you have mentioned?       
WITNESS:   
Actually, I have a copy of that on my record and this certifies that she came to us for treatment,
in my clinic.       
x x x x      
ATTY. RUBIO:   
x x x During that time, madam witness, April 16, 2004 to May 13, 2004, how often does (sic)
your patient Jasminia Palugod came (sic) to Makati Medical Center?       
WITNESS:   
She was treated daily, because our schedule of radiation therapy is everyday, from 8:00 to 5:00.
So, it's a total of eighteen (18) treatments. So, that is over four (4) weeks.       
ATTY. RUBIO:   
During that time, do you know who was with her?       
WITNESS:  
I remember as her companion... I don't know her name but I recognize her face.    
ATTY. RUBIO:   
For the record, your Honor, may I state that the witness is pointing to the defendant Lolita
Mendoza as the companion of patient Jasminia Palugod at the time the patient is being assisted at
the Makati Medical Center.       
COURT:   
Noted.80
On cross-examination, Dr. Ortin further testified:
[Atty. Arandia to Dr. Ortin]
ATTY. ARANDIA:
How long is the radiation treatment being conducted for each exposure?
WITNESS:
About fifteen (15) minutes, sir.
ATTY. ARANDIA:
After exposing the patient on radiation therapy, what is the effect thereof on her physical
condition?
WITNESS:
Radiation therapy is a local treatment, so the side effect should end on where the radiation is
directed. For example, there were exposure on the arms, other parts of the body would not have
any significant side effect.
ATTY. ARANDIA:
In the case of Ms. Palugod, who was according to you, afflicted with cancer which has
metastasized. So what part of her body was subjected to radiation exposure therapy?
WITNESS:
According to the records, it was in the thoraxic spine.
ATTY. ARANDIA:
What would be the effect of that radiation on the patient after exposure?
WITNESS:
The side effect is very minimal. You may feel a little weak but as you can see most of our
patients are treated in my clinic as out patient. They don't need to be confined. Most of our
patients can walk around and able to do their other duties after treatment.
ATTY. ARANDIA:
Will they feel weakness after the therapy?
WITNESS:
Yes, but not very significant for us to require them to stay in the hospital.
ATTY. ARANDIA:
In the case of Ms. Palugod considering that her cancer has already metastasized. I will assume
that during those times, Ms. Palugod was weak already?
xxxx
WITNESS:
I remember she was coming on a wheelchair and her main problem at that time, the reason for
the radiation, is that because she was in pain.
ATTY. ARANDIA:
On wheelchair. Meaning to say that she was weak to walk by herself?
WITNESS:
Yes, sir.
ATTY. ARANDIA:
And that her weakness will be aggravated after weeks of radiation therapy?
WITNESS:
Not significantly.
ATTY. ARANDIA:
What do you mean, "not significantly["]?
WITNESS:
It's not going to be extremely weak that you need to confine her because of the problem?
COURT:
What would be the end result of that radiation treatment to a person afflicted by cancer? Would
she be cured or would she be strong after each treatment?
WITNESS:
The main problem why she was referred to us was because she was in extreme pain, and
radiation is supposed to regress the pain and makes her to feel better.
COURT:
During this treatment, and you said that it was on a daily basis, after being treated for at least
fifteen (15) minutes of radiation, what should be the effect to Ms. Palugod?
WITNESS:
After few days of treatment, we expect her to be relieved....
COURT:
From the pain that she is suffering.
WITNESS:
Yes. Her treatment started on April 16 and on April 30, she claimed that she felt some relief from
her back pain.
xxxx
ATTY. ARANDIA:
x x x Ordinarily, if the patient like Ms. Palugod, who has been suffering from cancer which has
metastasized and who was undergoing radiation therapy, would it be natural for that patient like
Ms. Palugod to go to a notary public to acknowledge a document?
xxxx
WITNESS:
I don't think there's problem with that. For patients who are terminally ill, we advise them to take
care of things, important decisions that they have to decide on. So, I don't think that should be a
problem for patients who are suffering from illness with that concern.
ATTY. ARANDIA:
For all the treatments that you had been undertaken to Ms. Palugod, was she always
accompanied by somebody?
WITNESS:
Yes, as far as I can remember.
ATTY. ARANDIA:
So in other words, she cannot come to your office without being assisted by another person?
WITNESS:
Probably, not.
ATTY. ARANDIA:
What do you mean, "probably, not"?
WITNESS:
Because she has a very advance disease, I don't think, anybody would want her to go for
treatment by herself, especially because of her disease, it affected her bone, and she was in pain,
probably, she would not be able to travel by herself.
ATTY. ARANDIA:
What about the mental capacity of the witness, in your assessment, how was Ms. Palugod during
that time? Was her mental capacity affected by her illness?
xxxx
WITNESS:
In my clinical assessment, there is no reason to prove that her mental capacity has been affected.
If we notice something, the usual is we talk to the patient and we would request additional test,
and there is no such evaluation in our record, so I would think that at that time, in our clinical
judgment, her disease does not affect her mental capacity or function.81
Based on Dr. Ortin's clear, categorical and compelling testimony, Jasminia was not physically
incapable of traveling from Bacoor, Cavite to Makati Medical Center and to Pasay City for the
acknowledgment of the DAS before the Notary Public and she was not mentally incapacitated to
know the import thereof.

Given the significant inconsistencies in the testimony of respondent Natividad, the credibility of
her testimony is, to the Court, doubtful. To be sure, a witness' credibility is determined by the
probability or improbability of his testimony. As well, the witness' means and opportunity of
knowing the facts that he is testifying to are relevant. The improbability of respondent
Natividad's assertions is demonstrated by the evidence, both documentary and testimonial, that
petitioner Lolita adduced to rebut the same. Put simply, respondent Natividad's observations are
those of an outsider because she was not living with her daughter during the period at issue and
cannot be relied upon.

The RTC and the CA also did not even mention the glaring inconsistencies noted above, which if
properly considered, would have seriously affected the outcome of the case.

In addition, the lower courts misapprehended the admission by petitioner Lolita that she did not
pay the consideration before the Notary Public. They excised from their judgments petitioner
Lolita's sworn testimony as to how the consideration was paid by her. The portion of petitioner
Lolita's testimony that the lower courts quoted in their respective Decisions does not even
indubitably show that no consideration had been paid. What petitioner Lolita admitted was that
the consideration was not paid "before the Notary Public," and, as correctly pointed out by her,
there is no legal requirement that the consideration of a sale be paid in the very presence of the
Notary Public before whom the deed of sale is acknowledged.

Given the foregoing, contrary to the findings of the CA and the RTC, which evidently arose from
their misapprehension and non-consideration of relevant facts, respondents have not
discharged their burden of proof to rebut either the presumption of sufficient consideration of the
DAS or the evidence of petitioner Lolita. In fine, respondents failed to establish their cause of
action by preponderance of evidence.

All told, petitioners' evidence has superior weight. While petitioner Lolita could not present
receipts to show her payments to the late Jasminia, her sworn testimony which in certain portions
were corroborated by pertinent documents, remains more credible than that of respondent
Natividad. Indeed, the lack of receipts may be explained by the "close friendship" between
petitioner Lolita and Jasminia. The non-admission by petitioner Lolita of the "husband and wife"
relationship that she shared with Jasminia and her being a "lesbian or tomboy," as respondent
Natividad claimed, is of no moment. Whatever transpired between her and Jasminia is a private
matter, which the Court would not even speculate on. As to the gender identity and sexual
preference of petitioner Lolita, that is likewise a private matter.

Even from a pure evaluation of only the parties' testimonial evidence, wherein doubts on the
truthfulness of their respective narrations of the relevant facts are perceived and there may be
difficulty in determining who between respondent Natividad and petitioner Lolita is the more
credible witness and in which side the testimonial evidence preponderates, the evidence of the
parties should, at the very least, be held to be in equipoise. That being the situation, respondents,
who have the burden of proof in the present case, fail upon their cause of action.
Following Rivera v. CA82 quoted above, as neither party was able to make out a case, neither side
having established his/her cause of action, the Court can only leave them where they are and it
has no choice but to dismiss the complaint, as the lower courts should have done.

Consequently, the DAS executed by Jasminia in favor of petitioner Lolita over the subject
property is valid, the presumption that it has sufficient consideration not having been rebutted.
The same holds true regarding the Real Estate Mortgage between petitioner Lolita and
petitioners spouses Alexander and Elizabeth Gutierrez.

WHEREFORE, the Petition is hereby GRANTED. The Decision of the Court of Appeals dated
April 29, 2015 and its Resolution dated September 10, 2015 in CA-G.R. CV No. 102904 as well
as the Decision dated March 14, 2013 and Order dated May 8, 2014 of the Regional Trial Court
of Bacoor, Cavite, Branch 19 in Civil Case No. BCV 2004-217 are REVERSED AND SET
ASIDE. The complaint filed in Civil Case No. BCV 2004-217 is DISMISSED for lack of cause
of action.

SO ORDERED.

G.R. Nos. 211820-21, June 06, 2018

KENSONIC, INC., Petitioner, v. UNI-LINE MULTI-RESOURCES, INC.,

(PHIL.), Respondent.

G.R. Nos. 211834-35, June 06, 2018

UNI-LINE MULTI-RESOURCES, INC., Petitioner, v. KENSONIC, INC., Respondent.

DECISION

BERSAMIN, J.:

The case concerns the cancellation of the registration of the trademark SAKURA for the goods
of Uni-Line Multi Resources, Inc. (Phils.) (Uni-Line) being sought by Kensonic, Inc. (Kensonic)
on the ground that the latter had prior use and registration of the SAKURA mark.

The Case

Under consideration are the consolidated appeals urging the review and reversal of the decision
promulgated on July 30, 20131 and the amended decision promulgated on March 19,
2014,2 whereby the Court of Appeals (CA) affirmed the decision rendered on June 11, 2012 by
the Director General of the Intellectual Property Office (IPO) upholding the cancellation of the
application of Uni-Line for the registration of the SAKURA mark for goods falling under Class
09 of the Nice International Classification of Goods (Nice Classification), and allowing the
registration of Uni-Line's SAKURA mark registration for goods falling under Class 07 and Class
11 of the Nice Classification.3

Antecedents

The CA summarized the following factual and procedural antecedents, viz.:

On June 15, 1999, Uni-Line filed an application for the registration of the mark "SAKURA" for
amplifier, speaker, cassette, cassette disk, video cassette disk, car stereo, television, digital video
disk, mini component, tape deck, compact disk charger, VHS, and tape rewinder falling under
Class 9 of the Nice International Classification of Goods. Kensonic opposed Uni-Line's
application which was docketed as IPC No. 14-2004-00160 (IPC 1). The Director of the Bureau
of Legal Affairs (BLA) rendered Decision No. 2005-01 dated November 29, 2005 finding that
Kensonic was the first to adopt and use the mark SAKURA since 1994 and thus rejecting Uni-
Line's application. On January 19, 2006, said Decision became final and executory.

While IPC Case 1 was pending, Uni-Line filed an application and was issued a certificate of
registration for the mark "SAKURA & FLOWER DESIGN" for use on recordable compact disk
(CD-R) computer, computer parts and accessories falling under Class 9. On September 7, 2006,
Kensonic filed a petition for cancellation docketed as IPC No. 14-2006-00183 (IPC 2) of Uni-
Line's registration. In Decision No. 08-113 dated August 7, 2008, the BLA Director held that
Uni-Line's goods are related to Kensonic's goods and that the latter was the first user of the mark
SAKURA used on products under Class 9. The BLA Director thus cancelled Uni-Line's
certificate of registration. Uni-Line moved for reconsideration of the BLA Director's Decision
which is pending resolution to date.

On June 6, 2002, Uni-Line filed an application for the registration of the trademark SAKURA
for use on the following:
Goods Nice Classification
Washing machines, high pressure washers, vacuum cleaners, floor Class 07
polishers, blender, electric mixer, electrical juicer
Television sets, stereo components, DVD/VCD players, voltage Class 09
regulators, portable generators, switch breakers, fuse
Refrigerators, air conditioners, oven toaster, turbo broiler, rice cooker, Class 11
microwave oven, coffee maker, sandwich/waffle maker, electric stove,
electric fan, hot & cold water dispenser, airpot, electric griller and
electric hot pot
Uni-Line's application was thereafter published, and there being no opposition thereto,
Certificate of Registration No. 4-2002-004572 for the mark SAKURA effective March 18, 2006
was issued.

On September 7, 2006, Kensonic filed with the BLA a Petition for Cancellation of Uni-Line's
Certificate of Registration alleging that in October 1994, it introduced the marketing of
SAKURA products in the Philippines and that it owned said SAKURA products and was the first
to use, introduce and distribute said products. Kensonic also alleged that in IPC 1, it opposed
Uni-Line's application to register SAKURA and was already sustained by the Director General,
which Decision is now final and executory. Kensonic further alleged that it is the owner of a
copyright for SAKURA and that since 1994, has maintained and established a good name and
goodwill over the SAKURA products.

Kensonic filed its Supplemental Petition for Cancellation and its Reply to Uni-Line's Answer.
Uni-Line filed its Rejoinder thereto.4
Decision of the Bureau of Legal Affairs (BLA), IPO

After due proceedings, the BLA issued Decision No. 2008-149 dated August 11, 2008,5 whereby
it ruled in favor of Kensonic and against Uni-Line, and directed the cancellation of Registration
No. 4-2002-004572 of the latter's SAKURA mark. It observed that an examination of the
SAKURA mark of Kensonic and that of Uni-Line revealed that the marks were confusingly
similar with each other; that the goods sought to be covered by the SAKURA registration of Uni-
Line were related to the goods of Kensonic, thereby necessitating the cancellation of the
registration of Uni-Line's mark; and that considering that Kensonic had used the SAKURA mark
as early as 1994 in Class 09 goods (namely: amplifiers, speakers, cassette disks, video cassette
disks, car stereos, televisions, digital video disks, mini components, tape decks, compact disk
chargers, VHS and tape rewinders), Kensonic had acquired ownership of the SAKURA mark,
and should be legally protected thereon. The dispositive portion reads:
WHEREFORE, premises considered, the Verified Petition for Cancellation is
hereby GRANTED. Accordingly, Certificate of Registration No. 4-2002-004572 issued on 18
March 2006 for the trademark "SAKURA" in the name of Uni-Line Multi Resources, Inc. Phils.,
is hereby ordered CANCELLED.

Let the file wrapper of this case be forwarded to the Bureau of Trademark (BOT) for appropriate
action in accordance with this Decision.

SO ORDERED.6
Decision of the Director General, IPO

On appeal,7 the Director General of the IPO modified the decision of the BLR by upholding Uni-
Line's registration of the SAKURA mark as to goods classified as Class 07 and Class 11, thereby
effectively reversing the BLR, but affirmed the BLR as regards the treatment of the SAKURA
mark that covered the goods falling under Class 09. The Director General clarified that the marks
of Uni-Line and Kensonic were similar if not identical; that considering that Inter Partes Case
No. 14-2004-00160 (IPC 1) already effectively ruled that the products registered by Uni-Line
were goods related to those covered by the registration of Kensonic, the registration of Uni-Line
insofar as those products sought to be registered under Class 09 were concerned (i.e., television
sets, stereo components, DVD/VCD players, voltage regulators, portable generators, switch
breakers, fuse) was correctly cancelled; that the registration of products of Uni-Line falling under
Class 07 and Class 11 should not be cancelled because the products were different from the
goods registered under Class 09 in the name of Kensonic; that there should be evidence showing
how the continued registration of the SAKURA mark of Uni-Line would cause damage to
Kensonic; and that the goods covered by the SAKURA registration of Uni-Line and the
SAKURA registration of Kensonic should be distinguished because:
In addition, the ordinary purchaser must be thought of, as having, and credited with, at least a
modicum of intelligence. It does not defy common sense to assert that a purchaser would be
cognizant of the product he is buying. As a general rule, an ordinary buyer does not exercise as
much pendence in buying an article for which he pays a few centavos as he does in purchasing a
more valuable thing. Expensive and valuable items are normally bought only after deliberate,
comparative and analytical investigation.

In this instance, the products of the Appellants under Classes 7 and 11 are home appliances
which are not the ordinary everyday goods the public buys and consumes. These products are not
inexpensive items and a purchaser would ordinarily examine carefully the features and
characteristics of the same. It is, therefore, farfetched that the purchasing public would be misled
or be deceived as to the source or origin of the products. Furthermore, there is nothing in the
records that indicate any plans by the Appellee to enter into business transactions or to the
manufacture and distribution of goods similar to the products of the Appellants under Classes 7
and 11.8
The Director General of the IPO decreed as follows:
Wherefore, premises considered, the appeal is hereby dismissed in so far as the cancellation of
the Appellant's Cert. of Reg. No. 4-2002- 004572 for goods enumerated and falling under Class
9 is concerned. However, the appeal is hereby granted in so far as the cancellation of Cert. of
Reg. No. 4-2002-004572 for goods enumerated and falling under Classes 7 and 11 is concerned.

Accordingly, Cert. of Reg. No. 4-2002-004572 issued in favor of the Appellant for the mark
SAKURA is hereby amended. The registration of goods enumerated under Class 9, namely
television sets, stereo components, DVD/VCD players, voltage regulators, portable generators,
switch breakers, fuse is hereby cancelled.

Let a copy of this Decision as well as the records of this case be furnished and returned to the
Director of the Bureau of Legal Affairs for appropriate action. Further, let also the Director of
the Bureau of Trademarks and the library of Documentation, Information and Technology
Transfer Bureau be furnished a copy of this Decision for information, guidance, and records
purposes.

SO ORDERED.9
Judgment of the CA

Both parties appealed to the CA, which promulgated its decision on July 30, 2013 dismissing the
appeal of Kensonic (C.A.-G.R. SP No. 125420) and granting Uni-Line's appeals (C.A.-G.R. SP
No. 125424). The CA upheld Kensonic's ownership of the SAKURA mark based on its showing
of its use of the mark since 1994, but ruled that despite the identical marks of Kensonic and Uni-
Line, Kensonic's goods under Class 09 were different from or unrelated to Uni-Line's goods
under Class 07 and Class 11. It observed that the protection of the law regarding the SAKURA
mark could only extend to television sets, stereo components, DVD and VCD players but not to
Uni-Line's voltage regulators, portable generators, switch breakers and fuses due to such goods
being unrelated to Kensonic's goods; that Kensonic's registration only covered electronic audio-
video products, not electrical home appliances; and that the similarity of the marks would not
confuse the public because the products were different and unrelated. It ruled:
WHEREFORE, the Petition filed by Kensonic, Inc., in C.A.G.R. SP No. 125420
is DENIED and the Petition filed by Uni-Line Multi Resources, Inc. (Phils.) is GRANTED.

Accordingly, the Decision dated June 11, 2012 of Director General Ricardo R. Blancaflor of the
Intellectual Property Office is MODIFIED such that Uni-Line's Appeal insofar as the
cancellation of its Certificate of Registration No. 4-2002-004572 for goods enumerated and
falling under Class 9 is GRANTED but DELETING therefrom the goods television sets, stereo
components, DVD players and VCD players. The Decision dated June 11, 2012 of the Director
General is hereby UPHELD insofar as it granted Uni-Line's Appeal on the cancellation of its
Certificate of Registration No. 4-2002-004572 for goods enumerated and falling under Class 7
and Class 11.

SO ORDERED.10
Kensonic sought partial reconsideration, submitting that voltage regulators, portable generators,
switch breakers and fuse were closely related to its products; that maintaining the two SAKURA
marks would cause confusion as to the source of the goods; and that Uni-Line's goods falling
under Class 07 and Class 11 were closely related to its goods falling under Class 09.

In the assailed amended decision promulgated on March 19, 2014,11 the CA sided with Kensonic,
and reverted to the ruling by the Director General of IPO cancelling the registration of the
SAKURA mark covering all the goods of Uni-Line falling under Class 09 on the basis that all
the goods belonged to the general class of goods. The CA decreed:
WHEREFORE, the Motion for Partial Reconsideration filed by Kensonic Inc. is PARTIALLY
GRANTED. Uni-Line is prohibited from using the mark SAKURA for goods falling under
Class 9, but is allowed to use the mark SAKURA for goods falling under Classes 7 and 11. Thus,
the DENlAL of Uni-Line's Appeal insofar as the cancellation of its Certificate of Registration
No. 4-2002-004572 for goods enumerated and falling under Class 9 is UPHELD. The Decision
dated June 11, 2012 of the Director General is AFFIRMED in toto.

SO ORDERED.12
Issues

Hence, this appeal by both parties.

Kensonic (G.R. Nos. 211820-21) insists that the CA erred in not considering that Uni-Line's
goods under Class 07 and Class 11 were related to its goods falling under Class 09; and that all
the agencies below were unanimous in declaring that the marks were identical, and, as such, the
use of the SAKURA marks would lead to confusion about the source of the goods.

Uni-Line (G.R. Nos. 211834-35) contends that the SAKURA mark could not be appropriated
because it simply referred to cherry blossom in Japanese and was thus a generic name that was
not copyrightable; that it was grave error for the IPO and the CA to rule that Kensonic owned the
mark; and that voltage regulators, portable generators, switch breakers and fuse were unrelated to
Kensonic's products because Uni-Line's products were not electronic.

The following issues are, therefore, to be resolved:

(1) Is the SAKURA mark capable of appropriation?
(2) Are Kensonic's goods falling under Class 09 related to UniLine's goods falling under Class
07 and Class 11?; and
(3) Are Uni-Line's goods falling under Class 9, namely: voltage regulators, portable generators,
switch breakers and fuses, related to Kensonic's goods falling under Class 9?
Ruling of the Court

The appeal of Kensonic in G.R. Nos. 211820-21 is dismissed but the petition in G.R. Nos.
211834-35 is partially granted.
 I.

The SAKURA mark can be appropriated

Uni-Line's opposition to Kensonic's ownership of the SAKURA mark insists that the: SAKURA
mark is not copyrightable for being generic. Such insistence is unacceptable.

To be noted is that the controversy revolves around the SAKURA mark which is not a copyright.
The distinction is significant. A mark is any visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an enterprise, and includes a stamped or marked
container of goods.13 In contrast, a copyright is the right to literary property as recognized and
sanctioned by positive law; it is an intangible, incorporeal right granted by statute to the author
or originator of certain literary or artistic productions, whereby he or she is invested, for a
specific period, with the sole and exclusive privilege of multiplying copies of the same and
publishing and selling them.14 Obviously, the SAKURA mark is not an artistic or literary work
but a sign used to distinguish the goods or services of one enterprise from those of another.

An examination of the pertinent laws also reveals that Uni-Line mistakenly argues that the
SAKURA mark was not capable of registration for being generic.

Section 123(h) of the Intellectual Property Code prohibits the registration of a trademark that

consists exclusively of signs that are generic for the goods or services that they seek to identify.
It is clear from the law itself, therefore, that what is prohibited is not having a generic mark but
having such generic mark being identifiable to the good or service. In Asia Brewery, Inc., v.
Court of Appeals,15 the Court ruled that there was no infringement of San Miguel Brewery's Pale
Pilsen trademark because Pale Pilsen could not be appropriated. The Court explained:
The fact that the words pale pilsen are part of ABI's trademark does not constitute an
infringement of SMC's trademark: SAN MIGUEL PALE PILSEN, for "pale pilsen" are generic
words descriptive of the color ("pale"), of a type of beer ("pilsen"), which is a light bohemian
beer with a strong hops flavor that originated in the City of Pilsen in Czechoslovakia and
became famous in the Middle Ages. (Webster's Third New International Dictionary of the
English Language, Unabridged Edited by Philip Babcock Gove. Springfield, Mass.: G & C
Merriam Co., c) 1976, page 1716.) "Pilsen" is a "primarily geographically descriptive word,"
(Sec. 4, subpar. [e] Republic Act No. 166, as inserted by Sec. 2 of R.A. No. 638) hence, non-
registerable and not appropriable by any beer manufacturer. The Trademark Law provides:
"Sec. 4.... The owner of trade-mark, trade-name or service-mark used to distinguish his goods,
business or services from the goods, business or services of others shall have the right to register
the same [on the principal register], unless it:

xxx   xxx  xxx

"(e) Consists of a mark or trade-name which, when applied to or used in connection with the
goods, business or services of the applicant is merely descriptive or deceptively misdescriptive of
them, or when applied to or used in connection with the goods, business or services of the
applicant is primarily geographically descriptive or deceptively misdescriptive of them, or is
primarily merely a surname." (Emphasis supplied.)"
The words "pale pilsen" may not be appropriated by SMC for its exclusive use even if they are
part of its registered trademark: SAN MIGUEL PALE PILSEN, any more than such descriptive
words as "evaporated milk," "tomato ketchup," "cheddar cheese," "com flakes" and "cooking oil"
may be appropriated by any single manufacturer of these food products, for no other reason than
that he was the first to use them in his registered trademark. In Masso Hermanos, S.A. vs.
Director of Patents, 94 Phil. 136, 139 (1953), it was held that a dealer in shoes cannot register
"Leather Shoes" as his trademark because that would be merely descriptive and it would be
unjust to deprive other dealers in leather shoes of the right to use the same words with reference
to their merchandise. No one may appropriate generic or descriptive words. They belong to the
public domain (Ong Ai Gui vs. Director of Patents, 96 Phil. 673, 676  [1955]).
"A word or a combination of words which is merely descriptive of an article of trade, or of its
composition, characteristics, or qualities, cannot be appropriated and protected as a trademark to
the exclusion of its use by others . . . inasmuch as all persons have an equal right to produce and
vend similar articles, they also have the right to describe them properly and to use any
appropriate language or words for that purpose, and no person can appropriate to himself
exclusively any word or expression, properly descriptive of the article, its qualities, ingredients
or characteristics, and thus limit other persons in the use of language appropriate to the
description of their manufactures, the right to the use of such language being common to all.
This rule excluding descriptive terms has also been held to apply to trade-names. As to whether
words employed fall within this prohibition, it is said that the true test is not whether they are
exhaustively descriptive of the article designated, but whether in themselves, and as they are
commonly used by those who understand their meaning, they are reasonably indicative and
descriptive of the thing intended. If they are thus descriptive, and not arbitrary, they cannot be
appropriated from general use and become the exclusive property of anyone. (52 Am. Jur. 542-
543.)
 
". . . Others may use the same or similar descriptive word in connection with their own wares,
provided they take proper steps to prevent the public being deceived. (Richmond Remedies Co.
vs. Dr. Miles Medical Co., 16 E. [2d] 598.)

". . . A descriptive word may be admittedly distinctive, especially if the user is the first creator of
the article. It will, however, be denied protection, not because it lacks distinctiveness, but rather
because others are equally entitled to its use. (2 Callman, Unfair Competition and Trademarks,
pp. 869-870.)"
This, however, is not the situation herein. Although SAKURA refers to the Japanese flowering
cherry16 and is, therefore, of a generic nature, such mark did not identify Kensonic's goods unlike
the mark in Asia Brewery, Inc., v. Court of Appeals. Kensonic's DVD or VCD players and other
products could not be identified with cherry blossoms. Hence, the mark can be appropriated.

Kensonic's prior use of the mark since 1994 made it the owner of the mark, and its ownership
cannot anymore be challenged at this stage of the proceedings. Seeking the review of Kensonic's
ownership would entail the examination of facts already settled by the lower tribunals. Uni-
Line's challenge to the ownership of the SAKURA mark should stop here because the Court
cannot act on a factual matter in this appeal by petition for review on certiorari, which is limited
to the consideration of questions of law. Section 1, Rule 45 of the Rules of Court specifically so
provides:
Section 1. Filing of petition with Supreme Court. - A party desiring to appeal by certiorari from
a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Court of
Tax Appeals, the Regional Trial Court or other courts whenever authorized by law, may file with
the Supreme Court a verified petition for review on certiorari. The petition may include an
application for a writ of preliminary injunction or other provisional remedies and shall raise only
questions of law which must be distinctly set forth. The petitioner may seek the same provisional
remedies by verified motion filed in the same action or proceeding lat any time during its
pendency.
The distinction between a question of law and a question of fact is well defined. According
to Tongonan Holdings and Development Corporation v. Escaño, Jr.:17
A question of law arises when there is doubt as to what the law is on a certain state of facts,
while there is a question of fact when the doubt arises as to the truth or falsity of the alleged
facts. For a question to be one of law, the same must not involve an examination of the probative
value of the evidence presented by the litigants or any of them. The resolution of the issue must
rest solely on what the law provides on the given set of circumstances. Once it is clear that the
issue invites a review of the evidence presented, the question posed is one of fact. Thus, the test
of whether a question is one of law or of fact is not the appellation given to such question by the
party raising the same; rather, it is whether the appellate court can determine the issue raised
without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise it
is a question of fact.
It is timely to remind, too, that the Court is not a trier of facts. Hence, the factual findings of the
quasi-judicial body like the IPO, especially when affirmed by the CA, are binding on the
Court.18 Jurisprudence has laid down certain exceptions to the rule of bindingness,19 but, alas,
Uni-Line did not discharge its burden to show how its urging for a review of the factual findings
came within any of the exceptions.

II.

Uni-Line's goods classified under Class 07 and Class 11 were not related to Kensonic's
goods registered under Class 09

The CA did not err in allowing the registration of Uni-Line's products falling under Class 07 and
Class 11, for, indeed, those products - as found by the lower tribunals were unrelated to the
goods of Kensonic registered under Class 09.

Still, Kensonic contends that the goods of Uni-Line classified under Class 07 and Class 11 were
covered by the prohibition from registration for being within the normal potential expansion of
Kensonic.

The contention is unwarranted.

The prohibition under Section 123 of the Intellectual Property Code extends to goods that are
related to the registered goods, not to goods that the registrant may produce in the future. To
allow the expansion of coverage is to prevent future registrants of goods from securing a
trademark on the basis of mere possibilities and conjectures that may or may not occur at all.
Surely, the right to a trademark should not be made to depend on mere possibilities and
conjectures.
In Mighty Corporation v. E. & J. Gallo Winery,20 the Court has identified the different factors by
which to determine whether or not goods are related to each other for purposes of registration:
Non-competing goods may be those which, though they are not in actual competition, are so
related to each other that it can reasonably be assumed that they originate from one
manufacturer, in which case, confusion of business can arise out of the use of similar marks.
They may also be those which, being entirely unrelated, cannot be assumed to have a common
source; hence, there is no confusion of business, even though similar marks are used. Thus, there
is no trademark infringement if the public does not expect the plaintiff to make or sell the same
class of goods as those made or sold by the defendant.

In resolving whether goods are related, several factors come into play:

(a) the business (and its location) to which the goods belong
(b) the class of product to which the goods belong
(c) the product's quality, quantity, or size, including the nature of the package, wrapper or
container
(d) the nature and cost of the articles
(e) the descriptive properties, physical attributes or essential characteristics with reference to
their form, composition, texture or quality
(f) the purpose of the goods
(g) whether the article is bought for immediate consumption, that is, day-to-day household
items
(h) the fields of manufacture
(i) the conditions under which the article is usually purchased and
(j) the channels of trade through which the goods flow, how they are distributed, marketed,
displayed and sold. (Citations omitted)
An examination of the foregoing factors reveals that the goods of Uni-Line were not related to
the goods of Kensonic by virtue of their differences in class, the descriptive attribues, the
purposes and the conditions of the goods.

In Taiwan Kolin Corporation, Ltd. v. Kolin Electronics, Co., Inc.,21 the Court has opined tht the
mere fact that goods belonged to the same class does not necessarily mean that they are related;
and that the factors listed in Mighty Corporation v. E. & J. Gallo Winery should be taken into
consideration, to wit:
As mentioned, the classification of the products under the NCL is merely part and parcel of the
factors to be considered in ascertaining whether the goods are related. It is not sufficient to state
that the goods involved herein are electronic products under Class 9 in order to establish
relatedness petween the goods, for this only accounts for one of many considerations enumerated
in Mighty Corporation. xxx
Clearly then, it was erroneous for respondent to assume over the CA to condude that all
electronic products are related and that the coverage of one electronic product necessarily
precludes the registration of a similar; mark over another. In this digital age wherein electronic
products have not only diversified by leaps and bounds, and are geared towards interoperability,
it is difficult to assert readily, as respondent simplistically did, that all devices that require
plugging into sockets are necessarily related goods.

It bears to stress at this point that the list of products included in Class 9 can be sub-categorized
into five (5) classifications, namely: (1) apparatus and instruments for scientific or research
purposes, (2) information technology and audiovisual equipment, (3) apparatus and devices for
controlling the distribution and use of electricity, (4) optical apparatus and instruments, and (5)
safety equipment. From this subclassification, it becomes apparent that petitioner's products, i.e.,
televisions and DVD players, belong to audiovisual equipment, while that of respondent,
consisting of automatic voltage regulator, converter, recharger, stereo booster, AC-DC regulated
power supply, step-down transformer, and PA amplified AC-DC, generally fall under devices for
controlling the distribution and use of electricity.
Based on the foregoing pronouncement in Taiwan Kolin Corporation, Ltd. v. Kolin Electronics,
Co., Inc., there are other sub-classifications present even if the goods are classified under Class
09. For one, Kensonic's goods belonged to the information technology and audiovisual
equipment subclass, but Uni-Line's goods pertained to the apparatus and devices for controlling
the distribution of electricity sub-class. Also, the Class 09 goods of Kensonic were final products
but Uni-Line's Class 09 products were spare parts. In view of these distinctions, the Court agrees
with Uni-Line that its Class 09 goods were unrelated to the Class 09 goods of Kensonic.

WHEREFORE, the Court DENIES the petition for review on certiorari in G.R. No. 211820-
21; PARTIALLY GRANTS the petition for review on certiorari in G.R. No. 211834-
35; REVERSES and SETS ASIDE the amended decision promulgated on March 19,
2014; PARTIALLY REINSTATES the decision promulgated on July 30, 2013 insofar as it
allowed the registration by Uni-Line Multi-Resources, Inc. under the SAKURA mark of its
voltage regulators, portable generators, switch breakers and fuses; and ORDERS Kensonic, Inc.
to pay the costs of suit.

SO ORDERED.

G.R. No. 223660, April 02, 2018

LOURDES VALDERAMA, Petitioner, v. SONIA ARGUELLES AND LORNA

ARGUELLES, Respondents.

DECISION

TIJAM, J.:

Before this Court is a petition for review1 under Rule 45 of the Rules of Court filed by Lourdes
Valderama (petitioner) assailing the Decision2 dated December 14, 2015 and Resolution3 dated
February 24, 2016 of the Court of Appeals (CA) in CA-G.R. CV No. 103744. In the said
Decision, the CA dismissed the petitioner's appeal of the Resolutions4 dated April 11, 2014 and
July 31, 2014 of the Regional Trial Court (RTC) in Case No. P-09-499 LRC REC. No. 2400
ordering the cancellation of the Notice of Adverse Claim made as Entry No. 8957/Vol. 132/T-
266311, Registry of Deeds of Manila.

The Antecedents

On December 11, 2009, Sonia Arguelles and Lorna Arguelles (respondents) filed a petition to
cancel adverse claim5 involving a parcel of land covered by Transfer Certificate of Title (TCT)
No. 266311.6 The petition was docketed as Case No. P-09-499, LRC Record No. 2400 before the
RTC, Branch 4, Manila.

In their petition, respondents alleged that on November 18, 2004, Conchita Amongo Francia
(Conchita), who was the registered owner of a parcel of land consisting of one thousand (1000)
square meters located in Sampaloc, Manila and covered by TCT No. 180198 (subject property),
freely and voluntarily executed an absolute deed of sale of the subject property in favor of
respondents. The subject property was subsequently registered in the names of respondents under
TCT No. 266311.7

On November 14, 2007, Conchita filed an affidavit of adverse claim8 which was registered and
annotated on TCT No. 266311. On January 24, 2008, Conchita died. As registered owners of the
subject property, respondents prayed for the cancellation of the adverse claim in the petition
subject of this controversy.9

On February 10, 2010, petitioner and Tarcila Lopez (Tarcila), as full blooded sisters of Conchita,
filed an opposition10 to the petition. They claimed that upon Conchita's death, the latter's claims
and rights against the subject property were transmitted to her heirs by operation of law.11 They
also argued that the sale of the subject property to the respondents was simulated as evidenced by
the following, among others: (1) Conchita had continuous physical and legal possession over the
subject property; (2) Conchita was the one paying for the real estate taxes for the subject
property; and (3) Conchita had in her possession, up to the time of her death, the Owner's
Duplicate Copy of the TCT No. 266311.12

Meanwhile, on September 24, 2013, while the petition to cancel adverse claim was pending
before the RTC, respondents filed a complaint13 for recovery of ownership and physical
possession of a piece of realty and its improvements with damages and with prayer for the
issuance of temporary restraining order and/or writ of preliminary injunction against petitioner
and Tarcila, among others. The complaint was docketed as Civil Case No. 13130761 and raffled
to the RTC, Branch 47, Manila.

In light of the respondent's filing of the complaint, petitioner and Tarcila filed a notice of lis
pendens14 with respect to the TCT No. 266311 on October 22, 2013.

On November 21, 2013, respondents filed a manifestation and motion15 praying for the outright
cancellation of the adverse claim annotated on the TCT No. 266311 on the ground that
petitioner's subsequent filing of notice of lis pendens rendered the issue moot and academic.
After an exchange of several pleadings between the parties, the RTC issued a Resolution16 on
April 11, 2014 ordering the cancellation of the adverse claim. In arriving at the said ruling, the
RTC reasoned, thus:
From the examination of pleadings between the parties relative to Civil Case No. 13130761,
ownership and physical possession are sufficiently made as issues between the parties in the said
case. The parties have effectively submitted themselves to the jurisdiction and disposition of the
court relative to claims of ownership and possession over the property covered by Transfer
Certificate of Title No. 266311 of the Registry of Deeds for the City of Manila.

While this court is aware of the case of Spouses Sajonas vs. Court of Appeals, Et Al., G.R.
No. 102377 (July 5, 1996), it cannot disregard the pronouncement of the court in Villaflor
vs. Juerzan, G.R. No. 35205 (April 17, 1990) which states that a Notice of Lis Pendens
between the parties concerning Notice of Adverse Claim calls for the cancellation thereof.
Hence, to reconcile with the two cases, this court orders the cancellation of the Adverse
Claim in view of the Notice of Lis Pendens annotated on TCT No. 266311. Considering,
however, the case between the parties pending before Branch 47, the cancellation brought about
by the Notice of Lis Pendens is in no way in determination as to the veracity and substance of the
adverse claim. The cancellation does not touch upon the issues of ownership and possession
which is the property left to the jurisdiction disposition of Branch 47 of the Regional Trial Court
of Manila. If this court will continue with determining the substance of the questioned adverse
claim then there is a possibility that two adverse decisions will result. Thus, this court leaves the
issues of ownership on possession of the wisdom of Branch 47 of the Manila Regional Trial
Court.

WHEREFORE, premises considered, the Notice of Adverse Claim made as Entry No. 8957/Vol.
132/T-266311, Registry of Deeds of Manila is ordered CANCELLED. However, the cancellation
is not a determination of the veracity and substance of the adverse claim and is not a final
determination on the issue of ownership and possession.17 (Emphasis supplied)
Petitioner and Tarcila filed a motion for reconsideration18 but the same was denied in a
Resolution19 dated July 31, 2014. Aggrieved, petitioner and Tarcila appealed to the CA raising
the lone assignment of error:
THE COURT A QUO COMMITTED A GRAVE AND REVERSIBLE ERROR IN ORDERING
THE CANCELLATION OF THE ADVERSE CLAIM CAUSED TO BE ANNOTATED BY
THE LATE CONCHITA FRANCIA SIMPLY BECAUSE A NOTICE OF LIS PENDENS WAS
SUBSEQUENTLY CA USED TO BE ANNOTATED BY OPPOSITORS APPELLANTS
ON TRANSFER CERTIFICATE OF TITLE NO. 26631120
Ruling of the CA

On December 14, 2015, the CA rendered a decision21 dismissing petitioner's appeal for lack of
merit. The CA held that the issue on cancellation of adverse claim is a question of law since its
resolution would not involve an examination of the evidence but only an application of the law
on a particular set of facts. Having raised a sole question of law, the petition was dismissed by
the CA pursuant to Section 2, Rule 50 of the Rules of Court.22 Nonetheless, the CA found no
error in RTC's cancellation of the adverse claim, to wit:
In any case, oppositors-appellants' appeal before this Court has no merit. Oppositors-appellants
insist that the RTC erred in ordering the cancellation of the notice of adverse claim annotated at
the hack of TCT No. 266311, appearing as Entry No. 8957/Vol. 132.

We do not agree.

In Villaflor vs. Juezan, the Supreme Court pronoun(c)ed:

"The principal issue in this appeal is whether or not an adverse claim annotated in a transfer
certificate of title may be cancelled when the validity or invalidity of the claim is still subject of
inquiry in a civil case pending resolution by the trial court.

xxxx

On February 22, 1961 the appellant registered his affidavit of adverse claim in Transfer
Certificate of Title No. T-1217 (formerly a part of Original Certificate of Title 806) under
primary entry No. 26083 of the Register of Deeds of Davao. The affidavit conformed to the
requirements of Section 110, Act 496.

On March 1, 1961, the herein appellant filed Civil Case 3496 seeking from the defendant therein
the surrender of owner's duplicate of Transfer Certificate of Title T-1217 in order that the deed of
sale in favor of the herein appellant will be registered or annotated in the certificate of title.

In Civil Case No. 3496 the defendant's answer raised the issue of validity of the deed of sale in
favor of the herein appellant. In fact, trial was had on this issue and the case until the present is
pending decision in view of the death of Judge Abbas.

More than four (4) years after the appellant's adverse claim was annotated that is, on October 15.
1965 and while case No. 3496 is (sic) pending, the herein appellee presented for registration two
(2) deeds of sale affecting the land subject of the action, the first dated March 21, 1963
conveying 8.6186 hectares and the second dated September 6, 1986 conveying the remaining
3.0219 hectares and as a consequence, Transfer Certificate of Title T-1217 was cancelled and in
lieu thereof Transfer Certificate of Title T-7601 was issued to the appellee wherein the adverse
claim annotated was carried on.

It is this adverse claim which the appellee seeks to be cancelled in this case.

xxxx

On August 21, 1968, petitioner-appellee filed a motion to dismiss appeal in the Court of Appeals
on the ground that the issue involved has become moot and academic, because oppositor-
appellant Jose Juezan filed a notice of lis pendens on the property covered by T.C.T. No. T-7601
and in connect ion with Civil Case No. 3496.

The basis of Civil Case No. 3496 is a deed of absolute sale dated July 7, 1956, allegedly
executed by Simon Maghanay in favor of appellant Jose Juezan. This document is also the basis
of the Affidavit of Adverse Claim ordered cancelled by the trial court. The purpose of said
adverse claim is to protect the interest of the appellant pending this litigation.
Thus, considering that a notice of lis pendens had been annotated on T.C.T. No. T-7601 of
petitioner-appellee, the Court finds no basis for maintaining the adverse claim.

This Court sees no reason for disturbing the questioned order of the trial court dated August 25,
1967 directing the cancellation of the oppositor-appellant's adverse claim at the back of transfer
certificate of title No. T-7601. The notice of lis pendens filed by the oppositor-appellant affecting
the same property in connection with Civil Case No. 3496 is sufficient.

Moreover, in the manifestation that was tiled by counsel for appellant on February 8, 1990, it
appears that the related case pending in the Court of Appeals docketed as CA-G.R. No. 43818-R
was terminated thus affirming the decision of the trial court, and entry of judgment has been
made per letter of transmittal dated November 5, 1975.

Consequently, the instant case has been rendered moot and academic.

WHEREFORE, the appeal is DISMISSED.

SO ORDERED.23
Petitioner and Tarcila moved for reconsideration24 of the CA decision but the same was denied in
a Resolution25 dated February 24, 2016.

Undaunted, petitioner alone brought the instant petition raising the following issues:

1. Whether the appeal filed before the CA involved a pure question of law;

2. Whether the ruling of the Honorable Court in Villaflor vs. Juezan is inapplicable to this
case; and

3. Whether the adverse claim caused to be annotated by a person on a title may be cancelled
merely because another person caused the annotation of a notice of lis pendens on the
same title.26

Simply stated, the core issue to be resolved in this case is whether the subsequent annotation of a
notice of lis pendens on a certificate of title renders the case for cancellation of adverse claim on
the same title moot and academic.

Ruling of the Court

The CA did not err in dismissing the appeal for raising a pure question of law

Petitioner questions the CA's finding that no question of fact was raised before it. She argues that
questions of fact were involved in her appeal, such as whether or not the facts of the case are
similar to the facts in Villaflor vs. Juezan27 so as to justify its application. Petitioner also
mentioned that in the respondents' brief filed with the CA, the respondents called the attention of
the CA to examine the peculiar facts surrounding the instant case and Civil Case No. 13130761.
Respondents also questioned the legitimate interest of the petitioner over the subject property.
Thus, petitioner posits that the CA should have resolved the appeal taking into consideration the
evidence on record because the matters raised require the re-evaluation of the existence or
relevance of surrounding circumstances.28

We are not persuaded.

Under Section 2, Rule 41 of the Rules of Court, there are three modes of appeal from decisions
of the RTC, viz:
Section 2. Modes of appeal. -

(a) Ordinary appeal. - The appeal to the Court of Appeals in cases decided by the Regional Trial
Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the
court which rendered the judgment or final order appealed from and serving a copy thereof upon
the adverse party. No record on appeal shall be required except in special proceedings and other
cases of multiple or separate appeals where law on these Rules so require. In such cases, the
record on appeal shall be filed and served in like manner.

(b) Petition for review. - The appeal to the Court of Appeals in cases decided by the Regional
Trial Court in the exercise of its appellate jurisdiction shall be by petition for review in
accordance with Rule 42.

(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 the Rule 45. (Emphasis Ours)
Moreover, Section 2, Rule 50 of the Rules provide that an appeal to the CA raising only
questions of law shall be dismissed outright, thus:
Section 2. Dismissal of improper appeal to the Court of Appeals. - An appeal under Rule 41
taken from the Regional Trial Court to the Court of Appeals raising only questions of law shall
be dismissed, issues purely of law not being reviewable by said court. Similarly, an appeal by
notice of appeal instead of by petition for review from the appellate judgment of a Regional Trial
Court shall be dismissed.

An appeal erroneously taken to the Court of Appeals shall not be transferred to the
appropriate court but shall be dismissed outright. (Emphasis Ours)
Applying the foregoing rules, there is no question that an appeal from the RTC to the CA raising
only questions of law is an improper appeal which shall be dismissed outright. Thus, We now
delve into the issue on whether petitioner's appeal before the CA raised purely questions of law
thereby warranting its outright dismissal.

A question of law arises when there is doubt as to what the law is on a certain state of facts,
while there is a question of fact when the doubt arises as to the truth or falsity of the alleged
facts. For a question to be one of law, its resolution must not involve an examination of the
probative value of the evidence presented by the litigants, but must rely solely on what the law
provides on the given set of facts. If the facts are disputed or if the issues require an examination
of the evidence, the question posed is one of fact. The test, therefore, is not the appellation given
to a question by the party raising it, but whether the appellate court can resolve the issue without
examining or evaluating the evidence, in which case, it is a question of law; otherwise, it is a
question of fact.29

As correctly observed by the CA, a careful perusal of the records reveals that the essential facts
of the case are not disputed by the parties before the CA. Contrary to the petitioner's claim, the
question of whether this Court's ruling in the case of Villaflor is applicable to the present case is
not a question of fact. Given an undisputed set of facts, an appellate court may resolve the issue
on what law or ruling is applicable without examining the probative value of the evidence before
it.

Moreover, no other than the petitioner raised the issue on the cancellation of the adverse claim as
the sole issue in her appeal before the CA. As such, the CA correctly concluded that the said
issue involved a pure question of law as its resolution would not involve an examination of the
evidence but only an application of the law on a particular set of facts. At any rate, the
determination of whether an appeal involves only questions of law or both questions of law and
fact is best left to the appellate court. All doubts as to the correctness of the conclusions of the
appellate court will be resolved in favor of the CA unless it commits an error or commits a grave
abuse of discretion.30

The CA, therefore, did not err in dismissing the appeal filed by the petitioner for being an
improper appeal. The proper mode of appeal is an appeal by certiorari before this Court in
accordance with Rule 45. Section 2 of the said Rule provides that appellant has a period of 15
days from notice of judgment or final order appealed from within which to perfect her appeal. In
this case, petitioner filed the present petition before Us well beyond the said reglementary period.

Failure to perfect an appeal within the period provided by law renders the appealed judgment or
order final and immutable. However, this rule is not without exceptions. In some cases, this
Court opted to relax the rules and take cognizance of a petition for review on certiorari after an
improper appeal to the CA "in the interest of justice and in order to write finis to [the]
controversy"31 and "considering the important questions involved in a [the] case."32 As such, We
proceed to decide the merits of the case considering the confusion brought by conflicting
jurisprudence on the issue posed before Us.

Villaflor v. Juezan is not applicable in this case

At the outset, We rule that Villaflor v. Juezan is not applicable in this case. As aptly noted by the
RTC, there is a need to reconcile the cases of Villaflor v. Juezan and Sajonas v. CA33. Hence, it is
an opportune time for this Court to revisit the cases We decided delving on the issue before Us.

An adverse claim and a notice of lis pendens under P.D. 1529 are not of the same nature and
do not serve the same purpose

An adverse claim and a notice of lis pendens are both involuntary dealings expressly recognized
under Presidential Decree No. 1529 (P.D. 1529), otherwise known as the Property Registration
Decree.
The remedy of annotation of an adverse claim was introduced under Act 496 or the Land
Registration Act, Section 110, which reads:
Sec. 110. Whoever claims any right or interest in registered land adverse to the registered owner,
arising subsequent to the date of the original registration, may, if no other provision is made in
this Act for registering the same, make a statement in writing setting forth fully his alleged right
or interest, and how or under whom acquired, and a reference to the volume and page of the
certificate of title of the registered owner, and a description of the land in which the right or
interest is claimed.

The statement shall be signed and sworn to, and shall state the adverse claimant's residence, and
designate a place at which all notices may be served upon him. The statement shall be entitled to
registration as an adverse claim, and the court, upon a petition of any party in interest, shall
grant a speedy hearing upon the question of the validity of such adverse claim and shall
enter such decree therein as justice and equity may require. If the claim is adjudged to be
invalid, the registration shall be canceled. If in any case the court after notice and hearing shall
find that a claim thus registered was frivolous or vexatious, it may tax the adverse claimant
double or treble costs in its discretion. (Emphasis Ours)
Thereafter, P.D. 1529 introduced minor changes in the wordings of the law, as follows:
Sec. 70 Adverse Claim - Whoever claims any part or interest in registered land adverse to the
registered owner, arising subsequent to the date of the original registration, may, if no other
provision is made in this Decree for registering the same, make a statement in writing setting
forth fully his alleged right or interest, and how or under whom acquired, a reference to the
number of certificate of title of the registered owner, the name of the registered owner, and a
description of the land in which the right or interest is claimed.

The statement shall be signed and sworn to. and shall state the adverse claimants residence. and a
place at which all notices may be served upon him. This statement shall be entitled to registration
as an adverse claim on the certificate of title. The adverse claim shall be effective for a period of
thirty days from the date of registration. After the lapse of said period, the annotation of
adverse claim may be canceled upon filing of a verified petition therefor by the party in
interest: Provided, however, that after cancellation, no second adverse claim based on the
same ground shall be registered by the same claimant.

Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court of
First Instance where the land is situated for the cancellation of the adverse claim, and the court
shall grant a speedy hearing upon the question of the validity of such adverse claim, and
shall render judgment as may be just and equitable. If the adverse claim is adjudged to be
invalid, the registration thereof shall be ordered canceled. If, in any case, the court, after
notice and hearing shall find that the adverse claim thus registered was frivolous, it may tine the
claimant in an amount not less than one thousand pesos nor more than five thousand pesos, in its
discretion. Before the lapse of thirty days, the claimant may withdraw his adverse claim by filing
with the Register of Deeds a sworn petition to that effect. (Emphasis Ours)
In the case of Flor Martinez v. Ernesto G. Garcia and Edilberto M. Brua,34 the Court held that:
The annotation of an adverse claim is a measure designed to protect the interest of a person over
a piece of real property, where the registration of such interest or right is not otherwise provided
for by the Land Registration Act or Act No. 496 (now P.D. No. 1529 or the Property Registration
Decree), and serves a warning to third parties dealing with said property that someone is
claiming an interest on the same or a better right than that of the registered owner thereof.35
Also, in the case of Teresita Rosal Arrazola v. Pedro A. Bernas and Soledad Bernas Alivio,36 the
Court explained:
The purpose of annotating the adverse claim on the title of the disputed land is to apprise third
persons that there is a controversy over the ownership of the land and to preserve and protect the
right of the adverse claimant during the pendency of the controversy. It is a notice to third
persons that any transaction regarding the disputed land is subject to the outcome of the
dispute.37
As provided under the third paragraph of Section 70 of P.D. 1529:
The validity or efficaciousness of an adverse claim may only be determined by the Court upon
petition by an interested party, in which event, the Court shall order the immediate hearing
thereof and make the proper adjudication as justice and equity may warrant. And, it is only when
such claim is found unmeritorious that the registration of the adverse claim may be cancelled.38
On the other hand, the following Sections of P.D. 1529 govern the rule on annotation as well as
cancellation of a notice of lis pendens:
Section 76. Notice of lis pendens. No action to recover possession of real estate, or to quiet title
thereto, or to remove clouds upon the title thereof, or for partition, or other proceedings of any
kind in court directly affecting the title to land or the use or occupation thereof or the buildings
thereon, and no judgment, and no proceeding to vacate or reverse any judgment, shall have any
effect upon registered land as against persons other than the parties thereto, unless a
memorandum or notice stating the institution of such action or proceeding and the court wherein
the same is pending, as well as the date of the institution thereof, together with a reference to the
number of the certificate of title, and an adequate description of the land affected and the
registered owner thereof, shall have been tiled and registered.

Section 77. Cancellation of lis pendens. Before final judgment, a notice of lis pendens may be
canceled upon order of the court, after proper showing that the notice is for the purpose of
molesting the adverse party, or that it is not necessary to protect the rights of the party who
caused it to be registered. It may also be canceled by the Register of Deeds upon verified
petition of the party who caused the registration thereof.

At any time after final judgment in favor of the defendant. or other disposition of the action such
as to terminate finally all rights of the plaintiff in and to the land and/or buildings involved, in
any case in which a memorandum or notice of lis pendens has been registered as provided in the
preceding section, the notice of lis pendens shall be deemed canceled upon the registration of a
certificate of the clerk of court in which the action or proceeding was pending stating the manner
of disposal thereof. (Emphasis Ours)
Jurisprudence further provides in the case of Fernando Carrascoso, Jr. v. The Hon. Court of
Appeals39 that:
The doctrine of lis pendens is founded upon reason of public policy and necessity, the purpose of
which is to keep the subject matter of the litigation within the power of the court until the
judgment or decree shall have been entered otherwise by successive alienations pending the
litigation, its judgment or decree shall be rendered abortive and impossible of execution.40
As distinguished from an adverse claim, the notice of lis pendens is ordinarily recorded without
the intervention of the court where the action is pending.41
Moreover, a notice of lis pendens neither affects the merits of a case nor creates a right or a lien.
The notice is but an extrajudicial incident in an action. It is intended merely to constructively
advise, or warn, all people who deal with the property that they so deal with it at their own risk,
and whatever rights they may acquire in the property in any voluntary transaction are subject to
the results of the action.42 Corollarily, unlike the rule in adverse claims, the cancellation of a
notice lis pendens is also a mere incident in the action, and may be ordered by the Court having
jurisdiction of it at any given time. Its continuance or removal is not contingent on the existence
of a final judgment in the action, and ordinarily has no effect on the merits thereof.43

Given the foregoing, the law and jurisprudence provide clear distinctions between an annotation
of an adverse claim, on one hand, and an annotation of a notice of lis pendens on the other. In
sum, the main differences between the two are as follows: (1) an adverse claim protects the right
of a claimant during the pendency of a controversy while a notice of lis pendens protects the
right of the claimant during the pendency of the action or litigation; and (2) an adverse claim
may only be cancelled upon filing of a petition before the court which shall conduct a hearing
on its validity while a notice of lis pendens may be cancelled without a court hearing.

A subsequent annotation of a notice of lis pendens on a certificate of title does not necessarily
render a petition for cancellation of adverse claim on the same title moot and academic

Having laid down the differences between an annotation of an adverse claim and of a notice
of lis pendens on a certificate title, We now delve into the issue of whether both annotations on
the same certificate of title automatically constitute a superfluity that would warrant an outright
cancellation of adverse claim in a petition for its cancellation on the ground of being moot and
academic.

At the crux of the present controversy is this Court's ruling in the case of Villaflor44. In the said
case, the appellant registered and annotated his affidavit of adverse claim on a certificate of title
on the basis of a deed of sale issued in his favor pursuant to Section 110, Act 496. Subsequently,
he filed a civil case seeking the surrender of defendant's owner's duplicate of the certificate of
title in order that the deed of sale in his favor will be registered or annotated in the same
certificate. In the civil case, defendant raised the issue of validity of the deed of sale in favor of
appellant. More than four years after and while the civil case was pending, the appellee sought to
cancel the annotation of the adverse claim. The lower court first ordered its cancellation, then
reconsidered, and finally returned to its original stand. Thus, the sole issue on whether or not an
adverse claim annotated in a transfer certificate of title may be cancelled when the validity or
invalidity of the claim is still subject of inquiry in a civil case pending resolution by the trial
court, reached this Court.45

In finding no basis for maintaining the adverse claim, this Court noted the manifestation filed by
the appellant's counsel that the related case pending in the CA was terminated thus affirming the
decision of the trial court, and entry of judgment has been made. Consequently, this Court ruled
in Villaflor that the case has been rendered moot and academic.46

Admittedly, the present case involves the same issue resolved by this Court in Villaflor.
However, the Villaflor ruling stemmed from a different factual milieu. As pointed out by the
petitioner, in the case at bar, the respondents are the ones who filed the case subject of the notice
of lis pendens. Further, the ruling in Villaflor specifically highlighted the fact that the related
civil case was already terminated and attained finality. Here, the civil case filed by the
respondents is still pending before the RTC.

To Our mind, the termination of the related case subject of the notice of lis pendens was a
material factor in considering the petition for cancellation of adverse claim moot and academic in
the case of Villaflor. As such, the ruling in Villaflor is still good law if the same factual
circumstances are attendant. Unfortunately, the facts in the present case calls for a different
ruling.

The ruling of this Court in the case of Ty Sin Tei v. Dy Piao is applicable in this case

In the case of Paz Ty Sin Tei v. Jose Lee Dy Piao47, this Court sitting En Banc discussed in-depth
the present issue. Although the said case was decided in 1958, the rules on adverse claim were
substantially the same under Act 496 and under P.D. 1529, notwithstanding a few changes in the
wordings.

In Ty Sin Tei, the only issue presented before this Court is whether the institution of an action
and the corresponding annotation of a notice of lis pendens at the back of a certificate of title
invalidates a prior notation of an adverse claim appearing on the same title, where the
aforementioned action and the adverse claim refer to the same right or interest sought to be
recovered. Unlike in Villaflor, this Court, in Ty Sin Tei, set aside the lower court's order directing
the cancellation of appellants adverse claim on the certificate of title. Pertinent portions of the
decision are instructive, and reproduced as follows:
x x x the action taken by the lower Court in ordering the cancellation of the adverse claim
before its validity could he passed upon, is not sanctioned by law.

But We have to give certain consideration to the implication created by the lower court's ruling
that the institution of a court action for the purpose of securing or preserving the right which is
also the object of an adverse claim invalidates the latter, irrespective of whether a notice of lis
pendens has been annotated or not, for such a doctrine gives the impression that the 2 remedies
are contradictory or repugnant to one another, the existence of one automatically nullifying the
other. We are inclined to believe otherwise, for while both registrations have their own
characteristics and requisites, it cannot be denied that they are both intended to protect the
interest of a claimant by posing as notices and caution to those dealing with the property that
same is subject to a claim. But while a notice of lis pendens remains during the pendency of the
action. although same may be cancelled under certain circumstances as where the case is
prolonged unnecessarily or for failure of the plaintiff to introduce evidence hearing out the
allegations of the complaint (Victoriano vs. Rovira, 55 Phil., 1000; Municipal Council of
Parañaque vs. Court of First Instance of Rizal, 40 Off. Gaz., 8th Supp., 196); and it has even
been held that a court, in the absence of a statute, has the inherent power to cancel a lis
pendens notice in a proper case (Victoriano vs. Rovira, supra), the same is not true in a
registered adverse claim, for it may be cancelled only in one instance, i.e., after the claim is
adjudged invalid or unmeritorious by the Court, acting either as a land registration court or one
of general jurisdiction while passing upon a case before it where the subject of the litigation is
the same interest or right which is being secured by the adverse claim. The possibility therefore,
that parties claiming an interest in a registered property desire, for any other purpose, to have
their cause ventilated in a court of general jurisdiction, may result in giving them two ways of
making the registration of their claimed rights. In such instances, it would not only be
unreasonable but also oppressive to hold that the subsequent institution of an ordinary civil
action would work to divest the adverse claim of its validity, for as We have pointed out, a notice
of lis pendens may be cancelled even before the action is finally terminated for causes which
may not be attributable to the claimant. And it would similarly be beyond reason to confine a
claimant to the remedy afforded by section 110 of Act 496 if there arc other recourses in law
which such claimant may avail of. But, if any of the registrations should be considered
unnecessary or superfluous, it would be the notice of lis pendens and not the annotation of the
adverse claim which is more permanent and cannot be cancelled without adequate hearing and
proper disposition of the claim.

Wherefore, and on the strength of the foregoing considerations, the order appealed from
directing the Register of Deeds of Manila to cancel the annotation of adverse claim at the
back of Transfer Certificate of Title No. 58652, is hereby set aside and appellee's petition
for cancellation dismissed, with costs against petitioner-appellee. It is so ordered.48 (Emphasis
Ours)
The aforecited rationale of this Court in Ty Sin Tei is more in accordance with the basic tenets of
fair play and justice. As previously discussed, a notice of lis pendens is a mere incident of an
action which does not create any right nor lien. It may be cancelled without a court hearing. In
contrast, an adverse claim constitutes a lien on a property. As such, the cancellation of an
adverse claim is still necessary to render it ineffective, otherwise, the inscription will remain
annotated and shall continue as a lien upon the property.49

Given the different attributes and characteristics of an adverse claim vis-a-vis a notice of lis
pendens, this Court is led to no other conclusion but that the said two remedies may be availed of
at the same time. In fact, in a later case50 this Court ruled that the annotation of a notice of lis
pendens at the back of a certificate of title does not preclude the subsequent registration on the
same certificate of title of an adverse claim. Citing the ruling in Ty Sin Tei, this Court reasoned
that the two remedies are not contradictory to one another.

It bears stressing that the court is given a mandate under Section 70 or P.D. 1529, i.e., upon a
petition of any party in interest, it shall grant a speedy hearing upon the question of the validity
of such adverse claim and shall enter such decree therein as justice and equity may require.
Clearly, the validity of the adverse claim in this case was not inquired into by the RTC. The
RTC, thus, reason ed that if it will continue to determine the substance of the questioned adverse
claim, it may arrive into a decision which is adverse to the possible decision in the related case
filed by the respondents. However, We are not swayed by such reasoning. The law is clear as to
the mandate of the court hearing the petition for cancellation of adverse claim. Unless the subject
controversy of the adverse claim is finally settled by another court in a related case, the court
before which the petition for cancellation of adverse claim is filed can not excuse itself from
hearing the validity of the said adverse claim.
Further, upholding the right of an opposing party to the outright cancellation of adverse claim on
the sole basis of a subsequent notice of lis pendens on the same title would not achieve any
sound purpose. It may even encourage a party to not avail the remedy of annotation of a notice
of lis pendens if an adverse claim was already registered and annotated in the same party's favor.
Furthermore, such ruling would result to a situation where the subject case of the notice of lis
pendens may be dismissed on grounds not attributable to the adverse claimant. an example of
which is, as pointed out by the petitioner, deliberate forum-shopping of the other party who filed
the related case. Thus, the adverse claimant will be left with no other remedy in law to protect his
or her rights. To Our mind, this is not the intent of the law.

In light of the foregoing, this Court finds merit in the present petition. The RTC erred in ordering
the cancellation of the petitioner's adverse claim on the mere basis of a subsequent annotation of
a notice of lis pendens on the same certificate of title. We reverse and set aside the Resolutions
of the RTC and order the petition for cancellation of adverse claim dismissed.

WHEREFORE, premises considered, the petition is GRANTED. The Resolutions dated April
11, 2014 and July 31, 2014 of the Regional Trial Court (RTC) in Case No. P-09-499 LRC REC.
No. 2400, ordering the cancellation of the Notice of Adverse Claim made as Entry No. 8957/Vol.
132/T-266311, Registry of Deeds of Manila are hereby SET ASIDE and respondents Sonia
Arguelles and Lorna Arguelles's petition for cancellation DISMISSED.

SO ORDERED.

G.R. No. 213525, November 21, 2017

FORTUNE LIFE INSURANCE COMPANY, INC., Petitioner, v. COMMISSION ON

AUDIT (COA) PROPER; COA REGIONAL OFFICE NO. VI-WESTERN VISAYAS;
AUDIT GROUP LGS-B, PROVINCE OF ANTIQUE; AND PROVINCIAL
GOVERNMENT OF ANTIQUE, Respondents.

RESOLUTION

BERSAMIN, J.:

A party and its counsel who make offensive and disrespectful statements in their motion for
reconsideration may be properly sanctioned for indirect contempt of court.

We hereby resolve the following submissions of the petitioner, namely: (a) Joint

Explanation;1 (b) Manifestation with Motion for Leave to File Second Motion for
Reconsideration;2 and (c) Second Motion for Reconsideration.3

To recall the antecedents, the Court issued a resolution on January 27, 2015 denying the
petitioner's Motion for Reconsideration4 on the following grounds, namely: (a) failure to comply
with the rule on proof of service; (b) late filing; (c) failure to file a verified declaration under
the Efficient Use of Paper Rule; and (d) failure to prove grave abuse of discretion on the part of
respondent Commission on Audit (COA).
In the same resolution, however, the Court required the petitioner and its counsel, Atty. Eduardo
S. Fortaleza, to show cause why they should not be punished for indirect contempt of court for
using in the petitioner's Motion for Reconsideration dated October 1, 2014 harsh and
disrespectful language towards the Court; and further required Atty. Fortaleza to explain why he
should not be disbarred, disposing thusly:

WHEREFORE, the Court DENIES the Motion for Reconsideration for its lack of

merit; ORDERS the petitioner and its counsel, Atty. Eduardo S. Fortaleza, to show cause in
writing within ten (10) days from notice why they should not be punished for indirect contempt
of court; and FURTHER DIRECTS Atty. Fortaleza to show cause in the same period why he
should not be disbarred.

SO ORDERED.5
In the Joint Explanation dated March 9, 2015, the petitioner and Atty. Fortaleza, both now
represented by former Senate President Aquilino Q. Pimentel, Jr., have apologized for the
statements made in the Motion for Reconsideration, but have stated nonetheless that they had
been constrained to attach cut print-outs of registry receipt numbers because the Makati City
Central Post Office (MCPO) stopped issuing registry receipts and had adopted an electronic
system instead;6 that they thought that the Court, in mentioning proof of service, had been
referring to the non-submission of the affidavit of service;7 that Atty. Fortaleza had been only
lacking in finesse in the formulation of his submissions; that the petitioner honestly believed that
it had faithfully complied with the requirements of the Rules of Court on the service of
pleadings;8 and that because of time constraints Atty. Fortaleza had not been able to sufficiently
go over the Motion for Reconsideration.9

Atty. Fortaleza has prayed that he be spared from disbarment, stressing his not being some
wayward member of the Integrated Bar of the Philippines (IBP), but had in fact served the IBP
by handling pro bono cases in his home province of Antique.10

Additionally, the petitioner has filed its so-called Manifestation with Motion for Leave to file
Second Motion for Reconsideration, attaching therewith its Second Motion for Reconsideration.
It has contended in the Second Motion for Reconsideration that the final order referred to
in Neypes v. Court of Appeals11 applied to the 30-day period mentioned in Section 3, Rule 64 of
the Rules of Court as to make such period be reckoned from notice of the denial by the COA of
its Motion for Reconsideration; and that the reckoning of the 30-day period ought to be from July
14, 2014, the date when it received the denial by the COA of its Motion for Reconsideration.12

On the substantive issue, the petitioner has maintained that whether or not the Local Government
Code (LGC) allowed provincial governments to provide group insurance for barangay officials
was a question of law; that the interpretation of Atty. Pimentel as the Senator who had authored
the LGC had been unjustly ignored by the COA;13 and that the COA had consequently gravely
abused its discretion in interpreting the LGC during the pre-audit.14

The petitioner has further maintained that it had complied with the requirement of publication
under the Government Procurement Act; that it did not furnish the proof of publication of the
notice to bid to the COA because the term bidding documents in Republic Act No. 9184 did not
include the proof of publication;15 that the insurance program had been a laudable initiative of
former Gov. Salvacion Zaldivar Perez that had been stopped by Auditor Yolanda TM Veñegas, a
known ally of Gov. Exequiel B. Javier, the successor of Gov. Zaldivar; and that the Province of
Negros Occidental had been implementing the same insurance program without any issue.16

In its comment,17 the COA, through the Office of the Solicitor General (OSG), has countered that
the Second Motion for Reconsideration, being a prohibited motion, should be denied;18 that
the Fresh Period Rule enunciated in Neypes did not apply to petitions for certiorari filed under
Rule 64 of the Rules of Court;19 that the petitioner's interpretation of the term final order would
contradict and render meaningless the last sentence of Section 3 of Rule 64;20 that the distance
between the petitioner's Makati office and its counsel's office in the Province of Antique was not
sufficient to excuse the belated filing of the petition for certiorari;21 that the petitioner did not
submit proof of service of its petition for certiorari and the verified declaration required by
the Efficient Use of Paper Rule;22 that the supposed adoption by the MCPO of an electronic
system in the processing of mail matter did not inspire belief because the explanation came from
the petitioner's own staff who did not have personal knowledge of the supposed adoption of the
new system of the MCPO;23 that the Court affirmed the grounds cited by the COA for
disallowing the money claim;24 that the unchallenged giving of insurance coverage by the
Provincial Government of Negros Occidental did not validate the petitioner's claim because a
violation of law could not be excused by any practice to the contrary;25 and that the petitioner
should have presented the question of publication to the COA when it sought the
reconsideration.26

Ruling of the Court

Petitioner and Atty. Fortaleza were guilty of indirect contempt of court

The concept and objective of the power to punish contempt of court have been expounded
in Lorenzo Shipping Corporation v. Distribution Management Association of the
Philippines,27viz.:
Contempt of court has been defined as a willful disregard or disobedience of a public authority.
In its broad sense, contempt is a disregard of, or disobedience to, the rules or orders of a
legislative or judicial body or an interruption of its proceedings by disorderly behavior or
insolent language in its presence or so near thereto as to disturb its proceedings or to impair the
respect due to such a body. In its restricted and more usual sense, contempt comprehends a
despising of the authority, justice, or dignity of a court. The phrase contempt of court is generic,
embracing within its legal signification a variety of different acts.

The power to punish for contempt is inherent in all courts, and need not be specifically
granted by statute. It lies at the core of the administration of a judicial system. Indeed,
there ought to be no question that courts have the power by virtue of their very creation to
impose silence, respect, and decorum in their presence, submission to their lawful
mandates, and to preserve themselves and their officers from the approach and insults of
pollution. The power to punish for contempt essentially exists for the preservation of order
in judicial proceedings and for the enforcement of judgments, orders, and mandates of the
courts, and, consequently, for the due administration of justice. The reason behind the
power to punish for contempt is that respect of the courts guarantees the stability of their
institution; without such guarantee, the institution of the courts would be resting on a very
shaky foundation.28 (Bold underscoring supplied for emphasis)
Bearing the foregoing exposition in mind, the Court felt impelled to require the petitioner and
Atty. Fortaleza to show cause why they should not be punished for contempt of court for the
offensive and disrespectful statements contained in their Motion for Reconsideration dated
October 1, 2014,29 to wit:
xxxx

24. Second, with regard to the PROOF OF SERVICE required under Section 2(c), Rule 56 in
relation to Section 13, 1997 Rules of Civil Procedures, as amended, even a perfunctory
scrutiny of the present PETITION and its annexes would have yielded the observation that the
last document attached to the PETITION is the AFFIDAVIT OF SERVICE dated August 12,
2014, by Marcelino T. Pascua, Jr., xxx in compliance with Sections 5, 6, 7, 8, 11, & 13, RULE
13 of the 1997 REVISED RULES OF CIVIL PROCEDURE. A copy of the AFFIDAVIT OF
SERVICE is attached hereto as ANNEX "B", and made an integral part hereof;

25. Apparently, the staff of the Justice-in-charge failed to verify the PETITION and its
annexes up to its last page, thus, the erroneous finding that there were non-submission of
the proof of service;

26. In turn, the same omission was hoisted upon the other members of this Honorable Court
who took the observation from the office of the Justice-in-charge, to be the obtaining fact,
when in truth and in fact, it is not;

27. There is therefore need for this Honorable Court to rectify its foregoing finding;30 (Bold
underscoring supplied for emphasis)

xxxx
The Court subsequently observed in the resolution promulgated on January 27, 2015 as follows:
The petitioner and its counsel thereby exhibited their plain inability to accept the ill
consequences of their own shortcomings, and instead showed an unabashed propensity to readily
lay blame on others like the Court and its Members. In doing so, they employed harsh and
disrespectful language that accused the Court and its Members of ignorance and
recklessness in the performance of their function of adjudication.

We do not tolerate such harsh and disrespectful language being uttered against the Court
and its Members. We consider the accusatory language particularly offensive because it
was unfounded and undeserved. As this resolution earlier clarifies, the petition
for certiorari did not contain a proper affidavit of service. We do not need to rehash the
clarification. Had the petitioner and its counsel been humbler to accept their self-inflicted
situation and more contrite, they would have desisted from their harshness and disrespect
towards the Court and its Members. Although we are not beyond error, we assure the
petitioner and its counsel that our resolutions and determinations are arrived at or reached
with much care and caution, aware that the lives, properties and rights of the litigants are
always at stake. If there be errors, they would be unintended, and would be the result of
human oversight. But in this instance the Court and its Members committed no error. The
petition bore only cut reproductions of the supposed registry receipts, which even a mere
"perfunctory scrutiny" would not pass as the original registry receipts required by
the Rules of Court.31 (Bold underscoring supplied for emphasis)
Although the petitioner and Atty. Fortaleza are now apologizing for their offensive and
disrespectful statements, they insist nonetheless that the statements arose from their honest belief
of having complied with the rule on proof of service. They also attribute their procedural error to
the supposed adoption by the MCPO of an electronic system in the processing of mail matter.

The Court finds and declares the petitioner and Atty. Fortaleza guilty of indirect contempt of
court.

The administration of justice is an important function of the State. It is indispensable to the

maintenance of order in the Society. It is a duty lodged in this Court, and in all inferior courts.
For the Court and all other courts of the land to be able to administer and dispense evenhanded
justice, they should be free from harassment and disrespect.

The statements of the petitioner and Atty. Fortaleza unquestionably tended to attribute gross
inefficiency and negligence to the Court and its staff. It is worse because the statements were
uncalled for and unfounded. As such, the statements should be quickly deterred and gravely
sanctioned for actually harming and degrading the administration of justice by the Court
itself.32 The wrong the statements wrought on the reputation and prestige of the Court and its
operating staff must by all means be vindicated, and even undone if that was at all possible.

Moreover, we cannot but view and consider the attempt to shift the blame to the postal system as
the manifestation of the unwillingness of the petitioner and Atty. Fortaleza to take personal
responsibility for their harsh and disrespectful statements. We must reject the attempt, firstly,
because it reflected their lack of remorse for a grave contempt of court they committed, and,
secondly, because their shifting of blame was not even proved reliably. It appears, indeed, that
they were content on relying solely on the selfserving affidavit of a member of the petitioner's
own staff who could not at least profess having the personal knowledge about the change in the
system by MCPO.33

The courts have inherent power to impose a penalty for contempt that is reasonably
commensurate with the gravity of the offense. The degree of punishment lies within the sound
discretion of the courts.34 Ever mindful that the inherent power of contempt should be exercised
on the preservative, not on the vindictive, principle,35 and that the penalty should be meted
according to the corrective, not the retaliatory, idea of punishment,36 the Court must justly
sanction the contempt of court committed by the petitioner and its counsel. Under Section 7,
Rule 71 of the Rules of Court, the penalty of fine not exceeding P30,000.00, or imprisonment not
exceeding six months, or both fine and imprisonment, may be meted as punishment for
contemptuous conduct committed against a Regional Trial Court or a court of equivalent or
higher rank. Upon considering all the circumstances, the Court imposes a fine of P15,000.00 on
the petitioner and Atty. Fortaleza.
 II

Second Motion for Reconsideration, being a prohibited motion, is denied

Section 2, Rule 52 of the Rules of Court prohibits a second motion for reconsideration by the

same party. Section 3, Rule 15 of the Internal Rules of the Supreme Court echoes the prohibition,
providing thusly:
Section 3. Second motion for reconsideration. - The Court shall not entertain a second motion for
reconsideration, and any exception to this rule can only be granted in the higher interest of
justice by the Court en bane upon a vote of at least two-thirds of its actual membership. There is
reconsideration "in the higher interest of justice" when the assailed decision is not only legally
erroneous, but is likewise patently unjust and potentially capable of causing unwarranted and
irremediable injury or damage to the parties. A second motion for reconsideration can only be
entertained before the ruling sought to be reconsidered becomes final by operation of law or by
the Court's declaration.

In the Division, a vote of three Members shall be required to elevate a second motion for
reconsideration to the Court En Banc.
A second motion for reconsideration, albeit prohibited, may be entertained in the higher interest
of justice, such as when the assailed decision is not only legally erroneous but also patently
unjust and potentially capable of causing unwarranted and irremediable injury or damage to the
moving party.

The showing of exceptional merit to justify the acceptance of the petitioner's Second Motion for
Reconsideration was not made herein. Hence, we deny the Second Motion for Reconsideration.

For sure, the petitioner's non-compliance with the rule on proof of service and the petitioner's
unjustified reliance on the Fresh Period Rule as the basis to extend the period for filing of the
special civil actions for certiorari under Rule 64 of the Rules of Court were already enough
ground to dismiss the petition for certiorari. We need not remind that the Fresh Period
Rule applies only to appeals in civil and criminal cases, and in special proceedings filed under
Rule 40, Rule 41, Rule 42, Rule 43, Rule 45,37 and Rule 122.38

Hence, liberality could not be extended to the petitioner. According to Ginete v. Court of
Appeals,39 only matters of life, liberty, honor or property may warrant the suspension of the rules
of the most mandatory character. That is not the situation of the petitioner herein. It is also true
that other justifications may be considered, like: (1) the existence of special or compelling
circumstances; (2) the merits of the case; (3) a cause not entirely attributable to the fault or
negligence of the party favored by the suspension of the rules; (4) a lack of any showing that the
review sought is merely frivolous and dilatory; and (5) the other party will not be unjustly
prejudiced thereby.40 But, again, the petitioner has not shown the attendance of any of such
justifications for excepting its petition for certiorari from the stricture of timeliness of filing.

As earlier pointed out, the petition for certiorari was dismissed upon reasonable but still
formidable grounds, namely: (a) noncompliance with the rule on proof of service; (b)
noncompliance with the Efficient Use of Paper Rule; and (c) failure to establish the grave abuse
of discretion committed by the COA. The plea for liberality was really unworthy of favorable
consideration.

ACCORDINGLY, the Court:

(1) FINDS and PRONOUNCES the petitioner and its counsel, Atty. Eduardo S.

Fortaleza, GUILTY of INDIRECT CONTEMPT OF COURT, and,
accordingly, SENTENCES them to pay, JOINTLY AND SEVERALLY, a fine of P15,000.00;
and

(2) DENIES the Motion for Leave to File Second Motion for Reconsideration and the Second
Motion for Reconsideration.

SO ORDERED.