CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
FIRST DIVISION
G.R. No. 136368 - January 16, 2002
JAIME TAN, JR., as Judicial Administrator of the Intestate Estate of Jaime C.
Tan, Petitioner, vs. HON. COURT OF APPEALS (Ninth Special Div.) and JOSE A.
MAGDANGAL and ESTRELLA MAGDANGAL, Respondents.
PUNO, J.:
This is a petition for review of the Decision of the Court of Appeals dated July 15,
19981 and its Resolution dated November 9, 19982 denying petitioner's motion for
reconsideration in CA-G.R. SP-41738.
The facts are as stated in the impugned Decision, viz:
"Involved in this case is a parcel of land, designated as Lot No. 645-C, with an area of
34,829 square meters, more or less, situated in Bunawan, Davao City. The lot was once
covered by TCT No. T-72067 of the Registry of Deeds of Davao City in the name of the
late Jaime C. Tan (Tan, for short) married to Praxedes V. Tan.
From the petition, the motion to dismiss petition, their respective annexes and other
pleadings, we gather the following factual antecedents:
On January 22, 1981, Tan, for a consideration of P59,200.00, executed a deed of absolute
sale over the property in question in favor of spouses Jose Magdangal and Estrella
Magdangal. Simultaneous with the execution of this deed, the same contracting parties
entered into another agreement whereunder Tan given one (1) year within which to redeem
or repurchase the property.
Albeit given several opportunities and/or extensions to exercise the option, Tan failed to
redeem the property until his death on January 4, 1988.
On May 2, 1988, Tan's heirs filed before the Regional Trial Court at Davao City a suit
against the Magdangals for reformation of instrument. Docketed as CIVIL CASE NO.
19049-88, the complaint alleged that, while Tan and the Magdangals denominated their
agreement as deed of absolute sale, their real intention was to conclude an equitable
mortgage.
Page 1 of 169
Barely hours after the complaint was stamped 'received,' the Magdangals were able to have
Tan's title over the lot in question canceled and to secure in their names TCT No. T-
134470. This development prompted the heirs of Tan, who were to be later substituted by
Jaime V. Tan, Jr. (Tan, Jr.) as plaintiff, to file a supplemental complaint.
The intervening legal tussles are not essential to this narration. What is material is that on
June 4, 1991, Branch 11 of the Regional Trial Court of Davao City rendered judgment
finding for Tan, Jr., as plaintiff therein. The dispositive portion of the decision reads:.
'WHEREFORE, judgment is rendered:
1. The Deed of Absolute Sale (Exhibits B, B-1) is, in accordance with the true intention of
the parties, hereby declared and reformed an equitable mortgage;
2. The plaintiff is ordered to pay the defendants within 120 days after the finality of this
decision P59,200 plus interest at the rate of 12% per annum from May 2, 1988, the date the
complaint was filed, until paid;
3. In order to avoid multiplicity of suits and to fully give effect to the true intention of the
parties, upon the payment of the aforesaid amount, TCT No. T-134470 in the name of
defendants Jose Magdangal and Estrella Magdangal (Exh. 13) and shall be deemed
canceled and null and void and TCT No. T-72067 in the name of Jaime C. Tan and
Praxedes Valles Tan (Exh. A) be reinstated).
No pronouncement as to costs.
SO ORDERED. (Annex 'B', Petition; Emphasis added).'
From the above, the Magdangals appealed to this Court in CA-G.R. CV No. 33657.
In a decision promulgated on September 28, 1995, this Court, thru its then Special Third
Division, affirmed in toto the appealed decision of the lower court. Copy of this affirmatory
judgment was each received by the Magdangals and Tan, Jr. on October 5, 1995.
On March 13, 1996, the Clerk of this Court entered in the Book of Entries of Judgment the
Decision in CA-G.R. CV No. 33657 and issued the corresponding Entry of Judgment
which, on its face, stated that the said Decision 'has on October 21, 1995 become final and
executory' (Annex 'L', Petition; Emphasis added).
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
On March 21, 1996, the Magdangals filed in the lower court a MOTION FOR
CONSOLIDATION AND WRIT OF POSSESSION, therein alleging that they did not
appeal from the aforesaid decision of this Court, adding '[T]hat the appealed judgment of
the Court of Appeals has become final and executory 15 days from October 5, 1995 or up
to October 20, 1995, which the 120 days redemption period commences. And noting that
the redemption period has expired without Tan, Jr. exercising his option, the Magdangals
thus prayed that the title 'in the name of Jaime C. Tan and Praxedes Tan be consolidated
and confirmed in the name of the (Magdangals) x x x and pending such issuance, a writ of
possession be ordered issued (Annex "C", Petition).
In opposition to this motion (Annex 'F', Petition), Tan, Jr. alleged, among other things, that
until an entry of judgment has been issued by the Court of Appeals and copy thereof
furnished the parties, the appealed decision of the court a quo in this case cannot be
considered final and executory. Pressing the point, Tan, Jr., citing Cueto vs. Collantes,
infra., would then assert that the period of redemption on his part commenced to run from
receipt of entry of judgment in CA-G.R. CV No. 33657.
Meanwhile, Tan, Jr. via a motion for execution dated March 27, 1996, which he filed
directly with this court, prayed this court to direct the court a quo to issue the
corresponding writ of execution in Civil Case No. 19049-88. In a related move, Tan, Jr.
filed on April 16, 1996, a MANIFESTATION AND MOTION therein advising the court
a quo of his intention to redeem the property in question and of the fact that, on such date,
he has deposited with its clerk of court the repurchase price, plus interest, as required by its
original decision. By way of relief, Tan, Jr. prayed that the Magdangals be ordered to claim
the amount thus deposited and the Register of Deeds of Davao City, to reinstate the title of
Jaime Tan and Praxedes Tan.
Jointly acting on the aforementioned MOTON FOR CONSOLIDATION AND WRIT OF
POSSESION of the Magdangals (Annex 'C', Petition), MANIFESTATION AND
MOTION of Tan, Jr. (Annex 'I', Petition), the court a quo presided by the respondent judge,
came out with the first challenged order of June 10, 1996 (Annex 'N', Petition) dispositively
reading, as follows:
'WHEREFORE, x x x the Motion for Consolidation and a Writ of Possession is hereby
DENIED for lack of merit.
The deposit of the amount of P116,032.00 made by plaintiff with the Office of Court x x x
on April 17, 1996 is hereby considered full payment of the redemption price and the Clerk
of Court is hereby ordered to deliver said amount to herein defendants.
Page 2 of 169
The Register of Deeds of Davao City x x x is hereby directed to cancel TCT No. T-134470
in the name of Jose Magdangal and Estrella Magdangal and, thereafter, to reinstate TCT
No. 72067 in the name of Jaime C. Tan and Praxedes Valles Tan and to submit her
compliance thereto within ten (10) days from receipt of this Order.
SO ORDERED.'
Explaining her action, the respondent judge wrote in the same order:
'Following the ruling of the Supreme Court in Cueto vs. Collantes, et al., 97 Phil. 325, the
120 days period for plaintiff to pay the amount of P59,200.00 plus interest x x x should be
reckoned from the date of Entry of Judgment x x x which was March 13, 1996. The
plaintiff made a deposit on April 17, 1996 well within the 120-day period mandated by the
decision of this Court.'
In due time, the Magdangals moved for a reconsideration. However, in her next assailed
order of July 24, 1996 (Annex 'R', Petition), the respondent judge denied the motion for
being proforma and fatally defective."3
Petitioner assails the aforequoted Decision as follows:
"I. Petitioner's right to due process was violated when the Court of Appeals rendered a
judgment on the merits of private respondents' petition without granting to petitioner the
opportunity to controvert the same.
II. Appeal not certiorari was the appropriate remedy of private respondents as there was no
grave abuse of discretion as to amount to lack of or excess of jurisdiction on the part of the
trial judge. Neither is delay in resolving the main case a ground for giving due course to the
petition.
III. Cueto vs. Collantes, 97 Phil. 325, was disregarded by the Court of Appeals in resolving
the petition of private respondents. It is still good case law and was in effect made a part of
section 2 of Rule 68 of the 1997 Rules of Civil Procedure on Foreclosure of Mortgage.
IV. The St. Dominic vs. Intermediate Appellate Court, 138 SCRA 242 case is not applicable
to the case at bar; on the other hand the ruling in Gutierrez Hermanos vs. de La Riva, 46
Phil. 827, applies.
V. Equity considerations justify giving due course to this petition."4 (emphasis ours)
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
We will immediately resolve the key issue of what rule should govern the finality of
judgment favorably obtained in the trial court by the petitioner.
The operative facts show that in its Decision of June 4, 1991, the trial court held that: (1)
the contract between the parties is not an absolute sale but an equitable mortgage; and (2)
petitioner Tan should pay to the respondents Magdangal "within 120 days after the finality
of this decision P59,200.00 plus interest at the rate of 12% per annum from May 2, 1988,
the date the complaint was filed, until paid."5
On September 28, 1995 in CA-G.R. CV No. 33657, the Special Third Division of the Court
of Appeals affirmed the decision of the trial court in toto. Both parties received the decision
of the appellate court on October 5, 1995. On March 13, 1996, the clerk of court of the
appellate court entered in the Book of Entries of Judgement the decision in CA-G.R. CV
No. 33657 and issued the corresponding Entry of Judgment which, on its face, stated that
the said decision "has on October 21, 1995 become final and executory."6
The respondents Magdangal filed in the trial court a Motion for Consolidation and Writ of
Possession.7 They alleged that the 120-day period of redemption of the petitioner has
expired. They reckoned that the said period began 15 days after October 5, 1995, the date
when the finality of the judgment of the trial court as affirmed by the appellate court
commenced to run.
On the other hand, petitioner filed on March 27, 1996 a motion for execution in the
appellate court praying that it "direct the court a quo to issue the corresponding writ of
execution in Civil Case No. 19049-88."8 On April 17, 1996, petitioner deposited with the
clerk of court the repurchase price of the lot plus interest as ordered by the decision.
On June 10, 1996, the trial court allowed the petitioner to redeem the lot in question. It
ruled that the 120-day redemption period should be reckoned from the date of Entry of
Judgment in the appellate court or from March 13, 1996. 9 The redemption price was
deposited on April 17, 1996. As aforestated, the Court of Appeals set aside the ruling of the
trial court.
From 1991-1996, the years relevant to the case at bar, the rule that governs finality of
judgment is Rule 51 of the Revised Rules of Court. Its sections 10 and 11 provide:
"SEC. 10. Entry of judgments and final resolutions. - If no appeal or motion for new trial or
reconsideration is filed within the time provided in these Rules, the judgment or final
resolution shall forthwith be entered by the clerk in the book of entries of judgments. The
date when the judgment or final resolution becomes executory shall be deemed as the date
of its entry. The record shall contain the dispositive part of the judgment or final resolution
Page 3 of 169
and shall be signed by the clerk, with a certificate that such judgment or final resolution has
become final and executory. (2a, R36)
SEC. 11. Execution of judgment. - Except where the judgment or final order or resolution,
or a portion thereof, is ordered to be immediately executory, the motion for its execution
may only be filed in the proper court after its entry.
In original actions in the Court of Appeals, its writ of execution shall be accompanied by a
certified true copy of the entry of judgment or final resolution and addressed to any
appropriate officer for its enforcement.
In appealed cases, where the motion for execution pending appeal is filed in the Court of
Appeals at a time that it is in possession of the original record or the record on appeal, the
resolution granting such motion shall be transmitted to the lower court from which the case
originated, together with a certified true copy of the judgment or final order to be executed,
with a directive for such court of origin to issue the proper writ for its enforcement."
This rule has been interpreted by this Court in Cueto vs. Collantes as follows:10
"The only error assigned by appellants refer to the finding of the lower court that plaintiff
can still exercise his right of redemption notwithstanding the expiration of the 90-day
period fixed in the original decision and, therefore, defendants should execute the deed of
reconveyance required in said decision. Appellants contend that, the final judgment of the
Court of Appeals having been entered on July 8, 1953, the 90-day period for the exercise of
the right of redemption has long expired, it appearing that plaintiff deposited the
redemption money with the clerk of court only on October 17, 1953, or, after the expiration
of 101 days. Appellee brands this computation as erroneous, or one not in accordance with
the procedure prescribed by the rules of court.
Appellee's contention should be sustained. The original decision provides that appellee may
exercise his right of redemption within the period of 90 days from the date the judgment
has become final. It should be noted that appellee had appealed from this decision. This
decision was affirmed by the court of appeals and final judgment was entered on July 8,
1953. Does this mean that the judgment became final on that date?
Let us make a little digression for purposes of clarification. Once a decision is rendered by
the Court of Appeals a party may appeal therefrom by certiorari by filing with the Supreme
Court a petition within 10 days from the date of entry of such decision (Section 1, Rule 46).
The entry of judgment is made after it has become final, i.e., upon the expiration of 15 days
after notice thereof to the parties (Section 8, Rule 53, as modified by a resolution of the
Supreme Court dated October 1, 1945). But, as Chief Justice Moran has said, 'such finality
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
*** is subject to the aggrieved party's right of filing a petition for certiorari under this
section,' which means that 'the Court of Appeals shall remand the case to the lower court
for the execution of its judgment, only after the expiration of ten (10) days from the date of
such judgment, if no petition for certiorari is filed within that period.' (1 Moran, Comments
on the Rules of Court, 1952 ed., p. 950) It would therefore appear that the date of entry of
judgment of the Court of Appeals is suspended when a petition for review is filed to await
the final entry of the resolution or decision of the Supreme Court.
Since in the present case appellee has filed a petition for review within the reglementary
period, which was dismissed by resolution of July 6, 1953, and for lack of a motion for
reconsideration the entry of final judgment was made on August 7, 1953, it follows that
the 90-day period within which appellee may exercise his right of redemption should be
counted from said date, August 7, 1953. And appellee having exercised such right on
October 17, 1953 by depositing the redemption money with the clerk of court, it is likewise
clear that the motion be filed for the exercise of such right is well taken and is within the
purview of the decision of the lower court."11
On April 18, 1994, this Court issued Circular No. 24-94, viz:
"TO: COURT OF APPEALS, SANDIGANBAYAN, COURT OF TAX APPEALS,
REGIONAL TRIAL COURTS, METROPOLITAN TRIAL COURTS, MUNICIPAL
TRIAL COURTS, MUNICIPAL CIRCUIT TRIAL COURTS, AND ALL MEMBERS OF
THE INTEGRATED BAR OF THE PHILIPPINES
SUBJECT: RESOLUTION OF THE COURT EN BANC APPROVING AND
PROMULGATING THE REVISED PROVISION ON EXECUTION OF JUDGMENTS.
SPECIFICALLY IN APPEALED CASES, AND AMENDING SECTION 1, RULE 39 OF
THE RULES OF COURT
It appears that in a number of instances, the execution of judgments in appealed cases
cannot be promptly enforced because of undue administrative delay in the remand of the
records to the court of origin, aggravated at times by misplacement or misdelivery of said
records. The Supreme Court Committee on the Revision of the Rules of Court has drafted
proposals including a provision which can remedy the procedural impasse created by said
contingencies.
Accordingly, pending approval by the Court of the revised rules on Civil Procedure, and to
provide a solution to the aforestated problems, the Court Resolved to approve and
promulgate the following section thereof on execution of judgments, amending Section 1,
Rule 39 of the Rules of Court:
Page 4 of 169
Section 1. Execution upon judgments or final orders. - Execution shall issue as a matter of
right, on motion, upon a judgment or order that disposes of the action or proceeding upon
expiration of the period to appeal therefrom if no appeal has been duly perfected.
If the appeal has been duly perfected and finally resolved, such execution may forthwith be
applied for in the lower court from which the action originated, on motion of the judgment
obligee, submitting therewith certified true copies of the judgment or judgments or the final
order or orders sought to be enforced and of the entry thereof, with notice to the adverse
party.
The appellate court may, on motion in the same case, when the interest of justice so
requires, direct the court of origin to issue the writ of execution.
This resolution shall be published in two (2) newspapers of general circulation and shall
take effect on June 1, 1994.
April 18, 1994.
"(Sgd.) ANDRES R. NARVASA
Chief Justice"
The Circular took effect on June 1, 1994.
The 1997 Revised Rules of Civil Procedure, however, amended the rule on finality of
judgment by providing in section 1, Rule 39 as follows:
"Section 1. Execution upon judgments or final orders. - Execution shall issue as a matter of
right, on motion, upon a judgment or order that disposes of the action or proceeding upon
the expiration of the period to appeal therefrom if no appeal has been duly perfected. (1a)
If the appeal has been duly perfected and finally resolved, the execution may forthwith be
applied for in the court of origin, on motion of the judgment obligee, submitting therewith
certified true copies of the judgment or judgments or final order or orders sought to be
enforced and of the entry thereof, with notice to the adverse party.
The appellate court may, on motion in the same case, when the interest of justice so
requires, direct the court of origin to issue the writ of execution."
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
The rationale of the new rule is explained by retired Justice F.D. Regalado as follows: 12
"1. The term 'final order' is used in two senses depending on whether it is used on the issue
of appealability or on the issue of binding effect. For purposes of appeal, an order is "final"
if it disposes of the action, as distinguished from an interlocutory order which leaves
something to be done in the trial court with respect to the merits of the case (De la Cruz, et
al. vs. Paras, et al., L-41053, Feb. 27, 1976). For purposes of binding effect or whether it
can be subject of execution, an order is 'final' or executory after the lapse of the
reglementary period to appeal and no appeal has been perfected (see Perez, et al. vs.
Zulueta, L-10374, Sept. 30, 1959; cf. Denso [Phil.], Inc. vs. IAC, et al., G.R. No. 75000,
Feb. 27, 1987; Montilla vs. CA, et al., L-47968, May 9, 1988).
2. On the aspect of appealability, these revised Rules use the adjective 'final' with respect to
orders and resolutions, since to terminate a case the trial courts issue orders while the
appellate courts and most of the quasi-judicial agencies issue resolutions. Judgment are not
so qualified since the use of the so-called interlocutory judgments is not favored in this
jurisdiction, while the categorization of an order or a resolution for purposes of denoting
that it is appealable is to distinguish them from interlocutory orders or resolutions.
However, by force of extended usage the phrase 'final and executory judgment' is
sometimes used and tolerated, although the use of 'executory' alone would suffice. These
observations also apply to the several and separate judgments contemplated in Rule 36, or
partial judgments which totally dispose of a particular claim or severable part of the case,
subject to the power of the court to suspend or defer action on an appeal from or further
proceedings in such special judgment, or as provided by Rule 35 on the matter of partial
summary judgments which are not considered as appealable (see Sec. 4, Rule 35 and the
explanation therein).
The second paragraph of this section is an innovation in response to complaints over the
delay caused by the former procedure in obtaining a writ of execution of a judgment, which
has already been affirmed on appeal, with notice to the parties. As things then stood, after
the entry of judgment in the appellate court, the prevailing party had to wait for the records
of the case to be remanded to the court of origin when and where he could then move for
the issuance of a writ of execution. The intervening time could sometimes be substantial,
especially if the court a quo is in a remote province, and could also be availed of by the
losing party to delay or thwart actual execution.
On these considerations, the Supreme Court issued Circular No. 24-94, dated April 18,
1994, approving and promulgating in advance this amended Section 1 of Rule 39 and
declaring the same effective as of June 1, 1994.
Page 5 of 169
Under the present procedure, the prevailing party can secure certified true copies of the
judgment or final order of the appellate court and the entry thereof, and submit the same to
the court of origin with and to justify his motion for a writ of execution, without waiting for
its receipt of the records from the appellate court. That motion must be with notice to the
adverse party, with a hearing when the circumstances so require, to enable him to file any
objection thereto or bring to the attention of said court matters which may have transpired
during the pendency of the appeal and which may have a bearing on the execution sought
to enforce the judgment.
The third paragraph of this section, likewise a new provision, is due to the experience of the
appellate courts wherein the trial court, for reasons of its own or other unjustifiable
circumstances, unduly delays or unreasonably refuses to act on the motion for execution or
issue the writ therefor. On motion in the same case while the records are still with the
appellate court, or even after the same have been remanded to the lower court, the appellate
court can direct the issuance of the writ of execution since such act is merely in the
enforcement of its judgment and which it has the power to require."
It is evident that if we apply the old rule on finality of judgment, petitioner redeemed the
subject property within the 120-day period of redemption reckoned from the appellate
court's entry of judgment. The appellate court, however, did not apply the old rule but the
1997 Revised Rules of Civil Procedure. In fine, it applied the new rule retroactively and we
hold that given the facts of the case at bar this is an error.
There is no dispute that rules of procedure can be given retroactive effect. This general
rule, however, has well-delineated exceptions. We quote author Agpalo:13
"9.17. Procedural laws.
Procedural laws are adjective laws which prescribe rules and forms of procedure of
enforcing rights or obtaining redress for their invasion; they refer to rules of procedure by
which courts applying laws of all kinds can properly administer justice. They include rules
of pleadings, practice and evidence. As applied to criminal law, they provide or regulate the
steps by which one who commits a crime is to be punished.
The general rule that statutes are prospective and not retroactive does not ordinarily apply
to procedural laws. It has been held that "a retroactive law, in a legal sense, is one which
takes away or impairs vested rights acquired under laws, or creates a new obligation and
imposes a new duty, or attaches a new disability, in respect of transactions or
considerations already past. Hence, remedial statutes or statutes relating to remedies or
modes of procedure, which do not create new or take away vested rights, but only operate
in furtherance of the remedy or confirmation of rights already existing, do not come within
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
the legal conception of a retroactive law, or the general rule against the retroactive
operation of statutes." The general rule against giving statutes retroactive operation whose
effect is to impair the obligations of contract or to disturb vested rights does not prevent the
application of statutes to proceedings pending at the time of their enactment where they
neither create new nor take away vested rights. A new statute which deals with procedure
only is presumptively applicable to all actions - those which have accrued or are pending.
Statutes regulating the procedure of the courts will be construed as applicable to actions
pending and undetermined at the time of their passage. Procedural laws are retroactive in
that sense and to that extent. The fact that procedural statutes may somehow affect the
litigants' rights may not preclude their retroactive application to pending actions. The
retroactive application of procedural laws is not violative of any right of a person who may
feel that he is adversely affected. Nor is the retroactive application of procedural statutes
constitutionally objectionable. The reason is that as a general rule no vested right may
attach to, nor arise from, procedural laws. It has been held that "a person has no vested
right in any particular remedy, and a litigant cannot insist on the application to the trial of
his case, whether civil or criminal, of any other than the existing rules of procedure."
Thus, the provision of Batas Bilang 129 in Section 39 thereof prescribing that "no record
on appeal shall be required to take an appeal" is procedural in nature and should therefore
be applied retroactively to pending actions. Hence, the question as to whether an appeal
from an adverse judgment should be dismissed for failure of appellant to file a record on
appeal within thirty days as required under the old rules, which question is pending
resolution at the time Batas Bilang 129 took effect, became academic upon the effectivity
of said law because the law no longer requires the filing of a record on appeal and its
retroactive application removed the legal obstacle to giving due course to the appeal. A
statute which transfers the jurisdiction to try certain cases from a court to a quasi-judicial
tribunal is a remedial statute that is applicable to claims that accrued before its enactment
but formulated and filed after it took effect, for it does not create new nor take away vested
rights. The court that has jurisdiction over a claim at the time it accrued cannot validly try
the claim where at the time the claim is formulated and filed the jurisdiction to try it has
been transferred by law to a quasi-judicial tribunal, for even actions pending in one court
may be validly taken away and transferred to another and no litigant can acquire a vested
right to be heard by one particular court.
9.18. Exceptions to the rule.
The rule that procedural laws are applicable to pending actions or proceedings admits
certain exceptions. The rule does not apply where the statute itself expressly or by
necessary implication provides that pending actions are excepted from its operation, or
where to apply it to pending proceedings would impair vested rights. Under appropriate
circumstances, courts may deny the retroactive application of procedural laws in the event
Page 6 of 169
that to do so would not be feasible or would work injustice. Nor may procedural laws be
applied retroactively to pending actions if to do so would involve intricate problems of due
process or impair the independence of the courts."
We hold that section 1, Rule 39 of the 1997 Revised Rules of Procedure should not be
given retroactive effect in this case as it would result in great injustice to the petitioner.
Undoubtedly, petitioner has the right to redeem the subject lot and this right is a substantive
right. Petitioner followed the procedural rule then existing as well as the decisions of this
Court governing the reckoning date of the period of redemption when he redeemed the
subject lot. Unfortunately for petitioner, the rule was changed by the 1997 Revised Rules of
Procedure which if applied retroactively would result in his losing the right to redeem the
subject lot. It is difficult to reconcile the retroactive application of this procedural rule with
the rule of fairness. Petitioner cannot be penalized with the loss of the subject lot when he
faithfully followed the laws and the rule on the period of redemption when he made the
redemption. The subject lot may only be 34,829 square meters but as petitioner claims, "it
is the only property left behind by their father, a private law practitioner who was felled by
an assassin's bullet."14
Petitioner fought to recover this lot from 1988. To lose it because of a change of procedure
on the date of reckoning of the period of redemption is inequitous. The manner of
exercising the right cannot be changed and the change applied retroactively if to do so will
defeat the right of redemption of the petitioner which is already vested.
IN VIEW WHEREOF, the decision of the Court of Appeals dated July 15, 1998 and its
Resolution dated November 9, 1998 in CA-G.R. SP-41738 are annulled and set aside. The
Orders dated June 10, 1996 and July 24, 1996 of the RTC of Davao City, 11 th Judicial
Region, Branch 11, in Civil Case No. 19049-88 are reinstated. No costs.
SO ORDERED.
Davide, Jr., C.J., Kapunan, Pardo, and Ynares-Santiago, JJ., concur.
SECOND DIVISION
G.R. No. 188051 : November 22, 2010
ASIA UNITED BANK, Petitioner, v. GOODLAND COMPANY, INC., Respondent.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
DECISION
NACHURA, J.:
Petitioner assails the February 16, 2009 Decisioncralaw1 and the May 18, 2009
Resolutioncralaw2 of the Court of Appeals (CA) in CA-G.R. SP No. 103304, annulling the
August 23, 2007cralaw3 and February 15, 2008cralaw4 Orders of the Regional Trial Court
(RTC) of Makati City, Branch 150, which in turn denied due course to respondent
Goodland Company, Inc.'s (GOODLAND) notice of appeal for invalid substitution of
counsel.
The antecedents:
An Ex-Parte Application/Petition for the Issuance of Writ of Possessioncralaw5 was filed
by Asia United Bank (AUB) over a 5,801-square- meter lot located in Makati City and
covered by Transfer Certificate of Title (TCT) No. 223120 of the Registry of Deeds of
Makati in AUB's name. The property was previously registered in the name of
GOODLAND under TCT No. 192674 (114645).
The petition alleged that, on February 20, 2000, GOODLAND executed a Third Party Real
Estate Mortgage on the property in favor of AUB to secure the P202 million credit
accommodation extended by the latter to Radiomarine Network (Smartnet) Inc.
(Radiomarine).
When Radiomarine defaulted in the payment of its obligation, AUB instituted extrajudicial
foreclosure proceedings against the real estate mortgage. At the public auction sale held on
December 4, 2006, AUB was declared the highest bidder. On the same date, a Certificate of
Sale was issued in its name and registered with the Registry of Deeds of Makati City.
With the expiration of the redemption period, AUB proceeded to execute an Affidavit of
Consolidation of Ownership, through its First Vice-President, Florante del Mundo. AUB
thereafter secured a Certificate Authorizing Registration from the Bureau of Internal
Revenue to facilitate the transfer of the title.
On December 8, 2006, TCT No. 192674 (114645) was cancelled and, in lieu thereof, TCT
No. 223120 was issued in the name of AUB.
GOODLAND, through its counsel, Atty. Antonio Bautista (Atty. Bautista), opposed the
petition, denying that it executed the real estate mortgage. GOODLAND further averred
that the signature of the notary public appearing on the deed was a forgery, and that no
Page 7 of 169
technical description of the property supposedly mortgaged was indicated therein.
Concluding that AUB's title was derived from the foreclosure of a fake mortgage,
GOODLAND prayed for the petition's denial.cralaw6
On March 1, 2007, the RTC issued the writ of possession sought by AUB. It ratiocinated
that, as the purchaser of the property at the foreclosure sale and as the new title holder
thereof, AUB's right of possession and enjoyment of the same had become absolute.cralaw7
GOODLAND, through its counsel on record, Atty. Bautista, filed a motion for
reconsiderationcralaw8 and a supplemental motion for reconsideration,cralaw9 but both
were denied in the Ordercralaw10 dated April 25, 2007, which was received by Atty.
Bautista on June 15, 2007.cralaw11
Relentless, GOODLAND sought recourse with the CA by initially filing a Notice of
Appealcralaw12 with the RTC, through a certain Atty. Lito Mondragon (Atty. Mondragon)
of the Mondragon & Montoya Law Offices. On August 23, 2007, the RTC issued an
Ordercralaw13 denying due course to GOODLAND's notice of appeal for being legally
inutile due to Atty. Mondragon's failure to properly effect the substitution of former
counsel on record, Atty. Bautista. GOODLAND moved for reconsideration, but the same
was denied in the Order dated February 15, 2008.cralaw14
GOODLAND elevated the incident to the CA by way of a special civil acton for certiorari.
In its February 16, 2009 Decision, the CA granted the petition and directed the RTC to give
due course to the notice of appeal, thus:
WHEREFORE, the petition is hereby GRANTED. The assailed Orders dated August 23,
2007 and February 15, 2008 of the Regional Trial Court, Branch 150, Makati City are
ANNULLED and SET ASIDE. The trial court is DIRECTED to give due course to
petitioner's Notice of Appeal.
SO ORDERED.cralaw15
Aggrieved, AUB moved for reconsideration, but the CA denied the motion in its
Resolution dated May 18, 2009. Hence, the present petition for review
on certiorari, cralaw16 praying for the reinstatement of the RTC Order.
The petition is meritorious.
Under Rule 138, Section 26 of the Rules of Court, for a substitution of attorney to be
effectual, the following essential requisites must concur: (1) there must be a written
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
application for substitution; (2) it must be filed with the written consent of the client; (3) it
must be with the written consent of the attorney substituted; and (4) in case the consent of
the attorney to be substituted cannot be obtained, there must at least be proof of notice that
the motion for substitution was served on him in the manner prescribed by the Rules of
Court. cralaw17
The courts a quo were uniform and correct in finding that Atty. Mondragon failed to
observe the prescribed procedure and, thus, no valid substitution of counsel was actualized.
However, they took divergent postures as to the repercussion of such non-compliance,
thereby igniting the herein controversy.
The RTC strictly imposed the rule on substitution of counsel and held that the notice of
appeal filed by Atty. Mondragon was a mere scrap of paper.
However, relying on our pronouncement in Land Bank of the Philippines v. Pamintuan
Development Co., cralaw18 the CA brushed aside the procedural lapse and took a liberal
stance on considerations of substantial justice, viz.:
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 of 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, substantial justice would be better served by giving due course
to petitioner's notice of appeal.cralaw19
AUB argues that the liberality applied by the Court in Land Bank is incompatible with the
herein controversy, and that Pioneer Insurance and Surety Corporation v. De Dios
Transportation Co., Inc., cralaw20 which espouses the same view adopted by the
RTC,ismore appropriate.
GOODLAND, on the other hand, insists that the CA committed no reversible error in
ordering that the notice of appeal be allowed in order not to frustrate the ends of substantial
justice.
We agree with AUB. A revisit of our pronouncements in Land Bank and Pioneer is in
order.
In Land Bank, we held that the Department of Agrarian Reform Adjudication Board
gravely abused its discretion when it denied due course to the Notice of Appeal and Notice
Page 8 of 169
of Entry of Appearance filed by petitioner's new counsel for failure to effect a valid
substitution of the former counsel on record.
We clarified that the new counsel never intended to replace the counsel of record because,
although not so specified in the notice, they entered their appearance as collaborating
counsel. Absent a formal notice of substitution, all lawyers who appear before the court or
file pleadings in behalf of a client are considered counsel of the latter. We pursued a liberal
application of the rule in order not to frustrate the just, speedy, and inexpensive
determination of the controversy.
In Pioneer, we adopted a strict posture and declared the notice of withdrawal of appeal
filed by appellant's new counsel as a mere scrap of paper for his failure to file beforehand a
motion for the substitution of the counsel on record.
Provoking such deportment was the absence of a special power of attorney authorizing the
withdrawal of the appeal in addition to the lack of a proper substitution of counsel. More
importantly, we found that the withdrawal of the appeal was calculated to frustrate the
satisfaction of the judgment debt rendered against appellant, thereby necessitating a rigid
application of the rules in order to deter appellant from benefiting from its own deleterious
manipulation thereof.
The emerging trend of jurisprudence is more inclined to the liberal and flexible application
of the Rules of Court. However, we have not been remiss in reminding the bench and the
bar that zealous compliance with the rules is still the general course of action. Rules of
procedure are in place to ensure the orderly, just, and speedy dispensation of
cases;cralaw21 to this end, inflexibility or liberality must be weighed. The relaxation or
suspension of procedural rules or the exemption of a case from their operation is warranted
only by compelling reasons or when the purpose of justice requires it.cralaw22
As early as 1998, in Hon. Fortich v. Hon. Corona,cralaw23 we expounded on these guiding
principles:
Procedural rules, we must stress, should be treated with utmost respect and due regard since
they are designed to facilitate the adjudication of cases to remedy the worsening problem of
delay in the resolution of rival claims and in the administration of justice. The requirement
is in pursuance to the bill of rights inscribed in the Constitution which guarantees that 'all
persons shall have a right to the speedy disposition of their cases before all judicial, quasi-
judicial and administrative bodies.' The adjudicatory bodies and the parties to a case are
thus enjoined to abide strictly by the rules. While it is true that a litigation is not a game of
technicalities, it is equally true that every case must be prosecuted in accordance with the
prescribed procedure to ensure an orderly and speedy administration of justice. There have
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
been some instances wherein this Court allowed a relaxation in the application of the rules,
but this flexibility was 'never intended to forge a bastion for erring litigants to violate the
rules with impunity.' A liberal interpretation and application of the rules of procedure can
be resorted to only in proper cases and under justifiable causes and circumstances.
In Sebastian v. Hon. Morales, cralaw24 we straightened out the misconception that the
enforcement of procedural rules should never be permitted if it would prejudice the
substantive rights of litigants:
Under Rule 1, Section 6 of the 1997 Rules of Civil Procedure, liberal construction of the
rules is the controlling principle to effect substantial justice. Thus, litigations should, as
much as possible, be decided on their merits and not on technicalities. This does not mean,
however, that procedural rules are to be ignored or disdained at will to suit the convenience
of a party. Procedural law has its own rationale in the orderly administration of justice,
namely, to ensure the effective enforcement of substantive rights by providing for a system
that obviates arbitrariness, caprice, despotism, or whimsicality in the settlement of disputes.
Hence, it is a mistake to suppose that substantive law and procedural law are contradictory
to each other, or as often suggested, that enforcement of procedural rules should never be
permitted if it would result in prejudice to the substantive rights of the litigants.
x x x. Hence, rules of procedure must be faithfully followed except only when for
persuasive reasons, they may be relaxed to relieve a litigant of an injustice not
commensurate with his failure to comply with the prescribed procedure. x x x.
Indeed, the primordial policy is a faithful observance of the Rules of Court, and their
relaxation or suspension should only be for persuasive reasons and only in meritorious
cases, to relieve a litigant of an injustice not commensurate with the degree of his
thoughtlessness in not complying with the procedure prescribed.cralaw25 Further, a bare
invocation of 'the interest of substantial justice' will not suffice to override a stringent
implementation of the rules.cralaw26
A reading of the CA's Decision readily shows that the leniency it granted GOODLAND
was merely anchored on substantial justice. The CA overlooked GOODLAND's failure to
advance meritorious reasons to support its plea for the relaxation of Rule 138, Section 26.
The fact that GOODLAND stands to lose a valuable property is inadequate to dispense
with the exacting imposition of a rather basic rule.
More importantly, the CA failed to realize that the ultimate consequences that will come
about should GOODLAND's appeal proceed would in fact contravene substantial justice.
The CA and, eventually, this Court will just re-litigate an otherwise non-litigious matter
Page 9 of 169
and thereby compound the delay GOODLAND attempts to perpetrate in order to prevent
AUB from rightfully taking possession of the property.
It is a time-honored legal precept that after the consolidation of titles in the buyer's name,
for failure of the mortgagor to redeem, entitlement to a writ of possession becomes a matter
of right.cralaw27 As the confirmed owner, the purchaser's right to possession becomes
absolute.cralaw28 There is even no need for him to post a bond,cralaw29 and it is the
ministerial duty of the courts to issue the same upon proper application and proof of
title.cralaw30 To accentuate the writ's ministerial character, the Court has consistently
disallowed injunction to prohibit its issuance despite a pending action for annulment of
mortgage or the foreclosure itself.cralaw31
The nature of an ex parte petition for issuance of the possessory writ under Act No. 3135
has been described as a non-litigious proceeding and summary in nature.cralaw32 As an ex
parte proceeding, it is brought for the benefit of one party only, and without notice to or
consent by any person adversely interested.cralaw33
Subsequent proceedings in the appellate courts would merely involve a reiteration of the
foregoing settled doctrines. The issue involved in the assailed RTC issuances is
conclusively determined by the above cited legal dictum, and it would be unnecessarily
vexatious and unjust to allow the present controversy to undergo protracted litigation.
AUB's right of possession is founded on its right of ownership over the property which it
purchased at the auction sale. Upon expiration of the redemption period and consolidation
of the title to the property, its possessory rights over the same became absolute. We quote
with approval the pronouncement of the RTC, viz.:
As the purchaser of the property in the foreclosure sale to which new title has already been
issued, petitioner's right over the property has become absolute, vesting upon it the right of
possession and enjoyment of the property which this Court must aid in effecting its
delivery. Under the circumstances, and following established doctrine, the issuance of a
writ of possession is a ministerial function whereby the court exercises neither discretion
nor judgment x x x. Said writ of possession must be enforced without delay x x x.cralaw 34
The law does not require that a petition for a writ of possession be granted only after
documentary and testimonial evidence shall have been offered to and admitted by the
court.cralaw35 As long as a verified petition states the facts sufficient to entitle petitioner to
the relief requested, the court shall issue the writ prayed for.cralaw36
Given the foregoing, we are bound to deny a liberal application of the rules on substitution
of counsel and resolve definitively that GOODLAND's notice of appeal merits a denial, for
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
the failure of Atty. Mondragon to effect a valid substitution of the counsel on record.
Substantial justice would be better served if the notice of appeal is disallowed. In the same
way that the appellant in Pioneer was not permitted to profit from its own manipulation of
the rules on substitution of counsel, so too can GOODLAND be not tolerated to foster
vexatious delay by allowing its notice of appeal to carry on.
WHEREFORE, premises considered, the petition is GRANTED. The February 16, 2009
Decision and the May 18, 2009 Resolution of the Court of Appeals are
hereby ANNULLED and SET ASIDE; and the August 23, 2007 and February 15, 2008
Orders of the Regional Trial Court of Makati City, Branch 150, are REINSTATED.
SO ORDERED.
G.R. No. 201601 March 12, 2014
MARYLOU CABRERA, Petitioner,
vs.
FELIX NG, Respondent.
DECISION
REYES, J.:
Before this Court is a petition for review on certiorari1 under Rule 45 of the Rules of Court
seeking to annul and set aside the Decision2 dated October 21, 2009 and the
Resolution3 dated March 26, 2012 of the Court of Appeals (CA) in CA-G.R. SP No. 03392.
The CA denied the petition for certiorari filed by Marylou Cabrera (petitioner), which
assailed the Order4 dated December 19, 2007 of the Regional Trial Court (RTC) of
Mandaue City, Branch 56, in Civil Case No. MAN-4773.
The Facts
On February 14, 2004, Felix Ng (respondent) filed a complaint for sum of money with the
RTC against the petitioner and her husband Marionilo Cabrera (spouses Cabrera), alleging
that the latter issued to him the following: (1) Metrobank Check No. 0244694 dated June
30, 2002 for the amount of Thirty-One Thousand Pesos (₱31,000.00); (2) Metrobank
Check No. 0244674 dated August 9, 2002 for the amount of Thirty-Eight Thousand
Seventy-Four Pesos and Seventy-Six Centavos (₱38,074.76); and (3) Metrobank Check
No. 0244745 dated August 15, 2005 for Two Million Five Hundred Thousand Pesos
Page 10 of 169
(₱2,500,000.00). That when presented for payment, the said checks were all dishonored as
the accounts from which they had been drawn were already closed.
The spouses Cabrera admitted that they issued Metrobank Check No. 0244694 and
Metrobank Check No. 0244674 to the respondent and that the same were dishonored when
presented for payment. However, they claimed that they paid the respondent the amount
represented by the said checks through the latter’s son Richard Ng. Further, they deny
having issued Metrobank Check No. 0244745 to the respondent, alleging that the said
check was forcibly taken from them by Richard Ng.
On August 7, 2007, the RTC rendered a Decision,5 which ordered the spouses Cabrera to
pay the respondent the following: (1) Two Million Five Hundred Sixty-Nine Thousand
Seventy-Four Pesos (₱2,569,074.00) plus legal interest from inception of the obligation
until fully paid; (2) moral damages in the amount of Fifty Thousand Pesos (₱50,000.00);
(3) attorney’s fees of Twenty Thousand Pesos (₱20,000.00); and (4) litigation expenses in
the amount of Ten Thousand Pesos (₱10,000.00).
On August 8, 2007, the spouses Cabrera received a copy of the RTC Decision dated August
7, 2007. On August 14, 2007, the spouses Cabrera filed with the RTC a motion for
reconsideration,6 which they set for hearing on August 17, 2007. On even date, the spouses
Cabrera sent a copy of their motion for reconsideration to the respondent thru registered
mail; it was actually received by the respondent on August 21, 2007.
The said motion for reconsideration, however, was not heard on August 17, 2007 as the
new acting presiding judge of the said court had just assumed office. On August 28, 2007,
the RTC issued a notice,7 which set the said motion for reconsideration for hearing on
September 25, 2007.
On September 20, 2007, the respondent filed an opposition 8 to the motion for
reconsideration filed by the spouses Cabrera. The respondent alleged that the said motion
for reconsideration is a mere scrap of paper since it violated the three-day notice
requirement. The respondent pointed out that the spouses Cabrera sent to him a copy of
their motion for reconsideration, which was set for hearing on August 17, 2007, via
registered mail on August 14, 2007; that he actually received a copy thereof only on August
21, 2007 – four days after the scheduled hearing thereon.
It appears that the scheduled hearing of the spouses Cabrera’s motion for reconsideration
on September 25, 2007 did not push through. Consequently, on September 26, 2007, the
RTC issued another notice,9 which set the said motion for reconsideration for hearing on
October 26, 2007.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
On October 26, 2007, the RTC issued an Order,10 which directed the parties to file their
additional pleadings, after which the motion for reconsideration filed by the spouses
Cabrera would be deemed submitted for resolution.
On December 19, 2007, the RTC issued an Order11 which denied the motion for
reconsideration filed by the spouses Cabrera. The RTC pointed out that the spouses Cabrera
violated Section 4, Rule 15 of the Rules of Court, which mandates that every motion
required to be heard should be served by the movant in such a manner as to ensure its
receipt by the other party at least three days before the date of hearing. Thus:
After a meticulous scrutiny of the records of this case, the court opines that the motion was
filed beyond the reglementary three (3)[-]day period.
As the records bear out, the instant motion was mailed to the plaintiff’s counsel on August
14[, 2007] and was set for hearing on August 17, 2007. However, the copy of said motion
had reached plaintiff’s side and a copy of which was received by plaintiff’s counsel only on
August 17, 2007[,] four (4) days late after it was supposed to be heard. Hence, a clear
blatant violations [sic] of the rule on notice and hearing.12
The RTC further opined that a motion, which fails to comply with the three-day notice
requirement is a mere scrap of paper; it is not entitled to judicial cognizance and would not
toll the running of the reglementary period for filing the requisite pleadings. Accordingly,
the RTC held, its Decision dated August 7, 2007 had already become final for failure of the
spouses Cabrera to comply with the three-day notice requirement.
The petitioner then filed a petition for certiorari13 with the CA, alleging that the RTC
gravely abused its discretion in denying her motion for reconsideration. The petitioner
pointed out that the RTC did not actually conduct a hearing on her motion for
reconsideration on August 17, 2007;
that her motion for reconsideration was actually heard on October 26, 2007, after the
respondent had already filed his opposition thereto. Thus, the petitioner claimed, the issue
of her failure to comply with the three-day notice requirement had already been rendered
moot. In any case, the petitioner asserted, the RTC should have resolved her motion for
reconsideration on its merits rather than simply denying it on mere technicality.
On October 21, 2009, the CA, by way of the assailed Decision, 14 denied the petition for
certiorari filed by the petitioner. The CA opined that the RTC did not abuse its discretion in
denying the motion for reconsideration filed by the spouses Cabrera since it merely applied
the three-day notice requirement under Section 4, Rule 15 of the Rules of Court. Thus:
Page 11 of 169
It appears that petitioner’s Motion for Reconsideration was set for hearing on 17 August
2007. A copy thereof was mailed to private respondent on 14 August 2007, and private
respondent actually received his copy only on 21 August 2007 or four (4) days after the set
date of hearing; and thus, depriving him of the opportunity to oppose the motion.
Respondent court, therefore, correctly held that such motion violated the three (3)-day
notice rule; the essence of due process. Respondent court had applied said rule to the given
situation, and of no doubt, mere adherence to the rules cannot be considered grave abuse of
discretion on the part of the respondent court. x x x. 15 (Citation omitted)
The petitioner sought a reconsideration of the Decision dated October 21, 2009 but it was
denied by the CA in its Resolution16 dated March 26, 2012.
Hence, the instant petition.
The Issue
The sole issue to be resolved by the Court is whether the CA erred in affirming the RTC
Order dated December 19, 2007, which denied the motion for reconsideration filed by the
spouses Cabrera.
The Court’s Ruling
The petition is meritorious.
Sections 4 and 5, Rule 15 of the Rules of Court provide that:
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. (Emphasis ours)
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
The general rule is that the three-day notice requirement in motions under Sections 4 and 5
of the Rules of Court is mandatory. It is an integral component of procedural due
process.17 "The purpose of the three-day notice requirement, which was established not for
the benefit of the movant but rather for the adverse party, is to avoid surprises upon the
latter and to grant it sufficient time to study the motion and to enable it to meet the
arguments interposed therein."18
"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."19 "Being a fatal defect, in cases of
motions to reconsider a decision, the running of the period to appeal is not tolled by their
filing or pendency."20
Nevertheless, the three-day notice requirement is not a hard and fast rule. When the adverse
party had been afforded the opportunity to be heard, and has been indeed heard through the
pleadings filed in opposition to the motion, the purpose behind the three-day notice
requirement is deemed realized. In such case, the requirements of procedural due process
are substantially complied with. Thus, in Preysler, Jr. v. Manila Southcoast Development
Corporation,21 the Court ruled that:
The three-day notice rule is not absolute. A liberal construction of the procedural rules is
proper where the lapse in the literal observance of a rule of procedure has not prejudiced
the adverse party and has not deprived the court of its authority. Indeed, Section 6, Rule 1
of the Rules of Court provides that the Rules should be liberally construed in order to
promote their objective of securing a just, speedy and inexpensive disposition of every
action and proceeding. Rules of procedure are tools designed to facilitate the attainment of
justice, and courts must avoid their strict and rigid application which would result in
technicalities that tend to frustrate rather than promote substantial justice.
In Somera Vda. De Navarro v. Navarro, the Court held that there was substantial
compliance of the rule on notice of motions even if the first notice was irregular because no
prejudice was caused the adverse party since the motion was not considered and resolved
until after several postponements of which the parties were duly notified.
Likewise, in Jehan Shipping Corporation v. National Food Authority, the Court held that
despite the lack of notice of hearing in a Motion for Reconsideration, there was substantial
compliance with the requirements of due process where the adverse party actually had the
opportunity to be heard and had filed pleadings in opposition to the motion. The Court
held:
Page 12 of 169
This Court has indeed held time and again, that under Sections 4 and 5 of Rule 15 of the
Rules of Court, mandatory is the requirement in a motion, which is rendered defective by
failure to comply with the requirement. As a rule, a motion without a notice of hearing is
considered pro forma and does not affect the reglementary period for the appeal or the
filing of the requisite pleading.
As an integral component of the 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 of the
court.1âwphi1 Principles of natural justice demand that the right of a party should not be
affected without giving it an opportunity to be heard.
The test is the presence of 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. x x x22
(Emphasis supplied and citations omitted)
It is undisputed that the hearing on the motion for reconsideration filed by the spouses
Cabrera was reset by the RTC twice with due notice to the parties; it was only on October
26, 2007 that the motion was actually heard by the RTC. At that time, more than two
months had passed since the respondent received a copy of the said motion for
reconsideration on August 21, 2007. The respondent was thus given sufficient time to study
the motion and to enable him to meet the arguments interposed therein. Indeed, the
respondent was able to file his opposition thereto on September 20, 2007.
Notwithstanding that the respondent received a copy of the said motion for reconsideration
four days after the date set by the spouses Cabrera for the hearing thereof, his right to due
process was not impinged as he was afforded the chance to argue his position. Thus, the R
TC erred in denying the spouses Cabrera's motion for reconsideration based merely on their
failure to comply with the three-day notice requirement.
WHEREFORE, in consideration of the foregoing disquisitions, the instant petition is
GRANTED. The Decision dated October 21, 2009 and the Resolution dated March 26,
2012 of the Court of Appeals in CA-G.R. SP No. 03392, are hereby REVERSED and SET
ASIDE. The case is hereby REMANDED to the Regional Trial Court of Mandaue City,
Branch 56, to resolve the Motion for Reconsideration filed by the spouses Cabrera on the
merits within five (5) days from the finality of this Decision.
SO ORDERED.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
SECOND DIVISION
G.R. No. 141116. February 17, 2003
DAMASOSEBASTIANand TOMASA CARDENAS, Petitioners, v. HON. HORACIO R.
MORALES, Secretary of the Department of Agrarian Reform, LEONILA SARENAS[1,
JOSEPHINE SARENAS-DAYRIT, EVANGELINE SARENAS, ESTRELITA SARENAS
TAN, CECILIO MARCOS SARENAS, MANUEL DEL SARENAS, DAISY RITA
SARENAS, and JOY SARENAS, respondents.
DECISION
QUISUMBING, J.:
On appeal by certiorari is the decision2 of the Court of Appeals dated March 9, 1999 in
CA-G.R. SP No. 51288, which dismissed petitioners special civil action for certiorari and
prohibition on the ground that petitioners pursued the wrong mode of appeal. Equally
assailed is the resolution3 of the appellate court dated December 10, 1999, which denied
petitioners motion for reconsideration.
The facts, as gleaned from the record, are as follows:
Private respondents Leonila Sarenas, Josephine Sarenas-Dayrit, Evangeline Sarenas,
Estrellita Sarenas Tan, Cecilio Marcos Sarenas, Manuel Gil Sarenas, Daisy Rita Sarenas,
and Joy Sarenas are the heirs of the late Guillermo Sarenas, who died intestate on June 27,
1986. During his lifetime, Guillermo owned the following agricultural landholdings, all
located in Samon and Mayapyap Sur, Cabanatuan City:
1. Agricultural lot with an area of 1.6947 hectares covered by TCT No. NT-
8607 and tenanted by Juanito Gonzales;
2. Agricultural lot with an area of 3.1663 hectares covered by TCT No. NT-
8608, with petitioner Damaso Sebastian as the tenant; and
3. Agricultural lot with an area of 2.2723 hectares registered under TCT No.
NT-8609, with Perfecto Mana as the tenant.
In addition to the foregoing properties, Guillermo was also the registered owner of a parcel
of agricultural land located at San Ricardo, Talavera, Nueva Ecija, with a total area of
Page 13 of 169
4.9993 hectares, under TCT No. NT-143564. This property was, in turn, tenanted by
Manuel Valentin and Wenceslao Peneyra.
The tenants tilling the farm lots covered by TCT Nos. NT-8607, 8608, and 8609 had
already been issued emancipation patents pursuant to P.D. No. 27. 4cräläwvirtualibräry
On July 14, 1993, private respondents filed an application with the Department of Agrarian
Reform (DAR) Regional Office in San Fernando, Pampanga, docketed as No. A-0303-
1219-96, for retention of over five hectares of the late Guillermos landholdings. Among the
lots which private respondents sought to retain under Section 6 of the Comprehensive
Agrarian Reform Law (R.A. No. 6657)5 were those covered by TCT Nos. NT-8608 and
8609.
On June 6, 1997, the DAR Regional Office in San Fernando, Pampanga granted private
respondents application, thus:
WHEREFORE, premises considered, an ORDER is hereby issued:
1. GRANTING the Application for Retention of not more than five (5) hectares
of the Heirs of the late Guillermo Sarenas on their agricultural
landholdings covered by TCT Nos. NT-TCT-8608 and TCT-8609 situated
at Samon and Mayapyap Sur, Cabanatuan City, and which area must be
compact and contiguous and least prejudicial to the entire landholdings and
majority of the farmers therein;
2. DIRECTING the Heirs of the late Guillermo Sarenas o[r] their duly
authorized representative to coordinate with the MARO concerned for the
segregation of their retained area at their own expense and to submit a copy
of the segregation plan within thirty (30) days from approval thereof;
3. MAINTAINING the tenants in the retained areas as lessees thereof pursuant
to RA 3844 as amended; and
4. ACQUIRING the other agricultural landholdings in excess of the retained
area, and to distribute the same to identified qualified farmer-beneficiaries
pursuant to RA 6657.
SO ORDERED.6cräläwvirtualibräry
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
On June 16, 1997, petitioner Sebastian moved for reconsideration of the foregoing order
before the DAR Regional Director, Region III, which docketed the case as A.R. Case No.
LSD 1083-97. The DAR Regional Director found that the order dated June 6, 1997 in
Docket No. A-0303-1219-96 was contrary to law for violating Section 6 of RA No.
66577 and its Implementing Rules and Regulations. He then issued a new order dated
October 23, 1997, which instead allowed private respondents to retain a parcel of land with
an area of 4.9993 hectares, covered by TCT No. 143564, located at San Ricardo, Talavera,
Nueva Ecija.
Private respondents then appealed the order of October 23, 1997 to the DAR Secretary.
On June 18, 1998, the Secretary of Agrarian Reform set aside the order dated October 23,
1997, and in lieu thereof issued a new one the decretal portion of which reads:
WHEREFORE, premises considered, the 23 October 1997 Order of RD Herrera is hereby
SET ASIDE and a new one issued:
1. GRANTING the heirs of Guillermo Sarenas the right to retain 2.8032 has. of
the landholding covered by TCT No. 8608 located at Cabanatuan City;
2. AFFIRMING the validity of the coverage of the landholdings covered by
TCT Nos. 8607, 8609 and 143564 located at Cabanatuan City and
Talavera, Nueva Ecija respectively;
3. MAINTAINING the tenants affected in the retained area as leaseholders
thereof pursuant to RA 3844;
4. DIRECTING the MARO/PARO to determine the qualification status of the
FB whose respective tillage is embraced under TCT No. 8608, subject
of the pending controversy with the DARAB; and
5. DIRECTING the Heirs of the late Guillermo Sarenas or their duly
authorized representative to coordinate with the MARO concerned for
the segregation of their retained area at their own expense and to
submit a copy of the segregation plan within 30 days from approval
thereof.
SO ORDERED.8cräläwvirtualibräry
Page 14 of 169
Petitioner Sebastian then filed a motion for reconsideration, but this motion was denied by
the DAR Secretary in an order dated January 26, 1999, the dispositive portion of which
states:
WHEREFORE, premises considered, Order is hereby issued DENYING the instant Motion
for Reconsideration for utter lack of merit. Accordingly, as far as this Office is concerned,
this case is considered closed. Further, all persons, other than the recognized tenant-
farmers, are hereby ordered to cease and desist from further entering and undertaking any
activity on the subject landholdings.
SO ORDERED.9cräläwvirtualibräry
The Secretary also found that petitioners appeared to have waived their rights over the
tenanted land in favor of Clemente Bobares and Luzviminda Domingo-Villaroman, and had
allowed cultivation of the landholding by a certain Ricardo Dela Paz. He ruled that it was
unlawful/illegal to allow other persons than the tenant-farmers themselves to work on the
land except if they are only working as an aide of the latter otherwise, landowners shall
have the recourse against the tenant-farmers.10cräläwvirtualibräry
Consequently, on February 22, 1999, petitioners filed a special civil action for certiorari
and prohibition, with prayer for writ of preliminary mandatory injunction with the Court of
Appeals, docketed as CA-G.R. SP No. 51288.
On March 9, 1999, the Court of Appeals, without going into the merits of the case,
dismissed CA-G.R. SP No. 51288 after finding that petitioners pursued the wrong mode of
appeal.11 It found that the orders of the DAR Secretary sought to be reviewed were final
orders for they finally disposed of the agrarian case and left nothing more to be decided on
the merits. Hence, the proper remedy available to petitioners was a petition for review
pursuant to Rule 43, Section 1 of the 1997 Rules of Civil Procedure, 12 and not a special
civil action for certiorari under Rule 65. The Court of Appeals also ruled that petitioners
failed to attach a certified true copy or duplicate original of the assailed order of June 18,
1998 as required by Rule 46, Section 3,13 and hence, it had no alternative but to dismiss the
action pursuant to said Section 3.
Petitioners then timely moved for reconsideration, but the appellate court in its resolution
of December 10, 1999 denied their motion.
Hence, the instant case anchored on the following sole assigned error:
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR (A) IN NOT
TREATING THE PETITION FILED BY PETITIONERS AS A PETITION FOR
REVIEW; AND (B) IN NOT RESOLVING THE CASE ON THE
MERITS.14cräläwvirtualibräry
Petitioners submit that the sole issue before us is whether or not the dismissal by the Court
of Appeals of the petition in CA-G.R. SP No. 51288 is valid and proper.
Petitioners admit that there was error in the remedy resorted to before the Court of Appeals.
They insist, however, that a perusal of their initiatory pleading in CA-G.R. SP No. 51288
would show that said pleading contained all the features and contents for a petition for
review under Rule 43, Section 6 of the 1997 Rules of Civil Procedure.15 Hence, the court a
quo should have treated their special civil action for certiorari and prohibition under Rule
65 as a petition for review under Rule 43, since dismissals based on technicalities are
frowned upon. Petitioners contend that procedural rules are but a means to an end and
should be liberally construed to effect substantial justice.
Private respondents, on the other hand, claim that the Court of Appeals did not commit any
reversible error in dismissing the petition in CA-G.R. SP No. 51288, for it simply applied
the express and categorical mandate of this Court that a petition shall be dismissed if the
wrong remedy is availed of. Private respondents argue that while it is true that the Rules of
Court should be liberally construed, it is also equally true that the Rules cannot be ignored,
since strict observance thereof is indispensable to the orderly and speedy discharge of
judicial business.
Under Rule 1, Section 6 of the 1997 Rules of Civil Procedure, 16 liberal construction of the
rules is the controlling principle to effect substantial justice. Thus, litigations should, as
much as possible, be decided on their merits and not on technicalities. This does not mean,
however, that procedural rules are to be ignored or disdained at will to suit the convenience
of a party. Procedural law has its own rationale in the orderly administration of justice,
namely, to ensure the effective enforcement of substantive rights by providing for a system
that obviates arbitrariness, caprice, despotism, or whimsicality in the settlement of disputes.
Hence, it is a mistake to suppose that substantive law and procedural law are contradictory
to each other, or as often suggested, that enforcement of procedural rules should never be
permitted if it would result in prejudice to the substantive rights of the litigants.
Litigation is not a game of technicalities, but every case must be prosecuted in accordance
with the prescribed procedure so that issues may be properly presented and justly resolved.
Hence, rules of procedure must be faithfully followed except only when for persuasive
reasons, they may be relaxed to relieve a litigant of an injustice not commensurate with his
failure to comply with the prescribed procedure. Concomitant to a liberal application of the
Page 15 of 169
rules of procedure should be an effort on the part of the party invoking liberality to explain
his failure to abide by the rules.17cräläwvirtualibräry
In the instant case, petitioners failed to show any compelling reason for not resorting to the
proper remedy. Instead, we find from our perusal of their pleadings before the appellate
court that they stoutly and persistently insisted that the extraordinary remedy of certiorari
was their correct remedy. First, in instituting CA-G.R. SP No. 51288, petitioners
categorically invoked the jurisdiction of the Court of Appeals to have the questioned orders
of the DAR Secretary declared null and void for having been issued and promulgated with
grave abuse of discretion . . . a mounting to lack of jurisdiction.18 Note that it is precisely
the office of an action for certiorari under Rule 65 to correct errors of jurisdiction. Second,
after the appellate court dismissed their petition on the ground that the proper remedy was a
petition for review, petitioners continued to insist in their motion for reconsideration that
under Section 54 of R.A. No. 6657,19 a petition for certiorari is both adequate and proper in
CA-G.R. SP No. 51288. It was only as an afterthought that they asked the appellate court to
treat their special civil action for certiorari as a petition for review, after a belated and
grudging admission that their reliance on Section 54 of R.A. No. 6657 was an honest
mistake or excusable error.
We agree with the appellate court that petitioners reliance on Section 54 of R.A. No. 6657
is not merely a mistake in the designation of the mode of appeal, but clearly an erroneous
appeal from the assailed Orders.20 For in relying solely on Section 54, petitioners patently
ignored or conveniently overlooked Section 60 of R.A. No. 6657, the pertinent portion of
which provides that:
An appeal from the decision of the Court of Appeals, or from any order, ruling or decision
of the DAR, as the case may be, shall be by a petition for review with the Supreme Court,
within a non-extendible period of fifteen (15) days from receipt of a copy of said decision.
(Emphasis supplied.)
Section 60 of R.A. No. 6657 should be read in relation to R.A. No. 7902 expanding the
appellate jurisdiction of the Court of Appeals to include:
Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or
awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or
commissionsexcept those falling within the appellate jurisdiction of the Supreme Court in
accordance with the Constitution, the Labor Code of the Philippines under Presidential
Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the
third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary
Act of 1948.21cräläwvirtualibräry
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
With the enactment of R.A. No. 7902, this Court issued Circular 1-95 dated May 16, 1995
governing appeals from all quasi-judicial bodies to the Court of Appeals by petition for
review, regardless of the nature of the question raised. Said circular was incorporated in
Rule 43 of the 1997 Rules of Civil Procedure.
Section 61 of R.A. No. 665722 clearly mandates that judicial review of DAR orders or
decisions are governed by the Rules of Court. The Rules direct that it is Rule 43 that
governs the procedure for judicial review of decisions, orders, or resolutions of the DAR
Secretary. By pursuing a special civil action for certiorari under Rule 65 rather than the
mandatory petition for review under Rule 43, petitioners opted for the wrong mode of
appeal. Pursuant to the fourth paragraph of Supreme Court Circular No. 2-90,23 an appeal
taken to the Supreme Court or the Court of Appeals by the wrong or inappropriate mode
shall be dismissed. Therefore, we hold that the Court of Appeals committed no reversible
error in dismissing CA-G.R. SP No. 51288 for failure of petitioners to pursue the proper
mode of appeal.
But should the appellate court have treated the petition for the extraordinary writs of
certiorari and prohibition in CA-G.R. SP No. 51288 as a petition for review as petitioners
insist?
That a petition for certiorari under Rule 65 should pro forma satisfy the requirements for
the contents of a petition for review under Rule 43 does not necessarily mean that one is the
same as the other. Or that one may be treated as the other, for that matter. A petition for
review is a mode of appeal, while a special civil action for certiorari is an extraordinary
process for the correction of errors of jurisdiction. It is basic remedial law that the two
remedies are distinct, mutually exclusive,24 and antithetical. The extraordinary remedy of
certiorari is proper if the tribunal, board, or officer exercising judicial or quasi-judicial
functions acted without or in grave abuse of discretion amounting to lack or excess of
jurisdiction and there is no appeal or any plain, speedy, and adequate remedy in law. 25 A
petition for review, on the other hand, seeks to correct errors of judgment committed by the
court, tribunal, or officer. In the instant case, petitioners failed to show any grave abuse of
discretion amounting to want of jurisdiction on the part of the DAR Secretary. When a
court, tribunal, or officer has jurisdiction over the person and the subject matter of the
dispute, the decision on all other questions arising in the case is an exercise of that
jurisdiction. Consequently, all errors committed in the exercise of said jurisdiction are
merely errors of judgment. Under prevailing procedural rules and jurisprudence, errors of
judgment are not proper subjects of a special civil action for certiorari. 26 For if every error
committed by the trial court or quasi-judicial agency were to be the proper subject of
review by certiorari, then trial would never end and the dockets of appellate courts would
be clogged beyond measure. Hence, no error may be attributed to the appellate court in
refusing to grant petitioners request that their petition for certiorari under Rule 65 be treated
as a petition for review under Rule 43.
Page 16 of 169
As a final salvo, petitioners urge us to review the factual findings of the DAR Secretary.
Settled is the rule that factual questions are not the proper subject of an appeal by certiorari,
as a petition for review under Rule 45 is limited only to questions of law. 27 Moreover, it is
doctrine that the errors which may be reviewed by this Court in a petition for certiorari are
those of the Court of Appeals,28 and not directly those of the trial court or the quasi-judicial
agency, tribunal, or officer which rendered the decision in the first instance. Finally, it is
settled that factual findings of administrative agencies are generally accorded respect and
even finality by this Court, if such findings are supported by substantial evidence, 29 a
situation that obtains in this case. The factual findings of the Secretary of Agrarian Reform
who, by reason of his official position, has acquired expertise in specific matters within his
jurisdiction, deserve full respect and, without justifiable reason, ought not to be altered,
modified or reversed.
WHEREFORE, the instant petition is DENIED. The assailed decision of the Court of
Appeals in CA-G.R. SP No. 51288 dated March 4, 1999, as well as the resolution of the
appellate court dated December 10, 1999, is AFFIRMED. No pronouncement as to costs.
SO ORDERED.
FIRST DIVISION
[G.R. NO. 144568 : July 3, 2007]
GUILLERMA S. SABLAS, joined by her husband, PASCUAL
LUMANAS, Petitioners, v. ESTERLITA S. SABLAS and RODULFO S.
SABLAS, Respondents.
DECISION
CORONA, J.:
This case traces its roots to a complaint for judicial partition, inventory and accounting
filed by respondents Esterlita S. Sablas and Rodulfo S. Sablas against petitioner spouses
Pascual Lumanas and Guillerma S. Sablas in the Regional Trial Court of Baybay, Leyte,
Branch 141 on October 1, 1999.2
Petitioner spouses were served with summons and a copy of the complaint on October 6,
1999. On October 21, 1999, they filed a motion for extension of time requesting an
additional period of 15 days, or until November 5, 1999, to file their answer. However, they
were able to file it only on November 8, 1999. While the trial court observed that the
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
answer was filed out of time, it admitted the pleading because no motion to declare
petitioner spouses in default was filed.3
The following day, November 9, 1999, respondents filed a motion to declare petitioner
spouses in default.4 It was denied by the trial court in an order dated December 6,
1999.5 Respondents moved for reconsideration but it was also denied.6 Thereafter, they
challenged the December 6, 1999 order in the Court of Appeals in a petition
for certiorari 7 alleging that the admission of the answer by the trial court was contrary to
the rules of procedure and constituted grave abuse of discretion amounting to lack of
jurisdiction.
In a decision dated July 17, 2000,8 the appellate court ruled that the trial court committed
grave abuse of discretion because, pursuant to Section 3, Rule 9 of the Rules of Court, the
trial court had no recourse but to declare petitioner spouses in default when they failed to
file their answer on or before November 5, 1999. Thus, the Court of Appeals granted the
petition, vacated the December 6, 1999 order and remanded the case to the trial court for
reception of plaintiffs' evidence.
Aggrieved, petitioner spouses (defendants in the trial court) now assail the July 17, 2000
decision of the Court of Appeals in this Petition for Review on Certiorari .9
Petitioner spouses contend that the Court of Appeals decision was not in accord with the
rules of procedure as it misconstrued Section 3, Rule 9 of the Rules of Court and was in
contravention of jurisprudence.
We agree.
Where There Is No Motion, There
Can Be No Declaration of Default
The elements of a valid declaration of default are:
1. the court has validly acquired jurisdiction over the person of the defending party either
by service of summons or voluntary appearance;10
2. the defending party failed to file the answer within the time allowed therefor and
3. a motion to declare the defending party in default has been filed by the claiming party
with notice to the defending party.
Page 17 of 169
An order of default can be made only upon motion of the claiming party. 11 It can be
properly issued against the defending party who failed to file the answer within the
prescribed period only if the claiming party files a motion to that effect with notice to the
defending party.
In this connection, Section 3, Rule 9 of the Rules of Court provides:
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. x x x.
(emphasis supplied)
Three requirements must be complied with before the court can declare the defending party
in default: (1) the claiming party must file a motion asking the court to declare the
defending party in default; (2) the defending party must be notified of the motion to declare
him in default and (3) the claiming party must prove that the defending party has failed to
answer within the period provided by the Rules of Court.12
The rule on default requires the filing of a motion and notice of such motion to the
defending party. It is not enough that the defendant fails to answer the complaint within the
reglementary period.13 The trial court cannot motu proprio declare a defendant in
default14 as the rules leave it up to the claiming party to protect his or its interests. The trial
court should not under any circumstances act as counsel of the claiming party.
Where There Is No Declaration of Default, Answer May be Admitted Even If Filed
Out Of Time
It is within the sound discretion of the trial court to permit the defendant to file his answer
and to be heard on the merits even after the reglementary period for filing the answer
expires.15 The Rules of Court provides for discretion on the part of the trial court not only
to extend the time for filing an answer but also to allow an answer to be filed after the
reglementary period.16
Thus, the appellate court erred when it ruled that the trial court had no recourse but to
declare petitioner spouses in default when they failed to file their answer on or before
November 5, 1999.
The rule is that the defendant's answer should be admitted where it is filed before a
declaration of default and no prejudice is caused to the plaintiff. 17 Where the answer is filed
beyond the reglementary period but before the defendant is declared in default and there is
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
no showing that defendant intends to delay the case, the answer should be
admitted.18 chanrobles virtual law library
Therefore, the trial court correctly admitted the answer of petitioner spouses even if it was
filed out of time because, at the time of its filing, they were not yet declared in default nor
was a motion to declare them in default ever filed. Neither was there a showing that
petitioner spouses intended to delay the case.
Where Answer Has Been Filed, There can Be No Declaration of Default Anymore
Since the trial court already admitted the answer, it was correct in denying the subsequent
motion of respondents to declare petitioner spouses in default.
In Cathay Pacific Airways, Ltd. v. Hon. Romillo, Jr.,19 the Court ruled that it was error to
declare the defending party in default after the answer was filed. The Court was in fact
even more emphatic in Indiana Aerospace University v. Commission on Higher
Education:20 it was grave abuse of discretion to declare a defending party in default despite
the latter's filing of an answer.
The policy of the law is to have every litigant's case tried on the merits as much as possible.
Hence, judgments by default are frowned upon.21 A case is best decided when all
contending parties are able to ventilate their respective claims, present their arguments and
adduce evidence in support thereof. The parties are thus given the chance to be heard fully
and the demands of due process are subserved. Moreover, it is only amidst such an
atmosphere that accurate factual findings and correct legal conclusions can be reached by
the courts.
Accordingly, the petition is hereby GRANTED. The July 17, 2000 decision of the Court of
Appeals in CA-G.R. SP No. 57397 is REVERSED and SET ASIDE and the December 6,
1999 order of the Regional Trial Court of Baybay, Leyte, Branch 14 is REINSTATED.
The case is REMANDED to the trial court for further proceedings.
SO ORDERED.
G.R. No. 187104 August 3, 2010
SAINT LOUIS UNIVERSITY, INC., Petitioner,
vs.
EVANGELINE C. COBARRUBIAS, Respondent.
Page 18 of 169
DECISION
BRION, J.:
We resolve the present petition for review on certiorari 1 filed by petitioner Saint Louis
University, Inc. (SLU), to challenge the decision2 and the resolution3 of the Court of
Appeals (CA) in CA-G.R. SP No. 101708.4
The Factual Background
The facts of the case, gathered from the records, are briefly summarized below.
Respondent Evangeline C. Cobarrubias is an associate professor of the petitioner’s College
of Human Sciences. She is an active member of the Union of Faculty and Employees of
Saint Louis University (UFESLU).
The 2001-20065 and 2006-20116 Collective Bargaining Agreements (CBAs) between SLU
and UFESLU contain the following common provision on forced leave:
Section 7.7. For teaching employees in college who fail the yearly evaluation, the following
provisions shall apply:
(a) Teaching employees who are retained for three (3) cumulative years in five (5) years
shall be on forced leave for one (1) regular semester during which period all benefits due
them shall be suspended.7
SLU placed Cobarrubias on forced leave for the first semester of School Year (SY) 2007-
2008 when she failed the evaluation for SY 2002-2003, SY 2005-2006, and SY 2006-2007,
with the rating of 85, 77, and 72.9 points, respectively, below the required rating of 87
points.
To reverse the imposed forced leave, Cobarrubias sought recourse from the CBA’s
grievance machinery. Despite the conferences held, the parties still failed to settle their
dispute, prompting Cobarrubias to file a case for illegal forced leave or illegal suspension
with the National Conciliation and Mediation Board of the Department of Labor and
Employment, Cordillera Administrative Region, Baguio City. When circulation and
mediation again failed, the parties submitted the issues between them for voluntary
arbitration before Voluntary Arbitrator (VA) Daniel T. Fariñas.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Cobarrubias argued that the CA already resolved the forced leave issue in a prior case
between the parties, CA-G.R. SP No. 90596,8 ruling that the forced leave for teachers who
fail their evaluation for three (3) times within a five-year period should be coterminous
with the CBA in force during the same five-year period.9
SLU, for its part, countered that the CA decision in CA-G.R. SP No. 90596 cannot be
considered in deciding the present case since it is presently on appeal with this Court (G.R.
No. 176717)10 and, thus, is not yet final. It argued that the forced leave provision applies
irrespective of which CBA is applicable, provided the employee fails her evaluation three
(3) times in five (5) years.11
The Voluntary Arbitrator Decision
On October 26, 2007, VA Daniel T. Fariñas dismissed the case. 12 He found that the CA
decision in CA-G.R. SP No. 90596 is not yet final because of the pending appeal with this
Court. He noted that the CBA clearly authorized SLU to place its teaching employees on
forced leave when they fail in the evaluation for three (3) years within a five-year period,
without a distinction on whether the three years fall within one or two CBA periods.
Cobarrubias received the VA’s decision on November 20, 2007. 13
On December 5, 2007, Cobarrubias filed with the CA a petition for review under Rule 43
of the Rules of Court, but failed to pay the required filing fees and to attach to the petition
copies of the material portions of the record.14
Thus, on January 14, 2008, the CA dismissed the petition outright for Cobarrubias’
procedural lapses.15 Cobarrubias received the CA resolution, dismissing her petition, on
January 31, 2008.16
On February 15, 2008, Cobarrubias filed her motion for reconsideration, arguing that the
ground cited is technical. She, nonetheless, attached to her motion copies of the material
portions of the record and the postal money orders for ₱4,230.00. She maintained that the
ends of justice and fair play are better served if the case is decided on its merits.17
On July 30, 2008, the CA reinstated the petition. It found that Cobarrubias substantially
complied with the rules by paying the appeal fee in full and attaching the proper documents
in her motion for reconsideration.18
SLU insisted that the VA decision had already attained finality for Cobarrubias’ failure to
pay the docket fees on time.
Page 19 of 169
The CA Decision
The CA brushed aside SLU’s insistence on the finality of the VA decision and annulled it,
declaring that the "three (3) cumulative years in five (5) years" phrase in Section 7.7(a) of
the 2006-2011 CBA means within the five-year effectivity of the CBA. Thus, the CA
ordered SLU to pay all the benefits due Cobarrubias for the first semester of SY 2007-
2008, when she was placed on forced leave.19
When the CA denied20 the motion for reconsideration that followed,21 SLU filed the present
petition for review on certiorari.22
The Petition
SLU argues that the CA should not have reinstated the appeal since Cobarrubias failed to
pay the docket fees within the prescribed period, and rendered the VA decision final and
executory. Even if Cobarrubias’ procedural lapse is disregarded, SLU submits that Section
7.7(a) of the 2006-2011 CBA should apply irrespective of the five-year effectivity of each
CBA.23
The Case for Cobarrubias
Cobarrubias insists that the CA settled the appeal fee issue, in its July 30, 2008 resolution,
when it found that she had substantially complied with the rules by subsequently paying the
docket fees in full. She submits that the CA’s interpretation of Section 7.7(a) of the 2006-
2011 CBA is more in accord with law and jurisprudence. 24
The Issues
The core issues boil down to whether the CA erred in reinstating Cobarrubias’ petition
despite her failure to pay the appeal fee within the reglementary period, and in reversing the
VA decision. To state the obvious, the appeal fee is a threshold issue that renders all other
issues unnecessary if SLU’s position on this issue is correct.
The Court’s Ruling
We find the petition meritorious.
Payment of Appellate Court Docket Fees
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Appeal is not a natural right but a mere statutory privilege, thus, appeal must be made
strictly in accordance with the provision set by law.25 Rule 43 of the Rules of Court
provides that appeals from the judgment of the VA shall be taken to the CA, by filing a
petition for review within fifteen (15) days from the receipt of the notice of
judgment.26 Furthermore, upon the filing of the petition, the petitioner shall pay to the CA
clerk of court the docketing and other lawful fees;27 non-compliance with the procedural
requirements shall be a sufficient ground for the petition’s dismissal. 28 Thus, payment in
full of docket fees within the prescribed period is not only mandatory, but also
jurisdictional.29 It is an essential requirement, without which, the decision appealed from
would become final and executory as if no appeal has been filed. 30
As early as the 1932 case of Lazaro v. Endencia and Andres,31 we stressed that the payment
of the full amount of the docket fee is an indispensable step for the perfection of an appeal.
In Lee v. Republic,32 we decided that even though half of the appellate court docket fee was
deposited, no appeal was deemed perfected where the other half was tendered after the
period within which payment should have been made. In Aranas v. Endona, 33 we reiterated
that the appeal is not perfected if only a part of the docket fee is deposited within the
reglementary period and the remainder is tendered after the expiration of the period.
The rulings in these cases have been consistently reiterated in subsequent cases: Guevarra
v. Court of Appeals,34 Pedrosa v. Spouses Hill,35 Gegare v. Court of Appeals,36 Lazaro v.
Court of Appeals,37 Sps. Manalili v. Sps. de Leon,38 La Salette College v. Pilotin,39 Saint
Louis University v. Spouses Cordero,40 M.A. Santander Construction, Inc. v.
Villanueva,41 Far Corporation v. Magdaluyo,42 Meatmasters Int’l. Corp. v. Lelis Integrated
Dev’t. Corp.,43 Tamayo v. Tamayo, Jr.,44 Enriquez v. Enriquez,45 KLT Fruits, Inc. v. WSR
Fruits, Inc.,46 Tan v. Link,47 Ilusorio v. Ilusorio-Yap,48 and most recently in Tabigue v.
International Copra Export Corporation (INTERCO),49 and continues to be the controlling
doctrine.
In the present case, Cobarrubias filed her petition for review on December 5, 2007, fifteen
(15) days from receipt of the VA decision on November 20, 2007, but paid her docket fees
in full only after seventy-two (72) days, when she filed her motion for reconsideration on
February 15, 2008 and attached the postal money orders for ₱4,230.00. Undeniably, the
docket fees were paid late, and without payment of the full docket fees, Cobarrubias’
appeal was not perfected within the reglementary period.
Exceptions to the Rule on Payment of Appellate Court Docket Fees not applicable
Procedural rules do not exist for the convenience of the litigants; the rules were established
primarily to provide order to and enhance the efficiency of our judicial system. 50 While
procedural rules are liberally construed, the provisions on reglementary periods are strictly
Page 20 of 169
applied, indispensable as they are to the prevention of needless delays, and are necessary to
the orderly and speedy discharge of judicial business.51
Viewed in this light, procedural rules are not to be belittled or dismissed simply because
their non-observance may have prejudiced a party's substantive rights; like all rules, they
are required to be followed. However, there are recognized exceptions to their strict
observance, such as: (1) most persuasive and weighty reasons; (2) to relieve a litigant from
an injustice not commensurate with his failure to comply with the prescribed procedure; (3)
good faith of the defaulting party by immediately paying within a reasonable time from the
time of the default; (4) the existence of special or compelling circumstances; (5) the merits
of the case; (6) a cause not entirely attributable to the fault or negligence of the party
favored by the suspension of the rules; (7) a lack of any showing that the review sought is
merely frivolous and dilatory; (8) the other party will not be unjustly prejudiced thereby;
(9) fraud, accident, mistake or excusable negligence without the appellant's fault; (10)
peculiar, legal and equitable circumstances attendant to each case; (11) in the name of
substantial justice and fair play; (12) importance of the issues involved; and (13) exercise
of sound discretion by the judge, guided by all the attendant circumstances.52 Thus, there
should be an effort, on the part of the party invoking liberality, to advance a reasonable or
meritorious explanation for his/her failure to comply with the rules.1avvphi1
In Cobarrubias' case, no such explanation has been advanced. Other than insisting that
the ends of justice and fair play are better served if the case is decided on its merits,
Cobarrubias offered no excuse for her failure to pay the docket fees in full when she filed
her petition for review. To us, Cobarrubias’ omission is fatal to her cause.
We, thus, find that the CA erred in reinstating Cobarrubias’ petition for review despite the
nonpayment of the requisite docket fees within the reglementary period. The VA decision
had lapsed to finality when the docket fees were paid; hence, the CA had no jurisdiction to
entertain the appeal except to order its dismissal.
WHEREFORE, the present petition is GRANTED. The assailed decision and resolution
of the Court of Appeals in CA-G.R. SP No. 101708 are hereby DECLARED VOID and
are consequently SET ASIDE. The decision of the voluntary arbitrator, that the voided
Court of Appeals decision and resolution nullified, stands. No pronouncement as to costs.
SO ORDERED.
SECOND DIVISION
G.R. No.177425 June 18, 2014
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
ALONZO GIPA, IMELDA MARO LLANO, JUANITO LUDOVICE, VIRGILIO
GOJIT, DEMAR BIT ANGCOR, FELIPE MONTALBAN AND DAISY M.
PLACER,1 Petitioners,
vs.
SOUTHERN LUZON INSTITUTE as represented by its Vice-President For
Operations and Corporate Secretary, RUBEN G. ASUNCION, Respondent.
DECISION
DEL CASTILLO, J.:
Suffice it to say that "[ c ]oncomitant to the liberal interpretation of the rules of procedure
should be an effort on the part of the party invoking liberality to adequately explain his
failure to abide by the rules."2 Those who seek exemption from the application of the rule
have the burden of proving the existence of exceptionally meritorious reasons warranting
such departure.3 Assailed in this Petition for Review on Certiorari is the December 20,
2006 Resolution4 of the Court of Appeals (CA) in CA-G.R. CV No. 85215 which
dismissed for non-perfection herein petitioners' appeal from the January 5, 2005 Decision'
of the Regional Trial Court (RTC), Branch 65, Sorsogon City in Civil Case No. 547-37.
Likewise questioned is the CA Resolution6 dated March 30, 2007 which denied the Motion
for Reconsideration thereto.
Factual Antecedents
On February 26, 1996, respondent Southern Luzon Institute (SLI), an educational
institution in Bulan, Sorsogon, filed a Complaint7 for Recovery of Ownership and
Possession with Damages against petitioners Alonzo Gipa, Imelda Marollano, Juanito
Ludovice, Demar Bitangcor, Virgilio Gojit, Felipe Montalban and four others namely,
Arturo Rogacion, Virgilio Gracela, Rosemarie Alvarez and Rosita Montalban (Rosita).
During trial, defendant Rosita executed a Special Power of Attorney8 in favor of her sister
Daisy M. Placer (Placer) authorizing the latter to represent her in the case and to sign any
and all papers in relation thereto.
SLI alleged that it is the absolute owner of a 7,516-squaremeter parcel of land situated in
Brgy. Poblacion, Bulan, Sorsogon covered by Original Certificate of Title (OCT) No. P-
28928. However, petitioners and their co-defendants who had been informally occupying a
portion of the said property refused to vacate the same despite demand. Hence, SLI sought
that they be ordered to immediately vacate the premises, turn over the same to SLI, and pay
compensatory damages, attorney’s fees and cost of suit.
Page 21 of 169
In their Answer with Counterclaim,9 petitioners and their co-defendants asserted that they
did not heed SLI’s demand to vacate as they believed that they have the right to stay on the
said property. They relied on their occupation thereof and that of their predecessors-in-
interest which, according to them, dates back to as early as 1950. Impugning SLI’s claims,
petitioners and their co-defendants averred that SLI had not even for a single moment taken
possession of the subject property and was merely able to procure a title over the same thru
fraud, bad faith and misrepresentation. By way of counterclaim, they prayed that they be
declared the lawful possessors of the property; that OCT No. P-28928 be declared null and
void; and, that SLI be ordered to pay them moral damages and litigation expenses.
Ruling of the Regional Trial Court
Finding SLI to have proven its ownership of the property by preponderance of evidence,
the RTC rendered a Decision10 in its favor on January 5, 2005. The said court gave weight
to SLI’s documentary evidence showing the grant of its Miscellaneous Sales Application
(MSA) over the subject property which became the basis for the issuance of title under its
name, and the testimony of the Supervising Draftsman of the National Housing Authority
(NHA) who categorically stated that the houses occupied by petitioners and their co-
defendants were within the property of SLI per NHA’s survey. It rejected, on the other
hand, petitioners and their co-defendants’ claim of title to the property. For one, the fact
that SLI had an existing MSA over the property as far back as 1969 could not have been
unknown to them. This is because several of the petitioners and their codefendants filed
Revocable Permit Applications over the same property which were denied on March 4,
1964, precisely because the areas applied for were already included in SLI’s MSA. For
another, the documentary evidence submitted by them consisted mostly of tax declarations
and other documents which were self-serving and could not be considered as conclusive
evidence of ownership. Hence, the RTC ruled:
WHEREFORE, premises considered, judgment is hereby rendered –
a) Declaring plaintiff-SLI as absolute owner of that portion of Lot 4705
containing an area of SEVEN THOUSAND FIVE HUNDRED SIXTEEN
(7,516) SQUARE METERS covered by "Katibayan ng Orihinal na Titulo Blg. P-
28928".
b) Ordering herein defendants to vacate and relinquish the portions of lot 4705
belonging to the SLI that they are presently occupying illegally and to demolish
the residential houses existing thereon at their own expense.
c) To pay attorney’s fee in the amount of Php10,000.00 jointly.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
d) And to pay the costs.
SO ORDERED.11
Petitioners and their co-defendants filed a Notice of Appeal12 which was granted by the
RTC in its Order13 of January 27, 2005.
Ruling of the Court of Appeals
The CA, however, dismissed the appeal in its Resolution 14 of August 26, 2005 since it was
not shown that the appellate court docket fees and other lawful fees were paid.15 Petitioners
and their co-defendants promptly filed a Motion for Reconsideration 16 to which they
attached a Certification17 from the RTC that they paid the appeal fee in the amount
of₱3,000.00 under Official Receipt No. 18091130 dated January 25, 2005. In view of this,
the CA granted the said motion and consequently reinstated the appeal through a
Resolution18 dated November 2, 2005.
Subsequently, however, the CA further required petitioners and their codefendants, through
a Minute Resolution19 dated March 1, 2006,to remit within ten days from notice the amount
of ₱30.00 for legal research fund, which apparently was not included in the ₱3,000.00
appeal fee previously paid by them. Copy of the said resolution was received on March
13,2006 by petitioners’ counsel, Atty. Jose G. Gojar of the Public Attorney’s Office.20
Despite the lapse of nine months from their counsel’s receipt of the said resolution,
petitioners and their co-defendants, however, failed to comply with the CA’s directive.
Hence, the said court dismissed the appeal through its Resolution 21 of December 20, 2006in
this wise:
Jurisprudence is replete that the nonpayment of the docket and other lawful fees within the
reglementary period as provided under Section 4 of Rule 41 of the Revised Rules of
[C]ourt is a ground for the dismissal of an appeal, as provided for under Section 1(c)[,]
Rule 50 of the same Rule. We quote:
SECTION 1. Grounds for dismissal of appeal. – An appeal may be dismissed by the Court
of Appeals, on its own motion or on that of the appellee, on the following grounds:
xxx xxx xxx
c. Failure of the appellant to pay the docket and other lawful fees as provided in Section 4
of Rule 41; x x x
Page 22 of 169
xxxx
In the instant case, appellants were given sufficient time to complete the payment of the
appeal fees. Unfortunately, appellants still failed to comply with the said directive [despite
the fact] that the amount of ₱30.00 involved is very little. Hence, appellants failed to
perfect their appeal for failure to fully pay the appeal fees. They are deemed to have lost
interest over the instant appeal. x x x x
WHEREFORE, premises considered, the instant Appeal is hereby DISMISSED.
SO ORDERED.22
Petitioners and their co-defendants filed a Motion for Reconsideration23 invoking the
principle of liberality in the application of technical rules considering that they have paid
the substantial amount of ₱3,000.00 for docket and other legal fees and fell short only by
the meager amount of ₱30.00. Ascompliance, they attached to the said motion a postal
money order in the sum of ₱30.00 payable to the Clerk of Court of the CA. 24
The CA, however, was not swayed, hence, the denial of the Motion for Reconsideration in
its Resolution25 of March 30, 2007.
Issue
Petitioners and Placer now file this Petition for Review on Certiorari raising the lone issue
of:
WHETHER THE COURT OF APPEALS GRAVELY ERRED IN DISMISSING THE
APPEAL FILED BY THE PETITIONERS FOR FAILURE TO REMIT THE
MEAGERAMOUNT OF THIRTY PESOS (₱30.00) AFTER HAVING ADVANCED A
SUBSTANTIAL PORTION OF THE DOCKET FEES.26
It must, however, be noted at the outset that the caption of the present Petition includes
Placer as one of the petitioners. In fact, the other petitioners even authorized her to sign the
verification and certification of non-forum shopping in their behalf.27 A review of the
records, however, shows that she was not one of the defendants before the RTC. Her only
participation therein was that she represented her sister Rosita as one of the defendants by
virtue of a Special Power of Attorney which the latter executed in her favor.28 Notably in
the present Petition, Placer appears to have been impleaded in her personal capacity and not
as Rosita’s representative. This cannot be done. It bears emphasizing that an appeal on
certiorari, as in this case, is a continuation of the original suit.29 Hence, the parties in the
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
original suit must also be the parties in such an appeal. 30 Placer, therefore, not being a party
in the complaint before the RTC has no personality to continue the same on appeal and
cannot be considered as a petitioner. At the most, her only role in this Petition was to sign
the verification and certification of non-forum shopping for and in behalf of petitioners.
The Parties’ Arguments
Initially, petitioners invoke the liberal application of technical rules31 and contend that the
fact that only the amount of ₱30.00 was not paid justifies relaxation of the same. Later in
their Reply,32 however, petitioners concede that the payment of docket fees is not a mere
technicality. Nevertheless, they point out that while full payment of docket fees is
indispensable in the perfection of an appeal, the same admits of exceptions. 33 Their case
falls under one of the exceptions, that is, in the name of substantial justice and fair play.
According to petitioners, the dismissal of their appeal for failure to pay ₱30.00 runs counter
to substantial justice and fair play as the same would deprive them of their right to justice
and render ineffective the amount of ₱3,000.00, which despite being indigents, they
undertook to pay. To support their case, petitioners cited Andrea Camposagrado v. Pablo
Camposagrado34 and Spouses Gutierrez v. Spouses Valiente35 wherein the Court excused
the insufficient payment of docket fees.1âwphi1 Moreover, petitioners raise in the said
Reply, albeit for the first time, the argument that while Republic Act (RA) No. 9406 36 was
still in existent at the time their appeal was filed before the CA, Section 6 37 thereof which
exempts PAO clients like themselves from the payment of docket and other fees should be
given retroactive application.
For its part, SLI argues that since petitioners’ appeal was not perfected due to insufficient
payment of docket and other legal fees, the January 5, 2005 Decision of the RTC had
already become final and executory. Further, the CA correctly dismissed petitioners’ appeal
because aside from the fact that petitioners failed to comply with the CA’s directive to pay
the lacking amount of ₱30.00 for a period of more than nine months from their counsel’s
receipt of notice, no plausible explanation was tendered by them for such failure.
Our Ruling
The Petition fails.
Payment of the full amount of appellate
court docket and lawful fees is
mandatory and jurisdictional;
Relaxation of the rule on payment of
appeal fee is unwarranted in this case.
Page 23 of 169
Section 4, Rule 41 of the Rules of Court provides:
Sec. 4. Appellate court docket and other lawful fees. – Within the period for taking an
appeal, the appellant shall pay to the clerk of court which rendered the judgment or final
order appealed from, the full amount of the appellate court docket and other lawful fees.
Proof of payment of said fees shall be transmitted to the appellate court together with the
original record or the record on appeal. (Emphases supplied)
In Gonzales v. Pe,38 the Court’s explanation anent the requirement of full payment of
docket and other lawful fees under the above-quoted provision was iterated, viz:
In Far Corporation v. Magdaluyo, as with other subsequent cases of the same ruling, the
Court explained that the procedural requirement under Section 4 of Rule 41 is not merely
directory, as the payment of the docket and other legal fees within the prescribed period is
both mandatory and jurisdictional. It bears stressing that an appeal is not a right, but a mere
statutory privilege. An ordinary appeal from a decision or final order of the RTC to the CA
must be made within 15 days from notice. And within this period, the full amount of the
appellate court docket and other lawful fees must be paid to the clerk of the court which
rendered the judgment or final order appealed from. The requirement of paying the full
amount of the appellate docket fees within the prescribed period is not a mere technicality
of law or procedure. The payment of docket fees within the prescribed period is mandatory
for the perfection of an appeal. Without such payment, the appeal is not perfected. The
appellate court does not acquire jurisdiction over the subject matter of the action and the
Decision sought to be appealed from becomes final and executory. Further, under Section 1
(c), Rule 50, an appeal may be dismissed by the CA, on its own motion or on that of the
appellee, on the ground of the non-payment of the docket and other lawful fees within the
reglementary period as provided under Section 4 of Rule 41. The payment of the full
amount of the docket fee is an indispensable step for the perfection of an appeal. In both
original and appellate cases, the court acquires jurisdiction over the case only upon the
payment of the prescribed docket fees.39
Here, petitioners concede that payment of the full amount of docket fees within the
prescribed period is not a mere technicality of law or procedure but a jurisdictional
requirement. Nevertheless, they want this Court to relax the application of the rule on the
payment of the appeal fee in the name of substantial justice and equity.
The Court is not persuaded.
The liberality which petitioners pray for has already been granted to them by the CA at the
outset. It may be recalled that while petitioners paid a substantial part of the docket fees,
they still failed to pay the full amount thereof since their payment was short of
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
₱30.00.Based on the premise that the questioned Decision of the RTC has already become
final and executory due to non-perfection, the CA could have dismissed the appeal outright.
But owing to the fact that only the meager amount of ₱30.00 was lacking and considering
that the CA may opt not to proceed with the case until the docket fees are paid, 40 it still
required petitioners, even if it was already beyond the reglementary period, to complete
their payment of the appeal fee within 10 days from notice. Clearly, the CA acted
conformably with the pronouncement made in Camposagrado, a case cited by petitioners,
that "[a] party’s failure to pay the appellate docket fee within the reglementary period
confers only a discretionary and not a mandatory power to dismiss the proposed appeal.
Such discretionary power should be used in the exercise of the court’s sound judgment in
accordance with the tenets of justice and fair play with great deal of circumspection,
considering all attendant circumstances and must be exercised wisely and prudently, never
capriciously, with a view to substantial justice."41
The CA’s leniency over petitioners’ cause did not end there. Although they were given
only 10 days to remit the ₱30.00 deficiency, the said court allowed an even longer period of
nine months to lapse, apparently in the hope that petitioners’ compliance would be on its
way. But as no payment was remitted, it was constrained to finally dismiss the appeal for
non-perfection. Surprisingly, petitioners were again heard of when they filed a Motion for
Reconsideration to which they attached a postal money order of ₱30.00. Nevertheless, they
did not offer any plausible explanation either as to why they, at the start, failed to pay the
correct docket fees or why they failed to comply with the CA’s directive for them to remit
the ₱30.00-deficiency. Instead, they focused on begging the CA for leniency, arguing that
the meager amount of the deficiency involved justifies relaxation of the rules. What is
worse is that even if the CA already took note of the lack of such explanation in its
Resolution denying petitioners’ motion for reconsideration, petitioners, up to now, have not
attempted to tender one in this Petition and instead continue to capitalize on substantial
justice, fair play and equity to secure a reversal of the dismissal of their appeal. The Court
cannot, therefore, help but conclude that there is really no plausible reason behind the said
omission.
Suffice it to say that "[c]oncomitant to the liberal interpretation of the rules of procedure
should be an effort on the part of the party invoking liberality to adequately explain his
failure to abide by the rules."42 Those who seek exemption from the application of the rule
have the burden of proving the existence of exceptionally meritorious reason warranting
such departure.43 Petitioners’ failure to advance any explanation as to why they failed to
pay the correct docket fees or to complete payment of the same within the period allowed
by the CA is thus fatal to their cause. Hence, a departure from the rule on the payment of
the appeal fee is unwarranted. Neither do the cases cited by petitioners help because they
are not in point. Unlike in this case, the CA in Camposagrado no longer required the
petitioners therein to complete the payment of the appeal fee by remitting the ₱5.00
deficiency but just dismissed the appeal outright. Moreover, a justifiable reason for the
Page 24 of 169
insufficient payment was tendered by petitioners in the said case, i.e., that they relied on the
assessment made by the collection officer of the court and honestly believed that the
amount collected from them was that which is mandated by the Rules.1âwphi1
The same thing goes true with Gutierrez. In fact, the pronouncement made in Sun Insurance
Office, Ltd. v. Asuncion,44 as cited in Gutierrez, even militates against petitioners. It was
reiterated therein that the rule that "a court acquires jurisdiction over any case only upon
payment of the prescribed docket fees does not apply where the party does not deliberately
intend to defraud the court in payment of docket fees, and manifests its willingness to abide
by the rules by paying additional docket fees when required by the court."45 As may be
recalled, petitioners in this case did not immediately remit the deficient amount of ₱30.00
when required by the CA and only did so after the lapse of more than nine months when
their appeal was already dismissed.
The Court need not belabor the issue
of the retroactive application of Section 6
of RA 9406.
"The purpose of a reply is to deny or allege facts in denial of new matters alleged by way of
defense in the answer,"46 or in this case, in the comment to the petition. "It is not the office
or function of a reply to set up or introduce a new [issue] or to amend or amplify the
[Petition]."47 The issue of whether Section 6 of RA 9406 should be given retroactive
application in order to exempt petitioners from payment of docket fees was therefore
improperly introduced in petitioners’ Reply. Moreover, "[t]he rule in pleadings and practice
is that no new issue in a case can be raised in a pleading which by due diligence could have
been raised in previous pleadings."48 Here, petitioners at the outset could have very well
raised the said issue in the Petition since at the time of its filing on June 7, 2007, RA 9406
was already in effect.49 However, they failed to do so. Besides, for this Court to take
cognizance of the same is to offend the basic rules of fair play, justice and due process
since SLI had no chance to propound its argument in connection thereto. This is because
even if it wanted to, SLI could not anymore do so in its Memorandum as no new issues or
arguments may be raised in the said pleading, it being only the summation of the parties’
previous pleadings.50 For these reasons, the Court sees no need to belabor the issue of the
retroactive application of Section 6 of RA 9406.
All told, the Court finds the CA’s dismissal of the appeal interposed by petitioners in order.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed Resolutions
dated December 20, 2006 and March 30, 2007 of the Court of Appeals in CA-G.R. CV No.
85215 are AFFIRMED.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)

SO ORDERED. Rm. 14, J.S. Building

Lacson-Galo Sts., Bacolod City
EN BANC IBP O.R. No. 731938 11/24/08
PTR NO. 0223568 1/5/09
ROLL NO. 20865
A.C. NO. 10525, September 01, 2015 MCLENO. 001597010 (Emphasis supplied)

INTESTATE ESTATE OF JOSE UY, HEREIN REPRESENTED BY ITS
ADMINISTRATOR WILSON UY, Complainant, v. ATTY. PACIFICO M.
MAGHARI III, Respondent.
RESOLUTION
LEONEN, J.:
This resolves a Complaint1 for disbarment directly filed before this court by complainant
Wilson Uy, the designated administrator of the estate of Jose Uy. This Complaint charges
respondent Atty. Pacifico M. Maghari, III (Maghari) with engaging in deceitful conduct
and violating the Lawyer's Oath. Specifically, Maghari is charged with the use of
information that is false and/or appropriated from other lawyers in signing certain
pleadings.2
On February 18, 1997, Lilia Hofileña (Hofileña) filed a Petition before the Bacolod City
Regional Trial Court praying that she be designated administratrix of the estate of her
common-law partner, the deceased Jose Uy. This was docketed as Spec. Proc. No. 97-241.3
Hofileña was initially designated administratrix.4 However, a Motion for Reconsideration
of the Order designating Hofileña as administratix was filed by Wilson Uy, one of Jose
Uy's children, on behalf of Jose Uy's spouse and other children.5 In its Order6 dated June 9,
1998, the Regional Trial Court designated Wilson Uy as administrator of Jose Uy's estate.
Subsequently, Hofileña's claims in the settlement of Jose Uy's estate were granted. 7 Hence,
she filed a Motion for Execution8 dated September 14, 2007.
There appears to have been conflicts between Wilson Uy and the other heirs of Jose
Uy.11 In the course of the proceedings, Wilson Uy prayed that a subpoena ad testificandum
be issued to Magdalena Uy as she was alleged to have been the treasurer of several
businesses owned by Jose Uy.12 In its Order13 dated April 20, 2010, the Regional Trial
Court granted Wilson Uy's Motion that a Subpoena ad Testificandum be issued to
Magdalena Uy.
Thereafter, Magdalena Uy, through Maghari, her counsel, filed a Motion to Quash
Subpoena ad Testificandum with Alternative Motion to Cite the Appearance of Johnny
K.H. Uy.14 In signing this Motion, Maghari indicated the following details:
PACIFICO M. MAGHARI, III
Counsel for Magdalena Uy
590 Ylac St., Villamonte
Bacolod City
IBP O.R. No. 731938 11/24/08 B.C.
PTR NO. 0223568 1/5/09 B.C.
ROLL NO. 20865
MCLECompl. 0015970 1/14/0915 (Emphasis supplied)
On November 9, 2010, Wilson Uy filed his Opposition to Magdalena Uy's Motion to
Quash.16
Magdalena Uy, through Maghari, filed her Reply17 to Wilson Uy's Opposition. This Reply
was dated December 8, 2010. In signing this Reply, Maghari indicated the following
details:

In Spec. Proc No. 97-241 and in other proceedings arising from the conflicting claims to PACIFICO M. MAGHARI, III
Jose Uy's estate, Hofileña was represented by her counsel, Atty. Mariano L. Natu-El (Atty. Counsel for Magdalena Uy
Natu-el). In a pleading filed in the course of these proceedings (i.e., in the Comment dated 590 Ylac St., Villamonte
May 27, 2009 filed before the Court of Appeals9), Atty. Natu-El indicated the following Bacolod City
details: IBP O.R. No. 766304 11/27/09 B.C.
PTR NO. 3793872 1/4/10 B.C.
MARIANO L. NATU-EL ROLL NO. 20865
Counsel for Private-Respondent MCLE Compl. 0015970 1/14/0918 (Emphasis supplied)

Page 25 of 169
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)

The Regional Trial Court subsequently denied Magdalena Uy's Motion to On July 31, 2014, Wilson Uy filed before this court the present Complaint for
Quash.19 Thereafter, Maghari filed for Magdalena Uy a Motion for Reconsideration 20 dated disbarment.29 Pointing to Maghari's act of repeatedly a changing and using another lawyer's
July 15, 2011. In signing this Motion, Maghari indicated the following details: professional details, Wilson Uy asserts that Maghari violated the Lawyer's Oath and acted
in a deceitful manner.
PACIFICO M. MAGHARI, III
Counsel for Magdalena Uy In the Resolution30 dated November 12, 2014, this court directed Maghari to file his
590 Ylac St., Villamonte Comment on Wilson Uy's Complaint.
Bacolod City
IBP O.R. No. 815530 1/4/11 B.C. This court, through the Office of the Bar Confidant, received Maghari's Comment 31 on
PTR NO. 4190929 1/4/11 B.C. March 2, 2015.
ROLL NO. 20865
MCLE Compl. IH-0000762 1/14/0921(Emphasis supplied) For resolution are the issues of whether respondent Atty. Pacifico M. Maghari, III engaged
in unethical conduct and of what proper penalty may be meted on him.
As the Motion for Reconsideration was denied,22 Maghari filed for Magdalena Uy a Motion
I
to Recall Subpoena ad Testificandum23 dated March 8, 2012. In signing this Motion,
Maghari indicated the following details:
Respondent does not deny the existence of the errant entries indicated by complainant.
However, he insists that he did not incur disciplinary liability. He claims that these entries
PACIFICO M. MAGHARI, III were mere overlooked errors:
Counsel for Magdalena Uy
590 Ylac St., Villamonte
For true indeed that after the draft of a particular motion or pleading had been printed and
Bacolod City
ready for signature, all what [sic] he did after cursorily going over it was to affix his
IBP O.R. No. 848630 12/27/11 B.C.
signature thereon, specifically, atop his printed name, without giving any special or
PTR NO. 4631737 1/2/12 B.C.
particular attention to details as the "IBP, PTR, and MCLE Numbers", considering that
ROLL NO. 44869
these are matters of record and are easily verifiable, thus he gains nothing by "the
MCLE Compl. III-0000762 1/14/0924 (Emphasis supplied)
usurpation of professional details of another lawyer" and has no sinister motive or ill-
purpose in so doing[.]32
At this point, Wilson Uy's counsel noticed that based on the details indicated in the March
8, 2012 Motion, Maghari appeared to have only recently passed the bar examinations. This
He attempts to diminish the significance of the dubious entries and instead ascribes ill
prompted Wilson Uy to check the records of Spec. Proc No. 97-241. Upon doing so, he
motive to complainant. He faults complainant for "nitpicking"33 and calls him a "sore
learned that since 2010, Maghari had been changing the professional details indicated in the
loser"34 and a "disgruntled litigant"35 who is merely "making a mountain out of a
pleadings he has signed and has been copying the professional details of Atty. Natu-
molehill"36 and is predisposed to "fault-finding."
El.25cralawred
He adds that "for the satisfaction of complainant,"37 he has provided what are supposedly
Wilson Uy then filed a Motion26 to declare Magdalena Uy in indirect contempt (as by then
his correct professional details:
she had still not complied with the Subpoena ad Testificandum) and to require Maghari to
explain why he had been usurping the professional details of another lawyer.
2009

In its Order27 dated February 16, 2012, the Regional Trial Court declined from citing IBP OR No. 765868 - Dec. 22, 2008 - Bacolod City
Magdalena Uy in contempt as no verified petition asking that she be so cited had been PTR No. 3408746 - Jan. 5, 2009 -Bacolod City
filed.28 MCLE Compl. II-0012507 - Jan. 14, 2009 and

Page 26 of 169
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)

III-0000762-Jan. 14, 2009

Rule 138, Section 27 of the Rules of Court provides for deceit as a ground for disbarment.
2010 The Lawyer's Oath entails commitment to, among others, obeying laws and legal orders,
doing no falsehood, conducting one's self as a lawyer to the best of one's capacity, and
IBP OR No. 766304 - Dec. 9, 2009 - Bacolod City acting with fidelity to both court and client:
PTR No. 3793872 - Jan. 4, 2010 -Bacolod City
MCLE Compl. II-0012507 - Jan. 14, 2009 and I, do solemnly swear that I will maintain allegiance to the Republic of the Philippines, I
III-0000762 - Jan. 14, 2009 will support the Constitution and obey the laws as well as the legal orders of the duly
constituted authorities therein; I will do no falsehood, nor consent to the doing of any in
2011 court; I will not wittingly or willingly promote or sue any groundless, false or unlawful
suit, or give aid nor consent to the same; I will delay no man for money or malice, and will
IBP OR No. 815530 -Jan. 4, 2011 -Bacolod City conduct myself as a lawyer according to the best of my knowledge and discretion, with all
PTRNo. 4190929 - Jan. 4, 2011 - Bacolod City good fidelity as well to the courts as to my clients; and I impose upon myself these
MCLE Compl. III-0000762 - Jan. 14, 2009 voluntary obligations without any mental reservation or purpose of evasion. So help me
God.
2012

IBP OR No. 848630-Dec. 27, 2011 - Bacolod City
PTR No. 4631737 - Jan. 2, 2012 -Bacolod City
MCLE Compl. III-0000762 - Jan. 14, 200938ChanRoblesVirtualawlibrary
II
Respondent's avowals, protestations, and ad hominem attacks on complainant fail to
impress.
The duplicitous entries speak for themselves. The errors are manifest and respondent
admits their existence. This court would perhaps be well counseled to absolve respondent
of liability or let him get away with a proverbial slap on the wrist if all that was involved
were a typographical error, or otherwise, an error or a handful of errors made in an isolated
instance or a few isolated instances. So too, if the error pertained to only ' one of the several
pieces of information that lawyers are required to indicate when signing pleadings.
None of these can be said of this case. Respondent did not merely commit errors in good
faith. The truth is far from it. First, respondent violated clear legal requirements, and
indicated patently false information. Second, the way he did so demonstrates that he did so
knowingly. Third, he did so repeatedly. Before our eyes is a pattern of deceit. Fourth, the
information he used was shown to have been appropriated from another lawyer. Not only
was he deceitful; he was also larcenous. Fifth, his act not only of usurping another lawyer's
details but also of his repeatedly changing information from one pleading to another
demonstrates the intent to mock and ridicule courts and legal processes. Respondent toyed
with the standards of legal practice.
No amount of feigned ignorance and ad hominem attacks on complainant can negate the
gravity of respondent's actions. His insolent and mocking violation of statutory and
regulatory requirements is a violation of his duties to society and to courts. His swiping of
another lawyer's information is a violation of his duties to the legal profession. The
unnecessary risks that he foiled on his client as a possible result of deficiently signed
pleadings violate his duties to his client. Thus, respondent did not only act in a deceitful
manner and violate the solemn oath he took to be admitted into the legal profession; he also
violated every single chapter of the Code of Professional Responsibility.
It is as clear as the entries themselves that respondent acted in a manner that is woefully
unworthy of an officer of the court. He was not even a good citizen. As respondent has
fallen short of the ethical standards apropos to members of the legal profession, we find it
proper to suspend respondent from the practice of law for two (2) years.
III
The requirement of a counsel's signature in pleadings, the significance of this requirement,
and the consequences of non-compliance are spelled out in Rule 7, Section 3 of the Rules
of Court:
Section 3. Signature and address. — Every pleading must be signed by the party or counsel
representing him, stating in either case his address which should not be a post office box.
The signature of counsel constitutes a certificate by him that he has read the pleading; that
to the best of his knowledge, information, and belief there is good ground to support it; and
that it is not interposed for delay.

Page 27 of 169
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
An unsigned pleading produces no legal effect. However, the court may, in its discretion,
allow such deficiency to be remedied if it shall appear that the same was due to mere
inadvertence and not intended for delay. Counsel who deliberately files an unsigned
pleading, or signs a pleading in violation of this Rule, or alleges scandalous or indecent
matter therein, or fails promptly report to the court a change of his address, shall be subject
to appropriate disciplinary action. (Emphasis supplied)
A counsel's signature on a pleading is neither an empty formality nor even a mere means
for identification. Through his or her signature, a party's counsel makes a positive
declaration. In certifying through his or her signature that he or she has read the pleading,
that there is ground to support it, and that it is not interposed for delay, a lawyer asserts his
or her competence, credibility, and ethics. Signing a pleading is such a solemn component
of legal practice that this court has taken occasion to decry the delegation of this task to
non-lawyers as a violation of the Code of Professional Responsibility:
The signature of counsel constitutes an assurance by him that he has read the pleading; that,
to the best of his knowledge, information and belief, there is a good ground to support it;
and that it is not interposed for delay. Under the Rules of Court, it is counsel alone, by
affixing his signature, who can certify to these matters.
The preparation and signing of a pleading constitute legal work involving practice of law
which is reserved exclusively for the members of the legal profession. Counsel may
delegate the signing of a pleading to another lawyer but cannot do so in favor of one who is
not. The Code of Professional Responsibility provides:chanRoblesvirtualLawlibrary
Rule 9.01 — A lawyer shall not delegate to any unqualified person the performance of any
task which by law may only be performed by a member of the Bar in good
standing.ChanRoblesVirtualawlibrary
Moreover, a signature by agents of a lawyer amounts to signing by unqualified persons,
something the law strongly proscribes.39 (Citations omitted)
A counsel's signature is such an integral part of a pleading that failure to comply with this
requirement reduces a pleading to a mere scrap of paper totally bereft of legal effect. Thus,
faithful compliance with this requirement is not only a matter of satisfying a duty to a court
but is as much a matter of fidelity to one's client. A deficiency in this respect can be fatal to
a client's cause.
Apart from the signature itself, additional information is required to be indicated as part of
a counsel's signature:
Page 28 of 169
(1) Per Rule 7, Section 3 of the Rules of Court, a counsel's address must be stated;
(2) In Bar Matter No. 1132,40 this court required all lawyers to indicate their Roll of
Attorneys number;
(3) In Bar Matter No. 287,41 this court required the inclusion of the "number and date of
their official receipt indicating payment of their annual membership dues to the
Integrated Bar of the Philippines for the current year"; in lieu of this, a lawyer may
indicate his or her lifetime membership number;
(4) In accordance with Section 139 of the Local Government Code, 42 a lawyer must
indicate his professional tax receipt number;
(5) Bar Matter No. 192243 required the inclusion of a counsel's Mandatory Continuing
Legal Education Certificate of Compliance or Certificate of Exemption; and
(6) This court's Resolution in A.M. No. 07-6-5-SC44 required the inclusion of a counsel's
contact details.
As with the signature itself, these requirements are not vain formalities.
The inclusion of a counsel's Roll of Attorneys number, professional tax receipt number, and
Integrated Bar of the Philippines (IBP) receipt (or lifetime membership) number is intended
to preserve and protect the integrity of legal practice. They seek to ensure that only those
who have satisfied the requisites for legal practice are able to engage in it. With the Roll of
Attorneys number, parties can readily verify if a person purporting to be a lawyer has, in
fact, been admitted to the Philippine bar.45 With the professional tax receipt number, they
can verify if the same person is qualified to engage in a profession in the place where he or
she principally discharges his or her functions. With the IBP receipt number, they can
ascertain if the same person remains in good standing as a lawyer. These pieces of
information, in the words of Galicto v. Aquino III, "protect the public from bogus
lawyers."46 Paying professional taxes (and the receipt that proves this payment) is likewise
compliance with a revenue mechanism that has been statutorily devolved to local
government units.
The inclusion of information regarding compliance with (or exemption from) Mandatory
Continuing Legal Education (MCLE) seeks to ensure that legal practice is reserved only for
those who have complied with the recognized mechanism for "keep[ing] abreast with law
and jurisprudence, maintaining] the ethics of the profession[,] and enhancing] the standards
of the practice of law."47
Lastly, the inclusion of a counsel's address and contact details is designed to facilitate the
dispensation of justice. These pieces of information aid in the service of court processes,
enhance compliance with the requisites of due process, and facilitate better representation
of a client's cause. In Juane v. Garcia,48 this court took occasion to expound on the
significance of putting on record a counsel's address:
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)

The time has come, we believe, for this Court to remind the members of the Bar that it is ROLL NO. 20865
their inescapable duty to make of record their correct address in all cases in which they are MCLENO. 001597050 [Emphasis supplied]ChanRoblesVirtualawlibrary
counsel for a suitor. For, instances there have been in the past when, because of failure to
inform the court of the change of address, litigations were delayed. And this, not to speak
The details that respondent indicated are reproduced as follows:
of inconvenience caused the other parties and the court. Worse still, litigants have lost their
cases in court because of such negligence on the part of their counsel. It is painful enough
for a litigant to surfer a setback in a legal battle. It is doubly painful if defeat is occasioned PACIFICO M. MAGHARI, III
by his attorney's failure to receive notice because the latter has changed the place of his law Counsel for Magdalena Uy
office without giving the proper notice therefor. It is only when some such situation comes 590 Ylac St., Villamonte
about that the negligent lawyer comes to realize the grave responsibility that he has Bacolod City
incurred both to his client and to the cause of justice. It is then that the lawyer is reminded IBPO.R. No. 731938 11/24/08 B.C.
that in his oath of office he solemnly declared that he "will conduct" himself "as a lawyer PTR NO. 0223568 1/5/09 B.C.
according to the best of his knowledge and discretion." Too late. Experience indeed is a ROLL NO. 20865
good teacher. To a lawyer, though, it could prove very expensive.49 MCLE Compl. 00159701/14/0951 (Emphasis supplied)

These requirements are not mere frivolities. They are not mere markings on a piece of In signing the Reply dated December 8, 2010, respondent used what was supposedly his
paper. To willfully disregard them is, thus, to willfully disregard mechanisms put in place correct IBP official receipt number and professional tax receipt number:
to facilitate integrity, competence, and credibility in legal practice; it is to betray apathy for
the ideals of the legal profession and demonstrates how one is wanting of the standards for PACIFICO M. MAGHARI, III
admission to and continuing inclusion in the bar. Worse, to not only willfully disregard Counsel for Magdalena Uy
them but to feign compliance only, in truth, to make a mockery of them reveals a dire, 590 Ylac St., Villamonte
wretched, and utter lack of respect for the profession that one brandishes. Bacolod City
IBP O.R. No. 766304 11/27/09 B.C.
IV PTR NO. 3793872 1/4/10 B.C.
ROLL NO. 20865
We underscore several facts. These demonstrate that respondent acted in manifest bad faith, MCLE Compl. 00159701/14/0952 (Emphasis supplied)
thereby exhibiting a pattern of insubordination, dishonesty, deceit, and intent to make a
mockery of courts and legal processes.
The same pleading, however, still bore Atty. Natu-el's Roll of Attorneys number and
In signing the Motion to Quash Subpoena ad Testificandum with Altenative Motion to Cite MCLE compliance number, which respondent previously appropriated for himself.
the Appearance of Johnny K.H. Uy, respondent appropriated four of the five details (i.e.,
IBP official receipt number, professional tax receipt number, Roll of Attorneys number, In signing the Motion for Reconsideration dated July 15, 2011, respondent used what was
and MCLE compliance number) that Atty. Natu-el indicated in the Comment dated May supposedly his correct IBP official receipt number and professional tax receipt number.
27, 2009, which the latter signed and filed before the Court of Appeals. Atty. Natu-el's However, he still used Atty. Natu-el's Roll of Attorneys number:
details are reproduced as follows:
PACIFICO M. MAGHARI, III
MARIANO L. NATU-EL Counsel for Magdalena Uy
Counsel for Private-Respondent 590 Ylac St., Villamonte
Rm. 14, J.S. Building Bacolod City
Lacson-Galo Sts., Bacolod City IBP O.R. No. 815530 1/4/11 B.C.
IBP O.R. No. 731938 11/24/08 PTR NO. 4190929 1/4/11 B.C.
PTR NO. 0223568 1/5/09 ROLL NO. 20865
MCLE Compl. III-0000762 1/14/09 53(Emphasis supplied)

Page 29 of 169
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
It was only in signing the Motion to Recall Subpoena ad Testificandum54 dated March 8,
2012, that all the professional details that respondent indicated are supposedly his own:
PACIFICO M. MAGHARI, III
Counsel for Magdalena Uy
590 Ylac St., Villamonte
Bacolod City
IBP O.R. No. 848630 12/27/11 B.C.
PTR NO. 4631737 1/2/12 B. C.
ROLL NO. 44869
MCLE Compl. 111-0000762 1/14/09 (Emphasis supplied)
Respondent acted deliberately. It is impossible that the erroneous details he indicated on his
pleadings are products of mere inadvertence.
To begin with, details were copied from a pleading submitted by another lawyer. These
details somehow found their way into respondent's own pleadings. Certainly, these details
could not have written themselves, let alone transfer themselves from a pleading prepared
by one lawyer to those prepared by another. Someone must have actually performed the act
of copying and transferring; that is, someone must have intended to copy and transfer them.
Moreover, the person responsible for this could have only been respondent or someone
acting under his instructions; the pleadings on which they were transferred are, after all,
respondent's pleadings.
Second, these details were not merely copied, they were modified. "B.C." was added to the
IBP official receipt and professional tax receipt numbers copied from Atty. Natu-el. The
facts of modification and addition show active human intervention to make something more
out of markings that could otherwise have simply been reproduced.
Third, in subsequent pleadings, some details copied from Atty. Natu-el were discarded
while some were retained. The December 8, 2010 Reply still bore Atty. Natu-el's Roll of
Attorneys number and MCLE compliance number, but no longer his IBP official receipt
number and professional tax receipt number. The July 15, 2011 Motion for Reconsideration
only bore Atty. Natu-el's MCLE compliance number. This gradual act of segregating
information—discarding some while retaining others, and retaining less over time—reveals
that the author of these markings must have engaged in a willful exercise that filtered those
that were to be discarded from those that were to be retained.
Respondent is rightly considered the author of these acts. Any claim that the error was
Page 30 of 169
committed by a secretary is inconsequential. As this court has stated in Gutierrez v.
Zulueta:55
The explanation given by the respondent lawyer to the effect that the failure is attributable
to the negligence of his secretary is devoid of merit. A responsible lawyer is expected to
supervise the work in his office with respect to all the pleadings to be filed in court and he
should not delegate this responsibility, lock, stock and barrel, to his office secretary. If it
were otherwise, irresponsible members of the legal profession can avoid appropriate
disciplinary action by simply disavowing liability and attributing the problem to the fault or
negligence of the office secretary. Such situation will not be countenanced by this Court.56
V
In the first place, it is doubtful that respondent has complied with the requirements of
paying his dues to the Integrated Bar of the Philippines, paying his annual professional tax,
and completing the necessary units for Mandatory Continuing Legal Education in the
periods concerned. To put it plainly, there would be no need for him to use incorrect
information if he had complied with all pertinent regulations.
In his Comment, respondent provided what are supposedly his correct professional details.
We emphasize, however, that he failed to attach to his Comment copies of the pertinent
official receipts, certifications, and other supporting documents. All that he relies on is a
self-serving recital of numbers and dates. None but respondent, himself, was in a better
position to produce the documents that could prove his claims. His failure to do so is, at the
very least, suspicious. It can very well mean that they do not exist, or that he willfully
desisted from producing them. The latter would be more damaging to respondent, as it calls
into operation the basic presumption "[t]hat evidence willfully suppressed would be
adverse if produced."57
Even assuming that the details provided by respondent in his Comment are correct, it still
remains that he (1) used a false IBP official receipt number, professional tax receipt
number, Roll of Attorneys number, and MCLE compliance number a total of seven (7)
times; and (2) used another lawyer's details seven (7) times.
In failing to accurately state his professional details, respondent already committed
punishable violations. An isolated inaccuracy, regardless of the concerned lawyer's lack of
bad faith, already merits a penalty of relative severity. In Bumactao v. Fano,58 respondent
Atty. Restito F. Fano was suspended from the practice of law for the singular violation of
indicating wrong MCLE compliance details:
Here, it is established that respondent Atty. Restito F. Fano falsely indicated "MCLE
Compliance No. III-0018308". . . . . The admitted falsity notwithstanding, respondent
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
endeavors to douse his culpability by shifting the blame to the MCLE providers - PLM and
IBP Quezon City Chapter — and insisting that he acted in good faith. He likewise attributes
the indication of "MCLE Compliance No. III-0018308" to his secretary / liaison, an "honest
mistake . . . because of the pressure of his many duties."
We are not impressed.
Bar Matter No. 1922, dated June 3, 2008, requires "practicing members of the bar to
indicate in all pleadings filed before the courts or quasi-judicial bodies, the number and
date of issue of their MCLE Certificate of Compliance or Certificate of Exemption, as may
be applicable. . . ." It further provides that "[f]ailure to disclose the required information
would cause the dismissal of the case and the expunction of the pleadings from the
records."
At the very least, respondent was negligent in failing to monitor his own MCLE
compliance. This is a sort of negligence that is hardly excusable. As a member of the legal
profession, respondent ought to have known that non-compliance would have resulted in
the rendering inutile of any pleading he may file before any tribunal. The grave
consequence of non-compliance notwithstanding, respondent (by his own account) admits
to having complacently relied on the statements of MCLE providers. His negligence,
therefore risked harm not only upon himself - he being now burdened with the present
complaint as a direct consequence - but worse, upon his clients, the reliefs they seek
through their pleadings being possibly rendered inoperative.59
This court has never shied away from disciplining lawyers who have willfully engaged in
acts of deceit and falsehood.
In Flores v. Chua,60 respondent Atty. Enrique S. Chua was disbarred on this court's finding
of "a habit, attitude, and mindset not only to abuse one's legal knowledge or training, but
also to deliberately defy or ignore known virtues and values which the legal profession
demands from its members."61 Atty. Enrique S. Chua was found to have notarized a
document that he knew to have been falsified so as to make it appear that a person had
personally appeared before him; this was part of a bigger design to defraud another.
In Nunga v. Viray,62 respondent Atty. Venancio Viray was suspended from the practice of
law for three (3) years after having been found to have notarized a document despite the
lapse of his commission as a notary public.
In Benguet Electric Cooperative v. Flores,63 respondent Atty. Ernesto B. Flores was
suspended from the practice of law for two (2) years after being found to have falsely stated
that he did not pursue an appeal so as to absolve himself of the charge of forum shopping
when, in fact, he had perfected an appeal.
Page 31 of 169
Here, respondent violated Bar Matter No. 287, Section 139(e) of the Local Government
Code, Bar Matter No. 1132, and Bar Matter No. 1922, a total of seven (7) times. The sheer
multiplicity of instances belies any claim that we are only dealing with isolated errors.
Regardless whether isolated or manifold, these inaccuracies alone already warrant
disciplinary sanctions. However, as shall be discussed, respondent also acted with
dishonest, deceitful, and even larcenous intent.
Respondent is not only accountable for inaccuracies. This case is far from being a matter of
clerical errors. He willfully used false information. In so doing, he misled courts,
litigants—his own client included— professional colleagues, and all others who may have
relied on the records and documents on which these false details appear.
Respondent's act of filing pleadings that he fully knew to contain false information is a
mockery of courts, chief of which is this court, considering that this court is the author of
all but one of the regulations that respondent violated. It is this court that requires
respondent to indicate his Roll of Attorneys number, IBP official receipt number, and
MCLE compliance number.
Having also violated a requirement spelled out in the Local Government Code, respondent
similarly made a mockery of an act of the legislature.
Respondent's profligacy does not stop here. He also appropriated for himself another
lawyer's professional details in seven (7) separate instances.
In seven distinct instances, respondent is accountable for three constituent acts of larceny,
taking, use, and profiting.
Seven times, respondent took for himself professional details that belonged to another. In
these seven instances, he used the same swiped details in his own pleadings. So too, in
these seven instances he personally benefited. In these instances, respondent succeeded in
making it appear that he filed valid pleadings and avoided the fatal consequences of a
deficiently signed pleading. He was able to pursue reliefs in court and carry on litigation
that could have been terminated as soon as his deficient pleadings were recognized.
All these instances of falsity, dishonesty, and professional larceny are similarly acts of
deceit. In using false information taken from another, respondent misled courts, parties, and
colleagues into believing that he was faithfully, truthfully, and decently discharging his
functions.
Respondent's acts reek of malicious intent to deceive courts. He was not only insubordinate
and disobedient of regulations; he was also dishonest, deceitful and duplicitous. Worse, he
was mocking and contemptuous.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
VI
The totality of respondent's actions demonstrates a degree of gravity that warrants
suspension from the practice of law for an extended period.
This case involves anything but trivial non-compliance. It is much graver. The confluence
of: (1) respondent's many violations; (2) the sheer multiplicity of rules violated; (3) the
frequency—nay, pattern—of falsity and deceit; and (4) his manifest intent to bring courts,
legal processes, and professional standards to disrepute brings to light a degree of depravity
that proves respondent worthy of being sanctioned. Having flagrantly disobeyed, deceived,
and ridiculed courts, respondent rightly stands to be at the receiving end of disciplinary
action.
Respondent's circumstances are well within the grounds for disciplining lawyers as
specified by Rule 138, Section 27 of the Rules of Court. His deception is well
demonstrated. He ran afoul of every single word, save perhaps his name, in the Lawyer's
Oath. Then again, it was his own signature, his own name, that respondent Pacifico M.
Maghari, III had disgraced.
Respondent's acts also demonstrate a violation of every single chapter of the Code of
Professional Responsibility.
Canon 1 of the Code of Professional Responsibility pronounces a lawyer's foremost duty
"to uphold the constitution, obey the laws of the land V and promote respect for law and
legal processes" Rule 1.01 of the same Code requires lawyers to "not engage in unlawful,
dishonest, immoral or deceitful conduct."
Per Canon 10 of the Code of Professional Responsibility, "[a] lawyer owes candor, fairness
and good faith to the court" Rule 10.01 requires lawyers to "not do any falsehood . . . or
allow the court to be misled by any artifice." Rule 10.03 imposes upon lawyers the duty of
faithfully "observ[ing] the rules of procedure [and] not misusing] them to defeat the ends of
justice." Canon 11 exhorts lawyers to "observe and maintain the respect due to the courts."
Respondent did not merely violate a statute and the many issuances of this court as regards
the information that members of the bar must indicate when they sign pleadings. He did so
in a manner that betrays intent to make a mockery of courts, legal processes, and
professional standards. By his actions, respondent ridiculed and toyed with the
requirements imposed by statute and by this court. He trampled upon professional
standards established not only by this court, in its capacity as overseer of the legal
profession, but by the Republic itself, through a duly enacted statute. In so doing, he
violated his duty to society and to the courts.
Canon 8 of the Code of Professional Responsibility requires a lawyer to "conduct himself
Page 32 of 169
with courtesy, fairness and candor toward his professional colleagues."
In appropriating information pertaining to his opposing counsel, respondent did not only
fail to observe common courtesy. He encroached upon matters that, ultimately, are personal
to another. This encroachment is, therefore, not only an act of trickery; it is also act of
larceny. In so doing, he violated his duty to the legal profession.
Canon 17 of the Code of Professional Responsibility imposes upon a lawyer "fidelity to the
cause of his client," while Canon 18 requires a lawyer to "serve his client with competence
and diligence."
In using false information in his pleadings, respondent unnecessarily put his own client at
risk. Deficiencies in how pleadings are signed can be fatal to a party's cause as unsigned
pleadings produce no legal effect. In so doing, respondent violated his duty to his clients.
It is tempting to think that the only thing respondent did was to deviate from required
formalities. Respondent was, himself, quite dismissive, stating that he did nothing more
than "cursorily [go] over . . . without giving any ... attention to details . . . that. . . are
matters of record and are easily verifiable."64 It is equally tempting to think it would be
excessive of this court to engage in an overly rigid, pedantic emphasis on formalistic
niceties.
However, we have demonstrated that what can otherwise be dismissed as empty formalities
are, in fact, necessary solemnities. They are not ends in themselves but crucial means to
enhance the integrity, competence and credibility of the legal profession. They are vital to
the dispensation of justice. The significance of these solemnities, along with the legal
profession's "high standard of legal proficiency, . . . morality, honesty, integrity[,] and fair
dealing[,]"65 put in contrast with how respondent has fallen dismally and disturbingly short
of the high standards that his profession demands, demonstrates the propriety of
momentarily suspending respondent from engaging in legal practice.
It is unsettling that respondent engaged in the mockery and ridicule that he did of the very
same badges—his place in the Roll of Attorneys, his membership in the Integrated Bar, his
recognition as a practicing professional, his continuing training and competence—that are
emblematic of his being a lawyer. Seeing as how he manifested such contempt for these
badges, we find that there is every reason for preventing him, at least temporarily, from
engaging in the profession these badges signify.
WHEREFORE, respondent Atty. Pacifico M. Maghari, III, having clearly violated his
Lawyer's Oath and the Canons of the Code of Professional Responsibility through his
unlawful, dishonest, and deceitful conduct, is SUSPENDED from the practice of law for
two (2) years, effective upon receipt of a copy of this Resolution.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Let copies of this Resolution be served on the Office of the Bar Confidant, the Integrated
Bar of the Philippines, and all courts in the country for their information and guidance. Let
a copy of this Resolution be attached to respondent Atty. Pacifico M. Maghari, III's
personal record as attorney.
SO ORDERED.chanroblesvirtuallawlibrary
SECOND DIVISION
G.R. No. 149576 August 8, 2006
REPUBLIC OF THE PHILIPPINES, represented by the Land Registration
Authority, Petitioner,
vs.
KENRICK DEVELOPMENT CORPORATION, Respondent.
DECISION
CORONA, J.:
The Republic of the Philippines assails the May 31, 2001 decision 1 and August 20, 2001
resolution of the Court of Appeals in CA-G.R. SP No. 52948 in this petition for review
under Rule 45 of the Rules of Court.
This case stemmed from the construction by respondent Kenrick Development Corporation
of a concrete perimeter fence around some parcels of land located behind the Civil Aviation
Training Center of the Air Transportation Office (ATO) in 1996. As a result, the ATO was
dispossessed of some 30,228 square meters of prime land. Respondent justified its action
with a claim of ownership over the property. It presented Transfer Certificate of Title
(TCT) Nos. 135604, 135605 and 135606 issued in its name and which allegedly originated
from TCT No. 17508 registered in the name of one Alfonso Concepcion.
ATO verified the authenticity of respondent’s titles with the Land Registration Authority
(LRA). On May 17, 1996, Atty. Jose Loriega, head of the Land Title Verification Task
Force of the LRA, submitted his report. The Registrar of Deeds of Pasay City had no record
of TCT No. 17508 and its ascendant title, TCT No. 5450. The land allegedly covered by
respondent’s titles was also found to be within Villamor Air Base (headquarters of the
Philippine Air Force) in Pasay City.
Page 33 of 169
By virtue of the report, the Office of the Solicitor General (OSG), on September 3, 1996,
filed a complaint for revocation, annulment and cancellation of certificates of title in behalf
of the Republic of the Philippines (as represented by the LRA) against respondent and
Alfonso Concepcion. It was raffled to Branch 114 of the Regional Trial Court of Pasay City
where it was docketed as Civil Case No. 96-1144.
On December 5, 1996, respondent filed its answer which was purportedly signed by Atty.
Onofre Garlitos, Jr. as counsel for respondent.
Since Alfonso Concepcion could not be located and served with summons, the trial court
ordered the issuance of an alias summons by publication against him on February 19, 1997.
The case was thereafter punctuated by various incidents relative to modes of discovery,
pre-trial, postponements or continuances, motions to dismiss, motions to declare defendants
in default and other procedural matters.
During the pendency of the case, the Senate Blue Ribbon Committee and Committee on
Justice and Human Rights conducted a hearing in aid of legislation on the matter of land
registration and titling. In particular, the legislative investigation looked into the issuance of
fake titles and focused on how respondent was able to acquire TCT Nos. 135604, 135605
and 135606.
During the congressional hearing held on November 26, 1998, one of those summoned was
Atty. Garlitos, respondent’s former counsel. He testified that he prepared respondent’s
answer and transmitted an unsigned draft to respondent’s president, Mr. Victor Ong. The
signature appearing above his name was not his. He authorized no one to sign in his behalf
either. And he did not know who finally signed it.
With Atty. Garlitos’ revelation, the Republic promptly filed an urgent motion on December
3, 1998 to declare respondent in default, 2 predicated on its failure to file a valid answer.
The Republic argued that, since the person who signed the answer was neither authorized
by Atty. Garlitos nor even known to him, the answer was effectively an unsigned pleading.
Pursuant to Section 3, Rule 7 of the Rules of Court, 3 it was a mere scrap of paper and
produced no legal effect.
On February 19, 1999, the trial court issued a resolution granting the Republic’s
motion. 4 It found respondent’s answer to be sham and false and intended to defeat the
purpose of the rules. The trial court ordered the answer stricken from the records, declared
respondent in default and allowed the Republic to present its evidence ex parte.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
The Republic presented its evidence ex parte, after which it rested its case and formally
offered its evidence.
Meanwhile, respondent sought reconsideration of the February 19, 1999 resolution but the
trial court denied it.
Aggrieved, respondent elevated the matter to the Court of Appeals via a petition for
certiorari 5 seeking to set aside the February 19, 1999 resolution of the trial court.
Respondent contended that the trial court erred in declaring it in default for failure to file a
valid and timely answer.
On May 31, 2001, the Court of Appeals rendered the assailed decision. It found Atty.
Garlitos’ statements in the legislative hearing to be unreliable since they were not subjected
to cross-examination. The appellate court also scrutinized Atty. Garlitos’ acts after the
filing of the answer 6 and concluded that he assented to the signing of the answer by
somebody in his stead. This supposedly cured whatever defect the answer may have had.
Hence, the appellate court granted respondent’s petition for certiorari. It directed the lifting
of the order of default against respondent and ordered the trial court to proceed to trial with
dispatch. The Republic moved for reconsideration but it was denied. Thus, this petition.
Did the Court of Appeals err in reversing the trial court’s order which declared respondent
in default for its failure to file a valid answer? Yes, it did.
A party may, by his words or conduct, voluntarily adopt or ratify another’s
statement. 7 Where it appears that a party clearly and unambiguously assented to or adopted
the statements of another, evidence of those statements is admissible against him. 8 This is
the essence of the principle of adoptive admission.
An adoptive admission is a party’s reaction to a statement or action by another person when
it is reasonable to treat the party’s reaction as an admission of something stated or implied
by the other person. 9 By adoptive admission, a third person’s statement becomes the
admission of the party embracing or espousing it. Adoptive admission may occur when a
party:
(a) expressly agrees to or concurs in an oral statement made by another; 10
(b) hears a statement and later on essentially repeats it; 11
(c) utters an acceptance or builds upon the assertion of another; 12
Page 34 of 169
(d) replies by way of rebuttal to some specific points raised by another but ignores further
points which he or she has heard the other make 13 or
(e) reads and signs a written statement made by another. 14
Here, respondent accepted the pronouncements of Atty. Garlitos and built its case on them.
At no instance did it ever deny or contradict its former counsel’s statements. It went to
great lengths to explain Atty. Garlitos’ testimony as well as its implications, as follows:
1. While Atty. Garlitos denied signing the answer, the fact was that the answer was signed.
Hence, the pleading could not be considered invalid for being an unsigned pleading. The
fact that the person who signed it was neither known to Atty. Garlitos nor specifically
authorized by him was immaterial. The important thing was that the answer bore a
signature.
2. While the Rules of Court requires that a pleading must be signed by the party or his
counsel, it does not prohibit a counsel from giving a general authority for any person to
sign the answer for him which was what Atty. Garlitos did. The person who actually signed
the pleading was of no moment as long as counsel knew that it would be signed by another.
This was similar to addressing an authorization letter "to whom it may concern" such that
any person could act on it even if he or she was not known beforehand.
3. Atty. Garlitos testified that he prepared the answer; he never disowned its contents and
he resumed acting as counsel for respondent subsequent to its filing. These circumstances
show that Atty. Garlitos conformed to or ratified the signing of the answer by another.
Respondent repeated these statements of Atty. Garlitos in its motion for reconsideration of
the trial court’s February 19, 1999 resolution. And again in the petition it filed in the Court
of Appeals as well as in the comment 15 and memorandum it submitted to this Court.
Evidently, respondent completely adopted Atty. Garlitos’ statements as its own.
Respondent’s adoptive admission constituted a judicial admission which was conclusive on
it.
Contrary to respondent’s position, a signed pleading is one that is signed either by the party
himself or his counsel. Section 3, Rule 7 is clear on this matter. It requires that a pleading
must be signed by the party or counsel representing him.
Therefore, only the signature of either the party himself or his counsel operates to validly
convert a pleading from one that is unsigned to one that is signed.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Counsel’s authority and duty to sign a pleading are personal to him. He may not delegate it
to just any person.
The signature of counsel constitutes an assurance by him that he has read the pleading; that,
to the best of his knowledge, information and belief, there is a good ground to support it;
and that it is not interposed for delay. 16 Under the Rules of Court, it is counsel alone, by
affixing his signature, who can certify to these matters.
The preparation and signing of a pleading constitute legal work involving practice of law
which is reserved exclusively for the members of the legal profession. Counsel may
delegate the signing of a pleading to another lawyer 17 but cannot do so
in favor of one who is not. The Code of Professional Responsibility provides:
Rule 9.01 ― A lawyer shall not delegate to any unqualified person the performance of any
task which by law may only be performed by a member of the Bar in good standing.
Moreover, a signature by agents of a lawyer amounts to signing by unqualified
persons, 18 something the law strongly proscribes.
Therefore, the blanket authority respondent claims Atty. Garlitos entrusted to just anyone
was void. Any act taken pursuant to that authority was likewise void. There was no way it
could have been cured or ratified by Atty. Garlitos’ subsequent acts.
Moreover, the transcript of the November 26, 1998 Senate hearing shows that Atty.
Garlitos consented to the signing of the answer by another "as long as it conformed to his
draft." We give no value whatsoever to such self-serving statement.
No doubt, Atty. Garlitos could not have validly given blanket authority for just anyone to
sign the answer. The trial court correctly ruled that respondent’s answer was invalid and of
no legal effect as it was an unsigned pleading. Respondent was properly declared in default
and the Republic was rightly allowed to present evidence ex parte.
Respondent insists on the liberal application of the rules. It maintains that even if it were
true that its answer was supposedly an unsigned pleading, the defect was a mere
technicality that could be set aside.
Procedural requirements which have often been disparagingly labeled as mere technicalities
have their own valid raison d’ etre in the orderly administration of justice. To summarily
brush them aside may result in arbitrariness and injustice. 19
Page 35 of 169
The Court’s pronouncement in Garbo v. Court of Appeals 20 is relevant:
Procedural rules are [tools] designed to facilitate the adjudication of cases. Courts and
litigants alike are thus [enjoined] to abide strictly by the rules. And while the Court, in
some instances, allows a relaxation in the application of the rules, this, we stress, was never
intended to forge a bastion for erring litigants to violate the rules with impunity. The
liberality in the interpretation and application of the rules applies only in proper cases and
under justifiable causes and circumstances. While it is true that litigation is not a game of
technicalities, it is equally true that every case must be prosecuted in accordance with the
prescribed procedure to insure an orderly and speedy administration of justice.
Like all rules, procedural rules should be followed except only when, for the most
persuasive of reasons, they may be relaxed to relieve a litigant of an injustice not
commensurate with the degree of his thoughtlessness in not complying with the prescribed
procedure. 21 In this case, respondent failed to show any persuasive reason why it should be
exempted from strictly abiding by the rules.
As a final note, the Court cannot close its eyes to the acts committed by Atty. Garlitos in
violation of the ethics of the legal profession. Thus, he should be made to account for his
possible misconduct.
WHEREFORE, the petition is hereby GRANTED. The May 31, 2001 decision and
August 20, 2001 resolution of the Court of Appeals in CA-G.R. SP No. 52948
are REVERSED and SET ASIDE and the February 19, 1999 resolution of the Regional
Trial Court of Pasay City, Branch 114 declaring respondent in default is
hereby REINSTATED.
Let a copy of this decision be furnished the Commission on Bar Discipline of the Integrated
Bar of the Philippines for the commencement of disbarment proceedings against Atty.
Onofre Garlitos, Jr. for his possible unprofessional conduct not befitting his position as an
officer of the court.
SO ORDERED.
G.R. No. 204325, April 18, 2016
LYNMAN BACOLOR, JEFFREY R. GALURA, HELEN B. TORRES, FRITZIE C.
VELLEGAS, RAYMOND CANLAS AND ZHEILA C. TORRES,*Petitioners, v. VL
MAKABALI MEMORIAL HOSPITAL, INC., ALEJANDRO S. MAKABALI,
MELCHOR CATAMBING AND DAX M. TIDULA, Respondents.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
DECISION
DEL CASTILLO, J.:
Rules of procedure must be used to achieve speedy and efficient administration of justice
and not derail it. When strict application of the rules on verification and non-forum
shopping will result in patent denial of substantial justice, these rules may be construed
liberally. After all, the ends of justice are better served when cases are determined on the
merits, not on mere technicality.1
This Petition for Review on Certiorari assails the Resolution2 dated July 12, 2012 of the
Court of Appeals (CA) in CA-G.R. SP No. 125333. The CA dismissed the Petition
for Certiorari filed therewith because of the purported defective Verification/Certificate of
Non-Forum Shopping with Undertaking appended to the Petition; and of petitioners'
violation of Section 3, Rule 46 of the Rules of Court. Also challenged is, the CA
Resolution3 dated October 22, 2012 which denied the Motion for Reconsideration for lack
of merit.
Factual Antecedents
The case stemmed from an amended Complaint4 for illegal dismissal and money claims
filed by Drs. Lynman Bacolor (Dr. Bacolor), Jeffrey R. Galura (Dr. Galura), Helen B.
Torres (Dr. Helen), Fritzie C. Villegas (Dr. Villegas), Raymond Canlas (Dr. Canlas), Zheila
C. Torres (Dr. Zheila) and Dax Tidula (Dr. Tidula) against VL Makabali Hospital Inc. (the
Hospital), Alejandro S. Makabali, its owner and President, and Melchor Catambing
(Catambing), its Emergency Room (ER) Manager.5
Allegedly, the Hospital engaged Drs. Bacolor, Galura, Villegas and Canlas as resident
physicians assigned in its ER for one year, commencing October 2000 until October 2001.
It engaged Drs. Helen and Zheila, also as ER resident physicians, starting March 2001 until
March 2002, and January 2002 until January 2003, respectively. Despite the expiration of
their contracts, the Hospital continued to employ Drs. Bacolor, Galura, Villegas, Canlas,
Helen and Zheila (petitioners).6
Petitioners stated that on May 3, 2006, Catambing and one Dr. Lopez instructed them to
resign, and re-apply to the Hospital as resident physicians under a one-year fixed term
contract. They further alleged that Catambing and Dr. Lopez later directed them to sign a.
waiver and offered them "gratitude" pay of P27,000.00 but they refused to resign; and
because of their refusal, respondents demoted them as assistant physicians in the
Operating-Room (OR) of the Hospital.7
Additionally, petitioners insisted that to compel them to resign, respondents issued notices
Page 36 of 169
to explain to Drs. Bacolor, Galura, Helen, Villegas and Canlas. In particular, Drs. Bacolor,
Galura and Helen were charged with dishonesty for allegedly directing patients to secure
laboratory examinations outside the Hospital; while Drs. Villegas and Canlas were charged
with violation of timekeeping procedure and habitual violation of rules and regulations. 8
Consequently, petitioners filed a case for constructive illegal dismissal against respondents.
They argued that despite their complaint, respondents still conducted an administrative
investigation against them.9 On June 30, 2006, Drs. Bacolor and Galura received notices of
termination from the Hospital.10
Petitioners contended that they were constructively dismissed when respondents demoted
them as assistant physicians in the OR of the Hospital.11 They stated that such demotion
was neither necessary nor temporary, and was arbitrarily done to force them to resign. They
further averred that Drs. Bacolor and Galura were actually illegally dismissed after they
were given respective notices of termination.12
On the other hand, Dr. Tidula stated that the Hospital engaged him as resident physician for
a year commencing on January 1, 2001 to December 31, 2001; the Hospital renewed his
contract for the year 2002 to 2003; and after his contract expired, the Hospital continued to
engage his services.13
Dr. Tidula likewise alleged that in 2005, several resident physicians in the Hospital
resigned. As a result, the remaining resident physicians were made to fill in their duties.
Allegedly, it was agreed upon that when a resident doctor was absent, a reliever would take
his place; and the reliever's fee would be charged against the salary of the absent doctor.
Dr. Tidula claimed that the reliever shall punch in the time card of the absent doctor for t
recording, accounting and expediency purposes.14
Furthermore, Dr. Tidula asserted that in February 2006, Dr. Amelita Lising (Dr. Lising),
who was a resident physician, went on leave. He averred that being the acting Chief
Resident, he implemented the agreement regarding the designation of reliever. He stated
that the relievers of Dr. Lising were made to punch in and out her time card to prove that
they had taken her place; and they received salary from that intended for Dr. Lising. 15
Dr. Tidula narrated that on May 3, 2006, he and his fellow residents were directed to resign
with the promise that they would be re-engaged under a fixed term of one year. He averred
that Catambing and Dr. Lopez also instructed him and the other resident physicians to
tender their resignation and sign a waiver in favor of the Hospital. He alleged that they
were also offered P27,000.00 as financial assistance; however, he and the other resident
physicians refused to resign.16
Additionally, Dr. Tidula alleged that on May 16, 2006, he was ordered to report exclusively
at the OR of the Hospital as assistant physician; and this demotion was a result of his
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
refusal to resign. Consequently, he filed a complaint for constructive dismissal against the
Hospital.17
Later, Catambing gave Dr. Tidula a Notice18 of dismissal for violation of timekeeping
procedure. Dr. Tidula stated that he inquired from Catambing why he was not given any
notice to explain. Purportedly, Catambing informed him that a notice to explain was sent
through a private courier. Upon verification, Dr. Tidula discovered that the notice was
delivered to a person unknown to him. He informed the Hospital about the matter but the
Hospital insisted that he was given the opportunity to explain and was invited to an
investigation, as such, the sanction against him remains.19
Dr. Tidula argued that he was illegally dismissed since he did not receive a notice to
explain; and he did not violate any of the company rules. 20
For their part, respondents asserted that Drs. Tidula, Bacolor and Galura were validly
dismissed. In particular, they alleged that Dr. Tidula violated timekeeping procedure of the
Hospital when he punched in Dr. Lising's time card on February 2, 6, 10 and 12,
2006.21 On the other hand Drs. Bacolor and Galura were found guilty of referring patients
to other clinics for laboratory examination in February 2006. 22
Moreover, respondents claimed that the Hospital did not dismiss Drs. Helen, Villegas and
Canlas; thus, they should be dropped from the complaint. They added that Dr. Zheila was
never cited for any infraction but she abandoned her work as she had been absent since July
2006.23
Ruling of the Labor Arbiter
On July 23, 2010, the LA rendered a Decision 24 finding respondents guilty of illegally
dismissing petitioners and Dr. Tidula, as well as ordering respondents to pay them
backwages from the time of their dismissal until finality of the Decision, and separation
pay. The LA also ordered the Hospital to pay petitioners and Dr. Tidula moral damages of
P100,000.00 each and exemplary damages of P100,000.00 each, and attorney's fees.
The Hospital appealed to the National Labor Relations Commission (NLRC).25cralawred
Ruling of the National Labor Relations Commission
On November 11, 2011, the NLRC reversed and set aside the LA Decision and dismissed
the complaints.26 It held that there was no showing that petitioners and Dr. Tidula were
demoted, and that such demotion amounted to constructive dismissal. It ruled that "it would
be difficult to discern the differences between the duties of a resident and assistant
physician, as both indubitably perform doctor's duties."27 Also, the NLRC decreed that Dr.
Zheila did not even sign the verification and certificate of non-forum shopping in this case.
Page 37 of 169
Moreover, the NLRC gave credence to respondents' position that Drs. Bacolor and Galura
were validly dismissed because they repeatedly referred patients to another clinic for
laboratory examinations. It ruled that such was an act of deceit because the Hospital offered
the same services.
On April 18, 2012, the NLRC denied petitioners and Dr. Tidula's motion for
reconsideration.28
Aggrieved, petitioners filed a Petition for Certiorari with the CA ascribing grave abuse of
discretion on the part of the NLRC in giving due course to the appeal despite its alleged
lack of appeal bond; and in reversing the LA Decision.
The Petition was accompanied by three separate Verifications/Certificates of Non-Forum
Shopping signed by Drs. Galura, Bacolor and Helen.29 Atty. Carlos Raphael N. Francisco
executed and signed a Verification/Certificate of Non-Forum Shopping with Undertaking
in behalf of Drs. Villegas, Canlas and Zheila.30
Ruling of the Court of Appeals
On July 12, 2012, the CA issued the assailed Resolution, the pertinent portions of which
read:
chanRoblesvirtualLawlibrary
The Petition for Certiorari contains the following infirmities, hence is DISMISSED:
1. The Verification/Certification of Non-Forum Shopping With Undertaking attached to the
Petition is executed by Atty. Carlos Raphael N. Francisco, allegedly [sic] counsel of record
of petitioners Fritzie C. Villegas, Raymond Canlas and Zeila C. Torres, not by the three
petitioners themselves, in violation of Rule 7, Section 5 of the Rules of Court, and the
ruling in Far Eastern Shipping Company v. Court of Appeals et al.
2. The Petition does not indicate in its title that Dax Tidula is a party respondent, although
in the portion entitled 'Parties' he is so named, and does not indicate the address of Dax
Tidula, all in violation of Rule 46, Section 3 of the Rules of Court, in relation to Rule 65 of
the same Rules.
SO ORDERED.31ChanRoblesVirtualawlibrary
On October 22, 2012, the CA denied petitioners' Motion for Reconsideration. 32
Aggrieved, petitioners filed this Petition raising the following assignment of errors:
chanRoblesvirtualLawlibrary
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
1 THE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE
IN A WAY NOT PROBABLY IN ACCORD WITH LAW OR WITH THE
APPLICABLE DECISIONS OF THE HONORABLE COURT WHEN THE
COURT OF APPEALS DISMISSED THE PETITION FOR CERTIORARI OF
THE PETITIONERS DESPITE THE FACT THAT SEVERAL OF THE
PETITIONERS HAD VALIDLY EXECUTED VERIFICATIONS AND
CERTIFICATES OF NON-FORUM SHOPPING WHICH WERE ATTACHED
TO SAID PETITION FOR CERTIORARI;
2 THE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE
IN A WAY NOT PROBABLY IN ACCORD WITH LAW OR WITH THE
APPLICABLE DECISIONS OF THE HONORABLE COURT WHEN THE
COURT OF APPEALS DISMISSED THE PETITION FOR CERTIORARI OF
THE PETITIONERS DESPITE THE FACT THAT THE PETITIONERS HAD
SUBSTANTIALLY COMPLIED WITH THE RULES ON THE EXECUTION OF
A VERIFICATION AND CERTIFICATE OF NON-FORUM SHOPPING;
3 Petitioners argue that the verifications executed by three of the six petitioners and the
THE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE
IN A WAY NOT PROBABLY IN ACCORD WITH LAW OR WITH THE
APPLICABLE DECISIONS OF THE-HONORABLE COURT WHEN THE
COURT OF APPEALS. DISMISSED THE PETITION FOR CERTIORARI OF
THE PETITIONERS DESPITE THE FACT THAT THE ONLY KNOWN
ADDRESS OF RESPONDENT TIDULA WAS INCLUDED IN THE PETITION
FOR CERTIORARI AND THAT RESPONDENT TIDULA, THROUGH HIS
COUNSEL, WAS SERVED WITH A COPY OF SUCH PETITION FOR
CERTIORARI;
4 THE COURT OF APPEALS SANCTIONED A DEPARTURE BY THE NLRC IN
NLRC CASE NO[.] RAB. III-06-10180-06 FROM THE ACCEPTED OR USUAL
COURSE OF JUDICIAL PROCEEDINGS AS THE COURT OF APPEALS
ALLOWED THE NLRC TO VIRTUALLY EXTEND THE PERIOD OF THE
RESPONDENT HOSPITAL TO FILE AN APPEAL FOR ALMOST FOUR
MONTHS FROM THE EXPIRATION OF THE PERIOD TO FILE SUCH
APPEAL;
Page 38 of 169
5
THE COURT OF APPEALS SANCTIONED A DEPARTURE BY THE NLRC IN
NLRC CASE NO[.] RAB. 111-06-10180-06 FROM THE ACCEPTED OR
USUAL COURSE OF JUDICIAL PROCEEDINGS AS THE COURT OF
APPEALS ALLOWED THE NLRC TO GIVE DUE COURSE TO AN APPEAL
THAT WAS CLEARLY FILED OUT OF TIME AND TO MODIFY THE
DECISION OF THE LABOR ARBITER THAT WAS ALREADY FINAL AND
EXECUTORY; and
6
THE COURT OF APPEALS SANCTIONED A DEPARTURE BY THE NLRC IN
NLRC CASE NO[.] RAB. III-06-10180-06 FROM THE ACCEPTED OR USUAL
COURSE OF JUDICIAL PROCEEDINGS AS THE COURT OF APPEALS
TOLERATED THE GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR EXCESS OF JURISDICTION COMMITTED BY THE NLRC IN
REVERSING IN TOTO THE DECISION OF THE LABOR ARBITER DESPITE
THE FACT THAT SUCH REVERSAL IS NOT SUPPORTED BY ANY
EVIDENCE ON RECORD AND BY THE APPLICABLE LAWS.33
verification executed by their counsel constituted full compliance with the required
verification. They contended that the three petitioners who made their verification are real
parties-in-interest, and their counsel who also verified the Petition had been in possession
of authentic and relevant records of the case.
Also, petitioners posit that the failure of Drs. Villegas, Canlas and Zheila to execute a
certificate of non-forum shopping should not have caused the dismissal of the Petition
for Certorari. They insist that under justifiable circumstances, the signature of one of the
petitioners in the certificate against forum shopping substantially complies with the rules.
They further point out that all of them share a common interest and invoke a common cause
of action under the same set of facts.
Moreover, petitioners submit that they complied with Section 3, Rule 46 of the Rules of
Court. They contend that they included Dr. Tidula in the Petition for Certiorari as
respondent because he remains interested in the reversal of the NLRC Decision and
Resolution. They add that from the inception of the case, all pleadings had been coursed
through Dr. Tidula's counsel; and they are unaware of the address of Dr. Tidula as he never
indicated it in his position paper. Hence, they maintain that it is fair that in the present
proceeding, any pleading intended for Dr. Tidula be sent to his counsel.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
In addition, petitioners state that the non-inclusion of Dr. Tidula is not a fatal defect but a
mere typographical error which does not prejudice the rights of any party.
Finally, petitioners fault the CA in not finding that the NLRC committed grave abuse of
discretion in giving due course to the Hospital's appeal despite its failure to post appeal
bond within the period to perfect an appeal. They also maintain that the NLRC committed
grave abuse of discretion in holding that they were not illegally dismissed by respondents.
The Hospital, on the other hand, asserts that the CA correctly dismissed the Petition
because it was filed by a counsel who had no authority from petitioners; and that the
Certificate against Forum Shopping attached thereto was fatally defective. It also declares
that the Petition for Certiorari improperly impleaded Dr. Tidula as respondent. Lastly, it
contends that petitioners are not entitled to money claims.
Our Ruling
The Petition is meritorious.
In Altres v. Empleo,34 the Court summarized the basic tenets involving non-compliance
with the requirements on, or filing of defective verification and certificate against forum
shopping, to wit:
chanRoblesvirtualLawlibrary
1) A distinction must be made between non-compliance with the requirement on or
submission of defective verification, and non-compliance with the requirement on or
submission of defective certification against forum shopping.
2) As to verification, non-compliance therewith or a defect therein does not necessarily
render the pleading fatally defective. The court may order its submission or correction or
act on the pleading if the attending circumstances are such that strict compliance with the
Rule may be dispensed with in order that the ends of justice may be served thereby.
3) Verification is deemed substantially complied with when one who has ample knowledge
to swear to the truth of the allegations in the complaint or petition signs the verification,
and when matters alleged in the petition have been made in good faith or are true and
correct.
4) As to certification against forum shopping, non-compliance therewith or a defect therein,
unlike in verification, is generally not curable by its subsequent submission or correction
thereof, unless there is a need to relax the Rule on the ground of "substantial compliance"
or presence of "special circumstances or compelling reasons".
5) The certification against forum shopping must be signed by all the plaintiffs or
petitioners in a case; otherwise, those who did not sign will be dropped as parties to the
Page 39 of 169
case. Under reasonable or justifiable circumstances, however, as when all the plaintiffs or
petitioners share a common interest and invoke a common cause of action or defense, the
signature of only one of them in the certification against forum shopping substantially
complies with the Rule.
6) Finally, the certification against forum shopping must be executed by the party-pleader,
not by his counsel. If, however, for reasonable or justifiable reasons, the party-pleader is
unable to sign, he must execute a Special Power of Attorney designating his counsel of
record to sign on his behalf.
The CA dismissed the Petition for Certiorari on the ground that the Verification/Certificate
of Non-Forum Shopping executed by petitioners' counsel on behalf of Drs. Villegas, Canlas
and Zheila violated Section 5, Rule 7 of the Rules of Court. 35
As properly pointed out by the CA, the Verification/Certificate of Non-Forum Shopping
with Undertaking executed by petitioners' counsel is not valid. As stated in Altres, a
certificate against forum shopping must be signed by the party and in case his counsel signs
the same on his behalf, the counsel must be armed with a special power of attorney. Since
petitioners' counsel is not shown to have been authorized by Drs. Villegas, Canlas and
Zheila to sign a certificate of non-forum shopping on their behalf, the execution of said
certificate by counsel violates the foregoing rules.
Nonetheless, the CA failed to consider the concept of "substantial compliance" to the
requirements of verification and certificate of non-forum shopping, as it has been shown
that three of the six petitioners executed their own verification and certificate against forum
shopping.
The verification of a pleading is a formal and not a jurisdictional requirement. It is intended
to assure that the allegations in a pleading are true and correct. As such, the court may
order the correction of unverified pleadings, or it may act on them and waive strict
compliance with the rules.36
The verification requirement is deemed substantially complied with when a person who has
sufficient knowledge to swear to the truth of the allegations in the complaint or petition
signs the verification; and matters alleged therein have been made in good faith or are true
and correct. Thus, there is substantial compliance if at least one of the petitioners makes a
proper verification.37
In Ateneo de Naga University v. Manalo,38 the signature of one of three petitioners therein
was considered substantial compliance with the verification requirement. The Court held
that Fr. Tabora, the petitioner who signed the verification, has sufficient knowledge to
swear to the truth of the allegations in the petition filed with the CA; and his signature was
ample assurance that the allegations have been made in good faith or are true and correct.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
In SKM Art Craft Corporation v. Bauca,39 the Court held that the verification and
certificate against forum shopping signed by nine out of 23 respondents substantially
complied with the verification requirement since they have common interest and cause of
action. The Court likewise stated that the apparent merit of the petition and the conflicting
findings, of the LA and the NLRC also justified the decision of the CA to resolve the case
on the merits.
In this case, three out of six petitioners signed three separate verifications appended to the
Petition for Certiorari. Their signatures are sufficient assurance that the allegations in the
Petition were made in good faith, or are true and correct. Thus, there is substantial
compliance with the verification requirement.
On the other hand, as a rule, the certificate against forum shopping must be signed by all
plaintiffs or petitioners; otherwise, those who did not sign will be dropped as parties to the
case. Under reasonable or justifiable situations, such as when the plaintiffs or petitioners
share a common interest and invoke a common cause of action or defense, the signature of
one of them in the certificate against forum shopping is considered substantial compliance
with the rules.40cralawred
In Abaria v. National Labor Relations Commission,41 47 out of 88 petitioners signed the
certificate against forum shopping. The Court ruled that the petitioning employees shared a
common interest and cause of action when they filed the case for illegal dismissal. The
Court decreed ,that when petitioners therein appealed to the CA, they pursued the case as a
collective body, invoking one argument in support of their cause of action, which is, the
illegal dismissal purportedly committed by their employer when union members resorted to
strike due to the employer's refusal to bargain with officers of the local chapter.
Furthermore, in Torres v. Specialized Packaging Development Corp.,42 the Court allowed
the relaxation of the rules on submission. of certificate against forum shopping. One of the
compelling grounds for the allowance of said certificate therein where only two of 25
petitioners signed the same was the "apparent merits of the substantive aspects of the case."
It noted that the varying views of the LA and the NLRC give ample basis for the necessity
of a review on the merits and the outright dismissal of the petition was prejudicial to the
substantive rights.
Here, three of six petitioners signed the certificate of non-forum shopping. At the least, the
CA could have ordered that those who did not sign it be dropped as parties, but not the
outright dismissal of the Petition.
The Court, nevertheless, holds that there are justifiable reasons for the relaxation of the
rules on the filing of a certificate of non-forum shopping and that the certificate against
forum shopping signed by three out of six petitioners suffices.
Page 40 of 169
Specifically, petitioners' cause of action revolves on the same issue, that is, respondents
illegally dismissed them under similar circumstances. They were all resident physicians
who were purportedly 1) re-employed by the Hospital even after the expiration of their
respective one year contracts; 2) forced to resign and offered to be re-engaged as fixed term
employees but declined; 3) demoted; 4) accused of violations of the Hospital rules and
regulations; and, 5) dismissed.
Moreover, substantial justice dictates that the Petition for Certiorari be given due course
and be resolved on the merits. This is especially so since the findings of the LA are
contrary to those of the NLRC,43 particularly on the issues of whether respondents illegally
dismissed petitioners and of whether they were afforded due process of law.
The requirement of strict compliance with the rules on filing of certificate against forum
shopping highlights the mandatory character of the submission of such certificate.
However, this mandatory requirement allows substantial compliance provided that there are
justifiable circumstances for the relaxation of the rules.44
Furthermore, the CA dismissed the Petition for Certiorari because it did not indicate in its
title that Dr. Tidula is a party respondent and the Petition did not state Dr. Tidula's actual
address. The CA held that these omissions violate Section 3, 45 Rule 46 of the Rules of
Court, in relation to Rule 65 thereof.
We do not agree.
Since Dr. Tidula was included as one of the respondents in the body of the Petition, then
the CA could have clarified with petitioners the non-inclusion of Dr. Tidula in the title and
could have ordered the title rectified.
Likewise, the Court finds that the failure to state the address of Dr. Tidula is insufficient to
cause the dismissal of the Petition. The lack of address of Dr. Tidula is not a fatal defect as
he had been represented by his counsel in the case. The indication that the party "could be
served with process care of his counsel was substantial compliance with the Rules." And,
when a party has appeared through counsel, service is to be made upon the counsel, unless
the court expressly orders that it be made upon the party. 46
In view of the foregoing, a remand of the case to the CA for proper disposition on the
merits is deemed proper.chanrobleslaw
WHEREFORE, the Petition is GRANTED. The July 42, 2012 and October 22, 2012
Resolutions of the Court of Appeals in CA-G.R. SP No. 125333 are REVERSED and SET
ASIDE. The case is REMANDED to the Court of Appeals for appropriate disposition.
[G.R. NO. 151413 : February 13, 2008]
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
CAGAYAN VALLEY DRUG CORPORATION, Petitioner, v. COMMISSIONER OF
INTERNAL REVENUE, Respondent.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review under Rule 45 of the Rules of Court seeks the recall of the August
31, 2000 Resolution1 of the Court of Appeals (CA) in CA-G.R. SP No. 59778, which
dismissed petitioner Cagayan Valley Drug Corporation's Petition for Review of the April
26, 2000 Decision2 of the Court of Tax Appeals (CTA) in C.T.A. Case No. 5581 on the
ground of defective verification and certification against forum shopping.
The Facts
Petitioner, a corporation duly organized and existing under Philippine laws, is a duly
licensed retailer of medicine and other pharmaceutical products. It operates two drugstores,
one in Tuguegarao, Cagayan, and the other in Roxas, Isabela, under the name and style of
"Mercury Drug."
Petitioner alleged that in 1995, it granted 20% sales discounts to qualified senior citizens on
purchases of medicine pursuant to Republic Act No. (RA) 7432 3 and its implementing rules
and regulations.
In compliance with Revenue Regulation No. (RR) 2-94, petitioner treated the 20% sales
discounts granted to qualified senior citizens in 1995 as deductions from the gross sales in
order to arrive at the net sales, instead of treating them as tax credit as provided by Section
4 of RA 7432.
On December 27, 1996, however, petitioner filed with the Bureau of Internal Revenue
(BIR) a claim for tax refund/tax credit of the full amount of the 20% sales discount it
granted to senior citizens for the year 1995, allegedly totaling to PhP 123,083 in accordance
with Sec. 4 of RA 7432.
The BIR's inaction on petitioner's claim for refund/tax credit compelled petitioner to file on
March 18, 1998 a Petition for Review before the CTA docketed as C.T.A. Case No. 5581
in order to forestall the two-year prescriptive period provided under Sec. 2304 of the 1977
Page 41 of 169
Tax Code, as amended. Thereafter, on March 31, 2000, petitioner amended its Petition for
Review .
The Ruling of the Court of Tax Appeals
On April 26, 2000, the CTA rendered a Decision dismissing the Petition for Review for
lack of merit.5
The CTA sustained petitioner's contention that pursuant to Sec. 4 of RA 7432, the 20%
sales discounts petitioner extended to qualified senior citizens in 1995 should be treated as
tax credit and not as deductions from the gross sales as erroneously interpreted in RR 2-94.
The CTA reiterated its consistent holdings that RR 2-94 is an invalid administrative
interpretation of the law it purports to implement as it contravenes and does not conform to
the standards RA 7432 prescribes.
Notwithstanding petitioner's entitlement to a tax credit from the 20% sales discounts it
extended to qualified senior citizens in 1995, the CTA nonetheless dismissed petitioner's
action for refund or tax credit on account of petitioner's net loss in 1995. First, the CTA
rejected the refund as it is clear that RA 7432 only grants the 20% sales discounts extended
to qualified senior citizens as tax credit and not as tax refund. Second, in rejecting the tax
credit, the CTA reasoned that while petitioner may be qualified for a tax credit, it cannot be
so extended to petitioner on account of its net loss in 1995.
The CTA ratiocinated that on matters of tax credit claim, the government applies the
amount determined to be reimbursable after proper verification against any sum that may
be due and collectible from the taxpayer. However, if no tax has been paid or if no amount
is due and collectible from the taxpayer, then a tax credit is unavailing. Moreover, it held
that before allowing recovery for claims for a refund or tax credit, it must first be
established that there was an actual collection and receipt by the government of the tax
sought to be recovered. In the instant case, the CTA found that petitioner did not pay any
tax by virtue of its net loss position in 1995.
Petitioner's Motion for Reconsideration was likewise denied through the appellate tax
court's June 30, 2000 Resolution.6
The Ruling of the Court of Appeals
Aggrieved, petitioner elevated the matter before the CA, docketed as CA-G.R. SP No.
59778. On August 31, 2000, the CA issued the assailed Resolution7 dismissing the petition
on procedural grounds. The CA held that the person who signed the verification and
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
certification of absence of forum shopping, a certain Jacinto J. Concepcion, President of
petitioner, failed to adduce proof that he was duly authorized by the board of directors to do
so.
As far as the CA was concerned, the main issue was whether or not the verification and
certification of non-forum shopping signed by the President of petitioner is sufficient
compliance with Secs. 4 and 5, Rule 7 of the 1997 Rules of Civil Procedure.
The verification and certification in question reads:
I, JACINTO J. CONCEPCION, of legal age with office address at 2 nd Floor, Mercury Drug
Corporation, No. 7 Mercury Ave, Bagumbayan, Quezon City, under oath, hereby state that:
1. I am the President of Cagayan Valley Drug Corporation, Petitioner in the above-entitled
case and am duly authorized to sign this Verification and Certification of Absence of
Forum Shopping by the Board of Director.
xxx
The CA found no sufficient proof to show that Concepcion was duly authorized by the
Board of Directors of petitioner. The appellate court anchored its disposition on our
ruling in Premium Marble Resources, Inc. v. Court of Appeals (Premium), that "[i]n the
absence of an authority from the Board of Directors, no person, not even the officers of the
corporation, can validly bind the corporation."8
Hence, we have this petition.
The Issues
Petitioner raises two issues: first, whether petitioner's president can sign the subject
verification and certification sans the approval of its Board of Directors. And second,
whether the CTA committed reversible error in denying and dismissing petitioner's action
for refund or tax credit in C.T.A. Case No. 5581.
The Court's Ruling
The petition is meritorious.
Premium not applicable
Page 42 of 169
As regards the first issue, we find the CA to have erroneously relied on Premium. In said
case, the issue tackled was not on whether the president of Premium Marble Resources,
Inc. was authorized to sign the verification and certification against forum shopping, but
rather on which of the two sets of officers, both claiming to be the legal board of directors
of Premium, have the authority to file the suit for and in behalf of the company. The factual
antecedents and issues in Premium are not on all fours with the instant case and is,
therefore, not applicable.
With respect to an individual litigant, there is no question that litigants must sign the sworn
verification and certification unless they execute a power of attorney authorizing another
person to sign it. With respect to a juridical person, Sec. 4, Rule 7 on verification and Sec.
5, Rule 7 on certification against forum shopping are silent as to who the authorized
signatory should be. Said rules do not indicate if the submission of a board resolution
authorizing the officer or representative is necessary.
Corporate powers exercised through board of directors
It must be borne in mind that Sec. 23, in relation to Sec. 25 of the Corporation Code,
clearly enunciates that all corporate powers are exercised, all business conducted, and all
properties controlled by the board of directors. A corporation has a separate and distinct
personality from its directors and officers and can only exercise its corporate powers
through the board of directors. Thus, it is clear that an individual corporate officer cannot
solely exercise any corporate power pertaining to the corporation without authority from
the board of directors. This has been our constant holding in cases instituted by a
corporation.
In a slew of cases, however, we have recognized the authority of some corporate officers to
sign the verification and certification against forum shopping. In Mactan-Cebu
International Airport Authority v. CA, we recognized the authority of a general manager or
acting general manager to sign the verification and certificate against forum
shopping;9 in Pfizer v. Galan, we upheld the validity of a verification signed by an
"employment specialist" who had not even presented any proof of her authority to represent
the company;10 in Novelty Philippines, Inc., v. CA, we ruled that a personnel officer who
signed the petition but did not attach the authority from the company is authorized to sign
the verification and non-forum shopping certificate;11 and in Lepanto Consolidated Mining
Company v. WMC Resources International Pty. Ltd. (Lepanto), we ruled that the
Chairperson of the Board and President of the Company can sign the verification and
certificate against non-forum shopping even without the submission of the board's
authorization.12
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
In sum, we have held that the following officials or employees of the company can sign the
verification and certification without need of a board resolution: (1) the Chairperson of the
Board of Directors, (2) the President of a corporation, (3) the General Manager or Acting
General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor case.
While the above cases do not provide a complete listing of authorized signatories to the
verification and certification required by the rules, the determination of the sufficiency of
the authority was done on a case to case basis. The rationale applied in the foregoing cases
is to justify the authority of corporate officers or representatives of the corporation to sign
the verification or certificate against forum shopping, being "in a position to verify the
truthfulness and correctness of the allegations in the petition."13
Authority from board of directors required
In Philippine Airlines v. Flight Attendants and Stewards Association of the Philippines, we
ruled that only individuals vested with authority by a valid board resolution may sign the
certificate of non-forum shopping on behalf of a corporation. The action can be dismissed
if the certification was submitted unaccompanied by proof of the signatory's
authority.14 We believe that appending the board resolution to the complaint or petition is
the better procedure to obviate any question on the authority of the signatory to the
verification and certification. The required submission of the board resolution is grounded
on the basic precept that corporate powers are exercised by the board of directors, 15 and not
solely by an officer of the corporation. Hence, the power to sue and be sued in any court or
quasi-judicial tribunal is necessarily lodged with the said board.
There is substantial compliance with Rule 7, Secs. 4 and 5
In the case at bar, we so hold that petitioner substantially complied with Secs. 4 and 5, Rule
7 of the 1997 Revised Rules on Civil Procedure. First, the requisite board resolution has
been submitted albeit belatedly by petitioner. Second, we apply our ruling in Lepanto with
the rationale that the President of petitioner is in a position to verify the truthfulness and
correctness of the allegations in the petition. Third, the President of petitioner has signed
the complaint before the CTA at the inception of this judicial claim for refund or tax credit.
Consequently, the petition in CA-G.R. SP No. 59778 ought to be reinstated. However, in
view of the enactment of RA 9282 which made the decisions of the CTA appealable to this
Court, we will directly resolve the second issue which is a purely legal one.
Petitioner entitled to tax credit
Page 43 of 169
The pith of the dispute between petitioner and respondent is whether petitioner is entitled to
a tax refund or tax credit of 20% sales discount granted to senior citizens under RA 7432 or
whether the discount should be treated as a deduction from gross income.
This issue is not new, as the Court has resolved several cases involving the very same issue.
In Commissioner of Internal Revenue v. Central Luzon Drug Corporation (Central
Luzon),16 we held that private drug companies are entitled to a tax credit for the 20% sales
discounts they granted to qualified senior citizens under RA 7432 and nullified Secs. 2.i
and 4 of RR 2-94. In Bicolandia Drug Corporation (formerly Elmas Drug Corporation) v.
Commissioner of Internal Revenue,17 we ruled that petitioner therein is entitled to a tax
credit of the "cost" or the full 20% sales discounts it granted pursuant to RA 7432. In the
related case of Commissioner of Internal Revenue v. Bicolandia Drug Corporation,18 we
likewise ruled that respondent drug company was entitled to a tax credit, and we struck
down RR 2-94 to be null and void for failing to conform with the law it sought to
implement.
A perusal of the April 26, 2000 CTA Decision shows that the appellate tax court correctly
ruled that the 20% sales discounts petitioner granted to qualified senior citizens should be
deducted from petitioner's income tax due and not from petitioner's gross sales as
erroneously provided in RR 2-94. However, the CTA erred in denying the tax credit to
petitioner on the ground that petitioner had suffered net loss in 1995, and ruling that the tax
credit is unavailing.
Net loss in a taxable year does not preclude grant of tax credit
It is true that petitioner did not pay any tax in 1995 since it suffered a net loss for that
taxable year. This fact, however, without more, does not preclude petitioner from availing
of its statutory right to a tax credit for the 20% sales discounts it granted to qualified senior
citizens. The law then applicable on this point is clear and without any qualification. Sec. 4
(a) of RA 7432 pertinently provides:
Sec. 4. Privileges for the Senior citizens. The senior citizens shall be entitled to the
following:
a) the grant of twenty percent (20%) discount from all establishments relative to utilization
of transportation services, hotels and similar lodging establishments, restaurants and
recreation centers and purchase of medicines anywhere in the country: Provided,
That private establishments may claim the cost as tax credit. (Emphasis ours.)
The fact that petitioner suffered a net loss in 1995 will not make the tax credit due to
petitioner unavailable. This is the core issue resolved in Central Luzon, where we ruled that
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
the net loss for a taxable year does not bar the grant of the tax credit to a taxpayer pursuant
to RA 7432 and that prior tax payments are not required for such grant. We explained:
Although this tax credit benefit is available, it need not be used by losing ventures, since
there is no tax liability that calls for its application. Neither can it be reduced to nil by the
quick yet callow stroke of an administrative pen, simply because no reduction of taxes can
instantly be effected. By its nature, the tax credit may still be deducted from a future, not
a present, tax liability, without which it does not have any use. x x x
xxx
While a tax liability is essential to the availment or use of any tax credit, prior tax
payments are not. On the contrary, for the existence or grant solely of such credit, neither a
tax liability nor a prior tax payment is needed. The Tax Code is in fact replete with
provisions granting or allowing tax credits, even though no taxes have been previously
paid.19
It is thus clear that petitioner is entitled to a tax credit for the full 20% sales discounts it
extended to qualified senior citizens for taxable year 1995. Considering that the CTA has
not disallowed the PhP 123,083 sales discounts petitioner claimed before the BIR and
CTA, we are constrained to grant them as tax credit in favor of petitioner.
Consequently, petitioner's appeal before the CA in CA-G.R. SP No. 59778 must be
granted, and, necessarily, the April 26, 2000 CTA Decision in C.T.A. Case No. 5581
reversed and set aside.
WHEREFORE, the petition is GRANTED. The August 31, 2000 CA Resolution in CA-
G.R. SP No. 59778 is ANNULLED AND SET ASIDE. The April 26, 2000 CTA Decision
in C.T.A. Case No. 5581 dismissing petitioner's claim for tax credit is
accordingly REVERSED AND SET ASIDE. The Commissioner of Internal Revenue
is ORDERED to issue a Tax Credit Certificate in the name of petitioner in the amount of
PhP 123,083. No costs.
G.R. No. 162924 February 4, 2010
MID-PASIG LAND DEVELOPMENT CORPORATION, Petitioner,
vs.
MARIO TABLANTE, doing business under the name and style ECRM
ENTERPRISES; ROCKLAND CONSTRUCTION COMPANY; LAURIE LITAM;
and MC HOME DEPOT, INC., Respondents.
Page 44 of 169
DECISION
NACHURA, J.:
Assailed in the instant petition are the two (2) Resolutions1 of the Court of Appeals (CA)
dated November 20, 2003 and March 22, 2004, dismissing the petition for certiorari before
it on technical grounds and denying the motion for reconsideration thereof, respectively.
The background facts are as follows:
Petitioner is the registered owner of a piece of land situated in Pasig City, bounded by
Meralco Avenue, Ortigas Avenue, Doña Julia Vargas Avenue, and Valle Verde
Subdivision. On December 6, 1999, petitioner, represented by its Chairman and President,
Ronaldo Salonga, and ECRM Enterprises, represented by its proprietor, Mario P. Tablante,
executed an agreement whereby the former would lease to the latter an area, approximately
one (1) hectare, of the aforesaid land, for a period of three (3) months, to be used as the
staging area for the Home and Garden Exhibition Fair. On March 6, 2000, the date of the
expiration of the Lease Agreement, Tablante assigned all his rights and interests under the
said agreement to respondents Laurie M. Litam and/or Rockland Construction Company,
Inc. (Rockland) under a Deed of Assignment of the same date. Petitioner eventually learned
that respondent Tablante had executed a Contract of Lease with respondent MC Home
Depot, Inc. on November 26, 1999 over the same parcel of land. Thereafter, respondent
MC Home Depot, Inc. constructed improvements on the land and subdivided the area into
fifty-nine (59) commercial stalls, which it leased to various entities. Upon the expiration of
the lease on March 6, 2000, petitioner demanded that respondents vacate the land. A final
demand was made in a letter dated December 20, 2000.2
In order to forestall ejectment from the premises, respondent Rockland filed a case for
Specific Performance with the Regional Trial Court (RTC), Branch 266, Pasig City, on
January 11, 2001, compelling petitioner to execute a new lease contract for another three
(3) years, commencing in July 2000. This was docketed as Civil Case No. 68213. Petitioner
moved to dismiss the complaint on the ground that it was anticipatory in nature.
Consequently, on August 22, 2001, petitioner filed Civil Case No. 8788 for unlawful
detainer against herein respondents, raffled to the Municipal Trial Court (MTC), Pasig
City, Branch 70. Simultaneously, petitioner filed a supplemental motion to dismiss Civil
Case No. 68213, on the ground of litis pendentia. Petitioner’s motion to dismiss was
denied. The denial was questioned and eventually elevated to the Supreme Court. 3
Meantime, on April 29, 2002, the MTC rendered judgment in the unlawful detainer
(ejectment) case. In the main, the trial court ruled that the issue did not involve material or
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
physical possession, but rather, whether or not ECRM had the right to exercise an option to
renew its lease contract. The MTC stated that, considering that this issue was incapable of
pecuniary estimation, jurisdiction over the case was vested in the RTC. The trial court,
therefore, disposed, as follows:
WHEREFORE, judgment is hereby rendered DISMISSING the complaint for lack of merit.
In the meantime, the plaintiff is hereby ordered to pay the defendants attorney’s fees and
expenses of litigation in the amount of TWENTY THOUSAND PESOS (₱20,000.00). 4
On appeal, the RTC, Pasig City, Branch 160, affirmed in toto. In its decision dated July 10,
2003, the RTC ruled that:
Relative to the issue raised by the appellant that the lower court erred in finding it had no
jurisdiction over the subject matter of this case as the question of whether or not ECRM
under the provisions of the lease agreement (pars. 3 and 13) has the right to exercise an
option to renew its lease contract is one incapable of pecuniary estimation and therefore
jurisdiction is vested in the Regional Trial Court. Republic Act No. 7691 grants
Metropolitan Trial Courts the exclusive jurisdiction over cases of forcible entry and
unlawful detainer. Since it has been sufficiently established under the facts obtaining that
the contract of lease has been renewed before the expiration of the lease period, and the
appellant has consented to the renewal and assignment of the lease, it necessarily follows
that the issue on whether the lower court erred in finding that it did not have jurisdiction
over the subject matter raised by the appellant, deserves scant consideration and this court
need not delve into it anymore.5
A petition for certiorari was consequently filed with the CA.
In the assailed resolution dated November 20, 2003, the CA resolved to dismiss the petition
on the following grounds:
1) The verification and certification against non-forum shopping was signed by a
certain Antonio A. Merelos as General Manager of the petitioner-corporation
without attaching therewith a Corporate Secretary’s certificate or board
resolution that he is authorized to sign for and on behalf of the petitioner; and
2) Lack of pertinent and necessary documents which are material portions of the
record as required by Section 2, Rule 42 of the Rules of Civil Procedure. 6
The motion for reconsideration was denied;7 hence, the instant petition assigning the
following errors:
Page 45 of 169
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING
THAT THE VERIFICATION AND CERTIFICATION AGAINST FORUM-SHOPPING
IN THE PETITION FAILED TO ATTACH THE BOARD RESOLUTION SHOWING
THE AUTHORITY OF THE AFFIANT.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING
THAT THE PETITION LACKED THE PERTINENT AND NECESSARY
DOCUMENTS REQUIRED BY THE RULES.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN DISMISSING
THE PETITION THUS EFFECTIVELY UPHOLDING THE DECISION OF THE
REGIONAL TRIAL COURT, TO WIT: (a) THAT THE LEASE AGREEMENT WAS
UNILATERALLY RENEWED AND THAT PETITIONER IS ESTOPPED FROM
DENYING SUCH UNILATERAL RENEWAL; (b) THAT RESPONDENTS
TABLANTE/ECRM, ROCKLAND AND MC HOME DEPOT COULD VALIDLY
OCCUPY THE PROPERTY IN THE ABSENCE OF ANY VALID LEASE
AGREEMENT CONSENTED TO BY PETITIONER; (c) PETITIONER [IS] LIABLE
FOR ATTORNEY’S FEES AND COSTS OF SUIT.8
The petition is granted.
In Cagayan Valley Drug Corporation v. Commissioner of Internal Revenue, 9 the Court had
occasion to explain that:
It must be borne in mind that Sec. 23, in relation to Sec. 25 of the Corporation Code,
clearly enunciates that all corporate powers are exercised, all business conducted, and all
properties controlled by the board of directors. A corporation has a separate and distinct
personality from its directors and officers and can only exercise its corporate powers
through the board of directors. Thus, it is clear that an individual corporate officer cannot
solely exercise any corporate power pertaining to the corporation without authority from
the board of directors. This has been our constant holding in cases instituted by a
corporation.
In a slew of cases, however, we have recognized the authority of some corporate officers to
sign the verification and certification against forum shopping. In Mactan-Cebu
International Airport Authority v. CA, we recognized the authority of a general manager or
acting general manager to sign the verification and certificate against forum shopping; x x
x.
In sum, we have held that the following officials or employees of the company can sign the
verification and certification without need of a board resolution: (1) the Chairperson of the
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Board of Directors, (2) the President of a corporation, (3) the General Manager or Acting
General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor
case.1avvphi1
While the above cases do not provide a complete listing of authorized signatories to the
verification and certification required by the rules, the determination of the sufficiency of
the authority was done on a case to case basis. The rationale applied in the foregoing cases
is to justify the authority of corporate officers or representatives of the corporation to sign
the verification or certificate against forum shopping, being "in a position to verify the
truthfulness and correctness of the allegations in the petition."10
From the foregoing, it is thus clear that the failure to attach the Secretary’s Certificate,
attesting to General Manager Antonio Merelos’s authority to sign the Verification and
Certification of Non-Forum Shopping, should not be considered fatal to the filing of the
petition. Nonetheless, the requisite board resolution was subsequently submitted to the CA,
together with the pertinent documents.11 Considering that petitioner substantially complied
with the rules, the dismissal of the petition was, therefore, unwarranted. Time and again,
we have emphasized that dismissal of an appeal on a purely technical ground is frowned
upon especially if it will result in unfairness. The rules of procedure ought not to be applied
in a very rigid, technical sense for they have been adopted to help secure, not override,
substantial justice. For this reason, courts must proceed with caution so as not to deprive a
party of statutory appeal; rather, they must ensure that all litigants are granted the amplest
opportunity for the proper and just ventilation of their causes, free from the constraint of
technicalities.12
After a finding that the CA erred in dismissing the petition before it, a remand of the case is
in order. However, a perusal of the records reveals that this is no longer necessary in light
of relevant developments obtaining in the case at bar.
Petitioner, in its Memorandum dated October 28, 2005, alleged that respondents’
possessory claims had lapsed and, therefore, had become moot and academic. Respondent
Rockland prayed that a three-year lease period be granted to it in order that it would be able
to plan its activities more efficiently. Since the claimed "lease contract" had already expired
as of July or August 2003, there appears no reason why respondents should continue to
have any claim to further possession of the property.13
Respondent Rockland also stated in its Memorandum dated March 16, 2006 that it was no
longer in possession of the subject property considering that:
50. In a Resolution dated 17 September 2004, in the case of "Rockland Construction
Company, Inc. vs. Mid-Pasig Land Development Corporation, et al.," docketed as SCA No.
Page 46 of 169
2673, and the Omnibus Order dated 12 November 2004, affirming the aforesaid
Resolution, Branch 67 Pasig City Regional Trial Court Presiding Judge Mariano M.
Singzon awarded possession (albeit erroneously) of subject property to Pasig Printing
Corporation, an intervenor in the SCA case.
51. At present, petitioner does not have a cause of action against herein respondent
Rockland. Respondent is not unlawfully withholding possession of the property in question
as in fact respondent is not in possession of the subject property. The issue of possession in
this ejectment case has therefore been rendered moot and academic.14
This allegation was confirmed by respondent MC Home Depot, Inc. in its
Comment/Memorandum dated May 22, 2007 submitted to the Court. It stated therein that
"the passage of time has rendered the issue of possession moot and academic with respect
to respondent Rockland, as the three-year period has long been expired in
2003."15 Furthermore, respondent MC Home Depot, Inc. asserts that it is in rightful
possession of the land on the strength of a Memorandum of Agreement dated November
22, 2004 between the latter and Pasig Printing Corporation. By petitioner’s admission that
while it remains the registered owner of the land, possession of the same had been
adjudicated in favor of Pasig Printing Corporation, another entity without any contractual
relationship with petitioner, on the strength of an Order from the RTC of Pasig City.
Considering that Pasig Printing Corporation has the jus possessionis over the subject
property, it granted the MC Home Depot, Inc. actual occupation and possession of the
subject property for a period of four (4) years, renewable for another four (4) years upon
mutual agreement of the parties.16
WHEREFORE, the petition is GRANTED. The assailed Resolutions of the Court of
Appeals are REVERSED and SET ASIDE. However, in view of the developments which
have rendered the issue of the right of possession over the subject property moot and
academic, the main case is hereby considered CLOSED AND TERMINATED.
No pronouncement as to costs.
G.R. No. 173946 June 19, 2013
BOSTON EQUITY RESOURCES, INC., Petitioner,
vs.
COURT OF APPEALS AND LOLITA G. TOLEDO, Respondents.
DECISION
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
PEREZ, J.:
Before the Court is a Petition for Review on Certiorari seeking to reverse and set aside: (1)
the Decision,1 dated 28 February 2006 and (2) the Resolution,2 dated 1 August 2006 of the
Court of Appeals in CA-G.R. SP No. 88586. The challenged decision granted herein
respondent's petition for certiorari upon a finding that the trial court committed grave abuse
of discretion in denying respondent's motion to dismiss the complaint against her.3 Based
on this finding, the Court of Appeals reversed and set aside the Orders, dated 8 November
20044 and 22 December 2004,5 respectively, of the Regional Trial Court (RTC) of Manila,
Branch 24.
The Facts
On 24 December 1997, petitioner filed a complaint for sum of money with a prayer for the
issuance of a writ of preliminary attachment against the spouses Manuel and Lolita
Toledo.6 Herein respondent filed an Answer dated 19 March 1998 but on 7 May 1998, she
filed a Motion for Leave to Admit Amended Answer7 in which she alleged, among others,
that her husband and co-defendant, Manuel Toledo (Manuel), is already dead.8 The death
certificate9 of Manuel states "13 July 1995" as the date of death. As a result, petitioner filed
a motion, dated 5 August 1999, to require respondent to disclose the heirs of Manuel.10 In
compliance with the verbal order of the court during the 11 October 1999 hearing of the
case, respondent submitted the required names and addresses of the heirs.11 Petitioner then
filed a Motion for Substitution,12 dated 18 January 2000, praying that Manuel be
substituted by his children as party-defendants. It appears that this motion was granted by
the trial court in an Order dated 9 October 2000.13
Pre-trial thereafter ensued and on 18 July 2001, the trial court issued its pre-trial order
containing, among others, the dates of hearing of the case. 14
The trial of the case then proceeded. Herein petitioner, as plaintiff, presented its evidence
and its exhibits were thereafter admitted.
On 26 May 2004, the reception of evidence for herein respondent was cancelled upon
agreement of the parties. On 24 September 2004, counsel for herein respondent was given a
period of fifteen days within which to file a demurrer to evidence. 15 However, on 7 October
2004, respondent instead filed a motion to dismiss the complaint, citing the following as
grounds: (1) that the complaint failed to implead an indispensable party or a real party in
interest; hence, the case must be dismissed for failure to state a cause of action; (2) that the
trial court did not acquire jurisdiction over the person of Manuel pursuant to Section 5,
Rule 86 of the Revised Rules of Court; (3) that the trial court erred in ordering the
substitution of the deceased Manuel by his heirs; and (4) that the court must also dismiss
Page 47 of 169
the case against Lolita Toledo in accordance with Section 6, Rule 86 of the Rules of
Court.16
The trial court, in an Order dated 8 November 2004, denied the motion to dismiss for
having been filed out of time, citing Section 1, Rule 16 of the 1997 Rules of Court which
states that: "Within the time for but before filing the answer to the complaint or pleading
asserting a claim, a motion to dismiss may be made x x x."17 Respondent’s motion for
reconsideration of the order of denial was likewise denied on the ground that "defendants’
attack on the jurisdiction of this Court is now barred by estoppel by laches" since
respondent failed to raise the issue despite several chances to do so. 18
Aggrieved, respondent filed a petition for certiorari with the Court of Appeals alleging that
the trial court seriously erred and gravely abused its discretion in denying her motion to
dismiss despite discovery, during the trial of the case, of evidence that would constitute a
ground for dismissal of the case.19
The Court of Appeals granted the petition based on the following grounds:
It is elementary that courts acquire jurisdiction over the person of the defendant x x x only
when the latter voluntarily appeared or submitted to the court or by coercive process issued
by the court to him, x x x. In this case, it is undisputed that when petitioner Boston filed the
complaint on December 24, 1997, defendant Manuel S. Toledo was already dead, x x x.
Such being the case, the court a quo could not have acquired jurisdiction over the person of
defendant Manuel S. Toledo.
x x x the court a quo’s denial of respondent’s motion to dismiss was based on its finding
that respondent’s attack on the jurisdiction of the court was already barred by laches as
respondent failed to raise the said ground in its [sic] amended answer and during the pre-
trial, despite her active participation in the proceedings.
However, x x x it is well-settled that issue on jurisdiction may be raised at any stage of the
proceeding, even for the first time on appeal. By timely raising the issue on jurisdiction in
her motion to dismiss x x x respondent is not estopped from raising the question on
jurisdiction.
Moreover, when issue on jurisdiction was raised by respondent, the court a quo had not yet
decided the case, hence, there is no basis for the court a quo to invoke estoppel to justify its
denial of the motion for reconsideration;
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
It should be stressed that when the complaint was filed, defendant Manuel S. Toledo was
already dead. The complaint should have impleaded the estate of Manuel S. Toledo as
defendant, not only the wife, considering that the estate of Manuel S. Toledo is an
indispensable party, which stands to be benefited or be injured in the outcome of the case. x
xx
xxxx
Respondent’s motion to dismiss the complaint should have been granted by public
respondent judge as the same was in order. Considering that the obligation of Manuel S.
Toledo is solidary with another debtor, x x x, the claim x x x should be filed against the
estate of Manuel S. Toledo, in conformity with the provision of Section 6, Rule 86 of the
Rules of Court, x x x.20
The Court of Appeals denied petitioner’s motion for reconsideration. Hence, this petition.
The Issues
Petitioner claims that the Court of Appeals erred in not holding that:
1. Respondent is already estopped from questioning the trial court’s jurisdiction;
2. Petitioner never failed to implead an indispensable party as the estate of
Manuel is not an indispensable party;
3. The inclusion of Manuel as party-defendant is a mere misjoinder of party not
warranting the dismissal of the case before the lower court; and
4. Since the estate of Manuel is not an indispensable party, it is not necessary that
petitioner file its claim against the estate of Manuel.
In essence, what is at issue here is the correctness of the trial court’s orders denying
respondent’s motion to dismiss.
The Ruling of the Court
We find merit in the petition.
Motion to dismiss filed out of time
Page 48 of 169
To begin with, the Court of Appeals erred in granting the writ of certiorari in favor of
respondent. Well settled is the rule that the special civil action for certiorari is not the
proper remedy to assail the denial by the trial court of a motion to dismiss. The order of the
trial court denying a motion to dismiss is merely interlocutory, as it neither terminates nor
finally disposes of a case and still leaves something to be done by the court before a case is
finally decided on the merits.21 Therefore, "the proper remedy in such a case is to appeal
after a decision has been rendered."22
As the Supreme Court held in Indiana Aerospace University v. Comm. on Higher
Education:23
A writ of certiorari is not intended to correct every controversial interlocutory ruling; it is
resorted only to correct a grave abuse of discretion or a whimsical exercise of judgment
equivalent to lack of jurisdiction. Its function is limited to keeping an inferior court within
its jurisdiction and to relieve persons from arbitrary acts – acts which courts or judges have
no power or authority in law to perform. It is not designed to correct erroneous findings and
conclusions made by the courts. (Emphasis supplied)
Even assuming that certiorari is the proper remedy, the trial court did not commit grave
abuse of discretion in denying respondent’s motion to dismiss. It, in fact, acted correctly
when it issued the questioned orders as respondent’s motion to dismiss was filed SIX
YEARS AND FIVE MONTHS AFTER SHE FILED HER AMENDED ANSWER. This
circumstance alone already warranted the outright dismissal of the motion for having been
filed in clear contravention of the express mandate of Section 1, Rule 16, of the Revised
Rules of Court. Under this provision, a motion to dismiss shall be filed within the time for
but before the filing of an answer to the complaint or pleading asserting a claim. 24
More importantly, respondent’s motion to dismiss was filed after petitioner has completed
the presentation of its evidence in the trial court, giving credence to petitioner’s and the
trial court’s conclusion that the filing of the motion to dismiss was a mere ploy on the part
of respondent to delay the prompt resolution of the case against her.
Also worth mentioning is the fact that respondent’s motion to dismiss under consideration
herein is not the first motion to dismiss she filed in the trial court. It appears that she had
filed an earlier motion to dismiss26 on the sole ground of the unenforceability of petitioner’s
claim under the Statute of Frauds, which motion was denied by the trial court. More telling
is the following narration of the trial court in its Order denying respondent’s motion for
reconsideration of the denial of her motion to dismiss:
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
As can be gleaned from the records, with the admission of plaintiff’s exhibits, reception of
defendants’ evidence was set on March 31, and April 23, 2004 x x x . On motion of the
defendants, the hearing on March 31, 2004 was cancelled.
On April 14, 2004, defendants sought the issuance of subpoena ad testificandum and duces
tecum to one Gina M. Madulid, to appear and testify for the defendants on April 23, 2004.
Reception of defendants’ evidence was again deferred to May 26, June 2 and June 30,
2004, x x x.
On May 13, 2004, defendants sought again the issuance of a subpoena duces tecum and ad
testificandum to the said Gina Madulid. On May 26, 2004, reception of defendants [sic]
evidence was cancelled upon the agreement of the parties. On July 28, 2004, in the absence
of defendants’ witness, hearing was reset to September 24 and October 8, 2004 x x x.
On September 24, 2004, counsel for defendants was given a period of fifteen (15) days to
file a demurrer to evidence. On October 7, 2004, defendants filed instead a Motion to
Dismiss x x x.27
Respondent’s act of filing multiple motions, such as the first and earlier motion to dismiss
and then the motion to dismiss at issue here, as well as several motions for postponement,
lends credibility to the position taken by petitioner, which is shared by the trial court, that
respondent is
deliberately impeding the early disposition of this case. The filing of the second motion to
dismiss was, therefore, "not only improper but also dilatory."28 Thus, the trial court, "far
from deviating or straying off course from established jurisprudence on the matter, x x x
had in fact faithfully observed the law and legal precedents in this case."29 The Court of
Appeals, therefore, erred not only in entertaining respondent’s petition for certiorari, it
likewise erred in ruling that the trial court committed grave abuse of discretion when it
denied respondent’s motion to dismiss.
On whether or not respondent is estopped from
questioning the jurisdiction of the trial court
At the outset, it must be here stated that, as the succeeding discussions will demonstrate,
jurisdiction over the person of Manuel should not be an issue in this case. A protracted
discourse on jurisdiction is, nevertheless, demanded by the fact that jurisdiction has been
raised as an issue from the lower court, to the Court of Appeals and, finally, before this
Court. For the sake of clarity, and in order to finally settle the controversy and fully dispose
of all the issues in this case, it was deemed imperative to resolve the issue of jurisdiction.
Page 49 of 169
1. Aspects of Jurisdiction
Petitioner calls attention to the fact that respondent’s motion to dismiss questioning the trial
court’s jurisdiction was filed more than six years after her amended answer was filed.
According to petitioner, respondent had several opportunities, at various stages of the
proceedings, to assail the trial court’s jurisdiction but never did so for six straight years.
Citing the doctrine laid down in the case of Tijam, et al. v. Sibonghanoy, et al. 30 petitioner
claimed that respondent’s failure to raise the question of jurisdiction at an earlier stage bars
her from later questioning it, especially since she actively participated in the proceedings
conducted by the trial court.
Petitioner’s argument is misplaced, in that, it failed to consider that the concept of
jurisdiction has several aspects, namely: (1) jurisdiction over the subject matter; (2)
jurisdiction over the parties; (3) jurisdiction over the issues of the case; and (4) in cases
involving property, jurisdiction over the res or the thing which is the subject of the
litigation.31
The aspect of jurisdiction which may be barred from being assailed as a result of estoppel
by laches is jurisdiction over the subject matter. Thus, in Tijam, the case relied upon by
petitioner, the issue involved was the authority of the then Court of First Instance to hear a
case for the collection of a sum of money in the amount of ₱1,908.00 which amount was, at
that time, within the exclusive original jurisdiction of the municipal courts.
In subsequent cases citing the ruling of the Court in Tijam, what was likewise at issue was
the jurisdiction of the trial court over the subject matter of the case. Accordingly, in
Spouses Gonzaga v. Court of Appeals,32 the issue for consideration was the authority of the
regional trial court to hear and decide an action for reformation of contract and damages
involving a subdivision lot, it being argued therein that jurisdiction is vested in the Housing
and Land Use Regulatory Board pursuant to PD 957 (The Subdivision and Condominium
Buyers Protective Decree). In Lee v. Presiding Judge, MTC, Legaspi City, 33 petitioners
argued that the respondent municipal trial court had no jurisdiction over the complaint for
ejectment because the issue of ownership was raised in the pleadings. Finally, in People v.
Casuga,34 accused-appellant claimed that the crime of grave slander, of which she was
charged, falls within the concurrent jurisdiction of municipal courts or city courts and the
then courts of first instance, and that the judgment of the court of first instance, to which
she had appealed the municipal court's conviction, should be deemed null and void for want
of jurisdiction as her appeal should have been filed with the Court of Appeals or the
Supreme Court.
In all of these cases, the Supreme Court barred the attack on the jurisdiction of the
respective courts concerned over the subject matter of the case based on estoppel by laches,
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
declaring that parties cannot be allowed to belatedly adopt an inconsistent posture by
attacking the jurisdiction of a court to which they submitted their cause voluntarily. 35
Here, what respondent was questioning in her motion to dismiss before the trial court was
that court’s jurisdiction over the person of defendant Manuel. Thus, the principle of
estoppel by laches finds no application in this case. Instead, the principles relating to
jurisdiction over the person of the parties are pertinent herein.
The Rules of Court provide:
RULE 9
EFFECT OF FAILURE TO PLEAD
Section 1. Defenses and objections not pleaded. – Defenses and objections not pleaded
either in a motion to dismiss or in the answer are deemed waived. However, when it
appears from the pleadings or the evidence on record that the court has no jurisdiction over
the subject matter, that there is another action pending between the same parties for the
same cause, or that the action is barred by a prior judgment or by statute of limitations, the
court shall dismiss the claim.
RULE 15
MOTIONS
Sec. 8. Omnibus motion. – Subject to the provisions of Section 1 of Rule 9, a motion
attacking a pleading, order, judgment, or proceeding shall include all objections then
available, and all objections not so included shall be deemed waived.
Based on the foregoing provisions, the "objection on jurisdictional grounds which is not
waived even if not alleged in a motion to dismiss or the answer is lack of jurisdiction over
the subject matter. x x x Lack of jurisdiction over the subject matter can always be raised
anytime, even for the first time on appeal, since jurisdictional issues cannot be waived x x x
subject, however, to the principle of estoppel by laches."36
Since the defense of lack of jurisdiction over the person of a party to a case is not one of
those defenses which are not deemed waived under Section 1 of Rule 9, such defense must
be invoked when an answer or a motion to dismiss is filed in order to prevent a waiver of
the defense.37 If the objection is not raised either in a motion to dismiss or in the answer,
the objection to the jurisdiction over the person of the plaintiff or the defendant is deemed
waived by virtue of the first sentence of the above-quoted Section 1 of Rule 9 of the Rules
of Court.38
Page 50 of 169
The Court of Appeals, therefore, erred when it made a sweeping pronouncement in its
questioned decision, stating that "issue on jurisdiction may be raised at any stage of the
proceeding, even for the first time on appeal" and that, therefore, respondent timely raised
the issue in her motion to dismiss and is, consequently, not estopped from raising the
question of jurisdiction. As the question of jurisdiction involved here is that over the person
of the defendant Manuel, the same is deemed waived if not raised in the answer or a motion
to dismiss. In any case, respondent cannot claim the defense since "lack of jurisdiction over
the person, being subject to waiver, is a personal defense which can only be asserted by the
party who can thereby waive it by silence."39
2. Jurisdiction over the person of a defendant is acquired through a valid service of
summons; trial court did not acquire jurisdiction over the person of Manuel Toledo
In the first place, jurisdiction over the person of Manuel was never acquired by the trial
court. A defendant is informed of a case against him when he receives summons.
"Summons is a writ by which the defendant is notified of the action brought against him.
Service of such writ is the means by which the court acquires jurisdiction over his
person."40
In the case at bar, the trial court did not acquire jurisdiction over the person of Manuel
since there was no valid service of summons upon him, precisely because he was already
dead even before the complaint against him and his wife was filed in the trial court. The
issues presented in this case are similar to those in the case of Sarsaba v. Vda. de Te. 41
In Sarsaba, the NLRC rendered a decision declaring that Patricio Sereno was illegally
dismissed from employment and ordering the payment of his monetary claims. To satisfy
the claim, a truck in the possession of Sereno’s employer was levied upon by a sheriff of
the NLRC, accompanied by Sereno and his lawyer, Rogelio Sarsaba, the petitioner in that
case. A complaint for recovery of motor vehicle and damages, with prayer for the delivery
of the truck pendente lite was eventually filed against Sarsaba, Sereno, the NLRC sheriff
and the NLRC by the registered owner of the truck. After his motion to dismiss was denied
by the trial court, petitioner Sarsaba filed his answer. Later on, however, he filed an
omnibus motion to dismiss citing, as one of the grounds, lack of jurisdiction over one of the
principal defendants, in view of the fact that Sereno was already dead when the complaint
for recovery of possession was filed.
Although the factual milieu of the present case is not exactly similar to that of Sarsaba, one
of the issues submitted for resolution in both cases is similar: whether or not a case, where
one of the named defendants was already dead at the time of its filing, should be dismissed
so that the claim may be pursued instead in the proceedings for the settlement of the estate
of the deceased defendant. The petitioner in the Sarsaba Case claimed, as did respondent
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
herein, that since one of the defendants died before summons was served on him, the trial
court should have dismissed the complaint against all the defendants and the claim should
be filed against the estate of the deceased defendant. The petitioner in Sarsaba, therefore,
prayed that the complaint be dismissed, not only against Sereno, but as to all the
defendants, considering that the RTC did not acquire jurisdiction over the person of
Sereno.42 This is exactly the same prayer made by respondent herein in her motion to
dismiss.
The Court, in the Sarsaba Case, resolved the issue in this wise:
x x x We cannot countenance petitioner’s argument that the complaint against the other
defendants should have been dismissed, considering that the RTC never acquired
jurisdiction over the person of Sereno. The court’s failure to acquire jurisdiction over one’s
person is a defense which is personal to the person claiming it. Obviously, it is now
impossible for Sereno to invoke the same in view of his death. Neither can petitioner
invoke such ground, on behalf of Sereno, so as to reap the benefit of having the case
dismissed against all of the defendants. Failure to serve summons on Sereno’s person will
not be a cause for the dismissal of the complaint against the other defendants, considering
that they have been served with copies of the summons and complaints and have long
submitted their respective responsive pleadings. In fact, the other defendants in the
complaint were given the chance to raise all possible defenses and objections personal to
them in their respective motions to dismiss and their subsequent answers.43 (Emphasis
supplied.)
Hence, the Supreme Court affirmed the dismissal by the trial court of the complaint against
Sereno only.
Based on the foregoing pronouncements, there is no basis for dismissing the complaint
against respondent herein. Thus, as already emphasized above, the trial court correctly
denied her motion to dismiss.
On whether or not the estate of Manuel
Toledo is an indispensable party
Rule 3, Section 7 of the 1997 Rules of Court states:
SEC. 7. Compulsory joinder of indispensable parties. – Parties-in-interest without whom no
final determination can be had of an action shall be joined either as plaintiffs or defendants.
Page 51 of 169
An indispensable party is one who has such an interest in the controversy or subject matter
of a case that a final adjudication cannot be made in his or her absence, without injuring or
affecting that interest. He or she is a party who has not only an interest in the subject matter
of the controversy, but "an interest of such nature that a final decree cannot be made
without affecting that interest or leaving the controversy in such a condition that its final
determination may be wholly inconsistent with equity and good conscience. It has also
been considered that an indispensable party is a person in whose absence there cannot be a
determination between the parties already before the court which is effective, complete or
equitable." Further, an indispensable party is one who must be included in an action before
it may properly proceed.44
On the other hand, a "person is not an indispensable party if his interest in the controversy
or subject matter is separable from the interest of the other parties, so that it will not
necessarily be directly or injuriously affected by a decree which does complete justice
between them. Also, a person is not an indispensable party if his presence would merely
permit complete relief between him or her and those already parties to the action, or if he or
she has no interest in the subject matter of the action." It is not a sufficient reason to declare
a person to be an indispensable party simply because his or her presence will avoid
multiple litigations.45
Applying the foregoing pronouncements to the case at bar, it is clear that the estate of
Manuel is not an indispensable party to the collection case, for the simple reason that the
obligation of Manuel and his wife, respondent herein, is solidary.
The contract between petitioner, on the one hand and respondent and respondent’s husband,
on the other, states:
FOR VALUE RECEIVED, I/We jointly and severally46 (in solemn) promise to pay
BOSTON EQUITY RESOURCES, INC. x x x the sum of PESOS: [ONE MILLION FOUR
HUNDRED (₱1,400,000.00)] x x x.47
The provisions and stipulations of the contract were then followed by the respective
signatures of respondent as "MAKER" and her husband as "CO-MAKER."48 Thus,
pursuant to Article 1216 of the Civil Code, petitioner may collect the entire amount of the
obligation from respondent only. The aforementioned provision states: "The creditor may
proceed against any one of the solidary debtors or some or all of them simultaneously. The
demand made against one of them shall not be an obstacle to those which may
subsequently be directed against the others, so long as the debt has not been fully
collected."
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
In other words, the collection case can proceed and the demands of petitioner can be
satisfied by respondent only, even without impleading the estate of Manuel. Consequently,
the estate of Manuel is not an indispensable party to petitioner’s complaint for sum of
money.
However, the Court of Appeals, agreeing with the contention of respondent, held that the
claim of petitioner should have been filed against the estate of Manuel in accordance with
Sections 5 and 6 of Rule 86 of the Rules of Court. The aforementioned provisions provide:
SEC. 5. Claims which must be filed under the notice. If not filed, barred; exceptions. All
claims for money against the decedent, arising from contract, express or implied, whether
the same be due, not due, or contingent, all claims for funeral expenses and judgment for
money against the decedent, must be filed within the time limited in the notice; otherwise,
they are barred forever, except that they may be set forth as counterclaims in any action
that the executor or administrator may bring against the claimants. x x x.
SEC. 6. Solidary obligation of decedent. Where the obligation of the decedent is solidary
with another debtor, the claim shall be filed against the decedent as if he were the only
debtor, without prejudice to the right of the estate to recover contribution from the other
debtor. x x x.
The Court of Appeals erred in its interpretation of the above-quoted provisions.
In construing Section 6, Rule 87 of the old Rules of Court, the precursor of Section 6, Rule
86 of the Revised Rules of Court, which latter provision has been retained in the present
Rules of Court without any revisions, the Supreme Court, in the case of Manila Surety &
Fidelity Co., Inc. v. Villarama, et. al.,49 held:50
Construing Section 698 of the Code of Civil Procedure from whence [Section 6, Rule 87]
was taken, this Court held that where two persons are bound in solidum for the same debt
and one of them dies, the whole indebtedness can be proved against the estate of the latter,
the decedent’s liability being absolute and primary; x x x. It is evident from the foregoing
that Section 6 of Rule 87 provides the procedure should the creditor desire to go against the
deceased debtor, but there is certainly nothing in the said provision making compliance
with such procedure a condition precedent before an ordinary action against the surviving
solidary debtors, should the creditor choose to demand payment from the latter, could be
entertained to the extent that failure to observe the same would deprive the court
jurisdiction to take cognizance of the action against the surviving debtors. Upon the other
hand, the Civil Code expressly allows the creditor to proceed against any one of the
solidary debtors or some or all of them simultaneously. There is, therefore, nothing
improper in the creditor’s filing of an action against the surviving solidary debtors alone,
Page 52 of 169
instead of instituting a proceeding for the settlement of the estate of the deceased debtor
wherein his claim could be filed.
The foregoing ruling was reiterated and expounded in the later case of Philippine National
Bank v. Asuncion51 where the Supreme Court pronounced:
A cursory perusal of Section 6, Rule 86 of the Revised Rules of Court reveals that nothing
therein prevents a creditor from proceeding against the surviving solidary debtors. Said
provision merely sets up the procedure in enforcing collection in case a creditor chooses to
pursue his claim against the estate of the deceased solidary debtor. The rule has been set
forth that a creditor (in a solidary obligation) has the option whether to file or not to file a
claim against the estate of the solidary debtor. x x x
xxxx
It is crystal clear that Article 1216 of the New Civil Code is the applicable provision in this
matter. Said provision gives the creditor the right to "proceed against anyone of the solidary
debtors or some or all of them simultaneously." The choice is undoubtedly left to the
solidary creditor to determine against whom he will enforce collection. In case of the death
of one of the solidary debtors, he (the creditor) may, if he so chooses, proceed against the
surviving solidary debtors without necessity of filing a claim in the estate of the deceased
debtors. It is not mandatory for him to have the case dismissed as against the surviving
debtors and file its claim against the estate of the deceased solidary debtor, x x x. For to
require the creditor to proceed against the estate, making it a condition precedent for any
collection action against the surviving debtors to prosper, would deprive him of his
substantive rightsprovided by Article 1216 of the New Civil Code. (Emphasis supplied.)
As correctly argued by petitioner, if Section 6, Rule 86 of the Revised Rules of Court were
applied literally, Article 1216 of the New Civil Code would, in effect, be repealed since
under the Rules of Court, petitioner has no choice but to proceed against the estate of [the
deceased debtor] only. Obviously, this provision diminishes the [creditor’s] right under the
New Civil Code to proceed against any one, some or all of the solidary debtors. Such a
construction is not sanctioned by principle, which is too well settled to require citation, that
a substantive law cannot be amended by a procedural rule. Otherwise stated, Section 6,
Rule 86 of the Revised Rules of Court cannot be made to prevail over Article 1216 of the
New Civil Code, the former being merely procedural, while the latter, substantive.
Based on the foregoing, the estate of Manuel is not an indispensable party and the case can
proceed as against respondent only. That petitioner opted to collect from respondent and
not from the estate of Manuel is evidenced by its opposition to respondent’s motion to
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
dismiss asserting that the case, as against her, should be dismissed so that petitioner can
proceed against the estate of Manuel.
On whether or not the inclusion of Manuel as
party defendant is a misjoinder of party
Section 11 of Rule 3 of the Rules of Court states that "neither misjoinder nor non-joinder of
parties is ground for dismissal of an action. Parties may be dropped or added by order of
the court on motion of any party or on its own initiative at any stage of the action and on
such terms as are just. Any claim against a misjoined party may be severed and proceeded
with separately."
Based on the last sentence of the afore-quoted provision of law, a misjoined party must
have the capacity to sue or be sued in the event that the claim by or against the misjoined
party is pursued in a separate case. In this case, therefore, the inclusion of Manuel in the
complaint cannot be considered a misjoinder, as in fact, the action would have proceeded
against him had he been alive at the time the collection case was filed by petitioner. This
being the case, the remedy provided by Section 11 of Rule 3 does not obtain here. The
name of Manuel as party-defendant cannot simply be dropped from the case. Instead, the
procedure taken by the Court in Sarsaba v. Vda. de Te, 52 whose facts, as mentioned earlier,
resemble those of this case, should be followed herein. There, the Supreme Court agreed
with the trial court when it resolved the issue of jurisdiction over the person of the deceased
Sereno in this wise:
As correctly pointed by defendants, the Honorable Court has not acquired jurisdiction over
the person of Patricio Sereno since there was indeed no valid service of summons insofar as
Patricio Sereno is concerned. Patricio Sereno died before the summons, together with a
copy of the complaint and its annexes, could be served upon him.
However, the failure to effect service of summons unto Patricio Sereno, one of the
defendants herein, does not render the action DISMISSIBLE, considering that the three (3)
other defendants, x x x, were validly served with summons and the case with respect to the
answering defendants may still proceed independently. Be it recalled that the three (3)
answering defendants have previously filed a Motion to Dismiss the Complaint which was
denied by the Court.
Hence, only the case against Patricio Sereno will be DISMISSED and the same may be
filed as a claim against the estate of Patricio Sereno, but the case with respect to the three
(3) other accused [sic] will proceed. (Emphasis supplied.)53
As a result, the case, as against Manuel, must be dismissed.
Page 53 of 169
In addition, the dismissal of the case against Manuel is further warranted by Section 1 of
Rule 3 of the Rules of Court, which states that: only natural or juridical persons, or entities
authorized by law may be parties in a civil action." Applying this provision of law, the
Court, in the case of Ventura v. Militante,54 held:
Parties may be either plaintiffs or defendants. x x x. In order to maintain an action in a
court of justice, the plaintiff must have an actual legal existence, that is, he, she or it must
be a person in law and possessed of a legal entity as either a natural or an artificial person,
and no suit can be lawfully prosecuted save in the name of such a person.
The rule is no different as regards party defendants. It is incumbent upon a plaintiff, when
he institutes a judicial proceeding, to name the proper party defendant to his cause of
action. In a suit or proceeding in personam of an adversary character, the court can acquire
no jurisdiction for the purpose of trial or judgment until a party defendant who actually or
legally exists and is legally capable of being sued, is brought before it. It has even been
held that the question of the legal personality of a party defendant is a question of substance
going to the jurisdiction of the court and not one of procedure.
The original complaint of petitioner named the "estate of Carlos Ngo as represented by
surviving spouse Ms. Sulpicia Ventura" as the defendant.1âwphi1 Petitioner moved to
dismiss the same on the ground that the defendant as named in the complaint had no legal
personality. We agree.
x x x. Considering that capacity to be sued is a correlative of the capacity to sue, to the
same extent, a decedent does not have the capacity to be sued and may not be named a
party defendant in a court action. (Emphases supplied.)
Indeed, where the defendant is neither a natural nor a juridical person or an entity
authorized by law, the complaint may be dismissed on the ground that the pleading
asserting the claim states no cause of action or for failure to state a cause of action pursuant
to Section 1(g) of Rule 16 of the Rules of Court, because a complaint cannot possibly state
a cause of action against one who cannot be a party to a civil action. 55
Since the proper course of action against the wrongful inclusion of Manuel as party-
defendant is the dismissal of the case as against him, thus did the trial court err when it
ordered the substitution of Manuel by his heirs. Substitution is proper only where the party
to be substituted died during the pendency of the case, as expressly provided for by Section
16, Rule 3 of the Rules of Court, which states:
Death of party;duty of counsel. – Whenever a party to a pending action dies, and the claim
is not thereby extinguished, it shall be the duty of his counsel to inform the court within
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
thirty (30) days after such death of the fact thereof, and to give the name and address of his
legal representative or representatives. x x x
The heirs of the deceased may be allowed to be substituted for the deceased, without
requiring the appointment of an executor or administrator x x x.
The court shall forthwith order said legal representative or representatives to appear and be
substituted within a period of thirty (30) days from notice. (Emphasis supplied.)
Here, since Manuel was already dead at the time of the filing of the complaint, the court
never acquired jurisdiction over his person and, in effect, there was no party to be
substituted.
WHEREFORE, the petition is GRANTED. The Decision dated 28 February 2006 and the
Resolution dated 1 August 2006 of the Court of Appeals in CA-G.R. SP No. 88586 are
REVERSED and SET ASIDE. The Orders of the Regional Trial Court dated 8 November
2004 and 22 December 2004, respectively, in Civil Case No. 97-86672, are
REINSTATED. The Regional Trial Court, Branch 24, Manila is hereby DIRECTED to
proceed with the trial of Civil Case No. 97-86672 against respondent Lolita G. Toledo
only, in accordance with the above pronouncements of the Court, and to decide the case
with dispatch.
SO ORDERED.
THIRD DIVISION
[G.R. NO. 140746 : March 16, 2005]
PANTRANCO NORTH EXPRESS, INC., and ALEXANDER
BUNCAN, Petitioner, v. STANDARD INSURANCE COMPANY, INC., and
MARTINA GICALE, Respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a Petition for Review on Certiorari assailing the Decision1 dated July 23 1999
and Resolution2 dated November 4, 1999 of the Court of Appeals in CA-G.R. CV No.
Page 54 of 169
38453, entitled "Standard Insurance Company, Inc., and Martina Gicale v. PANTRANCO
North Express, Inc., and Alexander Buncan."
In the afternoon of October 28, 1984, Crispin Gicale was driving the passenger jeepney
owned by his mother Martina Gicale, respondent herein. It was then raining. While driving
north bound along the National Highway in Talavera, Nueva Ecija, a passenger bus, owned
by Pantranco North Express, Inc., petitioner, driven by Alexander Buncan, also a petitioner,
was trailing behind. When the two vehicles were negotiating a curve along the highway, the
passenger bus overtook the jeepney. In so doing, the passenger bus hit the left rear side of
the jeepney and sped away.
Crispin reported the incident to the Talavera Police Station and respondent Standard
Insurance Co., Inc. (Standard), insurer of the jeepney. The total cost of the repair
was P21,415.00, but respondent Standard paid only P8,000.00. Martina Gicale shouldered
the balance of P13,415.00.
Thereafter, Standard and Martina, respondents, demanded reimbursement from petitioners
Pantranco and its driver Alexander Buncan, but they refused. This prompted respondents to
file with the Regional Trial Court (RTC), Branch 94, Manila, a complaint for sum of
money.
In their answer, both petitioners specifically denied the allegations in the complaint and
averred that it is the Metropolitan Trial Court, not the RTC, which has jurisdiction over the
case.
On June 5, 1992, the trial court rendered a Decision 3 in favor of respondents Standard and
Martina, thus:
"WHEREFORE, and in view of the foregoing considerations, judgment is hereby rendered
in favor of the plaintiffs, Standard Insurance Company and Martina Gicale, and against
defendants Pantranco Bus Company and Alexander Buncan, ordering the latter to pay as
follows:
(1) to pay plaintiff Standard Insurance the amount of P8,000.00 with interest due thereon
from November 27, 1984 until fully paid;
(2) to pay plaintiff Martina Gicale the amount of P13,415.00 with interest due thereon from
October 22, 1984 until fully paid;
(3) to pay the sum of P10,000.00 for attorney's fees;
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
(4) to pay the expenses of litigation and the cost of suit.
SO ORDERED."
On appeal, the Court of Appeals, in a Decision4 dated July 23, 1999, affirmed the trial
court's ruling, holding that:
"The appellants argue that appellee Gicale's claim of P13,415.00 and appellee insurance
company's claim of P8,000.00 individually fell under the exclusive original jurisdiction of
the municipal trial court. This is not correct because under the Totality Rule provided for
under Sec. 19, Batas Pambansa Bilang 129, it is the sum of the two claims that determines
the jurisdictional amount.
xxx
In the case at bench, the total of the two claims is definitely more than P20,000.00 which at
the time of the incident in question was the jurisdictional amount of the Regional Trial
Court.
Appellants contend that there was a misjoinder of parties. Assuming that there was, under
the Rules of Court (Sec. 11, Rule 7) as well as under the Rules of Civil Procedure (ditto),
the same does not affect the jurisdiction of the court nor is it a ground to dismiss the
complaint.
xxx
It does not need perspicacity in logic to see that appellees Gicale's and insurance company's
individual claims against appellees (sic) arose from the same vehicular accident on October
28, 1984 involving appellant Pantranco's bus and appellee Gicale's jeepney. That being the
case, there was a question of fact common to all the parties: Whose fault or negligence
caused the damage to the jeepney?cralawlibrary
Appellants submit that they were denied their day in court because the case was deemed
submitted for decision "without even declaring defendants in default or to have waived the
presentation of evidence." This is incorrect. Of course, the court did not declare defendants
in default because that is done only when the defendant fails to tender an answer within the
reglementary period. When the lower court ordered that the case is deemed submitted for
decision that meant that the defendants were deemed to have waived their right to present
evidence. If they failed to adduce their evidence, they should blame nobody but themselves.
They failed to be present during the scheduled hearing for the reception of their evidence
Page 55 of 169
despite notice and without any motion or explanation. They did not even file any motion
for reconsideration of the order considering the case submitted for decision.
Finally, contrary to the assertion of the defendant-appellants, the evidence preponderantly
established their liability for quasi-delict under Article 2176 of the Civil Code."
Petitioners filed a motion for reconsideration but was denied by the Appellate Court in a
Resolution dated November 4, 1999.
Hence, this Petition for Review on Certiorari raising the following assignments of error:
"I
WHETHER OR NOT THE TRIAL COURT HAS JURISDICTION OVER THE
SUBJECT OF THE ACTION CONSIDERING THAT RESPONDENTS' RESPECTIVE
CAUSE OF ACTION AGAINST PETITIONERS DID NOT ARISE OUT OF THE SAME
TRANSACTION NOR ARE THERE QUESTIONS OF LAW AND FACTS COMMON
TO BOTH PETITIONERS AND RESPONDENTS.
II
WHETHER OR NOT PETITIONERS ARE LIABLE TO RESPONDENTS
CONSIDERING THAT BASED ON THE EVIDENCE ADDUCED AND LAW
APPLICABLE IN THE CASE AT BAR, RESPONDENTS HAVE NOT SHOWN ANY
RIGHT TO THE RELIEF PRAYED FOR.
III
WHETHER OR NOT PETITIONERS WERE DEPRIVED OF THEIR RIGHT TO DUE
PROCESS."
For their part, respondents contend that their individual claims arose out of the same
vehicular accident and involve a common question of fact and law. Hence, the RTC has
jurisdiction over the case.
I
Petitioners insist that the trial court has no jurisdiction over the case since the cause of
action of each respondent did not arise from the same transaction and that there are no
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
common questions of law and fact common to both parties. Section 6, Rule 3 of the
Revised Rules of Court,5 provides:
"Sec. 6. Permissive joinder of parties. - All persons in whom or against whom any right to
relief in respect to or arising out of the same transaction or series of transactions is alleged
to exist, whether jointly, severally, or in the alternative, may, except as otherwise provided
in these Rules, join as plaintiffs or be joined as defendants in one complaint, where any
question of law or fact common to all such plaintiffs or to all such defendants may arise in
the action; but the court may make such orders as may be just to prevent any plaintiff or
defendant from being embarrassed or put to expense in connection with any proceedings in
which he may have no interest."
Permissive joinder of parties requires that: (a) the right to relief arises out of the same
transaction or series of transactions; (b) there is a question of law or fact common to all the
plaintiffs or defendants; and (c) such joinder is not otherwise proscribed by the provisions
of the Rules on jurisdiction and venue.6
In this case, there is a single transaction common to all, that is, Pantranco's bus hitting the
rear side of the jeepney. There is also a common question of fact, that is, whether
petitioners are negligent. There being a single transaction common to both respondents,
consequently, they have the same cause of action against petitioners.
To determine identity of cause of action, it must be ascertained whether the same evidence
which is necessary to sustain the second cause of action would have been sufficient to
authorize a recovery in the first.7 Here, had respondents filed separate suits against
petitioners, the same evidence would have been presented to sustain the same cause of
action. Thus, the filing by both respondents of the complaint with the court below is in
order. Such joinder of parties avoids multiplicity of suit and ensures the convenient, speedy
and orderly administration of justice.
Corollarily, Section 5(d), Rule 2 of the same Rules provides:
"Sec. 5. Joinder of causes of action. - A party may in one pleading assert, in the alternative
or otherwise, as many causes of action as he may have against an opposing party, subject to
the following conditions:
xxx
(d) Where the claims in all the causes of action are principally for recovery of money the
aggregate amount claimed shall be the test of jurisdiction."
Page 56 of 169
The above provision presupposes that the different causes of action which are joined accrue
in favor of the same plaintiff/s and against the same defendant/s and that no misjoinder of
parties is involved.8 The issue of whether respondents' claims shall be lumped together is
determined by paragraph (d) of the above provision. This paragraph embodies the "totality
rule" as exemplified by Section 33 (1) of B.P. Blg. 129 9 which states, among others, that
"where there are several claims or causes of action between the same or different parties,
embodied in the same complaint, the amount of the demand shall be the totality of the
claims in all the causes of action, irrespective of whether the causes of action arose out of
the same or different transactions."
As previously stated, respondents' cause of action against petitioners arose out of the same
transaction. Thus, the amount of the demand shall be the totality of the claims.
Respondent Standard's claim is P8,000.00, while that of respondent Martina Gicale
is P13,415.00, or a total of P21,415.00. Section 19 of B.P. Blg. 129 provides that the RTC
has "exclusive original jurisdiction over all other cases, in which the demand, exclusive of
interest and cost or the value of the property in controversy, amounts to more than twenty
thousand pesos (P20,000.00)." Clearly, it is the RTC that has jurisdiction over the instant
case. It bears emphasis that when the complaint was filed, R.A. 7691 expanding the
jurisdiction of the Metropolitan, Municipal and Municipal Circuit Trial Courts had not yet
taken effect. It became effective on April 15, 1994.
II
The finding of the trial court, affirmed by the Appellate Court, that petitioners are negligent
and thus liable to respondents, is a factual finding which is binding upon us, a rule well-
established in our jurisprudence. It has been repeatedly held that the trial court's factual
findings, when affirmed by the Appellate Court, are conclusive and binding upon this
Court, if they are not tainted with arbitrariness or oversight of some fact or circumstance of
significance and influence. Petitioners have not presented sufficient ground to warrant a
deviation from this rule.10
III
There is no merit in petitioners' contention that they were denied due process. Records
show that during the hearing, petitioner Pantranco's counsel filed two motions for resetting
of trial which were granted by the trial court. Subsequently, said counsel filed a notice to
withdraw. After respondents had presented their evidence, the trial court, upon petitioners'
motion, reset the hearing to another date. On this date, Pantranco failed to appear. Thus, the
trial court warned Pantranco that should it fail to appear during the next hearing, the case
will be submitted for resolution on the basis of the evidence presented. Subsequently,
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Pantranco's new counsel manifested that his client is willing to settle the case amicably and
moved for another postponement. The trial court granted the motion. On the date of the
hearing, the new counsel manifested that Pantranco's employees are on strike and moved
for another postponement. On the next hearing, said counsel still failed to appear. Hence,
the trial court considered the case submitted for decision.
We have consistently held that the essence of due process is simply an opportunity to be
heard, or an opportunity to explain one's side or an opportunity to seek for a
reconsideration of the action or ruling complained of.11
Petitioner Pantranco filed an answer and participated during the trial and presentation of
respondents' evide,nce. It was apprised of the notices of hearing issued by the trial court.
Indeed, it was afforded fair and reasonable opportunity to explain its side of the
controversy. Clearly, it was not denied of its right to due process. What is frowned upon is
the absolute lack of notice and hearing which is not present here.
WHEREFORE, the petition is DENIED. The assailed Decision dated July 23 1999 and
Resolution dated November 4, 1999 of the Court of Appeals in CA-G.R. CV No. 38453 are
hereby AFFIRMED. Costs against petitioners.
SO ORDERED.
G. R. No. 166876 March 24, 2006
ARTEMIO INIEGO,1Petitioner,
vs.
The HONORABLE JUDGE GUILLERMO G. PURGANAN, in his official capacity
as Presiding Judge of the Regional Trial Court, Branch 42, City of Manila, and
FOKKER C. SANTOS, Respondents.
DECISION
CHICO-NAZARIO, J.:
For this Court to grant this petition for review on certiorari under Rule 45 of the Rules of
Court, petitioner has to persuade us on two engaging questions of law. First, he has to
convince us that actions for damages based on quasi-delict are actions that are capable of
pecuniary estimation, and therefore would fall under the jurisdiction of the municipal
courts if the claim does not exceed the jurisdictional amount of P400,000.00 in Metro
Manila. Second, he has to convince us that the moral and exemplary damages claimed by
Page 57 of 169
the private respondent should be excluded from the computation of the above-mentioned
jurisdictional amount because they arose from a cause of action other than the negligent act
of the defendant.
Petitioner urges us to reverse the 28 October 2004 Decision and 26 January 2005
Resolution of the Court of Appeals, Eighth Division, in CA-G.R. SP No. 76206 denying
due course to the petition for certiorari filed by petitioner under Rule 65, elevating the 21
October 2002 Omnibus Order and the 21 January 2003 Order of the Regional Trial Court
(RTC), Branch 42, City of Manila. The dispositive portion of the 28 October 2004 Decision
of the Court of Appeals reads:
WHEREFORE, the petition is DENIED DUE COURSE and DISMISSED for lack of
merit.2
The factual and procedural antecedents of this case are as follows:
On 1 March 2002, private respondent Fokker Santos filed a complaint for quasi-delict and
damages against Jimmy T. Pinion, the driver of a truck involved in a traffic accident, and
against petitioner Artemio Iniego, as owner of the said truck and employer of Pinion. The
complaint stemmed from a vehicular accident that happened on 11 December 1999, when a
freight truck allegedly being driven by Pinion hit private respondent’s jitney which private
respondent was driving at the time of the accident.
On 24 August 2002, private respondent filed a Motion to Declare defendant in Default
allegedly for failure of the latter to file his answer within the final extended period. On 28
August 2002, petitioner filed a Motion to Admit and a Motion to Dismiss the complaint on
the ground, among other things, that the RTC has no jurisdiction over the cause of action of
the case.
On 21 October 2002, public respondent Judge Guillermo G. Purganan, acting as presiding
judge of the RTC, Branch 42, Manila, issued the assailed Omnibus Order denying the
Motion to Dismiss of the petitioner and the Motion to Declare Defendant in Default of the
private respondent. Pertinent portions of the Omnibus Order and the dispositive portion
thereof read:
In his opposition to the motion to declare him in default and his Motion to Admit defendant
IÑEGO alleged that he never received the Order dated 12 August 2002. But believing in
good faith, without being presumptuous, that his 3rd Motion for additional Time to file or
any appropriate [pleading] would be granted, he filed the aforesaid Motion received by the
Court on 23 August 2002.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
The explanation of defendant IÑEGO has merit. The order dated 12 August 2002 was sent
to a wrong address, thus defendant IÑEGO did not receive it. Since it was not received, he
was not aware that the court would grant no further extension. The Motion to Admit
Motion to Dismiss has to be granted and the Motion to declare Defendant IÑEGO [in
default] has to be DENIED.
xxxx
The plaintiff opines that this court has exclusive jurisdiction because the cause of action is
the claim for damages, which exceeds P400,000.00. The complaint prays for actual
damages in the amount of P40,000.00, moral damages in the amount of P300,000.00, and
exemplary damages in the amount of P150,000.00. Excluding attorney’s fees in the amount
of P50,000.00, the total amount of damages being claimed is P490,000.00.
Proceeding on the assumption that the cause of action is the claim of (sic) for damages in
the total amount of P490,000.00, this court has jurisdiction. But is the main cause of action
the claim for damages?
This court is of the view that the main cause of action is not the claim for damages but
quasi-delict. Damages are being claimed only as a result of the alleged fault or negligence
of both defendants under Article 2176 of the Civil Code in the case of defendant Pinion and
under Article 2180 also of the Civil Code in the case of defendant Iniego. But since fault or
negligence (quasi-delicts) could not be the subject of pecuniary estimation, this court has
exclusive jurisdiction.
xxxx
WHEREFORE, in view of all the foregoing, the motion to declare defendant Iniego in
default and the said defendant’s motion to dismiss are denied. 3
On 7 November 2002, petitioner filed a Motion for Reconsideration of the Omnibus Order
of 21 October 2002. On 21 January 2003, public respondent issued an Order denying
petitioner’s motion for reconsideration. Pertinent portions of the 21 January 2003 Order are
reproduced hereunder:
What this court referred to in its Order sought to be reconsidered as not capable of
pecuniary estimation is the CAUSE OF ACTION, which is quasi-delict and NOT the
amount of damage prayed for.
xxxx
Page 58 of 169
WHEREFORE, in view of the foregoing, the motion for reconsideration is DENIED. 4
Petitioner elevated the 21 October 2002 and 21 January 2003 Orders of the RTC to the
Court of Appeals on petition for certiorari under Rule 65 of the Rules of Court. On 28
October 2004, the Court of Appeals promulgated the assailed Decision, the dispositive
portion thereof reads:
WHEREFORE, the petition is DENIED DUE COURSE and dismissed for lack of merit.5
On 22 November 2004, petitioner moved for reconsideration, which was denied by the
Court of Appeals on 26 January 2005. Hence, this present petition.
Petitioner claims that actions for damages based on quasi-delict are actions that are capable
of pecuniary estimation; hence, the jurisdiction in such cases falls upon either the municipal
courts (the Municipal Trial Courts, Metropolitan Trial Courts, Municipal Trial Courts In
Cities, And Municipal Circuit Trial Courts), or the Regional Trial Courts, depending on the
value of the damages claimed.
Petitioner argues further that should this Court find actions for damages capable of
pecuniary estimation, then the total amount of damages claimed by the private respondent
must exceed P400,000.00 in order that it may fall under the jurisdiction of the RTC.
Petitioner asserts, however, that the moral and exemplary damages claimed by private
respondent be excluded from the computation of the total amount of damages for
jurisdictional purposes because the said moral and exemplary damages arose, not from the
quasi-delict, but from the petitioner’s refusal to pay the actual damages.
I
Actions for damages based on quasi-delicts are primarily and effectively actions for the
recovery of a sum of money for the damages suffered because of the defendant’s alleged
tortious acts, and are therefore capable of pecuniary estimation.
In a recent case,6 we did affirm the jurisdiction of a Municipal Circuit Trial Court in actions
for damages based on quasi-delict, although the ground used to challenge said jurisdiction
was an alleged forum shopping, and not the applicability of Section 19(1) of Batas
Pambansa Blg. 129.
According to respondent Judge, what he referred to in his assailed Order as not capable of
pecuniary estimation is the cause of action, which is a quasi-delict, and not the amount of
damage prayed for.7 From this, respondent Judge concluded that since fault or negligence
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
in quasi-delicts cannot be the subject of pecuniary estimation, the RTC has jurisdiction.
The Court of Appeals affirmed respondent Judge in this respect. 8
Respondent Judge’s observation is erroneous. It is crystal clear from B.P. Blg. 129, as
amended by Republic Act No. 7691, that what must be determined to be capable or
incapable of pecuniary estimation is not the cause of action, but the subject matter of the
action.9 A cause of action is "the delict or wrongful act or omission committed by the
defendant in violation of the primary rights of the plaintiff."10 On the other hand, the
"subject matter of the action" is "the physical facts, the thing real or personal, the money,
lands, chattels, and the like, in relation to which the suit is prosecuted, and not the delict or
wrong committed by the defendant."11
The case of Lapitan v. Scandia, Inc., et al.,12 has guided this Court time and again in
determining whether the subject matter of the action is capable of pecuniary estimation. In
Lapitan, the Court spoke through the eminent Mr. Justice Jose B.L. Reyes:
In determining whether an action is one the subject matter of which is not capable of
pecuniary estimation this Court has adopted the criterion of first ascertaining the nature of
the principal action or remedy sought. If it is primarily for the recovery of a sum of money,
the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the
municipal courts or in the courts of first instance [now Regional Trial Courts] would
depend on the amount of the claim. However, where the basic issue is something other than
the right to recover a sum of money, where the money claim is purely incidental to, or a
consequence of, the principal relief sought like suits to have the defendant perform his part
of the contract (specific performance) and in actions for support, or for annulment of a
judgment or to foreclose a mortgage, this court has considered such actions as cases where
the subject of the litigation may not be estimated in terms of money, and are cognizable
exclusively by courts of first instance [now Regional Trial Courts]. x x x. 13 (Emphasis
supplied.)
Actions for damages based on quasi-delicts are primarily and effectively actions for the
recovery of a sum of money for the damages suffered because of the defendant’s alleged
tortious acts. The damages claimed in such actions represent the monetary equivalent of the
injury caused to the plaintiff by the defendant, which are thus sought to be recovered by the
plaintiff. This money claim is the principal relief sought, and is not merely incidental
thereto or a consequence thereof. It bears to point out that the complaint filed by private
respondent before the RTC actually bears the caption "for DAMAGES."
Fault or negligence, which the Court of Appeals claims is not capable of pecuniary
estimation, is not actionable by itself. For such fault or negligence to be actionable, there
must be a resulting damage to a third person. The relief available to the offended party in
Page 59 of 169
such cases is for the reparation, restitution, or payment of such damage, without which any
alleged offended party has no cause of action or relief. The fault or negligence of the
defendant, therefore, is inextricably intertwined with the claim for damages, and there can
be no action based on quasi-delict without a claim for damages.
We therefore rule that the subject matter of actions for damages based on quasi-delict is
capable of pecuniary estimation.
II
The amount of damages claimed is within the jurisdiction of the RTC, since it is the claim
for all kinds of damages that is the basis of determining the jurisdiction of courts, whether
the claims for damages arise from the same or from different causes of action.
Despite our concurrence in petitioner’s claim that actions for damages based on quasi-delict
are actions that are capable of pecuniary estimation, we find that the total amount of
damages claimed by the private respondent nevertheless still exceeds the jurisdictional
limit of P400,000.00 and remains under the jurisdiction of the RTC.
Petitioner argues that in actions for damages based on quasi-delict, claims for damages
arising from a different cause of action (i.e., other than the fault or negligence of the
defendant) should not be included in the computation of the jurisdictional amount.
According to petitioner, the moral and exemplary damages claimed by the respondents in
the case at bar are not direct and proximate consequences of the alleged negligent act.
Petitioner points out that the complaint itself stated that such moral and exemplary damages
arose from the alleged refusal of defendants to honor the demand for damages, and
therefore there is no reasonable cause and effect between the fault or negligence of the
defendant and the claim for moral and exemplary damages.14 If the claims for moral and
exemplary damages are not included in the computation for purposes of determining
jurisdiction, only the claim for actual damages in the amount of P40,000.00 will be
considered, and the MeTC will have jurisdiction.
We cannot give credence to petitioner’s arguments. The distinction he made between
damages arising directly from injuries in a quasi-delict and those arising from a refusal to
admit liability for a quasi-delict is more apparent than real, as the damages sought by
respondent originate from the same cause of action: the quasi-delict. The fault or
negligence of the employee and the juris tantum presumption of negligence of his employer
in his selection and supervision are the seeds of the damages claimed, without distinction.
Even assuming, for the sake of argument, that the claims for moral and exemplary damages
arose from a cause of action other than the quasi-delict, their inclusion in the computation
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
of damages for jurisdictional purposes is still proper. All claims for damages should be
considered in determining the jurisdiction of the court regardless of whether they arose
from a single cause of action or several causes of action. Rule 2, Section 5, of the Rules of
Court allows a party to assert as many causes of action as he may have against the opposing
party. Subsection (d) of said section provides that where the claims in all such joined
causes of action are principally for recovery of money, the aggregate amount claimed shall
be the test of jurisdiction.15
Hence, whether or not the different claims for damages are based on a single cause of
action or different causes of action, it is the total amount thereof which shall govern.
Jurisdiction in the case at bar remains with the RTC, considering that the total amount
claimed, inclusive of the moral and exemplary damages claimed, is P490,000.00.
In sum, actions for damages based on quasi-delicts are actions that are capable of pecuniary
estimation. As such, they fall within the jurisdiction of either the RTC or the municipal
courts, depending on the amount of damages claimed. In this case, the amount of damages
claimed is within the jurisdiction of the RTC, since it is the claim for all kinds of damages
that is the basis of determining the jurisdiction of courts, whether the claims for damages
arise from the same or from different causes of action.
WHEREFORE, the petition for review on certiorari is hereby DENIED for lack of merit.
The Decision and Resolution of the Court of Appeals dated 28 October 2004 and 26
January 2005, respectively, are AFFIRMED insofar as they held that the Regional Trial
Court has jurisdiction. No costs.
SO ORDERED.
G.R. No. 202836, June 19, 2018
FIRST SARMIENTO PROPERTY HOLDINGS, INC., Petitioner, v. PHILIPPINE
BANK OF COMMUNICATIONS, Respondent.
DECISION
LEONEN, J.:
To determine the nature of an action, whether or not its subject matter is capable or
incapable of pecuniary estimation, the nature of the principal action or relief sought must
be ascertained. If the principal relief is for the recovery of a sum of money or real property,
then the action is capable of pecuniary estimation. However, if the principal relief sought is
Page 60 of 169
not for the recovery of sum of money or real property, even if a claim over a sum of money
or real property results as a consequence of the principal relief, the action is incapable of
pecuniary estimation.
This resolves the Petition for Review1 filed by First Sarmiento Property Holdings, Inc.
(First Sarmiento) assailing the April 3, 2012 Decision 2 and July 25, 2012 Order3 of Branch
11, Regional Trial Court, Malolos City, Bulacan in Civil Case No. 04-M-2012.
The facts as established by the parties are as follows:
On June 19, 2002,4 First Sarmiento obtained from Philippine Bank of Communications
(PBCOM) a P40,000,000.00 loan, which was secured by a real estate mortgage 5 over 1,076
parcels of land.6
On March 15, 2003,7 the loan agreement was amended8 with the increase of the loan
amount to P51,200,000.00. On September 15, 2003, the loan agreement was further
amended9 when the loan amount was increased to P100,000,000.00.
On January 2, 2006,10 PBCOM filed a Petition for Extrajudicial Foreclosure of Real Estate
Mortgage.11 It claimed in its Petition that it sent First Sarmiento several demand letters, yet
First Sarmiento still failed to pay the principal amount and accrued interest on the loan.
This prompted PBCOM to resort to extrajudicial foreclosure of the mortgaged properties, a
recourse granted to it under the loan agreement.12
On December 27, 2011, First Sarmiento attempted to file a Complaint for annulment of real
estate mortgage with the Regional Trial Court. However, the Clerk of Court refused to
accept the Complaint in the absence of the mortgaged properties' tax declarations, which
would be used to assess the docket fees.13
On December 29, 2011, Executive Judge Renato C. Francisco (Judge Francisco), First
Vice-Executive Judge Ma. Theresa A. Mendoza Arcega, Second Vice-Executive Judge Ma.
Belen R. Liban, and Third Vice-Executive Judge Basilio R. Gabo, Jr. of the Regional Trial
Court of City of Malolos, Bulacan, granted First Sarmiento's Urgent Motion to Consider
the Value of Subject Matter of the Complaint as Not Capable of Pecuniary Estimation, and
ruled that First Sarmiento's action for annulment of real estate mortgage was incapable of
pecuniary estimation.14
Also on December 29, 2011, the mortgaged properties were auctioned and sold to PBCOM
as the highest bidder.15
On January 2, 2012, First Sarmiento filed a Complaint for annulment of real estate
mortgage and its amendments, with prayer for the issuance of temporary restraining order
and preliminary injunction.16 It paid a filing fee of P5,545.00.17
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
First Sarmiento claimed in its Complaint that it never received the loan proceeds of
P100,000,000.00 from PBCOM, yet the latter still sought the extrajudicial foreclosure of
real estate mortgage. It prayed for the issuance of a temporary restraining order and
preliminary injunction to enjoin the Ex-Officio Sheriff from proceeding with the
foreclosure of the real estate mortgage or registering the certificate of sale in PBCOM's
favor with the Registry of Deeds of Bulacan.18
That same day, Judge Francisco issued an ex-parte temporary restraining order for 72
hours, enjoining the registration of the certificate of sale with the Registry of Deeds of
Bulacan.19
On January 4, 2012, the Regional Trial Court directed the parties to observe the status quo
ante.20
On January 24, 2012, the Clerk of Court and Ex-Officio Sheriff of Malolos City, Bulacan
issued a certificate of sale to PBCOM.21
In its Opposition (Re: Application for Issuance of Temporary Restraining
Order),22 PBCOM asserted that the Regional Trial Court failed to acquire jurisdiction over
First Sarmiento's Complaint because the action for annulment of mortgage was a real
action; thus, the filing fees filed should have been based on the fair market value of the
mortgaged properties.23
PBCOM also pointed out that the Regional Trial Court's directive to maintain the status
quo order beyond 72 hours constituted an indefinite extension of the temporary restraining
order, a clear contravention of the rules.24
On April 3, 2012, Branch 11, Regional Trial Court,25 Malolos City, Bulacan dismissed the
Complaint for lack of jurisdiction:
Following the High Court's ruling in the case of Home Guaranty Corporation v. R. II
Builders, Inc. and National Housing Authority, G.R. No. 192549, March 9, 2011, cited by
the bank in its Rejoinder, which appears to be the latest jurisprudence on the matter to the
effect that an action for annulment or rescission of contract does not operate to efface the
true objective and nature of the action which is to recover real property, this Court hereby
RESOLVES TO DISMISS the instant case for lack of jurisdiction, plaintiff having failed to
pay the appropriate filing fees.
Accordingly, the instant case is hereby DISMISSED.
SO ORDERED.26
Page 61 of 169
On July 25, 2012, the Regional Trial Court27 denied First Sarmiento's motion for
reconsideration.28
On August 17, 2012, First Sarmiento sought direct recourse to this Court with its Petition
for Review29 under Rule 45. It insists that its Complaint for the annulment of real estate
mortgage was incapable of pecuniary estimation.30 It points out that the Executive Judge
and Vice-Executive Judges of the Regional Trial Court likewise acknowledged that its
action was incapable of pecuniary estimation.31
Petitioner highlights that the Supreme Court En Banc in Lu v. Lu Ym held "that an action
for declaration of nullity of issuance of shares or an action questioning the legality of a
conveyance is one not capable of pecuniary estimation."32 Furthermore, petitioner
maintains that the Supreme Court En Banc in Bunayog v. Tunas also established that a
complaint questioning the validity of a mortgage is an action incapable of pecuniary
estimation.33
It emphasizes that Home Guaranty Corporation v. R-II Builders, which the Regional Trial
Court relied on to dismiss its complaint for lack of jurisdiction, was rendered by a division
of the Supreme Court; hence, it cannot modify or reverse a doctrine or principle of law laid
down by the Supreme Court En Banc.34
On September 19, 2012,35 this Court directed respondent PBCOM to comment on the
petition.
In its Comment,36 respondent contends that petitioner's action to annul the real estate
mortgage and enjoin the foreclosure proceedings did not hide the true objective of the
action, which is to restore petitioner's ownership of the foreclosed properties. 37
Respondent maintains that this Court has already settled that "a complaint for cancellation
of sale which prayed for both permanent and preliminary injunction aimed at the
restoration of possession of the land in litigation is a real action."38
It likewise stresses that since petitioner's primary objective in filing its Complaint was to
prevent the scheduled foreclosure proceedings over the mortgaged properties and the
conveyance of their ownership to the highest bidder, the case was a real action. 39
Finally, it denies that Home Guaranty Corporation modified and reversed Lu v. Lu
Ym because the factual and legal milieus of these two (2) cases were different.40
On November 26, 2012,41 this Court required petitioner to file a reply to the comment.
On February 1, 2013, petitioner filed its Reply42 where it denies that its Complaint was for
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
the annulment of the foreclosure sale, because when it filed its Complaint, the foreclosure
sale had not yet happened.43
It proclaims that its Complaint sought the removal of the lien on the mortgaged properties
and was not intended to recover ownership or possession since it was still the registered
owner with possession of the mortgaged properties when it filed its Complaint. 44
On February 27, 2013,45 this Court noted petitioner's reply and directed the parties to
submit their respective memoranda.
On May 30, 2013, the parties filed their respective memoranda. 46
In its Memorandum,47 petitioner continues to insist that it did not receive the loan proceeds
from PBCOM which is why it filed its Complaint for annulment of real estate mortgage in
response to the latter's Petition for Extrajudicial Foreclosure of Real Estate Mortgage.48
Petitioner reiterates that its Complaint for annulment of real estate mortgage was an action
incapable of pecuniary estimation because it merely sought to remove the lien on its
properties, not the recovery or reconveyance of the mortgaged properties.49
It states that it never expressly or impliedly sought the conveyance of the mortgaged
properties because it was still the registered owner of the mortgaged properties when its
Complaint was first presented for filing with the Clerk of Court.50
On the other hand, respondent in its Memorandum51 restates its stand that petitioner's
Complaint involved a real action; hence, the estimated value of the mortgaged properties
should have been alleged and used as the basis for the computation of the docket fees.52
Respondent claims that the allegations in petitioner's Complaint reveal the latter's real
intention to assert its title and recover the real properties sold at the public auction. 53
The only issue for this Court's resolution is whether or not the Regional Trial Court
obtained jurisdiction over First Sarmiento Corporation, Inc.'s Complaint for annulment of
real estate mortgage.
I Petitioner contends that its Complaint for annulment of real estate mortgage has a subject
Rule 45 of the Rules of Court allows for a direct recourse to this Court by appeal from a
judgment, final order, or resolution of the Regional Trial Court. Rule 45, Section 1
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,
Page 62 of 169
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.
Rule 41, Section 2(c) likewise provides:
Section 2. Modes of appeal. —
....
(c) Appeal by certiorari. — In all cases where only questions of law are raised or involved,
the appeal shall be to the Supreme Court by petition for review on certiorari in accordance
with Rule 45.
Thus, there is no question that a petitioner may file a verified petition for review directly
with this Court if only questions of law are at issue; however, if both questions of law and
of facts are present, the correct remedy is to file a petition for review with the Court of
Appeals.54
Doña Adela Export International v. Trade and Investment Development
Corp.55 differentiated between a question of law and a question of fact as follows:
We stress that a direct recourse to this Court from the decisions, final resolutions and orders
of the RTC may be taken where only questions of law are raised or involved. There is a
question of law when the doubt or difference arises as to what the law is on a certain state
of facts, which does not call for an examination of the probative value of the evidence
presented by the parties-litigants. On the other hand, there is a question of fact when the
doubt or controversy arises as to the truth or falsity of the alleged facts. Simply put, when
there is no dispute as to fact, the question of whether the conclusion drawn therefrom is
correct or not, is a question of law.56 (Citation omitted)
In the case at bar, the underlying question for this Court's resolution pertains to jurisdiction,
or to be more precise, whether the Regional Trial Court attained jurisdiction over
petitioner's Complaint with the amount of docket fees paid.
Considering that the issue of jurisdiction is a pure question of law,57 petitioner did not err in
filing its appeal directly with this Court pursuant to law and prevailing jurisprudence.
II
incapable of pecuniary estimation because it was not intended to recover ownership or
possession of the mortgaged properties sold to respondent during the auction sale.58 It
insists that it had ownership and possession of the mortgaged properties when it filed its
Complaint; hence, it never expressly or impliedly sought recovery of their ownership or
possession.59
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
The petition is meritorious.
Jurisdiction is "the power and authority of a court to hear, try and decide a case"60 brought
before it for resolution.
Courts exercise the powers conferred on them with binding effect if they acquire
jurisdiction over: "(a) the cause of action or the subject matter of the case; (b) the thing or
the res; (c) the parties; and (d) the remedy."61
Jurisdiction over the thing or the res is a court's authority over the object subject of
litigation.62 The court obtains jurisdiction or actual custody over the object through the
seizure of the object under legal process or the institution of legal proceedings which
recognize the power and authority of the court.63
Jurisdiction over the parties is the court's power to render judgment that are binding on the
parties. The courts acquire jurisdiction over the plaintiffs when they file their initiatory
pleading, while the defendants come under the court's jurisdiction upon the valid service of
summons or their voluntary appearance in court.64
Jurisdiction over the cause of action or subject matter of the case is the court's authority to
hear and determine cases within a general class where the proceedings in question belong.
This power is conferred by law and cannot be acquired through stipulation, agreement
between the parties,65 or implied waiver due to the silence of a party.66
Jurisdiction is conferred by the Constitution, with Congress given the plenary power, for
cases not enumerated in Article VIII, Section 567 of the Constitution, to define, prescribe,
and apportion the jurisdiction of various courts.68
Batas Pambansa Blg. 129, or the Judiciary Reorganization Act of 1980 as amended by
Republic Act No. 7691, provided for the jurisdictional division between the first and
second level courts by considering the complexity of the cases and the experience needed
of the judges assigned to hear the cases.
In criminal cases, first level courts are granted exclusive original jurisdiction to hear
complaints on violations of city or municipal ordinances69 and offenses punishable with
imprisonment not exceeding six (6) years.70 In contrast, second level courts, with more
experienced judges sitting at the helm, are granted exclusive original jurisdiction to preside
over all other criminal cases not within the exclusive jurisdiction of any other court,
tribunal, or body.71
The same holds true for civil actions and probate proceedings, where first level courts have
the power to hear cases where the value of personal property, estate, or amount of the
Page 63 of 169
demand does not exceed P100,000.00 or P200,000.00 if in Metro Manila. 72 First level
courts also possess the authority to hear civil actions involving title to, possession of, or
any interest in real property where the value does not exceed P20,000.00 or P50,000.00 if
the real property is situated in Metro Manila.73 Second level courts then assume jurisdiction
when the values involved exceed the threshold amounts reserved for first level courts 74 or
when the subject of litigation is incapable of pecuniary estimation.75
First level courts were also conferred with the power to hear the relatively uncomplicated
cases of forcible entry and unlawful detainer,76 while second level courts are authorized to
hear all actions in admiralty and maritime jurisdiction77 with claims above a certain
threshold amount. Second level courts are likewise authorized to hear all cases involving
the contract of marriage and marital relations,78 in recognition of the expertise and probity
required in deciding issues which traverse the marital sphere.
Section 19(1) of Batas Pambansa Blg. 129, as amended, provides Regional Trial Courts
with exclusive, original jurisdiction over "all civil actions in which the subject of the
litigation is incapable of pecuniary estimation."
Lapitan v. Scandia79 instructed that to determine whether the subject matter of an action is
incapable of pecuniary estimation, the nature of the principal action or remedy sought must
first be established. This finds support in this Court's repeated pronouncement that
jurisdiction over the subject matter is determined by examining the material allegations of
the complaint and the relief sought.80Heirs of Dela Cruz v. Heirs of Cruz81 stated, thus:
It is axiomatic that the jurisdiction of a tribunal, including a quasi-judicial officer or
government agency, over the nature and subject matter of a petition or complaint is
determined by the material allegations therein and the character of the relief prayed for,
irrespective of whether the petitioner or complainant is entitled to any or all such reliefs.82
However, Lapitan stressed that where the money claim is only a consequence of the
remedy sought, the action is said to be one incapable of pecuniary estimation:
A review of the jurisprudence of this Court indicates that in determining whether an action
is one the subject matter of which is not capable of pecuniary estimation, this Court has
adopted the criterion of first ascertaining the nature of the principal action or remedy
sought. If it is primarily for the recovery of a sum of money, the claim is considered
capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in
the courts of first instance would depend on the amount of the claim. However, where the
basic issue is something other than the right to recover a sum of money, or where the
money claim is purely incidental to, or a consequence of, the principal relief sought like in
suits to have the defendant perform his part of the contract (specific performance) and in
actions for support, or for annulment of a judgment or to foreclose a mortgage, this Court
has considered such actions as cases where the subject of the litigation may not be
estimated in terms of money, and are cognizable exclusively by courts of first instance. The
rationale of the rule is plainly that the second class cases, besides the determination of
damages, demand an inquiry into other factors which the law has deemed to be more within
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
the competence of courts of first instance, which were the lowest courts of record at the
time that the first organic laws of the Judiciary were enacted allocating jurisdiction (Act
136 of the Philippine Commission of June 11, 1901). 83 (Citation omitted)
Heirs of Sebe v. Heirs of Sevilla84 likewise stressed that if the primary cause of action is
based on a claim of ownership or a claim of legal right to control, possess, dispose, or enjoy
such property, the action is a real action involving title to real property. 85
A careful reading of petitioner's Complaint convinces this Court that petitioner never
prayed for the reconveyance of the properties foreclosed during the auction sale, or that it
ever asserted its ownership or possession over them. Rather, it assailed the validity of the
loan contract with real estate mortgage that it entered into with respondent because it
supposedly never received the proceeds of the P100,000,000.00 loan agreement. 86 This is
evident in its Complaint, which read:
GROUNDS FOR THE APPLICATION OF PRELIMINARY INJUNCTION AND
TEMPORARY RESTRAINING ORDER
7. Defendant PBCOM knows fully well that plaintiff did not receive from it the loan it
(PBCOM) alleged to have granted in its favor.
8. Despite this, defendant PBCOM has filed with the Ex-Officio Sheriff of Bulacan, a
petition for extra judicial foreclosure of real estate mortgage, bent on foreclosing the real
estate properties of plaintiff, photocopy of the petition is hereto attached as Annex "F".
9. The auction sale of the properties is set on December 29, 2011.
10. Defendant PBCOM, well knowing the facts narrated above and willfully disregarding
the property rights of plaintiff, wrongfully filed an extra judicial foreclosure of real estate
mortgage and pursuant to said petition, the Ex-Officio Sheriff now does offer for sale, the
real estate properties of the plaintiff as set forth in its (PBCOM) said petition.
11. Unless defendants PBCOM and Ex-Officio Sheriff are restrained by this Honorable
Court, they will infringe the property rights of the plaintiff in the manner herein before
related.87
Far East Bank and Trust Company v. Shemberg Marketing Corporation88 stated that an
action for cancellation of mortgage has a subject that is incapable of pecuniary estimation:
Here, the primary reliefs prayed for by respondents in Civil Case No. figue4045 is the
cancellation of the real estate and chattel mortgages for want of consideration. In Bumayog
v. Tumas, this Court ruled that where the issue involves the validity of a mortgage, the
action is one incapable of pecuniary estimation. In the more recent case of Russell v. Vestil,
this Court, citing Bumayog, held that an action questioning the validity of a mortgage is one
incapable of pecuniary estimation. Petitioner has not shown adequate reasons for this Court
to revisit Bumayog and Russell. Hence, petitioner's contention [cannot] be sustained. Since
Page 64 of 169
respondents paid the docket fees, as computed by the clerk of court, consequently, the trial
court acquired jurisdiction over Civil Case No. MAN-4045.89
It is not disputed that even if the Complaint were filed a few days after the mortgaged
properties were foreclosed and sold at auction to respondent as the highest bidder, the
certificate of sale was only issued to respondent after the Complaint was filed.
Section 6 of Act No. 3135,90 as amended, provides that a property sold through an
extrajudicial sale may be redeemed "at any time within the term of one year from and after
the date of the sale":
Section 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.
Mahinay v. Dura Tire & Rubber Industries Inc.91 clarified that "[t]he date of the sale'
referred to in Section 6 is the date the certificate of sale is registered with the Register of
Deeds. This is because the sale of registered land does not 'take effect as a conveyance, or
bind the land' until it is registered."92
The registration of the certificate of sale issued by the sheriff after an extrajudicial sale is a
mandatory requirement; thus, if the certificate of sale is not registered with the Registry of
Deeds, the property sold at auction is not conveyed to the new owner and the period of
redemption does not begin to run.93
In the case at bar, the Ex-Officio Sheriff of the City of Malolos, Bulacan was restrained
from registering the certificate of sale with the Registry of Deeds of Bulacan and the
certificate of sale was only issued to respondent after the Complaint for annulment of real
estate mortgage was filed. Therefore, even if the properties had already been foreclosed
when the Complaint was filed, their ownership and possession remained with petitioner
since the certificate of sale was not registered with the Registry of Deeds. This supports
petitioner's claim that it never asked for the reconveyance of or asserted its ownership over
the mortgaged properties when it filed its Complaint since it still enjoyed ownership and
possession over them.
Considering that petitioner paid the docket fees as computed by the clerk of court, upon the
direction of the Executive Judge, this Court is convinced that the Regional Trial Court
acquired jurisdiction over the Complaint for annulment of real estate mortgage.
Furthermore, even if it is assumed that the instant case were a real action and the correct
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
docket fees were not paid by petitioner, the case should not have been dismissed; instead,
the payment of additional docket fees should have been made a lien on the judgment award.
The records attest that in filing its complaint, petitioner readily paid the docket fees
assessed by the clerk of court; hence, there was no evidence of bad faith or intention to
defraud the government that would have rightfully merited the dismissal of the
Complaint.94
III
Although not raised in the Petition, this Court nonetheless deems it proper to pass upon the
legality of the Regional Trial Court January 4, 2012 Order, which directed the parties to
observe the status quo ante,95 effectively extending indefinitely its 72-hour ex-parte
temporary restraining order issued on January 2, 2012.96
Rule 58, Section 5 of the Rules of Court provides the instances when a temporary
restraining order may be issued:
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. 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 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.
However, and subject to the provisions of the preceding sections, if the matter is of extreme
urgency and the applicant will suffer grave injustice and irreparable injury, the executive
judge of a multiple-sala court or the presiding judge of a single-sala court may issue ex-
parte a temporary restraining order effective for only seventy-two (72) hours from issuance
but he shall immediately comply with the provisions of the next preceding section as to
service of summons and the documents to be served therewith. Thereafter, within the
aforesaid seventy-two (72) hours, the judge before whom the case is pending shall conduct
a summary hearing to determine whether the temporary restraining order shall be extended
until the application for preliminary injunction can be heard. In no case shall the total
period of effectivity of the temporary restraining order exceed twenty (20) days, including
the original seventy-two hours provided herein.
In the event that the application for preliminary injunction is denied or not resolved within
the said period, the temporary restraining order is deemed automatically vacated. The
effectivity of a temporary restraining order is not extendible without need of any judicial
Page 65 of 169
declaration to that effect and no court shall have authority to extend or renew the same on
the same ground for which it was issued.
However, if issued by the Court of Appeals or a member thereof, the temporary restraining
order shall be effective for sixty (60) days from service on the party or person sought to be
enjoined. A restraining order issued by the Supreme Court or a member thereof shall be
effective until further orders.
It is clear that a temporary restraining order may be issued by a trial court in only two (2)
instances: first, when great or irreparable injury would result to the applicant even before
the application for writ of preliminary injunction can be heard; and second, if the matter is
of extreme urgency and the applicant will suffer grave injustice and irreparable injury. The
executive judge of a multi-sala court or the presiding judge of a single-sala court may issue
a 72-hour temporary restraining order.
In both instances, the temporary restraining order may be issued ex parte. However, in the
first instance, the temporary restraining order has an effectivity of only 20 days to be
counted from service to the party sought to be enjoined. Likewise, within those 20 days, the
court shall order the enjoined party to show why the injunction should not be granted and
shall then determine whether or not the injunction should be granted.
In the second instance, when there is extreme urgency and the applicant will suffer grave
injustice and irreparable injury, the court shall issue a temporary restraining order effective
for only 72 hours upon issuance. Within those 72 hours, the court shall conduct a summary
hearing to determine if the temporary restraining order shall be extended until the
application for writ of preliminary injunction can be heard. However, in no case shall the
extension exceed 20 days.
If the application for preliminary injunction is denied or not resolved within the given
periods, the temporary restraining order is automatically vacated and the court has no
authority to extend or renew it on the same ground of its original issuance.
Despite the clear wording of the rules, the Regional Trial Court issued a status quo ante
order dated January 4, 2012, indefinitely extending the temporary restraining order on the
registration of the certificate of sale with the Registry of Deeds.
Petitioner applied for a writ of preliminary injunction, yet the Regional Trial Court did not
conduct any hearing for that purpose and merely directed the parties to observe the status
quo ante.
Miriam College Foundation, Inc v. Court of Appeals97 explained the difference between
preliminary injunction and a restraining order as follows:
Preliminary injunction is an order granted at any stage of an action or proceeding prior to
the judgment or final order, requiring a party or a court, agency or a person to perform to
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
refrain from performing a particular act or acts. As an extraordinary remedy, injunction is
calculated to preserve or maintain the status quo of things and is generally availed of to
prevent actual or threatened acts, until the merits of the case can be heard. A preliminary
injunction persists until it is dissolved or until the termination of the action without the
court issuing a final injunction.
The basic purpose of restraining order, on the other hand, is to preserve the status quo until
the hearing of the application for preliminary injunction. Under the former A§5, Rule 58 of
the Rules of Court, as amended by A§5, Batas Pambansa Blg. 224, a judge (or justice) may
issue a temporary restraining order with a limited life of twenty days from date of issue. If
before the expiration of the 20-day period the application for preliminary injunction is
denied, the temporary order would thereby be deemed automatically vacated. If no action is
taken by the judge on the application for preliminary injunction within the said 20 days, the
temporary restraining order would automatically expire on the 20th day by the sheer force
of law, no judicial declaration to that effect being necessary. In the instant case, no such
preliminary injunction was issued; hence, the TRO earlier issued automatically expired
under the aforesaid provision of the Rules of Court.98 (Citations omitted)
A temporary restraining order cannot be extended indefinitely to take the place of a writ of
preliminary injunction, since a temporary restraining order is intended only to have a
limited lifespan and is deemed automatically vacated upon the expiration of 72 hours or 20
days, as the case may be. As such, the temporary restraining order has long expired and, in
the absence of a preliminary injunction, there was nothing to stop the sheriff from
registering the certificate of sale with the Registry of Deeds.
This Court has repeatedly expounded on the nature of a temporary restraining order99 and a
preliminary injunction.100 Yet lower courts consistently interchange these ancillary
remedies and disregard the sunset clause101 inherent in a temporary restraining order by
erroneously extending it indefinitely. Such ignorance or defiance of basic remedial
measures is a gross disservice to the public, who look towards the court for legal guidance
and legal remedy. More importantly, this cavalier attitude towards these injunctive reliefs
might even be construed as a deliberate effort to look the other way to favor a party, which
will then sully the image of the entire judiciary. Henceforth, this Court will demand stricter
compliance with the rules from the members of the bench as regards their issuances of
these injunctive reliefs.
IV
Finally, there is a need to reassess the place of Home Guaranty v. R-II Builders102 in our
jurisprudence.
In Home Guaranty, R-II Builders, Inc. (R-II Builders) filed a Complaint for the rescission
of the Deed of Assignment and Conveyance it entered into with Home Guaranty
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Corporation and National Housing Authority. The Complaint was initially determined to
have a subject that is incapable of pecuniary estimation and the docket fees were assessed
and paid accordingly.103
R-II Builders later filed a motion to admit its Amended and Supplemental Complaint,
which deleted its earlier prayer for the resolution of its Deed of Assignment and
Conveyance, and prayed for the conveyance of title to and/or possession of the entire Asset
Pool. The Regional Trial Court ruled that the Amended and Supplemental Complaint
involved a real action and directed R-II Builders to pay the correct docket fees.104
Instead of paying the additional docket fees, R-II Builders withdrew its Amended and
Supplemental Complaint and instead filed a motion to admit its Second Amended
Complaint, which revived the prayer in its original Complaint to resolve the Deed of
Assignment and Conveyance and deleted the causes of action for conveyance of title to
and/or possession of the entire Asset Pool in its Amended and Supplemental
Complaint.105 The Regional Trial Court granted the motion to admit the Second Amended
Complaint, ratiocinating that the docket fees to the original Complaint had been paid; that
the Second Amended Complaint was not intended to delay the proceedings; and that the
Second Amended Complaint was consistent with R-II Builders' previous pleadings.106
The Court of Appeals upheld the ruling of the Regional Trial Court and reiterated that the
case involved a subject that was incapable of pecuniary estimation.107 However, Home
Guaranty reversed the Court of Appeals Decision, ruling that the Complaint and the
Amended and Supplemental Complaint both involved prayers for the conveyance and/or
transfer of possession of the Asset Pool, causes of action which were undoubtedly real
actions. Thus, the correct docket fees had not yet been paid:108
Although an action for resolution and/or the nullification of a contract, like an action for
specific performance, fall squarely into the category of actions where the subject matter is
considered incapable of pecuniary estimation, we find that the causes of action for
resolution and/or nullification of the [Deed of Assignment and Conveyance] was
erroneously isolated by the [Court of Appeals] from the other causes of action alleged in R-
II Builders' original complaint and Amended and Supplemental Complaint which prayed
for the conveyance and/or transfer of possession of the Asset Pool. In Gochan v. Gochan,
this Court held that an action for specific performance would still be considered a real
action where it seeks the conveyance or transfer of real property, or ultimately, the
execution of deeds of conveyance of real property.
....
Granted that R-II Builders is not claiming ownership of the Asset Pool because its
continuing stake is, in the first place, limited only to the residual value thereof, the
conveyance and/or transfer of possession of the same properties sought in the original
complaint and Amended and Supplemental Complaint both presuppose a real action for
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)

which appropriate docket fees computed on the basis of the assessed or estimated value of the nature of the principal action or relief sought. Thus, if the principal relief sought is the
said properties should have been assessed and paid. . . . 109 (Citations omitted) recovery of a sum of money or real property, then the action is capable of pecuniary
estimation. However, if the principal relief sought is not for the recovery of money or real
Home Guaranty stated that to determine whether an action is capable or incapable of
property and the money claim is only a consequence of the principal relief, then the action
pecuniary estimation, the nature of the principal action or remedy prayed for must first be
is incapable of pecuniary estimation.116
determined.110 Nonetheless, in citing Ruby Shelter Builders v. Formaran, Home
Guaranty looked beyond R-II Builder's principal action for annulment or rescission of
Considering that the principal remedy sought by R-II Builders was the resolution of the
contract to purportedly unmask its true objective and nature of its action, which was to
Deed of Assignment and Conveyance, the action was incapable of pecuniary estimation
recover real property.111
and Home Guaranty erred in treating it as a real action simply because the principal action
was accompanied by a prayer for conveyance of real property.
In a dissenting opinion in the Home Guaranty112 June 22, 2011 Resolution that dismissed
R-II Builders' motion for reconsideration, Associate Justice Presbitero Velasco, Jr. stressed
It is clear that subject matter jurisdiction cannot be dependent on the supposed ultimate
that one must first look at the principal action of the case to determine if it is capable or
motive or true objective of the complaint because this will require the judge to speculate on
incapable of pecuniary estimation:
the defenses of the plaintiff beyond the material allegations contained in the complaint.
Whether or not the case is a real action, and whether or not the proper docket fees were
Likewise, in attempting to pinpoint the true objective of the complaint at the initial stages
paid, one must look to the main cause of action of the case. In all instances, in the original
of trial, the judge might end up dictating the result outside of the evidence still to be
Complaint, the Amended and Supplemental Complaint and the Amended Complaint, it was
presented during the trial, opening up the judge to charges of partiality and even
all for the resolution or rescission of the [Deed of Assignment and Conveyance], with the
impropriety. Furthermore, the judge is not aware of the evidence to be presented by either
prayer for the provisional remedy of injunction and the appointment of a trustee and
party when the complaint is filed; thus, there is no reliable basis that can be used to infer
subsequently a receiver. In the Second Amended Complaint, the return of the remaining
the true objective of the complaint. It is imperative then that the competing claims as basis
assets of the asset pool, if any, to respondent R-II Builders would only be the result of the
of subject matter jurisdiction be textually based, finding its basis in the body of the
resolution or rescission of the [Deed of Assignment and Conveyance].
complaint and the relief sought without reference to extraneous facts not alleged or
evidence still to be presented.
Even if real property in the Asset Pool may change hands as a result of the case in the trial
court, the fact alone that real property is involved does not make that property the basis of
Nonetheless, if subject matter jurisdiction is assailed during the course of the trial and
computing the docket fees. De Leon v. Court of Appeals has already settled the matter. That
evidence is presented to prove the defense's allegation of lack of jurisdiction, this will lead
case, citing Bautista v, Lim, held that a case for rescission or annulment of contract is not
to an anomaly where the defense's evidence, instead of the complaint, will effectively
susceptible of pecuniary estimation. On the other hand, in the Decision We rendered on
determine the remedy and cause of action.
July 25, 2005 in Serrano v. Delica, We ruled that the action for cancellation of contracts of
sale and the titles is a real action. Similarly, on February 10, 2009, We ruled in Ruby
In the case at bar, petitioner contends that its complaint prayed for the annulment of the real
Shelter Builders and Realty Development Corporation v. Formaran III (Ruby Shelter) that
estate mortgage it entered into with respondent and not for the recovery or reconveyance of
an action for nullification of a Memorandum of Agreement which required the lot owner to
the mortgaged properties because it was still the registered owner when it filed its
issue deeds of sale and cancellation of the. Deeds of Sale is a real action. 113 (Citations
complaint. The evidence on record supports petitioner's claim; hence, there was no reason
omitted)
for the dismissal of its Complaint for lack of jurisdiction.
Whatever confusion there might have been regarding the nature of actions for nullity of
contracts or legality of conveyances, which would also involve recovery of sum of money Home Guaranty likewise erred in dismissing the action because of non-payment of the
or real property, was directly addressed by Lu v. Lu Ym.114Lu underscored that "where the correct filing fees. Fedman Development Corporation v. Agcaoili117 reiterated that where
basic issue is something other than the right to recover a sum of money, the money claim the assessed docket fees have been paid and the assessment turns out to be insufficient, the
being only incidental to or merely a consequence of, the principal relief sought, the action court still acquires jurisdiction over the case, subject to payment of the deficiency
is incapable of pecuniary estimation."115 assessment.118 The only exception is when the deficiency in docket fees is accompanied
with bad faith and an intention to defraud the government. 119 It is not disputed that R-II
This finds support in numerous decisions where this Court proclaimed that the test to Builders paid the assessed docket fees when it filed its Complaint, negating bad faith or
determine whether an action is capable or incapable of pecuniary estimation is to ascertain intent on its part to defraud the government.

Page 67 of 169
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
In light of the foregoing, this Court reaffirms that the nature of an action is determined by
the principal relief sought in the complaint, irrespective of the other causes of actions that
may also crop up as a consequence of the principal relief prayed for. The contrary rule
espoused in Home Guaranty is thereby set aside.
WHEREFORE, this Court resolves to GRANT the Petition. The assailed April 3, 2012
Decision and July 25, 2012 Order of Branch 11, Regional Trial Court, City of Malolos,
Bulacan in Civil Case No. 04-M-2012 are REVERSED and SET ASIDE.
The case is ordered REMANDED to Branch 11, Regional Trial Court, City of Malolos,
Bulacan for continued trial on First Sarmiento Property Holdings, Inc.'s Complaint for
annulment of real estate mortgage and its amendments.
SO ORDERED.
G.R. No. L-21450 April 15, 1968
SERAFIN TIJAM, ET AL., plaintiffs-appellees,
vs.
MAGDALENO SIBONGHANOY alias GAVINO SIBONGHANOY and LUCIA
BAGUIO, defendants,
MANILA SURETY AND FIDELITY CO., INC. (CEBU BRANCH) bonding company
and defendant-appellant.
F. S. Urot and G. A. Uriate for plaintiffs-appellees.
Carlos J. Cuizon for defendants Gavino Sibonghanoy and Lucia Baguio.
Villaluz Law Office, Velasco Law Office, Pages and Soberano for defendant-appellant
Manila Surety and Fidelity Company, Inc.
DIZON, J.:
On July 19, 1948 — barely one month after the effectivity of Republic Act No. 296 known
as the Judiciary Act of 1948 — the spouses Serafin Tijam and Felicitas Tagalog
commenced Civil Case No. R-660 in the Court of First Instance of Cebu against the
spouses Magdaleno Sibonghanoy and Lucia Baguio to recover from them the sum of
P1,908.00, with legal interest thereon from the date of the filing of the complaint until the
whole obligation is paid, plus costs. As prayed for in the complaint, a writ of attachment
was issued by the court against defendants' properties, but the same was soon dissolved
upon the filing of a counter-bond by defendants and the Manila Surety and Fidelity Co.,
Inc. hereinafter referred to as the Surety, on the 31st of the same month.
Page 68 of 169
After being duly served with summons the defendants filed their answer in which, after
making some admissions and denials of the material averments of the complaint, they
interposed a counterclaim. This counterclaim was answered by the plaintiffs.
After trial upon the issues thus joined, the Court rendered judgment in favor of the
plaintiffs and, after the same had become final and executory, upon motion of the latter, the
Court issued a writ of execution against the defendants. The writ having been returned
unsatisfied, the plaintiffs moved for the issuance of a writ of execution against the Surety's
bond (Rec. on Appeal, pp. 46-49), against which the Surety filed a written opposition (Id.
pp. 49) upon two grounds, namely, (1) Failure to prosecute and (2) Absence of a demand
upon the Surety for the payment of the amount due under the judgment. Upon these
grounds the Surety prayed the Court not only to deny the motion for execution against its
counter-bond but also the following affirmative relief : "to relieve the herein bonding
company of its liability, if any, under the bond in question" (Id. p. 54) The Court denied
this motion on the ground solely that no previous demand had been made on the Surety for
the satisfaction of the judgment. Thereafter the necessary demand was made, and upon
failure of the Surety to satisfy the judgment, the plaintiffs filed a second motion for
execution against the counterbond. On the date set for the hearing thereon, the Court, upon
motion of the Surety's counsel, granted the latter a period of five days within which to
answer the motion. Upon its failure to file such answer, the Court granted the motion for
execution and the corresponding writ was issued.
Subsequently, the Surety moved to quash the writ on the ground that the same was issued
without the required summary hearing provided for in Section 17 of Rule 59 of the Rules of
Court. As the Court denied the motion, the Surety appealed to the Court of Appeals from
such order of denial and from the one denying its motion for reconsideration (Id. p. 97). Its
record on appeal was then printed as required by the Rules, and in due time it filed its brief
raising therein no other question but the ones covered by the following assignment of
errors:
I. That the Honorable Court a quo erred in issuing its order dated November 2,
1957, by holding the incident as submitted for resolution, without a summary
hearing and compliance with the other mandatory requirements provided for in
Section 17, Rule 59 of the Rules of Court.
II. That the Honorable Court a quo erred in ordering the issuance of execution
against the herein bonding company-appellant.
III. That the Honorable Court a quo erred in denying the motion to quash the writ
of execution filed by the herein bonding company-appellant as well as its
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
subsequent motion for reconsideration, and/or in not quashing or setting aside the
writ of execution.
Not one of the assignment of errors — it is obvious — raises the question of lack of
jurisdiction, neither directly nor indirectly.
Although the appellees failed to file their brief, the Court of Appeals, on December 11,
1962, decided the case affirming the orders appealed from.
On January 8, 1963 — five days after the Surety received notice of the decision, it filed a
motion asking for extension of time within which to file a motion for reconsideration. The
Court of Appeals granted the motion in its resolution of January 10 of the same year. Two
days later the Surety filed a pleading entitled MOTION TO DISMISS, alleging
substantially that appellees action was filed in the Court of First Instance of Cebu on July
19, 1948 for the recovery of the sum of P1,908.00 only; that a month before that date
Republic Act No. 296, otherwise known as the Judiciary Act of 1948, had already become
effective, Section 88 of which placed within the original exclusive jurisdiction of inferior
courts all civil actions where the value of the subject-matter or the amount of the demand
does not exceed P2,000.00, exclusive of interest and costs; that the Court of First Instance
therefore had no jurisdiction to try and decide the case. Upon these premises the Surety's
motion prayed the Court of Appeals to set aside its decision and to dismiss the case. By
resolution of January 16, 1963 the Court of Appeals required the appellees to answer the
motion to dismiss, but they failed to do so. Whereupon, on May 20 of the same year, the
Court resolved to set aside its decision and to certify the case to Us. The pertinent portions
of its resolution read as follows:
It would indeed appear from the record that the action at bar, which is a suit for
collection of money in the sum of exactly P1,908.00 exclusive of interest, was
originally instituted in the Court of First Instance of Cebu on July 19, 1948. But
about a month prior to the filing of the complaint, more specifically on June 17,
1948, the Judiciary Act of 1948 took effect, depriving the Court of First Instance
of original jurisdiction over cases in which the demand, exclusive of interest, is
not more than P2,000.00. (Secs. 44[c] and 86[b], R.A. No. 296.)
We believe, therefore, that the point raised in appellant's motion is an important
one which merits serious consideration. As stated, the complaint was filed on
July 19, 1948. This case therefore has been pending now for almost 15 years, and
throughout the entire proceeding appellant never raised the question of
jurisdiction until after receipt of this Court's adverse decision.
Page 69 of 169
There are three cases decided by the Honorable Supreme Court which may be
worthy of consideration in connection with this case, namely: Tyson Tan, et al.
vs. Filipinas Compañia de Seguros, et al., G.R. No. L-10096, March 23, 1956;
Pindangan Agricultural Co., Inc. vs. Jose P. Dans, etc., et al., G.R. No. L-14591,
September 26, 1962; and Alfredo Montelibano, et al. vs. Bacolod-Murcia Milling
Co., Inc., G.R. No. L-15092, September 29, 1962, wherein the Honorable
Supreme Court frowned upon the 'undesirable practice' of appellants submitting
their case for decision and then accepting the judgment, if favorable, but
attacking it for lack of jurisdiction when adverse.
Considering, however, that the Supreme Court has the "exclusive" appellate
jurisdiction over "all cases in which the jurisdiction of any inferior court is in
issue" (See. 1, Par. 3[3], Judiciary Act of 1948, as amended), we have no choice
but to certify, as we hereby do certify, this case to the Supreme
Court.1äwphï1.ñët
ACCORDINGLY, pursuant to Section 31 of the Judiciary Act of 1948 as
amended, let the record of this case be forwarded to the Supreme Court.
It is an undisputed fact that the action commenced by appellees in the Court of First
Instance of Cebu against the Sibonghanoy spouses was for the recovery of the sum of
P1,908.00 only — an amount within the original exclusive jurisdiction of inferior courts in
accordance with the provisions of the Judiciary Act of 1948 which had taken effect about a
month prior to the date when the action was commenced. True also is the rule that
jurisdiction over the subject matter is conferred upon the courts exclusively by law, and as
the lack of it affects the very authority of the court to take cognizance of the case, the
objection may be raised at any stage of the proceedings. However, considering the facts and
circumstances of the present case — which shall forthwith be set forth — We are of the
opinion that the Surety is now barred by laches from invoking this plea at this late hour for
the purpose of annuling everything done heretofore in the case with its active participation.
As already stated, the action was commenced in the Court of First Instance of Cebu on July
19, 1948, that is, almost fifteen years before the Surety filed its motion to dismiss on
January 12, 1963 raising the question of lack of jurisdiction for the first time.
It must be remembered that although the action, originally, was exclusively against the
Sibonghanoy spouses the Surety became a quasi-party therein since July 31, 1948 when it
filed a counter-bond for the dissolution of the writ of attachment issued by the court of
origin (Record on Appeal, pp. 15-19). Since then, it acquired certain rights and assumed
specific obligations in connection with the pending case, in accordance with sections 12
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
and 17, Rule 57, Rules of Court (Bautista vs. Joaquin, 46 Phil. 885; Kimpang & Co. vs.
Javier, 65 Phil. 170).
Upon the filing of the first motion for execution against the counter-bond the Surety not
only filed a written opposition thereto praying for its denial but also asked for an
additional affirmative relief — that it be relieved of its liability under the counter-bond
upon the grounds relied upon in support of its opposition — lack of jurisdiction of the
court a quo not being one of them.
Then, at the hearing on the second motion for execution against the counter-bond, the
Surety appeared, through counsel, to ask for time within which to file an answer or
opposition thereto. This motion was granted, but instead of such answer or opposition, the
Surety filed the motion to dismiss mentioned heretofore.
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, or 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 limitations, 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 can not invoke the jurisdiction of a court to sure 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 can not 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.
Page 70 of 169
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 Relation et al., G.R. L-20307, Feb. 26, 1965,
and Mejia vs. Lucas, 100 Phil. p. 277.
The facts of this case show that from the time the Surety became a quasi-party on July 31,
1948, it could have raised the question of the lack of jurisdiction of the Court of First
Instance of Cebu to take cognizance of the present action by reason of the sum of money
involved which, according to the law then in force, was within the original exclusive
jurisdiction of inferior courts. It failed to do so. Instead, at several stages of the proceedings
in the court a quo as well as in the Court of Appeals, it invoked the jurisdiction of said
courts to obtain affirmative relief and submitted its case for a final adjudication on the
merits. It was only after an adverse decision was rendered by the Court of Appeals that it
finally woke up to raise the question of jurisdiction. Were we to sanction such conduct on
its part, We would in effect be declaring as useless all the proceedings had in the present
case since it was commenced on July 19, 1948 and compel the judgment creditors to go up
their Calvary once more. The inequity and unfairness of this is not only patent but
revolting.
Coming now to the merits of the appeal: after going over the entire record, We have
become persuaded that We can do nothing better than to quote in toto, with approval, the
decision rendered by the Court of Appeals on December 11, 1962 as follows:
In Civil Case No. R-660 of the Court of First Instance of Cebu, which was a suit
for collection of a sum of money, a writ of attachment was issued against
defendants' properties. The attachment, however, was subsequently discharged
under Section 12 of Rule 59 upon the filing by defendants of a bond subscribed
by Manila Surety & Fidelity Co., Inc.
After trial, judgment was rendered in favor of plaintiffs.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
The writ of execution against defendants having been returned totally unsatisfied,
plaintiffs moved, under Section 17 of Rule 59, for issuance of writ of execution
against Manila Surety & Fidelity Co., Inc. to enforce the obligation of the bond.
But the motion was, upon the surety's opposition, denied on the ground that there
was "no showing that a demand had been made, by the plaintiffs to the bonding
company for payment of the amount due under the judgment" (Record on
Appeal, p. 60).
Hence, plaintiffs made the necessary demand upon the surety for satisfaction of
the judgment, and upon the latter's failure to pay the amount due, plaintiffs again
filed a motion dated October 31, 1957, for issuance of writ of execution against
the surety, with notice of hearing on November 2, 1957. On October 31, 1957,
the surety received copy of said motion and notice of hearing.
It appears that when the motion was called on November 2, 1957, the surety's
counsel asked that he be given time within which to answer the motion, and so an
order was issued in open court, as follows:1äwphï1.ñët
As prayed for, Atty. Jose P. Soberano, Jr., counsel for the Manila
Surety & Fidelity Co., Inc., Cebu Branch, is given until Wednesday,
November 6, 1957, to file his answer to the motion for the issuance of a
writ of execution dated October 30, 1957 of the plaintiffs, after which
this incident shall be deemed submitted for resolution.
SO ORDERED.
Given in open court, this 2nd day of November, 1957, at Cebu City,
Philippines.
(Sgd.) JOSE M. MENDOZA
Judge
(Record on Appeal, pp.
64-65, emphasis ours)
Since the surety's counsel failed to file any answer or objection within the period
given him, the court, on December 7, 1957, issued an order granting plaintiffs'
motion for execution against the surety; and on December 12, 1957, the
corresponding writ of execution was issued.
Page 71 of 169
On December 24, 1957, the surety filed a motion to quash the writ of execution
on the ground that the same was "issued without the requirements of Section 17,
Rule 59 of the Rules of Court having been complied with," more specifically, that
the same was issued without the required "summary hearing". This motion was
denied by order of February 10, 1958.
On February 25, 1958, the surety filed a motion for reconsideration of the above-
stated order of denial; which motion was likewise denied by order of March 26,
1958.
From the above-stated orders of February 10, 1958 and March 26, 1958 —
denying the surety's motion to quash the writ of execution and motion for
reconsideration, respectively — the surety has interposed the appeal on hand.
The surety insists that the lower court should have granted its motion to quash the
writ of execution because the same was issued without the summary hearing
required by Section 17 of Rule 59, which reads;
"Sec. 17. When execution returned unsatisfied, recovery had upon
bond. — If the execution be returned unsatisfied in whole or in part, the
surety or sureties on any bond given pursuant to the provisions of this
role to secure the payment of the judgment shall become finally
charged on such bond, and bound to pay to the plaintiff upon demand
the amount due under the judgment, which amount may be recovered
from such surety or sureties after notice and summary hearing in the
same action." (Emphasis ours)
Summary hearing is "not intended to be carried on in the formal manner in which
ordinary actions are prosecuted" (83 C.J.S. 792). It is, rather, a procedure by
which a question is resolved "with dispatch, with the least possible delay, and in
preference to ordinary legal and regular judicial proceedings" (Ibid, p. 790).
What is essential is that "the defendant is notified or summoned to appear and is
given an opportunity to hear what is urged upon him, and to interpose a defense,
after which follows an adjudication of the rights of the parties" (Ibid., pp. 793-
794); and as to the extent and latitude of the hearing, the same will naturally lie
upon the discretion of the court, depending upon the attending circumstances and
the nature of the incident up for consideration.
In the case at bar, the surety had been notified of the plaintiffs' motion for
execution and of the date when the same would be submitted for consideration. In
fact, the surety's counsel was present in court when the motion was called, and it
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
was upon his request that the court a quo gave him a period of four days within
which to file an answer. Yet he allowed that period to lapse without filing an
answer or objection. The surety cannot now, therefore, complain that it was
deprived of its day in court.
It is argued that the surety's counsel did not file an answer to the motion "for the
simple reason that all its defenses can be set up during the hearing of the motion
even if the same are not reduced to writing" (Appellant's brief, p. 4). There is
obviously no merit in this pretense because, as stated above, the record will show
that when the motion was called, what the surety's counsel did was to ask that he
be allowed and given time to file an answer. Moreover, it was stated in the order
given in open court upon request of the surety's counsel that after the four-day
period within which to file an answer, "the incident shall be deemed submitted
for resolution"; and counsel apparently agreed, as the order was issued upon his
instance and he interposed no objection thereto.
It is also urged that although according to Section 17 of Rule 59, supra, there is
no need for a separate action, there must, however, be a separate judgment
against the surety in order to hold it liable on the bond (Appellant's Brief, p. 15).
Not so, in our opinion. A bond filed for discharge of attachment is, per Section 12
of Rule 59, "to secure the payment to the plaintiff of any judgment he may
recover in the action," and stands "in place of the property so released". Hence,
after the judgment for the plaintiff has become executory and the execution is
"returned unsatisfied" (Sec. 17, Rule 59), as in this case, the liability of the bond
automatically attaches and, in failure of the surety to satisfy the judgment against
the defendant despite demand therefor, writ of execution may issue against the
surety to enforce the obligation of the bond.
UPON ALL THE FOREGOING, the orders appealed from are hereby affirmed, with costs
against the appellant Manila Surety and Fidelity Company, Inc.
[G.R. NO. 147406 : July 14, 2008]
VENANCIO FIGUEROA y CERVANTES,1 Petitioner, v. PEOPLE OF THE
PHILIPPINES, Respondent.
DECISION
NACHURA, J.:
Page 72 of 169
When is a litigant estopped by laches from assailing the jurisdiction of a tribunal? This is
the paramount issue raised in this Petition for Review of the February 28, 2001
Decision2 of the Court of Appeals (CA) in CA-G.R. CR No. 22697.
Pertinent are the following antecedent facts and proceedings:
On July 8, 1994, an information3 for reckless imprudence resulting in homicide was filed
against the petitioner before the Regional Trial Court (RTC) of Bulacan, Branch 18. 4 The
case was docketed as Criminal Case No. 2235-M-94.5 Trial on the merits ensued and on
August 19, 1998, the trial court convicted the petitioner as charged. 6 In his appeal before
the CA, the petitioner questioned, among others, for the first time, the trial court's
jurisdiction.7
The appellate court, however, in the challenged decision, considered the petitioner to have
actively participated in the trial and to have belatedly attacked the jurisdiction of the RTC;
thus, he was already estopped by laches from asserting the trial court's lack of jurisdiction.
Finding no other ground to reverse the trial court's decision, the CA affirmed the
petitioner's conviction but modified the penalty imposed and the damages awarded. 8
Dissatisfied, the petitioner filed the instant Petition for Review on Certiorari raising the
following issues for our resolution:
A. Does the fact that the petitioner failed to raise the issue of jurisdiction during the trial of
this case, which was initiated and filed by the public prosecutor before the wrong court,
constitute laches in relation to the doctrine laid down in Tijam v. Sibonghanoy,
notwithstanding the fact that said issue was immediately raised in petitioner's appeal to the
Honorable Court of Appeals? Conversely, does the active participation of the petitioner in
the trial of his case, which is initiated and filed not by him but by the public prosecutor,
amount to estoppel?cralawred
b. Does the admission of the petitioner that it is difficult to immediately stop a bus while it
is running at 40 kilometers per hour for the purpose of avoiding a person who unexpectedly
crossed the road, constitute enough incriminating evidence to warrant his conviction for the
crime charged?cralawred
c. Is the Honorable Court of Appeals justified in considering the place of accident as falling
within Item 4 of Section 35 (b) of the Land Transportation and Traffic Code, and
subsequently ruling that the speed limit thereto is only 20 kilometers per hour, when no
evidence whatsoever to that effect was ever presented by the prosecution during the trial of
this case?cralawred
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
d. Is the Honorable Court of Appeals justified in convicting the petitioner for homicide
through reckless imprudence (the legally correct designation is "reckless imprudence
resulting to homicide") with violation of the Land Transportation and Traffic Code when
the prosecution did not prove this during the trial and, more importantly, the information
filed against the petitioner does not contain an allegation to that effect?cralawred
e. Does the uncontroverted testimony of the defense witness Leonardo Hernal that the
victim unexpectedly crossed the road resulting in him getting hit by the bus driven by the
petitioner not enough evidence to acquit him of the crime charged?9
Applied uniformly is the familiar rule that the jurisdiction of the court to hear and decide a
case is conferred by the law in force at the time of the institution of the action, unless such
statute provides for a retroactive application thereof.10 In this case, at the time the criminal
information for reckless imprudence resulting in homicide with violation of the Automobile
Law (now Land Transportation and Traffic Code) was filed, Section 32(2) of Batas
Pambansa (B.P.) Blg. 12911 had already been amended by Republic Act No. 7691. 12 The
said provision thus reads:
Sec. 32. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal
Circuit Trial Courts in Criminal Cases. Except in cases falling within the exclusive original
jurisdiction of Regional Trial Courts and the Sandiganbayan, the Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise:
xxx
(2) Exclusive original jurisdiction over all offenses punishable with imprisonment not
exceeding six (6) years irrespective of the amount of fine, and 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 thereof.
As the imposable penalty for the crime charged herein is prision correccional in its medium
and maximum periods or imprisonment for 2 years, 4 months and 1 day to 6
years,13 jurisdiction to hear and try the same is conferred on the Municipal Trial Courts
(MTCs). Clearly, therefore, the RTC of Bulacan does not have jurisdiction over Criminal
Case No. 2235-M-94.
While both the appellate court and the Solicitor General acknowledge this fact, they
nevertheless are of the position that the principle of estoppel by laches has already
precluded the petitioner from questioning the jurisdiction of the RTC the trial went on for 4
Page 73 of 169
years with the petitioner actively participating therein and without him ever raising the
jurisdictional infirmity. The petitioner, for his part, counters that the lack of jurisdiction of
a court over the subject matter may be raised at any time even for the first time on appeal.
As undue delay is further absent herein, the principle of laches will not be applicable.
To settle once and for all this problem of jurisdiction vis - à-vis estoppel by laches, which
continuously confounds the bench and the bar, we shall analyze the various Court decisions
on the matter.
As early as 1901, this Court has declared that unless jurisdiction has been conferred by
some legislative act, no court or tribunal can act on a matter submitted to it.14 We went on
to state in U.S. v. De La Santa15 that:
It has been frequently held that a lack of jurisdiction over the subject-matter is fatal, and
subject to objection at any stage of the proceedings, either in the court below or on appeal
(Ency. of Pl. & Pr., vol. 12, p. 189, and large array of cases there cited), and indeed, where
the subject-matter is not within the jurisdiction, the court may dismiss the proceeding ex
mero motu. (4 Ill., 133; 190 Ind., 79; Chipman v. Waterbury, 59 Conn., 496.)
Jurisdiction over the subject-matter in a judicial proceeding is conferred by the sovereign
authority which organizes the court; it is given only by law and in the manner prescribed by
law and an objection based on the lack of such jurisdiction can not be waived by the
parties. x x x16
Later, in People v. Casiano,17 the Court explained:
4. The operation of the principle of estoppel on the question of jurisdiction seemingly
depends upon whether the lower court actually had jurisdiction or not. If it had no
jurisdiction, but the case was tried and decided upon the theory that it had jurisdiction, the
parties are not barred, on appeal, from assailing such jurisdiction, for the same "must exist
as a matter of law, and may not be conferred by consent of the parties or by estoppel"
(5 C.J.S., 861-863). However, if the lower court had jurisdiction, and the case was heard
and decided upon a given theory, such, for instance, as that the court had no jurisdiction,
the party who induced it to adopt such theory will not be permitted, on appeal, to assume an
inconsistent position that the lower court had jurisdiction. Here, the principle of estoppel
applies. The rule that jurisdiction is conferred by law, and does not depend upon the will of
the parties, has no bearing thereon. Thus, Corpus Juris Secundum says:
Where accused has secured a decision that the indictment is void, or has been granted an
instruction based on its defective character directing the jury to acquit, he is estopped, when
subsequently indicted, to assert that the former indictment was valid. In such case, there
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
may be a new prosecution whether the indictment in the former prosecution was good or
bad. Similarly, where, after the jury was impaneled and sworn, the court on accused's
motion quashed the information on the erroneous assumption that the court had no
jurisdiction, accused cannot successfully plead former jeopardy to a new information. x x x
(22 C.J.S., sec. 252, pp. 388-389; italics ours.)
Where accused procured a prior conviction to be set aside on the ground that the court was
without jurisdiction, he is estopped subsequently to assert, in support of a defense of
previous jeopardy, that such court had jurisdiction." (22 C.J.S. p. 378.)18
But in Pindañgan Agricultural Co., Inc. v. Dans,19 the Court, in not sustaining the plea of
lack of jurisdiction by the plaintiff-appellee therein, made the following observations:
It is surprising why it is only now, after the decision has been rendered, that the plaintiff-
appellee presents the question of this Court's jurisdiction over the case. Republic Act No.
2613 was enacted on August 1, 1959. This case was argued on January 29, 1960.
Notwithstanding this fact, the jurisdiction of this Court was never impugned until the
adverse decision of this Court was handed down. The conduct of counsel leads us to
believe that they must have always been of the belief that notwithstanding said enactment
of Republic Act 2613 this Court has jurisdiction of the case, such conduct being born out of
a conviction that the actual real value of the properties in question actually exceeds the
jurisdictional amount of this Court (over P200,000). Our minute resolution in G.R. No. L-
10096, Hyson Tan, et al. v. Filipinas Compaña de Seguros, et al., of March 23, 1956, a
parallel case, is applicable to the conduct of plaintiff-appellee in this case, thus:
x x x that an appellant who files his brief and submits his case to the Court of Appeals for
decision, without questioning the latter's jurisdiction until decision is rendered therein,
should be considered as having voluntarily waived so much of his claim as would exceed
the jurisdiction of said Appellate Court; for the reason that a contrary rule would encourage
the undesirable practice of appellants submitting their cases for decision to the Court of
Appeals in expectation of favorable judgment, but with intent of attacking its jurisdiction
should the decision be unfavorable: x x x20
Then came our ruling in Tijam v. Sibonghanoy21 that a party may be barred by laches from
invoking lack of jurisdiction at a late hour for the purpose of annulling everything done in
the case with the active participation of said party invoking the plea. We expounded, thus:
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.
Page 74 of 169
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 limitations, 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 v. 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 v. Rathbun-Jones etc., 243 U.S. 273, 61 L. Ed.
715, 37 S.Ct. 283; St. Louis etc. v. McBride, 141 U.S. 127, 35 L. Ed. 659). And in Littleton
v. 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. v. Dans et al., G.R. L-14591, September 26, 1962; Montelibano et al.
v. Bacolod-Murcia Milling Co., Inc., G.R. L-15092; Young Men Labor Union etc. v. The
Court of Industrial Relations et al., G.R. L-20307, Feb. 26, 1965, and Mejia v. Lucas, 100
Phil. p. 277.
The facts of this case show that from the time the Surety became a quasi-party on July 31,
1948, it could have raised the question of the lack of jurisdiction of the Court of First
Instance of Cebu to take cognizance of the present action by reason of the sum of money
involved which, according to the law then in force, was within the original exclusive
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
jurisdiction of inferior courts. It failed to do so. Instead, at several stages of the proceedings
in the court a quo, as well as in the Court of Appeals, it invoked the jurisdiction of said
courts to obtain affirmative relief and submitted its case for a final adjudication on the
merits. It was only after an adverse decision was rendered by the Court of Appeals that it
finally woke up to raise the question of jurisdiction. Were we to sanction such conduct on
its part, We would in effect be declaring as useless all the proceedings had in the present
case since it was commenced on July 19, 1948 and compel the judgment creditors to go up
their Calvary once more. The inequity and unfairness of this is not only patent but
revolting.22
For quite a time since we made this pronouncement in Sibonghanoy, courts and tribunals,
in resolving issues that involve the belated invocation of lack of jurisdiction, have applied
the principle of estoppel by laches. Thus, in Calimlim v. Ramirez,23 we pointed out that
Sibonghanoy was developing into a general rule rather than the exception:
A rule that had been settled by unquestioned acceptance and upheld in decisions so
numerous to cite is that the jurisdiction of a court over the subject-matter of the action is a
matter of law and may not be conferred by consent or agreement of the parties. The lack of
jurisdiction of a court may be raised at any stage of the proceedings, even on appeal. This
doctrine has been qualified by recent pronouncements which stemmed principally from the
ruling in the cited case of Sibonghanoy. It is to be regretted, however, that the holding in
said case had been applied to situations which were obviously not contemplated therein.
The exceptional circumstance involved in Sibonghanoy which justified the departure from
the accepted concept of non-waivability of objection to jurisdiction has been ignored and,
instead a blanket doctrine had been repeatedly upheld that rendered the supposed ruling in
Sibonghanoy not as the exception, but rather the general rule, virtually overthrowing
altogether the time-honored principle that the issue of jurisdiction is not lost by waiver or
by estoppel.
In Sibonghanoy, the defense of lack of jurisdiction of the court that rendered the questioned
ruling was held to be barred by estoppel by laches. It was ruled that the lack of jurisdiction
having been raised for the first time in a motion to dismiss filed almost fifteen (15) years
after the questioned ruling had been rendered, such a plea may no longer be raised for
being barred by laches. As defined in said case, laches 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 has abandoned
it or declined to assert it.24
In Calimlim, despite the fact that the one who benefited from the plea of lack of jurisdiction
was the one who invoked the court's jurisdiction, and who later obtained an adverse
judgment therein, we refused to apply the ruling in Sibonghanoy. The Court accorded
Page 75 of 169
supremacy to the time-honored principle that the issue of jurisdiction is not lost by waiver
or by estoppel.
Yet, in subsequent cases decided after Calimlim, which by sheer volume are too plentiful to
mention, the Sibonghanoy doctrine, as foretold in Calimlim, became the rule rather than the
exception. As such, in Soliven v. Fastforms Philippines, Inc., 25 the Court ruled:
While it is true that jurisdiction may be raised at any time, "this rule presupposes that
estoppel has not supervened." In the instant case, respondent actively participated in all
stages of the proceedings before the trial court and invoked its authority by asking for an
affirmative relief. Clearly, respondent is estopped from challenging the trial court's
jurisdiction, especially when an adverse judgment has been rendered. In PNOC Shipping
and Transport Corporation v. Court of Appeals, we held:
Moreover, we note that petitioner did not question at all the jurisdiction of the lower court x
x x in its answers to both the amended complaint and the second amended complaint. It did
so only in its motion for reconsideration of the decision of the lower court after it had
received an adverse decision. As this Court held in Pantranco North Express, Inc. v. Court
of Appeals (G.R. No. 105180, July 5, 1993, 224 SCRA 477, 491), participation in all stages
of the case before the trial court, that included invoking its authority in asking for
affirmative relief, effectively barred petitioner by estoppel from challenging the court's
jurisdiction. Notably, from the time it filed its answer to the second amended complaint on
April 16, 1985, petitioner did not question the lower court's jurisdiction. It was only on
December 29, 1989 when it filed its motion for reconsideration of the lower court's
decision that petitioner raised the question of the lower court's lack of jurisdiction.
Petitioner thus foreclosed its right to raise the issue of jurisdiction by its own inaction.
(italics ours)
Similarly, in the subsequent case of Sta. Lucia Realty and Development, Inc. v. Cabrigas,
we ruled:
In the case at bar, it was found by the trial court in its 30 September 1996 decision in LCR
Case No. Q-60161(93) that private respondents (who filed the petition for reconstitution of
titles) failed to comply with both sections 12 and 13 of RA 26 and therefore, it had no
jurisdiction over the subject matter of the case. However, private respondents never
questioned the trial court's jurisdiction over its petition for reconstitution throughout the
duration of LCR Case No. Q-60161(93). On the contrary, private respondents actively
participated in the reconstitution proceedings by filing pleadings and presenting its
evidence. They invoked the trial court's jurisdiction in order to obtain affirmative relief -
the reconstitution of their titles. Private respondents have thus foreclosed their right to raise
the issue of jurisdiction by their own actions.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
The Court has constantly upheld the doctrine that while jurisdiction may be assailed at any
stage, a litigant's participation in all stages of the case before the trial court, including the
invocation of its authority in asking for affirmative relief, bars such party from challenging
the court's jurisdiction (PNOC Shipping and Transport Corporation v. Court of Appeals,
297 SCRA 402 [1998]). 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 (Asset Privatization Trust v. Court of Appeals,
300 SCRA 579 [1998]; Province of Bulacan v. Court of Appeals, 299 SCRA 442 [1998]).
The Court frowns upon the undesirable practice of a party participating in the proceedings
and submitting his case for decision and then accepting judgment, only if favorable, and
attacking it for lack of jurisdiction, when adverse (Producers Bank of the Philippines v.
NLRC, 298 SCRA 517 [1998], citing Ilocos Sur Electric Cooperative, Inc. v. NLRC, 241
SCRA 36 [1995]). (italics ours)26
Noteworthy, however, is that, in the 2005 case of Metromedia Times Corporation v.
Pastorin,27 where the issue of lack of jurisdiction was raised only in the National Labor
Relations Commission (NLRC) on appeal, we stated, after examining the doctrines of
jurisdiction vis - à-vis estoppel, that the ruling in Sibonghanoy stands as an exception,
rather than the general rule. Metromedia, thus, was not estopped from assailing the
jurisdiction of the labor arbiter before the NLRC on appeal. 28 chanrobles virtual law library
Later, in Francel Realty Corporation v. Sycip,29 the Court clarified that:
Petitioner argues that the CA's affirmation of the trial court's dismissal of its case was
erroneous, considering that a full-blown trial had already been conducted. In effect, it
contends that lack of jurisdiction could no longer be used as a ground for dismissal after
trial had ensued and ended.
The above argument is anchored on estoppel by laches, which has been used quite
successfully in a number of cases to thwart dismissals based on lack of jurisdiction. Tijam
v. Sibonghanoy, in which this doctrine was espoused, held that a party may be barred from
questioning a court's jurisdiction after being invoked to secure affirmative relief against its
opponent. In fine, laches prevents the issue of lack of jurisdiction from being raised for the
first time on appeal by a litigant whose purpose is to annul everything done in a trial in
which it has actively participated.
Laches is defined as the "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."
Page 76 of 169
The ruling in Sibonghanoy on the matter of jurisdiction is, however, the exception rather
than the rule.chanrobles virtual law library Estoppel by laches may be invoked to bar the
issue of lack of jurisdiction only in cases in which the factual milieu is analogous to that in
the cited case. In such controversies, laches should be clearly present; that is, lack of
jurisdiction must have been raised so belatedly as to warrant the presumption that the party
entitled to assert it had abandoned or declined to assert it. That Sibonghanoy applies only to
exceptional circumstances is clarified in Calimlim v. Ramirez, which we quote:
A rule that had been settled by unquestioned acceptance and upheld in decisions so
numerous to cite is that the jurisdiction of a court over the subject-matter of the action is a
matter of law and may not be conferred by consent or agreement of the parties. The lack of
jurisdiction of a court may be raised at any stage of the proceedings, even on appeal. This
doctrine has been qualified by recent pronouncements which stemmed principally from the
ruling in the cited case of Sibonghanoy. It is to be regretted, however, that the holding in
said case had been applied to situations which were obviously not contemplated therein.
The exceptional circumstance involved in Sibonghanoy which justified the departure from
the accepted concept of non-waivability of objection to jurisdiction has been ignored and,
instead a blanket doctrine had been repeatedly upheld that rendered the supposed ruling in
Sibonghanoy not as the exception, but rather the general rule, virtually overthrowing
altogether the time-honored principle that the issue of jurisdiction is not lost by waiver or
by estoppel.
Indeed, the general rule remains: a court's lack of jurisdiction may be raised at any stage of
the proceedings, even on appeal. The reason is that jurisdiction is conferred by law, and
lack of it affects the very authority of the court to take cognizance of and to render
judgment on the action. Moreover, jurisdiction is determined by the averments of the
complaint, not by the defenses contained in the answer.30
Also, in Mangaliag v. Catubig-Pastoral,31 even if the pleader of lack of jurisdiction actively
took part in the trial proceedings by presenting a witness to seek exoneration, the Court,
reiterating the doctrine in Calimlim, said:
Private respondent argues that the defense of lack of jurisdiction may be waived by
estoppel through active participation in the trial. Such, however, is not the general rule but
an exception, best characterized by the peculiar circumstances in Tijam v. Sibonghanoy.
In Sibonghanoy, the party invoking lack of jurisdiction did so only after fifteen years and at
a stage when the proceedings had already been elevated to the CA. Sibonghanoy is an
exceptional case because of the presence of laches, which was defined therein as 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 the negligence or omission to
assert a right within a reasonable time, warranting a presumption that the party entitled to
assert has abandoned it or declined to assert it.32
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
And in the more recent Regalado v. Go,33 the Court again emphasized that laches should be
clearly present for the Sibonghanoy doctrine to be applicable, thus:
Laches is defined as the "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 length of time, warranting
a presumption that the party entitled to assert it either has abandoned it or declined to assert
it."
The ruling in People v. Regalario that was based on the landmark doctrine enunciated in
Tijam v. Sibonghanoy on the matter of jurisdiction by estoppel is the exception rather than
the rule. Estoppel by laches may be invoked to bar the issue of lack of jurisdiction only in
cases in which the factual milieu is analogous to that in the cited case. In such
controversies, laches should have been clearly present; that is, lack of jurisdiction must
have been raised so belatedly as to warrant the presumption that the party entitled to assert
it had abandoned or declined to assert it.
In Sibonghanoy, the defense of lack of jurisdiction was raised for the first time in a motion
to dismiss filed by the Surety almost 15 years after the questioned ruling had been
rendered. At several stages of the proceedings, in the court a quo as well as in the Court of
Appeals, the Surety invoked the jurisdiction of the said courts to obtain affirmative relief
and submitted its case for final adjudication on the merits. It was only when the adverse
decision was rendered by the Court of Appeals that it finally woke up to raise the question
of jurisdiction.
Clearly, the factual settings attendant in Sibonghanoy are not present in the case at bar.
Petitioner Atty. Regalado, after the receipt of the Court of Appeals resolution finding her
guilty of contempt, promptly filed a Motion for Reconsideration assailing the said court's
jurisdiction based on procedural infirmity in initiating the action. Her compliance with the
appellate court's directive to show cause why she should not be cited for contempt and
filing a single piece of pleading to that effect could not be considered as an active
participation in the judicial proceedings so as to take the case within the milieu
of Sibonghanoy. Rather, it is the natural fear to disobey the mandate of the court that could
lead to dire consequences that impelled her to comply.34
The Court, thus, wavered on when to apply the exceptional circumstance in Sibonghanoy
and on when to apply the general rule enunciated as early as in De La Santa and expounded
at length in Calimlim. The general rule should, however, be, as it has always been, that the
issue of jurisdiction may be raised at any stage of the proceedings, even on appeal, and is
not lost by waiver or by estoppel. Estoppel by laches, to bar a litigant from asserting the
court's absence or lack of jurisdiction, only supervenes in exceptional cases similar to the
Page 77 of 169
factual milieu of Tijam v. Sibonghanoy. Indeed, the fact that a person attempts to invoke
unauthorized jurisdiction of a court does not estop him from thereafter challenging its
jurisdiction over the subject matter, since such jurisdiction must arise by law and not by
mere consent of the parties. This is especially true where the person seeking to invoke
unauthorized jurisdiction of the court does not thereby secure any advantage or the adverse
party does not suffer any harm.35
Applying the said doctrine to the instant case, the petitioner is in no way estopped by laches
in assailing the jurisdiction of the RTC, considering that he raised the lack thereof in his
appeal before the appellate court. At that time, no considerable period had yet elapsed for
laches to attach. True, delay alone, though unreasonable, will not sustain the defense of
"estoppel by laches" unless it further appears that the party, knowing his rights, has not
sought to enforce them until the condition of the party pleading laches has in good faith
become so changed that he cannot be restored to his former state, if the rights be then
enforced, due to loss of evidence, change of title, intervention of equities, and other
causes.36 In applying the principle of estoppel by laches in the exceptional case of
Sibonghanoy, the Court therein considered the patent and revolting inequity and unfairness
of having the judgment creditors go up their Calvary once more after more or less 15
years.37 The same, however, does not obtain in the instant case.
We note at this point that estoppel, being in the nature of a forfeiture, is not favored by law.
It is to be applied rarely only from necessity, and only in extraordinary circumstances. The
doctrine must be applied with great care and the equity must be strong in its favor. 38 When
misapplied, the doctrine of estoppel may be a most effective weapon for the
accomplishment of injustice.39 Moreover, a judgment rendered without jurisdiction over the
subject matter is void.40 Hence, the Revised Rules of Court provides for remedies in
attacking judgments rendered by courts or tribunals that have no jurisdiction over the
concerned cases. No laches will even attach when the judgment is null and void for want of
jurisdiction.41 As we have stated in Heirs of Julian Dela Cruz and Leonora Talaro v. Heirs
of Alberto Cruz,42
It is axiomatic that the jurisdiction of a tribunal, including a quasi-judicial officer or
government agency, over the nature and subject matter of a petition or complaint is
determined by the material allegations therein and the character of the relief prayed for,
irrespective of whether the petitioner or complainant is entitled to any or all such reliefs.
Jurisdiction over the nature and subject matter of an action is conferred by the Constitution
and the law, and not by the consent or waiver of the parties where the court otherwise
would have no jurisdiction over the nature or subject matter of the action. Nor can it be
acquired through, or waived by, any act or omission of the parties. Moreover, estoppel does
not apply to confer jurisdiction to a tribunal that has none over the cause of action. x x x
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Indeed, the jurisdiction of the court or tribunal is not affected by the defenses or theories set
up by the defendant or respondent in his answer or motion to dismiss. Jurisdiction should
be determined by considering not only the status or the relationship of the parties but also
the nature of the issues or questions that is the subject of the controversy. x x x x The
proceedings before a court or tribunal without jurisdiction, including its decision, are null
and void, hence, susceptible to direct and collateral attacks. 43
With the above considerations, we find it unnecessary to resolve the other issues raised in
the petition.
WHEREFORE, premises considered, the Petition for Review on Certiorari is GRANTED.
Criminal Case No. 2235-M-94 is hereby DISMISSED without prejudice.
SO ORDERED.
FIRST DIVISION
G.R. No. L-34362 November 19, 1982
MODESTA CALIMLIM AND LAMBERTO MAGALI IN HIS CAPACITY AS
ADMINISTRATOR OF THE ESTATE OF DOMINGO MAGALI, petitioners,
vs.
HON. PEDRO A. RAMIREZ IN HIS CAPACITY AS PRESIDING JUDGE OF THE
COURT OF FIRST INSTANCE OF PANGASINAN, BRANCH I, and FRANCISCO
RAMOS, respondents.
Eugenio Ramos for petitioners.
Rogelio P. Closa for respondents.
VASQUEZ, J.:
The dismissal of Civil Case No. SCC-180 filed by the herein petitioners in the respondent
Court against the private respondent is sought to be annulled and set aside by this Petition
For Review On Certiorari.
The antecedent material facts are not disputed. Sometime in 1961, a judgment for a sum of
money was rendered in favor of Independent Mercantile Corporation against a certain
Page 78 of 169
Manuel Magali by the Municipal Court of Manila in Civil Case No. 85136. After said
judgment became final, a writ of execution was issued on July 31, 1961. The Notice of
Levy made on September 21, 1961 on a parcel of land covered by Transfer Certificate of
Title No. 9138 registered in the name of "Domingo Magali, married to Modesta Calimlim",
specified that the said levy was only against "all rights, title, action, interest and
participation of the defendant Manuel Magali over the parcel of land described in this title.
" The Certificate of Sale executed by the Provincial Sheriff of Pangasinan on October 17,
1961 in favor of Independent Mercantile Corporation also stated that the sale referred only
to the rights and interest of Manuel Magali over the land described in TCT No. 9138.
Manuel Magali is one of the several children of Domingo Magali who had died in 1940 and
herein petitioner Modesta Calimlim.
However, when the Sheriff issued the final Deed of Sale on January 25, 1963, it was
erroneously stated therein that the sale was with respect to "the parcel of land described in
this title" (referring to TCT No. 9138) and not only over the rights and interest of Manuel
Magali in the same. The execution of the said final Deed of Sale was annotated at the back
of said title.
On February 23, 1967, Independent Mercantile Corporation filed a petition in the
respondent Court to compel Manuel Magali to surrender the owner's duplicate of TCT No.
9138 in order that the same may be cancelled and a new one issued in the name of the said
corporation. Not being the registered owner and the title not being in his possession,
Manuel Magali failed to comply with the order of the Court directing him to surrender the
said title. On June 20, 1967, Independent Mercantile Corporation filed an ex-parte petition
to declare TCT No. 9138 as cancelled and to issue a new title in its name. The said petition
was granted by the respondent Court and in its Order dated July 13, 1967, it directed the
issuance of a new certificate of title in the name of the Independent Mercantile Corporation
and the cancellation of TCT No. 9138. By virtue of said Order, the Register of Deeds of
Pangasinan issued a new title in the name of the corporation, Identified as TCT No. 68568.
On November 21, 1967, petitioner Modesta Calimlim, surviving spouse of Domingo
Magali, upon learning that her husband's title over the parcel of land had been cancelled,
filed a petition with the respondent Court, sitting as a cadastral court, praying for the
cancellation of TCT No. 68568. An opposition to the said petition was filed by Independent
Mercantile Corporation. After the parties submitted their respective Memoranda, the
respondent Court issued an Order dated June 3, 1968 dismissing the petition. (Rollo, pp.
31-38.)
The herein petitioners did not appeal the dismissal of the petition they filed in LRC Record
No. 39492 for the cancellation of TCT No. 68568. Instead, on January 11, 1971, they filed
the complaint in Civil Case No. SCC-180 praying for the cancellation of the conveyances
and sales that had been made with respect to the property, covered by TCT No. 9138
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
previously registered in the name of Domingo Magali, married to Modesta Calimlim.
Named as defendant in said civil case was herein private respondent Francisco Ramos who
claimed to have bought the property from Independent Mercantile Corporation on July 25,
1967. Private respondent Francisco Ramos, however, failed to obtain a title over the
property in his name in view of the existence of an adverse claim annotated on the title
thereof at the instance of the herein petitioners.
Private respondent Francisco Ramos filed a Motion To Dismiss Civil Case No. SCC-180
on the ground that the same is barred by prior judgement or by statute of limitations (Rollo.
pp. 42-45). Resolving the said Motion, the respondent Court, in its Order dated April 21,
1971, dismissed Civil Case No. SCC- 180 on the ground of estoppel by prior judgment.
(Ibid., pp, 10-13.) A Motion For Reconsideration filed by the petitioners was denied by the
respondent Judge in his Order of September 2, 1971. (Ibid., pp. 13-15.) A second Motion
For Reconsideration was similarly denied in the Order dated September 29, 197 1. (Rollo,
pp. 16-17.) Hence, this Petition.
We find merit in this appeal.
It is error to consider the dismissal of the petition filed by the herein petitioner in LRC
Record No. 39492 for the cancellation of TCT No. 68568 as a bar by prior judgment
against the filing of Civil Case No. SCC-180. In order to avail of the defense of res
judicata, it must be shown, among others, that the judgment in the prior action must have
been rendered by a court with the proper jurisdiction to take cognizance of the proceeding
in which the prior judgment or order was rendered. If there is lack of jurisdiction over the
subject-matter of the suit or of the parties, the judgment or order cannot operate as an
adjudication of the controversy. (2 Moran Comments on the Rules of Court, 1970 Edition,
p. 364.) This essential element of the defense of bar by prior judgment or res judicata does
not exist in the case presently considered.
The petition filed by the herein petitioners in LRC Record No. 39492 was an apparent
invocation of the authority of the respondent Court sitting as a land registration court,
Although the said petition did not so state, that reliance was apparently placed on Section
112 of the Land Registration Act. It has been settled by consistent rulings of this Court that
a court of first instance, acting as a land registration court, is a court of limited and special
jurisdiction. As such, its proceedings are not adequate for the litigation of issues pertaining
to an ordinary civil action, such as, questions involving ownership or title to real property.
(Bareng vs. Shintoist Shrine and Japanese Charity Bureau, 83 SCRA 418; Manalo vs.
Mariano, 69 SCRA 80; In re: Nicanor T Santos, 102 SCRA 747; Santos vs. Aquino, 101
SCRA 377.) In Hu chon Sunpongco vs. Heirs of Nicolas Ronquillo, L- 27040, December
19, 1970, 36 SCRA 395, we have held that:
Page 79 of 169
Section 112 of Act 496 confers authority upon the land registration
court to order the cancellation, alteration or amendment of a certificate
of title but withdraws from the Court the power to pass upon any
question concerning ownership of the registered property, or any
incident where the issues involved have become controversial.
It may hardly be questioned that the issues raised by the petitioners in their petition to
cancel TCT No. 68568 refer to the ownership or title over the property covered thereby.
The said petition presented before the respondent Court in the exercise of its limited
jurisdiction as a cadastral court, the question of who should be considered the true and
lawful owner of the parcel of land embraced in said title. The petitioners alleged therein
that they are the true owners of the property, and that TCT No. 68568 which they sought to
cancel was issued as a result of the errors which were not of their own making. In short, the
petition raised a highly controversial matter which is beyond the judicial competence of a
cadastral court to pass upon or to adjudicate.
It may neither be claimed that the parties have mutually agreed to submit the aforesaid
issues for the determination by the court, it being a fact that herein private respondent was
not a party in the petition in LRC Record No. 39492. Incidentally, although the said
petition was filed by the herein petitioners on November 21, 1967, the Opposition filed by
Independent Mercantile Corporation to the said petition made no mention of the alleged
sale of the property in question in favor of private respondent Francisco Ramos on July 5,
1967. This circumstance places in grave doubt the sincerity of said sale and the claim that
the private respondent was an innocent purchaser for value of the property in question.
In the order of the respondent Judge dated September 29, 1971 denying the second motion
for reconsideration, he cited the case of Tijam vs. Sibonghanoy, 23 SCRA 29, to uphold the
view that the petitioners are deemed estopped from questioning the jurisdiction of the
respondent Court in having taken cognizance of the petition for cancellation of TCT No.
68568, they being the ones who invoked the jurisdiction of the said Court to grant the
affirmative relief prayed for therein. We are of the opinion that the ruling laid down
in Sibonghanoy may not be applied herein. Neither its factual backdrop nor the philosophy
of the doctrine therein expounded fits the case at bar.
A rule that had been settled by unquestioned acceptance and upheld in decisions so
numerous to cite is that the jurisdiction of a court over the subject-matter of the action is a
matter of law and may not be conferred by consent or agreement of the parties. The lack of
jurisdiction of a court may be raised at any stage of the proceedings, even on appeal. This
doctrine has been qualified by recent pronouncements which stemmed principally from the
ruling in the cited case of Sibonghanoy. It is to be regretted, however, that the holding in
said case had been applied to situations which were obviously not contemplated therein.
The exceptional circumstance involved in Sibonghanoy which justified the departure from
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
the accepted concept of non-waivability of objection to jurisdiction has been ignored and,
instead a blanket doctrine had been repeatedly upheld that rendered the supposed ruling
in Sibonghanoy not as the exception, but rather the general rule, virtually overthrowing
altogether the time-honored principle that the issue of jurisdiction is not lost by waiver or
by estoppel.
In Sibonghanoy, the defense of lack of jurisdiction of the court that rendered the questioned
ruling was held to be barred by estoppel by laches. It was ruled that the lack of jurisdiction
having been raised for the first time in a motion to dismiss filed almost fifteen (15) years
after the questioned ruling had been rendered, such a plea may no longer be raised for
being barred by laches. As defined in said case, laches 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 has abandoned
it or declined to assert it."
The petitioners in the instant case may not be faulted with laches. When they learned that
the title to the property owned by them had erroneously and illegally been cancelled and
registered in the name of another entity or person who had no right to the same, they filed a
petition to cancel the latter's title. It is unfortunate that in pursuing said remedy, their
counsel had to invoke the authority of the respondent Court as a cadastral court, instead of
its capacity as a court of general jurisdiction. Their petition to cancel the title in the name of
Independent Mercantile Corporation was dismissed upon a finding by the respondent Court
that the same was "without merit." No explanation was given for such dismissal nor why
the petition lacked merit. There was no hearing, and the petition was resolved solely on the
basis of memoranda filed by the parties which do not appear of record. It is even a
possibility that such dismissal was in view of the realization of the respondent Court that,
sitting as a cadastral court, it lacked the authority to entertain the petition involving as it
does a highly controversial issue. Upon such petition being dismissed, the petitioners
instituted Civil Case No. SCC-180 on January 1, 1971, or only two and one-half years after
the dismissal of their petition in LRC Record No. 39492. Hence, we see no unreasonable
delay in the assertion by the petitioners of their right to claim the property which rightfully
belongs to them. They can hardly be presumed to have abandoned or waived such right by
inaction within an unreasonable length of time or inexcusable negligence. In short, their
filing of Civil Case No. SCC-180 which in itself is an implied non-acceptance of the
validity of the proceedings had in LRC Record No. 39492 may not be deemed barred by
estoppel by laches.
It is neither fair nor legal to bind a party by the result of a suit or proceeding which was
taken cognizance of in a court which lacks jurisdiction over the same irrespective of the
attendant circumstances. The equitable defense of estoppel requires knowledge or
consciousness of the facts upon which it is based. The same thing is true with estoppel by
Page 80 of 169
conduct which may be asserted only when it is shown, among others, that the
representation must have been made with knowledge of the facts and that the party to
whom it was made is ignorant of the truth of the matter. (De Castro vs. Gineta, 27 SCRA
623.) The filing of an action or suit in a court that does not possess jurisdiction to entertain
the same may not be presumed to be deliberate and intended to secure a ruling which could
later be annulled if not favorable to the party who filed such suit or proceeding. Instituting
such an action is not a one-sided affair. It can just as well be prejudicial to the one who
filed the action or suit in the event that he obtains a favorable judgment therein which could
also be attacked for having been rendered without jurisdiction. The determination of the
correct jurisdiction of a court is not a simple matter. It can raise highly debatable issues of
such importance that the highest tribunal of the land is given the exclusive appellate
jurisdiction to entertain the same. The point simply is that when a party commits error in
filing his suit or proceeding in a court that lacks jurisdiction to take cognizance of the same,
such act may not at once be deemed sufficient basis of estoppel. It could have been the
result of an honest mistake, or of divergent interpretations of doubtful legal provisions. If
any fault is to be imputed to a party taking such course of action, part of the blame should
be placed on the court which shall entertain the suit, thereby lulling the parties into
believing that they pursued their remedies in the correct forum. Under the rules, it is the
duty of the court to dismiss an action "whenever it appears that the court has no jurisdiction
over the subject matter." (Sec. 2, Rule 9, Rules of Court.) Should the court render a
judgment without jurisdiction, such judgment may be impeached or annulled for lack of
jurisdiction (Sec. 30, Rule 132, Ibid), within ten (10) years from the finality of the same.
(Art. 1144, par. 3, Civil Code.)
The inequity of barring the petitioners from vindicating their right over their property in
Civil Case No. SCC-180 is rendered more acute in the face of the undisputed fact that the
property in question admittedly belonged to the petitioners, and that the title in the name of
the private respondent was the result of an error committed by the Provincial Sheriff in
issuing the deed of sale in the execution proceeding. The justness of the relief sought by
herein petitioners may not be ignored or rendered futile by reason of a doctrine which is of
highly doubtful applicability herein.
WHEREFORE, the Orders appealed from are hereby REVERSED and SET ASIDE. The
Motion To Dismiss filed by the private respondent in Civil Case No. SCC-180 shall be
deemed denied and the respondent Court is ordered to conduct further proceedings in the
case. With costs against the private respondent.
SO ORDERED.
G.R. No. 143951 October 25, 2005
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Norma Mangaliag and Narciso Solano, Petitioners,
vs.
Hon. Edelwina Catubig-Pastoral, Judge of the Regional Trial Court, 1st Judicial
Region, San Carlos City, (Pangasinan), Branch 56 and Apolinario Serquina,
Jr., Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a petition for certiorari, with a prayer for the issuance of a temporary
restraining order, to set aside the Order dated April 17, 2000 of the Regional Trial Court
(RTC), Branch 56, San Carlos City in Civil Case No. SCC-2240, which denied petitioners’
motion to dismiss; and the Order dated June 13, 2000, which denied petitioners’ motion for
reconsideration.
The factual background of the case is as follows:
On May 10, 1999, private respondent Apolinario Serquina, Jr. filed before the RTC a
complaint for damages against petitioners Norma Mangaliag and Narciso Solano. The
complaint alleges that: on January 21, 1999, from 9:00 to 10:00 a.m., private respondent,
together with Marco de Leon, Abner Mandapat and Manuel de Guzman, was on board a
tricycle driven by Jayson Laforte; while in Pagal, San Carlos City, a dump truck owned by
petitioner Mangaliag and driven by her employee, petitioner Solano, coming from the
opposite direction, tried to overtake and bypass a tricycle in front of it and thereby
encroached the left lane and sideswiped the tricycle ridden by private respondent; due to
the gross negligence, carelessness and imprudence of petitioner Solano in driving the truck,
private respondent and his co-passengers sustained serious injuries and permanent
deformities; petitioner Mangaliag failed to exercise due diligence required by law in the
selection and supervision of her employee; private respondent was hospitalized and spent
₱71,392.00 as medical expenses; private respondent sustained a permanent facial deformity
due to a fractured nose and suffers from severe depression as a result thereof, for which he
should be compensated in the amount of ₱500,000.00 by way of moral damages; as a
further result of his hospitalization, private respondent lost income of ₱25,000.00; private
respondent engaged the services of counsel on a contingent basis equal to 25% of the total
award.1
On July 21, 1999, petitioners filed their answer with counterclaim denying that private
respondent has a cause of action against them. They attributed fault or negligence in the
vehicular accident on the tricycle driver, Jayson Laforte, who was allegedly driving without
license.2
Page 81 of 169
Following pre-trial conference, trial on the merits ensued. When private respondent rested
his case, petitioner Solano testified in his defense.
Subsequently, on March 8, 2000, petitioners, assisted by a new counsel, filed a motion to
dismiss on the ground of lack of jurisdiction over the subject matter of the claim, alleging
that the Municipal Trial Court (MTC) has jurisdiction over the case since the principal
amount prayed for, in the amount of ₱71,392.00, falls within its jurisdiction. 3 Private
respondent opposed petitioners’ motion to dismiss.4 On March 24, 2000, petitioners filed a
supplement in support of their motion to dismiss.5
On April 17, 2000, the respondent RTC Judge, Edelwina Catubig-Pastoral, issued the first
assailed Order denying petitioners’ motion to dismiss,6 relying upon the mandate of
Administrative Circular No. 09-94, paragraph 2 of which reads:
2. The exclusion of the term "damages of whatever kind in determining the jurisdictional
amount under Section 19 (8) and Section 33 (1) of B.P. Blg. 129, as amended by R.A. No.
7691, applied to cases where the damages are merely incidental to or a consequence of the
main cause of action. However, in cases where the claim for damages is the main cause of
action, or one of the causes of action, the amount of such claim shall be considered in
determining the jurisdiction of the court.
The respondent RTC Judge also cited the 1999 case of Ong vs. Court of Appeals,7 where an
action for damages due to a vehicular accident, with prayer for actual damages of
₱10,000.00 and moral damages of ₱1,000,000.00, was tried in a RTC.
On May 19, 2000, petitioners filed a motion for reconsideration 8 but it was denied by the
respondent RTC Judge in her second assailed Order, dated June 13, 2000. 9
Hence, the present petition for certiorari, with prayer for the issuance of a temporary
restraining order.10
On August 9, 2000, the Court resolved to issue the temporary restraining order prayed for
by petitioners. Consequently, the respondent RTC Judge desisted from hearing further Civil
Case No. SCC-2240.11
Petitioners propound this issue for consideration: In an action for recovery of damages,
does the amount of actual damages prayed for in the complaint provide the sole test for
determining the court’s jurisdiction, or is the total amount of all the damages claimed,
regardless of kind and nature, such as moral, exemplary, nominal damages, and attorney’s
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
fees, etc., to be computed collectively with the actual damages to determine what court –
whether the MTC or the RTC – has jurisdiction over the action?
Petitioners maintain that the court’s jurisdiction should be based exclusively on the amount
of actual damages, excluding therefrom the amounts claimed as moral, exemplary, nominal
damages and attorney’s fee, etc. They submit that the specification in Administrative
Circular No. 09-94 that "in cases where the claim for damages is the main cause of action. .
. the amount of such claim shall be considered in determining the jurisdiction of the
court" signifies that the court’s jurisdiction must be tested solely by the amount of that
damage which is principally and primarily demanded, and not the totality of all the
damages sought to be recovered.
Petitioners insist that private respondent’s claim for actual damages in the amount of
₱71,392.00 is the principal and primary demand, the same being the direct result of the
alleged negligence of petitioners, while the moral damages for ₱500,000.00 and attorney’s
fee, being the consequent effects thereof, may prosper only upon a prior finding by the
court of the existence of petitioners’ negligence that caused the actual damages.
Considering that the amount of actual damages claimed by private respondent in Civil Case
No. SCC-2240 does not exceed ₱200,000.00, which was then the jurisdictional amount of
the MTC, the jurisdiction over the case clearly pertains to the MTC, and not to the RTC.
Therefore, the RTC should have dismissed the case for lack of jurisdiction. Petitioners cite
as relevant the case of Movers-Baseco Integrated Port Services, Inc. vs. Cyborg Leasing
Corporation12 wherein the Court, in disposing of the jurisdictional issue, limited its
consideration only to the actual or compensatory damages.
Furthermore, while admitting that the defense of lack of jurisdiction was only raised during
the trial, petitioners nevertheless contend that jurisdiction may be raised anytime, even after
judgment, but before it is barred by laches or estoppel. They submit that they seasonably
presented the objection to the RTC’s lack of jurisdiction, i.e., during the trial stage where
no decision had as yet been rendered, must less one unfavorable to them.
At any rate, they argue that when the jurisdictional flaw is evident from the record of the
case, the court may, even without the urgings of the parties, take judicial notice of such
fact, and thereupon dismiss the case motu proprio. Thus, even if lack of jurisdiction was
not initially raised in a motion to dismiss or in the answer, no waiver may be imputed to
them.
Private respondent, on the other hand, submits that in an action for recovery of damages
arising from a tortious act, the claim of moral damages is not merely an incidental or
consequential claim but must be considered in the amount of demand which will determine
the court’s jurisdiction. He argues that the position taken by petitioners is a misreading of
Page 82 of 169
paragraph 2 of Administrative Circular No. 09-94. The clear and explicit language of said
circular leaves no room for doubt; hence, needs no interpretation.
He further submits that petitioners’ reliance on Movers-Baseco Integrated Port Services,
Inc. is misplaced since that case is for recovery of the value of vehicle and unpaid rentals
on the lease of the same. He contends that Section 18, paragraph 8 of Batas Pambansa Blg.
129, as amended by Republic Act No. 7691, upon which petitioners anchor their stand,
refers to all the demands involving collection of sums of money based on obligations
arising from contract, express or implied, where the claim for damages is just incidental
thereto and it does not apply to actions for damages based on obligations arising from
quasi-delict where the claim for damages of whatever kind is the main action.
Private respondent also contends that, being incapable of pecuniary computation, the
amount of moral damages that he may be awarded depends on the sound discretion of the
trial court, not restrained by the limitation of the jurisdictional amount. Should the Court
follow petitioners’ line of reasoning, private respondent argues that it will result in an
absurd situation where he can only be awarded moral damages of not more than
₱200,000.00 although he deserves more than this amount, taking into consideration his
physical suffering, as well as social and financial standing, simply because his claim for
actual damages does not exceed ₱200,000.00 which amount falls under the jurisdiction of
the MTC.
Lastly, he asserts that it is too late in the day for petitioners to question the jurisdiction of
the RTC since they are estopped from invoking this ground. He contends that after actively
taking part in the trial proceedings and presenting a witness to seek exoneration, it would
be unfair and legally improper for petitioners to seek the dismissal of the case.
At the outset, it is necessary to stress that generally a direct recourse to this Court is highly
improper, for it violates the established policy of strict observance of the judicial hierarchy
of courts. Although this Court, the RTCs and the Court of Appeals (CA) have concurrent
jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas
corpus and injunction, such concurrence does not give the petitioner unrestricted freedom
of choice of court forum. This Court is a court of last resort, and must so remain if it is to
satisfactorily perform the functions assigned to it by the Constitution and immemorial
tradition.13
Thus, this Court, as a rule, will not entertain direct resort to it unless the redress desired
cannot be obtained in the appropriate courts, and exceptional and compelling
circumstances, such as cases of national interest and of serious implications, justify the
availment of the extraordinary remedy of writ of certiorari, calling for the exercise of its
primary jurisdiction.14 Such exceptional and compelling circumstances were present in the
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
following cases: (a) Chavez vs. Romulo15 on the citizens’ right to bear arms;
(b) Government of the United States of America vs. Purganan16 on bail in extradition
proceedings; (c) Commission on Elections vs. Quijano-Padilla17 on a government contract
on the modernization and computerization of the voters’ registration list; (d) Buklod ng
Kawaning EIIB vs. Zamora[18] on the status and existence of a public office; and
(e) Fortich vs. Corona19 on the so-called "Win-Win Resolution" of the Office of the
President which modified the approval of the conversion to agro-industrial area of a 144-
hectare land.
Be that as it may, the judicial hierarchy of courts is not an iron-clad rule. It generally
applies to cases involving warring factual allegations. For this reason, litigants are required
to repair to the trial courts at the first instance to determine the truth or falsity of these
contending allegations on the basis of the evidence of the parties. Cases which depend on
disputed facts for decision cannot be brought immediately before appellate courts as they
are not triers of facts.20 Therefore, a strict application of the rule of hierarchy of courts is
not necessary when the cases brought before the appellate courts do not involve factual but
legal questions.
In the present case, petitioners submit a pure question of law involving the interpretation
and application of paragraph 2 of Administrative Circular No. 09-94. This legal question
and in order to avoid further delay are compelling enough reasons to allow petitioners’
invocation of this Court’s jurisdiction in the first instance.
Before resolving this issue, the Court shall deal first on the question of estoppel posed by
private respondent. Private respondent argues that the defense of lack of jurisdiction may
be waived by estoppel through active participation in the trial. Such, however, is not the
general rule but an exception, best characterized by the peculiar circumstances in Tijam vs.
Sibonghanoy.21 In Sibonghanoy, the party invoking lack of jurisdiction did so only after
fifteen years and at a stage when the proceedings had already been elevated to the
CA. Sibonghanoy is an exceptional case because of the presence of laches, which was
defined therein as 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 the
negligence or omission to assert a right within a reasonable time, warranting a presumption
that the party entitled to assert has abandoned it or declined to assert it. 22
As enunciated in Calimlim vs. Ramirez,23 this Court held:
A rule that had been settled by unquestioned acceptance and upheld in decisions so
numerous to cite is that the jurisdiction of a court over the subject matter of the action is a
matter of law and may not be conferred by consent or agreement of the parties. The lack of
jurisdiction of a court may be raised at any stage of the proceedings, even on appeal. This
Page 83 of 169
doctrine has been qualified by recent pronouncements which stemmed principally from the
ruling in the cited case of Sibonghanoy. It is to be regretted, however, that the holding in
said case had been applied to situations which were obviously not contemplated therein.
The exceptional circumstances involved in Sibonghanoy which justified the departure from
the accepted concept of non-waivability of objection to jurisdiction has been ignored and,
instead a blanket doctrine had been repeatedly upheld that rendered the supposed ruling in
Sibonghanoy not as the exception, but rather the general rule, virtually overthrowing
altogether the time honored principle that the issue of jurisdiction is not lost by waiver or
by estoppel.
...
It is neither fair nor legal to bind a party by the result of a suit or proceeding which was
taken cognizance of in a court which lacks jurisdiction over the same irrespective of the
attendant circumstances. The equitable defense of estoppel requires knowledge or
consciousness of the facts upon which it is based. The same thing is true with estoppel by
conduct which may be asserted only when it is shown, among others, that the
representation must have been made with knowledge of the facts and that the party to
whom it was made is ignorant of the truth of the matter (De Castro vs. Gineta, 27 SCRA
623). The filing of an action or suit in a court that does not possess jurisdiction to entertain
the same may not be presumed to be deliberate and intended to secure a ruling which could
later be annulled if not favorable to the party who filed such suit or proceeding. Instituting
such an action is not a one-sided affair. It can just as well be prejudicial to the one who file
the action or suit in the event that he obtains a favorable judgment therein which could also
be attacked for having been rendered without jurisdiction. The determination of the correct
jurisdiction of a court is not a simple matter. It can raise highly debatable issues of such
importance that the highest tribunal of the land is given the exclusive appellate jurisdiction
to entertain the same. The point simply is that when a party commits error in filing his suit
or proceeding in a court that lacks jurisdiction to take cognizance of the same, such act may
not at once be deemed sufficient basis of estoppel. It could have been the result of an
honest mistake or of divergent interpretations of doubtful legal provisions. If any fault is to
be imputed to a party taking such course of action, part of the blame should be placed on
the court which shall entertain the suit, thereby lulling the parties into believing that they
pursued their remedies in the correct forum. Under the rules, it is the duty of the court to
dismiss an action "whenever it appears that court has no jurisdiction over the subject
matter." (Section 2, Rule 9, Rules of Court) Should the Court render a judgment without
jurisdiction, such judgment may be impeached or annulled for lack of jurisdiction (Sec. 30,
Rule 132, Ibid), within ten (10) years from the finality of the same (Art. 1144, par. 3, Civil
Code).24
In the present case, no judgment has yet been rendered by the RTC.25 As a matter of fact, as
soon as the petitioners discovered the alleged jurisdictional defect, they did not fail or
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
neglect to file the appropriate motion to dismiss. Hence, finding the pivotal element of
laches to be absent, the Sibonghanoy doctrine does not control the present controversy.
Instead, the general rule that the question of jurisdiction of a court may be raised at any
stage of the proceedings must apply. Therefore, petitioners are not estopped from
questioning the jurisdiction of the RTC.
In any event, the petition for certiorari is bereft of merit.
Section 1 of Republic Act (R.A.) No. 7691, which took effect on April 15, 1994,
provides inter alia that where the amount of the demand in civil cases exceeds
₱100,000.00,26 exclusive of interest, damages of whatever kind, attorney’s fees, litigation
expenses, and costs, the exclusive jurisdiction thereof is lodged with in the RTC. Under
Section 3 of the same law, where the amount of the demand in the complaint does not
exceed ₱100,000.00, exclusive of interest, damages of whatever kind, attorney’s fees,
litigation expenses, and costs, the exclusive jurisdiction over the same is vested in the
Metropolitan Trial Court, MTC and Municipal Circuit Trial Court. The jurisdictional
amount was increased to ₱200,000.00,27 effective March 20, 1999, pursuant to Section
528 of R.A. No. 7691 and Administrative Circular No. 21-99.
In Administrative Circular No. 09-94 dated March 14, 1994, the Court specified the
guidelines in the implementation of R.A. No. 7691. Paragraph 2 of the Circular provides:
2. The exclusion of the term "damages of whatever kind in determining the jurisdictional
amount under Section 19 (8) and Section 33 (1) of B.P. Blg. 129, as amended by R.A. No.
7691, applied to cases where the damages are merely incidental to or a consequence of the
main cause of action. However, in cases where the claim for damages is the main cause
of action, or one of the causes of action, the amount of such claim shall be considered
in determining the jurisdiction of the court. (Emphasis supplied)
The well-entrenched principle is that the jurisdiction of the court over the subject matter of
the action is determined by the material allegations of the complaint and the law,
irrespective of whether or not the plaintiff is entitled to recover all or some of the claims or
reliefs sought therein.29 In the present case, the allegations in the complaint plainly show
that private respondent seeks to recover not only his medical expenses, lost income but also
damages for physical suffering and mental anguish due to permanent facial deformity from
injuries sustained in the vehicular accident. Viewed as an action for quasi-delict, the
present case falls squarely within the purview of Article 2219 (2), 30 which provides for the
payment of moral damages in cases of quasi-delict causing physical injuries.
Private respondent’s claim for moral damages of ₱500,000.00 cannot be considered as
merely incidental to or a consequence of the claim for actual damages. It is a separate and
Page 84 of 169
distinct cause of action or an independent actionable tort. It springs from the right of a
person to the physical integrity of his or her body, and if that integrity is violated, damages
are due and assessable.31 Hence, the demand for moral damages must be considered as a
separate cause of action, independent of the claim for actual damages and must be included
in determining the jurisdictional amount, in clear consonance with paragraph 2 of
Administrative Circular No. 09-94.
If the rule were otherwise, i.e., the court’s jurisdiction in a case of quasi-delict causing
physical injuries would only be based on the claim for actual damages and the complaint is
filed in the MTC, it can only award moral damages in an amount within its jurisdictional
limitations, a situation not intended by the framers of the law.
It must be remembered that moral damages, though incapable of pecuniary estimation, are
designed to compensate and alleviate in some way the physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injury unjustly caused a person.32 Moral damages are awarded to
enable the injured party to obtain means, diversions or amusements that will serve to
alleviate the moral suffering he/she has undergone, by reason of the defendant’s culpable
action. Its award is aimed at restoration, as much as possible, of the spiritual status quo
ante; thus, it must be proportionate to the suffering inflicted. Since each case must be
governed by its own peculiar circumstances, there is no hard and fast rule in determining
the proper amount.33
The petitioners’ reliance in the case of Movers-Baseco Integrated Port Services, Inc. vs.
Cyborg Leasing Corporation34 is misplaced. The claim for damages therein was based on a
breach of a contract of lease, not a quasi-delict causing physical injuries, as in this case.
Besides, there was no claim therein for moral damages. Furthermore, moral damages are
generally not recoverable in damage actions predicated on a breach of contract in view of
the provisions of Article 222035 of the Civil Code.
In view of the foregoing, the Court is convinced that the respondent RTC Judge committed
no grave abuse of discretion in issuing the assailed Orders dated April 17, 2000 and June
13, 2000.
WHEREFORE, the instant petition for certiorari is DISMISSED for lack of merit. The
temporary restraining order issued by this Court on August 9, 2000 is LIFTED.
The Regional Trial Court, Branch 56, San Carlos City is DIRECTED to continue with the
trial proceedings in Civil Case No. SCC-2240 and resolve the case with dispatch.
Costs against petitioners.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
G.R. No. 169700 July 30, 2009
APOLONIA BANAYAD FRIANELA, Petitioner,
vs.
SERVILLANO BANAYAD, JR., Respondent.
DECISION
NACHURA, J.:
Before the court is a petition for review on certiorari under Rule 45 of the Rules of Court
assailing the June 17, 2005 Decision1 of the Court of Appeals (CA) in CA-G.R. CV No.
53929, and the August 17, 2005 Resolution2 denying the motion for partial reconsideration
thereof.
Narrated in brief are the antecedent facts and proceedings, to wit:
Following the death of her uncle, the testator Moises F. Banayad, petitioner, who was
named as devisee in the will, filed before the Regional Trial Court (RTC) of Pasay City, on
June 3, 1991, Sp. Proc. No. 3664-P3 for the allowance of the November 18, 1985
holographic will of the decedent. Petitioner alleged that Moises died without issue and left
to her the following properties, namely: (1) a parcel of land situated in Pasay City and
described in Transfer Certificate of Title No. 9741; (2) images of Oracion del Huerto and
Pieta including the crown; and (3) all personal belongings.4
Respondent, a cousin of the petitioner, filed his opposition and counter-petitioned for the
allowance of two other holographic wills of the decedent, one dated September 27, 1989
and another dated September 28, 1989.5
After trial on the merits, the RTC, on September 29, 1995, rendered its Decision6 declaring
the September 27, 1989 holographic will as having revoked the November 18, 1985 will,
allowing the former, and appointing respondent as administrator of Moises’s estate.7
On appeal, the CA, in the assailed June 17, 2005 Decision, 8 modified the decision of the
trial court and ruled that the September 27, 1989 holographic will had only revoked the
November 18, 1985 will insofar as the testamentary disposition of Moises’s real property
was concerned.9
With the denial of her motion for reconsideration in the further assailed August 17, 2005
Resolution,10 petitioner elevated the case before us via the instant petition.11
Page 85 of 169
The Court notes that the trial court focused all of its attention on the merits of the case
without first determining whether it could have validly exercised jurisdiction to hear and
decide Sp. Proc. No. 3664-P. On appeal, the appellate court also overlooked the issue on
the jurisdictional competence of the trial court over the said case. This Court, after a
meticulous review of the records, finds that the RTC of Pasay City had no jurisdiction over
the subject matter in Sp. Proc. No. 3664-P.
The jurisdiction of the court to hear and decide a case is conferred by the law in force at the
time of the institution of the action unless such statute provides for a retroactive application
thereof.12 Jurisdiction is moreover determined by the allegations or averments in the
complaint or petition.13
In this case, at the time the petition for the allowance of Moises’s holographic will was
instituted, the then Sections 19 and 3314 of Batas Pambansa (B.P.) Blg. 12915 were in force,
thus—
SECTION 19. Jurisdiction in civil cases. — Regional Trial Courts shall exercise exclusive
original jurisdiction:
xxxx
(4) In all matters of probate, both testate and intestate, where the gross value of the estate
exceeds twenty thousand pesos (₱20,000.00);
xxxx
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:
(1) Exclusive original jurisdiction over civil actions and probate proceedings, testate and
intestate, including the grant of provisional remedies in proper cases, where the demand
does not exceed twenty thousand pesos exclusive of interest and costs but inclusive of
damages of whatever kind, the amount of which must be specifically alleged: Provided,
That where there are several claims or causes of action between the same or different
parties, embodied in the same complaint, the amount of the demand shall be the totality of
the claims in all the causes of action irrespective of whether the causes of action arose out
of the same or different transactions; and
xxxx
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
The applicable law, therefore, confers jurisdiction on the RTC or the MTCs over probate
proceedings depending on the gross value of the estate,16 which value must be alleged in
the complaint or petition to be filed.1avvphi1 Significantly, in this case, the original
petition docketed before the trial court contains only the following averments:
xxxx
1. That Petitioner is of legal age, married, Filipino and residing at 2237 P. Burgos
St., Pasay City who is named devisee in the Last Will and Testament of MOISES
BANAYAD, deceased who died in Pasay City General Hospital on March 27,
1991 xerox copy of his death certificate is herewith attached as Annex "A" to
form integral part hereof;
2. That the said Last Will and Testament is herewith (sic) attached as Annex "B"
and made an integral part of this Petition, the original thereof will be presented to
this Honorable Court at the time of probate;
3. That the decedent is an inhabitant of the Philippines and residing at 2237 P.
Burgos St., Pasay City at the time of his death;
4. That the properties left by the decedent consist of real and personal properties
particularly described herein below, which decedent all bequeathed to petitioner;
A. A parcel of land described under TCT No. 9741 xerox copy of
which is herewith (sic) attached as Annex "C".
B. Imahen ng Oracion del Huerto at Pieta, kasama and korona.
C. All personal belongings.
5. That the testator at the time of the execution of the said Will was of sound and
disposing mind.
WHEREFORE, it is most respectfully prayed of the Honorable Court that:
a. Upon proper notice and hearing, the above mentioned Will be admitted to
probate;
Page 86 of 169
b. That letters testamentary or administration be issued to herein petitioner
without bond;
Petitioner prays for such other reliefs just and equitable in (sic) the premises.
x x x x17
Nowhere in the petition is there a statement of the gross value of Moises’s estate. Thus,
from a reading of the original petition filed, it cannot be determined which court has
original and exclusive jurisdiction over the proceedings.18 The RTC therefore committed
gross error when it had perfunctorily assumed jurisdiction despite the fact that the initiatory
pleading filed before it did not call for the exercise of its jurisdiction. The RTC should
have, at the outset, dismissed the case for lack of jurisdiction. Be it noted that the dismissal
on the said ground may be ordered motu proprio by the courts. 19 Further, the CA, on
appeal, should have dismissed the case on the same ground. Settled is the doctrine that the
issue of jurisdiction may be raised by any of the parties or may be reckoned by the court, at
any stage of the proceedings, even on appeal, and is not lost by waiver or by estoppel. 20
Despite the pendency of this case for around 18 years, the exception laid down in Tijam v.
Sibonghanoy21 and clarified recently in Figueroa v. People22 cannot be applied. First,
because, as a general rule, the principle of estoppel by laches cannot lie against the
government.23 No injustice to the parties or to any third person will be wrought by the
ruling that the trial court has no jurisdiction over the instituted probate proceedings.
Second and most important, because in Tijam, the delayed invocation of lack of jurisdiction
has been made during the execution stage of a final and executory ruling of a court. In
Figueroa, the Court has emphasized that estoppel by laches only supervenes in exceptional
cases similar to the factual milieu in Tijam. It is well to note the following factual setting of
Tijam:
On July 19, 1948 — barely one month after the effectivity of Republic Act No. 296 known
as the Judiciary Act of 1948 — the spouses Serafin Tijam and Felicitas Tagalog
commenced Civil Case No. R-660 in the Court of First Instance of Cebu against the
spouses Magdaleno Sibonghanoy and Lucia Baguio to recover from them the sum of
P1,908.00, with legal interest thereon from the date of the filing of the complaint until the
whole obligation is paid, plus costs. As prayed for in the complaint, a writ of attachment
was issued by the court against defendants' properties, but the same was soon dissolved
upon the filing of a counter-bond by defendants and the Manila Surety and Fidelity Co.,
Inc. hereinafter referred to as the Surety, on the 31st of the same month.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
After being duly served with summons the defendants filed their answer in which, after
making some admissions and denials of the material averments of the complaint, they
interposed a counterclaim. This counterclaim was answered by the plaintiffs.1avvphi1
After trial upon the issues thus joined, the Court rendered judgment in favor of the
plaintiffs and, after the same had become final and executory, upon motion of the latter, the
Court issued a writ of execution against the defendants. The writ having been returned
unsatisfied, the plaintiffs moved for the issuance of a writ of execution against the Surety's
bond (Rec. on Appeal pp. 46-49), against which the Surety filed a written opposition (Id.
pp. 49) upon two grounds, namely, (1) Failure to prosecute and (2) Absence of a demand
upon the Surety for the payment of the amount due under the judgment. Upon these
grounds the Surety prayed the Court not only to deny the motion for execution against its
counter-bond but also the following affirmative relief: "to relieve the herein bonding
company of its liability, if any, under the bond in question" (Id. p. 54) The Court denied
this motion on the ground solely that no previous demand had been made on the Surety for
the satisfaction of the judgment. Thereafter the necessary demand was made, and upon
failure of the Surety to satisfy the judgment, the plaintiffs filed a second motion for
execution against the counter-bond. On the date set for the hearing thereon, the Court, upon
motion of the Surety's counsel, granted the latter a period of five days within which to
answer the motion. Upon its failure to file such answer, the Court granted the motion for
execution and the corresponding writ was issued.
Subsequently, the Surety moved to quash the writ on the ground that the same was issued
without the required summary hearing provided for in Section 17 of Rule 59 of the Rules of
Court. As the Court denied the motion, the Surety appealed to the Court of Appeals from
such order of denial and from the one denying its motion for reconsideration (Id. p. 97). Its
record on appeal was then printed as required by the Rules, and in due time it filed its brief
raising therein no other question but the ones covered by the following assignment of
errors:
"I. That the Honorable Court a quo erred in issuing its order dated November 2,
1957, by holding the incident as submitted for resolution, without a summary
hearing and compliance with the other mandatory requirements provided for in
Section 17, Rule 59 of the Rules of Court.
"II. That the Honorable Court a quo erred in ordering the issuance of execution
against the herein bonding company-appellant.
"III. That the Honorable Court a quo erred in denying the motion to quash the
writ of execution filed by the herein bonding company- appellant as well as its
Page 87 of 169
subsequent motion for reconsideration, and/or in not quashing or setting aside the
writ of execution."
Not one of the assignment of errors — it is obvious raises the question of lack of
jurisdiction, neither directly nor indirectly.
Although the appellees failed to file their brief, the Court of Appeals, on December 11,
1962, decided the case affirming the orders appealed from.
On January 8, 1963 — five days after the Surety received notice of the decision, it filed a
motion asking for extension of time within which to file a motion for reconsideration. The
Court of Appeals granted the motion in its resolution of January 10 of the same year. Two
days later the Surety filed a pleading entitled MOTION TO DISMISS, alleging
substantially that appellees' action was filed in the Court of First Instance of Cebu on July
19, 1948 for the recovery of the sum of P1,908.00 only; that a month before that date
Republic Act No. 296, otherwise known as the Judiciary Act of 1948, had already become
effective, Section 88 of which placed within the original exclusive jurisdiction of inferior
courts all civil actions where the value of the subject-matter or the amount of the demand
does not exceed P2,000.00, exclusive of interest and costs; that the Court of First Instance
therefore had no jurisdiction to try and decide the case. Upon these premises the Surety's
motion prayed the Court of Appeals to set aside its decision and to dismiss the case. By
resolution of January 16, 1963 the Court of Appeals required the appellees to answer the
motion to dismiss, but they failed to do so. Whereupon, on May 20 of the same year, the
Court resolved to set aside its decision and to certify the case to Us.
x x x x24
Clearly, then, in Tijam, the issue of lack of jurisdiction has only been raised during the
execution stage, specifically when the matter of the trial court’s denial of the surety’s
motion to quash the writ of execution has been brought to the appellate court for review.
Here, the trial court’s assumption of unauthorized jurisdiction over the probate proceedings
has been discovered by the Court during the appeal stage of the main case, not during the
execution stage of a final and executory decision. Thus, the exceptional rule laid down in
Tijam cannot apply.
Since the RTC has no jurisdiction over the action, all the proceedings therein, including the
decision rendered, are null and void.25 With the above disquisition, the Court finds it
unnecessary to discuss and resolve the other issues raised in the petition.
IN THE LIGHT OF THE FOREGOING, Sp. Proc. No. 3664-P before the Regional Trial
Court of Pasay City is DISMISSED for lack of jurisdiction.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
SO ORDERED.
G.R. No. 131282 January 4, 2002
GABRIEL L. DUERO, petitioner,
vs.
HON.COURT OF APPEALS, and BERNARDO A. ERADEL, respondents.
QUISUMBING, J.:
This petition for certiorari assails the Decisionl dated September 17, 1997, of the Court of
Appeals in CA-G.R. No. SP No.. 2340- UDK, entitled Bernardo Eradel vs. Non. Ermelino
G. Andal, setting aside all proceedings in Civil Case No.1075, Gabriel L. Duero vs.
Bernardo Eradel, before the Branch 27 of the Regional Trial Court of Tandag, Surigao del
Sur .
The pertinent facts are as follow.
Sometime in 1988, according to petitioner, private respondent Bemardo Eradel2 entered and
occupied petitioner's land covered by Tax Declaration No. A-16-13-302, located in Baras,
San Miguel, Surigao del Sur. As shown in the tax declaration, the land had an assessed
value of P5,240. When petitioner politely informed private respondent that the land was his
and requested the latter to vacate the land, private respondent refused, but instead
threatened him with bodily harm. Despite repeated demands, private respondent remained
steadfast in his refusal to leave the land.
On June 16, 1995, petitioner filed before the RTC a complaint for Recovery of Possession
and Ownership with Damages and Attorney's Fees against private respondent and two
others, namely, Apolinario and Inocencio Ruena. Petitioner appended to the complaint the
aforementioned tax declaration. The counsel of the Ruenas asked for extension to file their
Answer and was given until July 18, 1995. Meanwhile, petitioner and the, Ruenas executed
a compromise agreement, which became the trial court's basis for a partial judgment
rendered on January 12, 1996. In this agreement, the Ruenas through their counsel, Atty.
Eusebio Avila, entered into a Compromise Agreement with herein petitioner, Gabriel
Duero. Inter alia, the agreement stated that the Ruenas recognized and bound themselves to
respect the ownership and possession of Duero.3 Herein private respondent Eradel was not
a party to the agreement, and he was declared in default for failure to file his answer to the
complaint.4
Page 88 of 169
Petitioner presented his evidence ex parte on February 13, 1996. On May 8, 1996,
judgment was rendered in his favor, and private respondent was ordered to peacefully
vacate and turn over Lot No.1065 Cad. 537-D to petitioner; pay petitioner P2,000 annual
rental from 1988 up the time he vacates the land, and P5,000 as attorney's fees and the cost
of the suit.5 Private respondent received a copy of the decision on May 25, 1996.
On June 10, 1996, private respondent filed a Motion for New Trial, alleging that he has
been occupying the land as a tenant of Artemio Laurente, Sr., since 1958. He explained that
he turned over the complaint and summons to Laurente in the honest belief that as landlord,
the latter had a better right to the land and was responsible to defend any adverse claim on
it. However, the trial court denied the motion for new trial.1âwphi1.nêt
Meanwhile, RED Conflict Case No.1029, an administrative case between petitioner and
applicant-contestants Romeo, Artemio and Jury Laurente, remained pending with the
Office of the Regional Director of the Department of Environment and Natural Resources
in Davao City. Eventually, it was forwarded to the DENR Regional Office in Prosperidad,
Agusan del Sur .
On July 24, 1996, private respondent filed before the RTC a Petition for Relief from
Judgment, reiterating the same allegation in his Motion for New Trial. He averred that
unless there is a determination on who owned the land, he could not be made to vacate the
land. He also averred that the judgment of the trial court was void inasmuch as the heirs of
Artemio Laurente, Sr., who are indispensable parties, were not impleaded.
On September 24, 1996, Josephine, Ana Soledad and Virginia, all surnamed Laurente,
grandchildren of Artemio who were claiming ownership of the land, filed a Motion for
Intervention. The RTC denied the motion.
On October 8, 1996, the trial court issued an order denying the Petition for Relief from
Judgment. In a Motion for Reconsideration of said order, private respondent alleged that
the RTC had no jurisdiction over the case, since the value of the land was only P5,240 and
therefore it was under the jurisdiction of the municipal trial court. On November 22, 1996,
the RTC denied the motion for reconsideration.
On January 22, 1997, petitioner filed a Motion for Execution, which the RTC granted on
January 28. On February 18, 1997, Entry of Judgment was made of record and a writ of
execution was issued by the RTC on February 27,1997. On March 12,1997, private
respondent filed his petition for certiorari before the Court of Appeals.
The Court of Appeals gave due course to the petition, maintaining that private respondent
is not estopped from assailing the jurisdiction 'of the RTC, Branch 27 in Tandag, Surigao
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
del Sur, when private respondent filed with said court his Motion for Reconsideration
And/Or Annulment of Judgment. The Court of Appeals decreed as follows:
IN THE LIGHT OF ALL THE FOREGOING, the Petition is GRANTED. All
proceedings in "Gabriel L. Duero vs. Bernardo Eradel, et. al. Civil Case 1075"
filed in the Court a quo, including its Decision, Annex "E" of the petition, and its
Orders and Writ of Execution and the turn over of the property to the Private
Respondent by the Sheriff of the Court a quo, are declared null and void and
hereby SET ASIDE, No pronouncement as to costs.
SO ORDERED.6
Petitioner now comes before this Court, alleging that the Court of Appeals acted with grave
abuse of discretion amounting to lack or in excess of jurisdiction when it held that:
I.
...THE LOWER COURT HAS NO JURISDICTION OVER THE SUBJECT MA
TTER OF THE CASE.
II
...PRIVATE RESPONDENT WAS NOT THEREBY ESTOPPED FROM
QUESTIONING THE JURISDICTION OF THE LOWER COURT EVEN
AFTER IT SUCCESSFULLY SOUGHT AFFIRMATIVE RELIEF
THEREFROM.
III
...THE FAlLURE OF PRIVATE RESPONDENT TO FILE HIS ANSWER IS
JUSTIFIED. 7
The main issue before us is whether the Court of Appeals gravely abused its discretion
when it held that the municipal trial court had jurisdiction, and that private respondent was
not estopped from assailing the jurisdiction of the RTC after he had filed several motions
before it. The secondary issue is whether the Court of appeals erred in holding that private
respondent's failure to file an answer to the complaint was justified.
Page 89 of 169
At the outset, however, we note that petitioner through counsel submitted to this Court
pleadings that contain inaccurate statements. Thus, on page 5 of his petition, 8 we find that
to bolster the claim that the appellate court erred in holding that the RTC had no
jurisdiction, petitioner pointed to Annex E9 of his petition which supposedly is the
Certification issued by the Municipal Treasurer of San Miguel, Surigao, specifically
containing the notation, "Note: Subject for General Revision Effective 1994." But it
appears that Annex E of his petition is not a Certification but a xerox copy of a Declaration
of Real Property. Nowhere does the document contain a notation, "Note: Subject for
General Revision Effective 1994." Petitioner also asked this Court to refer to Annex
F,10 where he said the zonal value of the disputed land was P1.40 per sq.m., thus placing
the computed value of the land at the time the complaint was filed before the RTC at
P57,113.98, hence beyond the jurisdiction of the municipal court and within the jurisdiction
of the regional trial court. However, we find that these annexes are both merely xerox
copies. They are obviously without evidentiary weight or value.
Coming now to the principal issue, petitioner contends that respondent appellate court
acted with grave abuse of discretion. By "grave abuse of discretion" is meant such
capricious and whimsical exercise of judgment which is equivalent to an excess or a lack of
jurisdiction. The abuse of discretion must be so patent and gross as to amount to an evasion
of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in
contemplation of law as where the power is exercised in an arbitrary and despotic manner
by reason of passion or hostility.11 But here we find that in its decision holding that the
municipal court has jurisdiction over the case and that private respondent was not estopped
from questioning the jurisdiction of the RTC, respondent Court of Appeals discussed the
facts on which its decision is grounded as well as the law and jurisprudence on the
matter.12 Its action was neither whimsical nor capricious.
Was private respondent estopped from questioning the jurisdiction of the RTC? In this
case, we are in agreement with the Court of Appeals that he was not. While participation in
all stages of a case before the trial court, including invocation of its authority in asking for
affirmative relief, effectively bars a party by estoppel from challenging the court's
jurisdiction,13 we note that estoppel has become an equitable defense that is both
substantive and remedial and its successful invocation can bar a right and not merely its
equitable enforcement.14 Hence, estoppel ought to be applied with caution. For estoppel to
apply, the action giving rise thereto must be unequivocal and intentional because, if
misapplied, estoppel may become a tool of injustice. 15
In the present case, private respondent questions the jurisdiction of RTC in Tandag,
Surigao del Sur, on legal grounds. Recall that it was petitioner who filed the complaint
against private respondent and two other parties before the said court, 16 believing that the
RTC had jurisdiction over his complaint. But by then, Republic Act 769117 amending BP
129 had become effective, such that jurisdiction already belongs not to the RTC but to the
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
MTC pursuant to said amendment. Private respondent, an unschooled farmer, in the
mistaken belief that since he was merely a tenant of the late Artemio Laurente Sr., his
landlord, gave the summons to a Hipolito Laurente, one of the surviving heirs of Artemio
Sr., who did not do anything about the summons. For failure to answer the complaint,
private respondent was declared in default. He then filed a Motion for New Trial in the
same court and explained that he defaulted because of his belief that the suit ought to be
answered by his landlord. In that motion he stated that he had by then the evidence to prove
that he had a better right than petitioner over the land because of his long, continuous and
uninterrupted possession as bona-fide tenant-lessee of the land.18 But his motion was
denied. He tried an alternative recourse. He filed before the RTC a Motion for Relief from
Judgment. Again, the same court denied his motion, hence he moved for reconsideration of
the denial. In his Motion for Reconsideration, he raised for the first time the RTC's lack of
jurisdiction. This motion was again denied. Note that private respondent raised the issue of
lack of jurisdiction, not when the case was already on appeal, but when the case, was still
before the RTC that ruled him in default, denied his motion for new trial as well as for
relief from judgment, and denied likewise his two motions for reconsideration. After the
RTC still refused to reconsider the denial of private respondent's motion for relief from
judgment, it went on to issue the order for entry of judgment and a writ of execution.
Under these circumstances, we could not fault the Court of Appeals in overruling the RTC
and in holding that private respondent was not estopped from questioning the jurisdiction
of the regional trial court. The fundamental rule is that, the lack of jurisdiction of the court
over an action cannot be waived by the parties, or even cured by their silence, acquiescence
or even by their express consent.19 Further, a party may assail the jurisdiction of the court
over the action at any stage of the proceedings and even on appeal. 20 The appellate court
did not err in saying that the RTC should have declared itself barren of jurisdiction over the
action. Even if private respondent actively participated in the proceedings before said court,
the doctrine of estoppel cannot still be properly invoked against him because the question
of lack of jurisdiction may be raised at anytime and at any stage of the action. 21 Precedents
tell us that as a general rule, the jurisdiction of a court is not a question of acquiescence as a
matter of fact, but an issue of conferment as a matter of law. 22 Also, neither waiver nor
estoppel shall apply to confer jurisdiction upon a court, barring highly meritorious and
exceptional circumstances.23 The Court of Appeals found support for its ruling in our
decision in Javier vs. Court of Appeals, thus:
x x x The point simply is that when a party commits error in filing his suit or
proceeding in a court that lacks jurisdiction to take cognizance of the same, such
act may not at once be deemed sufficient basis of estoppel. It could have been the
result of an honest mistake, or of divergent interpretations of doubtful legal
provisions. If any fault is to be imputed to a party taking such course of
action, part of the blame should be placed on the court which shall entertain
the suit, thereby lulling the parties into believing that they pursued their
Page 90 of 169
remedies in the correct forum. Under the rules, it is the duty of the court to
dismiss an action 'whenever it appears that the court has no jurisdiction over the
subject matter.' (Sec. 2, Rule 9, Rules of Court) Should the Court render a
judgment without jurisdiction, such judgment may be impeached or annulled for
lack of jurisdiction (Sec. 30, Rule 132, Ibid), within ten (10) years from the
finality of the same. [Emphasis ours.] 24
Indeed, "...the trial court was duty-bound to take judicial notice of the parameters of its
jurisdiction and its failure to do so, makes its decision a 'lawless' thing."25
Since a decision of a court without jurisdiction is null and void, it could logically never
become final and executory, hence appeal therefrom by writ of error would be out of the
question. Resort by private respondent to a petition for certiorari before the Court of
Appeals was in order .
In holding that estoppel did not prevent private respondent from questioning the RTC's
jurisdiction, the appellate court reiterated the doctrine that estoppel must be applied only in
exceptional cases, as its misapplication could result in a miscarriage of justice. Here, we
find that petitioner, who claims ownership of a parcel of land, filed his complaint before a
court without appropriate jurisdiction. Defendant, a farmer whose tenancy status is still
pending before the proper administrative agency concerned, could have moved for
dismissal of the case on jurisdictional grounds. But the farmer as defendant therein could
not be expected to know the nuances of jurisdiction and related issues. This farmer, who is
now the private respondent, ought not to be penalized when he claims that he made an
honest mistake when he initially submitted his motions before the RTC, before he realized
that the controversy was outside the RTC's cognizance but within the jurisdiction of the
municipal trial court. To hold him in estoppel as the RTC did would amount to foreclosing
his avenue to obtain a proper resolution of his case. Furthermore, if the RTC's order were to
be sustained, he would be evicted from the land prematurely, while RED Conflict Case
No.1029 would remain unresolved. Such eviction on a technicality if allowed could result
in an injustice, if it is later found that he has a legal right to till the land he now occupies as
tenant-lessee.1âwphi1.nêt
Having determined that there was no grave abuse of discretion by the appellate court in
ruling that private respondent was not estopped from questioning the jurisdiction of the
RTC, we need not tarry to consider in detail the second issue. Suffice it to say that, given
the circumstances in this case, no error was committed on this score by respondent
appellate court. Since the RTC had no jurisdiction over the case, private respondent had
justifiable reason in law not to file an answer, aside from the fact that he believed the suit
was properly his landlord's concern.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
WHEREFORE, the petition is DISMISSED. The assailed decision of the Court of
Appeals is AFFIRMED. The decision of the Regional Trial Court in Civil Case No.1075
entitled Gabriel L. Duero vs. Bernardo Eradel, its Order that private respondent turn over
the disputed land to petitioner, and the Writ of Execution it issued, are ANNULLED and
SET ASIDE. Costs against petitioner .
SO ORDERED.
G.R. No. 75919 May 7, 1987
MANCHESTER DEVELOPMENT CORPORATION, ET AL., petitioners,
vs.
COURT OF APPEALS, CITY LAND DEVELOPMENT CORPORATION,
STEPHEN ROXAS, ANDREW LUISON, GRACE LUISON and JOSE DE
MAISIP, respondents.
Tanjuatco, Oreta and Tanjuatco for petitioners.
Pecabar Law Offices for private respondents.
RESOLUTION
GANCAYCO, J.:
Acting on the motion for reconsideration of the resolution of the Second Division of
January 28,1987 and another motion to refer the case to and to be heard in oral argument by
the Court En Banc filed by petitioners, the motion to refer the case to the Court en banc is
granted but the motion to set the case for oral argument is denied.
Petitioners in support of their contention that the filing fee must be assessed on the basis of
the amended complaint cite the case of Magaspi vs. Ramolete. 1 They contend that the
Court of Appeals erred in that the filing fee should be levied by considering the amount of
damages sought in the original complaint.
The environmental facts of said case differ from the present in that —
Page 91 of 169
1. The Magaspi case was an action for recovery of ownership and possession of a parcel of
land with damages.2 While the present case is an action for torts and damages and specific
performance with prayer for temporary restraining order, etc.3
2. In the Magaspi case, the prayer in the complaint seeks not only the annulment of title of
the defendant to the property, the declaration of ownership and delivery of possession
thereof to plaintiffs but also asks for the payment of actual moral, exemplary damages and
attorney's fees arising therefrom in the amounts specified therein. 4 However, in the present
case, the prayer is for the issuance of a writ of preliminary prohibitory injunction during the
pendency of the action against the defendants' announced forfeiture of the sum of P3
Million paid by the plaintiffs for the property in question, to attach such property of
defendants that maybe sufficient to satisfy any judgment that maybe rendered, and after
hearing, to order defendants to execute a contract of purchase and sale of the subject
property and annul defendants' illegal forfeiture of the money of plaintiff, ordering
defendants jointly and severally to pay plaintiff actual, compensatory and exemplary
damages as well as 25% of said amounts as maybe proved during the trial as attorney's fees
and declaring the tender of payment of the purchase price of plaintiff valid and producing
the effect of payment and to make the injunction permanent. The amount of damages
sought is not specified in the prayer although the body of the complaint alleges the total
amount of over P78 Million as damages suffered by plaintiff.5
3. Upon the filing of the complaint there was an honest difference of opinion as to the
nature of the action in the Magaspi case. The complaint was considered as primarily an
action for recovery of ownership and possession of a parcel of land. The damages stated
were treated as merely to the main cause of action. Thus, the docket fee of only P60.00 and
P10.00 for the sheriff's fee were paid. 6
In the present case there can be no such honest difference of opinion. As maybe gleaned
from the allegations of the complaint as well as the designation thereof, it is both an action
for damages and specific performance. The docket fee paid upon filing of complaint in the
amount only of P410.00 by considering the action to be merely one for specific
performance where the amount involved is not capable of pecuniary estimation is obviously
erroneous. Although the total amount of damages sought is not stated in the prayer of the
complaint yet it is spelled out in the body of the complaint totalling in the amount of
P78,750,000.00 which should be the basis of assessment of the filing fee.
4. When this under-re assessment of the filing fee in this case was brought to the attention
of this Court together with similar other cases an investigation was immediately ordered by
the Court. Meanwhile plaintiff through another counsel with leave of court filed an
amended complaint on September 12, 1985 for the inclusion of Philips Wire and Cable
Corporation as co-plaintiff and by emanating any mention of the amount of damages in the
body of the complaint. The prayer in the original complaint was maintained. After this
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Court issued an order on October 15, 1985 ordering the re- assessment of the docket fee in
the present case and other cases that were investigated, on November 12, 1985 the trial
court directed plaintiffs to rectify the amended complaint by stating the amounts which
they are asking for. It was only then that plaintiffs specified the amount of damages in the
body of the complaint in the reduced amount of P10,000,000.00. 7 Still no amount of
damages were specified in the prayer. Said amended complaint was admitted.
On the other hand, in the Magaspi case, the trial court ordered the plaintiffs to pay the
amount of P3,104.00 as filing fee covering the damages alleged in the original complaint as
it did not consider the damages to be merely an or incidental to the action for recovery of
ownership and possession of real property. 8 An amended complaint was filed by plaintiff
with leave of court to include the government of the Republic as defendant and reducing
the amount of damages, and attorney's fees prayed for to P100,000.00. Said amended
complaint was also admitted. 9
In the Magaspi case, the action was considered not only one for recovery of ownership but
also for damages, so that the filing fee for the damages should be the basis of assessment.
Although the payment of the docketing fee of P60.00 was found to be insufficient,
nevertheless, it was held that since the payment was the result of an "honest difference of
opinion as to the correct amount to be paid as docket fee" the court "had acquired
jurisdiction over the case and the proceedings thereafter had were proper and
regular." 10 Hence, as the amended complaint superseded the original complaint, the
allegations of damages in the amended complaint should be the basis of the computation of
the filing fee. 11
In the present case no such honest difference of opinion was possible as the allegations of
the complaint, the designation and the prayer show clearly that it is an action for damages
and specific performance. The docketing fee should be assessed by considering the amount
of damages as alleged in the original complaint.
As reiterated in the Magaspi case the rule is well-settled "that a case is deemed filed only
upon payment of the docket fee regardless of the actual date of filing in court . 12 Thus, in
the present case the trial court did not acquire jurisdiction over the case by the payment of
only P410.00 as docket fee. Neither can the amendment of the complaint thereby vest
jurisdiction upon the Court. 13 For an legal purposes there is no such original complaint
that was duly filed which could be amended. Consequently, the order admitting the
amended complaint and all subsequent proceedings and actions taken by the trial court are
null and void.
Page 92 of 169
The Court of Appeals therefore, aptly ruled in the present case that the basis of assessment
of the docket fee should be the amount of damages sought in the original complaint and not
in the amended complaint.
The Court cannot close this case without making the observation that it frowns at the
practice of counsel who filed the original complaint in this case of omitting any
specification of the amount of damages in the prayer although the amount of over P78
million is alleged in the body of the complaint. This is clearly intended for no other purpose
than to evade the payment of the correct filing fees if not to mislead the docket clerk in the
assessment of the filing fee. This fraudulent practice was compounded when, even as this
Court had taken cognizance of the anomaly and ordered an investigation, petitioner through
another counsel filed an amended complaint, deleting all mention of the amount of
damages being asked for in the body of the complaint. It was only when in obedience to the
order of this Court of October 18, 1985, the trial court directed that the amount of damages
be specified in the amended complaint, that petitioners' counsel wrote the damages sought
in the much reduced amount of P10,000,000.00 in the body of the complaint but not in the
prayer thereof. The design to avoid payment of the required docket fee is obvious.
The Court serves warning that it will take drastic action upon a repetition of this unethical
practice.
To put a stop to this irregularity, henceforth all complaints, petitions, answers and other
similar pleadings should specify the amount of damages being prayed for not only in the
body of the pleading but also in the prayer, and said damages shall be considered in the
assessment of the filing fees in any case. Any pleading that fails to comply with this
requirement shall not bib accepted nor admitted, or shall otherwise be expunged from the
record.
The Court acquires jurisdiction over any case only upon the payment of the prescribed
docket fee. An amendment of the complaint or similar pleading will not thereby vest
jurisdiction in the Court, much less the payment of the docket fee based on the amounts
sought in the amended pleading. The ruling in the Magaspi case 14 in so far as it is
inconsistent with this pronouncement is overturned and reversed.
WHEREFORE, the motion for reconsideration is denied for lack of merit.
SO ORDERED.
G.R. Nos. 79937-38 February 13, 1989
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
SUN INSURANCE OFFICE, LTD., (SIOL), E.B. PHILIPPS and D.J.
WARBY, petitioners,
vs.
HON. MAXIMIANO C. ASUNCION, Presiding Judge, Branch 104, Regional Trial
Court, Quezon City and MANUEL CHUA UY PO TIONG, respondents.
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles Law Offices for petitioners.
Tanjuatco, Oreta, Tanjuatco, Berenguer & Sanvicente Law Offices for private respondent.
GANCAYCO, J.:
Again the Court is asked to resolve the issue of whether or not a court acquires jurisdiction
over a case when the correct and proper docket fee has not been paid.
On February 28, 1984, petitioner Sun Insurance Office, Ltd. (SIOL for brevity) filed a
complaint with the Regional Trial Court of Makati, Metro Manila for the consignation of a
premium refund on a fire insurance policy with a prayer for the judicial declaration of its
nullity against private respondent Manuel Uy Po Tiong. Private respondent as declared in
default for failure to file the required answer within the reglementary period.
On the other hand, on March 28, 1984, private respondent filed a complaint in the Regional
Trial Court of Quezon City for the refund of premiums and the issuance of a writ of
preliminary attachment which was docketed as Civil Case No. Q-41177, initially against
petitioner SIOL, and thereafter including E.B. Philipps and D.J. Warby as additional
defendants. The complaint sought, among others, the payment of actual, compensatory,
moral, exemplary and liquidated damages, attorney's fees, expenses of litigation and costs
of the suit. Although the prayer in the complaint did not quantify the amount of damages
sought said amount may be inferred from the body of the complaint to be about Fifty
Million Pesos (P50,000,000.00).
Only the amount of P210.00 was paid by private respondent as docket fee which prompted
petitioners' counsel to raise his objection. Said objection was disregarded by respondent
Judge Jose P. Castro who was then presiding over said case. Upon the order of this Court,
the records of said case together with twenty-two other cases assigned to different branches
of the Regional Trial Court of Quezon City which were under investigation for under-
assessment of docket fees were transmitted to this Court. The Court thereafter returned the
said records to the trial court with the directive that they be re-raffled to the other judges in
Quezon City, to the exclusion of Judge Castro. Civil Case No. Q-41177 was re-raffled to
Branch 104, a sala which was then vacant.
Page 93 of 169
On October 15, 1985, the Court en banc issued a Resolution in Administrative Case No.
85-10-8752-RTC directing the judges in said cases to reassess the docket fees and that in
case of deficiency, to order its payment. The Resolution also requires all clerks of court to
issue certificates of re-assessment of docket fees. All litigants were likewise required to
specify in their pleadings the amount sought to be recovered in their complaints.
On December 16, 1985, Judge Antonio P. Solano, to whose sala Civil Case No. Q-41177
was temporarily assigned, issuedan order to the Clerk of Court instructing him to issue a
certificate of assessment of the docket fee paid by private respondent and, in case of
deficiency, to include the same in said certificate.
On January 7, 1984, to forestall a default, a cautionary answer was filed by petitioners. On
August 30,1984, an amended complaint was filed by private respondent including the two
additional defendants aforestated.
Judge Maximiano C. Asuncion, to whom Civil Case No. Q41177 was thereafter assigned,
after his assumption into office on January 16, 1986, issued a Supplemental Order requiring
the parties in the case to comment on the Clerk of Court's letter-report signifying her
difficulty in complying with the Resolution of this Court of October 15, 1985 since the
pleadings filed by private respondent did not indicate the exact amount sought to be
recovered. On January 23, 1986, private respondent filed a "Compliance" and a "Re-
Amended Complaint" stating therein a claim of "not less than Pl0,000,000. 00 as actual
compensatory damages" in the prayer. In the body of the said second amended complaint
however, private respondent alleges actual and compensatory damages and attorney's fees
in the total amount of about P44,601,623.70.
On January 24, 1986, Judge Asuncion issued another Order admitting the second amended
complaint and stating therein that the same constituted proper compliance with the
Resolution of this Court and that a copy thereof should be furnished the Clerk of Court for
the reassessment of the docket fees. The reassessment by the Clerk of Court based on
private respondent's claim of "not less than P10,000,000.00 as actual and compensatory
damages" amounted to P39,786.00 as docket fee. This was subsequently paid by private
respondent.
Petitioners then filed a petition for certiorari with the Court of Appeals questioning the said
order of Judie Asuncion dated January 24, 1986.
On April 24, 1986, private respondent filed a supplemental complaint alleging an additional
claim of P20,000,000.00 as d.qmages so the total claim amounts to about P64,601,623.70.
On October 16, 1986, or some seven months after filing the supplemental complaint, the
private respondent paid the additional docket fee of P80,396.00. 1
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
On August 13, 1987, the Court of Appeals rendered a decision ruling, among others, as
follows:
WHEREFORE, judgment is hereby rendered:
1. Denying due course to the petition in CA-G.R. SP No. 1, 09715
insofar as it seeks annulment of the order
(a) denying petitioners' motion to dismiss the complaint, as amended,
and
(b) granting the writ of preliminary attachment, but giving due course
to the portion thereof questioning the reassessment of the docketing
fee, and requiring the Honorable respondent Court to reassess the
docketing fee to be paid by private respondent on the basis of the
amount of P25,401,707.00. 2
Hence, the instant petition.
During the pendency of this petition and in conformity with the said judgment of
respondent court, private respondent paid the additional docket fee of P62,432.90 on April
28, 1988. 3
The main thrust of the petition is that the Court of Appeals erred in not finding that the
lower court did not acquire jurisdiction over Civil Case No. Q-41177 on the ground of
nonpayment of the correct and proper docket fee. Petitioners allege that while it may be
true that private respondent had paid the amount of P182,824.90 as docket fee as herein-
above related, and considering that the total amount sought to be recovered in the amended
and supplemental complaint is P64,601,623.70 the docket fee that should be paid by private
respondent is P257,810.49, more or less. Not having paid the same, petitioners contend that
the complaint should be dismissed and all incidents arising therefrom should be annulled.
In support of their theory, petitioners cite the latest ruling of the Court in Manchester
Development Corporation vs. CA, 4 as follows:
The Court acquires jurisdiction over any case only upon the payment of
the prescribed docket fee. An amendment of the complaint or similar
pleading will not thereby vest jurisdiction in the Court, much less the
payment of the docket fee based on the amounts sought in the amended
pleading. The ruling in the Magaspi Case in so far as it is inconsistent
with this pronouncement is overturned and reversed.
Page 94 of 169
On the other hand, private respondent claims that the ruling in Manchester cannot apply
retroactively to Civil Case No. Q41177 for at the time said civil case was filed in court
there was no such Manchester ruling as yet. Further, private respondent avers that what is
applicable is the ruling of this Court in Magaspi v. Ramolete, 5 wherein this Court held that
the trial court acquired jurisdiction over the case even if the docket fee paid was
insufficient.
The contention that Manchester cannot apply retroactively to this case is untenable.
Statutes regulating the procedure of the courts will be construed as applicable to actions
pending and undetermined at the time of their passage. Procedural laws are retrospective in
that sense and to that extent. 6
In Lazaro vs. Endencia and Andres, 7 this Court held that the payment of the full amount of
the docket fee is an indispensable step for the perfection of an appeal. In a forcible entry
and detainer case before the justice of the peace court of Manaoag, Pangasinan, after notice
of a judgment dismissing the case, the plaintiff filed a notice of appeal with said court but
he deposited only P8.00 for the docket fee, instead of P16.00 as required, within the
reglementary period of appeal of five (5) days after receiving notice of judgment. Plaintiff
deposited the additional P8.00 to complete the amount of the docket fee only fourteen (14)
days later. On the basis of these facts, this court held that the Court of First Instance did
notacquire jurisdiction to hear and determine the appeal as the appeal was not thereby
perfected.
In Lee vs. Republic, 8 the petitioner filed a verified declaration of intention to become a
Filipino citizen by sending it through registered mail to the Office of the Solicitor General
in 1953 but the required filing fee was paid only in 1956, barely 5V2 months prior to the
filing of the petition for citizenship. This Court ruled that the declaration was not filed in
accordance with the legal requirement that such declaration should be filed at least one year
before the filing of the petition for citizenship. Citing Lazaro, this Court concluded that the
filing of petitioner's declaration of intention on October 23, 1953 produced no legal effect
until the required filing fee was paid on May 23, 1956.
In Malimit vs. Degamo, 9 the same principles enunciated in Lazaro and Lee were applied. It
was an original petition for quo warranto contesting the right to office of proclaimed
candidates which was mailed, addressed to the clerk of the Court of First Instance, within
the one-week period after the proclamation as provided therefor by law.10 However, the
required docket fees were paid only after the expiration of said period. Consequently, this
Court held that the date of such payment must be deemed to be the real date of filing of
aforesaid petition and not the date when it was mailed.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Again, in Garica vs, Vasquez, 11 this Court reiterated the rule that the docket fee must be
paid before a court will act on a petition or complaint. However, we also held that said rule
is not applicable when petitioner seeks the probate of several wills of the same decedent as
he is not required to file a separate action for each will but instead he may have other wills
probated in the same special proceeding then pending before the same court.
Then in Magaspi, 12 this Court reiterated the ruling in Malimit and Lee that a case is
deemed filed only upon payment of the docket fee regardless of the actual date of its filing
in court. Said case involved a complaint for recovery of ownership and possession of a
parcel of land with damages filed in the Court of First Instance of Cebu. Upon the payment
of P60.00 for the docket fee and P10.00 for the sheriffs fee, the complaint was docketed as
Civil Case No. R-11882. The prayer of the complaint sought that the Transfer Certificate of
Title issued in the name of the defendant be declared as null and void. It was also prayed
that plaintiff be declared as owner thereof to whom the proper title should be issued, and
that defendant be made to pay monthly rentals of P3,500.00 from June 2, 1948 up to the
time the property is delivered to plaintiff, P500,000.00 as moral damages, attorney's fees in
the amount of P250,000.00, the costs of the action and exemplary damages in the amount
of P500,000.00.
The defendant then filed a motion to compel the plaintiff to pay the correct amount of the
docket fee to which an opposition was filed by the plaintiff alleging that the action was for
the recovery of a parcel of land so the docket fee must be based on its assessed value and
that the amount of P60.00 was the correct docketing fee. The trial court ordered the
plaintiff to pay P3,104.00 as filing fee.
The plaintiff then filed a motion to admit the amended complaint to include the Republic as
the defendant. In the prayer of the amended complaint the exemplary damages earlier
sought was eliminated. The amended prayer merely sought moral damages as the court may
determine, attorney's fees of P100,000.00 and the costs of the action. The defendant filed
an opposition to the amended complaint. The opposition notwithstanding, the amended
complaint was admitted by the trial court. The trial court reiterated its order for the
payment of the additional docket fee which plaintiff assailed and then challenged before
this Court. Plaintiff alleged that he paid the total docket fee in the amount of P60.00 and
that if he has to pay the additional fee it must be based on the amended complaint.
The question posed, therefore, was whether or not the plaintiff may be considered to have
filed the case even if the docketing fee paid was not sufficient. In Magaspi, We reiterated
the rule that the case was deemed filed only upon the payment of the correct amount for the
docket fee regardless of the actual date of the filing of the complaint; that there was an
honest difference of opinion as to the correct amount to be paid as docket fee in that as the
action appears to be one for the recovery of property the docket fee of P60.00 was correct;
and that as the action is also one, for damages, We upheld the assessment of the additional
Page 95 of 169
docket fee based on the damages alleged in the amended complaint as against the
assessment of the trial court which was based on the damages alleged in the original
complaint.
However, as aforecited, this Court
overturned Magaspi in Manchester. Manchester involves an action for torts and damages
and specific performance with a prayer for the issuance of a temporary restraining order,
etc. The prayer in said case is for the issuance of a writ of preliminary prohibitory
injunction during the pendency of the action against the defendants' announced forfeiture of
the sum of P3 Million paid by the plaintiffs for the property in question, the attachment of
such property of defendants that may be sufficient to satisfy any judgment that may be
rendered, and, after hearing, the issuance of an order requiring defendants to execute a
contract of purchase and sale of the subject property and annul defendants' illegal forfeiture
of the money of plaintiff. It was also prayed that the defendants be made to pay the plaintiff
jointly and severally, actual, compensatory and exemplary damages as well as 25% of said
amounts as may be proved during the trial for attorney's fees. The plaintiff also asked the
trial court to declare the tender of payment of the purchase price of plaintiff valid and
sufficient for purposes of payment, and to make the injunction permanent. The amount of
damages sought is not specified in the prayer although the body of the complaint alleges
the total amount of over P78 Millon allegedly suffered by plaintiff.
Upon the filing of the complaint, the plaintiff paid the amount of only P410.00 for the
docket fee based on the nature of the action for specific performance where the amount
involved is not capable of pecuniary estimation. However, it was obvious from the
allegations of the complaint as well as its designation that the action was one for damages
and specific performance. Thus, this court held the plaintiff must be assessed the correct
docket fee computed against the amount of damages of about P78 Million, although the
same was not spelled out in the prayer of the complaint.
Meanwhile, plaintiff through another counsel, with leave of court, filed an amended
complaint on September 12, 1985 by the inclusion of another co-plaintiff and eliminating
any mention of the amount of damages in the body of the complaint. The prayer in the
original complaint was maintained.
On October 15, 1985, this Court ordered the re-assessment of the docket fee in the said case
and other cases that were investigated. On November 12, 1985, the trial court directed the
plaintiff to rectify the amended complaint by stating the amounts which they were asking
for. This plaintiff did as instructed. In the body of the complaint the amount of damages
alleged was reduced to P10,000,000.00 but still no amount of damages was specified in the
prayer. Said amended complaint was admitted.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Applying the principle in Magaspi that "the case is deemed filed only upon payment of the
docket fee regardless of the actual date of filing in court," this Court held that the trial court
did not acquire jurisdiction over the case by payment of only P410.00 for the docket fee.
Neither can the amendment of the complaint thereby vest jurisdiction upon the Court. For
all legal purposes there was no such original complaint duly filed which could be amended.
Consequently, the order admitting the amended complaint and all subsequent proceedings
and actions taken by the trial court were declared null and void.13
The present case, as above discussed, is among the several cases of under-assessment of
docket fee which were investigated by this Court together with Manchester. The facts and
circumstances of this case are similar to Manchester. In the body of the original complaint,
the total amount of damages sought amounted to about P50 Million. In the prayer, the
amount of damages asked for was not stated. The action was for the refund of the premium
and the issuance of the writ of preliminary attachment with damages. The amount of only
P210.00 was paid for the docket fee. On January 23, 1986, private respondent filed an
amended complaint wherein in the prayer it is asked that he be awarded no less than
P10,000,000.00 as actual and exemplary damages but in the body of the complaint the
amount of his pecuniary claim is approximately P44,601,623.70. Said amended complaint
was admitted and the private respondent was reassessed the additional docket fee of
P39,786.00 based on his prayer of not less than P10,000,000.00 in damages, which he paid.
On April 24, 1986, private respondent filed a supplemental complaint alleging an additional
claim of P20,000,000.00 in damages so that his total claim is approximately
P64,601,620.70. On October 16, 1986, private respondent paid an additional docket fee of
P80,396.00. After the promulgation of the decision of the respondent court on August 31,
1987 wherein private respondent was ordered to be reassessed for additional docket fee,
and during the pendency of this petition, and after the promulgation of Manchester, on
April 28, 1988, private respondent paid an additional docket fee of P62,132.92. Although
private respondent appears to have paid a total amount of P182,824.90 for the docket fee
considering the total amount of his claim in the amended and supplemental complaint
amounting to about P64,601,620.70, petitioner insists that private respondent must pay a
docket fee of P257,810.49.
The principle in Manchester could very well be applied in the present case. The pattern and
the intent to defraud the government of the docket fee due it is obvious not only in the
filing of the original complaint but also in the filing of the second amended complaint.
However, in Manchester, petitioner did not pay any additional docket fee until] the case
was decided by this Court on May 7, 1987. Thus, in Manchester, due to the fraud
committed on the government, this Court held that the court a quo did not acquire
jurisdiction over the case and that the amended complaint could not have been admitted
inasmuch as the original complaint was null and void.
Page 96 of 169
In the present case, a more liberal interpretation of the rules is called for considering that,
unlike Manchester, private respondent demonstrated his willingness to abide by the rules
by paying the additional docket fees as required. The promulgation of the decision in
Manchester must have had that sobering influence on private respondent who thus paid the
additional docket fee as ordered by the respondent court. It triggered his change of stance
by manifesting his willingness to pay such additional docket fee as may be ordered.
Nevertheless, petitioners contend that the docket fee that was paid is still insufficient
considering the total amount of the claim. This is a matter which the clerk of court of the
lower court and/or his duly authorized docket clerk or clerk in-charge should determine
and, thereafter, if any amount is found due, he must require the private respondent to pay
the same.
Thus, the Court rules as follows:
1. It is not simply the filing of the complaint or appropriate initiatory pleading, but the
payment of the prescribed docket fee, that vests a trial court with jurisdiction over the
subject matter or nature of the action. Where the filing of the initiatory pleading is not
accompanied by payment of the docket fee, the court may allow payment of the fee within
a reasonable time but in no case beyond the applicable prescriptive or reglementary period.
2. The same rule applies to permissive counterclaims, third party claims and similar
pleadings, which shall not be considered filed until and unless the filing fee prescribed
therefor is paid. The court may also allow payment of said fee within a reasonable time but
also in no case beyond its applicable prescriptive or reglementary period.
3. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate
pleading and payment of the prescribed filing fee but, subsequently, the judgment awards a
claim not specified in the pleading, or if specified the same has been left for determination
by the court, the additional filing fee therefor shall constitute a lien on the judgment. It shall
be the responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien
and assess and collect the additional fee.
WHEREFORE, the petition is DISMISSED for lack of merit. The Clerk of Court of the
court a quo is hereby instructed to reassess and determine the additional filing fee that
should be paid by private respondent considering the total amount of the claim sought in
the original complaint and the supplemental complaint as may be gleaned from the
allegations and the prayer thereof and to require private respondent to pay the deficiency, if
any, without pronouncement as to costs.
SO ORDERED.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
THIRD DIVISION
[G.R. NO. 171532 : August 7, 2007]
UNITED OVERSEAS BANK (formerly WESTMONT BANK), Petitioner, v. HON.
JUDGE REYNALDO ROS, Presiding Judge of the Regional Trial Court of Manila,
Branch 33, and ROSEMOOR MINING AND DEVELOPMENT
CORPORATION, Respondents.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules
of Court, filed by petitioner United Overseas Bank, seeking the reversal and the setting
aside of the Decision1 dated 19 April 2005, and the Resolution2 dated 13 February 2006 of
the Court of Appeals in CA-G.R. SP No. 82626. The appellate court, in its assailed
Decision and Resolution affirmed the Order of the Regional Trial Court (RTC) of Manila,
Branch 33, denying the Motion to Dismiss Civil Case No. 98-90089 filed by petitioner on
the ground of estoppel.
Petitioner is a banking institution duly authorized as such under Philippine laws. 3
Private respondent Rosemoor Mining and Development Corporation, on the other hand, is a
domestic corporation likewise duly authorized by the Philippine laws to engage in mining
operation.4
On 5 August 1998, private respondent filed an action for damages, accounting, release of
the balance of the loan and machinery and annulment of foreclosure sale against petitioner
before the RTC of Manila, Branch 33. The case was docketed as Civil Case No. 98-90089.5
In its Complaint,6 private respondent alleged that it obtained a loan from petitioner in the
amount of P80,000,000.00 in order to raise the needed capital for the importation of
machineries necessary for its operation. The said loan was secured by two Real Estate
Mortgage Contracts over several parcels of land situated in the Provinces of Bulacan and
Nueva Ecija.
The arrangement agreed to by the parties was for the petitioner to handle on behalf of the
private respondent the amount of P50,000,000.00 while the loan balance of P30,000,000.00
will be released by petitioner to private respondent as a revolving credit line. Petitioner,
Page 97 of 169
however, allegedly mishandled the proceeds of the loan causing serious financial injury to
private respondent.
On 10 August 1998, petitioner filed an Urgent Motion to Dismiss7 the private respondent's
complaint on the ground of improper venue since the said complaint included the prayer for
the nullification of the foreclosure of real estate mortgage, a real action which must be
lodged before the RTC of the place where the property or one of the properties is situated.
Consequently, the private respondent amended its Complaint, this time praying for
Accounting, Release of the Balance of the Loan and Damages.
In resolving petitioner's Urgent Motion to Dismiss, the RTC of Manila issued an Omnibus
Resolution8 on 24 January 2000 denying the same for lack of merit. Petitioner timely
interposed a Motion for Reconsideration9 but it was also denied by the lower court in an
Order10 dated 29 May 2000.
On 11 November 1999, private respondent filed a Second Amended Complaint, dropping
Lourdes Pascual as plaintiff and impleaded the officers of the petitioners namely, Florido
Casuela, Rolando Castro, Avelina de la Cruz and Proserfina Cruz, as defendants.
Subsequently, petitioner filed its Answer with Counterclaim. 11 After the pre-trial was
conducted, trial on the merits ensued.
On 11 March 2002, private respondent filed another action for Injunction with Damages
before the RTC of Malolos, Bulacan docketed as Civil Case No. 275-M-2002.12
The filing of the above mentioned case prompted the petitioner to file a second Motion to
Dismiss13 Civil Case No. 98-90089, before the RTC of Manila on the ground of forum
shopping. In an Order14 dated 23 October 2002, the Manila RTC denied the second Motion
to Dismiss for lack or merit. The subsequent Motion for Reconsideration 15 filed by the
petitioner was also denied for the arguments raised therein were merely a rehash of the
issues already raised and considered by the lower court. 16
On 29 September 2003, a third Motion to Dismiss Civil Case No. 98-90089 was filed by
the petitioner with the Manila RTC this time raising the issue of jurisdiction. In its latest
Motion to Dismiss, petitioner claimed that private respondent failed to specify the amount
of damages, either in the body or the prayer of its Second Amended Complaint, in order to
evade the payment of the docket fees. As a result, the Manila RTC cannot acquire
jurisdiction over the main action, which should be dismissed.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
On 16 October 2003, the Manila RTC denied petitioner's third Motion to Dismiss Civil
Case No. 98-90089 on the ground that petitioner was already estopped to raise the issue.
Having participated in several stages of the proceedings, and having invoked the authority
of the court by seeking an affirmative relief therefrom through the filing of the Answer
with Counterclaim, petitioner was now barred from assailing the authority of the Court to
hear and decide the case.17 The dispositive portion of the Order of the Manila RTC dated
16 October 2003 thus reads:
WHEREFORE, the motion to dismiss is DENIED on the ground of estoppel.
Similarly ill-fated was petitioner's motion for reconsideration of the foregoing Order which
was denied by the RTC in another Order dated 5 January 2004. 18
Aggrieved, petitioner filed a Petition for Certiorari19 before the Court of Appeals, alleging
that the Manila RTC acted with grave abuse of discretion amounting to lack or excess of
jurisdiction in issuing the Orders dated 16 October 2003 and 5 January 2004.
In a Decision20 promulgated on 19 April 2005, the Court of Appeals affirmed the Manila
RTC Orders dated 16 October 2003 and 5 January 2004 and upheld the latter's finding that
petitioner was now barred from questioning the jurisdiction of the lower court after it had
participated in several stages of the proceedings therein including the presentation of its
witness. In addition, the appellate court declared that an interlocutory order, such as an
Order denying the Motion to Dismiss, cannot be the subject of the extraordinary remedy
of certiorari, save on well-recognized exceptions, which were wanting in the instant case.
The Court of Appeals likewise denied petitioner's Motion for Reconsideration, since the
arguments raised therein were mere reiterations of those already considered and passed
upon by the appellate court.21
Undaunted, petitioner filed this instant Petition for Review on Certiorari22 before this
Court, alleging that the Decision and Resolution of the Court of Appeals denying its
Petition for Certiorari are contrary to law.
For the resolution of this Court then are the following issues:
I. WHETHER OR NOT THE COURT OF APPEALS ERRED IN DENYING THE
PETITION FOR CERTIORARI FILED BY THE PETITIONER.
II. WHETHER OR NOT THE PETITIONER IS BARRED BY LACHES FROM
QUESTIONING THE RTC's JURISDICTION.
Page 98 of 169
III. WHETHER OR NOT THE FAILURE OF THE PRIVATE RESPONDENT TO PAY
THE DOCKET FEES WARRANTS THE DISMISSAL OF THE INSTANT CASE.
Petitioner asserts that the appellate court committed an error of law in dismissing its
petition for certiorari and affirming the Orders dated 16 October 2003 and 5 January 2004
of the RTC. It argues that the private respondent's attempted subterfuge, i.e., failing to state
the amount of damages being claimed and to pay the corresponding docket fees, warrant
the penalty of dismissal of its case.
At the outset, attention must be called to Section 1, Rule 41 of the 1997 Revised Rules of
Civil Procedure, to wit:
SECTION 1. Subject of appeal. - 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.
No appeal may be taken from:
(a) An order denying a motion for new trial or reconsideration;
(b) An order denying a petition for relief or any similar motion seeking relief from
judgment;
(c) An interlocutory order;
(d) An order disallowing or dismissing an appeal;
(e) An order denying a motion to set aside a judgment by consent, confession or
compromise on the ground of fraud, mistake or duress, or any other ground vitiating
consent;
(f) An order of execution;
(g) A judgment or final order for or against one or more of several parties or in separate
claims, counterclaims, crossclaims and third-party complaints, while the main case is
pending, unless the court allows an appeal therefrom; andcralawlibrary
(h) An order dismissing an action without prejudice;
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
In all the above instances where the judgment or final order is not appealable, the aggrieved
party may file an appropriate special civil action under Rule 65. (Emphasis provided.)
Based on the foregoing, it is clear that no appeal, under Rule 45 of the Revised Rules of
Court, may be taken from an interlocutory order. In case of denial of an interlocutory order,
the immediate remedy available to the aggrieved party is to file an appropriate Special Civil
Action for Certiorari under Rule 65 of the Revised Rules of Court.
The word interlocutory refers to something intervening between the commencement and
the end of the suit which decides some point or matter but is not a final decision of the
whole controversy.23 This Court had the occasion to distinguish a final order or resolution
from an interlocutory one in the case of Investments, Inc. v. Court of Appeals, thus:
x x x A "final" judgment or order is one that finally disposes of a case, leaving nothing
more to be done by the Court in respect thereto, e.g., an adjudication on the merits which,
on the basis of the evidence presented on the trial, declares categorically what the rights
and obligations of the parties are and which party is in the right; or a judgment or order that
dismisses an action on the ground, for instance, of res judicata or prescription. Once
rendered, the task of the Court is ended, as far as deciding the controversy or determining
the rights and liabilities of the litigants is concerned. Nothing more remains to be done by
the Court except to await the parties' next move (which among others, may consist of the
filing of a motion for new trial or reconsideration, or the taking of an appeal) and
ultimately, of course, to cause the execution of the judgment once it becomes "final" or, to
use the established and more distinctive term, "final and executory."
xxx
Conversely, an order that does not finally dispose of the case, and does not end the Court's
task of adjudicating the parties' contentions and determining their rights and liabilities as
regards each other, but obviously indicates that other things remain to be done by the
Court, is "interlocutory" e.g., an order denying motion to dismiss under Rule 16 of the
Rules, or granting of motion on extension of time to file a pleading, or authorizing
amendment thereof, or granting or denying applications for postponement, or production or
inspection of documents or things, etc. Unlike a "final" judgment or order, which is
appealable, as above pointed out, an "interlocutory" order may not be questioned on appeal
except only as part of an appeal that may eventually be taken from the final judgment
rendered in the case.24
Since an Order denying a Motion to Dismiss does not finally dispose of the case, and in
effect, allows the case to proceed until the final adjudication thereof by the court, then such
order is merely interlocutory in nature.
Page 99 of 169
In affirming the interlocutory nature of an order denying a motion to dismiss, the Court
thus categorically declares in Españo v. Court of Appeals25 :
We find occasion here to state the rule, once more, that an order denying a motion to
dismiss is merely interlocutory and therefore not appealable, nor can it be subject of a
Petition for Review on Certiorari . Such order 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
that event is to file an answer, go to trial, and if the decision is adverse, reiterate the issue
on appeal from the final judgment.
Indubitably, the Order of the RTC dated 16 October 2003 is merely an interlocutory order
which cannot be made the subject of appeal or certiorari .
This rule is founded on considerations of orderly procedure, to forestall useless appeals and
avoid undue inconvenience to the appealing party by having to assail orders as they are
promulgated by the court, when all such orders may be contested in a single appeal. 26 To
allow appeals from interlocutory orders would result in the "sorry spectacle" of a case
being a subject of a counter-productive ping-pong to and from the trial court, as often as the
trial court is perceived to have made an error in any of its interlocutory resolutions. 27
In Sitchon v. Sheriff of Occidental Negros,28 this Court reiterated the rationale for this rule:
The reason of the law in permitting appeal only from a final order or judgment, and not
from interlocutory or incidental one, is to avoid multiplicity of appeals in a single action,
which must necessarily suspend the hearing and decision on the merits of the case during
the pendency of the appeal. If such appeal were allowed the trial on the merits of the case
should necessarily be delayed for a considerable length of time, and compel the adverse
party to incur unnecessary expenses; for one of the parties may interpose as many appeals
as incidental questions may be raised by him and interlocutory orders rendered or issued by
the lower court.
However, the aggrieved party is not without remedy under the law after his Motion to
Dismiss the case was denied by the lower court. As stated above, the aggrieved party may
wait for the court a quo to render a judgment or decision and reiterate such interlocutory
order as an error of the court on appeal.29
In underscoring this remedy, we further ruled in Espaňo v. Court of Appeals30 :
We find the occasion here to state the rule, once more, that an order denying a motion to
dismiss is merely interlocutory and therefore not appealable, nor can it be the subject of a
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Petition for Review on Certiorari . Such order may only be reviewed in the ordinary course
of law by an appeal from the judgment after the trial. The ordinary procedure to be
followed in that event is to file an answer, go to trial, and if the decision is adverse,
reiterate the issue on appeal from the final judgment.
In J.L. Bernardo Construction v. Court of Appeals,31 this Court also prescribed an
alternative remedy to be taken from an order denying a motion to dismiss:
As a general rule, an interlocutory order is not appealable until after the rendition of the
judgment on the merits for a contrary rule would delay the administration of justice and
unduly burden the courts. However, we have ruled that certiorari is an appropriate remedy
to assail an interlocutory order (1) when the tribunal issued such order without or in excess
of jurisdiction or with grave abuse jurisdiction and (2) when the assailed interlocutory order
is patently erroneous and the remedy of appeal would not afford adequate and expeditious
relief.
Since the aggrieved party did not wait for the final determination of Civil Case No. 98-
90089 from which he could appeal, but opted to assail the Manila RTC Order dated 16
October 2003 through a Petition for Certiorari before the Court of Appeals, it is imperative
upon this Court to determine whether the prerequisites prescribed in the J.L. Bernardo
Construction for initiating an original action for certiorari are attendant in the case at bar.
This Court must thus address the issue of whether the Manila RTC in issuing its 16 October
2003 Order gravely abused its discretion.
The Manila RTC grounded its Order dated 16 October 2003, denying petitioner's Motion to
Dismiss on estoppel, rationating in this wise:
This Court would have agreed with the [petitioner] had this question been raised earlier.
The Court notes that this motion was filed at the time when the [petitioner] [was] supposed
to cross-examine the [private respondent's] witness Dra. Lourdes S. Pascual, whose
testimony was taken only after five (5) years since the case was filed on August 5, 1998.
Indeed, the said [petitioner] [is] already in estoppel to question the jurisdiction of this
Court.
In the case of Maersk Tabacalera Shipping Agency v. Court of Appeals, 187 SCRA 646,
the Supreme Court ruled:
"Unlike Manchester, however, were the jurisdictional issue arising from insufficiency of
the docket fee paid was seasonably raised in the answer of the defendant in the trial court,
in this case, the issue is being raised for the first time. Petitioner submitted to the
jurisdiction of the trial court without question. It filed a counterclaim seeking affirmative
Page 100 of 169
reliefs, and actively took part in the trial. A party who voluntarily participates in the trial
cannot later on raise the issue of the Court's lack of jurisdiction. (Tan Boon Bee and Co. v.
Judge Jarencio, 163 SCRA 205).
In the case at bar, the said [petitioner] filed their counter-claim seeking affirmative relief
and then filed a motion to dismiss without raising the issue of non-payment of docket fees.
And when plaintiff's witness Dra. Lourdes S. Pascual was presented on direct examination
the said [petitioner] did not object and participated in the proceedings. It is only when the
said witness was to be cross examined that the issue of non-payment of docket fees was
raised. Clearly, the said [petitioner] [is] in estoppel to question the jurisdiction of the
Court.32
After carefully examining the aforequoted Order in light of the prevailing circumstances
surrounding its issuance, we find nothing which would support petitioner's contention that
the lower court abused its discretion in denying petitioner's Motion to Dismiss or that the
assailed Order was patently erroneous. To the contrary, the Manila RTC Order dated 16
October 2003 was sufficiently supported by the evidence on record and jurisprudence.
In its Order, the lower court even recognized the validity of petitioner's claim of lack of
jurisdiction had it timely raised the issue. It bears to stress that the non-payment of the
docket fees by private respondent and the supposed lack of jurisdiction of the Manila RTC
over Civil Case No. 98-90089 was raised by the petitioner only five years after institution
of the instant case and after one of the private respondent's witnesses was directly
examined in open court. Not only that, the petitioner even implored the court a quo's
jurisdiction by filing an Answer with Counterclaim praying that the amount
of P12,643,478.46 as deficiency claim of the credit granted to private respondent and the
sum P6,411,786.19 as full payment of one of the Letters of Credit, be awarded in its favor.
Petitioner likewise prayed for the award of exemplary damages in the amount
of P1,000,000.00, attorney's fees and cost of the suit.
It should also be underscored that the petitioner interposed a second Motion to Dismiss
after the private respondent filed its Second Amended Complaint but never questioned
therein private respondent's non-payment of docket fees and the Manila RTC's lack of
jurisdiction over the case by reason thereof.
The petitioner would like to sway this Court that the ripe time to raise the issue of lack of
jurisdiction of the Manila RTC arose only after the testimony of one of the private
respondent's witnesses when it became evident that the private respondent failed to make
good its promise that it would eventually specify the amount of damages it was claiming.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
This Court, however, is not persuaded. It is incumbent upon the petitioner to file a Motion
to Dismiss at the earliest opportune time to raise the issue of the court's lack of jurisdiction,
more so, that this issue is susceptible to laches. Petitioner's failure to seasonably raise the
question of jurisdiction leads us to the inevitable conclusion that it is now barred by laches
to assail the Manila RTC's jurisdiction over the case. As defined in the landmark case of
Tijam v. Sibonghanoy33 :
Laches, in 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 length of time,
warranting a presumption that the party entitled to assert it either has abandoned it or
declined to assert it.
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. By way of explaining the rule, it was further said that the
question of whether or not the court had jurisdiction either over the subject matter of the
action or the parties is not important in such cases because the party is barred from such
conduct, not because the judgment or the order of the court is valid and conclusive as an
adjudication, but for the reason that such a practice cannot be tolerated by reason of public
policy.34
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 merely a question of time but is principally a question of the inequity or
unfairness of permitting a right or claim to be enforced or asserted.35
There is no absolute rule as to what constitutes laches or staleness of demand; each case is
to be determined according to its particular circumstances. Ultimately, however, the
question of laches is addressed to the sound discretion of the court and, since it is an
equitable doctrine, its application is controlled by equitable consideration. 36
Since the Manila RTC ruled that the petitioner is now estopped by laches from questioning
its jurisdiction and considering that its Order denying petitioner's Motion to Dismiss is not
tainted with grave abuse of discretion but wholly substantiated by the evidence on the
record, this Court would no longer disturb said order.
Of significant application in the case at bar is our ruling in the case of Pantranco North
Express, Inc. v. Court of Appeals37 :
Page 101 of 169
[P]articipating in all stages of the case before the trial court and even invoking the trial
court's authority in order to ask for affirmative relief, the petitioner is effectively barred by
estoppel from challenging the court's jurisdiction.
Even granting arguendo that petitioner is not barred from questioning the jurisdiction of the
Manila RTC by estoppel, this petition will still fail on the merits. Petitioner's own
construction of the doctrine laid down in the cases of Manchester Development
Corporation v. Court of Appeals,38 and Sun Insurance Office, Ltd., (SIOL) v. Asuncion 39 is
skewed.
It must be stressed that the application of the doctrines enunciated by this Court in the cases
of Manchester and Sun Insurance must be guided by the prevailing circumstance attendant
to each and the respective strict and liberal construction of the rules on the payment of
docket fees prescribed therein must not be sought to evade penalty of one's fraudulent act
or to attribute fraud, in the absence of any.
In Manchester, we ruled that the court acquires jurisdiction over any case only upon
payment of the prescribed docket fee. An amendment of the complaint or similar pleading
will not thereby vest jurisdiction in the court, much less the payment of the docket fee
based on the amount sought in the amended pleading. The strict set of guidelines provided
in Manchester was prompted by the fraudulent intent of the counsel in said case to avoid
payment of the required docket fee.40
Faced with an entirely different set of circumstances in Sun Insurance, we modified our
ruling in Manchester and decreed that where the initiatory pleading is not accompanied by
the payment of the docket fee, the court may allow payment of the fee within reasonable
period of time, but in no case beyond the applicable prescriptive or reglementary
period. The aforesaid ruling was made on the justification that, unlike in Manchester, the
private respondent in Sun Insurance demonstrated his willingness to abide by the rules by
paying the additional docket fees required.41
The petitioner posits that this Court's pronouncement in Sun Insurance is not applicable to
the private respondent, since it employed fraudulent schemes in order to deprive the court
of the docket fees due. It highlights the private respondent's act of omitting the amount of
damages in its Second Amended Complaint and emboldens such act in order to make it
appear that the present case is of the same circumstance as that of Manchester.
Again, we do not agree. This Court wonders how the petitioner could possibly arrive at the
conclusion that the private respondent was moved by fraudulent intent in omitting the
amount of damages claimed in its Second Amended Complaint, thus placing itself on the
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
same footing as the complainant in Manchester, when it is clear that the factual milieu of
the instant case is far from that of Manchester.
First, the complainant in Manchester paid the docket fee only in the amount of P410.00,
notwithstanding its claim for damages in the amount of P78,750,000.00, while in the
present case, the private respondent paid P42,000.00 as docket fees upon filing of the
original complaint.
Second, complainant's counsel in Manchester claimed, in the body of the complaint,
damages in the amount of P78,750.00 but omitted the same in its prayer in order to evade
the payment of docket fees. Such fraud-defining circumstance is absent in the instant
petition.
Finally, when the court took cognizance of the issue of non-payment of docket fees in
Manchester, the complainant therein filed an amended complaint, this time omitting all
mention of the amount of damages being claimed in the body of the complaint; and when
directed by the court to specify the amount of damages in such amended complaint, it
reduced the same from P78,750,000.00 to P10,000,000.00, obviously to avoid payment of
the required docket fee. Again, this patent fraudulent scheme is wanting in the case at bar.
This Court is not inclined to adopt the petitioner's piecemeal construction of our rulings in
Manchester and Sun Insurance. Its attempt to strip the said landmark cases of one or two
lines and use them to bolster its arguments and clothe its position with jurisprudential
blessing must be struck down by this Court.chanrobles virtual law library
All told, the rule is clear and simple. In case where the party does not deliberately intend to
defraud the court in payment of docket fees, and manifests its willingness to abide by the
rules by paying additional docket fees when required by the court, the liberal doctrine
enunciated in Sun Insurance and not the strict regulations set in Manchester will apply.
In the case at bar, it was not shown that the private respondent, in failing to state the exact
amount of damages it was claiming in its Second Amended Complaint intended to defraud
the court of the docket fees due. In the first place, upon filing of the original Complaint, the
private respondent paid docket fees in the amount of P42,000.00. Clearly, the
circumstances attendant in Manchester, that prompted this Court to dismiss the case then
before it, are wanting herein. Thus, in PNOC Shipping and Transport Corporation v. Court
of Appeals,42 we ruled:
With respect to petitioner's contention that the lower court did not acquire jurisdiction over
the amended complaint increasing the amount of damages claimed to P600,000.00, we
agree with the Court of Appeals that the lower court acquired jurisdiction over the case
Page 102 of 169
when private respondent paid the docket fee corresponding to its claim in its original
complaint. Its failure to fee the docket fee corresponding to its increased claim for damages
under the amended complaint should not be considered as having curtailed the lower court's
jurisdiction. Pursuant to the ruling in Sun Insurance Office, Ltd., (SIOL) v. Asuncion, the
unpaid docket fee should be considered as a lien on the judgment even though private
respondent specified the amount of P600,000.00 as its claim for damages in its amended
complaint.
Based on the foregoing, it is but proper therefore, that this case should not be dismissed but
be allowed to continue until judgment, and the private respondent's unpaid docket fee
should be considered as a lien on any monetary judgment in its favor.
WHEREFORE, IN VIEW OF THE FOREGOING, the instant Petition
is DENIED. The Decision dated 19 April 2005, and the Resolution dated 13 February
2006, rendered by the Court of Appeals in CA-G.R. SP No. 82626, are
hereby AFFIRMED.
SO ORDERED.
[G.R. NO. 179878 : December 24, 2008]
NEGROS ORIENTAL PLANTERS ASSOCIATION, INC.
(NOPA), Petitioner, v. HON. PRESIDING JUDGE OF RTC-NEGROS
OCCIDENTAL, BRANCH 52, BACOLOD CITY, and ANICETO MANOJO
CAMPOS, Respondents.
DECISION
CHICO-NAZARIO, J.:
What's sauce for the goose is sauce for the gander.
This is a Petition for Review on Certiorari seeking the reversal of the Resolutions1 of the
Court of Appeals dated 23 May 2007 and 16 August 2007, respectively, in CA-G.R. SP
No. 02651 outrightly dismissing the Petition for Certiorari filed by petitioner Negros
Oriental Planters Association, Inc. (NOPA) against private respondent Aniceto Manojo
Campos (Campos).
On 17 March 1999, Campos filed a Complaint for Breach of Contract with Damages,
docketed as Civil Case No. 99-10773, against NOPA before the Regional Trial Court
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
(RTC) of Negros Occidental, Bacolod City. According to the Complaint, Campos and
NOPA entered into two separate contracts denominated as Molasses Sales Agreement.
Campos allegedly paid the consideration of the Molasses Sales Agreement in full, but was
only able to receive a partial delivery of the molasses because of a disagreement as to the
quality of the products being delivered.
On 17 August 2005, more than six years after NOPA filed its Answer, NOPA filed a
Motion to Dismiss on the ground of an alleged failure of Campos to file the correct filing
fee. According to NOPA, Campos deliberately concealed in his Complaint the exact
amount of actual damages by opting to estimate the value of the unwithdrawn molasses in
order to escape the payment of the proper docket fees.
On 30 June 2006, the RTC issued an Order denying the Motion to Dismiss. NOPA received
this Order on 17 July 2006.
On 1 August 2006, NOPA filed a Motion for Reconsideration of the 30 June 2006 Order.
On 5 January 2007, the RTC issued an Order denying NOPA's Motion for Reconsideration.
On 2 April 2007, NOPA filed a Petition for Certiorari before the Court of Appeals
assailing the Orders of the RTC dated 30 June 2006 and 5 January 2007.
On 23 May 2007, the Court of Appeals issued the first assailed Resolution dismissing the
Petition for Certiorari on the following grounds:
1. Failure of the Petitioner to state in its Verification that the allegations in the petition are
"based on authentic records", in violation of Section 4, Rule 7, of the 1997 Rules of Civil
Procedure, as amended by A.M. No. 00-2-10-SC (May 1, 2000), which provides:
" ' x x x - A pleading is verified by an affidavit that the affiant has read the pleading and
that the allegations therein are true and correct of his personal knowledge or based on
authentic records.
A pleading required to be verified which contains a verification based on "information and
belief," or lacks a proper verification, shall be treated as an unsigned pleading."
2. Failure of the petitioner to append to the petition relevant pleadings and documents,
which would aid in the resolution of the instant petition, in violation of Section 1, Rule 65
of the Rules of Court, such as:
A. Ex-parte Motion to Set the Case for Pre-Trial dated July 27, 1999;
Page 103 of 169
b. Notice of Pre-Trial;
c. Motion for Leave to File Third Party Complaint;
d. Orders dated July 31, 2000, March 20 2001, November 17, 2004, and May 17, 2005,
respectively;
e. Motion to Suspend the Proceedings dated August 10, 2003;
f. Motion to Dismiss for Failure to Prosecute; andcralawlibrary
g. Motion for Reconsideration to the Order dated May 12, 2005.
Section 1, Rule 65 of the Rules of Court, provides:
"When any tribunal, board or officer exercising judicial or quasi-judicial functions has
acted without or in excess of its or his jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy,
and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a
verified petition in the proper court, alleging the facts with certainty and praying that
judgment be rendered annulling or modifying the proceedings of such tribunal, board or
officer, and granting such incidental reliefs as law and justice may require.
The petition shall 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 paragraph of
section 3, Rule 46."
3. Failure of petitioner's counsel to indicate in the petition his current IBP Official Receipt
Number, in violation of Bar Matter No. 1132 and/or A.M. No. 287, which reads as follows:
"The Court resolved, upon recommendation of the Office of the Bar Confidant, to GRANT
the request of the Board of Governors of the Integrated Bar of the Philippines and the
Sanguniang Panlalawigan of Ilocos Norte to require all lawyers to indicate their Roll of
Attorneys Number in all papers or pleadings submitted to the various judicial or quasi-
judicial bodies in addition to the requirement of indicating the current Professional Tax
Receipt (PTR) and the IBP Official Receipt or Lifetime Member Number."2
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
On 22 June 2007, NOPA filed a Motion for Reconsideration of the above Resolution,
attaching thereto an Amended Petition for Certiorari in compliance with the requirements
of the Court of Appeals deemed to have been violated by NOPA. The Court of Appeals
denied the said Motion in the second assailed Resolution dated 16 August 2007.
Hence, this Petition for Review on Certiorari, where NOPA raises the following issue and
arguments:
ISSUE
WHETHER OR NOT THE PUBLIC RESPONDENT CA COMMITTED REVERSIBLE
ERROR WHEN IT RULED THAT THERE WAS NO SUBSTANTIAL COMPLIANCE
WITH THE PROCEDURAL REQUIREMENTS WHEN PETITIONER FAILED TO
ALLEGE IN ITS VERIFICATION THAT THE ALLEGATIONS THEREIN ARE TRUE
AND CORRECT OF HIS PERSONAL KNOWLEDGE OR BASED ON AUTHENTIC
RECORDS AND FAILURE TO ATTACH THE NECESSARY DOCUMENTS ON ITS
PLEADINGS AS REQUIRED BY SECTION 1, RULE 65 OF THE 1997 RULES OF
CIVIL PROCEDURE.3
ARGUMENTS
1. The requirement that a pleading be verified is merely formal and not jurisdictional. The
court may give due course to an unverified pleading where the material facts alleged are a
matter of record and the questions raised are mainly of law such as in a petition
for certiorari .4
2. Petitioner had attached to its Petition for Certiorari clearly legible and duplicate original
or a certified true copy of the judgment or final order or resolution of the court a quo and
the requisite number of plain copies thereof and such material portions of the record as
would support the petition.5
3. Substantial compliance of the rules, which was further supplied by the petitioner's
subsequent full compliance demonstrates its good faith to abide by the procedural
requirements.6
4. The resolution of the important jurisdictional issue raised by the petitioner before the
PUBLIC RESPONDENT CA would justify a relaxation of the rules.7
The original Verification in the original Petition for Certiorari filed by NOPA states as
follows:
Page 104 of 169
1. That I am the President and Chairman of the Board of Directors of Negros Oriental
Planters' Association, Inc. (NOPA), the petitioner in this case, a domestic corporation duly
organized under Philippine Laws, with principal place of business at Central Bais, Bais
City, Philippines; that I am duly authorized by the Board of NOPA (Secretary's Certificate
attached as Annex "A") to cause the preparation of the foregoing petition; and that I hereby
affirm and confirm that all the allegations contained herein are true and correct to my own
knowledge and belief;8
NOPA claims that this Court has in several cases allowed pleadings with a Verification that
contains the allegation "to the best of my knowledge" and the allegation "are true and
correct," without the words "of his own knowledge," citing Decano v. Edu,9 and Quimpo v.
De la Victoria.10 NOPA claims that the allegations in these cases constitute substantial
compliance with the Rules of Court, and should likewise apply to the case at bar.
NOPA is mistaken. NOPA cited cases promulgated before 1 May 2000, when Section 4 of
Rule 7 was amended by A.M. No. 00-2-10. Before the amendment, said Section 4 stated:
SEC. 4. Verification.–Except when otherwise specifically required by law or rule,
pleadings need not be under oath, verified or accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read the pleading and that the
allegations therein are true and correct of his knowledge and belief.
As amended, said Section 4 now states:
SEC. 4. Verification.–Except when otherwise specifically required by law or rule,
pleadings need not be under oath, verified or accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read the pleading and that the
allegations therein are true and correct of his personal knowledge or based on
authentic records.
Clearly, the amendment was introduced in order to make the verification requirement
stricter, such that the party cannot now merely state under oath that he believes the
statements made in the pleading. He cannot even merely state under oath that he has
knowledge that such statements are true and correct. His knowledge must be specifically
alleged under oath to be either personal knowledge or at least based on authentic records.
Unlike, however, the requirement for a Certification against Forum Shopping in Section 5,
wherein failure to comply with the requirements is not curable by amendment of the
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
complaint or other initiatory pleading,11 Section 4 of Rule 7, as amended, states that the
effect of the failure to properly verify a pleading is that the pleading shall be treated as
unsigned:
A pleading required to be verified which contains a verification based on "information
and belief," or upon "knowledge, information and belief," or lacks a proper
verification, shall be treated as an unsigned pleading.
Unsigned pleadings are discussed in the immediately preceding section of Rule 7:
SEC. 3. Signature and address. - x x x.
xxx
An unsigned pleading produces no legal effect. However, the court may, in its discretion,
allow such deficiency to be remedied if it shall appear that the same was due to mere
inadvertence and not intended for delay. Counsel who deliberately files an unsigned
pleading, or signs a pleading in violation of this Rule, or alleges scandalous or indecent
matter therein, or fails to promptly report to the court a change of his address, shall be
subject to appropriate disciplinary action. (5a)
A pleading, therefore, wherein the Verification is merely based on the party's knowledge
and belief produces no legal effect, subject to the discretion of the court to allow the
deficiency to be remedied. In the case at bar, the Court of Appeals, in the exercise of this
discretion, refused to allow the deficiency in the Verification to be remedied, by denying
NOPA's Motion for Reconsideration with attached Amended Petition for Certiorari.
May an appellate court reverse the exercise of discretion by a lower court? The old case
of Lino Luna v. Arcenas12 states that it can, but only in exceptional cases when there is
grave abuse of this discretion or adverse effect on the substantial rights of a litigant:
Discretionary power is generally exercised by trial judges in furtherance of the convenience
of the courts and the litigants, the expedition of business, and in the decision of
interlocutory matters on conflicting facts where one tribunal could not easily prescribe to
another the appropriate rule of procedure.
The general rule, therefore, and indeed one of the fundamental principles of appellate
procedure is that decisions of a trial court which "lie in discretion" will not be
reviewed on appeal, whether the case be civil or criminal at law or in equity.
Page 105 of 169
We have seen that where such rulings have to do with minor matters, not affecting the
substantial rights of the parties, the prohibition of review in appellate proceedings is made
absolute by the express terms of the statute; but it would be a monstrous travesty on
justice to declare that where the exercise of discretionary power by an inferior court
affects adversely the substantial legal rights of a litigant, it is not subject to review on
appeal in any case wherein a clear and affirmative showing is made of an abuse of
discretion, or of a total lack of its exercise, or of conduct amounting to an abuse of
discretion, such as its improper exercise under a misapprehension of the law applicable to
the facts upon which the ruling is based.
In its very nature, the discretionary control conferred upon the trial judge over the
proceedings had before him implies the absence of any hard-and-fast rule by which it is to
be exercised, and in accordance with which it may be reviewed. But the discretion
conferred upon the courts is not a willful, arbitrary, capricious and uncontrolled
discretion. It is a sound, judicial discretion which should always be exercised with due
regard to the rights of the parties and the demands of equity and justice. As was said
in the case of The Styria v. Morgan (186 U. S., 1, 9): "The establishment of a clearly
defined rule of action would be the end of discretion, and yet discretion should not be a
word for arbitrary will or inconsiderate action." So in the case of Goodwin v. Prime (92
Me., 355), it was said that "discretion implies that in the absence of positive law or fixed
rule the judge is to decide by his view of expediency or by the demands of equity and
justice."
There being no "positive law or fixed rule" to guide the judge in the court below in such
cases, there is no "positive law or fixed rule" to guide a court of appeal in reviewing his
action in the premises, and such courts will not therefore attempt to control the exercise of
discretion by the court below unless it plainly appears that there was "inconsiderate action"
or the exercise of mere "arbitrary will," or in other words that his action in the premises
amounted to "an abuse of discretion." But the right of an appellate court to review judicial
acts which lie in the discretion of inferior courts may properly be invoked upon a showing
of a strong and clear case of abuse of power to the prejudice of the appellant, or that the
ruling objected to rested on an erroneous principle of law not vested in discretion. 13
The case at bar demonstrates a situation in which there is no effect on the substantial rights
of a litigant. NOPA's Petition for Certiorari is seeking the reversal of the Orders of the
RTC denying NOPA's Motion to Dismiss on the ground of failure to pay the proper docket
fees. The alleged deficiency in the payment of docket fees by Campos, if there is any,
would not inure to the benefit of NOPA.
There is therefore no substantive right that will be prejudiced by the Court of Appeals'
exercise of discretion in the case at bar. While the payment of docket fees is jurisdictional,
it is nevertheless unmistakably also a technicality. Ironically, in seeking the leniency of this
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Court on the basis of substantial justice, NOPA is ultimately praying for a Writ
of Certiorari enjoining the action for breach of contract from being decided on the merits.
What's sauce for the goose is sauce for the gander. A party cannot expect its opponent to
comply with the technical rules of procedure while, at the same time, hoping for the
relaxation of the technicalities in its favor.
There was therefore no grave abuse of discretion on the part of the Court of Appeals
warranting this Court's reversal of the exercise of discretion by the former. However, even
if we decide to brush aside the lapses in technicalities on the part of NOPA in its Petition
for Certiorari, we nevertheless find that such Petition would still fail.
NOPA seeks in its Petition for Certiorari for the application of this Court's ruling
in Manchester Development Corporation v. Court of Appeals,14 wherein we ruled that the
court acquires jurisdiction over any case only upon payment of the prescribed docket fee.
An amendment of the complaint or similar pleading will not thereby vest jurisdiction in the
court, much less the payment of the docket fee based on the amount sought in the amended
pleading.
In denying15 NOPA's Motion to Dismiss, the RTC cited Sun Insurance Office, Ltd. (SIOL)
v. Asuncion,16 wherein we modified our ruling in Manchester and decreed that where the
initiatory pleading is not accompanied by the payment of the docket fee, the court may
allow payment of the fee within a reasonable period of time, but in no case beyond the
applicable prescriptive or reglementary period. The aforesaid ruling was made on the
justification that, unlike in Manchester, the private respondent in Sun Insurance Office, Ltd.
(SIOL) demonstrated his willingness to abide by the rules by paying the additional docket
fees required. NOPA claims that Sun is not applicable to the case at bar, since Campos
deliberately concealed his claim for damages in the prayer.
In United Overseas Bank (formerly Westmont Bank) v. Ros,17 we discussed how
Manchester was not applicable to said case in view of the lack of deliberate intent to
defraud manifested in the latter:
This Court wonders how the petitioner could possibly arrive at the conclusion that the
private respondent was moved by fraudulent intent in omitting the amount of damages
claimed in its Second Amended Complaint, thus placing itself on the same footing as the
complainant in Manchester, when it is clear that the factual milieu of the instant case is far
from that of Manchester.
First, the complainant in Manchester paid the docket fee only in the amount
of P410.00, notwithstanding its claim for damages in the amount of P78,750,000.00,
Page 106 of 169
while in the present case, the private respondent paid P42,000.00 as docket fees upon
filing of the original complaint.
Second, complainant's counsel in Manchester claimed, in the body of the complaint,
damages in the amount of P78,750.00 but omitted the same in its prayer in order to evade
the payment of docket fees. Such fraud-defining circumstance is absent in the instant
petition.
Finally, when the court took cognizance of the issue of non-payment of docket fees
in Manchester, the complainant therein filed an amended complaint, this time
omitting all mention of the amount of damages being claimed in the body of the
complaint; and when directed by the court to specify the amount of damages in such
amended complaint, it reduced the same from P78,750,000.00 to P10,000,000.00,
obviously to avoid payment of the required docket fee. Again, this patent fraudulent
scheme is wanting in the case at bar.
This Court is not inclined to adopt the petitioner's piecemeal construction of our rulings
in Manchester and Sun Insurance. Its attempt to strip the said landmark cases of one or two
lines and use them to bolster its arguments and clothe its position with jurisprudential
blessing must be struck down by this Court.
All told, the rule is clear and simple. In case where the party does not deliberately
intend to defraud the court in payment of docket fees, and manifests its willingness to
abide by the rules by paying additional docket fees when required by the court, the
liberal doctrine enunciated in Sun Insurance and not the strict regulations set
in Manchester will apply.
In the case at bar, Campos filed an amount of P54,898.50 as docket fee, based on the
amounts of P10,000,000.00 representing the value of unwithdrawn molasses, P100,00.00 as
storage fee, P200,00.00 as moral damages, P100,000.00 as exemplary damages
and P500,000.00 as attorney's fees. The total amount considered in computing the docket
fee was P10,900,000.00. NOPA alleges that Campos deliberately omitted a claim for
unrealized profit of P100,000.00 and an excess amount of storage fee in the amount
of P502,875.98 in its prayer and, hence, the amount that should have been considered in the
payment of docket fees is P11,502,875.98. The amount allegedly deliberately omitted was
therefore only P602,875.98 out of P11,502,875.98, or merely 5.2% of said alleged total.
Campos's pleadings furthermore evince his willingness to abide by the rules by paying the
additional docket fees when required by the Court.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Since the circumstances of this case clearly show that there was no deliberate intent to
defraud the Court in the payment of docket fees, the case of Sun should be applied, and the
Motion to Dismiss by NOPA should be denied.
WHEREFORE, the Resolutions of the Court of Appeals dated 23 May 2007 and 16
August 2007, respectively, in CA-G.R. SP No. 02651, outrightly dismissing the Petition
for Certiorari filed by petitioner Negros Oriental Planters Association, Inc. against private
respondent Aniceto Manojo Campos, are AFFIRMED. No costs.
SO ORDERED.
G.R. No. 96724 March 22, 1991
HONESTO GENERAL, petitioner,
vs.
HON. GRADUACION REYES CLARAVALL, Judge, Regional Trial Court at Pasig,
Br. 71, BENNETH THELMO and the PEOPLE OF THE PHILIPPINES, respondents.
Quisumbing, Torres & Evangelista for petitioner.
Raymundo A. Armovit for private respondent.
RESOLUTION
NARVASA, J.:
Benneth Thelmo filed with the Office of the Public Prosecutor of Rizal a sworn
complaint accusing Honesto General and another person of libel, and alleged that
by reason of the offense he (Thelmo) had suffered actual, moral and exemplary
damages in the total sum of P100 million. The information for libel subsequently
filed with the RTC at Pasig, after preliminary investigation, did not however
contain any allegation respecting the damages due the offended party. At the trial,
the defense raised the issue of non-payment of the docket fees corresponding to
the claim of damages contained in Thelmo's sworn complaint before the fiscal, as
a bar to Thelmo's pursuing his civil action therefor. The trial Court overruled the
objection, by Order dated March 28, 1990. It also denied the defendants' motion
for reconsideration and motion for suspension of proceedings, by another Order
dated May 17, 1990.
General and his co-accused are now before this Court applying for a writ
of certiorari to annul the aforesaid Orders of the Trial Court on the theory that
Page 107 of 169
they had been rendered with grave abuse of discretion. The issue he poses is
whether or not, in view of this Court's decision in three (3) cases —
1) Manchester vs. C.A., 149 SCRA 562 (1987),1
2) Sun Insurance Office, Ltd. vs. Asuncion, 170 SCRA 274 (1989),2 and
3) Tacay vs. RTC, 180 SCRA 433 (1989),3
the rule should now be that the filing fees for the civil action for the
recovery of civil liability arising from the offense should first be paid in
order that said civil action may be deemed to have been impliedly
instituted with the criminal and prosecuted in due course.
Manchester laid down the doctrine the specific amounts of claims of damages
must be alleged both in the body and the prayer of the complaint, and the filing
fees corresponding thereto paid at the time of the filing of the complaint; that if
these requisites were not fulfilled, jurisdiction could not be acquired by the trial
court; and that amendment of the complaint could not "thereby vest jurisdiction
upon the Court." Sun Insurance and Tacay affirmed the validity of the basic
principle but reduced its stringency somewhat by providing that only those
claims as to which the amounts were not specified would be refused acceptance
or expunged and that, in any case, the defect was not necessarily fatal of
irremediable as the plaintiff could on motion be granted a reasonable time within
which to amend his complaint and pay the requisite filing fees, unless in the
meantime the period of limitation of the right of action was completed.
Now, at the time of the promulgation of the Manchester decision in 1987, Section
1, Rule 111 of the Rules of Court, as amended in 1985,4 read as follows:5
Sec. 1. Institution of criminal and civil actions. — When a criminal
action is instituted, the civil action for the recovery of civil liability
arising from the offense charged is impliedly instituted with the
criminal action, unless the offended party expressly waives the civil
action or reserves his right to institute it separately. However, after the
criminal action has been commenced, the civil action cannot be
instituted until final judgment has been rendered in the criminal action.
When the offended party seeks to enforce civil liability against the
accused by way of actual, moral, nominal, temperate or exemplary
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
damages, the filing fees for such civil action as provided in these Rules
shall first be paid to the Clerk of Court of the court where the criminal
case is filed. In all other cases, the filing fees corresponding to the civil
liability awarded by the court shall constitute a first lien on the
judgment award and no payment by execution or otherwise may be
made to the offended party without his first paying the amount of such
filing fees to the Clerk of Court. (1a)
The rules set forth in the first paragraph are substantial reproductions of the
corresponding sections of Rule 111 of the Rules of 1964. The second paragraph
is new. It was incorporated in the 1985 Rules on Criminal Procedure in light of
this Court's Resolution of September 13, 1984 in Adm. Matter No. 83-6-389-
0,6 requiring increased court filing fees effective October 1, 1984, which
resolution pertinently provides that:
. . . When the offended party seeks to enforce civil liability against the
accused by way of actual, moral, nominal, temperate or exemplary
damages, the filing fees for such civil action as provided in the Rules of
Court and approved by the Court shall first be paid to the Clerk of the
court where the criminal action is filed. . . .
The purpose of the Resolution, according to the late Chief Justice Claudio
Teehankee,7 was to discourage the "gimmick of libel complainants of using the
fiscal's office to include in the criminal information their claim for astronomical
damages in multiple millions of pesos without paying any filing fees." This was
the same consideration that underlay the Manchester ruling: the fraudulent
practice, manifested by counsel in said ". . . of omitting any specification of the
amount of damages in the prayer although the amount of over P78 million is
alleged in the body of the complaint, . . . (an omission which was) clearly
intended for no other purpose than to evade the payment of the correct filing fees
if not to mislead the docket clerk in the assessment of the filing fee."8
This Court however adopted further amendments to the 1985 Rules on Criminal Procedure,
with effect on October 1, 1988.9 Among the provisions revised was Section 1, Rule 111. As
thus amended, it now reads as follows:10
Sec. 1. Institution of criminal and civil actions. — When a criminal action is
instituted, the civil action for the recovery of civil liability is impliedly with the
criminal action, unless the offended party waives the civil action, reserves his
right to institute it separately, or institutes the civil action prior to the criminal
action.
Page 108 of 169
Such civil action includes recovery of indemnity under the Revised Penal Code,
and damages under Articles 32, 33, 34 and 2176 of the Civil Code of the
Philippines arising from the same act or omission of the accused.
A waiver of any of the civil action extinguishes the others. The institution of, or
the reservation of the right to file, any of said civil actions separately waives the
others.
The reservation of the right to institute the separate civil actions shall be made
before the prosecution starts to present its evidence and under circumstances
affording the offended party a reasonable opportunity to make such reservation.
In no case may the offended party recover damages twice for the same act or
omission of the accused.
When the offended party seeks to enforce civil liability against the accused by
way of moral, nominal, temperate or exemplary damages, the filing fees for such
civil action as provided in these Rules shall constitute a first lien on the judgment
except in an award for actual damages.
In cases wherein the amount of damages, other than actual, is alleged in the
complaint or information, the corresponding filing fees shall be paid by the
offended party upon the filing thereof in court for trial. (1a)
The amendments were deliberated on and adopted by this Court after
the Manchester doctrine had been enunciated. Yet observe that the last two (2) paragraphs
prescribe a rule different from that in Manchester, and in the 1985 Rules on Criminal
Procedure. Under the 1985 Rules, the filing fees for the civil action impliedly instituted
with the criminal had to be paid first to the Clerk of the court where the criminal action was
commenced, without regard to whether the claim for such damages was set out in the
information or not. Under the 1988 Rules, however, it is only when "the amount of
damages, other than actual, is alleged in the complaint or information (that) the
corresponding filing fees shall be paid by the offended party upon the filing thereof in court
for trial." In any other case—i.e., when the amount of damages other than actual is NOT
alleged in the complaint or information—the filing fees for the civil action "to enforce civil
liability against the accused by way of moral, nominal, temperate or exemplary damages . .
. shall (merely) constitute a first lien on the judgment except in an award for actual
damages."
This Court's plain intent—to make the Manchester doctrine, requiring payment of filing
fees at the time of the commencement of an action applicable to impliedly instituted civil
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
actions under Section 1, Rule 111 only when "the amount of damages, other than actual, is
alleged in the complaint or information—has thus been made manifest by the language of
the amendatory provisions.
In any event, the Court now makes that intent plainer, and in the interests of clarity and
certainty, categorically declares for the guidance of all concerned that when a civil action is
deemed impliedly instituted with the criminal in accordance with Section 1, Rule 111 of the
Rules of Court—because the offended party has NOT waived the civil action, or reserved
the right to institute it separately, or instituted the civil action prior to the criminal action—
the rule is as follows:
1) when "the amount of damages, other than actual, is alleged in the complaint or
information" filed in court, then "the corresponding filing fees shall be paid by the offended
party upon the filing thereof in court for trial;"
2) in any other case, however—i.e., when the amount of damages is not so alleged in the
complaint or information filed in court, the corresponding filing fees need not be paid and
shall simply "constitute a first lien on the judgment, except in an award for actual damages.
WHEREFORE, there being no error in the challenged Orders of the respondent Court dated
March 28, 1990 and May 17, 1990, these appearing on the contrary to be in accord with the
law and the facts, the Court Resolved to DISMISS the petition, with costs against the
petitioner.
DELIA MANUEL, Petitioner, v. JUDGE DAVID ALFECHE, JR., in his capacity as
then Presiding Judge of RTC, Region Six, Branch 15, Roxas City, FELIPE CELINO,
DANNY FAJARD0 and LEMUEL FERNANDEZ, Respondents.
RESOLUTION
PANGANIBAN, J.:
In criminal prosecutions, the civil action is deemed impliedly instituted unless the
complainant waives it, or reserves the right to institute it separately or files it prior to the
criminal. Where the trial court renders a judgment finding the accused guilty of libel, but
motu proprio dismisses complainant’s claims for, inter alia, moral and exemplary damages
on the ground of complainant’s failure to pay the filing fees therefor, may the complainant
raise the matter via a petition for review on certiorari directly before this Court, while the
Page 109 of 169
judgment of conviction is on appeal before the Court of Appeals? This is the main question
brought before this Court in this petition to set aside a portion of the Decision 1 of the
respondent judge dated April 21, 1994 in Criminal Case No. 3539 as well as the Order 2 of
the same court dated May 27, 1994 denying the motion for reconsideration.
The Facts
On January 9, 1992, the City Prosecutor of the City of Roxas filed with the Regional Trial
Court, 6th Judicial Region, Branch 15, Roxas City an Information 3 for libel worded as
follows:jgc:chanrobles.com.ph
"That on or about the period September 20-22, 1991, in the City of Roxas, Philippines, and
within the jurisdiction of this Honorable Court, the said accused, FELIPE CELINO, being
then the writer/author; DANNY FAJARDO, Editor-in-Chief; LEMUEL T. FERNANDEZ,
Associate Editor; and JOHN PAUL TIA, Assistant Editor of a regional newspaper known
as "Panay News" which has considerable circulation in Panay Island and throughout
Western Visayas, including Roxas City and Capiz Province, conspiring, confederating
together and mutually helping one another, did then and there, willfully, unlawfully and
feloniously, and with malicious intent of impeaching the integrity, credibility, honor, and
reputation of DELIA MANUEL, and with the further malicious intent (to expose) DELIA
MANUEL to public hatred, contempt, disrespect and ridicule, prepare, write, arrange, and
publish, or cause to be prepared, written, arranged and published in the regular issue of the
said Panay News for the period September 20-22, 1991, as Article in the front page and/or
headline entitled "LOCAL SHABU PEDDLER NOW A MILLIONAIRE" the text of
which is quoted hereunder:jgc:chanrobles.com.ph
"LOCAL SHABU PEDDLER NOW A MILLIONAIRE"
BY: FELIPE V. CELINO
ROXAS CITY — A middle-aged woman here has joined the ranks of millionaires after
several years of selling shabu in the island of Panay.
Named by Narcom agents as "Delia" this woman is the alleged "shabu Queen" in Western
Visayas and has been (raking) in millions of pesos since she started peddling shabu,
marijuana and other prohibited drugs in this part of the country.
According to reliable sources, Delia has been transporting about 750 grams of shabu
weekly from Manila to Panay. A gram of this poor man’s Cocaine has a street value of
P1,000 more or less.
What makes her business prosper almost unscathed and very productive is the protection
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
provided her by a top ranking military officer in Manila, they said.
At present, the (sources) said, the shabu Queen is residing near one of the private schools in
this City. She has three brand new cars. Her house’s outside walls are made of bamboo but
it is fully air-conditioned and complete with luxurious household appliances, PN sources
added.
In Iloilo, Delia is known as "Madam-Ex." She doesn’t deal with small time users. "She
specializes in deals with scions of rich businessmen and even local politicians."cralaw
virtua1aw library
The Narcom has allegedly been monitoring the activities of the shabu queen but has not
nailed her down yet because of lack of cooperation from the public.
which newspaper issues containing the abovequoted article were sent and circulated to, or
caused to be sent or circulated to, and actually read by subscribers and other readers,
especially those in the City of Roxas and Province of Capiz.
That said accused intended to convey, as in fact (have) actually conveyed in said article,
false imputations and malicious insinuations against the said DELIA MANUEL that is, that
said Delia Manuel is the alleged "SHABU QUEEN" in Western Visayas and has been
raking in millions of pesos since she started peddling shabu, marijuana and other prohibited
drugs in this part of the country, with no good intention or justifiable motives, thereby
(unjustly) and unlawfully besmirching the good name, character, and reputation of said
Delia Manuel as a private person and as a businesswoman.
That as a direct consequence of the publication of the said article, said Delia Manuel
suffered actual, moral and exemplary damages in the amount of TEN MILLION PESOS
(P10,000,000.00)." (Emphasis supplied)
After trial, the respondent judge rendered the assailed Decision finding three of the accused
guilty and acquitting a fourth. However," (t)he civil indemnity by way of moral damages
(was) dismissed for lack of jurisdiction" on the ground that petitioner did not pay the filing
fees therefor. In the words of the respondent court:jgc:chanrobles.com.ph
". . ., close scrutiny of the record disclose that while the offended party seeks to enforce
civil liability against the accused by way of moral damages in the amount of
P10,000,000.00 which is alleged in the information, there was no payment of the filing fees
corresponding thereto at the time of the filing of the information on January 9, 1992. For
failing on this requisite, the court did not acquire jurisdiction on the civil indemnity thus
claimed. Hence, the claim for recovery of moral damages by the offended party is
dismissed."cralaw virtua1aw library
Page 110 of 169
The respondent court cited General v. Claravall 4 in support of its action.
Reconsideration having been denied, petitioner sought to overturn the above dismissal via
the instant petition for review on certiorari under Rule 45.
The Issues
Petitioner argues that "under the new Rules on Criminal Procedure . . . the filing fees, when
moral, nominal, temperate or exemplary damages are claimed in the criminal case, shall
constitute a first lien in the judgment, and thus need not be paid upon the filing of the
information, (and therefore) the filing fees herein was (sic) not assessed by the Clerk of
Court, nor paid by herein petitioner at the time of the filing of the information." Petitioner
further insists that "it is only when the amount of damages other than actual, has been
specified in the information that the filing fees is (sic) required to be paid upon the filing of
the information, . . . and that since in (this) case the amount of damages stated in the
information partakes firstly of actual damages and is not entirely other than actual, then this
case does not fall under the last par. of sec. 1 Rule III" of the 1988 Rules on Criminal
Procedure.
In their comment and subsequently in their memorandum, private respondents counter that
the present petition is erroneously filed. As the questioned Decision is a final judgment, the
appropriate remedy would have been ordinary appeal, not appeal by certiorari. They also
argue that" (t)he present petition is pre-mature because the questioned decision is pending
appeal with the Honorable Court of Appeals. . . . (I)f the questioned decision be reversed
ahead by the Court of Appeals . . . (there) would then be no more basis for the present
petition." The accused — herein private respondent — had gone to the Court of Appeals
seeking a reversal of the judgment of conviction.
The Court’s Ruling
The petition is devoid of merit.
While petitioner may be correct in asserting that a direct petition may, under appropriate
circumstances, be taken to this Court from the final judgment of the Regional Trial Court
on pure questions of law in the form and manner provided for in the Revised Rules of
Court, 5 nevertheless, in view of the factual environment of this case, particularly that
private respondents herein had already taken an appeal to the Court of Appeals to question
the trial court’s judgment of conviction, the proper remedy for petitioner is simply ordinary
appeal to the said tribunal.
This is so because the award of moral and exemplary damages by the trial court is
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
inextricably linked to and necessarily dependent upon the factual finding of basis therefor,
viz., the existence of the crime of libel. Inasmuch as the very same Decision herein assailed
is already pending review by the Court of Appeals, there is a distinct possibility that said
court may, if the facts and the law warrant, reverse the trial court and acquit the accused. In
such event, the appellate court’s action could collide with a ruling finding merit in
petitioner’s contentions before this Court. Such a situation would lead to absurdity and
confusion in the ultimate disposition of the case. Obviously, this possibility must be
avoided at all cost. This is (at least partly) the raison d ‘etre for the rule against forum-
shopping. 6 Clearly, then, petitioner ought to have brought her challenge in the Court of
Appeals.
In connection with the foregoing discussion, we note petitioner’s vehement insistence that
Art. 33 of the Civil Code allows an independent civil action for damages in cases of
defamation, fraud, and physical injuries to be instituted separately and independently from
the criminal. She then concludes that the civil aspect of the case is not dependent on the
criminal, but rather, may proceed independently thereof, and that therefore, the review of
the civil aspect by this Court may take place simultaneously with and separately from the
review of the criminal aspect by the Court of Appeals.
Such reasoning is misplaced. Sec. 1 of Rule 111 provides that the civil action for recovery
of civil liability is impliedly instituted with the criminal action unless the offended party
waives the civil action, reserves his right to institute it separately, or institutes the civil
action prior to the criminal action. In the present case, the civil action had been actually
(not just impliedly) instituted with the criminal prosecution, as shown by the fact that
petitioner took an active part in the prosecution of the criminal case. As admitted in the
petition, "the private prosecutor, counsel for . . . the petitioner herein" was allowed "upon
prior authority and under the supervision of the City Prosecutor, to handle the prosecution,
by presenting all the prosecution’s evidence" and even filing the Prosecution’s
Memorandum. Obviously then, there can no longer be any independent civil action to
speak of, as the civil aspect had previously been included in the criminal. And petitioner,
by attempting to have recourse to this Court with the criminal aspect still pending with the
Court of Appeals, was effectively trying to split a single cause of action. This we cannot
allow.
Petitioner also posits the non-necessity of paying the filing and docket fees by reason of the
non-specification of the amounts of moral and exemplary damages being claimed by her,
purportedly on the authority of this Court’s ruling in General v. Claravall (supra.). For the
sake of clarity, we quote from General:jgc:chanrobles.com.ph
"This Court’s plain intent — to make the Manchester doctrine requiring payment of filing
fees at the time of the commencement of an action applicable to impliedly instituted civil
actions under Section 1, Rule 111 only when ‘the amount of damages, other than actual, is
alleged in the complaint or information’ — has thus been made manifest by the language of
Page 111 of 169
the amendatory provisions (adopted by this Court with effect on October 1, 1988).
In any event, the Court now makes that intent plainer, and in the interests of clarity and
certainty, categorically declares for the guidance of all concerned that when a civil action is
deemed impliedly instituted with the criminal in accordance with Section 1, Rule 111 of the
Rules of Court — because the offended party has NOT waived the civil action, or reserved
the right to institute it separately, or instituted the civil action prior to the criminal action —
the rule is as follows:chanrob1es virtual 1aw library
1) when the ‘amount of damages, other than actual, is alleged in the complaint or
information’ filed in court, then ‘the corresponding filing fees shall be paid by the offended
party upon the filing thereof in Court for trial;’
2) in any other case, however — i.e., when the amount of damages is not so alleged in the
complaint or information filed in court, the corresponding filing fees need not be paid and
shall simply ‘constitute a first lien on the judgment, except in an award for actual
damages."cralaw virtua1aw library
We hold that said General ruling, especially the last subparagraph above-quoted, was
actually intended to apply to a situation wherein either (i) the judgment awards a claim not
specified in the pleading, or (ii) the complainant expressly claims moral, exemplary,
temperate and/or nominal damages but has not specified ANY amount at all, leaving the
quantification thereof entirely to the trial court’s discretion, 7 and NOT to a situation where
the litigant specifies some amounts of parameters for the awards being sought, even though
the different types of damages sought be not separately or individually quantified. Were we
to hold otherwise, the result would be to permit litigants to continue availing of one more
loophole in the rule on payment of filing fees, and would not serve to attain the purpose of
the revised Sec. 1 of Rule 111, which is "to discourage the ‘gimmick of libel complainants
of using the fiscal’s office to include in the criminal information their claim for
astronomical damages in multiple millions of pesos without paying any filing fees.’" 8
WHEREFORE, for utter lack of merit, the instant petition is DISMISSED.
SO ORDERED.
SECOND DIVISION
[G.R. NO. 157783. September 23, 2005]
NILO PALOMA, Petitioners, v. DANILO MORA, HILARIO FESTEJO, MAXIMA
SALVINO, BRYN BONGBONG and VALENTINO SEVILLA, Respondent.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
DECISION
CHICO-NAZARIO, J.:
In this Petition for Review on Certiorari, petitioner NILO PALOMA is in quest of the
reversal of the Decision1 and the Resolution,2 dated 15 November 2002 and 01 April 2003,
respectively, of the Court of Appeals in CA-G.R. SP No. 42553, affirming in toto the
Orders dated 12 March 1996 and 28 June 1996 of the Regional Trial Court (RTC), Branch
17, Palompon, Leyte, in Civil Case No. PN-0016, dismissing his complaint
for mandamus for being prematurely filed.
The undisputed facts, as summarized by the Court of Appeals and as unraveled from the
records, follow:
Petitioner Nilo Paloma was appointed General Manager of the Palompon, Leyte Water
District by its Board of Directors in 1993. His services were subsequently terminated by
virtue of Resolution No. 8-953 dated 29 December 1995, which was passed by respondents
as Chairman and members of the Board of the Palompon, Leyte Water District, namely:
Danilo Mora, Hilario Festejo, Bryn Bongbong and Maxima Salvino, respectively. The
Board, in the same Resolution, designated respondent Valentino Sevilla as Officer-in-
Charge.4
Pained by his termination, petitioner filed a petition for mandamus5 with prayer for
preliminary injunction with damages before the RTC on 11 January 1996 to contest his
dismissal with the prayer to be restored to the position of General Manager.6
Petitioner obdurately argued in his petition that the passage of Resolution No. 8-95
resulting in his dismissal was a "capricious and arbitrary act on the part of the Board of
Directors, constituting a travesty of justice and a fatal denial of his constitutional right to
due process for the grounds relied upon therein to terminate him were never made a subject
of a complaint nor was he notified and made to explain the acts he was said to be guilty of."
"Fundamental is the rule and also provided for in the Civil Service Rules and Regulations
that no officer or employee in the Civil Service shall be suspended, separated or dismissed
except for cause and after due process," so stressed petitioner. 7
On 25 January 1996, respondents filed a Motion to Dismiss the petition for lack of
jurisdiction and want of cause of action.8
On 12 March 1996, the trial court issued the assailed order dismissing the petition, with
the fallo:
Page 112 of 169
WHEREFORE, all foregoing considered, the complaint thus filed for mandamus with a
Prayer for a Writ for Preliminary Injunction with Damages is hereby DISMISSED for
being a premature cause of action. Without pronouncement as to costs. 9
Petitioner's motion for reconsideration likewise failed to sway the trial court by Order dated
28 June 1996.10
Meanwhile, petitioner filed a Complaint on 29 March 1996 with the Civil Service
Commission (CSC) against same respondents herein, for alleged Violation of Civil Service
Law and Rules and for Illegal Dismissal.11
On 06 November 1996, the CSC issued its decision 12 exonerating respondents from the
charge of violating the Civil Service Law when they voted for the termination of
petitioner's services as General Manager of the Palompon, Leyte Water District. Thus, the
CSC dismissed13 the complaint filed by petitioner before it, to wit:
In view of the foregoing, the instant complaint of Mr. Nilo Paloma former General
Manager of Palompon Water District against Messrs. Danilo Mora, Hilario Festejo, Bryn
Bongbong and Ms. Maxima Salvino for Violation of Civil Service Law and Rules and
Illegal Dismissal is hereby DISMISSED, for lack of prima facie case.14
In its Decision15 dated 15 November 2002, the Court of Appeals yielded to the decision of
the trial court and dismissed the appeal filed by petitioner, viz:
WHEREFORE, the instant petition is hereby DISMISSED for lack of merit. Accordingly,
the assailed Orders of the Regional Trial Court dated 12 March 1996 and 28 June 1996 in
Civil Case No. PN-0016, are AFFIRMED in toto.16
Equally unavailing was petitioner's motion for reconsideration, which was denied by the
Court of Appeals on 01 April 2003.
Affronted by the ruling, petitioner elevated the matter to us via the instant petition,
contending that:
the court of appeals gravely erred in affirming the decision of the regional trial court of
palompon, leyte, branch 17.17
The central inquiry raised in this petition is whether or not the Court of Appeals committed
any reversible error in its challenged decision. Concretely, we are tasked to resolve: (1)
whether or not mandamus will lie to compel the Board of Directors of the Palompon, Leyte
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Water District to reinstate the General Manager thereof, and (2) whether or not the CSC has
primary jurisdiction over the case for illegal dismissal of petitioner.
Petitioner, in his brief, is emphatic that the Court of Appeals overlooked the fact
that mandamus may lie to compel the performance of a discretionary duty in case of non-
observance of due process. He enthuses that the Court of Appeals overlooked the fact that
as an aggrieved party, he need not exhaust administrative remedies and may resort to court
action for relief as due process was clearly violated.18
Espousing a contrary view, respondents posit that petitioner breached the rule against
forum shopping as he filed another complaint for illegal dismissal against them with the
CSC after obtaining an unfavorable ruling in his Petition for Mandamus filed before the
RTC.19 Not only is petitioner guilty of forum shopping; he, too, is guilty of submitting a
false certificate against forum shopping as the certification he appended with the present
petition omitted the fact that he had previously filed a similar case with the CSC, so
respondents say.20 Respondents theorize, as well, that the instant case has already been
rendered moot by the dissolution of the Palompon, Leyte Water District and its subsequent
absorption by the municipal government of Palompon effective 1 June 1999. 21 Finally, it is
respondents' resolute stance that it was fitting for the Court of Appeals to affirm the trial
court's ruling dismissing the petition filed by petitioner inasmuch as Section 23 of
Presidential Decree (P.D.) No. 128 indeed clearly states that the General Manager shall
serve at the pleasure of the Board.22
We are not won over by petitioner's avowals. The petition ought to be denied.
Section 3, Rule 65 of the Rules of Court provides -
Sec. 3. Petition for mandamus . 'When any tribunal, corporation, board, officer or person
unlawfully neglects the performance of an act which the law specifically enjoins as a duty
resulting from an office, trust, or station, or unlawfully excludes another from the use and
enjoyment of a right or office to which such other is entitled, and there is no other plain,
speedy and adequate remedy in the ordinary course of law, the 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, immediately or at some other time
to be specified by the court, to do the act required to be done to protect the rights of the
petitioner and to pay the damages sustained by the petitioner by reason of the wrongful acts
of the respondent.
Mandamus lies to compel the performance, when refused, of a ministerial duty, but not to
compel the performance of a discretionary duty.23 Mandamus will not issue to control or
review the exercise of discretion of a public officer where the law imposes upon said public
Page 113 of 169
officer the right and duty to exercise his judgment in reference to any matter in which he is
required to act. It is his judgment that is to be exercised and not that of the court.24
In the case at bar, P.D. No. 198,25 otherwise known as THE PROVINCIAL WATER
UTILITIES ACT OF 1973, which was promulgated on 25 May 1973, categorically
provides that the general manager shall serve at the pleasure of the board of directors, viz:
Section 23. Additional Officers. - At the first meeting of the board, or as soon thereafter as
practicable, the board shall appoint, by a majority vote, a general manager, an auditor, and
an attorney, and shall define their duties and fix their compensation. Said officers shall
serve at the pleasure of the board.
Section 23 of P.D. No. 198 was later amended by P.D. No. 768 on 15 August 1975 to read:
SEC. 23. The General Manager. - At the first meeting of the board, or as soon thereafter as
practicable, the board shall appoint, by a majority vote, a general manager and shall define
his duties and fix his compensation. Said officer shall serve at the pleasure of the
board. (Emphasis supplied)ςrαlαωlιbrαrÿ
Mandamus does not lie to compel the Board of Directors of the Palompon, Leyte Water
District to reinstate petitioner because the Board has the discretionary power to remove him
under Section 23 of P.D. No. 198, as amended by P.D. No. 768.
The case of Mita Pardo de Tavera v. Philippine Tuberculosis Society, Inc.26 delineated the
nature of an appointment held "at the pleasure of the appointing power" in this wise:
An appointment held at the pleasure of the appointing power is in essence temporary in
nature. It is co-extensive with the desire of the Board of Directors. Hence, when the Board
opts to replace the incumbent, technically there is no removal but only an expiration of
term and in an expiration of term, there is no need of prior notice, due hearing or sufficient
grounds before the incumbent can be separated from office. The protection afforded by
Section 7.04 of the Code of By-Laws on Removal Of Officers and Employees, therefore,
cannot be claimed by petitioner.27 (Emphasis supplied)ςrαlαωlιbrαrÿ
In fine, the appointment of petitioner and his consequent termination are clearly within the
wide arena of discretion which the legislature has bestowed the appointing power, which in
this case is the Board of Directors of the Palompon, Leyte Water District. Here, considering
that the petitioner is at loggerheads with the Board, the former's services obviously ceased
to be "pleasurable" to the latter. The Board of Directors of a Water District may abridge the
term of the General Manager thereof the moment the latter's services cease to be convivial
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
to the former. Put another way, he is at the mercy of the appointing powers since his
appointment can be terminated at any time for any cause and following Orcullo there is no
need of prior notice or due hearing before the incumbent can be separated from office.
Hence, petitioner is treading on shaky grounds with his intransigent posture that he was
removed sans cause and due process.
Yes, as a general rule, no officer or employee of the civil service shall be removed or
suspended except for cause provided by law as provided in Section 2(3), Article IX-B of
the 1987 Constitution. As exception to this, P.D. No. 198, which we held in Feliciano v.
Commission On Audit 28 to be the special enabling charter of Local Water Districts,
categorically provides that the General Manager shall serve "at the pleasure of the board."
Correlatively, the nature of appointment of General Managers of Water Districts under
Section 23 of P.D. No. 198 falls under Section 14 of the Omnibus Rules Implementing
Book V of Executive Order No. 292, otherwise known as the Administrative Code of 1987,
which provides:
Sec. 14. An appointment may also be co-terminous which shall be issued to a person whose
entrance and continuity in the service is based on the trust and confidence of the appointing
authority or that which is subject to his pleasure, or co-existent with his tenure, or limited
by the duration of project or subject to the availability of funds.
The co-terminous status may thus be classified as follows:
(1) Co-terminous with the project - when the appointment is co-existent with the duration
of a particular project for which purpose employment was made or subject to the
availability of funds for the same;
(2) Co-terminous with the appointing authority - when appointment is co-existent with the
tenure of the appointing authority or at his pleasure;
(3) Co-terminous with the incumbent - when the appointment is co-existent with the
appointee, in that after the resignation, separation or termination of the services of the
incumbent the position shall be deemed automatically abolished; andcralawlibrary
(4) Co-terminous with a specific period - appointment is for a specific period and upon
expiration thereof, the position is deemed abolished; . . . (Underscoring supplied.)
The Court has previously sustained the validity of dismissal of civil servants who serve at
the pleasure of the appointing power and whose appointments are covered by Section 14 of
Page 114 of 169
the Omnibus Rules Implementing Book V of Executive Order No. 292 as cited above.
Thus, in Orcullo, Jr. v. Civil Service Commission,29 petitioner was hired as Project
Manager IV by the Coordinating Council of the Philippine Assistance Program-BOT
Center. In upholding the termination of his employment prior to the expiration of his
contract, we held that petitioner serves at the pleasure of the appointing authority. This
Court ruled in Orcullo'
A perusal of petitioner's employment contract will reveal that his employment with CCPAP
is qualified by the phrase "unless terminated sooner." Thus, while such employment is co-
terminous with the PAPS project, petitioner nevertheless serves at the pleasure of the
appointing authority as this is clearly stipulated in his employment contract. We agree with
the appellate court's interpretation of the phrase "unless terminated sooner" to mean "that
his contractual job as Project Manager IV from March 11, 1996 to January 30, 2000 could
end anytime before January 30, 2000 if terminated by the other contracting party-employer
CCPAP. (Emphasis supplied)ςrαlαωlιbrαrÿ
Neither is it the Court's business to intrude into the Congressional sphere on the matter of
the wisdom of Section 23 of P.D. No. 198. One of the firmly entrenched principles in
constitutional law is that the courts do not involve themselves with nor delve into the policy
or wisdom of a statute. That is the exclusive concern of the legislative branch of the
government. When the validity of a statute is challenged on constitutional grounds, the sole
function of the court is to determine whether it transcends constitutional limitations or the
limits of legislative power. No such transgression has been shown in this case. 30
Moreover, laws change depending on the evolving needs of society. In a related
development, President Gloria Macapagal-Arroyo inked into law Republic Act No. 9286,
which amended Section 23 of P.D. No. 198 providing that thereafter, the General Manager
of Water Districts shall not be removed from office, except for cause and after due process.
Rep. Act No. 9286 reads:
Republic Act No. 9286
AN ACT FURTHER AMENDING PRESIDENTIAL DECREE NO. 198,
OTHERWISE KNOWN AS "THE PROVINCIAL WATER UTILITIES ACT OF
1973", AS AMENDED
Approved: April 2, 2004
...
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Sec. 2. Section 23 of Presidential Decree No. 198, as amended, is hereby amended to read
as follows:
Sec. 23. The General Manager. 'At the first meeting of the Board, or as soon thereafter as
practicable, the Board shall appoint, by a majority vote, a general manager and shall define
his duties and fix his compensation. Said officer shall not be removed from office, except
for cause and after due process. (Emphasis supplied.)
...
Sec. 5. Effectivity Clause. 'This Act shall take effect upon its approval. 31
Unfortunately for petitioner, Rep. Act No. 9286 is silent as to the retroactivity of the law to
pending cases and must, therefore, be taken to be of prospective application. The general
rule is that in an amendatory act, every case of doubt must be resolved against its
retroactive effect.32 Since the retroactive application of a law usually divests rights that
have already become vested,33 the rule in statutory construction is that all statutes are to be
construed as having only a prospective operation unless the purpose and intention of the
legislature to give them a retrospective effect is expressly declared or is necessarily
implied from the language used.34
First, there is nothing in Rep. Act No. 9286 which provides that it should retroact to the
date of effectivity of P.D. No. 198, the original law. Next, neither is it necessarily implied
from Rep. Act No. 9286 that it or any of its provisions should apply retroactively. Third,
Rep. Act No. 9286 is a substantive amendment of P.D. No. 198 inasmuch as it has changed
the grounds for termination of the General Manager of Water Districts who, under the then
Section 23 of P.D. No. 198, "shall serve at the pleasure of the Board." Under the new law,
however, said General Manager shall not be removed from office, except for cause and
after due process. To apply Rep. Act No. 9286 retroactively to pending cases, such as the
case at bar, will rob the respondents as members of the Board of the Palompon, Leyte
Water District of the right vested to them by P.D. No. 198 to terminate petitioner at their
pleasure or discretion. Stated otherwise, the new law can not be applied to make
respondents accountable for actions which were valid under the law prevailing at the time
the questioned act was committed.
Prescinding from the foregoing premises, at the time petitioner was terminated by the
Board of Directors, the prevailing law was Section 23 of P.D. No. 198 prior to its
amendment by Rep. Act No. 9286.
Petitioner, next, heaves censure on the Court of Appeals for subscribing to the trial court's
view that the petition for mandamus was prematurely filed. We recall in Tanjay Water
Page 115 of 169
District v. Gabaton35 that water districts are government instrumentalities and that their
employees belong to the civil service. Thus, "[t]he hiring and firing of employees of
government-owned or controlled corporations are governed by the Civil Service Law and
Civil Service Rules and Regulations." Tanjay was clear-cut on this matter:
. . . Inasmuch as PD No. 198, as amended, is the original charter of the petitioner, Tanjay
Water District, and respondent Tarlac Water District and all water districts in the
country, they come under the coverage of the civil service law, rules and
regulations. (Emphasis supplied)ςrαlαωlιbrαrÿ
Underlying the rulings of the trial and appellate courts in the case at bar is the doctrine of
primary jurisdiction; i.e., courts cannot and will not resolve a controversy involving a
question which is within the jurisdiction of an administrative tribunal, especially where the
question demands the exercise of sound administrative discretion requiring the special
knowledge, experience and services of the administrative tribunal to determine technical
and intricate matters of fact.36 In Villaflor v. Court of Appeals,37 we revisited the import of
the doctrine of primary jurisdiction, to wit:
In recent years, it has been the jurisprudential trend to apply this doctrine to cases
involving matters that demand the special competence of administrative agencies even if
the question involved is also judicial in character. . .
In cases where the doctrine of primary jurisdiction is clearly applicable, the court cannot
arrogate unto itself the authority to resolve a controversy, the jurisdiction over which is
initially lodged with an administrative body of special competence. In Machete v. Court of
Appeals, the Court upheld the primary jurisdiction of the Department of Agrarian Reform
Adjudicatory Board (DARAB) in an agrarian dispute over the payment of back rentals
under a leasehold contract. In Concerned Officials of the Metropolitan Waterworks and
Sewerage System v. Vasquez [240 SCRA 502], the Court recognized that the MWSS was in
the best position to evaluate and to decide which bid for a waterworks project was
compatible with its development plan. (Emphasis supplied)ςrαlαωlιbrαrÿ
In a surfeit of cases, this Court has held that quasi-judicial bodies like the CSC are better-
equipped in handling cases involving the employment status of employees as those in the
Civil Service since it is within the field of their expertise.38 This is consistent with the
powers and functions of the CSC, being the central personnel agency of the Government, to
carry into effect the provisions of the Civil Service Law and other pertinent
laws,39 including, in this case, P.D. No. 198.
WHEREFORE, the present petition is hereby DENIED. Accordingly, the Decision and the
Resolution dated 15 November 2002 and 01 April
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)

2003, respectively, of the Court of Appeals in CA-G.R. SP No. 42553, are hereby
AFFIRMED. Costs against petitioner.

SO ORDERED.

Page 116 of 169

CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
G.R. No. 95694 October 9, 1997
VICENTE VILLAFLOR, substituted by his heirs, petitioner,
vs.
COURT OF APPEALS and NASIPIT LUMBER CO., INC., respondents.
PANGANIBAN, J.:
In this rather factually complicated case, the Court reiterates the binding force and effect of
findings of specialized administrative agencies as well as those of trial courts when
affirmed by the Court of Appeals; rejects petitioner's theory of simulation of contracts; and
passes upon the qualifications of private respondent corporation to acquire disposable
public agricultural lands prior to the effectivity of the 1973 Constitution.
The Case
Before us is a petition for review on certiorari seeking the reversal of the Decision1 of the
Court of Appeals, dated September 27, 1990, in CA. G.R CV No. 09062, affirming the
dismissal by the trial court of Petitioner Vicente Villaflor's complaint against Private
Respondent Nasipit Lumber Co., Inc. The disposition of both the trial and the appellate
courts are quoted in the statement of facts below.
The Facts
The facts of this case, as narrated in detail by Respondent Court of Appeals, are as
follows:2
The evidence, testimonial and documentary, presented during the trial show that
on January 16, 1940, Cirilo Piencenaves, in a Deed of Absolute Sale (exh. A),
sold to [petitioner], a parcel of agricultural land containing an area of 50
hectares,3 more or less, and particularly described and bounded as follows:
A certain parcel of agricultural land planted to abaca with
visible concrete monuments marking the boundaries and
bounded on the NORTH by Public Land now Private Deeds
on the East by Serafin Villaflor, on the SOUTH by Public
Land; and on the West by land claimed by H. Patete,
Page 117 of 169
containing an area of 60 hectares more or less, now under
Tax Dec. 29451 in the (sic) of said Vicente Villaflor, the
whole parcel of which this particular parcel is only a part, is
assessed at P22,550.00 under the above said Tax Dec.
Number.
This deed states:
That the above described land was sold to the said VICENTE
VILLAFLOR, . . . on June 22, 1937, but no formal document
was then executed, and since then until the present time, the
said Vicente Villaflor has been in possession and occupation
of (the same); (and)
That the above described property was before the sale, of my
exclusive property having inherited from my long dead
parents and my ownership to it and that of my [sic] lasted for
more than fifty (50) years, possessing and occupying same
peacefully, publicly and continuously without interruption for
that length of time.
Also on January 16, 1940, Claudio Otero, in a Deed of Absolute Sale (exh. C)
sold to Villaflor a parcel of agricultural land, containing an area of 24 hectares,
more or less, and particularly described and bounded as follows:
A certain land planted to corn with visible concrete
measurements marking the boundaries and bounded on the
North by Public Land and Tungao Creek; on the East by
Agusan River; on the South by Serafin Villaflor and Cirilo
Piencenaves; and on the West by land of Fermin Bacobo
containing an area of 24 hectares more or less, under Tax
Declaration No. 29451 in the name already of Vicente
Villaflor, the whole parcel of which this particular land is
only a part, is assessed at P22,550.00 under the above said
Tax Declaration No. 29451.
This deed states:
That the above described land was sold to the said VICENTE
VILLAFLOR, . . . on June 22, 1937, but no sound document
was then executed, however since then and until the present
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
time, the said Vicente Villaflor has been in open and
continuous possession and occupation of said land; (and)
That the above described land was before the sale, my own
exclusive property, being inherited from my deceased
parents, and my ownership to it and that of my predecessors
lasted more than fifty (50) years, possessing and occupying
the same, peacefully, openly and interruption for that length
of time.
Likewise on January 16, 1940, Hermogenes Patete, in a Deed of Absolute Sale
(exh. D), sold to Villaflor, a parcel of agricultural land, containing an area of 20
hectares, more or less, and particularly described and bounded as follows:
A certain parcel of agricultural land planted to abaca and corn
with visible concrete monuments marking the boundaries and
bounded on the North by Public Land area-private Road; on
the East by land claimed by Cirilo Piencenaves; on the South
by Public Land containing an area of 20 hectares more or
less, now under Tax Declaration No. 29451 in the name of
Vicente Villaflor the whole parcel of which this particular
parcel, is assessed at P22,550.00 for purposes of taxation
under the above said Tax Declaration No. 29451.
This deed states:
. . . (O)n June 22, 1937 but the formal document was then
executed, and since then until the present time, the said
VICENTE VILLAFLOR has been in continuous and open
possession and occupation of the same; (and)
That the above described property was before the sale, my
own and exclusive property, being inherited from my
deceased parents and my ownership to it and that of my
predecessors lasted more than fifty (50) years, possessing and
occupying same, peacefully, openly and continuously without
interruption for that length of time.
On February 15, 1940, Fermin Bocobo, in a Deed of Absolute Sale (exh. B), sold
to Villaflor, a parcel of agricultural land, containing an area of 18 hectares, more
or less, and particularly described and bounded as follows:
Page 118 of 169
A certain parcel of agricultural land planted with abaca with
visible part marking the corners and bounded on the North by
the corners and bounded on the North by Public Land; on the
East by Cirilo Piencenaves; on the South by Hermogenes
Patete and West by Public Land, containing an area of 18
hectares more or less now under Tax Declaration No. 29451
in the name of Vicente Villaflor. The whole parcel of which
this particular parcel is only a part is assessed as P22,550.00
for purposes of taxation under the above said Tax Declaration
Number (Deed of Absolute Sale executed by Fermin Bocobo
date Feb. 15, 1940). This document was annotated in
Registry of Deeds on February 16, 1940).
This deed states:
That the above described property was before the sale of my
own exclusive property, being inherited from my deceased
parents, and my ownership to it and that of my predecessors
lasted more than fifty (50) years, possessing and occupying
the same peacefully, openly and continuously without
interruption for that length of time.
On November 8, 1946, Villaflor, in a Lease Agreement (exh. Q), 4 leased to
Nasipit Lumber Co., Inc. a parcel of land, containing an area of two (2) hectares,
together with all the improvements existing thereon, for a period of five (5) years
from June 1, 1946 at a rental of P200.00 per annum "to cover the annual rental of
house and building sites for thirty three (33) houses or buildings." This agreement
also provides:5
3. During the term of this lease, the Lessee is authorized and
empowered to build and construct additional houses in
addition to the 33 houses or buildings mentioned in the next
preceding paragraph, provided however, that for every
additional house or building constructed the Lessee shall pay
unto the Lessor an amount of fifty centavos (¢50) per month
for every house or building. The Lessee is empowered and
authorized by the Lessor to sublot (sic) the premises hereby
leased or assign the same or any portion of the land hereby
leased to any person, firm and corporation; (and)
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
4. The Lessee is hereby authorized to make any construction
and/or improvement on the premises hereby leased as he may
deem necessary and proper thereon, provided however, that
any and all such improvements shall become the property of
the Lessor upon the termination of this lease without
obligation on the part of the latter to reimburse the Lessee for
expenses incurred in the construction of the same.
Villaflor claimed having discovered that after the execution of the lease
agreement, that Nasipit Lumber "in bad faith . . . surreptitiously grabbed and
occupied a big portion of plaintiff's property . . ."; that after a confrontation with
the corporate's (sic) field manager, the latter, in a letter dated December 3, 1973
(exh. R),6 stated recalling having "made some sort of agreement for the
occupancy (of the property at Acacia, San Mateo), but I no longer recall the
details and I had forgotten whether or not we did occupy your land. But if, as you
say, we did occupy it, then (he is ) sure that the company is obligated to pay the
rental."
On July 7, 1948, in an "Agreement to Sell" (exh. 2), Villaflor conveyed to Nasipit
Lumber, two (2) parcels of land . . . described as follows:7
PARCEL ONE
Bounded on the North by Public Land and Tungao Creek; on
the East by Agusan River and Serafin Villaflor; on the South
by Public Land, on the West by Public Land. Improvements
thereon consist of abaca, fruit trees, coconuts and thirty
houses of mixed materials belonging to the Nasipit Lumber
Company. Divided into Lot Nos. 5412, 5413, 5488, 5490,
5491, 5492, 5850, 5849, 5860, 5855, 5851, 5854, 5855, 5859,
5858, 5857, 5853, and 5852. Boundaries of this parcel of
land are marked by concrete monuments of the Bureau of
Lands. Containing an area of 112,000 hectares. Assessed at
P17,160.00 according to Tax Declaration No. V-315 dated
April 14, 1946.
PARCEL TWO
Bounded on the North by Pagudasan Creek; on the East by
Agusan River; on the South by Tungao Creek; on the West
by Public Land. Containing an area of 48,000 hectares more
Page 119 of 169
or less. Divided into Lot Nos. 5411, 5410, 5409, and 5399.
Improvements 100 coconut trees, productive, and 300 cacao
trees. Boundaries of said land are marked by concrete
monuments of the Bureau pf (sic) Lands. Assessed value —
P6,290.00 according to Tax No. 317, April 14, 1946.
This Agreement to Sell provides:
3. That beginning today, the Party of the Second Part shall
continue to occupy the property not anymore in concept of
lessee but as prospective owners, it being the sense of the
parties hereto that the Party of the Second Part shall not in
any manner be under any obligation to make any
compensation to the Party of the First Part, for the use, and
occupation of the property herein before described in such
concept of prospective owner, and it likewise being the sense
of the parties hereto to terminate as they do hereby terminate,
effective on the date of this present instrument, the Contract
of Lease, otherwise known as Doc. No. 420, Page No. 36,
Book No. II, Series of 1946 of Notary Public Gabriel R.
Banaag, of the Province of Agusan.
4. That the Party of the Second Part has bound as it does
hereby bind itself, its executors and administrators, to pay
unto the party of the First Part the sum of Five Thousand
Pesos (P5,000.00), Philippine Currency, upon presentation by
the latter to the former of satisfactory evidence that:
(a) The Bureau of Lands will not have
any objection to the obtainment by the
Party of the First Part of a Certificate of
Torrens Title in his favor, either thru
ordinary land registration proceedings or
thru administrative means procedure.
(b) That there is no other private claimant
to the properties hereinbefore described.
5. That the Party of the First Part has bound as he does
hereby bind to undertake immediately after the execution of
these presents to secure and obtain, or cause to be secured
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
and obtained, a Certificate of Torrens Title in his favor over
the properties described on Page (One) hereof, and after
obtainment of such Certificate of Torrens Title, the said Party
of the First Part shall execute a (D)eed of Absolute Sale unto
and in favor of the Party of the Second Part, its executors,
administrators and assigns, it being the sense of the parties
that the Party of the Second Part upon delivery to it of such
deed of absolute sale, shall pay unto the Party of the First
Part in cash, the sum of Twelve Thousand (P12,000.00)
Pesos in Philippine Currency, provided, however, that the
Party of the First Part, shall be reimbursed by the Party of the
Second Part with one half of the expenses incurred by the
Party of the First Part for survey and attorney's fees; and
other incidental expenses not exceeding P300.00.
On December 2, 1948, Villaflor filed Sales Application No.
V-8078 (exh. 1) with the Bureau of Lands, Manila, "to purchase under the
provisions of Chapter V, XI or IX of Commonwealth Act. No. 141 (The Public
Lands Act), as amended, the tract of public lands . . . and described as follows:
"North by Public Land; East by Agusan River and Serafin Villaflor; South by
Public Land and West by public land (Lot Nos. 5379, 5489, 5412, 5490, 5491,
5492, 5849, 5850, 5851, 5413, 5488, 5489, 5852, 5853, 5854, 5855, 5856, 5857,
5858, 5859 and 5860 . . . containing an area of 140 hectares . . . ." Paragraph 6 of
the Application, states: "I understand that this application conveys no right to
occupy the land prior to its approval, and I recognized (sic) that the land covered
by the same is of public domain and any and all rights may have with respect
thereto by virtue of continuous occupation and cultivation are hereby
relinquished to the Government."9 (exh. 1-D)
On December 7, 1948, Villaflor and Nasipit Lumber executed an "Agreement"
(exh 3).10 This contract provides:
1. That the First Party is the possessor since 1930 of two (2)
parcels of land situated in sitio Tungao, Barrio of San Mateo,
Municipality of Butuan, Province of Agusan;
2. That the first parcel of land abovementioned and described
in Plan PLS-97 filed in the office of the Bureau of Lands is
made up of Lots Nos. 5412, 5413, 5488, 5490, 5491, 5492,
5849, 5850, 5851, 5852, 5853, 5854, 5855, 5856, 5857, 5858,
5859 and 5860 and the second parcel of land is made of Lots
Nos. 5399, 5409, 5410 and 5411;
Page 120 of 169
3. That on July 7, 1948, a contract of Agreement to Sell was
executed between the contracting parties herein, covering the
said two parcels of land, copy of said Agreement to Sell is
hereto attached marked as Annex "A" and made an integral
part of this document. The parties hereto agree that the said
Agreement to Sell be maintained in full force and effect with
all its terms and conditions of this present agreement and in
no way be considered as modified.
4. That paragraph 4 of the Contract of Agreement to Sell,
marked as annex, "A" stipulates as follows:
Par. 4. That the Party of the Second Part
has bound as it does hereby bind itself, its
executors and administrators, to pay unto
the Party of the First Part of the sum of
FIVE THOUSAND PESOS (P5,000.00)
Philippine Currency, upon presentation
by the latter to the former of satisfactory
evidence that:
a) The Bureau of Lands will have any
objection to the obtainment by Party of
the First Part of a favor, either thru
ordinary land registration proceedings or
thru administrative means and procedure.
b) That there is no other private claimant
to the properties hereinabove described.
5. That the First Party has on December 2, 1948, submitted to
the Bureau of Lands, a Sales Application for the twenty-two
(22) lots comprising the two abovementioned parcels of land,
the said Sales Application was registered in the said Bureau
under No. V-807;
6. That in reply to the request made by the First Party to the
Bureau of Lands, in connection with the Sales Application
No. V-807, the latter informed the former that action on his
request will be expedited, as per letter of the Chief, Public
Land Division, dated December 2, 1948, copy of which is
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)

hereto attached marked as annex "B" and made an integral
part of this agreement:
7. That for and in consideration of the premises above stated
and the amount of TWENTY FOUR THOUSAND
(P24,000.00) PESOS that the Second Party shall pay to the
First Party, by these presents, the First Party hereby sells,
transfers and conveys unto the Second Party, its successors
and assigns, his right, interest and participation under, an(d)
by virtue of the Sales Application No. V-807, which he has
or may have in the lots mentioned in said Sales Application
No. V-807;
(P7,000.00) PESOS as specified in said document, but shall
also cover the amount of FIVE THOUSAND (P5,000.00)
PESOS to be paid as stipulated in paragraph 8, sub-paragraph
(b) of this present agreement, if the First Party should fail to
comply with the obligations as provided for in paragraphs 2,
4, and 5 of the Agreement to Sell;
10. It is further agreed that the First Party obligates himself to
sign, execute and deliver to and in favor of the Second Party,
its successors and assigns, at anytime upon demand by the
Second Party such other instruments as may be necessary in
order to give full effect to this present agreement;

8. That the amount of TWENTY FOUR THOUSAND
(P24,000.00) PESOS, shall be paid by the Second Party to
the First Party, as follows:
a) The amount of SEVEN THOUSAND
(P7,000.00) PESOS, has already been
paid by the Second Party to the First
Party upon the execution of the
Agreement to Sell, on July 7, 1948;
b) The amount of FIVE THOUSAND
(P5,000.00) PESOS shall be paid upon
the signing of this present agreement; and
c) The balance of TWELVE
THOUSAND (P12,000.00) shall be paid
upon the execution by the First Party of
the Absolute Deed of Sale of the two
parcels of land in question in favor of the
Second Party, and upon delivery to the
Second Party of the Certificate of
Ownership of the said two parcels of
land.
9. It is specially understood that the mortgage constituted by
the First Party in favor of the Second Party, as stated in the
said contract of Agreement to Sell dated July 7, 1948, shall
cover not only the amount of SEVEN THOUSAND
In the Report dated December 31, 1949 by the public land inspector, District
Land Office, Bureau of Lands, in Butuan, the report contains an Indorsement of
the aforesaid District Land Officer recommending rejection of the Sales
Application of Villaflor for having leased the property to another even before he
had acquired transmissible rights thereto.
In a letter of Villaflor dated January 23, 1950, addressed to the Bureau of Lands,
he informed the Bureau Director that he was already occupying the property
when the Bureau's Agusan River Valley Subdivision Project was inaugurated,
that the property was formerly claimed as private properties (sic), and that
therefore, the property was segregated or excluded from disposition because of
the claim of private ownership. In a letter of Nasipit Lumber dated February 22,
1950 (exh. X)11 addressed to the Director of Lands, the corporation informed the
Bureau that it recognized Villaflor as the real owner, claimant and occupant of
the land; that since June 1946, Villaflor leased two (2) hectares inside the land to
the company; that it has no other interest on the land; and that the Sales
Application of Villaflor should be given favorable consideration.
xxx xxx xxx
On July 24, 1950, the scheduled date of auction of the property covered by the
Sales Application, Nasipit Lumber offered the highest bid of P41.00 per hectare,
but since an applicant under CA 141, is allowed to equal the bid of the highest
bidder, Villaflor tendered an equal bid; deposited the equivalent of 10% of the
bid price and then paid the assessment in full.
xxx xxx xxx

Page 121 of 169

CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
On August 16, 1950, Villaflor executed a document, denominated as a "Deed of
Relinquishment of Rights" (exh. N),12 pertinent portion of which reads:
5. That in view of my present business in Manila, and my
change in residence from Butuan, Agusan to the City of
Manila, I cannot, therefore, develope (sic) or cultivate the
land applied for as projected before;
6. That the Nasipit Lumber Company, Inc., a corporation
duly organized . . . is very much interested in acquiring the
land covered by the aforecited application . . . ;
7. That I believe the said company is qualified to acquire
public land, and has the means to develop (sic) the above-
mentioned land;
xxx xxx xxx
WHEREFORE, and in consideration of the amount of FIVE
THOUSAND PESOS (P5,000.00) to be reimbursed to me by
the aforementioned Nasipit Lumber Company, Inc., after its
receipt of the order of award, the said amount representing
part of the purchase price of the land aforesaid, the value of
the improvements I introduced thereon, and the expenses
incurred in the publication of the Notice of Sale, I, the
applicant, Vicente J. Villaflor, hereby voluntarily renounce
and relinquish whatever rights to, and interests I have in the
land covered by my above-mentioned application in favor of
the Nasipit Lumber Company, Inc.
Also on August 16, 1950, Nasipit Lumber filed a Sales Application over the two
(2) parcels of land, covering an area of 140 hectares, more or less. This
application was also numbered V-807 (exh. Y).
On August 17, 1950 the Director of Lands issued an "Order of Award"13 in favor
of Nasipit Lumber Company, Inc., pertinent portion of which reads:
4. That at the auction sale of the land held on July 24, 1950
the highest bid received was that of Nasipit Lumber
Company, Inc. which offered P41.00 per hectare or
Page 122 of 169
P5,740.00 for the whole tract, which bid was equaled by
applicant Vicente J. Villaflor, who deposited the amount of
P574.00 under Official Receipt No. B-1373826 dated July
24, 1950 which is equivalent to 10% of the bid.
Subsequently, the said . . . Villaflor paid the amount of
P5,160.00 in full payment of the purchase price of the above-
mentioned land and for some reasons stated in an instrument
of relinquishment dated August 16, 1950, he (Vicente J.
Villaflor) relinquished his rights to and interest in the said
land in favor of the Nasipit Lumber Company, Inc. who filed
the corresponding application therefore.
In view of the foregoing, and it appearing that the
proceedings had . . . were in accordance with law and in [sic]
existing regulations, the land covered thereby is hereby
awarded to Nasipit Lumber Company, Inc. at P41.00 per
hectare or P5,740.00 for the whole tract.
This application should be entered in the record of this Office
as Sales Entry No. V-407.
It is Villaflor's claim that he only learned of the Order of Award on January 16,
1974, or after his arrival to the Philippines, coming from Indonesia, where he
stayed for more than ten (10) years; that he went to Butuan City in the latter part
of 1973 upon the call of his brother Serafin Villaflor, who was then sick and
learned that Nasipit Lumber (had) failed and refused to pay the agreed rentals,
although his brother was able to collect during the early years; and that Serafin
died three days after his (Vicente's) arrival, and so no accounting of the rentals
could be made; that on November 27, 1973, Villaflor wrote a letter to Mr. G.E.C.
Mears of Nasipit Lumber, reminding him of their verbal agreement in 1955 . . .
that Mr. Mears in a Reply dated December 3, 1973, appears to have referred the
matter to Mr. Noriega, the corporate general manager, but the new set of
corporate officers refused to recognize (Villaflor's) claim, for Mr. Florencio
Tamesis, the general manager of Nasipit Lumber, in a letter dated February 19,
1974, denied Villaflor's itemized claim dated January 5, 1974 (exh. V) to be
without valid and legal basis. In the 5th January, 1974 letter, Villaflor claimed the
total amount of P427,000.00 . . . .
In a formal protest dated January 31, 197414 which Villaflor filed with the Bureau
of Lands, he protested the Sales Application of Nasipit Lumber, claiming that the
company has not paid him P5,000.00 as provided in the Deed of Relinquishment
of Rights dated August 16, 1950.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
xxx xxx xxx
. . . (T)hat in a Decision dated August 8, 1977 (exh. 8), the Director of Lands
found that the payment of the amount of P5,000.00 in the Deed . . . and the
consideration in the Agreement to Sell were duly proven, and ordered the
dismissal of Villaflor's protest and gave due course to the Sales Application of
Nasipit Lumber. Pertinent portion of the Decision penned by Director of Lands,
Ramon Casanova, in the Matter of SP No. V-807 (C-V-407) . . . reads:
xxx xxx xxx
During the proceedings, Villaflor presented another claim
entirely different from his previous claim — this time, for
recovery of rentals in arrears arising from a supposed
contract of lease by Villaflor as lessor in favor of Nasipit as
lessee, and indemnity for damages supposedly caused
improvements on his other property . . . in the staggering
amount of Seventeen Million (P17,000,000.00) Pesos.
Earlier, he had also demanded from NASIPIT . . .
(P427,000.00) . . . also as indemnity for damages to
improvements supposedly caused by NASIPIT on his other
real property as well as for reimbursement of realty taxes
allegedly paid by him thereon.
xxx xxx xxx
It would seem that . . . Villaflor has sought to inject so many
collaterals, if not extraneous claims, into this case. It is the
considered opinion of this Office that any claim not within
the sphere or scope of its adjudicatory authority as an
administrative as well as quasi-judicial body or any issue
which seeks to delve into the merits of incidents clearly
outside of the administrative competence of this Office to
decide may not be entertained.
There is no merit in the contention of Villaflor that owing to
Nasipit's failure to pay the amount of . . . (P5,000.00) . . .
(assuming that Nasipit had failed) the deed of relinquishment
became null and void for lack of consideration. . . . .
xxx xxx xxx
Page 123 of 169
. . . The records clearly show, however, that since the
execution of the deed of relinquishment . . . Villaflor has
always considered and recognized NASIPIT as having the
juridical personality to acquire public lands for agricultural
purposes. . . . .
xxx xxx xxx
Even this Office had not failed to recognize the juridical
personality of NASIPIT to apply for the purchase of public
lands . . . when it awarded to it the land so relinquished by
Villaflor (Order of Award dated August 17, 1950) and
accepted its application therefor. At any rate, the question
whether an applicant is qualified to apply for the acquisition
of public lands is a matter between the applicant and this
Office to decide and which a third party like Villaflor has no
personality to question beyond merely calling the attention of
this Office thereto.
xxx xxx xxx
Villaflor offered no evidence to support his claim of non-
payment beyond his own self-serving assertions and
expressions that he had not been paid said amount. As
protestant in this case, he has the affirmative of the issue. He
is obliged to prove his allegations, otherwise his action will
fail. For, it is a well settled principle (') that if plaintiff upon
whom rests the burden of proving his cause of action fails to
show in a satisfactory manner the facts upon which he bases
his claim, the defendant is under no obligation to prove his
exceptions or special defenses (Belen vs. Belen, 13 Phil. 202;
Mendoza vs. Fulgencio, 8 Phil. 243).
xxx xxx xxx
Consequently, Villaflor's claim that he had not been paid
must perforce fail.
On the other hand, there are strong and compelling reasons to
presume that Villaflor had already been paid the amount of
Five Thousand (P5,000.00) Pesos.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
First, . . . What is surprising, however, is not so much his
claims consisting of gigantic amounts as his having forgotten
to adduce evidence to prove his claim of non-payment of the
Five Thousand (P5,000.00) Pesos during the investigation
proceedings when he had all the time and opportunity to do
so. . . . The fact that he did not adduce or even attempt to
adduce evidence in support thereof shows either that he had
no evidence to offer . . . that NASIPIT had already paid him
in fact. What is worse is that Villaflor did not even bother to
command payment, orally or in writing, of the Five Thousand
(P5,000.00) Pesos which was supposed to be due him since
August 17, 1950, the date when the order of award was
issued to Nasipit, and when his cause of action to recover
payment had accrued. The fact that he only made a command
(sic) for payment on January 31, 1974, when he filed his
protest or twenty-four (24) years later is immediately
nugatory of his claim for non-payment.
But Villaflor maintains that he had no knowledge or notice
that the order of award had already been issued to NASIPIT
as he had gone to Indonesia and he had been absent from the
Philippines during all those twenty-four (24) years. This of
course taxes credulity. . . . .
Second, it should be understood that the condition that
NASIPIT should reimburse Villaflor the amount of Five
Thousand (P5,000.00) Pesos upon its receipt of the order of
award was fulfilled as said award was issued to NASIPIT on
August 17, 1950. The said deed of relinquishment was
prepared and notarized in Manila with Villaflor and NASIPIT
signing the instrument also in Manila on August 16, 1950 (p.
77, (sic)). The following day or barely a day after that, or on
August 17, 1950, the order of award was issued by this
Office to NASIPIT also in Manila. Now, considering that
Villaflor is presumed to be more assiduous in following up
with the Bureau of Lands the expeditious issuance of the
order of award as the payment of the Five Thousand
(P5,000.00) Pesos (consideration) would depend on the
issuance of said order to award NASIPIT, would it not be
reasonable to believe that Villaflor was at hand when the
award was issued to NASIPIT an August 17, 1950, or barely
Page 124 of 169
a day which (sic) he executed the deed of relinquishment on
August 16, 1950, in Manila? . . . .
Third, on the other hand, NASIPIT has in his possession a
sort of "order" upon itself — (the deed of relinquishment
wherein he (sic) obligated itself to reimburse or pay Villaflor
the . . . consideration of the relinquishment upon its receipt of
the order of award) for the payment of the aforesaid amount
the moment the order of award is issued to it. It is reasonable
to presume that NASIPIT has paid the Five Thousand
(P5,000.00) Pesos to Villaflor.
A person in possession of an order on
himself for the payment of money, or the
delivery of anything, has paid the money
or delivered the thing accordingly.
(Section 5(k) B-131 Revised Rules of
Court.
It should be noted that NASIPIT did not produce direct
evidence as proof of its payment of the Five Thousand
(P5,000.00) Pesos to Villaflor. Nasipit's explanation on this
point is found satisfactory.
. . . (I)t was virtually impossible for
NASIPIT, after the lapse of the
intervening 24 years, to be able to cope
up with all the records necessary to show
that the consideration for the deed of
relinquishment had been fully paid. To
expect NASIPIT to keep intact all records
pertinent to the transaction for the whole
quarter of a century would be to require
what even the law does not. Indeed, even
the applicable law itself (Sec. 337,
National Internal Revenue Code) requires
that all records of corporations be
preserved for only a maximum of five
years.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
NASIPIT may well have added that at any rate while "there
are transactions where the proper evidence is impossible or
extremely difficult to produce after the lapse of time . . . the
law creates presumptions of regularity in favor of such
transactions (20 Am. Jur. 232) so that when the basic fact is
established in an action the existence of the presumed fact
must be assumed by force of law. (Rule 13, Uniform Rules of
Evidence; 9 Wigmore, Sec. 2491).
Anent Villaflor's claim that the 140-hectare land relinquished
and awarded to NASIPIT is his private property, little (need)
be said. . . . . The tracks of land referred to therein are not
identical to the lands awarded to NASIPIT. Even in the
assumption that the lands mentioned in the deeds of transfer
are the same as the 140-hectare area awarded to NASIPIT,
their purchase by Villaflor (or) the latter's occupation of the
same did not change the character of the land from that of
public land to a private property. The provision of the law is
specific that public lands can only be acquired in the manner
provided for therein and not otherwise (Sec. 11, C.A. No.
141, as amended). The records show that Villaflor had
applied for the purchase of the lands in question with this
Office (Sales Application No. V-807) on December 2, 1948. .
. . . There is a condition in the sales application signed by
Villaflor to the effect that he recognizes that the land covered
by the same is of public domain and any and all rights he
may have with respect thereto by virtue of continuous
occupation and cultivation are relinquished to the
Government (paragraph 6, Sales Application No. V-807 . . .)
of which Villaflor is very much aware. It also appears that
Villaflor had paid for the publication fees appurtenant to the
sale of the land. He participated in the public auction where
he was declared the successful bidder. He had fully paid the
purchase prive (sic) thereof (sic). It would be a (sic) height of
absurdity for Villaflor to be buying that which is owned by
him if his claim of private ownership thereof is to be
believed. The most that can be said is that his possession was
merely that of a sales applicant to when it had not been
awarded because he relinquished his interest therein in favor
of NASIPIT who (sic) filed a sales application therefor.
xxx xxx xxx
Page 125 of 169
. . . During the investigation proceedings, Villaflor presented
as his Exhibit "(sic)" (which NASIPIT adopted as its own
exhibit and had it marked in evidence as Exhibit "1") a duly
notarized "agreement to Sell" dated July 7, 1948, by virtue of
which Villaflor undertook to sell to Nasipit the tracts of land
mentioned therein, for a consideration of Twenty-Four
Thousand (P24,000.00) Pesos. Said tracts of land have been
verified to be identical to the parcels of land formerly applied
for by Villaflor and which the latter had relinquished in favor
of NASIPIT under a deed of relinquishment executed by him
on August 16, 1950. In another document executed on
December 7, 1948 . . . Villaflor as "FIRST PARTY" and
NASIPIT as "SECOND PARTY" confirmed the "Agreement
to Sell" of July 7, 1948, which was maintained "in full force
and effect with all its terms and conditions . . ." (Exh. "38-
A"); and that "for and in consideration of . . . TWENTY
FOUR THOUSAND (P24,000.00) PESOS that the Second
Party shall pay to the First Party . . . the First Party hereby
sells, transfers and conveys unto the Second Party . . . his
right interest and participation under and by virtue of the
Sales Application No. V-807" and, in its paragraph 8, it made
stipulations as to when part of the said consideration . . . was
paid and when the balance was to be paid, to wit:
a) the amount of SEVEN THOUSAND .
. . PESOS has already been paid by the
Second Party to the First Party upon the
execution of the Agreement to Sell, on
July 17, 1948;
b) the amount of FIVE THOUSAND . . .
PESOS shall be paid upon the signing of
this present agreement; and
c) the amount of TWELVE THOUSAND
. . . PESOS, shall be paid upon the
execution by the First Party of the
Absolute Sale of the Two parcels of land
in question in favor of the Second Party
of the Certificate of Ownership of the
said two parcels of land. (Exh. 38-B).
(Emphasis ours)
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
It is thus clear from this subsequent document marked
Exhibit "38 ANALCO" that of the consideration of the
"Agreement to Sell" dated July 7, 1948, involving the 140-
hectare area relinquished by Villaflor in favor of NASIPIT, in
the amount of Twenty-Four Thousand (P24,000.00) Pesos:
(1) the amount of Seven Thousand (P7,000.00) Pesos was
already paid upon the execution of the "Agreement to Sell"
on July 7, 1948, receipt of which incidentally was admitted
by Villaflor in the document of December 7, 1948;
(2) the amount of Five Thousand (P5,000.00) Pesos was
paid when said document was signed by Vicente J. Villaflor
as the First Party and Nasipit thru its President, as the Second
Party, on December 7, 1948; and
(3) the balance of Twelve Thousand (P12,000.00) Pesos to be
paid upon the execution by the First Party of the Absolute
Deed of Sale of the two parcels of land in favor of the Second
Party, and upon delivery to the Second Party of the
Certificate of Ownership of the said two parcels of land.
Villaflor contends that NASIPIT could not have paid
Villaflor the balance of Twelve Thousand (P12,000.00) Pesos
. . . consideration in the Agreement to Sell will only be paid
to applicant-assignor (referring to Villaflor) upon obtaining a
Torrens Title in his favor over the 140-hectare of land applied
for and upon execution by him of a Deed of Absolute Sale in
favor of Nasipit Lumber Company, Inc. . . . . Inasmuch as
applicant-assignor was not able to obtain a Torrens Title over
the land in question he could not execute an absolute Deed of
(sic) Nasipit Lumber Co., Inc. Hence, the Agreement to Sell
was not carried out and no Twelve Thousand (P12,000.00)
Pesos was overpaid either to the applicant-assignor, much
less to Howard J. Nell Company. (See MEMORANDUM
FOR THE APPLICANT-ASSIGNOR, dated January 5,
1977). . . .
. . . Villaflor did not adduce evidence in support of his claim
that he had not been paid the . . . (P12,000.00) . . .
consideration of the Agreement to Sell dated July 7, 1948
Page 126 of 169
(Exh. "38 NALCO") beyond his mere uncorroborated
assertions. On the other hand, there is strong evidence to
show that said Twelve Thousand (P12,000.00) Pesos had
been paid by (private respondent) to Edward J. Nell
Company by virtue of the Deed of Assignment of Credit
executed by Villaflor (Exh. "41 NALCO") for the credit of
the latter.
Atty. Gabriel Banaag, resident counsel of NASIPIT who is in
a position to know the facts, testified for NASIPIT. He
described that it was he who notarized the "Agreement to
Sell" (Exh. "F"); that he knew about the execution of the
document of December 7, 1948 (Exh. "38") confirming the
said "Agreement to Sell" having been previously consulted
thereon by Jose Fernandez, who signed said document on
behalf of NASIPIT . . . that subsequently, in January 1949,
Villaflor executed a Deed of Assignment of credit in favor of
Edward J. Nell Company (Exh. "41 NALCO") whereby
Villaflor ceded to the latter his receivable for NASIPIT
corresponding to the remaining balance in the amount of
Twelve Thousand . . . Pesos of the total consideration . . .
stipulated in both the "Agreement to Sell" (Exh. "F") and the
document dated December 7, 1948 (Exh. "39");
. . . . He further testified that the said assignment of credit
was communicated to (private respondent) under cover letter
dated January 24, 1949 (Exh. "41-A") and not long thereafter,
by virtue of the said assignment of credit, (private
respondent) paid the balance of Twelve Thousand . . . due to
Villaflor to Edward J. Nell Company . . . . Atty. Banaag's
aforesaid testimony stand unrebutted; hence, must be given
full weight and credit. . . . Villaflor and his counsel were
present when Atty. Banaag's foregoing testimony was
Villaflor did not demur, nor did he rebut the same, despite
having been accorded full opportunity to do so.
xxx xxx xxx
Having found that both the Five Thousand . . . consideration
of the deed of Relinquishment . . . and that the remaining
balance of
. . . (P12,000.00) to complete the Twenty-Four Thousand
(P24,000.00) Pesos consideration of both the Agreement to
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Sell dated July 7, 1948, and the document, dated December 7,
1948, executed by the former in favor of the latter, have been
paid Villaflor the issue on prescription and laches becomes
academic and needs no further discussion.
But more than all the questions thus far raised and resolved is
the question whether a sales patent can be issued to NASIPIT
for the 140-hectare area awarded to it in the light of Section
11, Article XIV of the new Constitution which provides in its
pertinent portion to wit:
. . . No private corporation or association
may hold alienable land of the public
domain except by lease not to exceed one
thousand hectares in area . . . .
The Secretary of Justice had previous occasion to rule on this
point in his opinion No. 140, s. 1974. Said the Honorable
Justice Secretary:
On the second question, (referring to the
questions when may a public land be
considered to have been acquired by
purchase before the effectivity of the new
Constitution posed by the Director of
Lands in his query on the effect on
pending applications for the issuance of
sales patent in the light of Section 11,
Art. XIV of the New Constitution
aforecited), you refer to this Office's
Opinion No. 64 series of 1973 in which I
stated:
On the other hand, with respect to sales
applications ready for issuance of sales
patent, it is my opinion that where the
applicant had, before the Constitution
took effect, fully complied with all this
obligations under the Public Land Act in
order to entitle him to a Sales patent,
there would be no legal or equitable
Page 127 of 169
justification for refusing to issue or
release the sales patent.
With respect to the point as to when the Sales applicant has
complied with all the terms and conditions which would
entitle him to a sales patent, the herein above Secretary of
Justice went on:
That as to when the applicant has
complied with all the terms and
conditions which would entitle him to a
patent is a questioned (sic) fact which
your office would be in the best position
to determine. However, relating this to
the procedure for the processing of
applications mentioned above, I think
that as the applicant has fulfilled the
construction/cultivation requirements and
has fully paid the purchase price, he
should be deemed to have acquired by
purchase the particular tract of land and
(sic) the area (sic) in the provision in
question of the new constitution would
not apply.
From the decision of the Director of Lands, Villaflor filed a Motion for
Reconsideration which was considered as an Appeal M.N.R. Case 4341, to the
Ministry of Natural Resources.
On June 6, 1979, the Minister of Natural Resources rendered a Decision (exh.
9), 15 dismissing the appeal and affirming the decision of the Director of Lands,
pertinent portions of which reads:
After a careful study of the records and the arguments of the
parties, we believe that the appeal is not well taken.
Firstly, the area in dispute is not the private property of
appellant.
The evidence adduced by appellant to establish his claim of
ownership over the subject area consists of deeds of absolute
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
sale executed in his favor on January 16, and February 15,
1940, by four (4) different persons, namely, Cirilo
Piencenaves, Fermin Balobo, Claudio Otero and Hermogenes
Patete.
However, an examination of the technical descriptions of the
tracts of land subject of the deeds of sale will disclose that
said parcels are not identical to, and do not tally with, the
area in controversy.
It is a basic assumption of our policy that
lands of whatever classification belong to
the state. Unless alienated in accordance
with law, it retains its rights over the
same as dominus, (Santiago vs. de los
Santos, L-20241, November 22, 1974, 61
SCRA 152).
For, it is well-settled that no public land
can be acquired by private persons
without any grant, express or implied
from the government. It is indispensable
then that there be showing of title from
the state or any other mode of acquisition
recognized by law. (Lee Hong Hok, et al.
vs. David, et al., L-30389, December 27,
1972, 48 SCRA 379.)
It is well-settled that all lands remain part of the public
domain unless severed therefrom by state grant or unless
alienated in accordance with law.
We, therefore, believe that the aforesaid deeds of sale do not
constitute clear and convincing evidence to establish that the
contested area is of private ownership. Hence, the property
must be held to be public domain.
"There being no evidence whatever that
the property in question was ever
acquired by the applicants or their
ancestors either by composition title from
Page 128 of 169
the Spanish Government or by
possessory information title or by any
other means for the acquisition of public
lands, the property must be held to be
public domain." (Lee Hong Hok, et al.,
vs. David , et al., L-30389 December 27,
1972, 48 SCRA 378-379 citing Heirs of
Datu Pendatun vs. Director of Lands; see
also Director of Lands vs. Reyes, L-
27594, November 28, 1975, 68 SCRA
177).
Be that as it may, appellant, by filing a sales application over
the controverted land, acknowledged unequivocably [sic] that
the same is not his private property.
"As such sales applicant, appellant
manifestly acknowledged that he does
not own the land and that the same is a
public land under the administration of
the Bureau of Lands, to which the
application was submitted, . . . All of its
acts prior thereof, including its real estate
tax declarations, characterized its
possessions of the land as that of a "sales
applicant" and consequently, as one who
expects to buy it, but has not as yet done
so, and is not, therefore, its owner."
(Palawan Agricultural and Industrial Co.,
Inc. vs. Director of Lands, L-25914,
March 21, 1972, 44 SCRA 20, 21).
Secondly, appellant's alleged failure to pay the consideration
stipulated in the deed of relinquishment neither converts said
deed into one without a cause or consideration nor ipso
facto rescinds the same. Appellant, though, has the right to
demand payment with legal interest for the delay or to
demand rescission.
xxx xxx xxx
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
However, appellant's cause of action, either for specific
performance or rescission of contract, with damages, lies
within the jurisdiction of civil courts, not with administrative
bodies.
xxx xxx xxx
Lastly, appellee has acquired a vested right to the subject area
and, therefore, is deemed not affected by the new
constitutional provision that no private corporation may hold
alienable land of the public domain except by lease.
xxx xxx xxx
Implementing the aforesaid Opinion No. 64 of the Secretary
of Justice, the then Secretary of Agriculture and Natural
Resources issued a memorandum, dated February 18, 1974,
which pertinently reads as follows:
In the implementation of the foregoing
opinion, sales application of private
individuals covering areas in excess of 24
hectares and those of corporations,
associations, or partnership which fall
under any of the following categories
shall be given due course and issued
patents, to wit:
From the records, it is evident that the aforestated requisites
have been complied with by appellee long before January 17,
1973, the effectivity of the New Constitution. To restate, the
disputed area was awarded to appellee on August 17, 1950,
the purchase price was fully paid on July 26, 1951, the
cultivation requirements were complied with as per
investigation report dated December 31, 1949, and the land
was surveyed under Pls-97.
On July 6, 1978, petitioner filed a complaint16 in the trial court for "Declaration of Nullity
of Contract (Deed of Relinquishment of Rights), Recovery of Possession (of two parcels of
land subject of the contract), and Damages" at about the same time that he appealed the
decision of the Minister of Natural Resources to the Office of the President.
Page 129 of 169
On January 28, 1983, petitioner died. The trial court ordered his widow, Lourdes D.
Villaflor, to be substituted as petitioner. After trial in due course, the then Court of First
Instance of Agusan del Norte and Butuan City, Branch III,17 dismissed the complaint on the
grounds that: (1) petitioner admitted the due execution and genuineness of the contract and
was estopped from proving its nullity, (2) the verbal lease agreements were unenforceable
under Article 1403 (2) (e) of the Civil Code, and (3) his causes of action were barred by
extinctive prescription and/or laches. It ruled that there was prescription and/or laches
because the alleged verbal lease ended in 1966, but the action was filed only on January 6,
1978. The six-year period within which to file an action on an oral contract per Article
1145 (1) of the Civil Code expired in 1972. The decretal portion18 of the trial court's
decision reads:
WHEREFORE, the foregoing premises duly considered, judgment is hereby
rendered in favor of the defendant and against the plaintiff. Consequently, this
case is hereby ordered DISMISSED. The defendant is hereby declared the lawful
actual physical possessor-occupant and having a better right of possession over
the two (2) parcels of land in litigation described in par. 1.2 of the complaint as
Parcel I and Parcel II, containing a total area of One Hundred Sixty (160)
hectares, and was then the subject of the Sales Application No. V-807 of the
plaintiff (Exhibits 1, 1-A, 1-B, pp. 421 to 421-A, Record), and now of the Sales
Application No. 807, Entry No. V-407 of the defendant Nasipit Lumber
Company (Exhibit Y, pp. 357-358, Record). The Agreements to Sell Real Rights,
Exhibits 2 to 2-C, 3 to 3-B, and the Deed of Relinquishment of Rights, Exhibits
N to N-1, over the two parcels of land in litigation are hereby declared binding
between the plaintiff and the defendant, their successors and assigns.
Double the costs against the plaintiff.
The heirs of petitioner appealed to Respondent Court of Appeals19 which, however,
rendered judgment against petitioner via the assailed Decision dated September 27, 1990
finding petitioner's prayers — (1) for the declaration of nullity of the deed of
relinquishment, (2) for the eviction of private respondent from the property and (3) for the
declaration of petitioner's heirs as owners — to be without basis. The decretal portion20 of
the assailed 49-page, single-spaced Decision curtly reads:
WHEREFORE, the Decision appealed from, is hereby AFFIRMED, with costs
against plaintiff-appellants.
Not satisfied, petitioner's heirs filed the instant 57-page petition for review dated December
7, 1990. In a Resolution dated June 23, 1991, the Court denied this petition "for being late."
On reconsideration — upon plea of counsel that petitioners were "poor" and that a full
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
decision on the merits should be rendered — the Court reinstated the petition and required
comment from private respondent. Eventually, the petition was granted due course and the
parties thus filed their respective memoranda.
The Issues
Petitioner, through his heirs, attributes the following errors to the Court of Appeals:
I. Are the findings of the Court of Appeals conclusive and binding upon the
Supreme Court?
II. Are the findings of the Court of Appeals fortified by the similar findings made
by the Director of Lands and the Minister of Natural Resources (as well as by the
Office of the President)?
III. Was there "forum shopping?".
IV. Are the findings of facts of the Court of Appeals and the trial court supported
by the evidence and the law?
V. Are the findings of the Court of Appeals supported by the very terms of the
contracts which were under consideration by the said court?
VI. Did the Court of Appeals, in construing the subject contracts, consider the
contemporaneous and subsequent act of the parties pursuant to article 1371 of the
Civil Code?
VII. Did the Court of Appeals consider the fact and the unrefuted claim of
Villaflor that he never knew of the award in favor of Nasipit?
VIII. Did the Court of Appeals correctly apply the rules on evidence in its
findings that Villaflor was paid the P5,000.00 consideration because Villaflor did
not adduce any proof that he was not paid?
IX. Is the Court of Appeals' conclusion that the contract is not simulated or
fictitious simply because it is genuine and duly executed by the parties, supported
by logic or the law?
Page 130 of 169
X. May the prestations in a contract agreeing to transfer certain rights constitute
estoppel when this very contract is the subject of an action for annulment on the
ground that it is fictitious?
XI. Is the Court of Appeals' conclusion that the lease agreement between
Villaflor is verbal and therefore, unenforceable supported by the evidence and the
law?
After a review of the various submissions of the parties, particularly those of petitioner, this
Court believes and holds that the issues can be condensed into three as follows:
(1) Did the Court of Appeals err in adopting or relying on the factual findings of
the Bureau of Lands, especially those affirmed by the Minister (now Secretary)
of Natural Resources and the trial court?
(2) Did the Court of Appeals err in upholding the validity of the contracts to sell
and the deed of relinquishment? Otherwise stated, did the Court of Appeals err in
finding the deed of relinquishment of rights and the contracts to sell valid, and
not simulated or fictitious?
(3) Is the private respondent qualified to acquire title over the disputed property?
The Court's Ruling
The petition is bereft of merit. It basically questions the sufficiency of the evidence relied
upon by the Court of Appeals, alleging that public respondent's factual findings were based
on speculations, surmises and conjectures. Petitioner insists that a review of those findings
is in order because they were allegedly (1) rooted, not on specific evidence, but on
conclusions and inferences of the Director of Lands which were, in turn, based on
misapprehension of the applicable law on simulated contracts; (2) arrived at whimsically —
totally ignoring the substantial and admitted fact that petitioner was not notified of the
award in favor of private respondent; and (3) grounded on errors and misapprehensions,
particularly those relating to the identity of the disputed area.
First Issue: Primary Jurisdiction of the Director of Lands and
Finality of Factual Findings of the Court of Appeals
Underlying the rulings of the trial and appellate courts is the doctrine of primary
jurisdiction; i.e., courts cannot and will not resolve a controversy involving a question
which is within the jurisdiction of an administrative tribunal, especially where the question
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
demands the exercise of sound administrative discretion requiring the special knowledge,
experience and services of the administrative tribunal to determine technical and intricate
matters of fact.21
In recent years, it has been the jurisprudential trend to apply this doctrine to cases involving
matters that demand the special competence of administrative agencies even if the question
involved is also judicial in character. It applies "where a claim is originally cognizable in
the courts, and comes into play whenever enforcement of the claim requires the resolution
of issues which, under a regulatory scheme, have been placed within the special
competence of an administrative body; in such case, the judicial process is suspended
pending referral of such issues to the administrative body for its view."22
In cases where the doctrine of primary jurisdiction is clearly applicable, the court cannot
arrogate unto itself the authority to resolve a controversy, the jurisdiction over which is
initially lodged with an administrative body of special competence. 23 In Machete vs. Court
of Appeals, the Court upheld the primary jurisdiction of the Department of Agrarian
Reform Adjudicatory Board (DARAB) in an agrarian dispute over the payment of back
rentals under a leasehold contract.24 In Concerned Officials of the Metropolitan
Waterworks and Sewerage System vs. Vasquez,25 the Court recognized that the MWSS was
in the best position to evaluate and to decide which bid for a waterworks project was
compatible with its development plan.
The rationale underlying the doctrine of primary jurisdiction finds application in this case,
since the questions on the identity of the land in dispute and the factual qualification of
private respondent as an awardee of a sales application require a technical determination by
the Bureau of Lands as the administrative agency with the expertise to determine such
matters. Because these issues preclude prior judicial determination, it behooves the courts
to stand aside even when they apparently have statutory power to proceed, in recognition of
the primary jurisdiction of the administrative agency.26
One thrust of the multiplication of administrative agencies is that the
interpretation of contracts and the determination of private rights thereunder is no
longer a uniquely judicial function, exercisable only by our regular courts. 27
Petitioner initiated his action with a protest before the Bureau of Lands and followed it
through in the Ministry of Natural Resources and thereafter in the Office of the President.
Consistent with the doctrine of primary jurisdiction, the trial and the appellate courts had
reason to rely on the findings of these specialized administrative bodies.
The primary jurisdiction of the director of lands and the minister of natural resources over
the issues regarding the identity of the disputed land and the qualification of an awardee of
Page 131 of 169
a sales patent is established by Sections 3 and 4 of Commonwealth Act No. 141, also
known as the Public Land Act:
Sec. 3. The Secretary of Agriculture and Commerce (now Secretary of Natural
Resources) shall be the executive officer charged with carrying out the provisions
of this Act through the Director of Lands, who shall act under his immediate
control.
Sec. 4. Subject to said control, the Director of Lands shall have direct executive
control of the survey, classification, lease, sale or any other form of concession or
disposition and management of the lands of the public domain, and his decision
as to questions of fact shall be conclusive when approved by the Secretary of
Agriculture and Commerce.
Thus, the Director of Lands, in his decision, said:28
. . . It is merely whether or not Villaflor has been paid the Five Thousand
(P5,000.00) Pesos stipulated consideration of the deed of relinquishment made by
him without touching on the nature of the deed of relinquishment. The
administration and disposition of public lands is primarily vested in the Director
of Lands and ultimately with the Secretary of Agriculture and Natural Resources
(now Secretary of Natural Resources), and to this end —
Our Supreme Court has recognized that the Director of Lands
is a quasi-judicial officer who passes on issues of mixed facts
and law (Ortua vs. Bingson Encarnacion, 59 Phil 440).
Sections 3 and 4 of the Public Land Law thus mean that the
Secretary of Agriculture and Natural Resources shall be the
final arbiter on questions of fact in public land conflicts
(Heirs of Varela vs. Aquino, 71 Phil 69; Julian vs. Apostol,
52 Phil 442).
The ruling of this Office in its order dated September 10, 1975, is worth
reiterating, thus:
. . . it is our opinion that in the exercise of his power of
executive control, administrative disposition and allegation of
public land, the Director of Lands should entertain the protest
of Villaflor and conduct formal investigation . . . to determine
the following points: (a) whether or not the Nasipit Lumber
Company, Inc. paid or reimbursed to Villaflor the
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
consideration of the rights in the amount of P5,000.00 and
what evidence the company has to prove payment, the
relinquishment of rights being part of the administrative
process in the disposition of the land in question . . . .
. . . . Besides, the authority of the
Director of Lands to pass upon and
determine questions considered inherent
in or essential to the efficient exercise of
his powers like the incident at issue, i.e. ,
whether Villaflor had been paid or not, is
conceded bylaw.
Reliance by the trial and the appellate courts on the factual findings of the Director of
Lands and the Minister of Natural Resources is not misplaced. By reason of the special
knowledge and expertise of said administrative agencies over matters falling under their
jurisdiction, they are in a better position to pass judgment thereon; thus, their findings of
fact in that regard are generally accorded great respect, if not finality, 29 by the courts.30 The
findings of fact of an administrative agency must be respected as long as they are supported
by substantial evidence, even if such evidence might not be overwhelming or even
preponderant. It is not the task of an appellate court to weigh once more the evidence
submitted before the administrative body and to substitute its own judgment for that of the
administrative agency in respect of sufficiency of evidence. 31
However, the rule that factual findings of an administrative agency are accorded respect
and even finality by courts admits of exceptions. This is true also in assessing factual
findings of lower courts.32 It is incumbent on the petitioner to show that the resolution of
the factual issues by the administrative agency and/or by the trial court falls under any of
the exceptions. Otherwise, this Court will not disturb such findings.33
We mention and quote extensively from the rulings of the Bureau of Lands and the
Minister of Natural Resources because the points, questions and issues raised by petitioner
before the trial court, the appellate court and now before this Court are basically the same
as those brought up before the aforesaid specialized administrative agencies. As held by the
Court of
Appeals:34
We find that the contentious points raised by appellant in this action, are
substantially the same matters he raised in BL Claim No. 873 (N). In both
actions, he claimed private ownership over the land in question, assailed the
validity and effectiveness of the Deed of Relinquishment of Rights he executed in
Page 132 of 169
August 16, 1950, that he had not been paid the P5,000.00 consideration, the value
of the improvements he introduced on the land and other expenses incurred by
him.
In this instance, both the principle of primary jurisdiction of administrative agencies and
the doctrine of finality of factual findings of the trial courts, particularly when affirmed by
the Court of Appeals as in this case, militate against petitioner's cause. Indeed, petitioner
has not given us sufficient reason to deviate from them.
Land in Dispute Is Public Land
Petitioner argues that even if the technical description in the deeds of sale and those in the
sales application were not identical, the area in dispute remains his private property. He
alleges that the deeds did not contain any technical description, as they were executed prior
to the survey conducted by the Bureau of Lands; thus, the properties sold were merely
described by reference to natural boundaries. His private ownership thereof was also
allegedly attested to by private respondent's former field manager in the latter's February
22, 1950 letter, which contained an admission that the land leased by private respondent
was covered by the sales application.
This contention is specious. The lack of technical description did not prove that the finding
of the Director of Lands lacked substantial evidence. Here, the issue is not so much
whether the subject land is identical with the property purchased by petitioner. The issue,
rather, is whether the land covered by the sales application is private or public land. In his
sales application, petitioner expressly admitted that said property was public land. This is
formidable evidence as it amounts to an admission against interest.
In the exercise of his primary jurisdiction over the issue, Director of Lands Casanova ruled
that the land was public:35
. . . Even (o)n the assumption that the lands mentioned in the deeds of transfer are
the same as the 140-hectare area awarded to Nasipit, their purchase by Villaflor
(or) the latter's occupation of the same did not change the character of the land
from that of public land to a private property. The provision of the law is specific
that public lands can only be acquired in the manner provided for therein and not
otherwise (Sec. 11, C.A. No. 141, as amended). The records show that Villaflor
had applied for the purchase of lands in question with this Office (Sales
Application No. V-807) on December 2, 1948. . . . There is a condition in the
sales application . . . to the effect that he recognizes that the land covered by the
same is of public domain and any and all rights he may have with respect thereto
by virtue of continuous occupation and cultivation are relinquished to the
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Government (paragraph 6, Sales Application No. V-807 of Vicente J. Villaflor, p.
21, carpeta) of which Villaflor is very much aware. It also appears that Villaflor
had paid for the publication fees appurtenant to the sale of the land. He
participated in the public auction where he was declared the successful bidder.
He had fully paid the purchase prive (sic) thereor (sic). It would be a (sic) height
of absurdity for Villaflor to be buying that which is owned by him if his claim of
private ownership thereof is to be
believed. . . . .
This finding was affirmed by the Minister of Natural Resources:36
Firstly, the area in dispute is not the private property of appellant (herein
petitioner).
The evidence adduced by (petitioner) to establish his claim of ownership over the
subject area consists of deeds of absolute sale executed in his favor . . . .
However, an examination of the technical descriptions of the tracts of land
subject of the deeds of sale will disclose that said parcels are not identical to, and
do not tally with, the area in controversy.
It is a basic assumption of our policy that lands of whatever
classification belong to the state. Unless alienated in
accordance with law, it retains its rights over the same as
dominus. (Santiago vs. de los Santos, L-20241, November
22, 1974, 61 SCRA 152).
For it is well-settled that no public land can be acquired by
private persons without any grant, express or implied from
the government. It is indispensable then that there be showing
of title from the state or any other mode of acquisition
recognized by law. (Lee Hong Hok, et al. vs. David, et al., L-
30389, December 27, 1972, 48 SCRA 379).
xxx xxx xxx
We, therefore, believe that the aforesaid deeds of sale do not constitute clear and
convincing evidence to establish that the contested area is of private ownership.
Hence, the property must be held to be public domain.
Page 133 of 169
There being no evidence whatever that the property in
question was ever acquired by the applicants or their
ancestors either by composition title from the Spanish
Government or by possessory information title or by any
other means for the acquisition of public lands, the property
must be held to be public domain.
Be that as it may, [petitioner], by filing a sales application over the controverted
land, acknowledged unequivocably [sic] that the same is not his private property.
As such sales applicant manifestly acknowledged that he
does not own the land and that the same is a public land
under the administration of the Bureau of Lands, to which the
application was submitted, . . . All of its acts prior thereof,
including its real estate tax declarations, characterized its
possessions of the land as that of a "sales applicant". And
consequently, as one who expects to buy it, has not as yet
done so, and is not, therefore, its owner." (Palawan
Agricultural and Industrial Co., Inc. vs. Director of Lands, L-
25914, March 21, 1972, 44 SCRA 15).
Clearly, this issue falls under the primary jurisdiction of the Director of Lands because its
resolution requires "survey, classification, . . . disposition and management of the lands of
the public domain." It follows that his rulings deserve great respect. As petitioner failed to
show that this factual finding of the Director of Lands was unsupported by substantial
evidence, it assumes finality. Thus, both the trial and the appellate courts correctly relied on
such finding.37 We can do no less.
Second Issue: No Simulation of Contracts Proven
Petitioner insists that contrary to Article 137138 of the Civil Code, Respondent Court
erroneously ignored the contemporaneous and subsequent acts of the parties; hence, it
failed to ascertain their true intentions. However, the rule on the interpretation of contracts
that was alluded to by petitioner is used in affirming, not negating, their validity. Thus,
Article 1373,39 which is a conjunct of Article 1371, provides that, if the instrument is
susceptible of two or more interpretations, the interpretation which will make it valid and
effectual should be adopted. In this light, it is not difficult to understand that the legal basis
urged by petitioner does not support his allegation that the contracts to sell and the deed of
relinquishment are simulated and fictitious. Properly understood, such rules on
interpretation even negate petitioner's thesis.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
But let us indulge the petitioner awhile and determine whether the cited contemporaneous
and subsequent acts of the parties support his allegation of simulation. Petitioner asserts
that the relinquishment of rights and the agreements to sell were simulated because, first,
the language and terms of said contracts negated private respondent's acquisition of
ownership of the land in issue; and second, contemporaneous and subsequent
communications between him and private respondent allegedly showed that the latter
admitted that petitioner owned and occupied the two parcels; i.e., that private respondent
was not applying for said parcels but was interested only in the two hectares it had leased,
and that private respondent supported petitioner's application for a patent.
Petitioner explains that the Agreement to Sell dated December 7, 1948 did not and could
not transfer ownership because paragraph 8 (c) thereof stipulates that the "balance of
twelve thousand pesos (12,000.00) shall be paid upon the execution by the First Party
[petitioner] of the Absolute Deed of Sale of the two parcels of land in question in favor of
the Second Party, and upon delivery to the Second Party [private respondent] of the
Certificate of Ownership of the said two parcels of land." The mortgage provisions in
paragraphs 6 and 7 of the agreement state that the P7,000.00 and P5,000.00 were "earnest
money or a loan with antichresis by the free occupancy and use given to Nasipit of the 140
hectares of land not anymore as a lessee." If the agreement to sell transferred ownership to
Nasipit, then why was it necessary to require petitioner, in a second agreement, to mortgage
his property in the event of nonfulfillment of the prestations in the first agreement?
True, the agreement to sell did not absolutely transfer ownership of the land to private
respondent. This fact, however, does not show that the agreement was simulated.
Petitioner's delivery of the Certificate of Ownership and execution of the deed of absolute
sale were suspensive conditions, which gave rise to a corresponding obligation on the part
of the private respondent, i.e., the payment of the last installment of the consideration
mentioned in the December 7, 1948 Agreement. Such conditions did not affect the
perfection of the contract or prove simulation. Neither did the mortgage.
Simulation occurs when an apparent contract is a declaration of a fictitious will,
deliberately made by agreement of the parties, in order to produce, for the purpose of
deception, the appearance of a juridical act which does not exist or is different from that
which was really executed.40 Such an intention is not apparent in the agreements. The intent
to sell, on the other hand, is as clear as daylight.
Petitioner alleges further that the deed of relinquishment of right did not give full effect to
the two agreements to sell, because the preliminary clauses of the deed allegedly served
only to give private respondent an interest in the property as a future owner thereof and to
enable respondent to follow up petitioner's sales application.
Page 134 of 169
We disagree. Such an intention is not indicated in the deed. On the contrary, a real and
factual sale is evident in paragraph 6 thereof, which states: "That the Nasipit Lumber Co.,
Inc., . . . is very much interested in acquiring the land covered by the aforecited application
to be used for purposes of mechanized, farming" and the penultimate paragraph stating: ". .
. VICENTE J. VILLAFLOR, hereby voluntarily renounce and relinquish whatever rights
to, and interests I have in the land covered by my above-mentioned application in favor of
the Nasipit Lumber Co., Inc."
We also hold that no simulation is shown either in the letter, dated December 3, 1973, of
the former field manager of private respondent, George Mear. A pertinent portion of the
letter reads:
(a)s regards your property at Acacia, San Mateo, I recall that we made some sort
of agreement for the occupancy, but I no longer recall the details and I had
forgotten whether or not we actually did occupy your land. But if, as you say, we
did occupy it, then I am sure that the Company is obligated to pay a rental.
The letter did not contain any express admission that private respondent was still leasing
the land from petitioner as of that date. According to Mear, he could no longer recall the
details of his agreement with petitioner. This cannot be read as evidence of the simulation
of either the deed of relinquishment or the agreements to sell. It is evidence merely of an
honest lack of recollection.
Petitioner also alleges that he continued to pay realty taxes on the land even after the
execution of said contracts. This is immaterial because payment of realty taxes does not
necessarily prove ownership, much less simulation of said contracts.41
Nonpayment of the Consideration
Did Not Prove Simulation
Petitioner insists that nonpayment of the consideration in the contracts proves their
simulation. We disagree. Nonpayment, at most, gives him only the right to sue for
collection. Generally, in a contract of sale, payment of the price is a resolutory condition
and the remedy of the seller is to exact fulfillment or, in case of a substantial breach, to
rescind the contract under Article 1191 of the Civil Code.42 However, failure to pay is not
even a breach, but merely an event which prevents the vendor's obligation to convey title
from acquiring binding force.43
Petitioner also argues that Respondent Court violated evidentiary rules in upholding the
ruling of the Director of Lands that petitioner did not present evidence to show private
respondent's failure to pay him. We disagree. Prior to the amendment of the rules on
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
evidence on March 14, 1989, Section 1, Rule 131, states that each party must prove his or
her own affirmative allegations.44 Thus, the burden of proof in any cause rested upon the
party who, as determined by the pleadings or the nature of the case, asserts the affirmative
of an issue and remains there until the termination of the action. 45 Although nonpayment is
a negative fact which need not be proved, the party seeking payment is still required to
prove the existence of the debt and the fact that it is already due. 46
Petitioner showed the existence of the obligation with the presentation of the contracts, but
did not present any evidence that he demanded payment from private respondent. The
demand letters dated January 2 and 5, 1974 (Exhs. "J" and "U"), adduced in evidence by
petitioner, were for the payment of back rentals, damages to improvements and
reimbursement of acquisition costs and realty taxes, not payment arising from the contract
to sell.
Thus, we cannot fault Respondent Court for adopting the finding of the Director of Lands
that petitioner "offered no evidence to support his claim of nonpayment beyond his own
self-serving assertions," as he did not even demand "payment, orally or in writing, of the
five thousand (P5,000.00) pesos which was supposed to be due him since August 17, 1950,
the date when the order of award was issued to Nasipit, and when his cause of action to
recover payment had accrued." Nonpayment of the consideration in the contracts to sell or
the deed of relinquishment was raised for the first time in the protest filed with the Bureau
of Lands on January 31, 1974. But this protest letter was not the demand letter required by
law.
Petitioner alleges that the assignment of credit and the letter of the former field manager of
private respondent are contemporaneous and subsequent acts revealing the nonpayment of
the consideration. He maintains that the P12,000.00 credit assigned pertains to the
P5,000.00 and P7,000.00 initial payments in the December 7, 1948 Agreement, because the
balance of P12,000.00 was not yet "due and accruing." This is consistent, he argues, with
the representation that private respondent was not interested in filing a sales application
over the land in issue and that Nasipit was instead supporting petitioner's application
thereto in Mear's letter to the Director of Lands dated February 22, 1950 (Exh. "X")47
This argument is too strained to be acceptable. The assignment of credit did not establish
the nondelivery of these initial payments of the total consideration. First, the assignment of
credit happened on January 19, 1949, or a month after the signing of the December 7, 1948
Agreement and almost six months after the July 7, 1948 Agreement to Sell. Second, it does
not overcome the recitation in the Agreement of December 7, 1948: ". . . a) The amount of
SEVEN THOUSAND (P7,000.00) PESOS has already been paid by the Second Party to
the First Party upon the execution of the Agreement to Sell, on July 7, 1948; b) The amount
of FIVE THOUSAND (P5,000.00) PESOS shall be paid upon the signing of this present
agreement; . . . . "
Page 135 of 169
Aside from these facts, the Director of Lands found evidence of greater weight showing
that payment was actually made:48
. . . (T)here is strong evidence to show that said . . . (P12,000.00) had been paid
by NASIPIT to Edward J. Nell Company by virtue of the Deed of Assignment of
Credit executed by Villaflor (Exh. "41 NALCO") for the credit of the latter.
Atty. Gabriel Banaag, resident counsel of NASIPIT . . . declared that it was he
who notarized the "Agreement to Sell" (Exh. "F"); . . . that subsequently, in
January 1949, Villaflor executed a Deed of Assignment of credit in favor of
Edward J. Nell Company (Exh. "41 NALCO") whereby Villaflor ceded to the
latter his receivable for NASIPIT corresponding to the remaining balance in the
amount of . . . (P12,000.00) . . . of the total consideration . . . . ; He further
testified that the said assignment . . . was communicated to NASIPIT under cover
letter dated January 24, 1949 (Exh. "41-A") and not long thereafter, by virtue of
the said assignment of credit, NASIPIT paid the balance . . . to Edward J. Nell
Company (p. 58, ibid). Atty. Banaag's aforesaid testimony stand unrebutted;
hence, must be given full weight and credit.
xxx xxx xxx
The Director of Lands also found that there had been payment of the consideration in the
relinquishment of rights:49
On the other hand, there are strong and compelling reasons to presume that
Villaflor had already been paid the amount of Five Thousand (P5,000.00) Pesos.
First, . . . What is surprising, however, is not so much his claims consisting of
gigantic amounts as his having forgotten to adduce evidence to prove his claim of
non-payment of the Five Thousand (P5,000.00) Pesos during the investigation
proceedings when he had all the time and opportunity to do so. . . . . The fact that
he did not adduce or even attempt to adduce evidence in support thereof shows
either that he had no evidence to offer of that NASIPIT had already paid him in
fact. What is worse is that Villaflor did not even bother to command payment,
orally or in writing, of the Five Thousand (P5,000.00) Pesos which was supposed
to be due him since August 17, 1950, the date when the order of award was
issued to Nasipit, and when his cause of action to recover payment had accrued.
The fact that he only made a command for payment on January 31, 1974, when
he filed his protest or twenty-four (24) years later is immediately nugatory of his
claim for non-payment.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
But Villaflor maintains that he had no knowledge or notice that the order of
award had already been issued to NASIPIT as he had gone to Indonesia and he
had been absent from the Philippines during all those twenty-four (24) years.
This of course taxes credulity. . . .
. . . It is more in keeping with the ordinary course of things
that he should have acquired information as to what was
transpiring in his affairs in Manila . . . .
Second, it should be understood that the condition that NASIPIT should
reimburse Villaflor the amount of Five Thousand (P5,000.00) Pesos upon its
receipt of the order of award was fulfilled as said award was issued to NASIPIT
on August 17, 1950. The said deed of relinquishment was prepared and notarized
in Manila with Villaflor and NASIPIT signing the instrument also in Manila.
Now, considering that Villaflor is presumed to be more assiduous in following up
with the Bureau of Lands the expeditious issuance of the order of award as the
(consideration) would depend on the issuance of said order to award NASIPIT,
would it not be reasonable to believe that Villaflor was at hand when the award
was issued to NASIPIT on August 17, 1950, or barely a day which he executed
the deed of relinquishment on August 16, 1950, in Manila? . . . .
Third, on the other hand, NASIPIT has in his possession a sort of "order" upon
itself — (the deed of relinquishment wherein he(sic) obligated itself to reimburse
or pay Villaflor the . . . consideration of the relinquishment upon its receipt of the
order of award) for the payment of the aforesaid amount the moment the order of
award is issued to it. It is reasonable to presume that NASIPIT has paid the
(consideration) to Villaflor.
xxx xxx xxx
. . . (I)t was virtually impossible for NASIPIT, after the lapse of the intervening
24 years, to be able to cope up with all the records necessary to show that the
consideration for the deed of relinquishment had been fully paid. To expect
NASIPIT to keep intact all records pertinent to the transaction for the whole
quarter of a century would be to require what even the law does not. Indeed, even
the applicable law itself (Sec. 337, National Internal Revenue Code) requires that
all records of corporations be preserved for only a maximum of five years.
NASIPIT may well have added that at any rate while there are transactions where
the proper evidence is impossible or extremely difficult to produce after the lapse
of time . . . the law creates presumptions of regularity in favor of such
Page 136 of 169
transactions (20 Am. Jur. 232) so that when the basic fact is established in an
action the existence of the presumed fact must be assumed by force of law. (Rule
13, Uniform Rules of Evidence; 9 Wigmore, Sec. 2491).
The Court also notes that Mear's letter of February 22, 1950 was sent six months prior to
the execution of the deed of relinquishment of right. At the time of its writing, private
respondent had not perfected its ownership of the land to be able to qualify as a sales
applicant. Besides, although he was a party to the July 7, 1948 Agreement to Sell, Mear
was not a signatory to the Deed of Relinquishment or to the December 7, 1948 Agreement
to Sell. Thus, he cannot be expected to know the existence of and the amendments to the
later contracts. These circumstances explain the mistaken representations, not
misrepresentations, in said letter.
Lack of Notice of the Award
Petitioner insists that private respondent suppressed evidence, pointing to his not having
been notified of the Order of Award dated August 17, 1950. 50 At the bottom of page 2 of
the order, petitioner was not listed as one of the parties who were to be furnished a copy by
Director of Lands Jose P. Dans. Petitioner also posits that Public Land Inspector Sulpicio
A. Taeza irregularly received the copies for both private respondent and the city treasurer
of Butuan City. The lack of notice for petitioner can be easily explained. Plainly, petitioner
was not entitled to said notice of award from the Director of Lands, because by then, he had
already relinquished his rights to the disputed land in favor of private respondent. In the
heading of the order, he was referred to as sales applicant-assignor. In paragraph number 4,
the order stated that, on August 16, 1950, he relinquished his rights to the land subject of
the award to private respondent. From such date, the sales application was considered to be
a matter between the Bureau of Lands and private respondent only. Considering these facts,
the failure to give petitioner a copy of the notice of the award cannot be considered as
suppression of evidence.51 Furthermore, this order was in fact available to petitioner and
had been referred to by him since January 31, 1974 when he filed his protest with the
Bureau of Lands.52
Third Issue: Private Respondent Qualified
for an Award of Public Land
Petitioner asserts that private respondent was legally disqualified from acquiring the parcels
of land in question because it was not authorized by its charter to acquire disposable public
agricultural lands under Sections 121, 122 and 123 of the Public Land Act, prior to its
amendment by P.D. No. 763. We disagree. The requirements for a sales application under
the Public Land Act are: (1) the possession of the qualifications required by said Act (under
Section 29) and (2) the lack of the disqualifications mentioned therein (under Sections 121,
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
122, and 123). However, the transfer of ownership via the two agreements dated July 7 and
December 7, 1948 and the relinquishment of rights, being private contracts, were binding
only between petitioner and private respondent. The Public Land Act finds no relevance
because the disputed land was covered by said Act only after the issuance of the order of
award in favor of private respondent. Thus, the possession of any disqualification by
private respondent under said Act is immaterial to the private contracts between the parties
thereto. (We are not, however, suggesting a departure from the rule that laws are deemed
written in contracts.) Consideration of said provisions of the Act will further show their
inapplicability to these contracts. Section 121 of the Act pertains to acquisitions of public
land by a corporation from a grantee, but petitioner never became a grantee of the disputed
land. On the other hand, private respondent itself was the direct grantee. Sections 122 and
123 disqualify corporations, which are not authorized by their charter, from acquiring
public land; the records do not show that private respondent was not so authorized under its
charter.
Also, the determination by the Director of Lands and the Minister of Natural Resources of
the qualification of private respondent to become an awardee or grantee under the Act is
persuasive on Respondent Court. In Espinosa vs. Makalintal,53 the Court ruled that, by law,
the powers of the Secretary of Agriculture and Natural Resources regarding the disposition
of public lands — including the approval, rejection, and reinstatement of applications —
are of executive and administrative nature. (Such powers, however, do not include the
judicial power to decide controversies arising from disagreements in civil or contractual
relations between the litigants.) Consequently, the determination of whether private
respondent is qualified to become an awardee of public land under C.A. 141 by sales
application is included therein.
All told, the only disqualification that can be imputed to private respondent is the
prohibition in the 1973 Constitution against the holding of alienable lands of the public
domain by corporations.54 However, this Court earlier settled the matter, ruling that said
constitutional prohibition had no retroactive effect and could not prevail over a vested
right to the land. In Ayog vs. Cusi, Jr.,55 this Court declared:
We hold that the said constitutional prohibition has no retroactive application to
the sales application of Biñan Development Co., Inc. because it had already
acquired a vested right to the land applied for at the time the 1973 Constitution
took effect.
That vested right has to be respected. It could not be abrogated by the new
Constitution. Section 2, Article XIII of the 1935 Constitution allows private
corporations to purchase public agricultural lands not exceeding one thousand
and twenty-four hectares. Petitioner's prohibition action is barred by the doctrine
of vested rights in constitutional law.
Page 137 of 169
"A right is vested when the right to enjoyment has become the property of some
particular person or persons as a present interest." (16 C.J.S. 1173). It is "the
privilege to enjoy property legally vested, to enforce contracts, and enjoy the
rights of property conferred by existing law" (12 C.J. 955, Note 46, No. 6) or
"some right or interest in property which has become fixed and established and is
no longer open to doubt or controversy" (Downs vs. Blount, 170 Fed. 15, 20,
cited in Balboa vs. Farrales, 51 Phil. 498, 502).
The due process clause prohibits the annihilation of vested rights. "A state may
not impair vested rights by legislative enactment, by the enactment or by the
subsequent repeal of a municipal ordinance, or by a change in the constitution of
the State, except in a legitimate exercise of the police power" (16 C.J.S. 1177-
78).
It has been observed that, generally, the term "vested right" expresses the concept
of present fixed interest, which in right reason and natural justice should be
protected against arbitrary State action, or an innately just an imperative right
which an enlightened free society, sensitive to inherent and irrefragable
individual rights, cannot deny (16 C.J.S. 1174, Note 71, No. 5, citing
Pennsylvania Greyhound Lines, Inc. vs. Rosenthal, 192 Atl. 2nd 587).
Secretary of Justice Abad Santos in his 1973 opinion ruled that where the
applicant, before the Constitution took effect, had fully complied with all his
obligations under the Public Land Act in order to entitle him to a sales patent,
there would seem to be no legal or equitable justification for refusing to issue or
release the sales patent (p. 254, Rollo).
In Opinion No. 140, series of 1974, he held that as soon as the applicant had
fulfilled the construction or cultivation requirements and has fully paid the
purchase price, he should be deemed to have acquired by purchase the particular
tract of land and to him the area limitation in the new Constitution would not
apply.
In Opinion No. 185, series of 1976, Secretary Abad Santos held that where the
cultivation requirements were fulfilled before the new Constitution took effect
but the full payment of the price was completed after January 17, 1973, the
applicant was, nevertheless, entitled to a sales patent (p. 256, Rollo).
Such a contemporaneous construction of the constitutional prohibition by a high
executive official carries great weight and should be accorded much respect. It is
a correct interpretation of section 11 of Article XIV.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)

In the instant case, it is incontestable that prior to the effectivity of the 1973 Sales application for fishponds and for
Constitution the right of the corporation to purchase the land in question had agricultural purposes (SFA, SA and
become fixed and established and was no longer open to doubt or controversy. IGPSA) wherein prior to January 17,
1973,
Its compliance with the requirements of the Public Land Law for the issuance of
a patent had the effect of segregating the said land from the public domain. The a. the land covered
corporation's right to obtain a patent for that land is protected by law. It cannot be thereby was awarded;
deprived of that right without due process (Director of Lands vs. CA, 123 Phil.
919). b. cultivation
requirements of law
The Minister of Natural Resources ruled, and we agree, that private respondent was were complied with
similarly qualified to become an awardee of the disputed land because its rights to it vested as shown by
prior to the effectivity of the 1973 Constitution:56 investigation reports
submitted prior to
Lastly, appellee has acquired a vested right to the subject area and, therefore, is January 17, 1973;
deemed not affected by the new constitutional provision that no private
corporation may hold alienable land of the public domain except by lease. c. land was surveyed
and survey returns
It may be recalled that the Secretary of Justice in his Opinion No. 64, series of already submitted to
1973, had declared, to wit: the Director of Lands
for verification and
approval; and
On the other hand, with respect to sales application ready for
issuance of sales patent, it is my opinion that where the
applicant had, before, the constitution took effect, fully d. purchase price was
complied with all his obligations under the Public Land act in fully paid.
order to entitle him to sales patent, there would seem to be
not legal or equitable justification for refusing to issue or From the records, it is evident that the aforestated requisites have been complied
release the sales patent. with by appellee long before January 17, 1973, the effectivity of the New
Constitution. To restate, the disputed area was awarded to appellee on August 17,
Implementing the aforesaid Opinion No. 64 . . . , the then Secretary of 1950, the purchase price was fully paid on July 26, 1951, the cultivation
Agriculture and Natural Resources issued a memorandum, dated February 18, requirements were complied with as per investigation report dated December 31,
1974, which pertinently reads as follows: 1949, and the land was surveyed under Pls-97.

In the implementation of the foregoing opinion, sales
application of private individuals covering areas in excess of
24 hectares and those of corporations, associations, or
partnership which fall under any of the following categories
shall be given due course and issued patents, to wit:
The same finding was earlier made by the Director of Lands:57
It is further contended by Villaflor that Nasipit has no juridical personality to
apply for the purchase of public lands for agricultural purposes. The records
clearly show, however, that since the execution of the deed of relinquishment of
August 16, 1950, in favor of Nasipit, Villaflor has always considered and
recognized Nasipit as having the juridical personality to acquire public lands for
agricultural purposes. In the deed of relinquishment . . . , it is stated:

Page 138 of 169

CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
6. That the Nasipit Lumber Co., Inc., a corporation duly
organized in accordance with the laws of the Philippines, . . .
. (RTC) of Muntinlupa City, Branch 256, dated April 29, 2008.
Even this Office had not failed to recognize the juridical personality of Nasipit to
apply for the purchase of public lands . . . when it awarded to it the land so
relinquished by Villaflor (Order of Award dated August 17, 1950) and accepted
its application therefor. At any rate, the question whether an applicant is qualified
to apply for the acquisition of public lands is a matter between the applicant and
this Office to decide and which a third party like Villaflor has no personality to
question beyond merely calling the attention of this Office thereto.
Needless to say, we also agree that the November 8, 1946 Lease Agreement between
petitioner and private respondent had been terminated by the agreements to sell and the
relinquishment of rights. By the time the verbal leases were allegedly made in 1951 and
1955,58 the disputed land had already been acquired and awarded to private respondent. In
any event, petitioner's cause of action on these alleged lease agreements prescribed long
before he filed Civil Case No. 2072-III, as correctly found by the trial and appellate
courts.59 Thus, it is no longer important, in this case, to pass upon the issue of whether or
not amendments to a lease contract can be proven by parol evidence. The same holds true
as regards the issue of forum-shopping.
All in all, petitioner has not provided us sufficient reason to disturb the cogent findings of
the Director of Lands, the Minister of Natural Resources, the trial court and the Court of
Appeals.
WHEREFORE, the petition is hereby DISMISSED.
SO ORDERED.
G.R. No. 183926 March 29, 2010
GENEROSA ALMEDA LATORRE, Petitioner,
vs.
LUIS ESTEBAN LATORRE, Respondent.
RESOLUTION
NACHURA, J.:
Page 139 of 169
Before this Court is a Petition for Review on Certiorari1 under Rule 45, in relation to Rule
41, of the Rules of Civil Procedure, assailing the decision 2 of the Regional Trial Court
The facts of the case are as follows:
In October 2000, petitioner Generosa Almeda Latorre (petitioner) filed before the RTC of
Muntinlupa City a Complaint3 for Collection and Declaration of Nullity of Deed of
Absolute Sale with application for Injunction against her own son, herein respondent Luis
Esteban Latorre (respondent), and one Ifzal Ali (Ifzal).
Petitioner averred that, on September 28, 1999, respondent and Ifzal entered into a Contract
of Lease4 over a 1,244-square meter real property, situated at No. 1366 Caballero St.,
Dasmariñas Village, Makati City (subject property). Under the said contract, respondent, as
lessor, declared that he was the absolute and registered owner of the subject property.
Petitioner alleged that respondent's declaration therein was erroneous because she and
respondent were co-owners of the subject property in equal shares.
Petitioner narrated that, on March 14, 1989, she and respondent executed their respective
Deeds of Donation, conveying the subject property in favor of The Porfirio D. Latorre
Memorial & Fr. Luis Esteban Latorre Foundation, Inc. (the Foundation). Thus, Transfer
Certificate of Title (TCT) No. 1619635 was issued in the name of the Foundation.
Subsequently, on September 2, 1994, petitioner and respondent executed separate Deeds of
Revocation of Donation and Reconveyance of the subject property, consented to by the
Foundation, through the issuance of appropriate corporate resolutions. However, the Deeds
of Revocation were not registered; hence, the subject property remained in the name of the
Foundation. Petitioner insisted, however, that respondent was fully aware that the subject
property was owned in common by both of them. To protect her rights as co-owner,
petitioner formally demanded from Ifzal the payment of her share of the rentals, which the
latter, however, refused to heed.
Moreover, petitioner averred that, on or about August 16, 2000, she discovered that
respondent caused the annotation of an adverse claim on the TCT of the subject property,
claiming full ownership over the same by virtue of a Deed of Absolute Sale 6 dated March
21, 2000, allegedly executed by petitioner in favor of respondent. Petitioner claimed that
the deed was a falsified document; that her signature thereon was forged by respondent;
and that she never received ₱21 Million or any other amount as consideration for her share
of the subject property. Thus, petitioner prayed that Ifzal be enjoined from paying the
rentals to respondent, and the latter from receiving said rentals; that both Ifzal and
respondent be ordered to pay petitioner her share of the rentals; and that respondent be
enjoined from asserting full ownership over the subject property and from committing any
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
other act in derogation of petitioner's interests therein. Petitioner also prayed for the
payment of moral and exemplary damages, litigation expenses, and costs of the suit.
Respondent immediately filed a Motion to Dismiss7 on the sole ground that the venue of
the case was improperly laid. He stressed that while the complaint was denominated as one
for Collection and Declaration of Nullity of Deed of Absolute Sale with application for
Injunction, in truth the case was a real action affecting title to and interest over the subject
property. Respondent insisted that all of petitioner's claims were anchored on her claim of
ownership over one-half (½) portion of the subject property. Since the subject property is
located in Makati City, respondent argued that petitioner should have filed the case before
the RTC of Makati City and not of Muntinlupa City.
Ifzal also filed his motion to dismiss on the ground of want of jurisdiction, asserting that he
was immune from suit because he was an officer of the Asian Development Bank, an
international organization.
The RTC issued a Temporary Restraining Order dated November 6, 2000, restraining Ifzal
from paying his rentals to respondent and enjoining the latter from receiving from the
former the aforesaid rentals. The RTC also directed both Ifzal and respondent to pay
petitioner her share of the rentals, with the corresponding order against respondent not to
commit any act in derogation of petitioner's interest over the subject property.
In its Order dated January 2, 2001, the RTC denied respondent's motion to dismiss. The
RTC ruled that the nature of an action whether real or personal was determined by the
allegations in the complaint, irrespective of whether or not the plaintiff was entitled to
recover upon the claims asserted - a matter resolved only after, and as a result of, a trial.
Thus, trial on the merits ensued.
Undaunted, respondent filed an Answer Ad Cautelam8 dated March 19, 2001, insisting,
among others, that the case was a real action and that the venue was improperly
laid.9 Respondent narrated that he was a former Opus Dei priest but he left the congregation
in 1987 after he was maltreated by his Spanish superiors. Respondent alleged that petitioner
lived with him and his family from 1988 to 2000, and that he provided for petitioner's
needs. Respondent also alleged that, for almost 20 years, the Opus Dei divested the Latorre
family of several real properties. Thus, in order to spare the subject property from the Opus
Dei, both petitioner and respondent agreed to donate it to the Foundation. In 1994, when
respondent got married and sired a son, both petitioner and respondent decided to revoke
the said donation. The Foundation consented to the revocation. However, due to lack of
funds, the title was never transferred but remained in the name of the Foundation.
Page 140 of 169
Respondent asseverated that he and his wife took good care of petitioner and that they
provided for her needs, spending a substantial amount of money for these needs; that
because of this, and the fact that the rentals paid for the use of the subject property went to
petitioner, both parties agreed that petitioner would convey her share over the subject
property to respondent; and that, on March 21, 2000, petitioner executed a Deed of
Absolute Sale in favor of respondent.
Respondent further alleged that sometime in March to May 2000, the relationship of the
parties, as mother and son, deteriorated. Petitioner left respondent's house because he and
his wife allegedly ignored, disrespected, and insulted her.10 Respondent claimed, however,
that petitioner left because she detested his act of firing their driver.11 It was then that this
case was filed against him by petitioner.
In the meantime, in its Order dated May 15, 2003, the RTC dismissed petitioner's claim
against Ifzal because the dispute was clearly between petitioner and respondent.
On April 29, 2008, the RTC ruled in favor of respondent, disposing of the case in this wise:
While the case herein filed by the plaintiff involves recovery of possession of a real
property situated at 1366 Caballero St., Dasmariñas Village, Makati City, the same should
have been filed and tried in the Regional Trial Court of Makati City who, undoubtedly, has
jurisdiction to hear the matter as aforementioned the same being clearly a real action.
WHEREFORE, in view of the foregoing, the above-entitled case is hereby DISMISSED for
want of jurisdiction, all in pursuance to the above-cited jurisprudence and Rule 4 of the
Rules of Court.
SO ORDERED.12
Aggrieved, petitioner filed her Motion for Reconsideration, 13 which the RTC denied in its
Order14 dated July 24, 2008 for lack of merit.
Hence, this Petition, claiming that the RTC erred in treating the venue as jurisdiction and in
treating petitioner's complaint as a real action.
While the instant case was pending resolution before this Court, petitioner passed away on
November 14, 2009. Thus, petitioner's counsel prayed that, pending the appointment of a
representative of petitioner's estate, notices of the proceedings herein be sent to petitioner’s
other son, Father Roberto A. Latorre.15
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
As early as the filing of the complaint, this case had been marred by numerous procedural
infractions committed by petitioner, by respondent, and even by the RTC, all of which
cannot be disregarded by this Court.
First. Petitioner filed her complaint with the RTC of Muntinlupa City instead of the RTC of
Makati City, the latter being the proper venue in this case.
Sections 1 and 2, Rule 4 of the 1997 Rules of Civil Procedure provide an answer to the
issue of venue.16 Actions affecting title to or possession of real property or an interest
therein (real actions) shall be commenced and tried in the proper court that has territorial
jurisdiction over the area where the real property is situated. On the other hand, all other
actions (personal actions) shall be commenced and tried in the proper courts where the
plaintiff or any of the principal plaintiffs resides or where the defendant or any of the
principal defendants resides.17 The action in the RTC, other than for Collection, was for the
Declaration of Nullity of the Deed of Absolute Sale involving the subject property, which
is located at No. 1366 Caballero St., Dasmariñas Village, Makati City. The venue for such
action is unquestionably the proper court of Makati City, where the real property or part
thereof lies, not the RTC of Muntinlupa City.18
In this jurisdiction, we adhere to the principle that the nature of an action is determined by
the allegations in the Complaint itself, rather than by its title or heading. 19 It is also a settled
rule that what determines the venue of a case is the primary objective for the filing of the
case.20 In her Complaint, petitioner sought the nullification of the Deed of Absolute Sale on
the strength of two basic claims that (1) she did not execute the deed in favor of
respondent; and (2) thus, she still owned one half (½) of the subject property. Indubitably,
petitioner's complaint is a real action involving the recovery of the subject property on the
basis of her co-ownership thereof.
Second. The RTC also committed a procedural blunder when it denied respondent's motion
to dismiss on the ground of improper venue.
The RTC insisted that trial on the merits be conducted even when it was awfully glaring
that the venue was improperly laid, as pointed out by respondent in his motion to dismiss.
After trial, the RTC eventually dismissed the case on the ground of lack of jurisdiction,
even as it invoked, as justification, the rules and jurisprudence on venue. Despite the
conduct of trial, the RTC failed to adjudicate this case on the merits.
Third. Respondent also did not do very well, procedurally. When the RTC denied his
Motion to Dismiss, respondent could have filed a petition for certiorari and/or prohibition
inasmuch as the denial of the motion was done without jurisdiction or in excess of
jurisdiction or with grave abuse of discretion amounting to lack of jurisdiction.21 However,
Page 141 of 169
despite this lapse, it is clear that respondent did not waive his objections to the fact of
improper venue, contrary to petitioner's assertion. Notably, after his motion to dismiss was
denied, respondent filed a Motion for Reconsideration to contest such denial. Even in his
Answer Ad Cautelam, respondent stood his ground that the case ought to be dismissed on
the basis of improper venue.
Finally, petitioner came directly to this Court on a Petition for Review on Certiorari under
Rule 45, in relation to Rule 41, of the Rules of Civil Procedure on alleged pure questions of
law. In Murillo v. Consul,22 we laid down a doctrine that was later adopted by the 1997
Revised Rules of Civil Procedure. In that case, this Court had the occasion to clarify the
three (3) modes of appeal from decisions of the RTC, namely: (1) ordinary appeal or appeal
by writ of error, where judgment was rendered in a civil or criminal action by the RTC in
the exercise of its original jurisdiction; (2) petition for review, where judgment was
rendered by the RTC in the exercise of its appellate jurisdiction; and (3) petition for review
to the Supreme Court.
The first mode of appeal, governed by Rule 41, is brought to the Court of Appeals (CA) on
questions of fact or mixed questions of fact and law. The second mode of appeal, covered
by Rule 42, is brought to the CA on questions of fact, of law, or mixed questions of fact
and law. The third mode of appeal, provided in Rule 45, is filed with the Supreme Court
only on questions of law.1avvphi1
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.23 Our ruling in Velayo-Fong v. Velayo24 is instructive:
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.25
In her Reply to respondent’s Comment,26 petitioner prayed that this Court decide the case
on the merits. To do so, however, would require the examination by this Court of the
probative value of the evidence presented,
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
taking into account the fact that the RTC failed to adjudicate this controversy on the merits.
This, unfortunately, we cannot do. It thus becomes exceedingly clear that the filing of the
case directly with this Court ran afoul of the doctrine of hierarchy of courts. Pursuant to
this doctrine, direct resort from the lower courts to the Supreme Court will not be
entertained unless the appropriate remedy sought cannot be obtained in the lower tribunals.
This Court is a court of last resort, and must so remain if it is to satisfactorily perform the
functions assigned to it by the Constitution and by immemorial tradition.27
Accordingly, we find no merit in the instant petition. Neither do we find any reversible
error in the trial court’s dismissal of the case ostensibly for want of jurisdiction, although
the trial court obviously meant to dismiss the case on the ground of improper venue.
WHEREFORE, the instant Petition is DENIED. No costs.
SO ORDERED.
G.R. No. 198718 November 27, 2013
SPOUSES TEODORO and ROSARIO SARAZA and FERNANDO
SARAZA, Petitioners,
vs.
WILLIAM FRANCISCO, Respondent.
DECISION
REYES, J.:
This is a petition for review on Certiorari1 under Rule 45 of the Rules of Court, which
assails the Decision2 dated June 28, 2011 and Resolution3 dated September 30, 2011 of the
Court of Appeals (CA) in CA-G.R. CV No. 93961. The assailed decision and resolution of
the CA affirmed the Decision4 dated June 5, 2009 of the Regional Trial Court (RTC) of
Imus, Cavite, Branch 20, in Civil Case No. 0319-04, an action for specific
performance/sum of money and damages.
The Facts
The case stems from an amended complaint filed by William Francisco (respondent)
against Fernando Saraza (Fernando) and Spouses Teodoro and Rosario (Rosario) Saraza
(Spouses Saraza) (petitioners). The respondent alleged in his complaint that on September
1, 1999, he and Fernando executed an Agreement5 that provided for the latter’s sale of his
Page 142 of 169
100-square meter share in a lot situated in Bangkal, Makati City, which at that time was
still registered in the name of one Emilia Serafico and covered by Transfer Certificate of
Title (TCT) No. 40376 (later covered by TCT No. 220530), for a total consideration of
₱3,200,000.00. The amount of ₱1,200,000.00 was paid upon the Agreement’s execution,
while the balance of ₱2,000,000.00 was to be paid on installments to the Philippine
National Bank (PNB), to cover a loan of Spouses Saraza, Fernando’s parents, with the
bank. A final deed of sale conveying the property was to be executed by Fernando upon
full payment of the PNB loan.6
It was also agreed upon that should the parties fail for any reason to transfer the subject
property to the respondent’s name, Rosario and Fernando’s 136-sq m property covered by
TCT No. 156126 and encumbered to PNB to secure the loan that was to be paid by the
respondent shall be considered a collateral in favor of the respondent. 7 Spouses Saraza
signified their conformity to the Agreement. The respondent was also allowed to take
immediate possession of the property covered by TCT No. 156126 through a contract of
lease8. The petitioners likewise furnished PNB with an Authority9, allowing the respondent
to pay their obligations to the PNB, to negotiate for a loan restructuring, to receive the
owner’s duplicate copy of TCT No. 156126 upon full payment of the loan secured by its
mortgage, and to perform such other acts as may be necessary in connection with the
settlement of the loan.10
When the remaining balance of the PNB loan reached ₱226,582.13, the respondent asked
for the petitioners’ issuance of a Special Power of Attorney (SPA) that would authorize him
to receive from PNB the owner’s duplicate copy of TCT No. 156126 upon full payment of
the loan. The petitioners denied the request. Upon inquiry from PNB, the respondent found
out that the petitioners had instead executed an Amended Authority, which provided that
the owner’s copy of TCT No. 156126 should be returned to the mortgagors upon full
payment of the loan.11 Spouses Saraza also caused the eviction of the respondent from the
property covered by TCT No. 156126.12 These prompted the respondent to institute the
civil case for specific performance, sum of money and damages with the RTC of Imus,
Cavite on December 7, 2004.13
The petitioners admitted the existence of the Agreement and the Authority which was
addressed to PNB. They, nonetheless, opposed the respondent’s complaint on the ground
that the amount of ₱1,200,000.00 which was supposed to be paid by the respondent upon
the Agreement’s execution remained unpaid. The respondent allegedly took advantage of
the trust that was reposed upon him by the petitioners, who nonetheless did not formally
demand payment from him but merely waited for him to pay the amount. 14
The Ruling of the RTC
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
On June 5, 2009, the RTC rendered a Decision in favor of the respondent. The RTC
considered the contents of the Agreement executed by the parties, taking into account that
it was a notarized document. It held:
In another case, the High Court held that: "The recitals in a public instrument executed with
all the legal formalities are evidence against the parties thereto and their successors in
interest, and a high degree of proof is necessary to overcome the presumption that such
recitals are true." (Naval, et. al., v Enriquez, 3 Phil 669). 15 (Italics supplied)
The RTC held that contrary to the petitioners’ claim, the respondent’s full payment of the
₱3,200,000.00 consideration provided in the Agreement was supported by: (1) the
petitioners’ acknowledgment in the Agreement that they received the amount of
₱1,200,000.00 upon its execution; and (2) the Certification from PNB that the full amount
of Spouses Saraza’s loan with the bank had been fully paid.
The RTC, however, declared that only Fernando should be held liable for the respondent’s
claims, since the main action was for specific performance, specifically to compel him to
execute a Deed of Absolute Sale over the subject property already covered by TCT No.
220530 under Fernando’s name. Hence, the decretal portion of the RTC Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering [petitioner]
Fernando M. Saraza as follows, viz:
1. to EXECUTE a Deed of Absolute Sale covering the 100-square meter parcel of
land located in Barangay Bangkal, City of Makati and covered by Transfer
Certificate of Title No. 220530 of the Registry of Deeds of Makati in favor of
[respondent] William Francisco pursuant to their Agreement dated 01 September
1999;
2. to DELIVER to [respondent] William Francisco the Owner’s Copy of Transfer
Certificate of Title No. 220530 covering the 100-square meter parcel of land
located in Barangay Bangkal, City of Makati which is subject of the Deed of
Absolute Sale; and
3. to PAY all taxes imposable by law for the transfer of the title in the name of
[respondent], pursuant to the parties’ AGREEMENT dated 1 September 1999;
4. to PAY [respondent] William Francisco the following:
Page 143 of 169
4.1 One Hundred Thousand Pesos (Php 100,000.00) as and by way of
damages;
4.2 One Hundred Seventy-Seven Thousand Pesos (Php 177,000.00) as
and by way of attorney’s fees; and
4.3 the costs of suit.
SO ORDERED.16
Dissatisfied, Fernando questioned the RTC Decision before the CA. In addition to the
defenses which he raised during the proceedings before the RTC, he argued that the RTC of
Imus lacked jurisdiction over the case as it involved an adjudication of ownership of a
property situated in Makati City.17
The Ruling of the CA
The CA affirmed the RTC rulings via the Decision dated June 28, 2011. The CA rejected
the petitioners’ allegation that the amount of ₱1,200,000.00 remained unpaid by the
respondent, citing the stipulation in their Agreement which provided that the said amount
was paid upon the contract’s execution.
On the issue of jurisdiction, the CA cited Fernando’s failure to seasonably file before the
lower court a motion to dismiss stating that the action should have been filed in Makati
City. More importantly, the Court explained that the case was a personal action since it did
not involve a claim of ownership of the subject property, but only sought Fernando’s
execution of a deed of sale in the respondent’s favor. Thus, the venue for the action was the
residence of the plaintiff or the defendant, at the plaintiff’s option.18
Petitioner Fernando’s Motion for Reconsideration19 was denied by the CA in the
Resolution dated September 30, 2011.20 Hence, this petition for review on certiorari.
The Issue
The main issue for the Court’s resolution is: Whether or not the petitioners are bound to
comply with their obligations to the respondent as embodied in their Agreement dated
September 1, 1999.
This Court’s Ruling
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
The respondent’s satisfaction of his
obligation under the Agreement
It is imperative to look into the respondent’s compliance with his covenants under the
subject Agreement in order to ascertain whether or not he can compel the petitioners to
satisfy their respective undertakings.
At the outset, the Court underscores the limited scope of a petition for review on certiorari
under Rule 45 of the Rules of Court. Section 1 of Rule 45 provides that the petition shall
raise only questions of law, which must be distinctly set forth. Questions of fact are not
entertained, for the Court is not duty-bound to analyze again and weigh the evidence
introduced in and already considered by the tribunals below. 21 When supported by
substantial evidence, the findings of fact of the CA are conclusive and binding on the
parties and are not reviewable by the Court, save in some recognized exceptions such as:
(1) when the conclusion is a finding grounded entirely on speculation, surmises and
conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3)
where there is a grave 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, in
making its findings, went beyond the issues of the case and the same is contrary to the
admissions of both appellant and appellee; (7) when the findings are contrary to those of
the trial court; (8) when the findings of fact are conclusions without citation of specific
evidence on which they are based; (9) when the facts set forth in the petition as well as in
the petitioners’ main and reply briefs are not disputed by the respondents; and (10) when
the findings of fact of the CA are premised on the supposed absence of evidence and
contradicted by the evidence on record.22
The respondent’s obligation under the Agreement pertains to the payment of the
₱3,200,000.00 consideration for Fernando’s corresponding duty of executing a Deed of
Sale over the property formerly covered by TCT No. 40376. To dispute the respondent’s
claim that he has satisfied said obligation, the petitioners now raise factual issues which the
Court however emphasizes are not for the Court to reassess. For one, the issue of whether
or not the respondent’s obligation to pay has already been satisfied is a factual question.
We consider the fact that both the RTC and the CA have determined that there has been a
full payment by the respondent of his ₱3,200,000.00 obligation under the Agreement. Upon
review, the Court finds no reason to deviate from this finding of the courts, especially as it
is supported by substantial evidence. To begin with, the petitioners do not deny the
authenticity and their execution of the subject Agreement, a matter that is also sufficiently
established by the fact that the document was acknowledged before a notary public. As
both the RTC and CA correctly held, such Agreement sufficiently proves the fact of the
respondent’s payment to the petitioners of the agreed initial payment of ₱1,200,000.00, as
it states:
Page 144 of 169
That, for and in consideration of the agreed purchase price of THREE MILLION TWO
HUNDRED THOUSAND PESOS ([P]3,200,000.00), Philippine currency, of which the
sum of ONE MILLION TWO HUNDRED THOUSAND PESOS ([P]1,200,000.00), has
been paid by the buyer upon execution of this instrument x x x. 23 (Emphasis ours)
Given this categorical statement, the petitioners’ denial that they have received the amount
necessitated concrete and substantial proof. A perusal of the case records shows that the
petitioners failed in this regard. Even their unsubstantiated claim that the document’s
notarization was irregularly made cannot prevail over the presumption that the notary
public’s duty has been regularly performed.24 The CA also correctly held that the parol
evidence rule applies to this case. Unsubstantiated testimony, offered as proof of verbal
agreements which tend to vary the terms of the written agreement, is inadmissible under the
rule.25
In addition to the foregoing, the petitioners’ plain denial of the respondent’s claim of full
payment is self-serving, belied by their admission that they had not at anytime demanded
from the respondent the payment of ₱1,200,000.00. The petitioners are presumed under the
law to have taken ordinary care of their concerns;26 thus, they would have exerted efforts to
demand payment of the amount due them if in fact, no payment had been made. Moreover,
given this presumption, the petitioners were supposed to be wary of the import of affixing
their signature on the Agreement, and would not have voluntarily signed the subject
Agreement if they did not intend to give full effect thereto.
The petitioners also raise in their Supplemental Petition 27 some defenses which were not
introduced during the proceedings before the lower courts. These pertain to the alleged
failure of Spouses Saraza to fully understand the contents of the Agreement as these were
written in English, and their claim that the Agreement was a contract of adhesion for
having been prepared solely by the respondent. Basic is the rule, however, that no issue
may be raised on appeal unless it has been brought before the lower tribunals for
consideration.28 To consider such issues and arguments that are belatedly raised by a party
would be tantamount to a blatant disregard of the basic principles of fair play, justice and
due process.29 In any case, the new defenses that are raised by the petitioners deserve scant
consideration. There is no claim that the cited language limitation equally applied to the
respondent, the principal party in the Agreement. Contrary to the petitioners’ stance, the
Agreement also does not appear to be a contract where the petitioners had no opportunity to
question its terms, negotiate or decline its execution. The bare allegations of the petitioners
fail to suffice.
Based on available evidence, it is then clear that the respondent had fully satisfied his
obligation under the subject Agreement given the stipulation in the document on his initial
payment of ₱1,200,000.00, and considering PNB’s Certification 30 that the ₱2,000,000.00
loan of Spouses Saraza with the bank had been fully settled on April 22, 2005. Fernando,
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
being equally bound by the terms of the document, was correctly ordered by the RTC and
the CA to duly comply with his own obligation under the contract, particularly the
obligation to execute a deed of sale over his 100-sq m property in Bangkal, Makati City.
The respondent’s satisfaction of his obligation under the Agreement also rendered
unmeritorious the petitioners’ counterclaim for damages.
Venue of an Action for Specific
Performance
As to the issue of venue, the petitioners’ argument that the action should have been
instituted with the RTC of Makati City, and not the RTC of Imus, Cavite, is misplaced.
Although the end result of the respondent’s claim was the transfer of the subject property to
his name, the suit was still essentially for specific performance, a personal action, because
it sought Fernando’s execution of a deed of absolute sale based on a contract which he had
previously made.
Our ruling in Cabutihan v. Landcenter Construction & Development Corporation31 is
instructive. In the said case, a complaint for specific performance that involved property
situated in Parañaque City was instituted before the RTC of Pasig City. When the case’s
venue was raised as an issue, the Court sided with therein petitioner who argued that "the
fact that ‘she ultimately sought the conveyance of real property’ not located in the
territorial jurisdiction of the RTC of Pasig is x x x an anticipated consequence and beyond
the cause for which the action [for specific performance with damages] was
instituted."32 The Court explained:
[I]n La Tondeña Distillers, Inc. v. Ponferrada, private respondents filed an action for
specific performance with damages before the RTC of Bacolod City. The defendants
allegedly reneged on their contract to sell to them a parcel of land located in Bago City – a
piece of property which the latter sold to petitioner while the case was pending before the
said RTC. Private respondent did not claim ownership but, by annotating a notice of lis
pendens on the title, recognized defendants’ ownership thereof. This Court ruled that the
venue had properly been laid in the RTC of Bacolod, even if the property was situated in
Bago.
In Siasoco v. Court of Appeals, private respondent filed a case for specific performance
with damages before the RTC of Quezon City. It alleged that after it accepted the offer of
petitioners, they sold to a third person several parcels of land located in Montalban, Rizal.
The Supreme Court sustained the trial court’s order allowing an amendment of the original
Complaint for specific performance with damages. Contrary to petitioners’ position that the
RTC of Quezon City had no jurisdiction over the case, as the subject lots were located in
Montalban, Rizal, the said RTC had jurisdiction over the original Complaint. The Court
Page 145 of 169
reiterated the rule that a case for specific performance with damages is a personal action
which may be filed in a court where any of the parties reside. 33 (Citations omitted and
emphasis supplied)
The Court compared these two cases with the case of National Steel Corporation v. Court
of Appeals34 where the Court held that an action that seeks the execution of a deed of sale
over a parcel of land is for recovery of real property, and not for specific performance,
because the primary objective is to regain ownership and possession of the property. 35 It
was explained that the prayer in National Steel was not in any way connected to a contract
that was previously executed by the party against whom the complaint was filed, unlike in
Cabutihan where the parties had earlier executed an Undertaking for the property’s transfer,
correctly giving rise to a cause of action either for specific performance or for rescission, as
in this case.
Section 2, Rule 4 of the Rules of Court then governs the venue for the respondent’s action.
It provides that personal actions "may be commenced and tried where the plaintiff or any of
the principal plaintiffs resides, or where the defendant or any of the principal defendants
resides, or in the case of a non-resident defendant where he may be found, at the election of
the plaintiff." Considering the respondent’s statement in his complaint that he resides in
Imus, Cavite,36 the filing of his case with the RTC of Imus was proper.
Award of Damages
The Court, however, modifies the lower courts’ award of damages in favor of the
respondent.1âwphi1 In the assailed decision, the CA affirmed the RTC’s award of the
following amounts: (1) ₱100,000.00 as damages; (2) ₱177,000.00 as attorney’s fees; and
(3) costs of suit.
Upon review, the Court finds no justification for the order to pay damages in the amount
Pl00,000.00. Both the RTC and the CA failed to indicate the award's classification and the
factual and legal bases therefor, save for a general statement by the R TC that it was
deemed a "reasonable amount of damages arising from the failure of the [petitioners] to
fulfill [their] obligation under their Agreement."37
The claim in the complaint was for moral and compensatory damages, yet the RTC failed
to indicate whether the Pl00,000.00 was for the moral damages for the "undue anxiety,
mental anguish and wounded feelings"38, or compensatory damages for the "actual business
losses due to disruption of his business"39 as alleged by the respondent in his Amended
Complaint. More importantly, there is no showing that such allegations were sufficiently
substantiated by the respondent, rendering the deletion of the award warranted.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
WHEREFORE, the Decision dated June 28, 2011 and Resolution dated September 30,
2011 of the Court of Appeals in CA-G.R. CV No. 93961 are AFFIRMED with
MODIFICATION in that the award of Pl00,000.00 as damages in favor of respondent
William Francisco is deleted.
SO ORDERED.
FIRST DIVISION
G.R. No. 146089. December 13, 2001
VIRGINIA GOCHAN, LOUISE GOCHAN, LAPU-LAPU REAL ESTATE
CORPORATION, FELIX GOCHAN AND SONS REALTY CORPORATION,
MACTAN REALTY DEVELOPMENT CORPORATION, petitioners, vs.
MERCEDES GOCHAN, ALFREDO GOCHAN, ANGELINA GOCHAN-HERNAEZ,
MA. MERCED GOCHAN GOROSPE, CRISPO GOCHAN, JR., and MARLON
GOCHAN, Respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review seeking to set aside the decision of the Court of Appeals dated
September 10, 1999 in CA-G.R. SP No. 49084, 1 as well as its Resolution 2 dated
November 22, 2000, denying the Motion for Reconsideration.
Respondents were stockholders of the Felix Gochan and Sons Realty Corporation and the
Mactan Realty Development Corporation. Sometime in 1996, respondents offered to sell
their shares in the two corporations to the individual petitioners, the heirs of the late
Ambassador Esteban Gochan, for and in consideration of the sum of P200,000,000.00.
Petitioners accepted and paid the said amount to respondents. Accordingly, respondents
issued to petitioners the necessary Receipts. 3 In addition, respondents executed their
respective Release, Waiver and Quitclaim, 4 wherein they undertook that they would not
initiate any suit, action or complaint against petitioners for whatever reason or purpose.
In turn, respondents, through Crispo Gochan, Jr., required individual petitioners to execute
a promissory note, 5 undertaking not to divulge the actual consideration they paid for the
shares of stock. For this purpose, Crispo Gochan, Jr. drafted a document entitled
promissory note in his own handwriting and had the same signed by Felix Gochan, III,
Louise Gochan and Esteban Gochan, Jr.
Page 146 of 169
Unbeknown to petitioners, Crispo Gochan, Jr. inserted in the promissory note a phrase that
says, Said amount is in partial consideration of the sale. 6cräläwvirtualibräry
On April 3, 1998, respondents filed a complaint against petitioners for specific performance
and damages with the Regional Trial Court of Cebu City, Branch 11, docketed as Civil
Case No. CEB-21854. Respondents alleged that sometime in November 1996, petitioner
Louise Gochan, on behalf of all the petitioners, offered to buy their shares of stock,
consisting of 254 shares in the Felix Gochan and Sons Realty Corporation and 1,624 shares
of stock in the Mactan Realty Development Corporation; and that they executed a
Provisional Memorandum of Agreement, wherein they enumerated the following as
consideration for the sale:
1. Pesos: Two Hundred Million Pesos (P200M)
2. Two (2) hectares more or less of the fishpond in Gochan compound, Mabolo, Lot 4F-2-B
3. Lot 2, Block 9 with an area of 999 square meters in Gochan Compound, Mabolo, Cebu
4. Three Thousand (3,000) square meters of Villas Magallanes in Mactan, Cebu
5. Lot 423 New Gem Building with an area of 605 square meters. 7cräläwvirtualibräry
Accordingly, respondents claimed that they are entitled to the conveyance of the
aforementioned properties, in addition to the amount of P200,000,000.00, which they
acknowledge to have received from petitioners. Further, respondents prayed for moral
damages of P15,000,000.00, exemplary damages of P2,000,000.00, attorneys fees of
P14,000,000.00, and litigation expenses of P2,000,000.00.
Petitioners filed their answer, raising the following affirmative defenses: (a) lack of
jurisdiction by the trial court for non-payment of the correct docket fees; (b)
unenforceability of the obligation to convey real properties due to lack of a written
memorandum thereof, pursuant to the Statute of Frauds; (c) extinguishment of the
obligation by payment; (d) waiver, abandonment and renunciation by respondent of all
their claims against petitioners; and (e) non-joinder of indispensable parties.
On August 7, 1998, petitioners filed with the trial court a motion for a preliminary hearing
on the affirmative defenses. In an Order dated August 11, 1998, the trial court denied the
motion, ruling as follows:
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
As the grant of said motion lies in the discretion of the court under Section 6 of Rule 16 of
the 1997 Rules of Civil Procedure, this Court in the exercise of its discretion, hereby denies
the said motion because the matters sought to be preliminarily heard do not appear to be
tenable. For one, the statute of frauds does not apply in this case because the contract which
is the subject matter of this case is already an executed contract. The statute of frauds
applies only to executory contracts. According to Dr. Arturo M. Tolentino, a leading
authority in civil law, since the statute of frauds was enacted for the purpose of preventing
frauds, it should not be made the instrument to further them. Thus, where one party has
performed his obligation under a contract, equity would agree that all evidence should be
admitted to prove the alleged agreement (PNB vs. Philippine Vegetable Oil Company, 49
Phil. 897). For another, the contention of the defendants that the claims of the plaintiffs are
already extinguished by full payment thereof does not appear to be indubitable because the
plaintiffs denied under oath the due execution and genuineness of the receipts which are
attached as Annexes 1-A, 1-B and 1-C of defendants answer. This issue therefore has to be
determined on the basis of preponderance of evidence to be adduced by both parties. Then,
still for another, the contention that the complaint is defective because it allegedly has
failed to implead indispensable parties appears to be wanting in merit because the parties to
the memorandum of agreement adverted to in the complaint are all parties in this case.
Then the matter of payment of docketing and filing fees is not a fatal issue in this case
because the record shows that the plaintiffs had paid at least P165,000.00 plus in the form
of filing and docketing fees. Finally, regarding exerting earnest efforts toward a
compromise by the plaintiffs, the defendants cannot say that there is an absence of an
allegation to this effect in the complaint because paragraph 11 of the complaint precisely
states that before filing this case, earnest efforts toward a compromise have been made.
Petitioners motion for reconsideration of the above Order was denied by the trial court on
September 11, 1998.
Petitioners thus filed a petition for certiorari with the Court of Appeals, docketed as CA-
G.R. SP No. 49084. On September 10, 1999, the Court of Appeals rendered the appealed
decision dismissing the petition on the ground that respondent court did not commit grave
abuse of discretion, tantamount to lack or in excess of jurisdiction in denying the motion to
hear the affirmative defenses. 8cräläwvirtualibräry
Again, petitioners filed a motion for reconsideration, but the same was denied by the Court
of Appeals in its assailed Resolution of November 22, 2000. 9cräläwvirtualibräry
Petitioners, thus, brought the present petition for review anchored on the following
grounds:
I.
Page 147 of 169
THE COURT OF APPEALS COMMITTED GRAVE AND PALPABLE ERROR IN
FINDING THAT THE CORRECT DOCKET FEES HAVE BEEN PAID.
II.
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN RULING THAT THE
PMOA WAS A PARTIALLY EXECUTED CONTRACT AND HENCE NOT COVERED
BY THE STATUTE OF FRAUDS.
III.
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN DECIDING THAT
THE CLAIMS OF PRIVATE RESPONDENTS HAVE NOT BEEN EXTINGUISHED BY
PAYMENT OR FULL SETTLEMENT DESPITE THE PRESENCE OF RECEIPTS
SIGNED BY THE PRIVATE RESPONDENTS SHOWING THE CONTRARY.
IV.
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN RESOLVING THAT
FELIX GOCHAN III AND ESTEBAN GOCHAN, JR. ARE NOT INDISPENSABLE
PARTIES AND THEREFORE NEED NOT BE IMPLEADED AS
PARTIES.10cräläwvirtualibräry
Respondents filed their Comment, 11 arguing, in fine, that petitioners are guilty of forum-
shopping when they filed two petitions for certiorari with the Court of Appeals; and that the
Court of Appeals did not err in dismissing the petition for certiorari.
The instant petition has merit.
The rule is well-settled that the court acquires jurisdiction over any case only upon the
payment of the prescribed docket fees. In the case of Sun Insurance Office, Ltd. (SIOL) v.
Asuncion, 12 this Court held that it is not simply the filing of the complaint or appropriate
initiatory pleading, but the payment of the prescribed docket fee that vests a trial court with
jurisdiction over the subject matter or nature of the action.
Respondents maintain that they paid the correct docket fees in the amount of P165,000.00
when they filed the complaint with the trial court. Petitioners, on the other hand, contend
that the complaint is in the nature of a real action which affects title to real properties;
hence, respondents should have alleged therein the value of the real properties which shall
be the basis for the assessment of the correct docket fees.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
The Court of Appeals found that the complaint was one for specific performance and
incapable of pecuniary estimation. We do not agree.
It is necessary to determine the true nature of the complaint in order to resolve the issue of
whether or not respondents paid the correct amount of docket fees therefor. In this
jurisdiction, the dictum adhered to is that the nature of an action is determined by the
allegations in the body of the pleading or complaint itself, rather than by its title or
heading. 13 The caption of the complaint below was denominated as one for specific
performance and damages. The relief sought, however, is the conveyance or transfer of real
property, or ultimately, the execution of deeds of conveyance in their favor of the real
properties enumerated in the provisional memorandum of agreement. Under these
circumstances, the case below was actually a real action, affecting as it does title to or
possession of real property.
In the case of Hernandez v. Rural Bank of Lucena, 14 this Court held that a real action is
one where the plaintiff seeks the recovery of real property or, as indicated in section 2(a) of
Rule 4 (now Section 1, Rule 4 of the 1997 Rules of Civil Procedure), a real action is an
action affecting title to or recovery of possession of real property.
It has also been held that where a complaint is entitled as one for specific performance but
nonetheless prays for the issuance of a deed of sale for a parcel of land, its primary
objective and nature is one to recover the parcel of land itself and, thus, is deemed a real
action. In such a case, the action must be filed in the proper court where the property is
located:
In this Court, the appellant insists that her action is one for specific performance, and,
therefore, personal and transitory in nature.
This very issue was considered and decided by this Court in the case of Manuel B. Ruiz vs.
J.M. Tuason & Co., Inc. et al., L-18692, promulgated 31 January 1963. There the Court, by
unanimous vote of all the Justices, held as follows:
This contention has no merit. Although appellants complaint is entitled to be one for
specific performance, yet the fact that he asked that a deed of sale of a parcel of land
situated in Quezon City be issued in his favor and that a transfer certificate of title covering
said parcel of land be issued to him shows that the primary objective and nature of the
action is to recover the parcel of land itself because to execute in favor of appellant the
conveyance requested there is need to make a finding that he is the owner of the land which
in the last analysis resolves itself into an issue of ownership. Hence, the action must be
commenced in the province where the property is situated pursuant to Section 3, Rule 5, of
the Rules of Court, which provides that actions affecting title to or recovery of possession
Page 148 of 169
of real property shall be commenced and tried in the province where the property or any
part thereof lies.15cräläwvirtualibräry
In the case at bar, therefore, the complaint filed with the trial court was in the nature of a
real action, although ostensibly denominated as one for specific performance.
Consequently, the basis for determining the correct docket fees shall be the assessed value
of the property, or the estimated value thereof as alleged by the claimant. Rule 141, Section
7, of the Rules of Court, as amended by A.M. No. 00-2-01-SC, provides:
Section 7. Clerks of Regional Trial Courts. - x x x
(b) xxx
In a real action, the assessed value of the property, or if there is none, the estimated value
thereof shall be alleged by the claimant and shall be the basis in computing the fees.
We are not unmindful of our pronouncement in the case of Sun Insurance, 16 to the effect
that in case the filing of the initiatory pleading is not accompanied by payment of the
docket fee, the court may allow payment of the fee within a reasonable time but in no case
beyond the applicable prescriptive period. However, the liberal interpretation of the rules
relating to the payment of docket fees as applied in the case of Sun Insurance cannot apply
to the instant case as respondents have never demonstrated any willingness to abide by the
rules and to pay the correct docket fees. Instead, respondents have stubbornly insisted that
the case they filed was one for specific performance and damages and that they actually
paid the correct docket fees therefor at the time of the filing of the complaint. Thus, it was
stated in the case of Sun Insurance: 17cräläwvirtualibräry
The principle in Manchester could very well be applied in the present case. The pattern and
the intent to defraud the government of the docket fee due it is obvious not only in the
filing of the original complaint but also in the filing of the second amended complaint.
However, in Manchester, petitioner did not pay any additional docket fee until the case was
decided by this Court on May 7, 1987. Thus, in Manchester, due to the fraud committed on
the government, this Court held that the court a quo did not acquire jurisdiction over the
case and that the amended complaint could not have been admitted inasmuch as the original
complaint was null and void.
In the present case, a more liberal interpretation of the rules is called for considering that,
unlike Manchester, private respondent demonstrated his willingness to abide by the rules
by paying the additional docket fees as required. The promulgation of the decision
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
in Manchester must have had that sobering influence on private respondent who thus paid
the additional docket fee as ordered by the respondent court. It triggered his change of
stance by manifesting his willingness to pay such additional docket fee as may be ordered.
Respondents accuse petitioners of forum-shopping when they filed two petitions before the
Court of Appeals. Petitioners, on the other hand, contend that there was no forum-shopping
as there was no identity of issues or identity of reliefs sought in the two petitions.
We agree with petitioners that they are not guilty of forum-shopping. The deplorable
practice of forum-shopping is resorted to by litigants who, for the purpose of obtaining the
same relief, resort to two different fora to increase his or her chances of obtaining a
favorable judgment in either one. In the case of Golangco v. Court of Appeals, 18 we laid
down the following test to determine whether there is forum-shopping:
Ultimately, what is truly important to consider in determining whether forum-shopping
exists or not is the vexation caused the courts and the parties-litigant by a person who asks
different courts and/or administrative agencies to rule on the same or related causes and/or
grant the same or substantially the same reliefs, in the process creating the possibility of
conflicting decisions being rendered by the different fora upon the same issues.
In sum, two different orders were questioned, two distinct causes of action and issues were
raised, and two objectives were sought; thus, forum shopping cannot be said to exist in the
case at bar.
Likewise, we do not find that there is forum-shopping in the case at bar. The first petition,
docketed as CA-G.R. SP. No. 49084, which is now the subject of the instant petition,
involved the propriety of the affirmative defenses relied upon by petitioners in Civil Case
No. CEB-21854. The second petition, docketed as CA-G.R. SP No. 54985, raised the issue
of whether or not public respondent Judge Dicdican was guilty of manifest partiality
warranting his inhibition from further hearing Civil Case No. CEB-21854.
More importantly, the two petitions did not seek the same relief from the Court of Appeals.
In CA-G.R. SP. No. 49084, petitioners prayed, among others, for the annulment of the
orders of the trial court denying their motion for preliminary hearing on the affirmative
defenses in Civil Case No. CEB-21854. No such reliefs are involved in the second petition,
where petitioners merely prayed for the issuance of an order enjoining public respondent
Judge Dicdican from further trying the case and to assign a new judge in his stead.
True, the trial court has the discretion to conduct a preliminary hearing on affirmative
defenses. In the case at bar, however, the trial court committed a grave abuse of its
discretion when it denied the motion for preliminary hearing. As we have discussed above,
Page 149 of 169
some of these defenses, which petitioners invoked as grounds for the dismissal of the
action, appeared to be indubitable, contrary to the pronouncement of the trial court. Indeed,
the abuse of discretion it committed amounted to an evasion of positive duty or virtual
refusal to perform a duty enjoined by law, or to act at all in contemplation of law, 19 which
would have warranted the extraordinary writ of certiorari. Hence, the Court of Appeals
erred when it dismissed the petition for certiorari filed by petitioners.
WHEREFORE , in view of the foregoing, the instant petition is GRANTED. This case is
REMANDED to the Regional Trial Court of Cebu City, Branch 11, which is directed to
forthwith conduct the preliminary hearing on the affirmative defenses in Civil Case No.
CEB-21854.
SO ORDERED.
G.R. No. 175796 July 22, 2015
BPI FAMILY SAVINGS BANK INC., Petitioner,
vs.
SPOUSES BENEDICTO & TERESITA YUJUICO, Respondents,
DECISION
BERSAMIN, J.:
An action to recover the deficiency after extrajudicial foreclosure of a real property
mortgage is a personal action because it does not affect title to or possession of real
property, or any interest therein.
The Case
This appeal is taken by the petitioner to overturn the decision promulgated on March 31,
2006,1 whereby the Court of Appeals (CA) set aside the orders issued by the Regional Trial
Court, Branch 60, in Makati City (Makati RTC) on October 17, 2003 2 and February 1,
2005 3 dismissing
their action against the respondents to recover the deficiency after the extrajudicial
foreclosure of their mortgage (Civil Case No.03-450) on the ground of improper venue.
Antecedents
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
On August 22, 1996, the City of Manila filed a complaint against the respondents for the
expropriation of five parcels of land located in Tondo, Manila and registered in the name of
respondent Teresita Yujuico. Two of the parcels of land, covered by Transfer Certificate of
Title (TCT) No. 261331 and TCT No. 261332, were previously mortgaged to Citytrust
Banking Corporation, the petitioner's predecessor-in-interest, under a First Real Estate
Mortgage Contract.4 On June 30, 2000, the Regional Trial Court in Manila (Manila RTC)
rendered its judgment declaring the five parcels of land expropriated for public use. The
judgment became final and executory on January 28, 2001 and was entered in the book of
entries of judgment on March 23, 2001.5 The petitioner subsequently filed a Motion to
Intervene in Execution with Partial Opposition to Defendant's Request to Release, but the
RTC denied the motion for having been "filed out of time." Hence, the petitioner decided to
extrajudicially foreclose the mortgage constituted on the two parcels of land subject of the
respondents' loan. After holding the public auction, the sheriff awarded the two lots to the
petitioner as the highest bidder at ₱10, 000, 000.00. 6
Claiming a deficiency amounting to Pl8, 522155.42, the pet1t1oner sued the respondents to
recover such deficiency in the Makati RTC (Civil Case No. 03-450).1âwphi1 The
respondents moved to dismiss the complaint on several grounds, namely: that the suit was
barred by res judicata; that the complaint stated no cause of action; and that the plaintiffs
claim had been waived, abandoned, or extinguished. 7
In its order issued on October 17, 2003, the Makati RTC denied the respondents' motion to
dismiss, ruling that there was no res judicata; that the complaint stated a sufficient cause of
action to recover the deficiency; and that there was nothing to support the claim that the
obligation had been abandoned or extinguished apart from the respondents' contention that
the properties had been subjected to expropriation by the City of Manila. 8
On November 4, 2003, the respondents moved for reconsideration, reiterating their grounds
earlier made in their motion to dismiss. 9
In turn, the petitioner adopted its comment/opposition to the motion to dismiss. 10
11
The respondents then filed their reply, in which they raised for the first time their
objection on the ground of improper venue. They contended that the action for the recovery
of the deficiency, being a supplementary action of the extrajudicial foreclosure
proceedings, was a real action that should have been brought in the Manila RTC because
Manila was the place where the properties were located.12
On February 1, 2005, the Makati RTC denied the respondents' motion for reconsideration
for its lack of merit; and held on the issue of improper venue that:
Page 150 of 169
It would be improper for this Court to dismiss the plaintiffs complaint on the ground of
improper venue, assuming that the venue is indeed improperly laid, since the said ground
was not raised in the defendant's Motion to Dismiss. On this point, it was held in the case
of Malig, et al. vs. Bush, L 22761, May 31, 1969 that "an action cannot be dismissed on a
ground not alleged in the motion therefore even if said ground, e.g., prescription, is
provided in Rule 16. 13
Decision of the CA
Not satisfied, the respondents assailed the orders dated October 1 7, 2003 and February 1,
2005 by petition for certiorari.14 They submitted for consideration by the CA the following
issues, namely:
x x x (WHETHER OR NOT) RESPONDENT TRIAL COURT COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN IT ISSUED ITS ASSAILED ORDERS CONSIDERING THAT:
A THE COMPLAINT A QUO IS BARRED BY RES JUDICATA.
B. THE COMPLAINT STATED NO CAUSE OF ACTION.
C. PRIVATE RESPONDENT'S CLAIM HAS BEEN WAIVED, ABANDONED
OR OTHERWISE EXTINGUISHED.
D. VENUE WAS IMPROPERLY LAID. 15
On March 31, 2006, the CA granted the petition for certiorari of the respondents on the
basis of the fourth issue, opining:
xxxx
Thus, a suit for recovery of the deficiency after the foreclosure of a mortgage is in the
nature of a mortgage action because its purpose is precisely to enforce the mortgage
contract; it is upon a written contract and upon an obligation of the mortgage-debtor to pay
the deficiency which is created by law. As such, the venue of an action for recovery of
deficiency must necessarily be the same venue as that of the extrajudicial foreclosure of
mortgage.
xxxx
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
In this regard, We take note that the parcels of land subject of the mortgage contract are
located in Tondo, Manila, under Transfer Certificates of Title Nos. 216331 and 216332. On
the other hand, the extrajudicial foreclosure of the real estate mortgage took place at the R
TC of Manila on January 28, 2003. Thus, the suit for judgment on the deficiency filed by
respondent BPI against petitioners Yujuico, being an action emanating from the foreclosure
of the real estate mortgage contract between them, must necessarily be filed also at the
RTC of Manila, not at the RTC of Makati.
x x x x 16
The CA denied the respondents' Motion for Partial Reconsideration and the petitioner's
Partial Motion for Reconsideration on December 7, 2006. 17
Issues
Hence, this appeal by the petitioner, to assail the CA's dismissal of Civil Case No. 03-450
on the ground of improper venue upon the following grounds, 18 namely:
I.
WHETHER OR NOT THE HONORA.BLE COURT OF APPEALS' DENIAL OF THE
PETITIONER'S PARTIAL MOTION FOR RECONSIDERATION ON THE GROUND
OF IMPROPER VENUE AS A RESULT DISMISSED THE COMPLAINT FOR SUM OF
MONEY IS CONTRARY TO LAW.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS['] ACT OF
APPRECIATING THE ADDITIONAL GROUND OF IMPROPER VENUE, ONLY
RAISED IN THE MOTION FOR RECONSIDERATION FILED IN THE LOWER
COURT AFTER IT DENIED RESPONDENTS' MOTION TO DISMISS, IS CONTRARY
TO LAW AND JURISPRUDENCE.19
Ruling of the Court
We grant the petition for review on certiorari.
It is basic that the venue of an action depends on whether it is a real or a personal action.
The determinants of whether an action is of a real or a personal nature have been fixed by
Page 151 of 169
the Rules of Court and relevant jurisprudence. According to Section 1, Rule 4 of the Rules
of Court, a real action is one that affects title to or possession of real property, or an interest
therein. Thus, an action for partition or condemnation of, or foreclosure of mortgage on,
real property is a real action. 20 The real action is to be commenced and tried in the proper
court having jurisdiction over the area wherein the real property involved, or a portion
thereof, is situated, which explains why the action is also referred to as a local action. In
contrast, the Rules of Court declares all other actions as personal actions. 21 such actions
may include those brought for the recovery of personal property, or for the enforcement of
some contract or recovery of damages for its breach, or for the recovery of damages for the
commission of an injury to the person or property.22 The venue of a personal action is the
place where the plaintiff or any of the principal plaintiffs resides, or where the defendant or
any of the principal defendants resides, or in the case of a non-resident defendant where he
may be found, at the election of the plaintiff, 23 for which reason the action is considered a
transitory one.
Based on the distinctions between real and personal actions, an action to recover the
deficiency after the extrajudicial foreclosure of the real property mortgage is a personal
action, for it does not affect title to or possession of real property, or any interest therein.
It is true that the Court has said in Caltex Philippines, Inc. v. Intermediate Appellate
Court 24 that "a suit for the recovery of the deficiency after the foreclosure of a mortgage is
in the nature of a mortgage action because its purpose is precisely to enforce the mortgage
contract." However, the CA erred in holding, upon the authority of Caltex Philippines, Inc.,
that the venue of Civil Case No. 03 450 must necessarily be Manila, the same venue as that
of the extrajudicial foreclosure of mortgage. An examination of Caltex Philippines, Inc.
reveals that the Court was thereby only interpreting the prescriptive period within which to
bring the suit for the recovery of the deficiency after the foreclosure of the mortgage, and
was not at all ruling therein on the venue of such suit or on the nature of such suit being
either a real or a personal action.
Given the foregoing, the petitioner correctly brought Civil Case No.03-450 in the Makati
RTC because Makati was the place where the main office of the petitioner was
located.1avvphi1
Moreover, the Makati RTC observed, and the observation is correct in our view, that it
would be improper to dismiss Civil Case No. 03-450 on the ground of improper venue,
assuming that the venue had been improperly laid, considering that the respondents had not
raised such ground in their Motion to Dismiss. As earlier indicated, they came to raise the
objection of improper venue for the first time only in their reply to the petitioner's comment
on their Motion for Reconsideration. They did so belatedly.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
We underscore that in civil proceedings, venue is procedural, not jurisdictional, and may be
waived by the defendant if not seasonably raised either in a motion to dismiss or in the
answer.25 Section 1, Rule 9 of the Rules of Court thus expressly stipulates that defenses and
objections not pleaded either in a motion to dismiss or in the answer are deemed waived.
As it relates to the place of trial, indeed, venue is meant to provide convenience to the
parties, rather than to restrict their access to the courts.26 In other words, unless the
defendant seasonably objects, any action may be tried by a court despite its being the
improper venue.
WHEREFORE, we GRANT the petition for review on certiorari; REVERSE and SET
ASIDE the decision promulgated by the Court of Appeals on March 31, 2006;
REINSTATE the orders dated October 17, 2003 and February 1, 2005 of the Regional Trial
Court, Branch 60, in Makati City; and ORDER the respondents to pay the costs of suit.
SO ORDERED.
G.R. No. 204444, January 14, 2015
VIRGILIO C. BRIONES, Petitioner, v. COURT OF APPEALS AND CASH ASIA
CREDIT CORPORATION, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for certiorari1 are the Decision2 dated March 5, 2012 and the
Resolution3 dated October 4, 2012 of the Court of Appeals(CA) in CA-G.R. SP No.
117474, which annulled the Orders dated September 20, 20104 and October 22, 20105 of
the Regional Trial Court of Manila, Branch 173 (RTC) in Civil Case No. 10-124040,
denying private respondent Cash Asia Credit Corporation’s (Cash Asia) motion to dismiss
on the ground of improper venue.cralawred
The Facts
The instant case arose from a Complaint6 dated August 2, 2010 filed by Virgilio C. Briones
(Briones) for Nullity of Mortgage Contract, Promissory Note, Loan Agreement,
Foreclosure of Mortgage, Cancellation of Transfer Certificate of Title (TCT) No.290846,
and Damages against Cash Asia before the RTC.7 In his complaint, Briones alleged that he
is the owner of a property covered by TCT No. 160689 (subject property),and that, on July
15, 2010, his sister informed him that his property had been foreclosed and a writ of
Page 152 of 169
possession had already been issued in favor of Cash Asia.8 Upon investigation, Briones
discovered that: (a) on December 6, 2007, he purportedly executed a promissory note, 9 loan
agreement,10 and deed of real estate mortgage11covering the subject property (subject
contracts) in favor of Cash Asia in order to obtain a loan in the amount of P3,500,000.00
from the latter;12 and (b) since the said loan was left unpaid, Cash Asia proceeded to
foreclose his property.13 In this relation, Briones claimed that he never contracted any loans
from Cash Asia as he has been living and working in Vietnam since October 31, 2007. He
further claimed that he only went back to the Philippines on December 28, 2007 until
January 3, 2008 to spend the holidays with his family, and that during his brief stay in the
Philippines, nobody informed him of any loan agreement entered into with Cash Asia.
Essentially, Briones assailed the validity of the foregoing contracts claiming his signature
to be forged.14chanRoblesvirtualLawlibrary
For its part, Cash Asia filed a Motion to Dismiss15 dated August 25, 2010, praying for the
outright dismissal of Briones’s complaint on the ground of improper venue. 16 In this regard,
Cash Asia pointed out the venue stipulation in the subject contracts stating that “all legal
actions arising out of this notice in connection with the Real Estate Mortgage subject hereof
shall only be brought in or submitted to the jurisdiction of the proper court of Makati
City.”17 In view thereof, it contended that all actions arising out of the subject contracts
may only be exclusively brought in the courts of Makati City, and as such, Briones’s
complaint should be dismissed for having been filed in the City of
Manila.18chanRoblesvirtualLawlibrary
In response, Briones filed an opposition,19 asserting, inter alia, that he should not be
covered by the venue stipulation in the subject contracts as he was never a party therein. He
also reiterated that his signatures on the said contracts were
forgeries.20chanRoblesvirtualLawlibrary
The RTC Ruling
In an Order21 dated September 20, 2010, the RTC denied Cash Asia’s motion to dismiss for
lack of merit. In denying the motion, the RTC opined that the parties must be afforded the
right to be heard in view of the substance of Briones’s cause of action against Cash Asia as
stated in the complaint.22chanRoblesvirtualLawlibrary
Cash Asia moved for reconsideration23 which was, however, denied in an Order24 dated
October 22, 2010. Aggrieved, it filed a petition for certiorari25 before the CA.cralawred
The CA Ruling
In a Decision26 dated March 5, 2012, the CA annulled the RTC Orders, and accordingly,
dismissed Briones’s complaint without prejudice to the filing of the same before the proper
court in Makati City.27 It held that the RTC gravely abused its discretion in denying Cash
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Asia’s motion to dismiss, considering that the subject contracts clearly provide that actions
arising therefrom should be exclusively filed before the courts of Makati City only. 28 As
such, the CA concluded that Briones’s complaint should have been dismissed outright on
the ground of improper venue,29 this, notwithstanding Briones’s claim of forgery.
Dissatisfied, Briones moved for reconsideration,30 which was, however, denied in a
Resolution31 dated October 4, 2012, hence, this petition.
The Issue Before the Court
The primordial issue for the Court’s resolution is whether or not the CA gravely abused its
discretion in ordering the outright dismissal of Briones’s complaint on the ground of
improper venue.
The Court’s Ruling
The petition is meritorious.
At the outset, the Court stresses that “[t]o justify the grant of the extraordinary remedy
of certiorari, [the petitioner] must satisfactorily show that the court or quasi-judicial
authority gravely abused the discretion conferred upon it. Grave abuse of discretion
connotes judgment exercised in a capricious and whimsical manner that is tantamount to
lack of jurisdiction. To be considered ‘grave,’ discretion must be exercised in a 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 at all in contemplation of law.”32chanRoblesvirtualLawlibrary
Guided by the foregoing considerations, the Court finds that the CA gravely abused its
discretion in ordering the outright dismissal of Briones’s complaint against Cash Asia,
without prejudice to its re-filing before the proper court in Makati City.
Rule 4 of the Rules of Court governs the rules on venue of civil actions, to
wit:chanroblesvirtuallawlibrary
Rule 4
VENUE OF ACTIONS
SECTION 1. Venue of real actions. — Actions affecting title to or possession of real
property, or interest therein, shall be commenced and tried in the proper court which has
jurisdiction over the area wherein the real property involved, or a portion thereof, is
situated.
Forcible entry and detainer actions shall be commenced and tried in the municipal trial
Page 153 of 169
court of the municipality or city wherein the real property involved, or a portion thereof, is
situated.
SEC. 2. Venue of personal actions. — All other actions may be commenced and tried
where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any
of the principal defendants resides, or in the case of a non-resident defendant where he may
be found, at the election of the plaintiff.
SEC. 3. Venue of actions against nonresidents. — If any of the defendants does not reside
and is not found in the Philippines, and the action affects the personal status of the plaintiff,
or any property of said defendant located in the Philippines, the action may be commenced
and tried in the court of the place where the plaintiff resides, or where the property or any
portion thereof is situated or found.
SEC. 4. When Rule not applicable. — This Rule shall not apply –
(a) In those cases where a specific rule or law provides otherwise; or
(b) Where the parties have validly agreed in writing before the filing of the action on the
exclusive venue thereof.
Based therefrom, the general rule is that the venue of real actions is the court which has
jurisdiction over the area wherein the real property involved, or a portion thereof, is
situated; while the venue of personal actions is the court which has jurisdiction where the
plaintiff or the defendant resides, at the election of the plaintiff. As an exception,
jurisprudence in Legaspi v. Rep. of the Phils.33 instructs that the parties, thru a written
instrument, may either introduce another venue where actions arising from such instrument
may be filed, or restrict the filing of said actions in a certain exclusive
venue, viz.:chanroblesvirtuallawlibrary
The parties, however, are not precluded from agreeing in writing on an exclusive venue, as
qualified by Section 4 of the same rule. Written stipulations as to venue may be
restrictive in the sense that the suit may be filed only in the place agreed upon, or
merely permissive in that the parties may file their suit not only in the place agreed
upon but also in the places fixed by law. As in any other agreement, what is essential is
the ascertainment of the intention of the parties respecting the matter.
As regards restrictive stipulations on venue, jurisprudence instructs that it must be
shown that such stipulation is exclusive. In the absence of qualifying or restrictive
words, such as “exclusively,” “waiving for this purpose any other venue,” “shall only”
preceding the designation of venue, “to the exclusion of the other courts,” or words of
similar import, the stipulation should be deemed as merely an agreement on an
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
additional forum, not as limiting venue to the specified place.34 (Emphases and
underscoring supplied)
In this relation, case law likewise provides that in cases where the complaint assails only
the terms, conditions, and/or coverage of a written instrument and not its validity, the
exclusive venue stipulation contained therein shall still be binding on the parties, and thus,
the complaint may be properly dismissed on the ground of improper venue.35 Conversely,
therefore, a complaint directly assailing the validity of the written instrument itself should
not be bound by the exclusive venue stipulation contained therein and should be filed in
accordance with the general rules on venue.To be sure, it would be inherently consistent for
a complaint of this nature to recognize the exclusive venue stipulation when it, in fact,
precisely assails the validity of the instrument in which such stipulation is contained.
In this case, the venue stipulation found in the subject contracts is indeed restrictive in
nature, considering that it effectively limits the venue of the actions arising therefrom to the
courts of Makati City. However, it must be emphasized that Briones’s complaint directly
assails the validity of the subject contracts, claiming forgery in their execution. Given this
circumstance, Briones cannot be expected to comply with the aforesaid venue stipulation,
as his compliance therewith would mean an implicit recognition of their validity. Hence,
pursuant to the general rules on venue, Briones properly filed his complaint before a court
in the City of Manila where the subject property is located.
In conclusion, the CA patently erred and hence committed grave abuse of discretion in
dismissing Briones’s complaint on the ground of improper venue.chanrobleslaw
WHEREFORE, the petition is GRANTED. Accordingly, the Decision dated March 5,
2012 and the Resolution dated October 4, 2012 of the Court of Appeals in CA-G.R. SP No.
117474 are hereby ANNULLED and SET ASIDE. The Orders dated September 20, 2010
and October 22, 2010 of the Regional Trial Court of Manila, Branch 173 in Civil Case No.
10-124040 are REINSTATED.
SO ORDERED.cralawlawlibrary
G.R. No. 151037 June 23, 2005
SAN MIGUEL CORPORATION, petitioner,
vs.
TROY FRANCIS L. MONASTERIO, respondent.
RESOLUTION
Page 154 of 169
QUISUMBING, J.:
This appeal by certiorari seeks to reverse and set aside the D E C I S I O N1 dated July 16,
2001, and the Resolution2 dated November 27, 2001, of the Court of Appeals in CA-G.R.
SP No. 52622. The Court of Appeals dismissed the special civil action for certiorari filed
by San Miguel Corporation (SMC)3 assailing the Orders4 of the Regional Trial Court of
Naga City, Branch 20, which denied its Motion to Dismiss on the ground of improper
venue and the subsequent Motion for Reconsideration in Civil Case No. RTC’98-4150.
The facts are as follows:
On August 1, 1993, petitioner SMC entered into an Exclusive Warehouse
Agreement5 (hereafter EWA for brevity) with SMB Warehousing Services (SMB),
represented by its manager, respondent Troy Francis L. Monasterio. SMB undertook to
provide land, physical structures, equipment and personnel for storage, warehousing and
related services such as, but not limited to, segregation of empty bottles, stock handling,
and receiving SMC products for its route operations at Sorsogon, Sorsogon and Daet,
Camarines Norte.
The agreement likewise contained a stipulation on venue of actions, to wit:
26. GENERAL PROVISIONS
...
b. Should it be necessary that an action be brought in court to enforce the terms of this
Agreement or the duties or rights of the parties herein, it is agreed that the proper court
should be in the courts of Makati or Pasig, Metro Manila, to the exclusion of the other
courts at the option of the COMPANY.6 [Underscoring supplied.]
...
On November 3, 1998, respondent Monasterio, a resident of Naga City, filed a complaint
docketed as Civil Case No. RTC’98-4150 for collection of sum of money against petitioner
before the Regional Trial Court of Naga City, Branch 20.
In his Complaint,7 Monasterio claimed ₱900,600 for unpaid cashiering fees. He alleged
that from September 1993 to September 1997 and May 1995 to November 1997, aside
from rendering service as warehouseman, he was given the additional task of cashiering in
SMC’s Sorsogon and Camarines Norte sales offices for which he was promised a separate
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
fee. He claims that of approximately 290 million pesos in cash and checks of the sales
office and the risks of pilferage, theft, robbery and hold-up, he had assumed what amounted
to approximately 35 million pesos per annum for Sorsogon, Sorsogon, and 60 million pesos
for Daet, Camarines Norte. He also said that he hired personnel for the job. Respondent
added that it was only on December 1, 1997, that petitioner SMC started paying him
₱11,400 per month for his cashiering services.
Monasterio demanded ₱82,959.32 for warehousing fees, ₱11,400 for cashiering fees for the
month of September, 1998, as well as exemplary damages, and attorney’s fees in the
amount of ₱500,000 and ₱300,000, respectively.8
On November 19, 1998, SMC filed a Motion to Dismiss9 on the ground of improper venue.
SMC contended that respondent’s money claim for alleged unpaid cashiering services arose
from respondent’s function as warehouse contractor thus the EWA should be followed and
thus, the exclusive venue of courts of Makati or Pasig, Metro Manila is the proper venue as
provided under paragraph 26(b) of the Exclusive Warehouse Agreement. SMC cites in its
favor Section 4(b) in relation to Section 2 of Rule 4 10 of the Rules of Court allowing
agreement of parties on exclusive venue of actions.
Respondent filed an Opposition11 contending that the cashiering service he rendered for the
petitioner was separate and distinct from the services under the EWA. Hence, the provision
on venue in the EWA was not applicable to said services. Hence, respondent insists that in
accordance with Section 2 of Rule 4 of the Rules of Court the venue should be in Naga
City, his place of residence.
On February 22, 1999, the Regional Trial Court, of Naga City, Branch 20 issued
an Order12 denying petitioner’s motion to dismiss. The court held that the services agreed
upon in said contract is limited to warehousing services and the claim of plaintiff in his suit
pertains to the cashiering services rendered to the defendant, a relationship which was not
documented, and is certainly a contract separate and independent from the exclusive
warehousing agreements.13
SMC’s subsequent Motion for Reconsideration was likewise denied.14 While the motion
was pending, the respondent filed an Amended Complaint15 deleting his claim for unpaid
warehousing and cashiering fees but increasing the exemplary damages from ₱500,000 to
₱1,500,000.16
Petitioner elevated the controversy to the Court of Appeals by way of a special civil action
for certiorari with a prayer for the issuance of a Temporary Restraining Order and/or Writ
of Preliminary Injunction, imputing grave abuse of discretion on the RTC Naga City for
denying its motion to dismiss and subsequent motion for reconsideration.
Page 155 of 169
On June 11, 1999, during the pendency of the certiorari petition SMC filed before the trial
court an answer ex abundanti cautela17 with a compulsory counterclaim for moral and
exemplary damages and attorney’s fees. SMC averred lack of cause of action, payment,
waiver, abandonment and extinguishment.
In its decision dated July 16, 2001, the Court of Appeals found respondent’s claim for
cashiering services inseparable from his claim for warehousing services, thus, the venue
stipulated in the EWA is the proper venue. However, the Court of Appeals noted that prior
to the filing of SMC’s petition, respondent Monasterio filed an amended complaint to
which SMC filed an answer. Thus, the Court of Appeals dismissed San Miguel’s petition
for certiorari, stating that the case was already moot and academic.
Petitioner filed a motion for reconsideration which was denied by the Court of Appeals.
Hence, this petition wherein petitioner raises the following as issues:18
1. Whether or not this Honorable Court may review the finding of the Court of
Appeals that the Complaint and Amended Complaint were filed in the wrong
venue.
2. Assuming arguendo that this Honorable Court may review the finding of the
Court of Appeals that the Complaint and Amended Complaint were filed in the
wrong venue, whether or not such finding should be reversed.
3. Whether or not the Court of Appeals gravely erred in ruling that SMC’s
Petition For Certiorari has become moot and academic in view of the filing of
Monasterio’s Amended Complaint and SMC’s Answer (Ex Abundanti Cautela).19
In our view, two issues only require resolution: (1) Did the RTC of Naga City err in
denying the motion to dismiss filed by SMC alleging improper venue? (2) Did the CA
gravely err in ruling that SMC’s petition for certiorari has become moot?
On disputes relating to the enforcement of the rights and duties of the contracting parties,
the venue stipulation in the EWA should be construed as mandatory. Nothing therein being
contrary to law, morals, good custom or public policy, this provision is binding upon the
parties.20 The EWA stipulation on venue is clear and unequivocal, thus it ought to be
respected.
However, we note that the cause of action in the complaint filed by the respondent before
the RTC of Naga was not based on the EWA, but concern services not enumerated in the
EWA. Records show also that previously, respondent received a separate consideration of
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
₱11,400 for the cashiering service he rendered to SMC. Moreover, in the amended
complaint, the respondent’s cause of action was specifically limited to the collection of the
sum owing to him for his cashiering service in favor of SMC. He already omitted
petitioner’s non-payment of warehousing fees. As previously ruled, allegations in the
complaint determines the cause of action or the nature of the case.21 Thus, given the
circumstances of this case now before us, we are constrained to hold that it would be
erroneous to rule, as the CA did, that the collection suit of the respondent did not pertain
solely to the unpaid cashiering services but pertain likewise to the warehousing services. 22
Exclusive venue stipulation embodied in a contract restricts or confines parties thereto
when the suit relates to breach of the said contract. But where the exclusivity clause does
not make it necessarily all encompassing, such that even those not related to the
enforcement of the contract should be subject to the exclusive venue, the stipulation
designating exclusive venues should be strictly confined to the specific undertaking or
agreement. Otherwise, the basic principles of freedom to contract might work to the great
disadvantage of a weak party-suitor who ought to be allowed free access to courts of
justice.
Restrictive stipulations are in derogation of the general policy of making it more
convenient for the parties to institute actions arising from or in relation to their
agreements.23 Thus, the restriction should be strictly construed as relating solely to the
agreement for which the exclusive venue stipulation is embodied. Expanding the scope of
such limitation on a contracting party will create unwarranted restrictions which the parties
might find unintended or worse, arbitrary and oppressive.
Moreover, since convenience is the raison d’etre of the rules on venue,24 venue stipulation
should be deemed merely permissive, and that interpretation should be adopted which most
serves the parties’ convenience.25 Contrawise, the rules mandated by the Rules of Court
should govern.26 Accordingly, since the present case for the collection of sum of money
filed by herein respondent is a personal action,27 we find no compelling reason why it could
not be instituted in the RTC of Naga City, the place where plaintiff resides.
Having settled the issue on venue, we need not belabor the issue of whether SMC’s petition
has become moot.
WHEREFORE, it is hereby ruled that no reversible error was committed by the Regional
Trial Court of Naga City, Branch 20, in denying petitioner’s motion to dismiss. Said RTC
is the proper venue of the amended complaint for a sum of money filed by respondent
against petitioner San Miguel Corporation, in connection with his cashiering services. The
case is hereby REMANDED to the RTC of Naga City, Branch 20, for further proceedings
on respondent’s amended complaint, without further delay.
Page 156 of 169
Costs against petitioner.
SO ORDERED.
A.M. No. 99-10-05-0 December 14, 1999
(Amended by A.M. 99-10-05-0, August 7, 2001)
PROCEDURE IN EXTRA-JUDICIAL FORECLOSURE OF MORTGAGE
In line with the responsibility of an Executive Judge under Administrative Order No. 6,
dated June 30, 1975, for the management of courts within his administrative area, included
in which is the task of supervising directly the work of the Clerk of Court, who is also
the Ex Officio Sheriff, and his staff, and the issuance of commissions to notaries public and
enforcement of their duties under the law, the following procedures are hereby prescribed
in extrajudicial foreclosure of mortgages:
1. All applications for extra-judicial foreclosure of mortgage whether under the
direction of the sheriff or a notary public, pursuant to Act 3135, as amended by
Act 4118, and Act 1508, as amended, shall be filed with the Executive Judge,
through the Clerk of Court who is also the Ex-Officio Sheriff.
2. Upon receipt of an application for extra-judicial foreclosure of mortgage, it
shall be the duty of the Clerk of Court to:
a) receive and docket said application and to stamp thereon the
corresponding file number, date and time of filing;
b) collect the filing fees therefor and issue the corresponding official
receipt;
c) examine, in case of real estate mortgage foreclosure, whether the
applicant has complied with all the requirements before the public
auction is conducted under the direction of the sheriff or a notary
public, pursuant to Sec. 4 of Act 3135, as amended;
d) sign and issue the certificate of sale, subject to the approval of the
Executive Judge, or in his absence, the Vice-Executive Judge; and
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
e) after the certificate of sale has been issued to the highest bidder, keep
the complete records, while awaiting any redemption within a period of
one (1) year from date of registration of the certificate of sale with the
Register of Deeds concerned, after which the records shall be archived.
Where the application concerns the extrajudicial foreclosure of mortgages of real
estates and/or chattels in different locations covering one indebtedness, only one
filing fee corresponding to such indebtedness shall be collected. The collecting
Clerk of Court shall, apart from the official receipt of the fees, issue a certificate
of payment indicating the amount of indebtedness, the filing fees collected, the
mortgages sought to be foreclosed, the real estates and/or chattels mortgaged and
their respective locations, which certificate shall serve the purpose of having the
application docketed with the Clerks of Court of the places where other
properties are located and of allowing the extrajudicial foreclosures to proceed
thereat.
3. The notices of auction sale in extrajudicial foreclosure for publication by the
sheriff or by a notary public shall be published in a newspaper of general
circulation pursuant to Section 1, Presidential Decree No. 1709, dated January
26, 1977, and non-compliance therewith shall constitute a violation of Section 6
thereof.
4. The Executive Judge shall, with the assistance of the Clerk of Court, raffle
application for extrajudicial foreclosure of mortgage under the direction of the
sheriff among all sheriffs, including those assigned to the Office of the Clerk of
Court and Sheriffs IV assigned in the branches.
5. No auction sale shall be held unless there are at least two (2) participating
bidders, otherwise the sale shall be postponed to another date. If on the new date
set for the sale there shall not be at least two bidders, the sale shall then proceed.
The names of the bidders shall be reported by the sheriff or the notary public who
conducted the sale to the Clerk of Court before the issuance of the certificate of
sale.
This Resolution amends or modifies accordingly Administrative Order No. 3 issued by then
Chief Justice Enrique M. Fernando on 19 October 1984 and Administrative Circular No. 3-
98 issued by the Chief Justice Andres R. Narvasa on 5 February 1998.
The Court Administrator may issue the necessary guidelines for the effective enforcement
of this Resolution.
Page 157 of 169
The Clerk of Court shall cause the publication of this Resolution in a newspaper of general
circulation not later than 27 December 1999 and furnish copies thereof to the Integrated
Bar of the Philippines.
This Resolution shall take effect on the fifteenth day of January year 2000.
G.R. No. 192877 March 23, 2011
SPOUSES HERMES P. OCHOA and ARACELI D. OCHOA, Petitioners,
vs.
CHINA BANKING CORPORATION, Respondent.
RESOLUTION
NACHURA, J.:
For resolution is petitioners’ motion for reconsideration 1 of our January 17, 2011
Resolution2 denying their petition for review on certiorari3 for failing to sufficiently show
any reversible error in the assailed judgment4 of the Court of Appeals (CA).
Petitioners insist that it was error for the CA to rule that the stipulated exclusive venue of
Makati City is binding only on petitioners’ complaint for Annulment of Foreclosure, Sale,
and Damages filed before the Regional Trial Court of Parañaque City, but not on
respondent bank’s Petition for Extrajudicial Foreclosure of Mortgage, which was filed with
the same court.
We disagree.
The extrajudicial foreclosure sale of a real estate mortgage is governed by Act No. 3135, as
amended by Act No. 4118, otherwise known as "An Act to Regulate the Sale of Property
Under Special Powers Inserted In or Annexed to Real-Estate Mortgages." Sections 1 and 2
thereof clearly state:
Section 1. When a sale is made under a special power inserted in or attached to any real-
estate mortgage hereafter made as security for the payment of money or the fulfillment of
any other obligation, the provisions of the following sections shall govern as to the manner
in which the sale and redemption shall be effected, whether or not provision for the same is
made in the power.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Sec. 2. Said sale cannot be made legally outside of the province in which the property sold
is situated; and in case the place within said province in which the sale is to be made is the
subject of stipulation, such sale shall be made in said place or in the municipal building of
the municipality in which the property or part thereof is situated.5
The case at bar involves petitioners’ mortgaged real property located in Parañaque City
over which respondent bank was granted a special power to foreclose extra-judicially.
Thus, by express provision of Section 2, the sale can only be made in Parañaque City.
The exclusive venue of Makati City, as stipulated by the parties 6 and sanctioned by Section
4, Rule 4 of the Rules of Court,7 cannot be made to apply to the Petition for Extrajudicial
Foreclosure filed by respondent bank because the provisions of Rule 4 pertain to venue of
actions, which an extrajudicial foreclosure is not.
Pertinent are the following disquisitions in Supena v. De la Rosa: 8
Section 1, Rule 2 [of the Rules of Court] defines an action in this wise:
"Action means an ordinary suit in a court of justice, by which one party prosecutes another
for the enforcement or protection of a right, or the prevention or redress of a wrong."
Hagans v. Wislizenus does not depart from this definition when it states that "[A]n action is
a formal demand of one's legal rights in a court of justice in the manner prescribed by the
court or by the law. x x x." It is clear that the determinative or operative fact which
converts a claim into an "action or suit" is the filing of the same with a "court of justice."
Filed elsewhere, as with some other body or office not a court of justice, the claim may not
be categorized under either term. Unlike an action, an extrajudicial foreclosure of real
estate mortgage is initiated by filing a petition not with any court of justice but with the
office of the sheriff of the province where the sale is to be made.1avvphi1 By no stretch of
the imagination can the office of the sheriff come under the category of a court of justice.
And as aptly observed by the complainant, if ever the executive judge comes into the
picture, it is only because he exercises administrative supervision over the sheriff. But this
administrative supervision, however, does not change the fact that extrajudicial
foreclosures are not judicial proceedings, actions or suits.9
These pronouncements were confirmed on August 7, 2001 through A.M. No. 99-10-05-0,
entitled "Procedure in Extra-Judicial Foreclosure of Mortgage," the significant portions of
which provide:
Page 158 of 169
In line with the responsibility of an Executive Judge under Administrative Order No. 6,
date[d] June 30, 1975, for the management of courts within his administrative area,
included in which is the task of supervising directly the work of the Clerk of Court, who is
also the Ex-Office Sheriff, and his staff, and the issuance of commissions to notaries public
and enforcement of their duties under the law, the following procedures are hereby
prescribed in extra-judicial foreclosure of mortgages:
1. All applications for extrajudicial foreclosure of mortgage whether under the direction of
the sheriff or a notary public, pursuant to Act 3135, as amended by Act 4118, and Act
1508, as amended, shall be filed with the Executive Judge, through the Clerk of Court who
is also the Ex-Officio Sheriff.
Verily then, with respect to the venue of extrajudicial foreclosure sales, Act No. 3135, as
amended, applies, it being a special law dealing particularly with extrajudicial foreclosure
sales of real estate mortgages, and not the general provisions of the Rules of Court on
Venue of Actions.
Consequently, the stipulated exclusive venue of Makati City is relevant only to actions
arising from or related to the mortgage, such as petitioners’ complaint for Annulment of
Foreclosure, Sale, and Damages.
The other arguments raised in the motion are a mere reiteration of those already raised in
the petition for review. As declared in this Court’s Resolution on January 17, 2011, the
same failed to show any sufficient ground to warrant the exercise of our appellate
jurisdiction.
WHEREFORE, premises considered, the motion for reconsideration is hereby DENIED.
SO ORDERED.
G.R. No. 193753 September 26, 2012
LIVING @ SENSE, INC., Petitioner,
vs.
MALAYAN INSURANCE COMPANY, INC., Respondent.
RESOLUTION
PERLAS-BERNABE, J.:
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
This Petition for Review on Certiorari assails, on pure question of law, the Orders dated
April 8, 20101 and August 25, 20102 of the Regional Trial Court (RTC) of Parafiaque City,
Branch 257 dismissing, without prejudice, the complaint for specific performance and
breach of contract filed by petitioner Living @ Sense, Inc. (petitioner) for failure to
implead Dou Mac, Inc. (DMI) as an indispensable party.
The Factual Antecedents
Records show that petitioner was the main contractor of the FOC Network Project of Globe
Telecom in Mindanao. In connection with the project, petitioner entered into a Sub-
Contract Agreement3 (Agreement) with DMI, under which the latter was tasked to
undertake an underground open-trench work. Petitioner required DMI to give a bond, in the
event that DMI fails to perform its obligations under the Agreement. Thus, DMI secured
surety4 and performance5 bonds, both in the amount of ₱ 5,171,488.00, from respondent
Malayan Insurance Company, Inc. (respondent) to answer: (1) for the unliquidated portion
of the downpayment, and (2) for the loss and damage that petitioner may suffer,
respectively, should DMI fail to perform its obligations under the Agreement. Under the
bonds, respondent bound itself jointly and severally liable with DMI. 6
During the course of excavation and restoration works, the Department of Public Works
and Highways (DPWH) issued a work-stoppage order against DMI after finding the latter’s
work unsatisfactory. Notwithstanding the said order, however, DMI still failed to adopt
corrective measures, prompting petitioner to terminate7 the Agreement and
seek8 indemnification from respondent in the total amount of ₱ 1,040,895.34.
However, respondent effectively denied9 petitioner’s claim on the ground that the liability
of its principal, DMI, should first be ascertained before its own liability as a surety attaches.
Hence, the instant complaint, premised on respondent’s liability under the surety and
performance bonds secured by DMI.
Seeking the dismissal10 of the complaint, respondent claimed that DMI is an indispensable
party that should be impleaded and whose liability should first be determined before
respondent can be held liable.
On the other hand, petitioner asserted11 that respondent is a surety who is directly and
primarily liable to indemnify petitioner, and that the bond is "callable on demand"12 in the
event DMI fails to perform its obligations under the Agreement.
The RTC’s Ruling
Page 159 of 169
In its April 8, 2010 Order,13 the RTC dismissed the complaint without prejudice, for failure
to implead DMI as a party defendant. It ruled that before respondent could be held liable on
the surety and performance bonds, it must first be established that DMI, with whom
petitioner had originally contracted, had indeed violated the Agreement. DMI, therefore, is
an indispensable party that must be impleaded in the instant suit.
On August 25, 2010, the RTC denied14 petitioner’s motion for reconsideration for failure to
set the same for hearing as required under the rules.
The Issue Before The Court
The sole issue to be resolved by the Court is whether DMI is an indispensable party in this
case.
The Court's Ruling
Petitioner maintains that the rule on solidary obligations permits it, as creditor, to proceed
against any of the solidary debtors, citing Article 1216 of the Civil Code which provides:
Article 1216. The creditor may proceed against any one of the solidary debtors or some or
all of them simultaneously. The demand made against one of them shall not be an obstacle
to those which may subsequently be directed against the others, so long as the debt has not
been fully collected.
The petition is meritorious.
Records show that when DMI secured the surety and performance bonds from respondent
in compliance with petitioner’s requirement, respondent bound itself "jointly and severally"
with DMI for the damages and actual loss that petitioner may suffer should DMI fail to
perform its obligations under the Agreement, as follows:
That we, DOU MAC INC. as Principal, and MALAYAN INSURANCE CO., INC., x xx
are held firmly bound unto LIVING @ SENSE INC. in the sum of FIVE MILLION ONE
HUNDRED SEVENTY ONE THOUSAND FOUR HUNDRED EIGHTY EIGHT AND
00/100 PESOS ONLY (PHP ***5,171,488.00), PHILIPPINE Currency, for the payment of
which sum, well and truly to be made, we bind ourselves, our heirs, executors,
administrators, successors and assigns, jointly and severally, firmly by these presents
xxx15 (Emphasis Supplied)
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
The term "jointly and severally" expresses a solidary obligation 16 granting petitioner, as
creditor, the right to proceed against its debtors, i.e., respondent or DMI.
The nature of the solidary obligation under the surety does not make one an indispensable
party.17 An indispensable party is a party-in-interest without whom no final determination
can be had of an action, and who shall be joined mandatorily either as plaintiffs or
defendants. The presence of indispensable parties is necessary to vest the court with
jurisdiction, thus, without their presence to a suit or proceeding, the judgment of a court
cannot attain real finality. The absence of an indispensable party renders all subsequent
actions of the court null and void for want of authority to act, not only as to the absent
parties but even as to those present.18
In this case, DMI is not an indispensable party because petitioner can claim indemnity
directly from respondent, having made itself jointly and severally liable with DMI for the
obligation under the bonds. Therefore, the failure to implead DMI is not a ground to
dismiss the case, even if the same was without prejudice.1âwphi1
Moreover, even on the assumption that DMI was, indeed, an indispensable party, the RTC
committed reversible error in dismissing the complaint. Failure to implead an indispensable
party is not a ground for the dismissal of an action, as the remedy in such case is to implead
the party claimed to be indispensable, considering that 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. 19
Accordingly, the Court finds that the RTC erred in holding that DMI Is an indispensable
party and, consequently, in dismissing the complaint filed by petitioner without prejudice.
WHEREFORE, the assailed April 8, 2010 and August 25, 2010 Orders of the Regional
Trial Court (RTC) of Parañaque City, Branch 257 are hereby SET ASIDE. Petitioner's
complaint is ordered REINSTATED and the case remanded to the RTC for further
proceedings.
SO ORDERED.
G.R. No. 196750
MA. ELENA R. DIVINAGRACIA, as Administratrix of the ESTATE OF THE LATE
SANTIAGO C. DIVINAGRACIA, Petitioner,
vs.
CORONACION PARILLA, CELESTIAL NOBLEZA, CECILIA LELINA,
CELEDONIO NOBLEZA, MAUDE NOBLEZA, Respondents.
Page 160 of 169
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated March 26, 2009
and the Resolution3 dated April 6, 2011 of the Court of Appeals (CA) in CA-G.R. CV. No.
80167, which set aside the Decision4 dated November 29, 2002 and the Order5 dated April
4, 2003 of the Regional Trial Court of Iloilo City, Branch 31 (RTC) in Civil Case No.
19003 and, consequently, dismissed Santiago C. Divinagracia's (Santiago) complaint for
judicial partition.
The Facts
Conrado Nobleza, Sr. (Conrado, Sr.) owned a 313-square meter parcel of land located at
Cor. Fuentes-Delgado Streets, Iloilo City denominated as Lot 133-B-1-A and covered by
Transfer Certificate of Title (TCT) No. T- 12255 (subject land).6 During his lifetime, he
contracted two marriages: (a) the first was with Lolita Palermo with whom he had two (2)
children, namely, Cresencio and Conrado, Jr.; and (b) the second was with Eusela Niangar
with whom he had seven (7) children, namely, Mateo, Sr., Coronacion, Cecilia, Celestial,
Celedonio, Ceruleo,7 and Cebeleo, Sr. Conrado, Sr. also begot three (3) illegitimate
children, namely, Eduardo, Rogelio, and Ricardo.8 Mateo, Sr. pre-deceased Conrado, Sr.
and was survived by his children Felcon, Landelin, Eusela, Giovanni, Mateo, Jr., Tito, and
Gaylord. Cebeleo, Sr. also pre-deceased his father and was survived by his wife, Maude,
and children Cebeleo, Jr. and Neobel.9
According to Santiago, upon Conrado, Sr.’s death, Cresencio, Conrado, Jr., Felcon (in
representation of his father, Mateo, Sr., and his siblings), Coronacion, Celestial, Cecilia,
Rogelio, Eduardo, and Ricardo sold their respective interests over the subject land to
Santiago for a consideration of 447,695.66, as embodied in a Deed of Extrajudicial
Settlement or Adjudication with Deed of Sale10 dated November 22, 1989 (subject
document),11 which was, however, not signed by the other heirs who did not sell their
respective shares, namely, Ceruleo, Celedonio, and Maude (in representation of his
husband, Cebeleo, Sr., and their children).12 On December 22, 1989, the same parties
executed a Supplemental Contract13 whereby the vendors-heirs and Santiago agreed that
out of the aforesaid consideration, only 109,807.93 will be paid up front, and that Santiago
will only pay the remaining balance of 337,887.73 upon the partition of the subject
land.14 However, Santiago was not able to have TCT No. T-12255 cancelled and the
subject document registered because of Ceruleo, Celedonio, and Maude’s refusal to
surrender the said title. This fact, coupled with Ceruleo, Celedonio, and Maude’s failure to
partition the subject land, prompted Santiago to file a Complaint 15 dated January 3, 1990
for judicial partition and for receivership.16
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
For their part, Ceruleo, Celedonio, and Maude maintained that Santiago had no legal right
to file an action for judicial partition nor compel them to surrender TCT No. T-12255
because, inter alia: (a) Santiago did not pay the full purchase price of the shares sold to
him; and (b) the subject land is a conjugal asset of Conrado Sr. and Eusela Niangar and,
thus, only their legitimate issues may validly inherit the same.17
The RTC Ruling
In a Decision18 dated November 29, 2002, the RTC ordered, among others, the partition of
the subject land between Santiago on the one hand, and Ceruleo, Celedonio, Maude, and
the heirs of Mateo, Sr. (i.e., Felcon, et al.) on the other hand and, consequently, the
cancellation of TCT No. T- 12255 and the issuance of a new owner’s duplicate certificate
in favor of Santiago and the group of Ceruleo, Celedonio, Maude, and the heirs of Mateo,
Sr.19 The RTC found that through the subject document, Santiago became a co-owner of
the subject land and, as such, has the right to demand the partition of the same. However,
the RTC held that Santiago did not validly acquire Mateo, Sr.’s share over the subject land,
considering that Felcon admitted the lack of authority to bind his siblings with regard to
Mateo, Sr.’s share thereon.20
On reconsideration21 of Ceruleo and herein respondents Celedonio, Maude, Celestial,
Coronacion, and Cecilia (respondents), the RTC issued an Order22 dated April 4, 2003
further ordering Santiago to comply with the provisions of the Supplemental Contract dated
December 22, 1989 by paying the amount of 337,887.73 upon the partition of the subject
land.
Dissatisfied, respondents appealed23 to the CA. Records are bereft of any showing that the
other heirs made similar appeals thereto.
The CA Ruling
In a Decision24 dated March 26, 2009, the CA set aside the RTC Rulings and,
consequently, dismissed Santiago’s complaint for judicial partition.25 It held that Felcon’s
siblings, as well as Maude’s children, are indispensable parties to the judicial partition of
the subject land and, thus, their non-inclusion as defendants in Santiago’s complaint would
necessarily result in its dismissal. 26
Aggrieved, the heirs of Santiago27 moved for reconsideration28 which was, however, denied
in a Resolution29 dated April 6, 2011, hence, this petition instituted by herein petitioner,
Ma. Elena R. Divinagracia, as administratrix of Santiago’s estate.
Page 161 of 169
The Issues Before the Court
The issues for the Court’s resolution are whether or not the CA correctly: (a) ruled that
Felcon’s siblings and Cebeleo, Sr. and Maude’s children are indispensable parties to
Santiago’s complaint for judicial partition; and (b) dismissed Santiago’s complaint for his
failure to implead said omitted heirs.
The Court’s Ruling
The petition is partly meritorious.
An indispensable party is one whose interest will be affected by the court’s action in the
litigation, and without whom no final determination of the case can be had. The party’s
interest in the subject matter of the suit and in the relief sought are so inextricably
intertwined with the other parties’ that his legal presence as a party to the proceeding is an
absolute necessity. In his absence, there cannot be a resolution of the dispute of the parties
before the court which is effective, complete, or equitable.30 Thus, the absence of an
indispensable party renders all subsequent actions of the court null and void, for want of
authority to act, not only as to the absent parties but even as to those present. 31
With regard to actions for partition, Section 1, Rule 69 of the Rules of Court requires that
all persons interested in the property shall be joined as defendants, viz.:
SEC. 1. Complaint in action for partition of real estate. – A person having the right to
compel the partition of real estate may do so as provided in this Rule, setting forth in his
complaint the nature and extent of his title and an adequate description of the real estate of
which partition is demanded and joining as defendants all other persons interested in the
property. (Emphasis and underscoring supplied)
Thus, all the co-heirs and persons having an interest in the property are indispensable
parties; as such, an action for partition will not lie without the joinder of the said parties. 32
In the instant case, records reveal that Conrado, Sr. has the following heirs, legitimate and
illegitimate, who are entitled to a pro-indiviso share in the subject land, namely: Conrado,
Jr., Cresencio, Mateo, Sr., Coronacion, Cecilia, Celestial, Celedonio, Ceruleo, Cebeleo, Sr.,
Eduardo, Rogelio, and Ricardo. However, both Mateo, Sr. and Cebeleo, Sr. pre-deceased
Conrado, Sr. and, thus, pursuant to the rules on representation under the Civil Code,33 their
respective interests shall be represented by their children, namely: (a) for Mateo, Sr.:
Felcon, Landelin, Eusela, Giovanni, Mateo, Jr., Tito, and Gaylord; and (b) for Cebeleo, Sr.:
Cebeleo, Jr. and Neobel.34
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
The aforementioned heirs – whether in their own capacity or in representation of their
direct ascendant – have vested rights over the subject land and, as such, should be
impleaded as indispensable parties in an action for partition thereof. However, a reading of
Santiago’s complaint shows that as regards Mateo, Sr.’s interest, only Felcon was
impleaded, excluding therefrom his siblings and co-representatives. Similarly, with regard
to Cebeleo, Sr.’s interest over the subject land, the complaint impleaded his wife, Maude,
when pursuant to Article 97235 of the Civil Code, the proper representatives to his interest
should have been his children, Cebeleo, Jr. and Neobel. Verily, Santiago’s omission of the
aforesaid heirs renders his complaint for partition defective.
Santiago’s contention that he had already bought the interests of the majority of the heirs
and, thus, they should no longer be regarded as indispensable parties deserves no merit. As
correctly noted by the CA, in actions for partition, the court cannot properly issue an order
to divide the property, unless it first makes a determination as to the existence of co-
ownership. The court must initially settle the issue of ownership, which is the first stage in
an action for partition.36 Indubitably, therefore, until and unless this issue of co-ownership
is definitely and finally resolved, it would be premature to effect a partition of the disputed
properties.37
In this case, while it is conceded that Santiago bought the interests of majority of the heirs
of Conrado, Sr. as evidenced by the subject document, as a vendee, he merely steps into the
shoes of the vendors-heirs. Since his interest over the subject land is merely derived from
that of the vendors- heirs, the latter should first be determined as co-owners thereof, thus
necessitating the joinder of all those who have vested interests in such land, i.e., the
aforesaid heirs of Conrado, Sr., in Santiago’s complaint.
In fine, the absence of the aforementioned indispensable parties in the instant complaint for
judicial partition renders all subsequent actions of the RTC null and void for want of
authority to act, not only as to the absent parties, but even as to those present. 38 Therefore,
the CA correctly set aside the November 29, 2002 Decision and the April 4, 2003 Order of
the RTC.
However, the CA erred in ordering the dismissal of the complaint on account of Santiago’s
failure to implead all the indispensable parties in his complaint.1âwphi1 In Heirs of Mesina
v. Heirs of Fian, Sr.,39 the Court definitively explained that in instances of non-joinder of
indispensable parties, the proper remedy is to implead them and not to dismiss the case, to
wit:
The non-joinder of indispensable parties is not a ground for the dismissal of an action. At
any stage of a judicial proceeding and/or at such times as are just, parties may be added on
the motion of a party or on the initiative of the tribunal concerned. If the plaintiff refuses to
Page 162 of 169
implead an indispensable party despite the order of the court, that court may dismiss the
complaint for the plaintiff’s failure to comply with the order.
The remedy is to implead the non-party claimed to be indispensable. x x x40 (Underscoring
supplied; emphases in the original)
In view of the foregoing, the correct course of action in the instant case is to order its
remand to the RTC for the inclusion of those indispensable parties who were not impleaded
and for the disposition of the case on the merits.41
WHEREFORE, the petition is PARTLY GRANTED. Accordingly, the Decision dated
March 26, 2009 and the Resolution dated April 6, 2011 of the Court of Appeals in CA-G.R.
CV. No. 80167, setting aside the Decision dated November 29, 2002 and the Order dated
April 4, 2003 of the Regional Trial Court of Iloilo City, Branch 31 in Civil Case No.
19003, are hereby AFFIRMED with MODIFICATION REMANDING the instant case to
the court a quo, which is hereby DIRECTED to implead all indispensable parties and,
thereafter, PROCEED with the resolution of the case on the merits WITH DISPATCH.
SO ORDERED.
G.R. No. 182435 August 13, 2012
LILIA B. ADA, LUZ B. ADANZA, FLORA C. BA YLON, REMO BA YLON, JOSE
BA YLON, ERIC BA YLON, FLORENTINO BA YLON, and MA. RUBY BA
YLON, Petitioners,
vs.
FLORANTE BA YLON, Respondent.
VILLARAMA, JR.,*
DECISION
REYES, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking to annul and set aside the Decision1 dated October 26, 2007 rendered by the Court
of Appeals (CA) in CA-G.R. CV No. 01746. The assailed decision partially reversed and
set aside the Decision2 dated October 20, 2005 issued ~y the Regional Trial Court (RTC),
Tan jay City, Negros Oriental, Branch 43 in Civil Case No. 11657.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
The Antecedent Facts
This case involves the estate of spouses Florentino Baylon and Maximina Elnas Baylon
(Spouses Baylon) who died on November 7, 1961 and May 5, 1974, respectively. 3 At the
time of their death, Spouses Baylon were survived by their legitimate children, namely,
Rita Baylon (Rita), Victoria Baylon (Victoria), Dolores Baylon (Dolores), Panfila Gomez
(Panfila), Ramon Baylon (Ramon) and herein petitioner Lilia B. Ada (Lilia).
Dolores died intestate and without issue on August 4, 1976. Victoria died on November 11,
1981 and was survived by her daughter, herein petitioner Luz B. Adanza. Ramon died
intestate on July 8, 1989 and was survived by herein respondent Florante Baylon
(Florante), his child from his first marriage, as well as by petitioner Flora Baylon, his
second wife, and their legitimate children, namely, Ramon, Jr. and herein petitioners Remo,
Jose, Eric, Florentino and Ma. Ruby, all surnamed Baylon.
On July 3, 1996, the petitioners filed with the RTC a Complaint 4 for partition, accounting
and damages against Florante, Rita and Panfila. They alleged therein that Spouses Baylon,
during their lifetime, owned 43 parcels of land5 all situated in Negros Oriental. After the
death of Spouses Baylon, they claimed that Rita took possession of the said parcels of land
and appropriated for herself the income from the same. Using the income produced by the
said parcels of land, Rita allegedly purchased two parcels of land, Lot No. 4709 6 and half of
Lot No. 4706,7 situated in Canda-uay, Dumaguete City. The petitioners averred that Rita
refused to effect a partition of the said parcels of land.
In their Answer,8 Florante, Rita and Panfila asserted that they and the petitioners co-owned
229 out of the 43 parcels of land mentioned in the latter’s complaint, whereas Rita actually
owned 10 parcels of land10 out of the 43 parcels which the petitioners sought to partition,
while the remaining 11 parcels of land are separately owned by Petra Cafino
Adanza,11 Florante,12 Meliton Adalia,13 Consorcia Adanza,14 Lilia15 and Santiago
Mendez.16 Further, they claimed that Lot No. 4709 and half of Lot No. 4706 were acquired
by Rita using her own money. They denied that Rita appropriated solely for herself the
income of the estate of Spouses Baylon, and expressed no objection to the partition of the
estate of Spouses Baylon, but only with respect to the co-owned parcels of land.
During the pendency of the case, Rita, through a Deed of Donation dated July 6, 1997,
conveyed Lot No. 4709 and half of Lot No. 4706 to Florante. On July 16, 2000, Rita died
intestate and without any issue. Thereafter, learning of the said donation inter vivos in favor
of Florante, the petitioners filed a Supplemental Pleading17 dated February 6, 2002, praying
that the said donation in favor of the respondent be rescinded in accordance with Article
1381(4) of the Civil Code. They further alleged that Rita was already sick and very weak
Page 163 of 169
when the said Deed of Donation was supposedly executed and, thus, could not have validly
given her consent thereto.
Florante and Panfila opposed the rescission of the said donation, asserting that Article
1381(4) of the Civil Code applies only when there is already a prior judicial decree on who
between the contending parties actually owned the properties under litigation. 18
The RTC Decision
On October 20, 2005, the RTC rendered a Decision,19 the decretal portion of which reads:
Wherefore judgment is hereby rendered:
(1) declaring the existence of co-ownership over parcels nos. 1, 2, 3, 5, 7, 10, 13,
14, 16, 17, 18, 26, 29, 30, 33, 34, 35, 36, 40 and 41 described in the complaint;
(2) directing that the above mentioned parcels of land be partitioned among the
heirs of Florentino Baylon and Maximina Baylon;
(3) declaring a co-ownership on the properties of Rita Baylon namely parcels
no[s]. 6, 11, 12, 20, 24, 27, 31, 32, 39 and 42 and directing that it shall be
partitioned among her heirs who are the plaintiffs and defendant in this case;
(4) declaring the donation inter vivos rescinded without prejudice to the share of
Florante Baylon to the estate of Rita Baylon and directing that parcels nos. 1 and
2 paragraph V of the complaint be included in the division of the property as of
Rita Baylon among her heirs, the parties in this case;
(5) excluding from the co-ownership parcels nos. 20, 21, 22, 9, 43, 4, 8, 19 and
37.
Considering that the parties failed to settle this case amicably and could not agree on the
partition, the parties are directed to nominate a representative to act as commissioner to
make the partition. He shall immediately take [his] oath of office upon [his] appointment.
The commissioner shall make a report of all the proceedings as to the partition within
fifteen (15) days from the completion of this partition. The parties are given ten (10) days
within which to object to the report after which the Court shall act on the commissioner
report.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
SO ORDERED.20 (Emphasis ours)
The RTC held that the death of Rita during the pendency of the case, having died intestate
and without any issue, had rendered the issue of ownership insofar as parcels of land which
she claims as her own moot since the parties below are the heirs to her estate. Thus, the
RTC regarded Rita as the owner of the said 10 parcels of land and, accordingly, directed
that the same be partitioned among her heirs. Nevertheless, the RTC rescinded the donation
inter vivos of Lot No. 4709 and half of Lot No. 4706 in favor of Florante. In rescinding the
said donation inter vivos, the RTC explained that:
However, with respect to lot nos. 4709 and 4706 which [Rita] had conveyed to Florante
Baylon by way of donation inter vivos, the plaintiffs in their supplemental pleadings (sic)
assailed the same to be rescissible on the ground that it was entered into by the defendant
Rita Baylon without the knowledge and approval of the litigants [or] of competent judicial
authority. The subject parcels of lands are involved in the case for which plaintiffs have
asked the Court to partition the same among the heirs of Florentino Baylon and Maximina
Elnas.
Clearly, the donation inter vivos in favor of Florante Baylon was executed to prejudice the
plaintiffs’ right to succeed to the estate of Rita Baylon in case of death considering that as
testified by Florante Baylon, Rita Baylon was very weak and he tried to give her vitamins x
x x. The donation inter vivos executed by Rita Baylon in favor of Florante Baylon is
rescissible for the reason that it refers to the parcels of land in litigation x x x without the
knowledge and approval of the plaintiffs or of this Court. However, the rescission shall not
affect the share of Florante Baylon to the estate of Rita Baylon. 21
Florante sought reconsideration of the Decision dated October 20, 2005 of the RTC insofar
as it rescinded the donation of Lot No. 4709 and half of Lot No. 4706 in his favor.22 He
asserted that, at the time of Rita’s death on July 16, 2000, Lot No. 4709 and half of Lot No.
4706 were no longer part of her estate as the same had already been conveyed to him
through a donation inter vivos three years earlier. Thus, Florante maintained that Lot No.
4709 and half of Lot No. 4706 should not be included in the properties that should be
partitioned among the heirs of Rita.
On July 28, 2006, the RTC issued an Order23 which denied the motion for reconsideration
filed by Florante.
The CA Decision
On appeal, the CA rendered a Decision24 dated October 26, 2007, the dispositive portion of
which reads:
Page 164 of 169
WHEREFORE, the Decision dated October 20, 2005 and Order dated July 28, 2006
are REVERSED and SET ASIDE insofar as they decreed the rescission of the Deed of
Donation dated July 6, 1997 and the inclusion of lot no. 4709 and half of lot no. 4706 in the
estate of Rita Baylon. The case is REMANDED to the trial court for the determination of
ownership of lot no. 4709 and half of lot no. 4706.
SO ORDERED.25
The CA held that before the petitioners may file an action for rescission, they must first
obtain a favorable judicial ruling that Lot No. 4709 and half of Lot No. 4706 actually
belonged to the estate of Spouses Baylon and not to Rita. Until then, the CA asserted, an
action for rescission is premature. Further, the CA ruled that the petitioners’ action for
rescission cannot be joined with their action for partition, accounting and damages through
a mere supplemental pleading. Thus:
If Lot No. 4709 and half of Lot No. 4706 belonged to the Spouses’ estate, then Rita
Baylon’s donation thereof in favor of Florante Baylon, in excess of her undivided share
therein as co-heir, is void. Surely, she could not have validly disposed of something she did
not own. In such a case, an action for rescission of the donation may, therefore, prosper.
If the lots, however, are found to have belonged exclusively to Rita Baylon, during her
lifetime, her donation thereof in favor of Florante Baylon is valid. For then, she merely
exercised her ownership right to dispose of what legally belonged to her. Upon her death,
the lots no longer form part of her estate as their ownership now pertains to Florante
Baylon. On this score, an action for rescission against such donation will not prosper. x x x.
Verily, before plaintiffs-appellees may file an action for rescission, they must first obtain a
favorable judicial ruling that lot no. 4709 and half of lot no. 4706 actually belonged to the
estate of Spouses Florentino and Maximina Baylon, and not to Rita Baylon during her
lifetime. Until then, an action for rescission is premature. For this matter, the applicability
of Article 1381, paragraph 4, of the New Civil Code must likewise await the trial court’s
resolution of the issue of ownership.
Be that as it may, an action for rescission should be filed by the parties concerned
independent of the proceedings below. The first cannot simply be lumped up with the
second through a mere supplemental pleading.26 (Citation omitted)
The petitioners sought reconsideration27 of the Decision dated October 26, 2007 but it was
denied by the CA in its Resolution28 dated March 6, 2008.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
Hence, this petition.
Issue
The lone issue to be resolved by this Court is whether the CA erred in ruling that the
donation inter vivos of Lot No. 4709 and half of Lot No. 4706 in favor of Florante may
only be rescinded if there is already a judicial determination that the same actually
belonged to the estate of Spouses Baylon.
The Court’s Ruling
The petition is partly meritorious.
Procedural Matters
Before resolving the lone substantive issue in the instant case, this Court deems it proper to
address certain procedural matters that need to be threshed out which, by laxity or
otherwise, were not raised by the parties herein.
Misjoinder of Causes of Action
The complaint filed by the petitioners with the RTC involves two separate, distinct and
independent actions – partition and rescission. First, the petitioners raised the refusal of
their co-heirs, Florante, Rita and Panfila, to partition the properties which they inherited
from Spouses Baylon. Second, in their supplemental pleading, the petitioners assailed the
donation inter vivos of Lot No. 4709 and half of Lot No. 4706 made by Rita in favor of
Florante pendente lite.
The actions of partition and
rescission cannot be joined in a
single action.
By a joinder of actions, or more properly, a joinder of causes of action is meant the uniting
of two or more demands or rights of action in one action, the statement of more than one
cause of action in a declaration. It is the union of two or more civil causes of action, each of
which could be made the basis of a separate suit, in the same complaint, declaration or
petition. A plaintiff may under certain circumstances join several distinct demands,
controversies or rights of action in one declaration, complaint or petition.29
Page 165 of 169
The objectives of the rule or provision are to avoid a multiplicity of suits where the same
parties and subject matter are to be dealt with by effecting in one action a complete
determination of all matters in controversy and litigation between the parties involving one
subject matter, and to expedite the disposition of litigation at minimum cost. The provision
should be construed so as to avoid such multiplicity, where possible, without prejudice to
the rights of the litigants.30
Nevertheless, while parties to an action may assert in one pleading, in the alternative or
otherwise, as many causes of action as they may have against an opposing party, such
joinder of causes of action is subject to the condition, inter alia, that the joinder shall not
include special civil actions governed by special rules.31
Here, there was a misjoinder of causes of action. The action for partition filed by the
petitioners could not be joined with the action for the rescission of the said donation inter
vivos in favor of Florante. Lest it be overlooked, an action for partition is a special civil
action governed by Rule 69 of the Rules of Court while an action for rescission is an
ordinary civil action governed by the ordinary rules of civil procedure. The variance in the
procedure in the special civil action of partition and in the ordinary civil action of
rescission precludes their joinder in one complaint or their being tried in a single
proceeding to avoid confusion in determining what rules shall govern the conduct of the
proceedings as well as in the determination of the presence of requisite elements of each
particular cause of action.32
A misjoined cause of action, if not
severed upon motion of a party or
by the court sua sponte, may be
adjudicated by the court together
with the other causes of action.
Nevertheless, misjoinder of causes of action is not a ground for dismissal. Indeed, the
courts have the power, acting upon the motion of a party to the case or sua sponte, to order
the severance of the misjoined cause of action to be proceeded with separately. 33 However,
if there is no objection to the improper joinder or the court did not motu proprio direct a
severance, then there exists no bar in the simultaneous adjudication of all the erroneously
joined causes of action. On this score, our disquisition in Republic of the Philippines v.
Herbieto34 is instructive, viz:
This Court, however, disagrees with petitioner Republic in this regard. This procedural
lapse committed by the respondents should not affect the jurisdiction of the MTC to
proceed with and hear their application for registration of the Subject Lots.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
xxxx
Considering every application for land registration filed in strict accordance with the
Property Registration Decree as a single cause of action, then the defect in the joint
application for registration filed by the respondents with the MTC constitutes a misjoinder
of causes of action and parties. Instead of a single or joint application for registration,
respondents Jeremias and David, more appropriately, should have filed separate
applications for registration of Lots No. 8422 and 8423, respectively.
Misjoinder of causes of action and parties do not involve a question of jurisdiction of the
court to hear and proceed with the case. They are not even accepted grounds for dismissal
thereof. Instead, under the Rules of Court, the misjoinder of causes of action and parties
involve an implied admission of the court’s jurisdiction. It acknowledges the power of the
court, acting upon the motion of a party to the case or on its own initiative, to order the
severance of the misjoined cause of action, to be proceeded with separately (in case of
misjoinder of causes of action); and/or the dropping of a party and the severance of any
claim against said misjoined party, also to be proceeded with separately (in case of
misjoinder of parties).35 (Citations omitted)
It should be emphasized that the foregoing rule only applies if the court trying the case has
jurisdiction over all of the causes of action therein notwithstanding the misjoinder of the
same. If the court trying the case has no jurisdiction over a misjoined cause of action, then
such misjoined cause of action has to be severed from the other causes of action, and if not
so severed, any adjudication rendered by the court with respect to the same would be a
nullity.
Here, Florante posed no objection, and neither did the RTC direct the severance of the
petitioners’ action for rescission from their action for partition. While this may be a patent
omission on the part of the RTC, this does not constitute a ground to assail the validity and
correctness of its decision. The RTC validly adjudicated the issues raised in the actions for
partition and rescission filed by the petitioners.
Asserting a New Cause of Action in a Supplemental Pleading
In its Decision dated October 26, 2007, the CA pointed out that the said action for
rescission should have been filed by the petitioners independently of the proceedings in the
action for partition. It opined that the action for rescission could not be lumped up with the
action for partition through a mere supplemental pleading.
We do not agree.
Page 166 of 169
A supplemental pleading may raise
a new cause of action as long as it
has some relation to the original
cause of action set forth in the
original complaint.
Section 6, Rule 10 of the Rules of Court reads:
Sec. 6. Supplemental Pleadings. – Upon motion of a party the court may, upon reasonable
notice and upon such terms as are just, permit him to serve a supplemental pleading setting
forth transactions, occurrences or events which have happened since the date of the
pleading sought to be supplemented. The adverse party may plead thereto within ten (10)
days from notice of the order admitting the supplemental pleading.
In Young v. Spouses Sy,36 this Court had the opportunity to elucidate on the purpose of a
supplemental pleading. Thus:
As its very name denotes, a supplemental pleading only serves to bolster or add something
to the primary pleading. A supplement exists side by side with the original. It does not
replace that which it supplements. Moreover, a supplemental pleading assumes that the
original pleading is to stand and that the issues joined with the original pleading remained
an issue to be tried in the action. It is but a continuation of the complaint. Its usual office is
to set up new facts which justify, enlarge or change the kind of relief with respect to the
same subject matter as the controversy referred to in the original complaint.
The purpose of the supplemental pleading is to bring into the records new facts which will
enlarge or change the kind of relief to which the plaintiff is entitled; hence, any
supplemental facts which further develop the original right of action, or extend to vary the
relief, are available by way of supplemental complaint even though they themselves
constitute a right of action.37 (Citations omitted and emphasis ours)
Thus, a supplemental pleading may properly allege transactions, occurrences or events
which had transpired after the filing of the pleading sought to be supplemented, even if the
said supplemental facts constitute another cause of action.
Admittedly, in Leobrera v. Court of Appeals,38 we held that a supplemental pleading must
be based on matters arising subsequent to the original pleading related to the claim or
defense presented therein, and founded on the same cause of action. We further stressed
therein that a supplemental pleading may not be used to try a new cause of action.
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
However, in Planters Development Bank v. LZK Holdings and Development Corp.,39 we
clarified that, while a matter stated in a supplemental complaint should have some relation
to the cause of action set forth in the original pleading, the fact that the supplemental
pleading technically states a new cause of action should not be a bar to its allowance but
only a matter that may be considered by the court in the exercise of its discretion. In such
cases, we stressed that a broad definition of "cause of action" should be applied.
Here, the issue as to the validity of the donation inter vivos of Lot No. 4709 and half of Lot
No. 4706 made by Rita in favor of Florante is a new cause of action that occurred after the
filing of the original complaint. However, the petitioners’ prayer for the rescission of the
said donation inter vivos in their supplemental pleading is germane to, and is in fact,
intertwined with the cause of action in the partition case. Lot No. 4709 and half of Lot No.
4706 are included among the properties that were sought to be partitioned.
The petitioners’ supplemental pleading merely amplified the original cause of action, on
account of the gratuitous conveyance of Lot No. 4709 and half of Lot No. 4706 after the
filing of the original complaint and prayed for additional reliefs, i.e., rescission. Indeed, the
petitioners claim that the said lots form part of the estate of Spouses Baylon, but cannot be
partitioned unless the gratuitous conveyance of the same is rescinded. Thus, the principal
issue raised by the petitioners in their original complaint remained the same.
Main Issue: Propriety of Rescission
After having threshed out the procedural matters, we now proceed to adjudicate the
substantial issue presented by the instant petition.
The petitioners assert that the CA erred in remanding the case to the RTC for the
determination of ownership of Lot No. 4709 and half of Lot No. 4706. They maintain that
the RTC aptly rescinded the said donation inter vivos of Lot No. 4709 and half of Lot No.
4706 pursuant to Article 1381(4) of the Civil Code.
In his Comment,40 Florante asserts that before the petitioners may file an action for
rescission, they must first obtain a favorable judicial ruling that Lot No. 4709 and half of
Lot No. 4706 actually belonged to the estate of Spouses Baylon. Until then, Florante avers
that an action for rescission would be premature.
The petitioners’ contentions are well-taken.
The resolution of the instant dispute is fundamentally contingent upon a determination of
whether the donation inter vivos of Lot No. 4709 and half of Lot No. 4706 in favor of
Page 167 of 169
Florante may be rescinded pursuant to Article 1381(4) of the Civil Code on the ground that
the same was made during the pendency of the action for partition with the RTC.
Rescission is a remedy to address
the damage or injury caused to the
contracting parties or third
persons.
Rescission is a remedy granted by law to the contracting parties and even to third persons,
to secure the reparation of damages caused to them by a contract, even if it should be valid,
by means of the restoration of things to their condition at the moment prior to the
celebration of said contract.41 It is a remedy to make ineffective a contract, validly entered
into and therefore obligatory under normal conditions, by reason of external causes
resulting in a pecuniary prejudice to one of the contracting parties or their creditors. 42
Contracts which are rescissible are valid contracts having all the essential requisites of a
contract, but by reason of injury or damage caused to either of the parties therein or to third
persons are considered defective and, thus, may be rescinded.
The kinds of rescissible contracts, according to the reason for their susceptibility to
rescission, are the following: first, those which are rescissible because of lesion or
prejudice;43 second, those which are rescissible on account of fraud or bad faith;44 and third,
those which, by special provisions of law,45 are susceptible to rescission.46
Contracts which refer to things
subject of litigation is rescissible
pursuant to Article 1381(4) of the
Civil Code.
Contracts which are rescissible due to fraud or bad faith include those which involve things
under litigation, if they have been entered into by the defendant without the knowledge and
approval of the litigants or of competent judicial authority. Thus, Article 1381(4) of the
Civil Code provides:
Art. 1381. The following contracts are rescissible:
xxxx
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)
(4) Those which refer to things under litigation if they have been entered into by the
defendant without the knowledge and approval of the litigants or of competent judicial
authority.
The rescission of a contract under Article 1381(4) of the Civil Code only requires the
concurrence of the following: first, the defendant, during the pendency of the case, enters
into a contract which refers to the thing subject of litigation; and second, the said contract
was entered into without the knowledge and approval of the litigants or of a competent
judicial authority. As long as the foregoing requisites concur, it becomes the duty of the
court to order the rescission of the said contract.
The reason for this is simple. Article 1381(4) seeks to remedy the presence of bad faith
among the parties to a case and/or any fraudulent act which they may commit with respect
to the thing subject of litigation.
When a thing is the subject of a judicial controversy, it should ultimately be bound by
whatever disposition the court shall render. The parties to the case are therefore expected,
in deference to the court’s exercise of jurisdiction over the case, to refrain from doing acts
which would dissipate or debase the thing subject of the litigation or otherwise render the
impending decision therein ineffectual.
There is, then, a restriction on the disposition by the parties of the thing that is the subject
of the litigation. Article 1381(4) of the Civil Code requires that any contract entered into by
a defendant in a case which refers to things under litigation should be with the knowledge
and approval of the litigants or of a competent judicial authority.
Further, any disposition of the thing subject of litigation or any act which tends to render
inutile the court’s impending disposition in such case, sans the knowledge and approval of
the litigants or of the court, is unmistakably and irrefutably indicative of bad faith. Such
acts undermine the authority of the court to lay down the respective rights of the parties in a
case relative to the thing subject of litigation and bind them to such determination.
It should be stressed, though, that the defendant in such a case is not absolutely proscribed
from entering into a contract which refer to things under litigation. If, for instance, a
defendant enters into a contract which conveys the thing under litigation during the
pendency of the case, the conveyance would be valid, there being no definite disposition
yet coming from the court with respect to the thing subject of litigation. After all,
notwithstanding that the subject thereof is a thing under litigation, such conveyance is but
merely an exercise of ownership.
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This is true even if the defendant effected the conveyance without the knowledge and
approval of the litigants or of a competent judicial authority. The absence of such
knowledge or approval would not precipitate the invalidity of an otherwise valid contract.
Nevertheless, such contract, though considered valid, may be rescinded at the instance of
the other litigants pursuant to Article 1381(4) of the Civil Code.
Here, contrary to the CA’s disposition, the RTC aptly ordered the rescission of the donation
inter vivos of Lot No. 4709 and half of Lot No. 4706 in favor of Florante. The petitioners
had sufficiently established the presence of the requisites for the rescission of a contract
pursuant to Article 1381(4) of the Civil Code. It is undisputed that, at the time they were
gratuitously conveyed by Rita, Lot No. 4709 and half of Lot No. 4706 are among the
properties that were the subject of the partition case then pending with the RTC. It is also
undisputed that Rita, then one of the defendants in the partition case with the RTC, did not
inform nor sought the approval from the petitioners or of the RTC with regard to the
donation inter vivos of the said parcels of land to Florante.
Although the gratuitous conveyance of the said parcels of land in favor of Florante was
valid, the donation inter vivos of the same being merely an exercise of ownership, Rita’s
failure to inform and seek the approval of the petitioners or the RTC regarding the
conveyance gave the petitioners the right to have the said donation rescinded pursuant to
Article 1381(4) of the Civil Code.
Rescission under Article 1381(4) of
the Civil Code is not preconditioned
upon the judicial determination as
to the ownership of the thing
subject of litigation.
In this regard, we also find the assertion that rescission may only be had after the RTC had
finally determined that the parcels of land belonged to the estate of Spouses Baylon
intrinsically amiss. The petitioners’ right to institute the action for rescission pursuant to
Article 1381(4) of the Civil Code is not preconditioned upon the RTC’s determination as to
the ownership of the said parcels of land.
It bears stressing that the right to ask for the rescission of a contract under Article 1381(4)
of the Civil Code is not contingent upon the final determination of the ownership of the
thing subject of litigation. The primordial purpose of Article 1381(4) of the Civil Code is to
secure the possible effectivity of the impending judgment by a court with respect to the
thing subject of litigation. It seeks to protect the binding effect of a court’s impending
adjudication vis-à-vis the thing subject of litigation regardless of which among the
contending claims therein would subsequently be upheld. Accordingly, a definitive judicial
CIVIL PROCEDURE CASES (REMEDIAL LAW REVIEW 1)

determination with respect to the thing subject of litigation is not a condition sine qua non
before the rescissory action contemplated under Article 1381(4) of the Civil Code may be
instituted.
Moreover, conceding that the right to bring the rescissory action pursuant to Article
1381(4) of the Civil Code is preconditioned upon a judicial determination with regard to
the thing subject litigation, this would only bring about the very predicament that the said
provision of law seeks to obviate. Assuming arguendo that a rescissory action under Article
1381(4) of the Civil Code could only be instituted after the dispute with respect to the thing
subject of litigation is judicially determined, there is the possibility that the same may had
already been conveyed to third persons acting in good faith, rendering any judicial
determination with regard to the thing subject of litigation illusory. Surely, this paradoxical
eventuality is not what the law had envisioned.
Even if the donation inter vivos is
validly rescinded, a determination
as to the ownership of the subject
parcels of land is still necessary.
Having established that the RTC had aptly ordered the rescission of the said donation inter
vivos in favor of Florante, the issue that has to be resolved by this Court is whether there is
still a need to determine the ownership of Lot No. 4709 and half of Lot No. 4706.
In opting not to make a determination as to the ownership of Lot No. 4709 and half of Lot
No. 4706, the RTC reasoned that the parties in the proceedings before it constitute not only
the surviving heirs of Spouses Baylon but the surviving heirs of Rita as well. As intimated
earlier, Rita died intestate during the pendency of the proceedings with the RTC without
any issue, leaving the parties in the proceedings before the RTC as her surviving heirs.
Thus, the RTC insinuated, a definitive determination as to the ownership of the said parcels
of land is unnecessary since, in any case, the said parcels of land would ultimately be
adjudicated to the parties in the proceedings before it.
unless it determines that the said parcels of land indeed form part of the estate of Spouses
Baylon.
It should be stressed that the partition proceedings before the RTC only covers the
properties co-owned by the parties therein in their respective capacity as the surviving heirs
of Spouses Baylon. Hence, the authority of the RTC to issue an order of partition in the
proceedings before it only affects those properties which actually belonged to the estate of
Spouses Baylon.
In this regard, if Lot No. 4709 and half of Lot No. 4706, as unwaveringly claimed by
Florante, are indeed exclusively owned by Rita, then the said parcels of land may not be
partitioned simultaneously with the other properties subject of the partition case before the
RTC. In such case, although the parties in the case before the RTC are still co-owners of
the said parcels of land, the RTC would not have the authority to direct the partition of the
said parcels of land as the proceedings before it is only concerned with the estate of
Spouses Baylon.
WHEREFORE, in consideration of the foregoing disquisitions, the petition
is PARTIALLY GRANTED. The Decision dated October 26, 2007 issued by the Court of
Appeals in CA-G.R. CV No. 01746 is MODIFIED in that the Decision dated October 20,
2005 issued by the Regional Trial Court, Tanjay City, Negros Oriental, Branch 43 in Civil
Case No. 11657, insofar as it decreed the rescission of the Deed of Donation dated July 6,
1997 is hereby REINSTATED. The case is REMANDED to the trial court for the
determination of the ownership of Lot No. 4709 and half of Lot No. 4706 in accordance
with this Decision.
SO ORDERED.

We do not agree.

Admittedly, whoever may be adjudicated as the owner of Lot No. 4709 and half of Lot No.
4706, be it Rita or Spouses Baylon, the same would ultimately be transmitted to the parties
in the proceedings before the RTC as they are the only surviving heirs of both Spouses
Baylon and Rita. However, the RTC failed to realize that a definitive adjudication as to the
ownership of Lot No. 4709 and half of Lot No. 4706 is essential in this case as it affects the
authority of the RTC to direct the partition of the said parcels of land. Simply put, the RTC
cannot properly direct the partition of Lot No. 4709 and half of Lot No. 4706 until and

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