ANTONIO M. GARCIA v. FERRO CHEMICALS, INC. G.R. No.

172505,  FCI appealed to the CA as to the civil aspect of the case. The
October 01, 2014 notice of appeal filed was entitled "Notice of Appeal Ex Gratia
Abudantia Ad Cautelam (Of The Civil Aspect of the Case).
FACTS:
 The Makati City Prosecutor's Office and FCI also filed a petition for
certiorari with this court, assailing the RTC’s decision and order
 Antonio Garcia (Garcia), as seller, and Ferro Chemicals, Inc. (FCI) as
acquitting Garcia.
buyer, entered into a deed of absolute sale and purchase of shares of
stock. The deed was for the sale and purchase of shares of stock from
various corporations, including one class "A" share in Alabang Country
Club, Inc. and one proprietary membership in the Manila Polo Club,  The petition for certiorari filed before this court sought to annul the
Inc.4 These shares of stock were in the name of Garcia.5 The decision of the trial court acquitting Garcia.
contract was allegedly entered into to prevent these shares of
stock from being sold at public auction to pay the outstanding  People of the Philippines and FCI argued that the trial court "acted in
obligations of Garcia grave abuse of discretion amounting to lack or excess of jurisdiction”.
The verification/certification against forum shopping, signed by Ramon
.

 A deed of right of repurchase over the same shares of stock subject of
the deed of absolute sale and purchase of shares of stock was entered
into between Garcia and FCI under which Garcia can redeem the
properties sold within 180 days from the signing of the agreement.
 Before the end of the 180-day period, Garcia exercised his right to
repurchase the properties.8 However, FCI did not agree to the
repurchase of the shares of stock. Thus, Garcia filed an action for
specific performance and annulment of transfer of shares.
 The class "A" share and proprietary membership which were
included in the contracts entered into between Garcia and Ferro
were sold at public auction.
 Sometime in September the information based on the complaint of FCI
was filed against Garcia before the RTC. He was charged with estafa
for allegedly misrepresenting to Ferro that the shares subject of the
contracts entered into were free from all liens and encumbrances when
in truth and in fact, accused well' knew that aforesaid share of
stock/proprietary share had already been garnished and subsequently
sold at public auction.
 RTC: Garcia was acquitted for insufficiency of evidence. From
the foregoing, it is very clear that private complainant was
aware of the status of the subject CLUB SHARES. Thus, the
element of false pretense, fraudulent act or fraudulent means
which constitute the very cause or the only motive which
Garcia as president of FCI disclosed that the notice of appeal was filed
"with respect to the civil aspect of the case.
 The court dismissed the petition for certiorari filed, and entry of
judgment was made. On the other hand, the CA its decision
granted the appeal of FCI. The appellate court found that
Garcia failed to disclose the lien over the club shares.
 Garcia filed a motion for reconsideration and FCI filed a partial motion
for reconsideration of the decision of the CA. These motions were
denied. Thus, Garcia filed this petition for review on certiorari,
assailing the decision and resolution of the CA.
 In its comment, FCI points out that Garcia raised factual issues not
proper in a Rule 45 petition and reiterates the findings of CA.
 There are pertinent and important issues that the parties failed to raise
before the trial court, CA, and this court. Nonetheless, we resolve to
rule on these issues.
MAIN ISSUE: Antonio Garcia claims that both he and Ferro Chemicals, Inc.
acted in bad faith when they entered into the deed of absolute sale as a
scheme to defraud Antonio Garcia’s creditors. Thus, they are in pari delicto and
Ferro Chemicals, Inc. should not be allowed to recover from Antonio Garcia.
The issues are:chan

induced the private complainant to enter into the questioned

deed of sale (Exh. "A") is wanting in the case at bar. I. Whether or not Ferro was entitled to the awards given as civil
liability ex delicto
 FCI filed a motion for reconsideration, which was denied by the RTC.
II. Whether RTC had jurisdiction over the case
III. Whether the act of FCI in filing the notice of appeal before the CA and
the petition for certiorari assailing the same trial court decision
amounted to forum shopping
RULING:
I. When the Civil Action for the Recovery of Civil Liability ex
Delicto is instituted with the criminal action, the case will
be prosecuted under the direction and control of the public
prosecutor, including subsequent proceedings such as
appeal
When the civil action for the recovery of civil liability ex delicto is
instituted with the criminal action, whether by choice of private
complainant (i.e., no reservation is made or no prior filing
of a separate civil action) or as required by the law or rules,
the case will be prosecuted under the direction and control
of the public prosecutor. The civil action cannot proceed
independently of the criminal case. This includes subsequent
proceedings on the criminal action such as an appeal.
In any case, Ferro Chemicals, Inc. joined the public prosecutor in
filing the petition for certiorari before this court. Ramon Garcia,
President of Ferro Chemicals, Inc., signed the verification and
certification of non-forum shopping of the petition for certiorari.
In a criminal case in which the offended party is the State, the
interest of the private complainant or the offended party is limited
to the civil liability arising there from.
Hence, if a criminal case is dismissed by the trial court or if there
is an acquittal, a reconsideration of the order of dismissal or
acquittal may be undertaken, whenever legally feasible, insofar as
the criminal aspect thereof is concerned and may be made only by
the public prosecutor; or in the case of an appeal, by the State
only, through the OSG. The private complainant or offended
party may not undertake such motion for reconsideration or
appeal on the criminal aspect of the case.
However, the offended party or private complainant may file a
motion for reconsideration of such dismissal or acquittal or appeal
therefrom but only insofar as the civil aspect thereof is concerned.
In so doing, the private complainant or offended party need
not secure the conformity of the public prosecutor.
II. Ferro Chemicals, Inc.
committed forum shopping
Forum shopping is defined as "the act of a litigant who 'repetitively
availed of several judicial remedies in different courts,
simultaneously or successively, all substantially founded on the
same transactions and the same essential facts and
circumstances, and all raising substantially the same issues either
pending in, or already resolved adversely by some other court . . .
to increase his chances of obtaining a favorable decision if not in
one court, then in another'."
Once clearly established that forum shopping was committed
willfully and deliberately by a party or his or her counsel, the case
may be summarily dismissed with prejudice, and the act shall
constitute direct contempt and a cause for administrative
sanctions. Forum shopping is prohibited, and sanctions are
imposed on those who commit forum shopping as "it trifles with
the courts, abuses their processes, degrades the administration of
justice and adds to the already congested court dockets." What is
critical 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
rendered by the different fora upon the same issues, regardless of
whether the court in which one of the suits was brought has no
jurisdiction over the action.
The test for determining the existence of forum shopping is
whether the elements of litis pendentia are present, or whether a
final judgment in one case amounts to res judicata in another.
Thus, there is forum shopping when the following elements are
present:
(a) identity of parties, or at least such parties as represent the
same interests in both actions;
(b) identity of rights asserted and relief prayed for, the relief
being founded on the same facts; and
(c) the identity of the two preceding particulars, such that any
judgment rendered in the other action will, regardless of which
party is successful, amount to res judicata in the action under
consideration; said requisites are also constitutive of the requisites
for auter action pendant or lis pendens.
There is no question that FCI committed forum shopping when it
filed an appeal before the CA and a petition for certiorari before
this court assailing the same trial court decision. This is true even
if FCI's notice of appeal to the CA was entitled "Notice of Appeal Ex
Gratia Abudantia Ad Cautelam (Of The Civil Aspect of the
Case)."The "civil aspect of the case" referred to by FCI’s for
 the recovery of civil liability ex delicto. However, it failed to
make a reservation before the trial court to institute the
civil action for the recovery of civil liability ex delicto or
institute a separate civil action prior to the filing of the
criminal case.
There is identity of parties. Petitioner Garcia, and respondent FCI
are both parties in the appeal filed before the CA and the petition
for certiorari before this court.
There is identity of the rights asserted and reliefs prayed for in
both actions. At a glance, it may appear that FCI asserted different
rights: The appeal before the CA is purely on the civil aspect of the
trial court's decision while the petition for certiorari before this
court is allegedly only on the criminal aspect of the case. However,
the civil liability asserted by FCI before the CA arose from the
criminal act. It is in the nature of civil liability ex delicto. FCI did
not reserve the right to institute the civil action for the recovery of
civil liability ex delicto or institute a separate civil action prior to
the filing of the criminal case. Thus, it is an adjunct of the criminal
aspect of the case. When the trial court's decision was
appealed as to its criminal aspect in the petition for
certiorari before this court, the civil aspect thereof is
deemed included in the appeal. Thus, the relief prayed for
by FCI that is, recovery of civil liability ex delicto, is
asserted in both actions before this court and the CA.
Litigants cannot avail themselves of two separate remedies for the
same relief in the hope that in one forum, the relief prayed for will
be granted. This is the evil sought to be averted by the doctrine of
non-forum shopping, and this is the problem that has happened in
this case.
MAIN: The civil liability arising from the offense or ex delicto is
based on the acts or omissions that constitute the criminal
offense; hence, its trial is inherently intertwined with the criminal
action. For this reason, the civil liability ex delicto is impliedly
instituted with the criminal offense. If the action for the civil
liability ex delicto is instituted prior to or subsequent to the
filing of the criminal action, its proceedings are suspended
until the final outcome of the criminal action. The civil liability
based on delict is extinguished when the court hearing the criminal
action declares that ‘the act or omission from which the civil
liability may arise did not exist’.
III. The Regional Trial Court
did not have jurisdiction
Jurisdiction of a court over the subject matter is vested by law. In
criminal cases, the imposable penalty of the crime charged in the
information determines the court that has jurisdiction over the
case.
The information charged Garcia with violation of Article 318 of the
RPC, which is punishable by arresto mayor, or imprisonment for a
period of one (1) month and one (1) day to six (6) months.
When the information was filed the law in force was Batas
Pambansa Big. 129 before it was amended by RA No. 7691. Under
Section 32 of Batas Pambansa Big. 129, the MTC had jurisdiction
over the case:chanRoblesv irt ual Lawlib rary
SEC. 32. Jurisdiction of Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts in criminal cases.-
2. Exclusive original jurisdiction over all offenses punishable
with imprisonment of not exceeding four years and two months, or
a fine of not more than four thousand pesos, or both such fine and
imprisonment, regardless of other imposable accessory or other
penalties, including the civil liability arising from such offenses or
predicated thereon, irrespective of kind, nature, value, or amount
thereof: Provided, however, That in offenses involving damage to
property through criminal negligence they shall have exclusive
original jurisdiction where the imposable fine does not exceed
twenty thousand pesos.
The RTC did not have jurisdiction to hear and decide the case. This
lack of jurisdiction resulted in voiding all of the trial court's
proceedings and the judgment rendered. Although the trial court's
lack of jurisdiction was never raised as an issue in any part of the
proceedings and even until it reached this court, we proceed with
resolving the matter.
Jurisdiction is vested by law and cannot be conferred or waived by
the parties. Even on appeal and even if the reviewing parties did
not raise the issue of jurisdiction, the reviewing court is not
precluded from ruling that the lower court had no jurisdiction over
the case. Having arrived at the conclusion that the RTC did not
have jurisdiction to try the case against the appellant, it is no
longer necessary to consider the other issues raised as the
decision of the RTC is null and void. The trial court's lack of
jurisdiction cannot be cured by the parties' silence on the
matter. The failure of the parties to raise the matter of jurisdiction
also cannot be construed as a waiver of the parties. Jurisdiction is
conferred by law and cannot be waived by the parties.
 Khe Hong v. CA – (CHECK COMPILATION FOR F&I)
RULING:
An accion pauliana accrues only when the creditor discovers that
he has no other legal remedy for the satisfaction of his claim
against the debtor other than an accion pauliana. The accion
pauliana is an action of a last resort. For as long as the creditor
still has a remedy at law for the enforcement of his claim against
the debtor, the creditor will not have any cause of action against
the creditor for rescission of the contracts entered into by and
between the debtor and another person or persons. Indeed, an
accion pauliana presupposes a judgment and the issuance by the
trial court of a writ of execution for the satisfaction of the
judgment and the failure of the Sheriff to enforce and satisfy the
judgment of the court. It presupposes that the creditor has
exhausted the property of the debtor. The date of the decision of
the trial court against the debtor is immaterial. What is important
is that the credit of the plaintiff antedates that of the fraudulent
alienation by the debtor of his property. After all, the decision of
the trial court against the debtor will retroact to the time when the
debtor became indebted to the creditor. 9 suspensive
Petitioners, however, maintain that the cause of action of
respondent Philam against them for the rescission of the deeds of
donation accrued as early as December 27, 1989, when petitioner
Khe Hong Cheng registered the subject conveyances with the
Register of Deeds. Respondent Philam allegedly had constructive
knowledge of the execution of said deeds under Section 52 of
Presidential Decree No. 1529, quoted infra, as follows:chanrob1es
virtual 1aw library
SECTION 52. Constructive knowledge upon registration. — Every
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.chanrob1es virtua1 1aw 1ibrary
Petitioners argument that the Civil Code must yield to the
Mortgage and Registration Laws is misplaced, for in no way does
this imply that the specific provisions of the former may be all
together ignored. To count the four year prescriptive period to
rescind an allegedly fraudulent contract from the date of
registration of the conveyance with the Register of Deeds, as
alleged by the petitioners, would run counter to Article 1383 of the
Civil Code as well as settled jurisprudence. It would likewise
violate the third requisite to file an action for rescission of an
allegedly fraudulent conveyance of property, i.e., the creditor has
no other legal remedy to satisfy his claim.
An accion pauliana thus presupposes the following: 1) A
judgment; 2) the issuance by the trial court of a writ of execution
for the satisfaction of the judgment, and 3) the failure of the
sheriff to enforce and satisfy the judgment of the court. It requires
that the creditor has exhausted the property of the debtor. The
date of the decision of the trial court is immaterial. What is
important is that the credit of the plaintiff antedates that of the
fraudulent alienation by the debtor of his property. After all, the
decision of the trial court against the debtor will retroact to the
time when the debtor became indebted to the creditor.
Tolentino, a noted civilist, explained:jgc:chanrobles.com.ph
". . . [T]herefore, credits with suspensive term or condition are
excluded, because the accion pauliana presupposes a judgment
and unsatisfied execution, which cannot exist when the debt is not
yet demandable at the time the rescissory action is brought.
Rescission is a subsidiary action, which presupposes that the
creditor has exhausted the property of the debtor which is
impossible in credits which cannot be enforced because of a
term or condition.
While it is necessary that the credit of the plaintiff in the accion
pauliana must be prior to the fraudulent alienation, the date of the
judgment enforcing it is immaterial. Even if the judgment be
subsequent to the alienation, it is merely declaratory with
retroactive effect to the date when the credit was constituted." 10
These principles were reiterated by the Court when it explained
the requisites of an accion pauliana in greater detail, to
wit:jgc:chanrobles.com.ph
"The following successive measures must be taken by a creditor
before he may bring an action for rescission of an allegedly
fraudulent sale: (1) exhaust the properties of the debtor through
levying by attachment and execution upon all the property of the
debtor, except such as are exempt from execution; (2) exercise all
the rights and actions of the debtor, save those personal to him
(accion subrogatoria); and (3) seek rescission of the contracts
executed by the debtor in fraud of their rights (accion pauliana).
Without availing of the first and second remedies, i.e., exhausting
the properties of the debtor or subrogating themselves in
Francisco Bareg’s transmissible rights and actions. petitioners
simply undertook the third measure and filed an action for
annulment of sale. This cannot be done." 11 (Emphasis ours)
In the same case, the Court also quoted the rationale of the CA
when it upheld the dismissal of the accion pauliana on the basis of
lack of cause of action:jgc:chanrobles.com.ph
"In this case, plaintiff’s appellants had not even commenced an
action against defendants-appellees Bareng for the collection of against him, its action for rescission of the subject deeds clearly
the alleged indebtedness. Plaintiffs-appellants had not even tried had not yet prescribed.
to exhaust the property of defendants-appellees Bareng. Plaintiffs-
appellants, in seeking the rescission of the contracts of sale A final point. Petitioners now belatedly raise on appeal the defense
entered into between defendants-appellees, failed to show and of improper venue claiming that respondent Philam’s complaint is
prove that defendants-appellees Bareng had no other property, a real action and should have been filed with the RTC of Butuan
either at the time of the sale or at the time this action was filed, City since the property subject matter of the donations are located
out of which they could have collected this (sic) debts." (Emphasis therein. Suffice it to say that petitioners are already deemed to
ours) have waived their right to question the venue of the instant case.
Improper venue should be objected to as follows 1) in a motion to
Even if respondent Philam was aware, as of December 27, 1989, dismiss filed within the time but before the filing of the answer; 13
that petitioner Khe Hong Cheng had executed the deeds of or 2) in the answer as an affirmative defense over which, in the
donation in favor of his children, the complaint against Butuan discretion of the court, a preliminary hearing may be held as if a
Shipping Lines and/or petitioner Khe Hong Cheng was still pending motion to dismiss had been filed. 14 Having failed to either file a
before the trial court. Respondent Philam had no inkling, at the motion to dismiss on the ground of improper of venue or include
time, that the trial court’s judgment would be in its favor and the same as an affirmative defense in their answer, petitioners are
further, that such judgment would not be satisfied due to the deemed to have their right to object to improper venue.
deeds of donation executed by petitioner Khe Hong Cheng during
the pendency of the case. Had respondent Philam filed his
complaint on December 27, 1989, such complaint would have
been dismissed for being premature. Not only were all other legal
remedies for the enforcement of respondent Philam’s claims not
yet exhausted at the time the deeds of donation were executed
and registered. Respondent Philam would also not have been able
to prove then that petitioner Khe Hong Cheng had no more
property other than those covered by the subject deeds to satisfy
a favorable judgment by the trial court.chanrob1es virtua1 1aw
1ibrary

It bears stressing that petitioner Khe Hong Cheng even expressly

declared and represented that he had reserved to himself property
sufficient to answer for his debts contracted prior to this
date:jgc:chanrobles.com.ph

"That the DONOR further states, for the same purpose as

expressed in the next preceding paragraph, that this donation is
not made with the object of defrauding his creditors having
reserved to himself property sufficient to answer his debts
contracted prior to this date." 12

As mentioned earlier, respondent Philam only learned about the

unlawful conveyances made by petitioner Khe Hong Cheng in
January 1997 when its counsel accompanied the sheriff to Butuan
City to attach the properties of petitioner Khe Hong Cheng. There
they found that he no longer had any properties in his name. It
was only then that respondent Philam’s action for rescission of the
deeds of donation accrued because then it could be said that
respondent Philam had exhausted all legal means to satisfy the
trial court’s judgment in its favor. Since respondent Philam filed its
complaint for accion pauliana against petitioners on February 25,
1997, barely a month from its discovery that petitioner Khe Hong
Cheng had no other property to satisfy the judgment award