1
[G.R. NO. 153777. April 15, 2005] incomes from its AGZ Building, the same to be applied as payment of its
PLANTERS DEVELOPMENT BANK, Petitioners, v. LZK HOLDINGS and
DEVELOPMENT CORPORATION, Respondents.
DECISION
CALLEJO, SR., J.:
This is a Petition for Review of the Decision1 of the Court of Appeals (CA) in
CA-G.R. SP No. 61262, ordering the dismissal of the Petition for Certiorari of
Planters Development Bank and its resolution dismissing the motion for
reconsideration thereof.
The Antecedents
The LZK Holdings and Development Corporation (LHDC) is a duly-organized
corporation with principal office at AGZ Building, Quezon Avenue, San
Fernando City, La Union.2 The Planters Development Bank (PDB) is a
banking institution duly-organized and existing under and by virtue of the
laws of the Philippines.3
On December 16, 1996, the LHDC, through its Chief Executive Officer, Mrs.
Lourdes Z. Korshak, and the PDB entered into a "Loan
Agreement"4 whereby the former was extended a credit accommodation in
the amount of P40,000,000.00. The amount was to be used to finance the
ongoing construction of the seven-storey AGZ Building at Quezon Avenue,
San Fernando City, La Union.
To secure the loan, the LHDC executed in favor of the PDB a real estate
mortgage5 over the 589-square-meter lot where the AGZ Building was then
being constructed, covered by Transfer Certificate of Title (TCT) No. T-
45337 issued under the name of the LHDC. Subsequently, the latter
executed two promissory notes in favor of the PDB: (1) Promissory Note No.
97-53-0296 dated February 24, 1997, in the amount of P35,200,000.00
payable on or before February 24, 2012; and (2) Promissory Note No. 97-
53-0307 dated February 24, 1997 in the amount of P4,800,000.00, also
payable on or before February 24, 2012.
Thereafter, the LHDC executed a Deed of Assignment8 dated October 1,
1997 in favor of the PDB, wherein it assigned to the latter all its rental
obligations.
For non-payment of loan, non-compliance with the terms and conditions of
the Deed of Assignment, and failure to comply with the conditions of the
promissory notes, the PDB caused the extra-judicial foreclosure of the real
estate mortgage under Act No. 3135, before Atty. Melchor Abasolo of San
Fernando City, La Union, on April 6, 1998.9 Consequently, a Notice of Sale
dated July 16, 1998 was published.10 On September 21, 1998, the
foreclosed property was sold to the PDB as the highest bidder, and the
corresponding Certificate of Sale11 was issued in its favor.
On April 5, 1999, the PDB filed with the Regional Trial Court (RTC) of Makati
City, Branch 150, a complaint against the LHDC for "Annulment of
Extrajudicial Foreclosure, Mortgage Contract, Promissory Notes and for
Damages," docketed as Civil Case No. 99-471.
It was alleged, inter alia, that the real estate mortgage was void because it
was executed on December 16, 1996, a day after TCT No. T-45337 was
issued by the Register of Deeds, and two months before the execution of the
promissory notes; the first page was unsigned by the parties; and it never
received the proceeds of the loan in the amount of P40,000,000.00. The
LHDC further alleged that it never authorized the PDB to apply the proceeds
of the loan to the personal obligation of Armando La o and/or his wife
Lourdes Korshak. Moreover, the extrajudicial foreclosure of the real estate
mortgage was void because the LHDC did not, in any way, violate the said
deed, and the PDB even failed to take into account the remittances made
under the promissory note. The LHDC also averred that the PDB dealt with it
in gross bad faith, and as such is liable for damages and attorney's fees, and
prayed, thus:
WHEREFORE, it is respectfully prayed that judgment be rendered in favor of
plaintiff LZK and against defendant-bank, as follows:
1. On the First Cause of Action, declaring as null and void, the real estate
mortgage executed on 16 December 1996 by plaintiff LZK;
2. On the Second Cause of Action, declaring as a nullity, Promissory Notes
Nos. 97-53-029 and 97-53-030, both dated 24 February 1997;
3. On the Third Cause of Action, ruling that the extrajudicial foreclosure of
Transfer Certificate of Title No. T-45337, as being void and without legal

effect, as well as the Certificate of Sale executed by Notary Public Melchor
Abasolo;
4. On the Fourth Cause of Action, holding defendant-bank liable for moral
damages in the amount of not less than P10,000,000.00;
5. On the Fifth Cause of Action, adjudging exemplary damages against
defendant-bank, in the amount of P500,000.00;
6. On the Sixth Cause of Action, declaring defendant liable for attorney's
fees and cost of litigation in favor of plaintiff LZK, in the amount
of P500,000.00, and the additional amount of P5,000.00 for every court
attendance of plaintiff LZK's counsel.
Other reliefs just and equitable under the premises are likewise prayed for.12
The PDB filed in due course its answer,13 traversing the material allegations
thereof and interposing a counterclaim for attorney's fees and costs.
After a reply14 to the answer had been filed, the LHDC moved15 that the case
be set for a pre-trial conference,16 after which the parties submitted their
respective pre-trial briefs.17
On January 14, 2000, just before the scheduled pre-trial, the LHDC filed a
"Motion for Leave18 to file a Supplemental Complaint"19 to cover occurrences
subsequent to the original complaint. It alleged that after the filing of the
original complaint, it agreed in principle to enter into a contract of lease with
a prospective lessee, AMA Computer College, over three floors of the AGZ
Building, but the latter required it to first secure the petitioner's consent. The
LHDC thus wrote the PDB, requesting its consent to the said lease.
However, the latter gave unreasonable conditions in its reply, thus:
(a) AMA Computer College shall remit to defendant PDB all the stipulated
rental deposits and advance rentals;
(b) Plaintiff withdraws or drops the criminal complaint for falsification and
perjury against Mr. Mauro Tividad, an officer of defendant PDB, then
pending with the Office of the City Prosecutor of Makati; andcralawlibrary
20
(c) all documents shall be subject to review by defendant-bank.
2
This prompted the AMA Computer College to back-out from the contract.
Furthermore, the PDB wrote each and every tenant of the LHDC, demanding
that they directly remit their respective rentals to it. Worse still, the PDB,
which was leasing a space in the same building for its branch, had ceased
paying its rentals, on the pretext that it was setting-off the same against the
loan deficiency of the LHDC. In fact, according to the LHDC, the PDB had
ceased paying its monthly rental of P73,205.00 since November 1999, and
that the total amount due in rentals was P219,615.00.
The LHDC averred that until title to the property had been consolidated to
the PDB, it (the LHDC) remained its owner, and as such is entitled to
exercise all the attributes of ownership, including the right to receive rentals
from the tenants of the building. As such, the PDB had no authority to collect
the rentals and apply the previous loan deficiency because the legality and
validity of the promissory notes, the real estate mortgage, and the
subsequent extrajudicial foreclosure were in question before the courts. By
applying the rentals to the perceived loan deficiency, the PDB ignored the
authority of the court. Moreover, imposition by the PDB of unreasonable and
unfair conditions to the prospective lease of the property to AMA Computer
College, the LHDC failed to realize expected rentals of P43,000,000.00. It
was also alleged that as a result of the foregoing acts of the PDB, the LHDC
was entitled to moral damages of not less than P1,000,000.00. The LHDC
prayed that judgment be rendered on its supplemental complaint, thus:
WHEREFORE, it is respectfully prayed that this Honorable Court decide this
instant case in favor of plaintiff and against defendant PDB, by rendering
judgment in the following manner:
[a] holding defendant liable to pay compensatory damages in the amount of
no less than One Million Two Hundred Thousand Pesos (P1,200,000.00) in
favor of plaintiff;
[b] adjudging defendant as liable to pay the amount of Two Hundred
Nineteen Thousand Six Hundred Fifteen Pesos (P219,615.00), representing
rental arrearages for the months of November 1999 to January 2000;
[c] ruling that defendant is liable to pay moral damages in favor of plaintiff in
the amount of One Million Pesos (P1,000,000.00); andcralawlibrary
[d] to pay the cost of suit.

Other reliefs just and equitable under the premises are, likewise, prayed
for.21
On January 17, 2000, the LHDC filed an Urgent Motion for the Issuance of a
Temporary Restraining Order and Writ of Preliminary Injunction,22 seeking to
restrain the PDB from consolidating its title over the foreclosed property
pending the final determination of Civil Case No. 99-471. It averred that the
period for redemption had yet to expire on March 15, 1999.
On January 18, 2000, the PDB jointly opposed23 the supplemental complaint
and urgent motion, contending that the latter had "miserably failed to
establish any right in this regard." As to the supplemental complaint, it
argued that what goes against its admission is the fact that the supplemental
matters involved therein would bring into the case new causes of action,
distinct from those mentioned in the original complaint. It also pointed out the
lack of verification of the said supplemental complaint.
Meanwhile, after the hearing on the issuance of a writ of preliminary
injunction, the trial court issued on March 13, 2000 a Temporary Restraining
Order (TRO), effective for 20 days, restraining the PDB from consolidating
ownership over the foreclosed property.24 Thereafter, the trial court issued
on April 3, 2000 an Order25 granting the issuance of the writ, and required
the LHDC to file a bond of P40,000,000.00.
Despite the injunction, however, the PDB managed to consolidate its title
over the foreclosed property. Consequently, TCT No. T-5325326 was issued
by the Register of Deeds of La Union under its name on May 3, 2000.
On May 9, 2000, the LHDC filed an Omnibus Motion27 to declare invalid the
consolidated title, to cite the PDB and its counsel for contempt, and to enjoin
the latter from taking possession of the property. This was opposed by the
PDB.28
On June 2, 2000, the trial court issued an Order29 invalidating TCT No. T-
53253, and enjoining the PDB from taking possession of the foreclosed
property. The motion to cite the PDB and its counsel for contempt of court
was, however, denied.
On July 27, 2000, over the opposition of the PDB, the trial court issued an
Order,30 admitting the supplemental complaint with this fallo:
3
Wherefore, as prayed for, plaintiff's supplemental complaint is hereby
admitted upon its paying the docket fees corresponding to the amount
prayed in the supplemental complaint with notice of payment to defendant.
In turn, defendant is hereby ordered to plead within (10) days from receipt of
said notice of payment.
SO ORDERED.31
In admitting the same, the trial court declared:
The Court finds the terms in plaintiff's supplemental complaint to be just and
proper; hence, can be permitted by the Court. The additional causes of
action are intimately and necessarily connected to the causes of action set
forth in plaintiff's Complaint dated March 29, 2000 and are proper under the
circumstances inasmuch as the events happened since the filing of the
complaint sought to be supplemented.32
The PDB moved for a reconsideration of the order, but the trial court denied
the motion.
Dissatisfied, the PDB sought redress in the CA via a Petition for Certiorari,
docketed as CA-G.R. SP No. 61262,33 ascribing to the court a quo grave
abuse of discretion in admitting the supplemental complaint. In its petition, it
insisted that the supplemental complaint was improper. It argued that "there
is nothing to supplement and the additional causes of action are entirely
new, independent, separate and distinct."34 It prayed that the orders of the
court a quo be set aside and that the supplemental complaint be stricken-off
the record.35
On December 20, 2001, the CA rendered a Decision,36 finding that no grave
abuse of discretion was committed by the trial court in admitting the
supplemental complaint of the LHDC. In dismissing the petition, the CA
ratiocinated:
In the case at bench, respondent ably demonstrated the connection between
the original complaint and the supplemental complaint. Thus, the original
complaint for annulment of extrajudicial foreclosure, mortgage contract,
promissory notes and for damages was founded on the same transaction -
the loan and contract of mortgage as security for such loan - as that of the
supplemental complaint. The original complaint sought the annulment of the
promissory note and the contract of mortgage. On the other hand, the
supplemental complaint alleged petitioner's subsequent acts in asserting its

rights as such purported obligee and mortgagor. Thus, the acts complained
of under the supplemental complaint, namely: that petitioner imposed
unreasonable conditions in giving its consent to a pending lease agreement
between respondent and a third party and that petitioner demanded that
rentals on the property be made directly to it - are acts calculated to exercise
petitioner's rights, validly or invalidly, as the obligee and mortgagor in the
transaction sought to be annulled in the original complaint.
Conformably, we cannot subscribe to petitioner's view that the cause of
action raised in the supplemental complaint substantially changed or that the
theory of the case altered the causes of action contained in the original
complaint. If at all, the new allegations in the supplemental complaint sought
remedies only for subsequent acts perpetrated by petitioner to protect its
rights or in furtherance of its interests in the transaction sought to be
annulled.
The admission of supplemental pleadings, like their amendment, we must
underscore, should be liberally construed. In the present case, we find
justification for allowing the admission of the amended complaint in order
that the real question between the parties be properly and justly threshed out
in a single proceeding, and thus avoid multiplicity of actions. The filing of the
supplemental complaint can well be justified to the end that the real matter in
dispute and all matters in the action in dispute between the parties may, as
far as possible be completely determined in a single proceeding. Indeed,
what is important is that, as already stated, the basic allegations of fact in
the original and in the supplemental complaints are the same, namely, that
petitioner, without legal justification, foreclosed the property subject of
litigation.
In any event, the original complaint and the supplemental complaint,
involving as they do kindred causes of actions and remedies, are proper
subjects of joinder of causes of action. It is to be noted, furthermore, that the
admission or rejection of this kind of pleadings is within the sound discretion
of the court that will not be disturbed on appeal in the absence of abuse
thereof. In this case, the court clearly acted within the parameters of its
discretion.37
As the plea of the PDB for reconsideration there was denied,38 it now comes
to this Court for redress, contending that:
I. DECIDED IN A WAY NOT IN ACCORD WITH LAW OR WITH
APPLICABLE JURISPRUDENCE RENDERED BY THIS HONORABLE
COURT, AND/OR HAS SO FAR DEPARTED FROM THE ACCEPTED AND
4
USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR AN
EXERCISE OF THE POWER OF SUPERVISION VESTED IN THIS
HONORABLE COURT.
II. COMMITTED ERRORS IN THE FINDINGS OF FACTS OR
CONCLUSIONS OF LAW WHICH, IF NOT CORRECTED, WOULD CAUSE
GRAVE AND IRREPARABLE DAMAGE OR INJURY TO PDB; AND
III. COMMITTED GRAVE ABUSE OF DISCRETION IN THE
APPRECIATION OF FACTS.39
The petitioner reiterates its arguments before the appellate court, claiming
that the supplemental complaint was inappropriate because it introduced
causes of action which are "entirely new, totally independent, separate and
distinct" from those of the original complaint. It argues that a supplemental
complaint cannot be used for the purpose of trying new matter or a new
cause of action. Citing case law,40 it points out that a supplemental complaint
should, as the name implies, supply only deficiencies in aid of an original
complaint. It should contain only causes of action relevant and material to
the plaintiff's right and which help or aid the plaintiff's right or defense. The
supplemental complaint must be based on matters arising subsequent to the
original complaint related to the claim or defense presented therein, and
founded on the same cause of action. It cannot be used to try a new matter
or a new cause of action.
The original complaint vis - à -vis the supplemental complaint, the petitioner
asseverates, would show a great deal of difference in their causes of action.
3. In the supplemental complaint of LZK, the latter wishes to "supplement"
the original complaint with the following additional causes of action:
A. the alleged imposition of unfair and unreasonable conditions by PDB to
the impending lease agreement between LZK and AMA Computer College;
b. the alleged unilateral and unjustified decision of PDB to stop paying its
monthly rentals; andcralawlibrary
c. the demand of PDB upon the other tenants of the AGZ Building to remit
their respective rentals to PDB instead of paying to LZK.

4. The original complaint (Annex "C") sought to be supplemented is for
annulment of extrajudicial foreclosure, mortgage contract, promissory notes
and for damages with the following causes of actions:
A. the mortgage is allegedly null and void ab initio, as the mortgagor, LZK,
was not the registered owner of the subject matter thereof, at the time the
mortgage was executed on 16 December 1996;
b. the promissory notes are allegedly invalid in view of the claimed lack of
valuable consideration;
c. the extrajudicial foreclosure should allegedly be declared as invalid or void
form (sic) the very beginning, inasmuch as LZK allegedly did not violate the
terms and conditions of the promissory notes;
d. PDB is allegedly liable to LZK for moral and exemplary damages plus
attorney's fees.41
7. As discussed above, the original complaint has nothing to do with the
additional causes of action alleged in the supplemental complaint; the latter
does not bolster and it does not add anything to the original complaint. '42
The petition has no merit.
Section 6, Rule 10 of the Revised Rules of Court prescribes the manner and
substance of filing supplemental pleadings:
SECTION 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.
As its very name denotes, a supplemental pleading only serves to bolster or
adds something to the primary pleading. A supplement exists side by side
with the original. It does not replace that which it supplements.43 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.44 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
5
respect to the same subject matter as the controversy referred to in the
original complaint.45
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.46
The parties may file supplemental pleadings only to supply deficiencies in
aid of an original pleading, but not to introduce new and independent causes
of action. In Leobrera v. Court of Appeals,47 the Court ruled that when the
cause of action stated in the supplemental complaint is different from the
causes of action mentioned in the original complaint, the court should not
admit the supplemental complaint. However, a broad definition of causes of
action should be applied. As the United States Supreme Court ruled
in Smith v. Biggs Boiler Works Co.: 48
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 factor can be considered by the court
in the exercise of its discretion; and of course, a broad definition of "cause of
action" should be applied here as elsewhere.49
In the present case, the issue as to whether the petitioner stopped the
payment of rentals and the application thereof on the perceived loan
deficiency of the respondent, is a new matter that occurred after the filing of
the original complaint. However, the relief for damages, the collection of the
rentals and the application thereof by the petitioner to the perceived loan
deficiency of the respondent are germane to, and are in fact, intertwined with
the cause of action of nullification of the real estate mortgage and the
extrajudicial foreclosure thereof, as well as the sale at public auction. It is the
respondent's contention that the petitioner remained liable to it for rentals,
and until title to the property had been lawfully consolidated with the
petitioner. The claims of unrealized income by way of rentals from the AMA
Computer College on account of the respondent's insistence that such
should be remitted to it, and that the respondent first drop the criminal
complaint for falsification and perjury filed by it against Mauro Tividad, the
officer of the petitioner, are, likewise, germane and related to the
respondent's claim in its original complaint that it remained the owner of the
property despite the sale at public auction; hence, it is entitled to lease the
 6

property and collect the rentals therefrom. By its supplemental complaint, the
respondent merely enlarged its original causes of action on account of
events that transpired after the filing of the original complaint and prayed for
additional reliefs. The principal and core issues raised by the parties in their
original pleadings remain the same. There is no showing on record that the
petitioner would be prejudiced by the admission of the supplemental
complaint. After all, the petitioner has the right to file a supplemental answer
to the supplemental complaint, conformably to Section 7, Rule 11 of the
Revised Rules of Court which reads:

SEC. 7. Answer to supplemental complaint. - A supplemental complaint may

be answered within ten (10) days from notice of the order admitting the
same, unless a different period is fixed by the court. The answer to the
complaint shall serve as the answer to the supplemental complaint if no new
or supplemental answer is filed.

The trial court cannot, thus, be faulted for admitting the respondent's
supplemental complaint.

Besides, the admission of the supplemental complaint will better serve the
ends of justice. After all, the Rules of Court were designed to facilitate the
administration of justice to the rival claims of the parties in a just, speedy and
inexpensive manner.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of

merit. Costs against the petitioner.

SO ORDERED.

Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ.,

concur.

G.R. No. 157745             September 26, 2006
(CA-G.R. SP No. 70610)
GENALYN D. YOUNG, petitioner,
vs.
SPOUSES MANUEL SY and VICTORIA SY, respondents.
x---------------------x
G.R. No. 157955             September 26, 2006
(CA-G.R. SP No. 65629)
GENALYN D. YOUNG, petitioner,
vs.
SPOUSES MANUEL SY and VICTORIA SY, respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
The Cases
Before this Court are two Petitions for Review on Certiorari under Rule 45 of
the Rules of Court. Since the two cases are interdependent and originate
from the same proceeding, and for the sake of expediency, they have been
consolidated by this Court.
The Petition under G.R. No. 157955 (Re: Supplemental Complaint)
challenges the Decision dated November 18, 20021 of the Court of Appeals
(CA) in CA-G.R. SP No. 65629 affirming the Orders dated December 28,
2000 and April 6, 2001 of the Regional Trial Court, San Pablo City, Branch
32, in Civil Case No. SP-5703 (2000) (RTC) which denied the admission of
petitioner's Supplemental Complaint; and the CA Resolution dated April 2,
20032 which denied the petitioner's Motion for Reconsideration.
The Petition under G.R. No. 157745 (Re: Non-Suit) questions the Decision
dated November 29, 20023 of the CA in CA-G.R. SP No. 70610 which
affirmed the Orders of the RTC dated August 30, 2001, January 4, 2002 and
January 16, 2002 (RTC Orders), all of which in effect dismissed the
Complaint for non-suit; and the CA Resolution dated March 21, 20034 which
denied the petitioner's Motion for Reconsideration.
7
Both petitions originated from a Complaint for Nullification of Second
Supplemental Extra-judicial Settlement, Mortgage, Foreclosure Sale and Tax
Declaration filed by the petitioner on May 2, 2000 with the RTC. Genalyn D.
Young (petitioner), in her Complaint, alleged that the extra-judicial partition
executed by her natural mother, Lilia Dy Young which adjudicated an
unregistered parcel of land solely in favor of the latter, is unenforceable,
since at the time of the execution, she (petitioner) was only 15 years old and
no court approval had been procured; that the partition had been registered
with the Register of Deeds; that Lilia Dy obtained a loan from spouses
Manuel Sy and Victoria Sy (respondents) and mortgaged the subject
property; that the property was foreclosed and sold to the highest bidder,
respondent Manuel Sy; that a Certificate of Sale for this purpose had been
registered with the Register of Deeds; and that, thereafter, respondents
obtained in their name a tax declaration over the property in question.
The Antecedents
G.R. No. 157955 (Re: Supplemental Complaint)
On July 20, 2000, the petitioner filed with the RTC a Motion to Admit
Supplemental Complaint, attaching the Supplemental Complaint wherein
petitioner invoked her right, as co-owner, to exercise the legal redemption.
The RTC denied the Motion in an Order dated December 28, 2000.
Petitioner, on July 16, 2001, filed a Petition
for Certiorari and Mandamus under Rule 65 of the Rules of Court, docketed
as CA-G.R. SP No. 65629, and raised the following grounds:
THE HONORABLE RESPONDENT COURT ACTED WITHOUT OR
IN EXCESS OF JURISDICTION OR WITH GRAVE ABUSE OF
DISCRETION IN ISSUING THE ORDERS DATED 28 DECEMBER
2000 AND 06 APRIL 2001 SINCE:
A.
THE RELIEFS IN THE SUPPLEMENTAL COMPLAINT MERELY
DEVELOP OR EXTEND THE ORIGINAL CAUSES OF ACTION.
PLAINTIFF'S CAUSE OF ACTION FOR LEGAL REDEMPTION
ARISES DIRECTLY FROM AND IS A NATURAL EXTENSION OR
CONSEQUENCE OF HER RIGHTS AS CO-OWNER OF THE
PROPERTY SUBJECT OF THE CASE.
B.

THE SUPERVENING EVENT WHICH IS THE CONSOLIDATION
OF TITLE TO THE SUBJECT PROPERTY IN THE NAME OF
MANUEL SY, OCCURRED AFTER 21 JUNE 2000; SUCH DATE
IS PLAINLY SUBSEQUENT TO THE FILING OF THE
COMPLAINT ON 02 MAY 2000.5
On November 18, 2002, the CA promulgated its Decision denying the
Petition for Certiorari  and Mandamus and held that the cause of action of
the petitioner in the Supplemental Complaint is entirely different from the
original complaint; that the Supplemental Complaint did not merely supply its
deficiencies; and that, at any rate, in the event the trial court issues an
adverse ruling, the petitioner can still appeal the same, hence, the petition
under Rule 65 is not proper.
Hence, the present Petition for Review on Certiorari  under Rule 45, raising
the following issues:
A.
WHETHER OR NOT THE RTC ACTED WITHOUT OR IN EXCESS
OF JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LOSS OF JURISDICTION IN ISSUING THE
ORDERS DATED 28 DECEMBER 2000 AND 06 APRIL 2001.
1.
WHETHER OR NOT THE RELIEFS IN THE SUPPLEMENTAL
COMPLAINT MERELY DEVELOP OR EXTEND THE ORIGINAL
CAUSES OF ACTION.
2.
WHETHER OR NOT THE SUPERVENING EVENT WHICH IS THE
CONSOLIDATION OF TITLE TO THE SUBJECT PROPERTY IN
THE NAME OF MANUEL SY, OCCURRED AFTER 21 JUNE
2000 OR SUBSEQUENT TO THE FILING OF THE COMPLAINT
ON 02 MAY 2000.
B.
8
WHETHER OR NOT THE COURT OF APPEALS GRAVELY
ERRED IN HOLDING THAT NO GRAVE ABUSE OF DISCRETION
WAS COMMITTED BY THE RTC AND THAT THERE WAS NO
NEED TO FILE A "PETITION" TO EXERCISE THE RIGHT OF
LEGAL REDEMPTION.
C.
WHETHER OR NOT THE INSTANT PETITION IS MOOT AND
ACADEMIC.
D.
WHETHER OR NOT PETITIONER COMMITTED FORUM-
SHOPPING.6
G.R. No. 157745 (Re: Non-Suit)
I. Appeal to the CA
While the Petition for Certiorari  and Mandamus (re: Supplemental
Complaint) was pending in the CA, trial in the RTC continued. On August 29,
2001, a day before the hearing slated for August 30, 2001, the petitioner
filed a Motion to Cancel Hearing, alleging that she was indisposed. On the
day of the hearing, respondents, through counsel, objected to the
postponement and moved for the dismissal of the case for non-suit. The
RTC sustained the objection and issued the assailed August 30, 2001 Order
dismissing the Complaint. This Order reads in full:
ORDER
Atty. Raul S. Sison and his client arrived on time. When the case
was called for hearing, the Court found attached to the records a
last minute Motion to Cancel Hearing from Atty. Perpetuo M. Lotilla,
Jr. The Court invited the attention of Atty. Sison on the said motion.
Atty. Sison vehemently objected to the postponement on the
following grounds:
1) the motion is in violation of the three-day notice rule;

2) the ground stated in the motion is too shallow to be
appreciated because it merely states that a witness is
indisposed without stating the indisposition and there is no
Medical Certificate attached to the motion;
3) the instant motion for postponement is one of the
several postponements filed by Atty. Lotilla and this is
confirmed by the records of this case showing that last
minute postponements and other postponements were
filed by Atty. Lotilla;
4) that damages are being suffered by defendants in
paying the legal services of their counsel and that
defendants are unduly deprived of the possession and
enjoyment of the subject property.
The Court is constrained to sustain the objection to the Motion for
Postponement by Atty. Sison. The Court has also been quite liberal
with the Motions for Postponement filed by Atty. Lotilla by granting
the same. The Court holds that somehow the practice of filing
several postponements must be discouraged.
Atty. Sison therefore moved for the dismissal of the case for non-
suit. The Court finds merit on the Motion to Dismiss.
WHEREFORE, the Motion to Dismiss is granted and this case is
ordered DISMISSED without costs.
SO ORDERED.7
On January 4, 2002, the RTC denied the petitioner's Motion for
Reconsideration. The dispositive portion of this Order states:
WHEREFORE, the Motion for Reconsideration is DENIED. The
resolution on the pending incident of execution pendente lite is now
considered moot and academic.8
On January 16, 2002, the RTC issued an Order correcting the January 4,
2002 Order due to a typographical error. This Order reads in full:
ORDER
9
Finding merit on the Motion, the same is granted. The Court is sure
that only typographical error was committed.
The dispositive portion of the Order should therefore read as
follows:
"WHEREFORE, the Motion for Reconsideration is DENIED. The
resolution on the pending incident of Motion for Writ of
Possession, pendente lite, is now considered moot and academic.
SO ORDERED.9
On January 31, 2002, the petitioner filed a Notice of Appeal questioning the
foregoing RTC Orders. The case was eventually docketed as C.A.-G.R. CV
No. 74045. In said appeal, the petitioner assigned the following errors:
A.
THE TRIAL COURT GRAVELY ERRED IN ISSUING THE
ORDERS DATED 30 AUGUST 2001, 04 JANUARY 2002 AND 16
JANUARY 2002, SINCE THERE WAS NO FACTUAL OR LEGAL
BASIS TO DISMISS THE COMPLAINT FOR NON-SUIT.
B.
THE TRIAL COURT GRAVELY ERRED IN NOT HOLDING THAT
PLAINTIFF-APPELLANT HAD A JUST AND VALID GROUND TO
MOVE FOR THE CANCELLATION OF THE HEARING SET ON 30
AUGUST 2001.10
The CA rendered a Decision dated March 30, 200511 in favor of the
petitioner, reversing and setting aside the RTC Orders, the dispositive
portion of this Decision reads:
WHEREFORE, premises considered, the Orders, dated August 30,
2001, January 4, 2002 and January 16, 2002, issued by Branch 32
of the Regional Trial Court of San Pablo City are hereby
REVERSED and SET ASIDE. The record/case is hereby remanded
to the court of origin for further proceedings.
SO ORDERED.12

The respondents filed their Motion for Reconsideration, and based on the
records before the Court, this case is still pending in the CA.
II. Petition for Certiorari filed with the CA
On top of the foregoing appeal, the petitioner, four months after filing her
Notice of Appeal to the CA, or on May 28, 2002, filed with the CA a Petition
for Certiorari under Rule 65, docketed as CA-G.R. SP No. 70610 to annul
the same RTC Orders that comprise the subject matter of the ordinary
appeal. Predictably, the petitioner raised essentially the same issues:
THE HONORABLE RESPONDENT COURT ACTED WITHOUT OR
IN EXCESS OF JURISDICTION OR WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LOSS OF JURISDICTION IN
ISSUING THE ORDERS DATED AUGUST 30, 2001, JANUARY 4,
2002, AND JANUARY 16, 2002, SINCE:
A.
THERE WAS NO FACTUAL OR LEGAL BASIS FOR DISMISSAL
OF THE COMPLAINT ON THE GROUNDS OF NON-SUIT;
B.
PETITIONER HAD A JUST AND VALID GROUND TO MOVE FOR
THE CANCELLATION OF THE HEARING SET ON AUGUST 30,
2001.13
On November 29, 2002, ahead of the Decision dated March 30, 2005
rendered in the appealed case, the CA denied14 the Petition
for Certiorari and held that the dismissal of the case by the RTC on the
ground of non prosequitur has the effect of an adjudication upon the merits;
that an order of dismissal, whether right or wrong, is a final order that may
constitute an error of judgment correctible by ordinary appeal and not
by certiorari; that the petitioner actually chose the mode of ordinary appeal
by filing a Notice of Appeal on January 31, 2000; and that since the remedy
of appeal was available, then the petition for certiorari, being an
extraordinary remedy, must fail.
Hence, the present Petition for Review under Rule 45, with the following
issues that are likewise similar to the appealed case in the CA:
10
A.
WHETHER OR NOT THE REGIONAL TRIAL COURT ACTED
WITHOUT OR IN EXCESS OF JURISDICTION OR WITH GRAVE
ABUSE OF DISCRETION AMOUNTING TO LOSS OF
JURISDICTION IN ISSUING THE ORDERS DATED AUGUST 30,
2001, JANUARY 4, 2002, AND JANUARY 16, 2002, DISMISSING
THE COMPLAINT.
1.
WHETHER OR NOT THERE WAS FACTUAL OR LEGAL BASIS
FOR DISMISSAL OF THE COMPLAINT ON THE GROUNDS OF
NON-SUIT.
2.
WHETHER OR NOT PETITIONER HAD A JUST AND VALID
GROUND TO MOVE FOR THE CANCELLATION OF THE
HEARING SET ON AUGUST 30, 2001.
B.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY
ERRED IN HOLDING THAT NO GRAVE ABUSE OF DISCRETION
WAS COMMITTED BY THE RTC AND THAT ORDINARY APPEAL
IS PETITIONER'S REMEDY FROM THE DISMISSAL OF THE
COMPLAINT BY THE RTC.15
The Ruling of the Court
The Petition (re: Supplemental Complaint) is meritorious; but the Petition (re:
Non-Suit) must fail.
On the denial of the Motion to Admit Supplemental Complaint:
The courts a quo held that the Supplemental Complaint constituted a
substantial amendment of the original complaint; that the relief prayed for in
the former is inconsistent with the latter; and that the causes of action of
both are likewise different. This is incorrect.

Section 6, Rule 10 of the Revised Rules of Court provides:
SECTION 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.
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.16 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.17 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.18
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.19
In Leobrera v. Court of Appeals,20 the Court ruled that when the cause of
action stated in the supplemental complaint is different from the causes of
action mentioned in the original complaint, the court should not admit the
supplemental complaint; the parties may file supplemental pleadings only to
supply deficiencies in aid of an original pleading, but not to introduce new
and independent causes of action. However, in Planters Development Bank
v. LZK Holdings and Development Co.,21 the Court held that a broad
definition of causes of action should be applied: 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 factor to be considered by the court in the exercise of its
discretion; and of course, a broad definition of "cause of action" should be
applied here as elsewhere.22
11
In this case, the consolidation of title over the subject property in the name of
respondent Manuel Sy and the issue as to whether it precluded petitioner as
alleged co-owner from exercising the right of legal redemption, are new
matters that occurred after the filing of the original complaint. The relief
prayed for in the Supplemental Complaint, which is the exercise of the right
of legal redemption accorded to co-owners of property, is germane to and
intertwined with the cause of action in the Complaint for the nullification of
the "Second Supplemental to the Extrajudicial Partition" on the ground that it
lacked the approval of a guardianship court.
The petitioner's right to redeem the property is dependent on the nullification
of the partition which is the subject of the original complaint. Unless the
partition is nullified or declared without any force or effect, the petitioner will
not be considered a co-owner of the property and, consequently, she will be
unable to exercise any right of legal redemption under Article 162023 of the
Civil Code granted to co-owners of property.
The right of legal redemption as co-owner is conferred by law and is merely
a natural consequence of co-ownership. Hence, the petitioner's cause of
action for legal redemption as embodied in her Supplemental Complaint
stems directly from and is an extension of her rights as co-owner of the
property subject of the Complaint.
Furthermore, the evidence required to prove petitioner's right of legal
redemption in the Supplemental Complaint will be exactly the same
evidence required to prove the nullification of the partition in the Complaint.
If a separate action is filed for the subject covered by the Supplemental
Complaint, there will be multiplicity of suits. Should a separate complaint be
filed before the nullification of the partition, the same would be dismissed for
being premature pending the resolution of the Complaint for nullification.
After all, the respondents have the right to file a supplemental answer to the
Supplemental Complaint, conformably with Section 7, Rule 11 of the Rules
of Court which reads:
SEC. 7. Answer to supplemental complaint. - A supplemental
complaint may be answered within ten (10) days from notice of the
order admitting the same, unless a different period is fixed by the
court. The answer to the complaint shall serve as the answer to the
supplemental complaint if no new or supplemental answer is filed.

In affirming the RTC's denial of the admission of the Supplemental
Complaint, the CA rationalized that "[i]n the event that the lower court rules
in favor of petitioner, then there is no need for her to file a petition to
exercise the right of redemption. On the other hand, should the trial court
issue[ ] an adverse ruling then petitioner can still appeal the same. The
petition for certiorari is therefore not proper."24
This, too, is incorrect.
As the petitioner correctly pointed out, even if the trial court decides in her
favor, the redemption period would have lapsed and would not form a part of
the decision since it was not prayed for, much less alleged in the original
complaint. In such a case, the respondents could oppose the exercise of the
right to redeem since it would not have been included in the decision over
the original complaint. And should the trial court issue an adverse ruling, the
petitioner can only appeal what is included in the ruling which is limited to
the denial of the prayer for the nullification of the partition. Naturally, such a
decision would not concern any right of redemption.
25
Besides, as in Planters Development Bank,  the admission of the
petitioner's Supplemental Complaint will better serve the ends of justice. The
Rules of Court were designed to facilitate the administration of justice to the
rival claims of the parties in a just, speedy and inexpensive manner.
Thus, the courts a quo  erred in denying the admission of petitioner's
Supplemental Complaint and the Petition (G.R. No. 157955) should be
granted.
On the alleged Forum Shopping:
This Court is now concerned with the question of whether the petitioner has
engaged in forum shopping in appealing the RTC Orders which dismissed
her complaint for non-suit and in filing a Petition for Certiorari under Rule 65
with the CA involving the same RTC Orders.
Forum shopping consists of filing multiple suits involving the same parties for
the same cause of action, either simultaneously or successively, for the
purpose of obtaining a favorable judgment.26
There is forum shopping where there exist: (a) identity of parties, or at least
such parties as represent the same interests in both actions; (b) identity of
rights asserted and relief prayed for, the relief being founded on the same
12
facts; and (c) the identity of the two preceding particulars is such that any
judgment rendered in the pending case, regardless of which party is
successful would amount to res judicata.27
Ineluctably, the petitioner, by filing an ordinary appeal and a petition
for certiorari with the CA, engaged in forum shopping. When the petitioner
commenced the appeal, only four months had elapsed prior to her filing with
the CA the Petition for Certiorari under Rule 65 and which eventually came
up to this Court by way of the instant Petition (re: Non-Suit). The elements
of litis pendentia are present between the two suits. As the CA, through its
Thirteenth Division, correctly noted, both suits are founded on exactly the
same facts28 and refer to the same subject matter—the RTC Orders which
dismissed Civil Case No. SP-5703 (2000) for failure to prosecute. In both
cases, the petitioner is seeking the reversal of the RTC orders. The parties,
the rights asserted, the issues professed, and the reliefs prayed for, are all
the same. It is evident that the judgment of one forum may amount to res
judicata in the other.
But it is the proposition of the petitioner that between these two cases, the
one that is "proper" is the petition for certiorari filed with the CA, since the
RTC, according to her, acted with grave abuse of discretion; and that her
appeal in the CA "has proven to be not a speedy remedy" and had only been
instituted as a "precautionary measure." As proof of the averment that the
appeal was not speedy enough, she points out the fact that while the CA had
just promulgated a Decision on March 30, 2005 with respect to the appealed
case, that case, however, is still pending to this day in the CA by virtue of a
motion for reconsideration recently filed by the respondents, whereas, in the
proceedings that led to the present Petition (re: Non-Suit), the CA had
rendered a Decision dated November 29, 2000 – over four years ahead of
its counterpart. From these premises, she proceeds to cite jurisprudence
invoking the exceptional instances where a party may directly resort to the
extraordinary remedy of certiorari, because the appeal, in those cases, is not
speedy enough.29
This is completely unacceptable.
The Court begins with the unassailable premise that the RTC orders
dismissing the case for failure to prosecute are final orders, because such
orders of dismissal operate as a judgment on the merits.30 This principle is
now an express provision in Section 3, Rule 17 of the Rules of Court, to wit:
Section 3. Dismissal due to fault of plaintiff. – If, for no justifiable
cause, the plaintiff fails to appear on the date of the presentation of
 13

his evidence in chief on the complaint, or to prosecute his action for
an unreasonable length of time, or to comply with these Rules or
any order of the court, the complaint may be dismissed upon
motion of the defendant or upon the court's own motion, without
prejudice to the right of the defendant to prosecute his counterclaim
in the same or in a separate action. This dismissal shall have the
effect of an adjudication upon the merits, unless otherwise
declared by the court. (emphasis supplied)
It is firmly established, and with very few exceptions, that the remedy against
such final order is appeal and not certiorari.31
The general rule is that a writ of certiorari will not issue where the remedy of
appeal is available to the aggrieved party. The remedies of appeal in the
ordinary course of law and that of certiorari under Rule 65 are mutually
exclusive and not alternative or cumulative.32 Hence, the special civil action
of certiorari under Rule 65 cannot be a substitute for an appeal where the
latter remedy is available.
confusion, the Court adheres strictly to the rules against forum shopping,
and any violation of these rules results in the dismissal of the case.35
Thus, the CA correctly dismissed the petition for certiorari and the petition for
review (G.R. No. 157745) filed with this Court must be denied for lack of
merit.
WHEREFORE, the Petition for Review in G.R. No. 157745 is DENIED for
lack of merit.
The Petition for Review in G.R. No. 157955 is GRANTED. The Decisions
and Resolutions of the Court of Appeals in CA-G.R. SP No. 65629
are REVERSED AND SET ASIDE. The Regional Trial Court, San Pablo
City, Branch 32, is DIRECTED to ADMIT the petitioner's Supplemental
Complaint dated July 20, 2000.
No costs.

While indeed there are exceptions to the foregoing rule, and assuming
further that the case of the petitioner falls under any of those exceptions
which allows her to elect Rule 65, the jurisprudence which she calls upon
does not sanction the successive or cumulative filing of both an appeal and
a special civil action of certiorari. Quite the opposite, these cases set down
the exceptional circumstances where certiorari can be directly invoked in
lieu of appeal.

The remedies of appeal and certiorari under Rule 65 are mutually exclusive

and not alternative or cumulative.33 This is a firm judicial policy. The
petitioner cannot hedge her case by wagering two or more appeals, and, in
the event that the ordinary appeal lags significantly behind the others, she
cannot post facto validate this circumstance as a demonstration that the
ordinary appeal had not been speedy or adequate enough, in order to justify
the recourse to Rule 65. This practice, if adopted, would sanction the filing of
multiple suits in multiple fora, where each one, as the petitioner couches it,
becomes a "precautionary measure" for the rest, thereby increasing the
chances of a favorable decision. This is the very evil that the proscription on
forum shopping seeks to put right. In Guaranteed Hotels, Inc. v. Baltao,34 the
Court stated that the grave evil sought to be avoided by the rule against
forum shopping is the rendition by two competent tribunals of two separate
and contradictory decisions. Unscrupulous party litigants, taking advantage
of a variety of competent tribunals, may repeatedly try their luck in several
different fora until a favorable result is reached. To avoid the resultant

G.R. No. 158401             January 28, 2008
PHILIPPINE PORTS AUTHORITY, petitioner,
vs.
WILLIAM GOTHONG & ABOITIZ (WG&A), INC., respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
This resolves the Petition for Review on Certiorari filed by the Philippine
Ports Authority (petitioner) seeking the reversal of the Decision1 of the Court
of Appeals (CA) promulgated on October 24, 2002 and its Resolution dated
May 15, 2003.
The antecedent facts are accurately narrated by the CA as follows:
Petitioner William Gothong & Aboitiz, Inc. (WG&A for brevity), is a
duly organized domestic corporation engaged in the shipping
industry. Respondent Philippine Ports Authority (PPA for brevity),
upon the other hand, is a government-owned and controlled
company created and existing by virtue of the provisions of P.D.
No. 87 and mandated under its charter to operate and administer
the country's sea port and port facilities.
After the expiration of the lease contract of Veterans Shipping
Corporation over the Marine Slip Way in the North Harbor on
December 31, 2000, petitioner WG&A requested respondent PPA
for it to be allowed to lease and operate the said facility. Thereafter,
then President Estrada issued a memorandum dated December 18,
2000 addressed to the Secretary of the Department of
Transportation and Communication (DOTC) and the General
Manager of PPA, stating to the effect that in its meeting held on
December 13, 2000, the Economic Coordinating Council (ECC) has
approved the request of petitioner WG&A to lease the Marine Slip
Way from January 1 to June 30, 2001 or until such time that
respondent PPA turns over its operations to the winning bidder for
the North Harbor Modernization Project.
Pursuant to the said Memorandum, a Contract of Lease was
prepared by respondent PPA containing the following terms:
14
1. The lease of the area shall take effect on January 1 to
June 30, 2001 or until such time that PPA turns over its
operation to the winning bidder for the North Harbor
modernization;
2. You shall pay a monthly rental rate of P12.15 per
square meter or an aggregate monthly rental amount
of P886,950.00;
3. All structures/improvements introduced in the leased
premises shall be turned over to PPA;
4. Water, electricity, telephone and other utility expenses
shall be for the account of William, Gothong & Aboitiz,
Inc.;
5. Real Estate tax/insurance and other government dues
and charges shall be borne by WG&A.
The said contract was eventually conformed to and signed by the
petitioner company, through its President/Chief Executive Officer
Endika Aboitiz, Jr. Thereafter, in accordance with the stipulations
made in the lease agreement, PPA surrendered possession of the
Marine Slip Way in favor of the petitioner.
However, believing that the said lease already expired on June 30,
2001, respondent PPA subsequently sent a letter to petitioner
WG&A dated November 12, 2001 directing the latter to vacate the
contested premises not later than November 30, 2001 and to
turnover the improvements made therein pursuant to the terms and
conditions agreed upon in the contract.
In response, petitioner WG&A wrote PPA on November 27, 2001
urging the latter to reconsider its decision to eject the former. Said
request was denied by the PPA via a letter dated November 29,
2001.
On November 28, 2001, petitioner WG&A commenced an
Injunction suit before the Regional Trial Court of Manila. Petitioner
claims that the PPA unjustly, illegally and prematurely terminated
the lease contract. It likewise prayed for the issuance of a
temporary restraining order to arrest the evacuation. In its

complaint, petitioner also sought recovery of damages for breach of
contract and attorney's fees.
On December 11, 2001, petitioner WG&A amended its complaint
for the first time. The complaint was still denominated as one for
Injunction with prayer for TRO. In the said amended pleading, the
petitioner incorporated statements to the effect that PPA is already
estopped from denying that the correct period of lease is "until such
time that the North Harbor Modernization Project has been bidded
out to and operations turned over to the winning bidder. It likewise
included, as its third cause of action, the additional relief in its
prayer, that should the petitioner be forced to vacate the said
facility, it should be deemed as entitled to be refunded of the value
of the improvements it introduced in the leased property.
Following the first amendment in the petitioner's complaint,
respondent PPA submitted its answer on January 23, 2002.
Meanwhile, the TRO sought by the former was denied by the trial
court by way of an order dated January 16, 2002.
Petitioner later moved for the reconsideration of the said Order on
February 11, 2002. Shortly thereafter, petitioner filed a Motion to
Admit Attached Second Amended Complaint. This time, however,
the complaint was already captioned as one for Injunction with
Prayer for Temporary Restraining Order and/or Writ of Preliminary
Injunction and damages and/or for Reformation of Contract. Also, it
included as its fourth cause of action and additional relief in its
prayer, the reformation of the contract as it failed to express or
embody the true intent of the contracting parties.
The admission of the second amended complaint met strong
opposition from the respondent PPA. It postulated that the
reformation sought for by the petitioner constituted substantial
amendment, which if granted, will substantially alter the latter's
cause of action and theory of the case.
On March 22, 2002, the respondent judge issued an Order denying
the Admission of the Second Amended Complaint. Petitioner filed a
motion for reconsideration of the aforesaid order but the same was
again denied in an order dated April 26, 2002.2
Herein respondent WG&A then filed a petition for certiorari with the CA
seeking the nullification of the aforementioned RTC orders.
15
In its Decision dated October 24, 2002, the CA granted respondent's
petition, thereby setting aside the RTC orders and directing the RTC to admit
respondent's second amended complaint pursuant to Section 3, Rule 10 of
the 1997 Rules of Civil Procedure. Petitioner moved for reconsideration but
the same was denied per Resolution dated May 15, 2003.
Hence, the present petition where the only issue raised is whether the CA
erred in ruling that the RTC committed grave abuse of discretion when it
denied the admission of the second amended complaint.
The Court finds the petition without merit.
The CA did not err in finding that the RTC committed grave abuse of
discretion in issuing the Order dated March 22, 2002 denying the admission
of respondent's second amended complaint.
The RTC applied the old Section 3, Rule 10 of the Rules of Court:
Section 3. Amendments by leave of court. – after the case is set for
hearing, substantial amendments may be made only upon leave of
court. But such leave may be refused if it appears to the court that
the motion was made with intent to delay the action or that the
cause of action or defense is substantially altered. Orders of the
court upon the matters provided in this section shall be made upon
motion filed in court, and after notice to the adverse party, and an
opportunity to be heard.
instead of the provisions of the 1997 Rules of Civil Procedure, amending
Section 3, Rule 10, to wit:
SECTION 3. Amendments by leave of court. Except as provided in
the next preceding section, substantial amendments may be
made only upon leave of court. But such leave may be refused
if it appears to the court that the motion was made with intent
to delay. Orders of the court upon the matters provided in this
section shall be made upon motion filed in court, and after notice to
the adverse party, and an opportunity to be heard.
The Court has emphasized the import of Section 3, Rule 10 of the 1997
Rules of Civil Procedure in Valenzuela v. Court of Appeals,3 thus:
 16

Interestingly, Section 3, Rule 10 of the 1997 Rules of Civil

Procedure amended the former rule in such manner that the phrase
"or that the cause of action or defense is substantially altered" was
stricken-off and not retained in the new rules. The clear import of
such amendment in Section 3, Rule 10 is that under the new
rules, "the amendment may (now) substantially alter the cause
of action or defense." This should only be true, however, when
despite a substantial change or alteration in the cause of action or
defense, the amendments sought to be made shall serve the higher
interests of substantial justice, and prevent delay and equally
promote the laudable objective of the rules which is to secure a
"just, speedy and inexpensive disposition of every action and
proceeding."4

The application of the old Rules by the RTC almost five years after its
amendment by the 1997 Rules of Civil Procedure patently constitutes grave
abuse of discretion.

WHEREFORE, the petition is DENIED for lack of merit. The Decision of the

Court of Appeals promulgated on October 24, 2002 and its Resolution dated
May 15, 2003 are hereby AFFIRMED  in toto.

SO ORDERED.

G.R. No. 173399
CENTRAL BANK BOARD OF LIQUIDATORS, Petitioner
vs.
BANCO FILIPINO SAVINGS AND MORTGAGE BANK, Respondent
DECISION
SERENO, CJ.:
Our ruling in this case is confined to the resolution of procedural issues
pertaining to the propriety of the admission of a Second
Amended/Supplemental Complaint. The latter sought to hold the Bangko
Sentral ng Pilipinas (BSP) and its Monetary Board (MB) liable for causes of
action that arose almost 10 years after the original Complaint was filed
against the now defunct Central Bank of the Philippines (CB).
THE CASE
1
The Petition for Review on Certiorari  under Rule 45 of the 1997 Revised
Rules of Civil Procedure now before us was filed by the Central Bank Board
of Liquidators (CB-BOL). It seeks to annul the Decision2 of the Court of
Appeals (CA), which affirmed the Orders3 of the Regional Trial Court,
National Capital Judicial Region, Makati City-Branch 136 (RTC).
The assailed CA Decision affirmed the ruling of the RTC in consolidated Civil
Case Nos. 8108, 9675, and 10183, which had admitted the Second
Amended/Supplemental Complaint filed by respondent Banco Filipino
Savings and Mortgage Bank (Banco Filipino, or respondent).4 The CB-BOL
alleges that by admitting the complaint, the RTC erroneously included the
BSP and its MB as new parties to the consolidated civil cases and raised
new causes of action not alleged in the original Complaint.5
THE FACTS
The following are the pertinent facts of the case as gathered from its
records.6
On 14 February 1963, the MB of the then CB issued MB Resolution No. 223
allowing respondent Banco Filipino to operate as a savings bank.
Respondent began formal operations on 9 July 1964.7
17
However, on 27 July 1984, the CB issued MB Resolution No. 955 placing
Banco Filipino under conservatorship after granting the latter's loan
applications worth billions of pesos.8 Respondent bank filed with the RTC
Makati a Complaint against the CB for the annulment of MB Resolution No.
955.9 The case was docketed as Civil Case No. 8108 and raffled to Judge
Ricardo Francisco of Branch 136.10
Thereafter, on 25 January 1985, the CB issued MB Resolution No. 75
ordering the closure of Banco Filipino and placing the latter under
receivership. The Resolution stated that since respondent had been found to
be insolvent, the latter was forbidden to continue doing business to prevent
further losses to its depositors and creditors. The Resolution further provided
for the takeover of the assets and liabilities of Banco Filipino for the benefit
of its depositors and creditors, as well as for the termination of its
conservatorship.11 On 2 February 1985, Banco Filipino filed a Complaint with
the RTC Makati against the MB, assailing the latter's act of placing the bank
under receivership.12 The case was docketed as Civil Case No. 9675 and
raffled to Judge Zoilo Aguinaldo of Branch 143.13
Because of its impending closure,14 Banco Filipino filed with the CA a
Petition for Certiorari  and Mandamus on 28 February 1985, seeking the
annulment of MB Resolution No. 75 on the ground of grave abuse of
discretion in the issuance of the Resolution.15 The Petition eventually
reached the Supreme Court, where it was docketed as G.R. No. 70054.
On 22 March 1985, the CB issued another Resolution placing Banco Filipino
under Jiquidation. Respondent then filed another Complaint with the RTC
Makati to question the propriety of the liquidation.16 The case was docketed
as Civil Case No. 10183 and raffled to Judge Fernando Agdamag of Branch
138.17
Meanwhile, this Court in G.R. No. 70054 promulgated on 29 August 1985 a
Resolution directing, among others, the consolidation in Branch 136 of the
RTC Makati of the following cases: (1) Civil Case No. 8108, the case for the
annulment of the conservatorship order; (2) Civil Case No. 9675, the case
seeking to annul the receivership order; and (3) Civil Case No. 10183, the
case seeking to annul the order for the liquidation of the bank.18
On 11 December 1991, this Court, in an En Banc  Decision penned by
Associate Justice Leo D. Medialdea, nullified MB Resolution No. 75 and
ordered the CB and its MB to reorganize the bank and allow it to resume
business.19

On 6 July 1993, during the pendency of the three consolidated cases,
Republic Act (R.A.) No. 7653, or the New Central Bank Act of 1993, took
effect. Under the new law, the CB was abolished and, in its stead, the BSP
was created. The new law also created the CB-BOL for the purpose of
administering and liquidating the CB's assets and liabilities,20 not all of which
had been transferred to the BSP.21
Pursuant to the Decision of this Court in G.R. No. 70054, the BSP reopened
Banco Filipino and allowed it to resume business on 1 July 1994.22
On 29 May 1995, pursuant to the recent development, Banco Filipino filed a
Motion to Admit Attached Amended/Supplemental Complaint23 in the three
consolidated cases - Civil Case Nos. 8108, 9675, and 10183 - before the
RTC. In its Amended/Supplemental Complaint, respondent bank sought to
substitute the CB-BOL for the defunct CB and its MB. Respondent also
aimed to recover at least ₱18 billion in actual damages, litigation expenses,
attorney's fees, interests, and costs of suit against petitioner and individuals
who had allegedly acted with malice and evident bad faith in placing the
bank under conservatorship and eventually closing it down in 1985.24
The trial court, through an Order dated 29 March 1996, granted the Motion
to Admit filed by Banco Filipino and accordingly admitted the latter's
Amended/Supplemental Complaint. Consequently, the CB-BOL was
substituted for the defunct CB in respondent's civil cases, which are still
pending with the RTC.25
On 25 September 2003, or more than 10 years from the enactment of R.A.
7653, Banco Filipino again filed a Motion to Admit Second
Amended/Supplemental Complaint26 in the consolidated civil cases before
the RTC. In that Second Amended/Supplemental Complaint,27 respondent
sought to include the BSP and its MB - "the purported successor-in-interest
of the old CB"28 - as additional defendants based on the latter's alleged acts
or omissions as follows:
1. The BSP and the MB refused to grant Banco Filipino a universal banking
license, unless it complied with their stringent conditions intended to further
deplete its resources, contrary to the provisions of the Memorandum of
Agreement the parties entered into on 20 December 1999.29
2. The BSP and the MB engaged in a smear campaign against Banco
Filipino intended to undermine the trust and confidence of its depositors and
the public in general.30
18
3. With the objective of gaining control of respondent bank, the BSP
disqualified a member of the former' s board of directors.31
4. The BSP and its MB conspired with a group of minority stockholders of
Banco Filipino to institute a case against respondent and thereby place it
under a state of receivership or conservatorship or under a management
committee.32
5. The demands of Banco Filipino for an out-of-court settlement of its
damage claims against the BSP have gone unheeded and have resulted in
burgeoning litigation expenses and other damages, for which respondent
continues to suffer as a result of prolonged litigation.33
Banco Filipino claimed that the BSP employed "coercive measures"34 that
forced respondent to enter into a Memorandum of Agreement (MOA)
regarding the collection of advances extended to the latter by the defunct
CB. In addition, respondent also alleged that its present dealings with the
BSP and the MB have become increasingly difficult, especially in obtaining
favorable actions on its requests and other official dealings.35
Banco Filipino's Motion to Admit its Second Amended/Supplemental
Complaint was opposed by the CB-BOL based on the following grounds:
1. Banco Filipino's Second Amended/Supplemental Complaint was not
supported by a board resolution that authorized it to file the amended or
supplemental complaint.
2. The second supplemental complaint raised new and independent causes
of action against a new party- the BSP - which was not an original party.
3. The second supplemental complaint was violative of the rule on the
joinder of causes of action, because it alleged those that did not arise from
the same contract, transaction or relation between the parties - as opposed
to those alleged in the complaint sought to be amended or supplemented -
and differed from the causes of action cited in the original Complaint.
4. The admission of the second supplemental complaint would expand the
scope of the dispute in the consolidated civil cases to include new causes of
action against new parties like the BSP, resulting in a delay in the resolution
of the cases.36

On 27 January 2004, the RTC, through an Order penned by Presiding Judge
Rebecca R. Mariano, granted the Motion to Admit Banco Filipino's Second
Amended/Supplemental Complaint.37 The CB-BOL moved for the
reconsideration of the trial court's Order,38 but the motion was denied in an
Order dated 20 July 2004.39
On 1 October 2004, petitioner CB-BOL filed with the CA a Petition
for Certiorari under Rule 65, docketed as CA-G.R. SP No. 86697.40 It
questioned the propriety of the RTC's Order admitting Banco Filipino's
Second Amended/Supplemental Complaint and committing grave abuse of
discretion in the process. Reiterating the grounds stated in its Opposition to
the Motion to Admit the Second Amended/Supplemental Complaint,
petitioner contended that the complaint consisted of, among others, an
improper joinder of parties and other issues that were entirely different from
those raised in the original complaint.41
On 27 January 2006, the CA dismissed the CB-BOL's Petition and
affirmed in toto  the trial court's Order admitting the Second
Amended/Supplemental Complaint.42
The appellate court ruled that the old CB continued to exist and remained a
defendant in the consolidated civil cases, albeit  under a new name: CB-
BOL.
It also ruled that, pursuant to R.A. 7653, the BSP was the successor-in-
interest of the old CB. Further, with the transfer of assets from the CB to the
BSP during the pendency of the subject civil cases, the latter now became a
transferee pendente lite.  Therefore, the CA concluded that there were no
new parties impleaded in the civil cases when the Second
Amended/Supplemental Complaint was admitted by the trial court.43
The CA further sustained the RTC's ruling that respondent Banco Filipino did
not raise new issues against petitioner CB-BOL or seek new reliefs or claim
new damages from the latter. Supposedly, respondent merely sought the
addition of the BSP and its MB as parties-defendants in the consolidated
civil case, as they were the successors-in-interest of the defunct CB and its
MB.44
The assailed CA Decision also attributed to the CB-BOL the apparent delay
in the resolution of the current dispute, based on the number
of certiorari cases the latter had filed with the CA and the Supreme Court
since the commencement of those cases.45
19
On 16 February 2006, petitioner filed a Motion for Reconsideration seeking
the reversal of the Decision dated 27 January 2006 in CA-G.R. SP No.
86697.46 On 27 June 2006, the CA denied the Motion after finding no
"plausible reason" to depart from its assailed Decision.47
Petitioner CB-BOL now comes to this Court via a Petition for Review
on Certiorari. It assails the Decision of the appellate court in CA-G.R. SP
No. 86697, which affirmed in toto the trial court's Order admitting the Second
Amended/Supplemental Complaint of Banco Filipino. Specifically, petitioner
raises the following arguments:48
I.
THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURT'S
ORDER ADMITTING RESPONDENT'S SECOND
AMENDED/SUPPLEMENTAL COMPLAINT AGAINST THE BSP, DESPITE
THE FACT THAT THE PARTIES, SUBJECT MATTERAND CAUSES OF
ACTION ASSERTED THEREIN ARE DIFFERENT FROM AND TOTALLY
UNRELATED TO RESPONDENT'S CAUSES OF ACTION UNDER THE
FIRST AMENDED SUPPLEMENTAL COMPLAINT AGAINST THE
DEFUNCT CB.
xxxx
II.
THE COURT OF APPEALS ERRED IN REDUCING THE ADMISSION OF
THE SECOND AMENDED/SUPPLEMENTAL COMPLAINT TO THE MERE
AMENDMENT OF A PLEADING "TO SUBSTITUTE OR JOIN A
TRANSFEREE PENDENTE LITE"  UNDER SEC. 19, RULE 3 OF THE
REVISED RULES OF COURT x x x.
xxxx
III.
THE COURT OF APPEALS ERRED IN UPHOLDING THE TRIAL COURT'S
RULING THAT THE OLD CB CONTINUES TO EXIST AS PETITIONER CB-
BOL. PETITIONER IS A SEPARATE, DISTINCT AND INDEPENDENT
ENTITY FROM THE DEFUNCT CB WHICH HAS BEEN ABOLISHED UPON
THE ENACTMENT OF THE NEW CENTRAL BANK ACT.

IV.
PETITIONER'S PLEA AGAINST THE ADMISSION OF RESPONDENT'S
SECOND AMENDED/SUPPLEMENTAL COMPLAINT IS NOT A DILATORY
TACTIC OR A MERE RESORT TO TECHNICALITY; RATHER, IT IS AN
EARNEST APPEAL FOR PETITIONER TO BE FREE FROM A USELESS
AND WASTEFUL LEGAL CONTEST WHICH SHOULD BE THE SUBJECT
OF A SEPARATE CASE SOLELY BETWEEN THE RESPONDENT AND
THE BSP. IT IS A PLEA BY PETITIONER TO SECURE A JUST, SPEEDY
AND INEXPENSIVE DETERMINATION OF RESPONDENT'S CASE
AGAINST IT FOR ACTS SUPPOSEDLY PERPETRATED BY THE OLD CB
IN 1984-1985 FOR WHICH IT IS SUPPOSEDLY THE SUCCESSOR-IN-
INTEREST.
THE ISSUE
The crucial issue to be resolved here is whether the RTC erred in admitting
Banco Filipino's Second Amended/Supplemental Complaint in the
consolidated civil cases before it.
OUR RULING
The Petition of the CB-BOL is impressed with merit.
It must be noted at this point that the BSP and its MB are not yet required to
answer the RTC Complaint, as the issue of their addition as parties is yet to
be settled. Nevertheless, whether or not the BSP and its MB are transferees
or successors-in-interest of the CB and its MB, the former's addition or
substitution as parties to this case must comply with the correct procedure
and form prescribed by law.
The second amendment of the
Complaint was improper.
Rule 10 of the 1997 Revised Rules of Court allows the parties to amend their
pleadings (a) by adding or striking out an allegation or a party's name; or (b)
by correcting a mistake in the name of a party or rectifying a mistaken or an
inadequate allegation or description in the pleadings for the purpose of
determining the actual merits of the controversy in the most inexpensive and
expeditious manner.49
20
The prevailing rule on the amendment of pleadings is one of liberality,50 with
the end of obtaining substantial justice for the parties. However, the option of
a party-litigant to amend a pleading is not without limitation. If the purpose is
to set up a cause of action not existing at the time of the filing of the
complaint, amendment is not allowed. If no right existed at the time the
action was commenced, the suit cannot be maintained, even if the right of
action may have accrued thereafter.51
In the instant case, the causes of action subject of the Second
Amended/Supplemental Complaint only arose in 1994 - well after those
subject of the original Complaint. The original Complaint was based on the
alleged illegal closure of Banco Filipino effected in 1985 by the defunct CB
and its MB.
On the other hand, the Second Amended/Supplemental Complaint stemmed
from the alleged oppressive and arbitrary acts committed by the BSP and its
MB against Banco Filipino after respondent bank was reopened in 1994.
Since the acts or omissions allegedly committed in violation of respondent's
rights are different, they constitute separate causes of action.52
In its Comment53 on the present Petition, Banco Filipino contends, as the
RTC and the CA similarly ruled, that the Second Amended/Supplemental
Complaint does not alter the substance of the original demand, change the
cause of action against the original defendants, or seek additional or new
reliefs.54 Rather, respondent contends that the only change sought is the
addition of the BSP and its MB as parties-defendants. Respondent further
argues that what petitioner erroneously views as new causes of action are
merely demonstrations to show that the BSP has come to adopt the same
repressive and oppressive attitude of the latter's alleged predecessor-in-
interest.55
This contention is, however, belied by a closer examination of the Second
Amended/Supplemental Complaint, in which respondent asks the Court to
order the defendants to pay, among others, actual damages of at least
₱18.8 billion "as a consequence of the acts herein complained of."56
The "acts complained of'' cover not just the conservatorship, receivership,
closure, and liquidation of Banco Filipino in 1984 and 1985, but also the
alleged acts of harassment committed by the BSP and its MB after
respondent bank was reopened in 1994. These acts constituted a whole new
cause of action. In effect, respondent raised new causes of action and
asserted a new relief in the Second Amended/Supplemental Complaint. If it
is admitted, the RTC would need to look into the propriety of two entirely

different causes of action. This is not countenanced by law, as explained in
the preceding paragraphs.
The second supplemental pleading
was improper.
Rule 10 of the 1997 Revised Rules of Court allows the parties to supplement
their pleadings by setting forth transactions, occurrences, or events that
happened since the date of the pleading sought to be supplemented.57
However, the option of a party-litigant to supplement a pleading is not
without limitation. A supplemental pleading only serves to bolster or add
something to the primary pleading. Its usual function is to set up new facts
that justify, enlarge, or change the kind of relief sought with respect to the
same subject matter as that of the original complaint.58
This Court ruled in Leobrera v. CA59 that a supplemental complaint must be
founded on the same cause of action as that raised in the original complaint.
Although in Planters Development Bank v. LZK Holdings & Development
Corporation,60 the Court clarified that the fact that a supplemental pleading
technically states a new cause of action should not be a bar to its allowance,
still, the matter stated in the supplemental complaint must have a relation to
the cause of action set forth in the original pleading. That is, the matter must
be germane and intertwined with the cause of action stated in the original
complaint so that the principal and core issues raised by the parties in their
original pleadings remain the same.61
In the instant case, Banco Filipino, through the Second
Amended/Supplemental Complaint, attempted to raise new and different
causes of action that arose only in 1994.1a\^/phi1 These causes of action
had no relation whatsoever to the causes of action in the original Complaint,
as they involved different acts or omissions, transactions, and parties. If the
Court admits the Second Amended/Supplemental Complaint under these
circumstances, there will be no end to the process of amending the
Complaint. What indeed would prevent respondent from seeking further
amendments by alleging acts that may be committed in the future?
For these reasons, whether viewed as an amendment or a supplement to
the original Complaint, the Second Amended/Supplemental Complaint
should not have been admitted.
21
The amendment/supplement violates
the rules on joinder of parties and
causes of action.
Moreover, the admission of the Second Amended/Supplemental Complaint
is inappropriate because it violates the rule on joinder of parties and causes
of action. If its admission is upheld, the causes of action set forth therein
would be joined with those in the original Complaint. The joinder of causes of
action is indeed allowed under Section 5, Rule 2 of the 1997 Rules of
Court;62 but if there are multiple parties, the joinder is made subject to the
rules on joinder of parties under Section 6, Rule 3.63 Specifically, before
causes of action and parties can be joined in a complaint involving multiple
parties, (1) the right to relief must arise out of the same transaction or series
of transactions and (2) there must be a question of law or fact common to all
the parties.64
In the instant case, Banco Filipino is seeking to join the BSP and its MB as
parties to the complaint. However, they have different legal personalities
from those of the defunct CB and its MB: firstly, because the CB was
abolished by R.A. 7653, and the BSP created in its stead; and secondly,
because the members of each MB are natural persons. These factors make
the BSP and its MB different from the CB and its MB. Since there are
multiple parties involved, the two requirements mentioned in the previous
paragraph must be present before the causes of action and parties can be
joined. Neither of the two requirements for the joinder of causes of action
and parties was met.
First, the reliefs for damages prayed for by respondent did not arise from the
same transaction or series of transactions. While the damages prayed for in
the first Amended/Supplemental Complaint arose from the closure of Banco
Filipino by the defunct CB and its MB, the damages prayed for in the Second
Amended/Supplemental Complaint arose from the alleged acts of
oppression committed by the BSP and its MB against respondent.
Second, there is no common question of fact or law between the parties
involved. The acts attributed by Banco Filipino to the BSP and its MB pertain
to events that transpired after this Court ordered the respondent bank's
reopening in 1994. These acts bear no relation to those alleged in the
original Complaint, which related to the propriety of the closure and
liquidation of respondent as a banking institution way back in 1985.
 22

The only common factor in all these allegations is respondent bank itself as
the alleged aggrieved party. Since the BSP and its MB cannot be joined as
parties, then neither can the causes of action against them be joined.

This ruling is confined to

procedural issues.

As mentioned at the outset, the Court will confine its ruling on this Petition to
procedural issues pertaining to the propriety of the admission of the Second
Amended/Supplemental Complaint. We will not address the issues raised by
petitioner with regard the findings of the trial and the appellate court that the
BSP is the successor-in-interest of the defunct CB65 and is considered a
transferee pendente lite66 in the civil cases. These findings relate to the
BSP's potential liability for the causes of action alleged in the original
Complaint. At issue here is Banco Filipino's attempt, through the Second
Amended/Supplemental Complaint, to hold the BSP and its MB liable for
causes of action that arose in 1994. Respondent is not without any relief. If
the RTC finds that the BSP was indeed a transferee pendente lite,  the
failure to implead it would not prevent the trial court from holding the BSP
liable, should liability now attach for acts alleged in the original Complaint.67

WHEREFORE, the Petition of the CB-BOL is GRANTED, and the Decision

of the Court of Appeals dated 27 January 2006 and Resolution dated 27
June 2006 in CA-G.R. SP No. 86697 are hereby REVERSED and SET
ASIDE.

The RTC National Capital Judicial Region, Makati City, Branch 136 is
hereby DIRECTED to proceed with the trial of this case with utmost
dispatch.

SO ORDERED.

G.R. No. 80001 February 27, 1989
CARLOS LEOBRERA, petitioner
vs.
THE COURT OF APPEALS and BANK OF THE PHILIPPINE
ISLANDS, respondents.
Bengzon, Zarraga, Narciso, Cudala, Pescon & Bengson for petitioner.
Leoner, Ramirez & Associates for respondent BPI.
CORTES,  J.:
The crux of the present petition for review on certiorari is the propriety of the
admission by the trial court of a supplemental complaint filed by petitioner.
The undisputed facts of the case are as follows:
Sometime in 1980, petitioner Carlos Leobrera (Leobrera for short) was
granted an P 800,000.00 credit facility by private respondent Bank of the
Philippine Islands (BPI for short) consisting of the following: (a) P 200,000.00
revolving promissory note line at 10% interest p.a.; (b) P 100,000.00 export
advance line at 12% interest p.a.; and, (c) P 500,000.00 Industrial
Guarantee Loan Fund (IGLF) loan at 12% interest p.a. The facility was
granted as part of an amicable settlement between BPI and Leobrera
wherein the latter agreed to drop his claims for damages against the former
for its alleged failure to deliver on time three export letters of credit opened in
Leobrera's favor [Record, pp. 79 and 92.] The credit facility granted was
secured by two real estate mortgages dated 20 November 1976 and 8
February 1980. In 1984, the facility was entirely converted into a revolving
promissory note line at 26% interest p.a. and set on a floating rate basis the
year after. The line was last renewed on 21 March 1986 evidenced by two
90-day promissory notes numbered 017- 86/0233-0 and 017-86/ 0234-8 for
P 500,000.00 and P 300,000.00 respectively [Rollo, pp. 67-68.]
Aside from the abovementioned credit facility, Leobrera also obtained from
BPI a separate three-year term loan in the amount of P 500,000.00
evidenced by Promissory Note No. 01785/0224-0 dated 15 November 1985
[Rollo, p. 66.] This three-year term loan was secured by a third real estate
mortgage dated 23 October 1985.
23
Upon maturity of the 90-day notes [Rollo pp. 67-681 BPI and Leobrera
negotiated, albeit unsuccessfully, on the terms of their renewal. No
agreement having been reached by them, BPI demanded the full payment of
the loan. Leobrera failed to settle his loan account thus BPI prepared to
foreclose the real estate mortgages securing the same. Before BPI could
institute foreclosure proceedings however, Leobrera filed on 6 January 1987
a complaint for damages with a prayer for the issuance of a writ of
preliminary injunction seeking to enjoin BPI from foreclosing the mortgages,
docketed as Civil Case No. 15644 of the Regional Trial Court of Makati,
Metro Manila, Branch CXLV.
The trial court issued an order restraining BPI from foreclosing the real
estate mortgages securing the 90 day loans and, after hearing, issued a writ
of preliminary injunction.
Meanwhile, on 9 February 1987, the bank wrote Leobrera claiming that he
failed to pay the amortization due on the three-year term loan, as a result of
which, BPI opted to accelarate the maturity of the loan and called the entire
loan due and demandable. Leobrera likewise failed to remit the amount due
and BPI thus threatened to foreclose the real estate mortgage securing the
loan.
Before BPI could foreclose the mortgage, petitioner filed with the trial court
on 11 March 1987 a "Motion to File Supplemental Complaint," attaching
thereto the supplemental complaint which prayed for the issuance of an
injunction to restrain BPI from foreclosing the third mortgage. The next day,
12 March 1987, the trial court granted Leobrera's motion to file the
supplemental complaint and issued a restraining order enjoining BPI from
proceeding with any "Legal, court or other action" arising from the
promissory note evidencing the three-year term loan. That order was served
on BPI on 13 March 1987 [Rollo, p. 58.]
Contesting the validity of the 12 March 1987 order, BPI filed a motion to set
it aside but the motion was denied by the trial court on 31 March 1987.
BPI then filed a petition for certiorari and prohibition with a prayer for
preliminary injunction with the Court of Appeals, seeking to annul the 12
March 1987 court order issued by the trial court and asking that the latter be
prohibited from hearing the petition for injunction prayed for in the
supplemental complaint.
Before the Court of Appeals could act on BPI's petition however, the trial
court granted the injunction prayed for.

On 23 June 1987, the Court of Appeals gave due course to BPI's petition
and enjoined the trial judge from enforcing his order dated 12 March 1987.
On 29 July 1987, the Court of Appeals issued a writ of preliminary injunction
in favor of BPI.
On 21 September 1987, the Court of Appeals rendered a decision in favor of
BPI, the dispositive portion of which reads as follows:
WHEREFORE, the petition is hereby granted. The order of
the respondent Judge dated March 12, 1987 is declared
null and void and set aside.
Let the records of this case be remanded to the Court for
further proceedings on the original complaint in Civil Case
No. l5644.
Costs against the private respondents.
SO ORDERED. [Rollo, p. 25.]
From the foregoing decision of the Court of Appeals, Leobrera filed the
instant petition for review with prayer for the issuance of a writ of preliminary
injunction.
On 28 October 1987, the Court issued a temporary restraining order
enjoining BPI "from foreclosing the three (3) properties of the petitioner
herein ... [Rollo, p. 41.] However, by this time, BPI had already foreclosed
two of the properties [Rollo, p. 45.] On 24 February 1988 the Court gave due
course to the petition and the parties submitted their respective memoranda.
Petitioner filed two motions asking for the extension of suspension of the
period to redeem the properties but the Court in a resolution dated 21
October 1988 denied said motions as well as petitioner's motion for
reconsideration on 23 January 1989. The Court merely noted a subsequent
manifestation and motion praying that the foreclosure be declared null and
void, as it was in effect a second motion for reconsideration.
In assailing the decision of the Court of Appeals, petitioner assigns as errors
the following:
I "Motion to File the Supplemental Complaint" on 11 March 1987 attaching
24
THE HONORABLE COURT OF APPEALS ERRED IN STATING THAT THE
MOTION TO ADMIT SUPPLEMENTAL COMPLAINT FILED BY HEREIN
PETITIONER DID NOT CONTAIN A NOTICE OF HEARING OR THAT THE
SAME IS DEFECTIVE.
II
THAT THE COURT OF APPEALS ERRED IN CONSIDERING THAT THE
SUPPLEMENTAL COMPLAINT INVOLVES A NEW OR DISTINCT
MATTER WHICH CANNOT BE JOINED WITH THE ORIGINAL
COMPLAINT.
III
THAT THE COURT OF APPEALS ERRED IN ISSUING THE INJUNCTION
PRAYED FOR BY RESPONDENTS AND CONSEQUENTLY, GRAVE AND
IRREPARABLE INJURY RESULTED TO THE DAMAGE AND PREJUDICE
OF HEREIN PETITIONER. [Rollo, p. 6.]
The main issue here is whether or not the Court of Appeals erred in holding
that the trial court abused its discretion in admitting the supplemental
complaint. Section 6 of Rule 10 of the Rules of Court governing the
admission of supplemental pleadings states:
Section 6. Matters subject of 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 happened since the date of
the pleading sought to be supplemented. If the court
deems it advisable that the adverse party should plead
thereto, it shall so order, specifying the time therefor.
The above rule expressly provides that the Court may allow a party upon
motion to serve a supplemental pleading after reasonable notice has been
given the other party. The question here then is whether that requirement of
a "reasonable notice" has been complied with.
The Court of Appeals found, undisputed by petitioner, that petitioner filed the
thereto a copy of the supplemental complaint. A copy of the motion was sent
to BPI by registered mail on the same day but was received by the latter only

on 13 March 1987 [Record, p. 271.] A day earlier however, 12 March 1987,
the trial court had already issued an order granting the motion and admitted
the supplemental complaint "in the interest of sound administration of
justice" [Rollo, p. 69.] The trial judge likewise issued a temporary restraining
order to enjoin BPI from proceeding with "Any legal, court or other action
against plaintiff (Leobrera) arising from Promissory Note No. 017-224-0"
[Ibid.]
It is difficult to ascribe as "reasonable' the above described manner in which
BPI was apprised of the proceedings relative to the supplemental complaint.
The undue haste which characterized the trial courts admission of the
supplemental complaint is at once apparent as no notice had as yet been
received by BPI when the trial court issued the 12 March 1987
order granting the motion to file the supplemental complaint and restraining
BPI from foreclosing the mortgage. BPI learned of the existence of the
motion and the order granting it only on 13 March 1987. By then it was too
late for it to contest the motion.
The arbitrariness of the trial court's admission of the supplemental complaint
is brought to the fore when it is considered that the motion to file the
supplemental complaint contained an invalid notice of hearing and lacked
proof of its service as required by Section 4, 5 and 6 of Rule 15 of the
Revised Rules of Court. This is apparent from a cursory reading of said
"Notice of Hearing" to wit:
NOTICE OF HEARING
The Clerk of Court
GREETINGS:
Please submit the foregoing motion to the Honorable
Court immediately upon receipt thereof for its due
consideration and approval.
(Sgd.) ISIDRO C. ZARRAGA
Copy furnished:
Atty. Alfonso B. Verzosa
Counsel for the Defendant
15th Floor, BPI Family Bank Center
25
8753 Paseo de Roxas
Makati, Metro Manila
[Rollo, p. 73.]
The notice of hearing is intended to prevent surprise and to afford the
adverse party a chance to be heard before the motion is resolved by the trial
court. While the court has said that a literal observance of the notice
requirements in Sections 4, 5 and 6 of Rule 15 is not necessary, a
seasonable service of a copy of the motion on adverse party or counsel with
a notice of hearing indicating the time and place of hearing of the motion are
mandatory requirements that cannot be dispensed with as these are the
minimum requirements of procedural due process [Ibasan v. Republic, G.R.
No. 48528, April 25, 1980, 97 SCRA 101; Estipona v. Navarro, G.R. No. L-
41825, January 30, 1976, 69 SCRA 285; Manila Surety and Fidelity Co.,
Inc., v. Bath Construction and Co., G.R. No. 16636, June 24, 1965, 14
SCRA 435.]
It is evident from the notice that no time and place of hearing of the motion is
indicated. Neither does the record reveal that there was proof of service
attached to the motion. The minimum requirements of procedural due
process not having been satisfied by the notice, the motion to which it was
attached is thus a mere scrap of paper not entitled to any cognizance by the
trial court. The Court of Appeals thus committed no reversible error in
annulling the 12 March 1987 order of the trial court tainted as it was with
clear grave abuse of discretion.
As to the supplemental complaint, what likewise militates against its
admission is the fact that the matters involved therein are entirely different
from the causes of action mentioned in the original complaint.
A supplemental complaint should, as the name implies, supply only
deficiencies in aid of an original complaint [British Traders Insurance
Company v. Commissioner of Internal Revenue, G.R. No. L-20501, April
30,1965,13 SCRA 728.] It should contain only causes of action relevant and
material to the plaintiff's right and which help or aid the plaintiff's right or
defense [De la Rama Steamship Co., Inc. v. National Development
Company, G.R. No. L-15659, November 30,1962,6 SCRA 775.] The
supplemental complaint must be based on matters arising subsequent to the
original complaint related to the claim or defense presented therein, and
founded on the same cause of action. It cannot be used to try a new matter
or a new cause of action [See Randolph v. Missouri-Kansas-Texas R Co.,

D.C. Mo. 1948, 78 F. Supp. 727, Berssenbrugge v. Luce Mfg. Co., D.C. Mo.
1939,30 F. Supp. 101.]
While petitioner would persuade this Court that the causes of action are
interrelated, the record reveals otherwise. The record shows that petitioner's
main cause of action in the original complaint filed in Civil Case No. 15644
concerned BPI's threat to foreclose two real estate mortgages securing the
two 90 day promissory notes executed by petitioner in 1986. Petitioner
alleges that this threatened foreclosure violated the terms of the 1980
amicable settlement between BPI and petitioner.
The supplemental complaint on the other hand alleged acts of harassment
committed by BPI in unreasonably opting to declare petitioner in default and
in demanding full liquidation of the 1985 three-year term loan. This three-
year term loan, as previously mentioned, was entirely distinct and separate
from the two promissory notes. It was independent of the 1980 amicable
settlement between petitioner and BPI which gave rise to the credit facility
subject of the original complaint. Although there is Identity in the remedies
asked for in the original and supplemental complaints, i.e. injunction,
petitioner's subsequent cause of action giving rise to the claim for damages
in the supplemental complaint is unrelated to the amicable settlement which
brought about the grant of the credit facilities, the breach of which settlement
is alleged to be the basis of the original complaint. Petitioner himself in his
supplemental complaint admits this. The supplemental complaint states inter
alia:
xxx xxx xxx
2. That aside from the loan of P 800,000.00 which is part
and parcel of the amicable settlement entered into by
defendant for its gross negligence and bad faith in failing
to notify the plaintiff of at least three letters of credit which
as a result expired without having been served by the
plaintiff, the plaintiff obtained from the defendant another
loan of P 500,000.00 covered by PN 17-85/0224-0 which
was executed on or about November 15, 1985 payable
within a period of three years from the date of execution
with a monthly amortization of P 41,666.66....
xxx xxx xxx
4. That on or about February 12, 1987, the plaintiff
received a letter from defendant advising the former that
26
because of the plaintiffs alleged failure to meet the
amortization due on February 9, 1987, of PN 017-0224-0
for P 500,000.00 defendant had exercised its option to
accelerate the maturity of the account and demanded the
full liquidation of the balance of the account which was P
333,333.32 plus interest and penalties on or before
February 27, 1987.
xxx xxx xxx
6. That on November 12, 1986, Darlene Shells made a
remittance to the defendant in the amount of $ 8,350.94
with the plaintiff as beneficiary which said amount if
credited to the plaintiff's bank account with the defendant
would have meant an additional P 160,000.00, more or
less in said plaintiff's account with the defendant bank and
would have been more that sufficient to pay off the P
54,000.00 amortization due on February 9, 1987;
7. That the defendant, however, refused to accept the
remittance on the flimsy excuse that the name of the
beneficiary in the remittance was not Carfel Shell Export
but Car Sales Shell Export and made an empty motion of
trying to verify who was the supposed beneficiary when
the defendant could very well have known and found out
that the beneficiary was indeed Carfel Shell Export since
plaintiff bad export business transaction with defendant for
ten or so years and plaintiff had been asking the
defendant bank of said remittance of Darlene Shells many
times;
8. That had the defendant accepted said amount of $
8,350.94 plaintiffs account would have increased by P
190,000.00 as of November 13, 1986 which would have
been more that enough to cover the 54,000.00 due on
February 9, 1987;
9. That the defendant thru malicious acts and bad faith
refused to accept the $ 8,350.94 for the reason adverted
to above.
xxx xxx xxx
 27

[Rollo, pp. 74-76.]

As the allegations reveal, the P 500,000.00 three-year term loan is a

transaction independent of the P 800,000.00 credit facility and BPI's
questioned act of threatening to foreclose the properties securing said loan
was the result of an alleged default by petitioner in the payment of the
amortization due for 9 February 1987 and not because of any circumstance
related to the 1980 amicable settlement.

The two causes of action being entirely different, the latter one could not be
successfully pleaded by supplemental complaint.

WHEREFORE, in view of the foregoing, the petition is hereby DENIED. The

temporary restraining order issued on 28 October 1987 is hereby LIFTED.

SO ORDERED.

Gutierrez, Jr., and Bidin, JJ., concur.


G.R. No. 148120             October 24, 2003
RODRIGO QUIRAO, MONICA QUIRAO, ROBERTO QUIRAO,
EDILBERTO QUIRAO, JESUS GOLE, GERARDO QUIRAO, LAMBERTO
VALDEZ & FEDERICO QUIRAO, petitioners,
vs.
LYDIA QUIRAO & LEOPOLDO QUIRAO, JR., respondents.
DECISION
PUNO, J.:
The issue in this Petition for Review on Certiorari under Rule 45 of the
Revised Rules of Court is whether Branch 21 of the Regional Trial Court of
Mambusao, Capiz should admit the amended answer of petitioners.
Respondents Lydia Quirao and Leopoldo Quirao, Jr. filed before the trial
court a complaint for recovery of possession, ownership and damages
against petitioners Rodrigo Quirao, Monica Quirao, Roberto Quirao,
Edilberto Quirao, Gerardo Quirao, Jesus Gole, Lamberto Valdez, Federico
Quirao and Avelino Ngitngit.1 Respondents claimed that the late Leopoldo
Quirao was the owner of the sugarland, subject matter of the controversy.
Respondent Lydia is his widow, while Leopoldo, Jr. is his legitimate son and
compulsory heir. They alleged that in 1988, petitioners forcibly took
possession of the sugarland and appropriated for themselves its income.
They prayed for the issuance of a writ of Preliminary Mandatory Injunction
for petitioners to vacate the property.2
In their Answer, petitioners claimed that the subject property was owned by
their grandfather, Segundo Clarito; that petitioner Rodrigo Quirao had been
in possession of the land even before the Second World War; and that
Leopoldo Quirao never possessed it. They further alleged that petitioners
Jesus Gole, Avelino Ngitngit and Lamberto Valdez were recipients of
Emancipation Patents issued by the government.3
A few months after their Answer, petitioners filed a Motion to Dismiss the
complaint citing a Deed of Extra-Judicial Partition with Sale of the subject
property purportedly executed by respondents in favor of a certain Carlito de
Juan ("de Juan"). Petitioners contended that since respondents no longer
own the property, they lack the standing to file the complaint.4 They further
alleged that it was only after they filed their Answer that they learned of the
28
existence of the deed. The trial court denied the motion to dismiss for lack of
merit.5
The case underwent pre-trial. Petitioners' second counsel, who took over the
case, filed an amended pre-trial brief which reiterated the allegation that
respondents were not the real parties in interest as they had sold the
property to de Juan. Trial ensued and after respondents rested their case,
petitioners filed a "Motion for Leave of Court to Admit Attached Amended
Answer."6 They sought the amendment of their Answer by adding the
alternative defense that even if respondents were the owners of the property
by inheritance from Leopoldo Quirao, they (respondents) executed a Deed
of Extra-Judicial Partition of Property with Sale in favor of de Juan. They
further claimed that in turn, de Juan sold part of the property to them.7 The
second sale appears to be evidenced by a Deed of Sale8 involving part of the
subject property executed by de Juan and petitioners. It also appears that
Rodrigo made a partial payment of ₱50,000.00, evidenced by the receipt
signed by de Juan.9
Respondents opposed the motion on the grounds that: (1) it is dilatory and
(2) the amendments are substantial and cannot be allowed as the parties
have already undergone a pre-trial conference.10
The motion was again denied by the trial court. It ratiocinated that the
amendments will prejudice the respondents since they had already rested
their case and the alleged facts were already existing and known to the
petitioners when they filed their answer.11 Petitioners' motion for
reconsideration12 was likewise denied.13 1awphi1.nét
Petitioners repaired to the Court of Appeals which also dismissed their
petition for lack of merit. The appellate court ruled that the amendments are
basically the same issues raised in their motion to dismiss and are
substantial ones which may properly be refused. It cited Batara vs. Court of
Appeals,14 where we held that the negligence and ignorance of petitioners'
previous counsels cannot qualify as "transcendental matters" which can
outweigh technicalities.15 Petitioners filed a motion for reconsideration16 but
their efforts were in vain.17 Thus, this petition based on the following grounds:
A. THE OMISSION AND INACTION SEPARATELY AND
INDIVIDUALLY COMMITTED BY EACH OF PETITIONERS'
THREE PREVIOUS LAWYERS CONSTITUTE MERELY SIMPLE
NEGLIGENCE WHICH, AS A GENERAL RULE, SHOULD BIND
THEM. HOWEVER, WHEN PUT AND CONSIDERED TOGETHER,
SUCH OMISSION AND INACTION ARE TRANSFORMED INTO

AND COULD BE RIGHTFULLY CONSIDERED AS GROSS AND
RECKLESS AND, HENCE, SHOULD NOT AND COULD NEVER
BIND THEM. IT IS HUMBLY SUBMITTED THAT EVEN AT THIS
LATE STAGE OF THE PROCEEDING, THE AMENDMENTS
SOUGHT TO BE INTRODUCED IN THE ORIGINAL ANSWER
MAY STILL BE LAWFULLY ALLOWED; OTHERWISE,
PETITIONERS WOULD BE DEPRIVED OF THEIR PROPERTY
WITHOUT DUE PROCESS OF LAW;
B. IN THE HIGHER INTEREST OF SUBSTANTIAL JUSTICE, THE
AMENDMENTS SOUGHT TO BE INTRODUCED IN THE
ORIGINAL ANSWER SHOULD HAVE BEEN LIBERALLY
ALLOWED SINCE THIS COURSE OF ACTION WOULD RESULT
IN THE RESOLUTION OF THE CASE BELOW BASED ON PURE
MERITS, RATHER THAN ON PURE TECHNICALITY.
MOREOVER, THE RIGHTS OF RESPONDENTS COULD BE
AMPLY PROTECTED, AND WHATEVER DELAY HAS ALREADY
BEEN INCURRED IS NEVER SOLELY ATTRIBUTABLE TO
PETITIONERS;
C. THE COURT A QUO HAS LIBERALLY CONSTRUED THE
RULES IN FAVOR OF RESPONDENTS AND STRICTLY
CONSTRUED THEM AGAINST PETITIONERS; and
D. IN ITS DECISION, THE COURT OF APPEALS COMMITTED
THE FOLLOWING ERRORS: 1) IT RULED THAT THE MATTER
SOUGHT TO BE INTRODUCED IN THE ORIGINAL ANSWER IS
THE SAME ISSUE ALLEGED IN PETITIONERS' MOTION TO
DISMISS WHICH WAS DENIED BY THE COURT A QUO; 2) IT
FAILED TO DISCUSS THE THIRD GROUND EVEN AS THIS WAS
EXPLICITLY RAISED BEFORE IT; AND 3) IT APPLIED THE
JURISPRUDENCE LAID IN (sic) DOWN IN THE BATARA CASE.18
The Rules of Court allow amendments of pleadings as a matter of right
before a responsive pleading is served;19 otherwise, leave of court must first
be obtained.20
Our case law teaches us that amendments to pleadings are favored and
should be liberally allowed in furtherance of justice. This liberality is greatest
in the early stages of a lawsuit, decreases as it progresses, and changes at
times to a strictness amounting to a prohibition. Amendments are likewise
subject to the limitation that they are not dilatory.21 Thus, trial courts are
given the discretion to grant leave of court to file amended pleadings, and
29
their exercise of this discretion will normally not be disturbed on appeal,
unless there is evident abuse thereof.22
In the case at bar, petitioners filed their motion for leave of court to admit
amended answer only after respondents have rested their case. Petitioners
argue that the error was due to the oversight of the three previous counsels.
Petitioners' fourth counsel also claims that he learned of the alternative
defense late as his clients (petitioners herein) did not inform him of the Deed
of Sale.23 Allegedly, they relied on the advice of their previous counsels that
the said deed of sale "was a mere scrap of paper because it was not signed
by Carlito de Juan."24 Respondents contend that petitioners' motion is too
late in the day.
Petitioners' motion for admission of amended answer may be a little tardy
but this by itself is not a cause for its denial. Their amended answer alleges
that respondents no longer own the subject property having sold the same to
de Juan who, in turn, sold the property to petitioners. These allegations, if
correct, are vital to the disposition of the case at bar. The interest of justice
and equity demand that they be considered to avoid a result that is
iniquitous.1ªvvphi1.nét Truth cannot be barred by technical rules. For this
reason, our ruling case law holds that amendments to pleadings are
generally favored and should be liberally allowed in furtherance of justice so
that every case may so far as possible be determined on its real facts and in
order to prevent the circuity of action.25
We should always bear in mind that rules of procedure are mere tools
designed to facilitate the attainment of justice. Their strict and rigid
application especially on technical matters, which tends to frustrate rather
than promote substantial justice, must be avoided. Technicality, when it
deserts its proper office as an aid to justice and becomes its great hindrance
and chief enemy, deserves scant consideration from the courts.26
IN VIEW WHEREOF, the petition is GRANTED. Branch 21 of the Regional
Trial Court of Mambusao, Capiz is directed to admit the amended answer.
SO ORDERED.
Panganiban, Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.
G.R. No. 102858 July 28, 1997

THE DIRECTOR OF LANDS, Petitioner, v. COURT OF APPEALS and
TEODORO ABISTADO, substituted by MARGARITA, MARISSA,
MARIBEL, ARNOLD and MARY ANN, all surnamed
ABISTO, Respondents.
PANGANIBAN, J.:
Is newspaper publication of the notice of initial hearing in an original land
registration case mandatory or directory?
Statement of the Case
The Court of Appeals ruled that it was merely procedural and that the failure
to cause such publication did not deprive the trial court of its authority to
grant the application. But the Solicitor General disagreed and thus filed this
petition to set aside the Decision 1 promulgated on July 3, 1991 and the
subsequent Resolution 2 promulgated on November 19, 1991 by Respondent
Court of Appeals 3 in CA-G.R. CV No. 23719. The dispositive portion of the
challenged Decision reads: 4
WHEREFORE, premises considered, the judgment of dismissal appealed
from is hereby set aside, and a new one entered confirming the registration
and title of applicant, Teodoro Abistado, Filipino, a resident of Barangay 7,
Poblacion Mamburao, Occidental Mindoro, now deceased and substituted
by Margarita, Marissa, Maribel, Arnold and Mary Ann, all surnamed
Abistado, represented by their aunt, Miss Josefa Abistado, Filipinos,
residents of Poblacion Mamburao, Occidental Mindoro, to the parcel of land
covered under MSI (IV-A-8) 315-D located in Poblacion Mamburao,
Occidental Mindoro.
The oppositions filed by the Republic of the Philippines and private oppositor
are hereby dismissed for want of evidence.
Upon the finality of this decision and payment of the corresponding taxes
due on this land, let an order for the issuance of a decree be issued.
The Facts
On December 8, 1986, Private Respondent Teodoro Abistado filed a petition
for original registration of his title over 648 square meters of land under
Presidential Decree (PD) No. 1529. 5 The application was docketed as Land
Registration Case (LRC) No. 86 and assigned to Branch 44 of the Regional
30
Trial Court of Mamburao, Occidental Mindoro. 6 However, during the
pendency of his petition, applicant died. Hence, his heirs - Margarita,
Marissa, Maribel, Arnold and Mary Ann, all surnamed Abistado - represented
by their aunt Josefa Abistado, who was appointed their guardian ad litem,
were substituted as applicants.
The land registration court in its decision dated June 13, 1989 dismissed the
petition "for want of jurisdiction." However, it found that the applicants
through their predecessors-in-interest had been in open, continuous,
exclusive and peaceful possession of the subject land since 1938.
In dismissing the petition, the trial court reasoned: 7
. . . However, the Court noted that applicants failed to comply with the
provisions of Section 23 (1) of PD 1529, requiring the Applicants to publish
the notice of Initial Hearing (Exh. "E") in a newspaper of general circulation
in the Philippines. Exhibit "E" was only published in the Official Gazette
(Exhibits "F" and "G"). Consequently, the Court is of the well considered
view that it has not legally acquired jurisdiction over the instant application
for want of compliance with the mandatory provision requiring publication of
the notice of initial hearing in a newspaper of general circulation.
The trial court also cited Ministry of Justice Opinion No. 48, Series of 1982,
which in its pertinent portion provides: 8
It bears emphasis that the publication requirement under Section 23 [of PD
1529] has a two-fold purpose; the first, which is mentioned in the provision of
the aforequoted provision refers to publication in the Official Gazette, and is
jurisdictional; while the second, which is mentioned in the opening clause of
the same paragraph, refers to publication not only in the Official Gazette but
also in a newspaper of general circulation, and is procedural. Neither one
nor the other is dispensable. As to the first, publication in the Official Gazette
is indispensably necessary because without it, the court would be powerless
to assume jurisdiction over a particular land registration case. As to the
second, publication of the notice of initial hearing also in a newspaper of
general circulation is indispensably necessary as a requirement of
procedural due process; otherwise, any decision that the court may
promulgate in the case would be legally infirm.
Unsatisfied, private respondents appealed to Respondent Court of Appeals
which, as earlier explained, set aside the decision of the trial court and
ordered the registration of the title in the name of Teodoro Abistado.

The subsequent motion for reconsideration was denied in the challenged CA
Resolution dared November 19, 1991.
The Director of Lands represented by the Solicitor General thus elevated this
recourse to us. This Court notes that the petitioner's counsel anchored his
petition on Rule 65. This is an error. His remedy should be based on Rule 45
because he is appealing a final disposition of the Court of Appeals. Hence,
we shall treat his petition as one for review under Rule 45, and not
for certiorari under Rule 65. 9
The Issue
Petitioner alleges that Respondent Court of Appeals committed "grave
abuse of discretion" 10 in holding -
. . . that publication of the petition for registration of title in LRC Case No. 86
need not be published in a newspaper of general circulation, and in not
dismissing LRC Case No. 86 for want of such publication.
Petitioner points out that under Section 23 of PD 1529, the notice of initial
hearing shall be "published both in the Official Gazette and in a newspaper
of general circulation." According to petitioner, publication in the Official
Gazette is "necessary to confer jurisdiction upon the trial court, and . . .
in . . . a newspaper of general circulation to comply with the notice
requirement of due process." 11
Private respondents, on the other hand, contend that failure to comply with
the requirement of publication in a newspaper of general circulation is a
mere "procedural defect." They add that publication in the Official Gazette is
sufficient to confer jurisdiction. 12
In reversing the decision of the trial court, Respondent Court of Appeals
ruled: 13
. . . although the requirement of publication in the Official Gazette and in a
newspaper of general circulation is couched in mandatory terms, it cannot
be gainsaid that the law also mandates with equal force that publication in
the Official Gazette shall be sufficient to confer jurisdiction upon the court.
Further, Respondent Court found that the oppositors were afforded the
opportunity "to explain matters fully and present their side." Thus, it justified
its disposition in this wise: 14
31
. . . We do not see how the lack of compliance with the required procedure
prejudiced them in any way. Moreover, the other requirements of: publication
in the Official Gazette, personal notice by mailing, and posting at the site and
other conspicuous places, were complied with and these are sufficient to
notify any party who is minded to make any objection of the application for
registration.
The Court's Ruling
We find for petitioner.
Newspaper Publication Mandatory
The pertinent part of Section 23 of Presidential Decree No. 1529 requiring
publication of the notice of initial hearing reads as follows:
Sec. 23. Notice of initial hearing, publication, etc. - The court shall, within five
days from filing of the application, issue an order setting the date and hour of
the initial hearing which shall not be earlier than forty-five days nor later than
ninety days from the date of the order.
The public shall be given notice of initial hearing of the application for land
registration by means of (1) publication; (2) mailing; and (3) posting.
1. By publication. -
Upon receipt of the order of the court setting the time for initial hearing, the
Commissioner of Land Registration shall cause a notice of initial hearing to
be published once in the Official Gazette and once in a newspaper of
general circulation in the Philippines: Provided, however, that the publication
in the Official Gazette shall be sufficient to confer jurisdiction upon the court.
Said notice shall be addressed to all persons appearing to have an interest
in the land involved including the adjoining owners so far as known, and "to
all whom it may concern." Said notice shall also require all persons
concerned to appear in court at a certain date and time to show cause why
the prayer of said application shall not be granted.
xxx xxx xxx
Admittedly, the above provision provides in clear and categorical terms that
publication in the Official Gazette suffices to confer jurisdiction upon the land

registration court. However, the question boils down to whether, absent any
publication in a newspaper of general circulation, the land registration court
can validly confirm and register the title of private respondents.
We answer this query in the negative. This answer is impelled by the
demands of statutory construction and the due process rationale behind the
publication requirement.
The law used the term "shall" in prescribing the work to be done by the
Commissioner of Land Registration upon the latter's receipt of the court
order setting the time for initial hearing. The said word denotes an imperative
and thus indicates the mandatory character of a statute. 15 While concededly
such literal mandate is not an absolute rule in statutory construction, as its
import ultimately depends upon its context in the entire provision, we hold
that in the present case the term must be understood in its normal
mandatory meaning. In Republic vs. Marasigan, 16 the Court through Mr.
Justice Hilario G. Davide, Jr. held that Section 23 of PD 1529 requires notice
of the initial hearing by means of (1) publication, (2) mailing and (3) posting,
all of which must be complied with. "If the intention of the law were
otherwise, said section would not have stressed in detail the requirements of
mailing of notices to all persons named in the petition who, per Section 15 of
the Decree, include owners of adjoining properties, and occupants of the
land." Indeed, if mailing of notices is essential, then by parity of reasoning,
publication in a newspaper of general circulation is likewise imperative since
the law included such requirement in its detailed provision.
It should be noted further that land registration is a proceeding in
rem. 17 Being in rem, such proceeding requires constructive seizure of the
land as against all persons, including the state, who have rights to or
interests in the property. An in rem proceeding is validated essentially
through publication. This being so, the process must strictly be complied
with. Otherwise, persons who may be interested or whose rights may be
adversely affected would be barred from contesting an application which
they had no knowledge of. As has been ruled, a party as an owner seeking
the inscription of realty in the land registration court must prove by
satisfactory and conclusive evidence not only his ownership thereof but the
identity of the same, for he is in the same situation as one who institutes an
action for recovery of realty. 18 He must prove his title against the whole
world. This task, which rests upon the applicant, can best be achieved when
all persons concerned - nay, "the whole world" - who have rights to or
interests in the subject property are notified and effectively invited to come to
court and show cause why the application should not be granted. The
elementary norms of due process require that before the claimed property is
32
taken from concerned parties and registered in the name of the applicant,
said parties must be given notice and opportunity to oppose.
It may be asked why publication in a newspaper of general circulation should
be deemed mandatory when the law already requires notice by publication in
the Official Gazette as well as by mailing and posting, all of which have
already been complied with in the case at hand. The reason is due process
and the reality that the Official Gazette is not as widely read and circulated
as newspapers and is oftentimes delayed in its circulation, such that the
notices published therein may not reach the interested parties on time, if at
all. Additionally, such parties may not be owners of neighboring properties,
and may in fact not own any other real estate. In sum, the all-
encompassing in rem nature of land registration cases, the consequences of
default orders issued against the whole world and the objective of
disseminating the notice in as wide a manner as possible demand a
mandatory construction of the requirements for publication, mailing and
posting.
Admittedly, there was failure to comply with the explicit publication
requirement of the law. Private respondents did not proffer any excuse; even
if they had, it would not have mattered because the statute itself allows no
excuses. Ineludibly, this Court has no authority to dispense with such
mandatory requirement. The law is unambiguous and its rationale clear.
Time and again, this Court has declared that where the law speaks in clear
and categorical language, there is no room for interpretation, vacillation or
equivocation; there is room only for application. 19 There is no alternative.
Thus, the application for land registration filed by private respondents must
be dismissed without prejudice to reapplication in the future, after all the
legal requisites shall have been duly complied with.
WHEREFORE, the petition is GRANTED and the assailed Decision and
Resolution are REVERSED and SET ASIDE. The application of private
respondent for land registration is DISMISSED without prejudice. No costs.
SO ORDERED.
G.R. No. 178159               March 2, 2011

SPS. VICENTE DIONISIO AND ANITA DIONISIO, Petitioner,
vs.
WILFREDO LINSANGAN, Respondent.
DECISION
ABAD, J.:
The case is about a) amendments in the complaint that do not alter the
cause of action and b) the effect in an unlawful detainer action of the
tolerated possessor’s assignment of his possession to the defendant.
The Facts and the Case
Gorgonio M. Cruz (Cruz) owned agricultural lands in San Rafael, Bulacan,
that his tenant, Romualdo San Mateo (Romualdo) cultivated. Upon
Romualdo’s death, his widow, Emiliana, got Cruz’s permission to stay on the
property provided she would vacate it upon demand.
In September 1989 spouses Vicente and Anita Dionisio (the Dionisios)
bought the property from Cruz.1 In April 2002, the Dionisios found out that
Emiliana had left the property and that it was already Wilfredo Linsangan
(Wilfredo) who occupied it under the strength of a "Kasunduan ng Bilihan ng
Karapatan"2 dated April 7, 1977.
The Dionisios wrote Wilfredo on April 22, 2002, demanding that he vacate
the land but the latter declined, prompting the Dionisios to file an eviction
suit3 against him before the Municipal Trial Court (MTC) of San Rafael,
Bulacan. Wilfredo filed an answer with counterclaims in which he declared
that he had been a tenant of the land as early as 1977.
At the pre-trial, the Dionisios orally asked leave to amend their complaint.
Despite initial misgivings over the amended complaint, Wilfredo asked for
time to respond to it. The Dionisios filed their amended complaint on August
5, 2003; Wilfredo maintained his original answer.
The MTC issued a pre-trial order4 specifying the issues. For the plaintiffs: (1)
whether or not the defendant can be ejected from the property and (2)
whether or not the plaintiffs are entitled to reasonable rent for the use of the
property, damages, and attorney’s fees. For the defendant: (1) whether or
not the MTC has jurisdiction to try this case; (2) whether or not the defendant
33
can be ejected from the questioned property; and (3) whether or not the
defendant is entitled to damages and attorney’s fees.
On May 3, 2004 the MTC rendered judgment, ordering Wilfredo to vacate
the land and remove his house from it. Further, the MTC ordered Wilfredo to
pay the Dionisios ₱3,000.00 a month as reasonable compensation for the
use of the land and ₱20,000.00 as attorney’s fees and to pay the cost of suit.
On appeal,5 the Regional Trial Court (RTC) of Malolos, Bulacan, affirmed the
MTC decision, holding that the case was one for forcible entry. On
review,6 however, the Court of Appeals (CA) rendered judgment on July 6,
2006, reversing the decisions of the courts below, and ordering the dismissal
of the Dionisios’ action. The CA held that, by amending their complaint, the
Dionisios effectively changed their cause of action from unlawful detainer to
recovery of possession which fell outside the jurisdiction of the MTC.
Further, since the amendment introduced a new cause of action, its filing on
August 5, 2003 marked the passage of the one year limit from demand
required in ejectment suits. More, since jurisdiction over actions for
possession depended on the assessed value of the property and since such
assessed value was not alleged, the CA cannot determine what court has
jurisdiction over the action.
The Issues Presented
The issues presented in this case are:
1. Whether or not the Dionisios’ amendment of their complaint
effectively changed their cause of action from one of ejectment to
one of recovery of possession; and
2. Whether or not the MTC had jurisdiction over the action before it.
The Rulings of the Court
One. An amended complaint that changes the plaintiff’s cause of action is
technically a new complaint. Consequently, the action is deemed filed on the
date of the filing of such amended pleading, not on the date of the filing of its
original version. Thus, the statute of limitation resumes its run until it is
arrested by the filing of the amended pleading. The Court acknowledges,
however, that an amendment which does not alter the cause of action but
merely supplements or amplifies the facts previously alleged, does not affect
the reckoning date of filing based on the original complaint. The cause of

action, unchanged, is not barred by the statute of limitations that expired
after the filing of the original complaint.7
Here, the original complaint alleges that the Dionisios bought the land from
Cruz on September 30, 1989; that Romualdo used to be the land’s tenant;
that when he died, the Dionisios allowed his widow, Emiliana, to stay under
a promise that she would leave the land upon demand; that in April 2002 the
Dionisios discovered on visit to the land that Emiliana had left it and that
Wilfredo now occupied it under a claim that he bought the right to stay from
Emiliana under a "Kasunduan ng Bilihan ng Karapatan;" that the Dionisios
did not know of and gave no consent to this sale which had not been
annotated on their title; that the Dionisios verbally told Wilfredo to leave the
property by April 31, 2002; that their lawyer reiterated such demand in
writing on April 22, 2002; that Wilfredo did not heed the demand; that the
Dionisios wanted to get possession so they could till the land and demolish
Wilfredo’s house on it; that Wilfredo did not give the Dionisios’ just share in
the harvest; and that the Dionisios were compelled to get the services of
counsel for ₱100,000.00.
The amended complaint has essentially identical allegations. The only new
ones are that the Dionisios allowed Emiliana, Romualdo’s widow to stay "out
of their kindness, tolerance, and generosity;" that they went to the land in
April 2002, after deciding to occupy it, to tell Emiliana of their plan; that
Wilfredo cannot deny that Cruz was the previous registered owner and that
he sold the land to the Dionisios; and that a person occupying another’s land
by the latter’s tolerance or permission, without contract, is bound by an
implied promise to leave upon demand, failing which a summary action for
ejectment is the proper remedy.
To determine if an amendment introduces a different cause of action, the
test is whether such amendment now requires the defendant to answer for a
liability or obligation which is completely different from that stated in the
original complaint.8 Here, both the original and the amended complaint
required Wilfredo to defend his possession based on the allegation that he
had stayed on the land after Emiliana left out of the owner’s mere tolerance
and that the latter had demanded that he leave. Indeed, Wilfredo did not find
the need to file a new answer.
Two. Wilfredo points out that the MTC has no jurisdiction to hear and decide
the case since it involved tenancy relation which comes under the
jurisdiction of the DARAB.9 But the jurisdiction of the court over the subject
matter of the action is determined by the allegations of the
complaint.10 Besides, the records show that Wilfredo failed to substantiate
34
his claim that he was a tenant of the land. The MTC records show that aside
from the assertion that he is a tenant, he did not present any evidence to
prove the same. To consider evidence presented only during appeal is
offensive to the idea of fair play.
The remaining question is the nature of the action based on the allegations
of the complaint. The RTC characterized it as an action for forcible entry,
Wilfredo having entered the property and taken over from widow Emiliana on
the sly. The problem with this characterization is that the complaint
contained no allegation that the Dionisios were in possession of the property
before Wilfredo occupied it either by force, intimidation, threat, strategy, or
stealth, an element of that kind of eviction suit.11 Nowhere in the recitation of
the amended complaint did the Dionisios assert that they were in prior
possession of the land and were ousted from such possession by Wilfredo’s
unlawful occupation of the property.
Is the action one for unlawful detainer? An action is for unlawful detainer if
the complaint sufficiently alleges the following: (1) initially, the defendant has
possession of property by contract with or by tolerance of the plaintiff; (2)
eventually, however, such possession became illegal upon plaintiff’s notice
to defendant, terminating the latter’s right of possession; (3) still, the
defendant remains in possession, depriving the plaintiff of the enjoyment of
his property; and (4) within a year from plaintiff’s last demand that defendant
vacate the property, the plaintiff files a complaint for defendant’s
ejectment.12 If the defendant had possession of the land upon mere
tolerance of the owner, such tolerance must be present at the beginning of
defendant’s possession.13
Here, based on the allegations of the amended complaint, the Dionisios
allowed Emiliana, tenant Romualdo’s widow, to stay on the land for the
meantime and leave when asked to do so. But, without the knowledge or
consent of the Dionisios, she sold her "right of tenancy" to Wilfredo. When
the Dionisios visited the land in April 2002 and found Wilfredo there, they
demanded that he leave the land. They did so in writing on April 22, 2002
but he refused to leave. The Dionisios filed their eviction suit within the year.
It is pointed out that the original complaint did not allege that the Dionisios
"tolerated" Emiliana’s possession of the land after her husband died, much
less did it allege that they "tolerated" Wilfredo’s possession after he took
over from Emiliana. But the rules do not require the plaintiff in an eviction
suit to use the exact language of such rules. The Dionisios alleged that
Romualdo used to be the land’s tenant and that when he died, the Dionisios
allowed his widow, Emiliana, to stay under a promise that she would leave
 35

upon demand. These allegations clearly imply the Dionisios’ "tolerance" of

her stay meantime that they did not yet need the land.

As for Wilfredo, it is clear from the allegations of the complaint that Emiliana
assigned to him her right to occupy the property. In fact that assignment was
in writing. Consequently, his claim to the land was based on the Dionisios’
"tolerance" of the possession of Emiliana and, impliedly, of all persons
claiming right under her.

True, the "Kasunduan ng Bilihan ng Karapatan" under which Emiliana

transferred her tenancy right to Wilfredo appears to have been executed in
1977, years before Cruz sold the land to the Dionisios, implying that Wilfredo
had already been in possession of the property before the sale. But what is
controlling in ascertaining the jurisdiction of the court are the allegations of
the complaint. The Dionisios alleged in their complaint that they were the
ones who allowed Emiliana (and all persons claiming right under her) to stay
on the land meantime that they did not need it. The MTC and the RTC gave
credence to the Dionisios’ version. The Court will respect their judgment on
a question of fact.

WHEREFORE, the Court GRANTS the petition, REVERSES and SETS

ASIDE the Decision of the Court of Appeals in CA-G.R. SP 92643 dated July
6, 2006, and REINSTATES the Decision of the Municipal Trial Court of San
Rafael, Bulacan, in Civil Case 1160-SRB-2003 dated May 3, 2004.

G.R. No. 169129             March 28, 2007
SPS. VIRGILIO F. SANTOS & ESPERANZA LATI SANTOS,
SPS.VICTORINO F. SANTOS, & LAGRIMAS SANTOS, ERNESTO F.
SANTOS, and TADEO F. SANTOS, Petitioners,
vs.
SPS. JOSE LUMBAO and PROSERFINA LUMBAO, Respondents.
DECISION
CHICO-NAZARIO,  J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the
1997 Revised Rules of Civil Procedure seeking to annul and set aside the
Decision1 and Resolution2 of the Court of Appeals in CA-G.R. CV No. 60450
entitled, Spouses Jose Lumbao and Proserfina Lumbao v. Spouses Virgilio
F. Santos and Esperanza Lati, Spouses Victorino F. Santos and Lagrimas F.
Santos, Ernesto F. Santos and Tadeo F. Santos, dated 8 June 2005 and 29
July 2005, respectively, which granted the appeal filed by herein
respondents Spouses Jose Lumbao and Proserfina Lumbao (Spouses
Lumbao) and ordered herein petitioners Spouses Virgilio F. Santos and
Esperanza Lati, Spouses Victorino F. Santos and Lagrimas F. Santos,
Ernesto F. Santos and Tadeo F. Santos to reconvey to respondents
Spouses Lumbao the subject property and to pay the latter attorney’s fees
and litigation expenses, thus, reversing the Decision3 of the Regional Trial
Court (RTC) of Pasig City, dated 17 June 1998 which dismissed the
Complaint for Reconveyance with Damages filed by respondents Spouses
Lumbao for lack of merit.
Herein petitioners Virgilio, Victorino, Ernesto and Tadeo, all surnamed
Santos, are the legitimate and surviving heirs of the late Rita Catoc Santos
(Rita), who died on 20 October 1985. The other petitioners Esperanza Lati
and Lagrimas Santos are the daughters-in-law of Rita.
Herein respondents Spouses Jose Lumbao and Proserfina Lumbao are the
alleged owners of the 107-square meter lot (subject property), which they
purportedly bought from Rita during her lifetime.
The facts of the present case are as follows:
On two separate occasions during her lifetime, Rita sold to respondents
Spouses Lumbao the subject property which is a part of her share in the
36
estate of her deceased mother, Maria Catoc (Maria), who died intestate on
19 September 1978. On the first occasion, Rita sold 100 square meters of
her inchoate share in her mother’s estate through a document denominated
as "Bilihan ng Lupa," dated 17 August 1979.4 Respondents Spouses
Lumbao claimed the execution of the aforesaid document was witnessed by
petitioners Virgilio and Tadeo, as shown by their signatures affixed therein.
On the second occasion, an additional seven square meters was added to
the land as evidenced by a document also denominated as "Bilihan ng
Lupa," dated 9 January 1981.5
After acquiring the subject property, respondents Spouses Lumbao took
actual possession thereof and erected thereon a house which they have
been occupying as exclusive owners up to the present. As the exclusive
owners of the subject property, respondents Spouses Lumbao made several
verbal demands upon Rita, during her lifetime, and thereafter upon herein
petitioners, for them to execute the necessary documents to effect the
issuance of a separate title in favor of respondents Spouses Lumbao insofar
as the subject property is concerned. Respondents Spouses Lumbao
alleged that prior to her death, Rita informed respondent Proserfina Lumbao
she could not deliver the title to the subject property because the entire
property inherited by her and her co-heirs from Maria had not yet been
partitioned.
On 2 May 1986, the Spouses Lumbao claimed that petitioners, acting
fraudulently and in conspiracy with one another, executed a Deed of
Extrajudicial Settlement,6 adjudicating and partitioning among themselves
and the other heirs, the estate left by Maria, which included the subject
property already sold to respondents Spouses Lumbao and now covered by
TCT No. 817297 of the Registry of Deeds of Pasig City.
On 15 June 1992, respondents Spouses Lumbao, through counsel, sent a
formal demand letter8 to petitioners but despite receipt of such demand
letter, petitioners still failed and refused to reconvey the subject property to
the respondents Spouses Lumbao. Consequently, the latter filed a
Complaint for Reconveyance with Damages9 before the RTC of Pasig City.
Petitioners filed their Answer denying the allegations that the subject
property had been sold to the respondents Spouses Lumbao. They likewise
denied that the Deed of Extrajudicial Settlement had been fraudulently
executed because the same was duly published as required by law. On the
contrary, they prayed for the dismissal of the Complaint for lack of cause of
action because respondents Spouses Lumbao failed to comply with the
Revised Katarungang Pambarangay Law under Republic Act No. 7160,

otherwise known as the Local Government Code of 1991, which repealed
Presidential Decree No. 150810 requiring first resort to barangay conciliation.
Respondents Spouses Lumbao, with leave of court, amended their
Complaint because they discovered that on 16 February 1990, without their
knowledge, petitioners executed a Deed of Real Estate Mortgage in favor of
Julieta S. Esplana for the sum of ₱30,000.00. The said Deed of Real Estate
Mortgage was annotated at the back of TCT No. PT-81729 on 26 April 1991.
Also, in answer to the allegation of the petitioners that they failed to comply
with the mandate of the Revised Katarungang Pambarangay Law,
respondents Spouses Lumbao said that the Complaint was filed directly in
court in order that prescription or the Statute of Limitations may not set in.
During the trial, respondents Spouses Lumbao presented Proserfina
Lumbao and Carolina Morales as their witnesses, while the petitioners
presented only the testimony of petitioner Virgilio.
The trial court rendered a Decision on 17 June 1998, the dispositive portion
of which reads as follows:
Premises considered, the instant complaint is hereby denied for lack of
merit.
Considering that [petitioners] have incurred expenses in order to protect their
interest, [respondents spouses Lumbao] are hereby directed to pay
[petitioners], to wit: 1) the amount of ₱30,000.00 as attorney’s fees and
litigation expenses, and 2) costs of the suit.11
Aggrieved, respondents Spouses Lumbao appealed to the Court of Appeals.
On 8 June 2005, the appellate court rendered a Decision, thus:
WHEREFORE, premises considered, the present appeal is hereby
GRANTED. The appealed Decision dated June 17, 1998 of the Regional
Trial Court of Pasig City, Branch 69 in Civil Case No. 62175 is hereby
REVERSED and SET ASIDE. A new judgment is hereby entered ordering
[petitioners] to reconvey 107 square meters of the subject [property] covered
by TCT No. PT-81729 of the Registry of Deeds of Pasig City, Metro Manila,
and to pay to [respondents spouses Lumbao] the sum of ₱30,000.00 for
attorney’s fees and litigation expenses.
No pronouncement as to costs.12
37
Dissatisfied, petitioners filed a Motion for Reconsideration of the aforesaid
Decision but it was denied in the Resolution of the appellate court dated 29
July 2005 for lack of merit.
Hence, this Petition.
The grounds relied upon by the petitioners are the following:
I. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN
REVERSING THE DECISION OF THE TRIAL COURT, THEREBY
CREATING A VARIANCE ON THE FINDINGS OF FACTS OF TWO
COURTS.
II. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN
ORDERING THE PETITIONERS TO RECONVEY THE SUBJECT
[PROPERTY] TO THE RESPONDENTS [SPOUSES LUMBAO] AND IN
NOT RULING THAT THEY ARE GUILTY OF LACHES, HENCE THEY
CANNOT RECOVER THE LOT ALLEGEDLY SOLD TO THEM.
III. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN
NOT FINDING HEREIN PETITIONER[S] TO BE IN GOOD FAITH IN
EXECUTING THE "DEED OF EXTRAJUDICIAL SETTLEMENT" DATED [2
MAY 1986].
IV. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN
NOT FINDING THAT PETITIONERS ARE NOT LEGALLY BOUND TO
COMPLY WITH THE SUPPOSED BILIHAN NG LUPA DATED [17 AUGUST
1979] AND [9 JANUARY 1981] THAT WERE SUPPOSEDLY EXECUTED
BY THE LATE RITA CATOC.
V. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN
NOT FINDING THAT RESPONDENTS [SPOUSES LUMBAO’S] ACTION
FOR RECONVEYANCE WITH DAMAGES CANNOT BE SUPPORTED
WITH AN UNENFORCEABLE DOCUMENTS, SUCH AS THE BILIHAN NG
LUPA DATED [17 AUGUST 1979] AND [9 JANUARY 1981].
VI. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN
NOT FINDING THAT RESPONDENTS [SPOUSES LUMBAO’S]
COMPLAINT FOR RECONVEYANCE IS DISMISSABLE (SIC) FOR NON
COMPLIANCE OF THE MANDATE OF [P.D. NO.] 1508, AS AMENDED BY
Republic Act No. 7160.

VII. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN
NOT FINDING THAT RESPONDENTS [SPOUSES LUMBAO] SHOULD BE
HELD LIABLE FOR PETITIONERS’ CLAIM FOR DAMAGES AND
ATTORNEY[‘]S FEES.
Petitioners ask this Court to scrutinize the evidence presented in this case,
because they claim that the factual findings of the trial court and the
appellate court are conflicting. They allege that the findings of fact by the trial
court revealed that petitioners Virgilio and Tadeo did not witness the
execution of the documents known as "Bilihan ng Lupa"; hence, this finding
runs counter to the conclusion made by the appellate court. And even
assuming that they were witnesses to the aforesaid documents, still,
respondents Spouses Lumbao were not entitled to the reconveyance of the
subject property because they were guilty of laches for their failure to assert
their rights for an unreasonable length of time. Since respondents Spouses
Lumbao had slept on their rights for a period of more than 12 years
reckoned from the date of execution of the second "Bilihan ng Lupa," it
would be unjust and unfair to the petitioners if the respondents will be
allowed to recover the subject property.
Petitioners allege they are in good faith in executing the Deed of
Extrajudicial Settlement because even respondents Spouses Lumbao’s
witness, Carolina Morales, testified that neither petitioner Virgilio nor
petitioner Tadeo was present during the execution of the "Bilihan ng Lupa,"
dated 17 August 1979 and 9 January 1981. Petitioners affirm that the Deed
of Extrajudicial Settlement was published in a newspaper of general
circulation to give notice to all creditors of the estate subject of partition to
contest the same within the period prescribed by law. Since no claimant
appeared to interpose a claim within the period allowed by law, a title to the
subject property was then issued in favor of the petitioners; hence, they are
considered as holders in good faith and therefore cannot be barred from
entering into any subsequent transactions involving the subject property.
Petitioners also contend that they are not bound by the documents
denominated as "Bilihan ng Lupa" because the same were null and void for
the following reasons: 1) for being falsified documents because one of those
documents made it appear that petitioners Virgilio and Tadeo were
witnesses to its execution and that they appeared personally before the
notary public, when in truth and in fact they did not; 2) the identities of the
properties in the "Bilihan ng Lupa," dated 17 August 1979 and 9 January
1981 in relation to the subject property in litigation were not established by
the evidence presented by the respondents Spouses Lumbao; 3) the right of
the respondents Spouses Lumbao to lay their claim over the subject
property had already been barred through estoppel by laches; and 4) the
38
respondents Spouses Lumbao’s claim over the subject property had already
prescribed.
Finally, petitioners claim that the Complaint for Reconveyance with
Damages filed by respondents Spouses Lumbao was dismissible because
they failed to comply with the mandate of Presidential Decree No. 1508, as
amended by Republic Act No. 7160, particularly Section 412 of Republic Act
No. 7160.
Given the foregoing, the issues presented by the petitioners may be restated
as follows:
I. Whether or not the Complaint for Reconveyance with Damages
filed by respondents spouses Lumbao is dismissible for their failure
to comply with the mandate of the Revised Katarungang
Pambarangay Law under R.A. No. 7160.
II. Whether or not the documents known as "Bilihan ng Lupa" are
valid and enforceable, thus, they can be the bases of the
respondents spouses Lumbao’s action for reconveyance with
damages.
III. Whether or not herein petitioners are legally bound to comply
with the "Bilihan ng Lupa" dated 17 August 1979 and 9 January
1981 and consequently, reconvey the subject property to herein
respondents spouses Lumbao.
It is well-settled that in the exercise of the Supreme Court’s power of review,
the court is not a trier of facts and does not normally undertake the re-
examination of the evidence presented by the contending parties during the
trial of the case considering that the findings of fact of the Court of Appeals
are conclusive and binding on the Court.13 But, the rule is not without
exceptions. There are several recognized exceptions14 in which factual
issues may be resolved by this Court. One of these exceptions is when the
findings of the appellate court are contrary to those of the trial court. This
exception is present in the case at bar.
Going to the first issue presented in this case, it is the argument of the
petitioners that the Complaint for Reconveyance with Damages filed by
respondents Spouses Lumbao should be dismissed for failure to comply with
the barangay conciliation proceedings as mandated by the Revised

Katarungang Pambarangay Law under Republic Act No. 7160. This
argument cannot be sustained.
Section 408 of the aforesaid law and Administrative Circular No. 14-
9315 provide that all disputes between parties actually residing in the same
city or municipality are subject to barangay conciliation. A prior recourse
thereto is a pre-condition before filing a complaint in court or any
government offices. Non-compliance with the said condition precedent could
affect the sufficiency of the plaintiff’s cause of action and make his complaint
vulnerable to dismissal on ground of lack of cause of action or prematurity;
but the same would not prevent a court of competent jurisdiction from
exercising its power of adjudication over the case before it, where the
defendants failed to object to such exercise of jurisdiction.16
While it is true that the present case should first be referred to the Barangay
Lupon for conciliation because the parties involved herein actually reside in
the same city (Pasig City) and the dispute between them involves a real
property, hence, the said dispute should have been brought in the city in
which the real property, subject matter of the controversy, is located, which
happens to be the same city where the contending parties reside. In the
event that respondents Spouses Lumbao failed to comply with the said
condition precedent, their Complaint for Reconveyance with Damages can
be dismissed. In this case, however, respondents Spouses Lumbao’s non-
compliance with the aforesaid condition precedent cannot be considered
fatal. Although petitioners alleged in their answer that the Complaint for
Reconveyance with Damages filed by respondents spouses Lumbao should
be dismissed for their failure to comply with the condition precedent, which in
effect, made the complaint prematurely instituted and the trial court acquired
no jurisdiction to hear the case, yet, they did not file a Motion to Dismiss the
said complaint.
Emphasis must be given to the fact that the petitioners could have prevented
the trial court from exercising jurisdiction over the case had they filed a
Motion to Dismiss. However, instead of doing so, they invoked the very
same jurisdiction by filing an answer seeking an affirmative relief from it.
Worse, petitioners actively participated in the trial of the case by presenting
their own witness and by cross-examining the witnesses presented by the
respondents Spouses Lumbao. It is elementary that the active participation
of a party in a case pending against him before a court is tantamount to
recognition of that court’s jurisdiction and a willingness to abide by the
resolution of the case which will bar said party from later on impugning the
court’s jurisdiction.17 It is also well-settled that the non-referral of a case for
barangay conciliation when so required under the law is not jurisdictional in
nature and may therefore be deemed waived if not raised seasonably in a
39
motion to dismiss.18 Hence, herein petitioners can no longer raise the
defense of non-compliance with the barangay conciliation proceedings to
seek the dismissal of the complaint filed by the respondents Spouses
Lumbao, because they already waived the said defense when they failed to
file a Motion to Dismiss.
As regards the second issue, petitioners maintain that the "Bilihan ng Lupa,"
dated 17 August 1979 and 9 January 1981 are null and void for being
falsified documents as it is made to appear that petitioners Virgilio and
Tadeo were present in the execution of the said documents and that the
identities of the properties in those documents in relation to the subject
property has not been established by the evidence of the respondents
Spouses Lumbao. Petitioners also claim that the enforceability of those
documents is barred by prescription of action and laches.
It is the petitioners’ incessant barking that the "Bilihan ng Lupa" documents
dated 17 August 1979 and 9 January 1981 were falsified because it was
made to appear that petitioners Virgilio and Tadeo were present in the
executions thereof, and their allegation that even respondents Spouses
Lumbao’s witness Carolina Morales proved that said petitioners were not
present during the execution of the aforementioned documents. This is
specious.
Upon examination of the aforesaid documents, this Court finds that in the
"Bilihan ng Lupa," dated 17 August 1979, the signatures of petitioners
Virgilio and Tadeo appeared thereon. Moreover, in petitioners’ Answer and
Amended Answer to the Complaint for Reconveyance with Damages, both
petitioners Virgilio and Tadeo made an admission that indeed they acted as
witnesses in the execution of the "Bilihan ng Lupa," dated 17 August
1979.19 However, in order to avoid their obligations in the said "Bilihan ng
Lupa," petitioner Virgilio, in his cross-examination, denied having knowledge
of the sale transaction and claimed that he could not remember the same as
well as his appearance before the notary public due to the length of time that
had passed. Noticeably, petitioner Virgilio did not categorically deny having
signed the "Bilihan ng Lupa," dated 17 August 1979 and in support thereof,
his testimony in the cross-examination propounded by the counsel of the
respondents Spouses Lumbao is quoted hereunder:
ATTY. CHIU:
Q. Now, you said, Mr. Witness…Virgilio Santos, that you don’t know about
this document which was marked as Exhibit "A" for the [respondents
spouses Lumbao]?

ATTY. BUGARING:
The question is misleading, your Honor. Counsel premised the question that
he does not have any knowledge but not that he does not know.
ATTY. CHIU:
Q. Being… you are one of the witnesses of this document? [I]s it not?
WITNESS:
A. No, sir.
Q. I am showing to you this document, there is a signature at the left hand
margin of this document Virgilio Santos, will you please go over the same
and tell the court whose signature is this?
A. I don’t remember, sir, because of the length of time that had passed.
Q. But that is your signature?
A. I don’t have eyeglasses… My signature is different.
Q. You never appeared before this notary public Apolinario Mangahas?
A. I don’t remember.20
As a general rule, facts alleged in a party’s pleading are deemed admissions
of that party and are binding upon him, but this is not an absolute and
inflexible rule. An answer is a mere statement of fact which the party filing it
expects to prove, but it is not evidence.21 And in spite of the presence of
judicial admissions in a party’s pleading, the trial court is still given leeway to
consider other evidence presented.22 However, in the case at bar, as the
Court of Appeals mentioned in its Decision, "[herein petitioners] had not
adduced any other evidence to override the admission made in their
[A]nswer that [petitioners Virgilio and Tadeo] actually signed the [Bilihan ng
Lupa dated 17 August 1979] except that they were just misled as to the
purpose of the document, x x x."23 Virgilio’s answers were unsure and
quibbled. Hence, the general rule that the admissions made by a party in a
pleading are binding and conclusive upon him applies in this case.
40
On the testimony of respondents Spouses Lumbao’s witness Carolina
Morales, this Court adopts the findings made by the appellate court. Thus -
[T]he trial court gave singular focus on her reply to a question during cross-
examination if the [petitioners Virgilio and Tadeo] were not with her and the
vendor [Rita] during the transaction. It must be pointed out that earlier in the
direct examination of said witness, she confirmed that [respondents spouses
Lumbao] actually bought the lot from [Rita] ("nagkabilihan"). Said witness
positively identified and confirmed the two (2) documents evidencing the
sale in favor of [respondents spouse Lumbao]. Thus, her subsequent
statement that the [petitioners Virgilio and Tadeo] were not with them during
the transaction does not automatically imply that [petitioners Virgilio and
Tadeo] did not at any time sign as witnesses as to the deed of sale attesting
to their mother’s voluntary act of selling a portion of her share in her
deceased mother’s property. The rule is that testimony of a witness must be
considered and calibrated in its entirety and not by truncated portions thereof
or isolated passages therein.24
Furthermore, both "Bilihan ng Lupa" documents dated 17 August 1979 and 9
January 1981 were duly notarized before a notary public. It is well-settled
that a document acknowledged before a notary public is a public
document25 that enjoys the presumption of regularity. It is a prima facie
evidence of the truth of the facts stated therein and a conclusive
presumption of its existence and due execution.26 To overcome this
presumption, there must be presented evidence that is clear and convincing.
Absent such evidence, the presumption must be upheld.27 In addition, one
who denies the due execution of a deed where one’s signature appears has
the burden of proving that contrary to the recital in the jurat, one never
appeared before the notary public and acknowledged the deed to be a
voluntary act. Nonetheless, in the present case petitioners’ denials without
clear and convincing evidence to support their claim of fraud and falsity were
not sufficient to overthrow the above-mentioned presumption; hence, the
authenticity, due execution and the truth of the facts stated in the aforesaid
"Bilihan ng Lupa" are upheld.
The defense of petitioners that the identities of the properties described in
the "Bilihan ng Lupa," dated 17 August 1979 and 9 January 1981 in relation
to the subject property were not established by respondents Spouses
Lumbao’s evidence is likewise not acceptable.
It is noteworthy that at the time of the execution of the documents
denominated as "Bilihan ng Lupa," the entire property owned by Maria, the
mother of Rita, was not yet divided among her and her co-heirs and so the

description of the entire estate is the only description that can be placed in
the "Bilihan ng Lupa, dated 17 August 1979 and 9 January 1981" because
the exact metes and bounds of the subject property sold to respondents
Spouses Lumbao could not be possibly determined at that time.
Nevertheless, that does not make the contract of sale between Rita and
respondents Spouses Lumbao invalid because both the law and
jurisprudence have categorically held that even while an estate remains
undivided, co-owners have each full ownership of their respective aliquots or
undivided shares and may therefore alienate, assign or mortgage
them.28 The co-owner, however, has no right to sell or alienate a specific or
determinate part of the thing owned in common, because such right over the
thing is represented by an aliquot or ideal portion without any physical
division. In any case, the mere fact that the deed purports to transfer a
concrete portion does not per se render the sale void. The sale is valid, but
only with respect to the aliquot share of the selling co-owner. Furthermore,
the sale is subject to the results of the partition upon the termination of the
co-ownership.29
In the case at bar, when the estate left by Maria had been partitioned on 2
May 1986 by virtue of a Deed of Extrajudicial Settlement, the 107- square
meter lot sold by the mother of the petitioners to respondents Spouses
Lumbao should be deducted from the total lot, inherited by them in
representation of their deceased mother, which in this case measures 467
square meters. The 107-square meter lot already sold to respondents
Spouses Lumbao can no longer be inherited by the petitioners because the
same was no longer part of their inheritance as it was already sold during
the lifetime of their mother.
Likewise, the fact that the property mentioned in the two "Bilihan ng Lupa"
documents was described as "a portion of a parcel of land covered in Tax
Declarations No. A-018-01674," while the subject matter of the Deed of
Extrajudicial Settlement was the property described in Transfer Certificate of
Title (TCT) No. 3216 of the Registry of Deeds of the Province of Rizal in the
name of Maria is of no moment because in the "Bilihan ng Lupa," dated 17
August 1979 and 9 January 1981, it is clear that there was only one estate
left by Maria upon her death. And this fact was not refuted by the petitioners.
Besides, the property described in Tax Declaration No. A-018-01674 and the
property mentioned in TCT No. 3216 are both located in Barrio Rosario,
Municipality of Pasig, Province of Rizal, and almost have the same
boundaries. It is, thus, safe to state that the property mentioned in Tax
Declaration No. A-018-01674 and in TCT No. 3216 are one and the same.
The defense of prescription of action and laches is likewise unjustifiable. In
an action for reconveyance, the decree of registration is respected as
41
incontrovertible. What is sought instead is the transfer of the property or its
title which has been wrongfully or erroneously registered in another person’s
name to its rightful or legal owner, or to the one with a better right. It is,
indeed, true that the right to seek reconveyance of registered property is not
absolute because it is subject to extinctive prescription. However, when the
plaintiff is in possession of the land to be reconveyed, prescription cannot
set in. Such an exception is based on the theory that registration
proceedings could not be used as a shield for fraud or for enriching a person
at the expense of another.30
In the case at bar, the right of the respondents Spouses Lumbao to seek
reconveyance does not prescribe because the latter have been and are still
in actual possession and occupation as owners of the property sought to be
reconveyed, which fact has not been refuted nor denied by the petitioners.
Furthermore, respondents Spouses Lumbao cannot be held guilty of laches
because from the very start that they bought the 107-square meter lot from
the mother of the petitioners, they have constantly asked for the transfer of
the certificate of title into their names but Rita, during her lifetime, and the
petitioners, after the death of Rita, failed to do so on the flimsy excuse that
the lot had not been partitioned yet. Inexplicably, after the partition of the
entire estate of Maria, petitioners still included the 107-square meter lot in
their inheritance which they divided among themselves despite their
knowledge of the contracts of sale between their mother and the
respondents Spouses Lumbao.
Under the above premises, this Court holds that the "Bilihan ng Lupa"
documents dated 17 August 1979 and 9 January 1981 are valid and
enforceable and can be made the basis of the respondents Spouses
Lumbao’s action for reconveyance. The failure of respondents Spouses
Lumbao to have the said documents registered does not affect its validity
and enforceability. It must be remembered that registration is not a
requirement for validity of the contract as between the parties, for the effect
of registration serves chiefly to bind third persons. The principal purpose of
registration is merely to notify other persons not parties to a contract that a
transaction involving the property had been entered into. Where the party
has knowledge of a prior existing interest which is unregistered at the time
he acquired a right to the same land, his knowledge of that prior
unregistered interest has the effect of registration as to him.31 Hence, the
"Bilihan ng Lupa" documents dated 17 August 1979 and 9 January 1981,
being valid and enforceable, herein petitioners are bound to comply with
their provisions. In short, such documents are absolutely valid between and
among the parties thereto.
 42

Finally, the general rule that heirs are bound by contracts entered into by
their predecessors-in-interest applies in the present case. Article 131132 of
the NCC is the basis of this rule. It is clear from the said provision that
whatever rights and obligations the decedent have over the property were
transmitted to the heirs by way of succession, a mode of acquiring the
property, rights and obligations of the decedent to the extent of the value of
the inheritance of the heirs.33 Thus, the heirs cannot escape the legal
consequence of a transaction entered into by their predecessor-in-interest
because they have inherited the property subject to the liability affecting their
common ancestor. Being heirs, there is privity of interest between them and
their deceased mother. They only succeed to what rights their mother had
and what is valid and binding against her is also valid and binding as against
them. The death of a party does not excuse nonperformance of a contract
which involves a property right and the rights and obligations thereunder
pass to the personal representatives of the deceased. Similarly,
nonperformance is not excused by the death of the party when the other
party has a property interest in the subject matter of the contract.34

In the end, despite the death of the petitioners’ mother, they are still bound
to comply with the provisions of the "Bilihan ng Lupa," dated 17 August 1979
and 9 January 1981. Consequently, they must reconvey to herein
respondents Spouses Lumbao the 107-square meter lot which they bought
from Rita, petitioners’ mother. And as correctly ruled by the appellate court,
petitioners must pay respondents Spouses Lumbao attorney’s fees and
litigation expenses for having been compelled to litigate and incur expenses
to protect their interest.35 On this matter, we do not find reasons to reverse
the said findings.

WHEREFORE, premises considered, the instant Petition is hereby DENIED.

The Decision and Resolution of the Court of Appeals dated 8 June 2005 and
29 July 2005, respectively, are hereby AFFIRMED. Herein petitioners are
ordered to reconvey to respondents Spouses Lumbao the subject property
and to pay the latter attorney’s fees and litigation expenses. Costs against
petitioners.

SO ORDERED.

G.R. No. L-59952 August 31, 1984
RUBY H. GARDNER and FRANK GARDNER, JR., petitioners,
vs.
COURT OF APPEALS, DEOGRACIAS R. NATIVIDAD and JUANITA A.
SANCHEZ, respondents.
Mayor, Manalang, Reyes & Associates for petitioners.
Joanes Caacbay for private respondents.
MELENCIO-HERRERA, J.:
This is a Petition for the review of the Resolutions, dated April 24, 1980 and
December 24, 1980, respectively, of the then Court of Appeals in CA-G.R.
No. 52729-R entitled "Ruby H. Gardner, et al. versus Deogracias R.
Natividad, et al," whereby the original Decision of said Court, promulgated
on January 11, 1979, affirming in toto the judgment of the Court of First
Instance of Laguna, Branch I, Biñan in Civil Case No. B-774, was
reconsidered and the appealed judgment reversed in so far as private
respondents herein are concerned.
A chain of successive transfers of real property, five in all, is involved.
Petitioner Ruby H. GARDNER, married to Frank Gardner, Jr. an American
(the GARDNERS, for short), was the registered owner of two adjoining
parcels of agricultural land situated at Calamba, Laguna, designated as Lot
No. 1426-new and Lot No. 4748- new, with an aggregate area of 93,688
square meters more or less, and covered by TCT Nos. T-20571 and T-
20573, respectively, of the Registry of Property of Laguna (Exhibits "A" &
"B", Folio of Exhibits).
On November 27, 1961, the GARDNERS and the spouses Ariosto C.
SANTOS and Cirila Serrano (the SANTOSES) entered into an agreement for
the subdivision of the two parcels, with the SANTOSES binding themselves
to advance to the GARDNERS the amount of P93,000.00 in installments.
For the protection of both parties they executed the following documents all
on the same date and referring to the same parcels of land: (1) Absolute
Deed of Sale in favor of the SANTOSES (the First Transfer, considering the
nature of the document); (2) Subdivision Joint Venture Agreement; and (3)
43
Supplemental Agreement (Exhibits "C", "D" and "E",  Ibid.). Despite the
"sale,", the GARDNERS were still denominated in the Subdivision Joint
Venture Agreement and in the Supplemental Agreement as "owners" and
Ariosto SANTOS merely as "broker". It appears from the evidence that the
sale to the SANTOSES was one "in trust" for the protection of the
SANTOSES who had obligated themselves to give cash advances to the
GARDNERS from time to time (Exhibits "E-2" to "E-88" incl.) On December
5, 1961, new titles were issued in favor of the SANTOSES ( Exhibits " F " & "
G ", Ibid.).
Unknown to the GARDNERS, on June 10, 1964, the SANTOSES transferred
Lot No. 1426-New to Jose Cuenca, married to Amanda Relova (the JOSE
CUENCAS) (Exhibit "H", Ibid.), and on June 15, 1964, Lot No. 4748-New to
Juan Cuenca, married to Soledad Advincula (the JUAN CUENCAS) (Exhibit
"I", Ibid.) (jointly, the Second Transfer). Titles were thereafter issued in their
respective names (Exhibits "L" & "M", Ibid.).
Upon learning of the Transfer of the properties to the CUENCAS, petitioner
'Ruby GARDNER, caused the inscription of an Adverse Claim on the titles of
the CUENCAS with the Register of Deeds of Laguna on December 2, 1965,
Her Affidavit stated in part:
2. My adverse claim arose from the facts that sometime in
the middle part of 1961, I and Mr. Ariosto Santos of 2162
Apolinario, Bangkal St., Makati, Rizal had an
understanding and have agreed that we would subdivide
my aforedescribed properties then covered by TCT Nos.
T-20571 and T-20573 for Lot No. 1426-New and 4748-
New, respectively, under the condition that he would
advance to me a total amount of P93,000.00, which I
could withdraw little by little and from time to time; that he
would improve the aforesaid land by constructing paved
roads sewers, water, other facilities that may be required
by the authorities concerned and other requirements of the
subdivision laws until he shall have invested for these
purposes the sum of P234,220.00; that he assured me
that the construction of these paved roads, etc. would
commence immediately;
3. We (I and Mr. Ariosto Santos) have agreed that in order
to protect his (Mr. Santos) interest to the sum of
P93,000.00, to be withdrawn by me little by little and from

time to time, I would transfer to his name my
aforementioned titles in trust;
xxx xxx xxx
5. In the absolute Deed of Sale it was stated that I
received from Mr. Santos the sum of P70,266.00 and in
consideration of said amount, I have sold, transferred and
conveyed my aforedescribed parcels of land to Mr.
Santos; but these statements were and are not true, that is
why we have the other two more documents the
Subdivision Joint Venture Agreement and the
Supplemental Agreement. It is stated in the Subdivision
Joint Venture Agreement, which contains our true
agreement that Mr. Ariosto Santos is only my Broker, so
far as the aforedescribed parcels of land are concerned,
as can be gleaned from Page 2, paragraphs 2 and 3 of the
said Subdivision Joint Venture Agreement, ...
On October 19, 1966 and November 4, 1966, the JUAN CUENCAS and the
JOSE CUENCAS, respectively, transferred the lots to Michael C. VERROYA
(Exhibits "P" & Ibid.) an office assistant of Ariosto SANTOS (the Third
transfer). Titles were issued in VERROYA's name with the adverse Claim
carried over.
On March 29, 1967, VERROYA constituted a mortgage on both lots in favor
of Anita Nolasco and Rosario Dalina, which encumbrance was registered on
the existing titles.
On June 29, 1967, VERROYA ARROYA executed a deed of transfer of the
properties to respondent Deogracias Natividad, married to Juanita Sanchez
(the NATIVIDADS) (Exhibits "V", "V-4", Ibid.) (the Fourth Transfer).
On September 30, 1967, the NATIVIDADS transferred the lots to Ignacio
Bautista and Encarnacion de los Santos (the BAUTISTAS) (Exhibits "14",
"15" [Natividad], "JJ-2", Ibid.) (the Fifth Transfer). No titles were issued to the
BAUTISTAS.
It should be noted that from the titles of the CUENCAS (the Second
Transferees) to the titles of the NATIVIDADS (the Fourth Transferee), the
Adverse Claim of the GARDNERS continued to be carried, and that
throughout the successive transfers, or over a span of approximately six
44
years, the GARDNERS continued to remain in possession, cultivation and
occupation of the disputed properties.
Aggrieved by the series of transfers, the GARDNERS filed suit on July 8,
1969 for "Declaration of Nullity, Rescission and Damages" against the Five
Transferees, including the mortgagees, Anita Nolasco and Rosario Dalina,
before the Court of First Instance of Laguna, Branch I (Civil Case No. B-
774), praying for the declaration of nullity of all the Five Transfers and the
cancellation of all titles issued pursuant thereto on the ground that they were
all simulated, fictitious, and without consideration.
In their Answer, the SANTOSES claimed, in brief, that the sale to them was
conditional in the sense that the properties were to be considered as the
investment of the GARDNERS in the subdivision venture and that in the
event that this did not materialize they were to reconvey the lots to the
GARDNERS upon reimbursement by the latter of all sums advanced to
them; and that the deed of sale was to be registered for the protection of the
SANTOSES considering the moneys that the latter would be advancing.
For their part, respondents NATIVIDADS contended that they were
purchasers in good faith notwithstanding the adverse claim as the titles were
not shown to them by VERROYA at the time of the sale, and that they had
paid good and valuable consideration.
The mortgagees, Anita Nolasco and Rosario Dalima, denied the allegations
in the Complaint and counterclaimed for damages, which the GARDNERS
answered.
After the lifting of the Order of default against them, the CUENCAS filed their
Answer contending that their transfer to VERROYA of the properties in
question was not simulated and was supported by valuable consideration.
VERROYA, Juanita Sanchez (wife of Deogracias Natividad), and the
BAUTISTAS were declared in default for their failure to seasonably file their
responsive pleadings. 1
The GARDNERS, aside from their documentary evidence, adduced in their
favor the testimonies of Ruby GARDNER herself, Jose Infante, an employee
of the Register of Deeds of Laguna, and defendant Ariosto SANTOS who
was presented as an adverse witness.

Of the eight answering defendants, only respondent Deogracias NATIVIDAD
testified on his behalf. Defendant Ariosto SANTOS merely adopted as his
own evidence the declaration he had given as an adverse witness. The
JOSE CUENCAS and the JUAN CUENCAS neither presented any
testimonial evidence but just adopted the testimony of Ariosto SANTOS.
Defendants Anita Nolasco and Rosario Dalima, the mortgagees, submitted
their case after the genuineness of the deed of mortgage executed in their
favor by VERROYA was admitted by the parties. 2
On January 15, 1972, the Trial Court rendered judgment in favor of the
GARDNERS declaring as null and void the five Transfers; rescinding the
Subdivision Joint Venture Agreement (Exhibit "D") as well as the
Supplemental Agreement (Exhibits "E"; ordering the GARDNERS to
reimburse the SANTOSES the total cash advances of P36,712.80 which
theGARDNERS had received; authorizing the cancellation of the
corresponding titles issued pursuant to the deeds of sale and the issuance of
new ones in favor of the GARDNERS; ordering the deletion from the titles of
the mortgage executed by VERROYA; and requiring the Five Transferees
but not mortgagees, Anita Nolasco and Rosario Dalima, to pay the
GARDNERS P90,000.00 actual damages, P5,000.00 exemplary damages,
and to pay the costs.
The respondents NATIVIDADS appealed (notwithstanding that the wife was
declared in default) to the then Court of Appeals, which, on January 11,
1979 affirmed in toto the judgment of the Trial Court. 3 The NATIVIDADS
received the Decision of affirmance on January 16, 1979. On January 29,
1979, the NATIVIDADS asked for a 30-day extension from January 31, 1979
or up to March 2, 1979, within which to file a Motion for Reconsideration,
which was granted by respondent Court. 4 On March 2, 1979, the
NATIVIDADS filed their Motion for Reconsideration but the same was denied
on November 7, 1979. 5
On December 4, 1979, a "Very Urgent Manifestation and Motion for Leave to
File a Second Motion for Reconsideration" was filed by the NATIVIDADS.
The pleading was signed by Deogracias NATIVIDAD himself. Respondent
Court denied leave on December 28, 1979. 6 However, on the same date of
December 28, 1979, the NATIVIDADS filed their Second Motion for
Reconsideration.
On April 24, 1980, respondent Court reconsidered its Resolution of "January
7, 1980" denying respondents' "Motion for Leave to File Second Motion for
Reconsideration', and admitted said second Motion 7 (The resolution of
January 7,1980 refers to the resolution of December 28, 1979 which was
45
released on January 7, 1980). On December 24, 1980, respondent
Court 8 issued the questioned Resolution reversing its Decision of January
11, 1979 insofar as the NATIVIDADS are concerned, declaring as valid the
sale of the land to them as well as the titles issued pursuant thereto. On
January 20, 1981, the GARDNERS sought to set aside the questioned
Resolution and moved for entry of judgment averring that said Resolution
was null and void for having been issued without jurisdiction as the Decision
of January 11, 1979 had already become final and executory. The Motion
was denied for lack of merit on March 4, 1982. 9
Petitioners now seek to set aside the Appellate Court's Resolutions of April
24, 1980 (granting leave to file a 2nd Motion for Reconsideration) and
December 24, 1980 (reversing the original judgment), and assigning to
respondent Court the following errors:
I
The Court of Appeals erred in promulgating its resolution
of April 24, 1980, because it has already lost jurisdiction to
act on the case since the decision of January 11, 1979
had already become then final and executory.
II
The Court of Appeals erred in promulgating its resolution
of December 24, 1980, because it had already then lost
jurisdiction to act on the case, much more so, to reverse
through its resolution of December 24, 1980 its decision of
January 11, 1979 that has already become final and
executory.
III
Assuming arguendo that it has still jurisdiction to
promulgate its resolution of December 24, 1980, the Court
of Appeals erred in not holding that the defendant-
appellant Deogracias Natividad's second motion for
reconsideration, just like the first motion for
reconsideration, is unquestionably pro-forma, hence did
not suspend the running of the reglementary period of
time.

IV
Assuming arguendo that it has still jurisdiction to
promulgate its resolution of December 24, 1980, the Court
of Appeals erred in holding that the testimonies of Ariosto
Santos under oath on the witness stand cannot prevail
over the allegations in Santos' answer (not verified and
only signed by Ariosto Santos' counsel) and, regarding
which there is no substantial conflict or variance.
V Jan 16, 1979 Receipt by respondents of CA Decision
Assuming arguendo, it has still jurisdiction to promulgate
its resolution of December 24, 1980, the Court of Appeals
erred in reversing absolutely without valid justification, its
findings in its decision of January 11, 1979 and resolution
of November 7, 1979, both holding that defendant-
appellant Deogracias Natividad was not a buyer in good
faith and for value.
VI
Assuming arguendo that it has still jurisdiction to
promulgate its resolution of December 24, 1980, the Court
of Appeals erred in reversing, absolutely without valid
justification, its findings in its decision of January 11, 1979
and resolution of November 7, 1979 both holding that the
sales of the questioned properties from Ruby Gardner and
spouse Frank Gardner, Jr., to Ariosto Santos and spouse
Cirila Serrano, to Jose Cuenca and Juan Cuenca and their
spouses Amanda Relova and Soledad Advincula,
respectively, to Michael Verroya, to Deogracias Natividad
and spouse Juanita Sanchez, to Ignacio Bautista and
spouse Encarnacion delos Santos are null and void ab
initio.
VII
The Court of Appeals erred in holding that it will not
hesitate to consider and hear defendant-appellant
Deogracias Natividad's second motion for reconsideration
(even if it was received when the decision of January 11,
46
1979 was already final and executory) upon the
groundless claim that Deogracias Natividad was
abandoned by his counsel, who received the resolution
denying Natividad's first motion for reconsideration.
Upon the facts and the evidence, we rule that respondent Court had lost
jurisdiction to entertain the second Motion for Reconsideration because its
Decision of January 11, 1979 had already become final and executory as the
following chronological data before respondent Court will show:
dated Jan. 11, 1979.
Jan. 29, 1979 Private respondents filed motion for
extension of 30 days from Jan, 31, 1979 to file motion for
reconsideration.
This was granted.
Due — Mar. 2, 1979.
Mar. 2, 1979 Motion for Reconsideration filed (on the last
day).
Nov. 7, 1979 Reconsideration was denied.
Nov. 19, 1979 Receipt by private respondents of above
resolution.
Dec. 28, 1979 Motion for Leave to file Second Motion for
Reconsideration denied.
Dec. 28, 1979 Second Motion for Reconsideration filed by
private respondent.
Jan. 8, 1980 Motion for Reconsideration of Resolution of
Dec. 28, 1979 filed by private respondents.
April 24, 1980 Resolution reconsidering denial of Motion
for Leave, and Second Motion for Reconsideration

admitted. This is one of the admitted. This is one of the
disputed Resolutions.
Dec. 24, 1980 Resolution reversing Decision of January
11, 1979. This is other Resolution assailed.
Section 1, Rule 52 of the Rules of Court, provides:
Section 1. Motion for re-hearing. A motion for re- hearing
or reconsideration shall be made ex-parte and filed within
fifteen (15) days from notice of final order or judgment. No
more than one motion for re-hearing or reconsideration
shall be filed without express leave of court. A second
motion for reconsideration may be presented within fifteen
(15) days from notice of the order or judgment deducting
the time in which the first motion has been pending.
Evidently, the Second Motion for Reconsideration was filed beyond the
reglementary, period. The NATIVIDADS erroneously thought that they had
another 15-day period from the date of receipt of denial of the first Motion for
Reconsideration on November 7, 1979 within which to file a second Motion
for Reconsideration. That would be the rule for appeals by certiorari to the
Supreme Court from an Appellate Court judgment pursuant to Section 1 of
Rule 45.10 However, under the aforequoted provision, which is the
applicable rule, the time in which the first Motion has been pending has to be
deducted. As it was, all of the fifteen days had been used up when the first
Motion for Reconsideration was filed on March 2, 1979. The Decision of
January 11, 1979, therefore, had already attained finality on March 3, 1979
so that respondent Court no longer had jurisdiction to act on the "Very
Urgent Motion for Leave to File Second Motion for Reconsideration"
submitted by the NATIVIDADS on November 28, 1979, much less to grant
the same.
It is well settled that once a Decision has become final and executory, it is
removed from the power and jurisdiction of the Court which rendered it to
further alter or amend it, much less to revoke it. The subsequent filing of a
motion for reconsideration cannot disturb the finality of the judgment, nor
restore jurisdiction to the court. 11
Although the granting or denial of a motion for reconsideration involves the
exercise of discretion, 12 the same should not be exercise whimsically,
capriciously or arbitrarily, but prudently in conformity with law, justice, reason
and equity.
47
We likewise find reversible error in the reversal of respondent Court's
original Decision of January 11, 1979. In its Resolution of reversal, dated
December 24, 1980, respondent Court had stated in part:
The presence of the adverse claim in appellant's
(Deogracias Natividad) title does not make him a buyer in
bad faith The validity of the adverse claim has to be
determined by the Court. Until the validity of such claim is
determined judicially, the same cannot be considered as a
flaw in his vendor's title. The adverse claim first
appearance in the titles of the Cuencas, the second
buyers. It was carried on to the titles of subsequent
transferees. The title of Santos appeared clean This
makes the title of Santos' vendee clean. The subsequent
annotation of the adverse claim therein would not make
the Cuencas buyers in bad faith. If the Cuencas were
buyers in good faith, we do not see any reason why
subsequent buyers could not enjoy the same status. Good
faith is presumed while bad faith must be proved. ... 13
However, as set forth in the original Decision of the Appellate Court,
upholding the findings of the Trial Court, the evidence preponderantly shows
that all Five Transfer were null and void for having been simulated and
fictitious.
The First Transfer in favor of the SANTOSES was "indubitably established"
to have been without consideration and is, therefore, void and
inexistent. 14 That sale was executed merely as a means of protection to the
SANTOSES for their promised cash advances to the GARDNERS in one
year in the sum of P93,000.00. Added to this is the admission against his
own interest by Ariosto SANTOS that the GARDNERS did not receive from
him any consideration, 15 thereby corroborating the declarations of the
GARDNERS. The Subdivision Joint Venture Agreement (Exhibit "D") and the
Supplemental Agreement (Exhibit "E") eloquently express that the true and
real nature of the agreement between the GARDNERS and the SANTOSES
was for a subdivision and not a sale transaction.
The evidence also establishes that the Second Transfer to the CUENCAS
was fictitious and simulated for not having been supported with any
consideration. By his own admission, Ariosto SANTOS transferred to the
CUENCAS, who are his "compadres", the disputed properties, together with
others that he owned, merely to conceal his ownership and "to protect them
from persons who had filed suits against him and were running after the

properties registered in his name." It was SANTOS who had caused the
execution of those deeds of sale (Exhibits "H" & "I") and had them notarized
by his own counsel. 16 No wonder then that the CUENCAS did not even
dispute the validity of the adverse claim pursuant to Section 110 of the Land
Registration Act, and during the trial they merely adopted SANTOS'
testimony. Under the circumstances surrounding their transaction they knew
that their title was flawed and they were not, and cannot be considered,
buyers in good faith, having paid no consideration for the sale. The
subsequent registration of the adverse claim on their titles, therefore, could
not but serve as notice and warning to all subsequent buyers that someone
was claiming an interest in the properties or a better right than the registered
owners.
The Third Transfer in favor of VERROYA was similarly without consideration
and, therefore, void ab initio. The evidence on record shows that Ariosto
SANTOS himself caused the execution of the deeds of sale (Exhibits "P" &
"Q") in favor of VERROYA, who is SANTOS' office manager in his brokerage
business. The only purpose of the transfer was to enable VERROYA to
secure for SANTOS a loan with the Veterans Bank so much so that when
the documents of sale were signed by the CUENCAS in their respective
houses in favor of VERROYA, the latter was not even present. 17 Also
significant is the ' fact that Verroya was declared in default and had not even
bothered to resist the suit, which he would have done if the sale transaction
were genuine.
On equal footing is the Fourth Transfer from VERROYA VERROYA to
private respondents NATIVIDADS. It was SANTOS who had caused the
preparation of the deed of sale in favor of the NATIVIDADS after sensing
that VERROYA was not inclined to return the title to the properties.
Deogracias NATIVIDAD was SANTOS' close and trusted I 6 compadre who
agreed to put the titles in his (NATIVIDAD's) name because of the pending
cases against SANTOS. The amount of P 80,000.00 stated in the document
of sale was not actually paid by the NATIVIDADS to VERROYA, according
to SANTOS' own testimony. The latter further declared that VERROYA was
only coerced to sign the deeds (Exhibits "V" & ("V-4") after he was boxed by
NATIVIDAD in SANTOS' office at the Escolta. That coercion did exist is
shown by VERROYA's telegram to the Register of Deeds of Laguna to
dishonor any transaction involving the subject properties. 18
The Fifth Transfer to the BAUTISTAS partook of the same nature a
simulated and fictitious transaction, for being without consideration, as
shown by the evidence. They too, were declared in default and made no
attempt to answer or dispute the allegations in the Complaint against them.
48
The mortgage of the properties by VERROYA in favor of Anita Nolasco and
Rosario Dalima was executed after the inscription of the adverse claim on
the titles so that they can neither be considered as innocent mortgagees for
value.
Added proof of the fictitiousness of the chain of transfers is that fact that,
notwithstanding the same, the GARDNERS remained in actual possession,
cultivation and occupation of the disputed lots throughout the entire series of
transactions.
As concluded in the original Decision of respondent Court, all Five Transfers
starting from that of the SANTOSES down to the NATIVIDADS, were
absolutely simulated and fictitious and were, therefore, void ab initio and
inexistent. 19 Contracts of sale are void and produce no effect whatsoever
where the price, which appears therein as paid, has, in fact, never been paid
by the purchaser to the vendor.20 Such sales are inexistent and cannot be
considered consummated. 21
In its Resolution reversing the original Decision, respondent Court
discredited the testimony of Ariosto SANTOS for being at variance with the
allegations in his Answer. The fact, however, that the allegations made by
Ariosto SANTOS in his pleadings and in his declarations in open Court
differed win not militate against the findings herein made nor support the
reversal by respondent Court. As a general rule, facts alleged in a party's
pleading are deemed admissions of that party and binding upon it, but this is
not an absolute and inflexible rule. 22 An Answer is a mere statement of fact
which the party filing it expects to prove, but it is not evidence. 23 As Ariosto
SANTOS himself, in open Court, had repudiated the defenses he had raised
in his Answer and against his own interest, his testimony is deserving of
weight and credence. Both the Trial Court and the Appellate Court believed
in his credibility and we find no reason to overturn their findings thereon.
Lastly, the statement of respondent Court in its Resolution of reversal that
"until the validity of an adverse claim is determined judicially it cannot be
considered a flaw in the vendor's title, contradicts the very essence of
adverse claims. The annotation of an adverse claim is a measure designed
to protect the interest of a person over a piece of real property, and serves
as a notice and warning to third parties dealing with said property that
someone is claiming an interest on the same or has a better right than the
registered owner thereof.24 A subsequent sale of the property cannot prevail
over the adverse claim which was previously annotated in the certificate of
title of the property.25
 49

While one who buys from the registered owner need not have to look behind
the certificate of title, 26 he is nevertheless bound by the liens and
encumbrances annotated thereon.27 One who buys without checking the
vendor's title takes all the risks and losses consequent to such failure.28

WHEREFORE, the assailed Resolutions of respondent Court of Appeals

(now the Intermediate Appellate Court), dated April 24, 1980 and December
24, 1980, respectively, are hereby REVERSED and SET ASIDE, and its
Decision of January 11, 1979 affirming in toto the judgment of the then Court
of First Instance of Laguna, Branch 1, in Civil Case No. B-774, is hereby
reinstated. Costs against private respondents.

SO ORDERED.

G.R. No. 200134               August 15, 2012
ROBERTO OTERO, Petitioner,
vs.
ROGER TAN, Respondent.
VILLARAMA, JR.,*
RESOLUTION
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 April 29,
2011 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 02244,
which affirmed the Judgment2 dated December 28, 2007 issued by the
Regional Trial Court (RTC), Cagayan de Oro City, Branch 23 in Civil Case
No. 2007-90.
The Antecedent Facts
A Complaint3 for collection of sum of money and damages was filed by
Roger Tan (Tan) with the Municipal Trial Court in Cities (MTCC), Cagayan
de Oro City on July 28, 2005 against Roberto Otero (Otero). Tan alleged that
on several occasions from February 2000 to May 2001, Otero purchased on
credit petroleum products from his Petron outlet in Valencia City, Bukidnon
in the aggregate amount of ₱ 270,818.01. Tan further claimed that despite
several verbal demands, Otero failed to settle his obligation.
Despite receipt of the summons and a copy of the said complaint, which per
the records of the case below were served through his wife Grace R. Otero
on August 31, 2005, Otero failed to file his answer with the MTCC.
On November 18, 2005, Tan filed a motion with the MTCC to declare Otero
in default for his failure to file his answer. Otero opposed Tan’s motion,
claiming that he did not receive a copy of the summons and a copy of Tan’s
complaint. Hearing on the said motion was set on January 25, 2006, but was
later reset to March 8, 2006, Otero manifesting that he only received the
notice therefor on January 23, 2006. The hearing on March 8, 2006 was
further reset to April 26, 2006 since the presiding judge was attending a
convention. Otero failed to appear at the next scheduled hearing, and the
MTCC issued an order declaring him in default. A copy of the said order was
50
sent to Otero on May 9, 2006. Tan was then allowed to present his evidence
ex parte.
Tan adduced in evidence the testimonies of Rosemarie Doblado and Zita
Sara, his employees in his Petron outlet who attended Otero when the latter
made purchases of petroleum products now the subject of the action below.
He likewise presented various statements of account4 showing the petroleum
products which Otero purchased from his establishment. The said
statements of account were prepared and checked by a certain Lito Betache
(Betache), apparently likewise an employee of Tan.
The MTCC Decision
On February 14, 2007, the MTCC rendered a Decision5 directing Otero to
pay Tan his outstanding obligation in the amount of ₱ 270,818.01, as well as
attorney’s fees and litigation expenses and costs in the amounts of ₱
15,000.00 and ₱ 3,350.00, respectively. The MTCC opined that Otero’s
failure to file an answer despite notice is a tacit admission of Tan’s claim.
Undeterred, Otero appealed the MTCC Decision dated February 14, 2007 to
the RTC, asserting that the MTCC’s disposition is factually baseless and that
he was deprived of due process.
The RTC Decision
On December 28, 2007, the RTC rendered a Judgment6 affirming the MTCC
Decision dated February 14, 2007. The RTC held that the statements of
account that were presented by Tan before the MTCC were overwhelming
enough to prove that Otero is indeed indebted to Tan in the amount of ₱
270,818.01. Further, brushing aside Otero’s claim of denial of due process,
the RTC pointed out that:
As to the second assignment of error, suffice to say that as borne out by the
record of the case, defendant-appellant was given his day in Court contrary
to his claim. His wife, Grace R. Otero received a copy of the summons
together with a copy of the Complaint and its corresponding annexes on
August 31, 2005, per Return of Service made by Angelita N. Bandoy,
Process Server of OCC-MTCC of Davao City. He was furnished with a copy
of the Motion to Declare Defendant in Default on November 18, 2005, per
Registry Receipt No. 2248 which was received by the defendant. Instead of
filing his answer or any pleading to set aside the Order of default, he filed his

Comment to the Motion to Declare Defendant in Default of which plaintiff
filed his Rejoinder to Defendant’s Comment.
The case was set for hearing on January 23, 2006, but defendant through
counsel sent a telegram that he only received the notice on the day of the
hearing thereby he was unable to appear due to his previous scheduled
hearings. Still, for reasons only known to him, defendant failed to lift the
Order of Default.
The hearing on January 23, 2006 was reset on March 8, 2006 and again
reset on April 26, 2006 by agreement of counsels x x x.
It is not therefore correct when defendant said that he was deprived of due
process.7
Otero sought reconsideration of the Judgment dated December 28, 2007 but
it was denied by the RTC in its Order8 dated February 20, 2008.
Otero then filed a petition for review9 with the CA asserting that both the RTC
and the MTCC erred in giving credence to the pieces of evidence presented
by Tan in support of his complaint. Otero explained that the statements of
account, which Tan adduced during the ex parte presentation of his
evidence, were prepared by a certain Betache who was not presented as a
witness by Tan. Otero avers that the genuineness and due execution of the
said statements of account, being private documents, must first be
established lest the said documents be rendered inadmissible in evidence.
Thus, Otero asserts, the MTCC and the RTC should not have admitted in
evidence the said statements of account as Tan failed to establish the
genuineness and due execution of the same.
The CA Decision
On April 29, 2011, the CA rendered the assailed Decision10 which denied the
petition for review filed by Otero. In rejecting Otero’s allegation with regard to
the genuineness and due execution of the statements of account presented
by Tan, the CA held that any defense which Otero may have against Tan’s
claim is already deemed waived due to Otero’s failure to file his answer.
Thus:
Otero never denied that his wife received the summons and a copy of the
complaint. He did not question the validity of the substituted service.
Consequently, he is charged with the knowledge of Tan’s monetary claim.
51
Section 1, Rule 9 of the Rules of Court explicitly provides that defenses and
objections not pleaded are deemed waived. Moreover, when the defendant
is declared in default, the court shall proceed to render judgment granting
the claimant such relief as his pleading may warrant.
Due to Otero’s failure to file his Answer despite being duly served with
summons coupled with his voluntary appearance in court, he is deemed to
have waived whatever defenses he has against Tan’s claim. Apparently,
Otero is employing dilatory moves to defer the payment of his obligation
which he never denied.11 (Citation omitted)
Otero’s Motion for Reconsideration12 was denied by the CA in its
Resolution13 dated December 13, 2011.
Hence, the instant petition.
Issues
Essentially, the fundamental issues to be resolved by this Court are the
following: first, whether Otero, having been declared in default by the MTCC,
may, in the appellate proceedings, still raise the failure of Tan to
authenticate the statements of account which he adduced in evidence; and
second, whether Tan was able to prove the material allegations of his
complaint.
The Court’s Ruling
The petition is denied.
First Issue: Authentication of the Statements of Account
The CA, in denying the petition for review filed by Otero, held that since he
was declared in default by the MTCC, he is already deemed to have waived
whatever defenses he has against Tan’s claim. He is, thus, already barred
from raising the alleged infirmity in the presentation of the statements of
account.
We do not agree.
A defendant who fails to file an
answer loses his standing in court.

The effect of a defendant’s failure to file an answer within the time allowed
therefor is primarily governed by Section 3, Rule 9 of the Rules of Court, viz:
Sec. 3. Default; declaration of. – If the defending party fails to answer within
the time allowed therefor, the court shall, upon motion of the claiming party
with notice to the defending party, and proof of such failure, declare the
defending party in default. Thereupon, the court shall proceed to render
judgment granting the claimant such relief as his pleading may warrant,
unless the court in its discretion requires the claimant to submit evidence.
Such reception of evidence may be delegated to the clerk of court. x x x
(Emphasis ours)
A defendant who fails to file an answer may, upon motion, be declared by
the court in default. Loss of standing in court, the forfeiture of one’s right as a
party litigant, contestant or legal adversary, is the consequence of an order
of default. A party in default loses his right to present his defense, control the
proceedings, and examine or cross-examine witnesses. He has no right to
expect that his pleadings would be acted upon by the court nor may be
object to or refute evidence or motions filed against him.14
A defendant who was declared in
default may nevertheless appeal
from the judgment by default,
albeit on limited grounds.
Nonetheless, the fact that a defendant has lost his standing in court for
having been declared in default does not mean that he is left sans any
recourse whatsoever. In Lina v. CA, et al.,15 this Court enumerated the
remedies available to party who has been declared in default, to wit:
a) The defendant in default may, at any time after discovery thereof and
before judgment, file a motion, under oath, to set aside the order of default
on the ground that his failure to answer was due to fraud, accident, mistake
or excusable neglect, and that he has meritorious defenses; (Sec 3, Rule 18)
b) If the judgment has already been rendered when the defendant
discovered the default, but before the same has become final and executory,
he may file a motion for new trial under Section 1(a) of Rule 37;
c) If the defendant discovered the default after the judgment has become
final and executory, he may file a petition for relief under Section 2 of Rule
38; and
52
d) He may also appeal from the judgment rendered against him as contrary
to the evidence or to the law, even if no petition to set aside the order of
default has been presented by him. (Sec. 2, Rule 41)16 (Emphasis ours)
Indeed, a defending party declared in default retains the right to appeal from
the judgment by default. However, the grounds that may be raised in such
an appeal are restricted to any of the following: first, the failure of the plaintiff
to prove the material allegations of the complaint; second, the decision is
contrary to law; and third, the amount of judgment is excessive or different in
kind from that prayed for.17 In these cases, the appellate tribunal should only
consider the pieces of evidence that were presented by the plaintiff during
the ex parte presentation of his evidence.
A defendant who has been declared in default is precluded from raising any
other ground in his appeal from the judgment by default since, otherwise, he
would then be allowed to adduce evidence in his defense, which right he had
lost after he was declared in default.18 Indeed, he is proscribed in the
appellate tribunal from adducing any evidence to bolster his defense against
the plaintiff’s claim. Thus, in Rural Bank of Sta. Catalina, Inc. v. Land Bank
of the Philippines,19 this Court explained that:
It bears stressing that a defending party declared in default loses his
standing in court and his right to adduce evidence and to present his
defense. He, however, has the right to appeal from the judgment by default
and assail said judgment on the ground, inter alia, that the amount of the
judgment is excessive or is different in kind from that prayed for, or that the
plaintiff failed to prove the material allegations of his complaint, or that the
decision is contrary to law. Such party declared in default is proscribed from
seeking a modification or reversal of the assailed decision on the basis of
the evidence submitted by him in the Court of Appeals, for if it were
otherwise, he would thereby be allowed to regain his right to adduce
evidence, a right which he lost in the trial court when he was declared in
default, and which he failed to have vacated. In this case, the petitioner
sought the modification of the decision of the trial court based on the
evidence submitted by it only in the Court of Appeals.20 (Citations omitted
and emphasis ours)
Here, Otero, in his appeal from the judgment by default, asserted that Tan
failed to prove the material allegations of his complaint. He contends that the
lower courts should not have given credence to the statements of account
that were presented by Tan as the same were not authenticated. He points
out that Betache, the person who appears to have prepared the said
statements of account, was not presented by Tan as a witness during the ex

parte presentation of his evidence with the MTCC to identify and
authenticate the same. Accordingly, the said statements of account are mere
hearsay and should not have been admitted by the lower tribunals as
evidence.
Thus, essentially, Otero asserts that Tan failed to prove the material
allegations of his complaint since the statements of account which he
presented are inadmissible in evidence. While the RTC and the CA, in
resolving Otero’s appeal from the default judgment of the MTCC, were only
required to examine the pieces of evidence that were presented by Tan, the
CA erred in brushing aside Otero’s arguments with respect to the
admissibility of the said statements of account on the ground that the latter
had already waived any defense or objection which he may have against
Tan’s claim.
Contrary to the CA’s disquisition, it is not accurate to state that having been
declared in default by the MTCC, Otero is already deemed to have waived
any and all defenses which he may have against Tan’s claim.
While it may be said that by defaulting, the defendant leaves himself at the
mercy of the court, the rules nevertheless see to it that any judgment against
him must be in accordance with the evidence required by law. The evidence
of the plaintiff, presented in the defendant’s absence, cannot be admitted if it
is basically incompetent. Although the defendant would not be in a position
to object, elementary justice requires that only legal evidence should be
considered against him. If the same should prove insufficient to justify a
judgment for the plaintiff, the complaint must be dismissed. And if a
favorable judgment is justifiable, it cannot exceed in amount or be different in
kind from what is prayed for in the complaint.21
Thus, in SSS v. Hon. Chaves,22 this Court emphasized that:
We must stress, however, that a judgment of default against the petitioner
who failed to appear during pre-trial or, for that matter, any defendant who
failed to file an answer, does not imply a waiver of all of their rights, except
their right to be heard and to present evidence to support their allegations.
Otherwise, it would be meaningless to request presentation of evidence
every time the other party is declared in default. If it were so, a decision
would then automatically be rendered in favor of the non-defaulting party
and exactly to the tenor of his prayer. The law also gives the defaulting
parties some measure of protection because plaintiffs, despite the default of
defendants, are still required to substantiate their allegations in the
complaint.23 (Citations omitted and emphasis ours)
53
The statements of account
presented by Tan were merely
hearsay as the genuineness and due
execution of the same were not
established.
Anent the admissibility of the statements of account presented by Tan, this
Court rules that the same should not have been admitted in evidence by the
lower tribunals.
Section 20, Rule 132 of the Rules of Court provides that the authenticity and
due execution of a private document, before it is received in evidence by the
court, must be established. Thus:
Sec. 20. Proof of private document. – Before any private document offered
as authentic is received in evidence, its due execution and authenticity must
be proved either:
a) By anyone who saw the document executed or written; or
b) By evidence of the genuineness of the signature or handwriting of the
maker.
Any other private document need only be identified as that which it is
claimed to be.
A private document is any other writing, deed, or instrument executed by a
private person without the intervention of a notary or other person legally
authorized by which some disposition or agreement is proved or set forth.
Lacking the official or sovereign character of a public document, or the
solemnities prescribed by law, a private document requires authentication in
the manner allowed by law or the Rules of Court before its acceptance as
evidence in court. The requirement of authentication of a private document is
excused only in four instances, specifically: (a) when the document is an
ancient one within the context of Section 21, Rule 132 of the Rules of Court;
(b) when the genuineness and authenticity of an actionable document have
not been specifically denied under oath by the adverse party; (c) when the
genuineness and authenticity of the document have been admitted; or (d)
when the document is not being offered as genuine.24
The statements of account which Tan adduced in evidence before the
MTCC indubitably are private documents. Considering that these documents
 54

do not fall among the aforementioned exceptions, the MTCC could not admit
the same as evidence against Otero without the required authentication
thereof pursuant to Section 20, Rule 132 of the Rules of Court. During
authentication in court, a witness positively testifies that a document
presented as evidence is genuine and has been duly executed, or that the
document is neither spurious nor counterfeit nor executed by mistake or
under duress.25
Here, Tan, during the ex parte presentation of his evidence, did not present
anyone who testified that the said statements of account were genuine and
were duly executed or that the same were neither spurious or counterfeit or
executed by mistake or under duress. Betache, the one who prepared the
said statements of account, was not presented by Tan as a witness during
the ex parte presentation of his evidence with the MTCC.
Considering that Tan failed to authenticate the aforesaid statements of
account, the said documents should not have been admitted in evidence
against Otero. It was thus error for the lower tribunals to have considered the
same in assessing the merits of Tan’s Complaint.
First, the statements of account adduced by Tan during the ex parte
presentation of his evidence are just summaries of Otero's unpaid
obligations, the absence of which do not necessarily disprove the latter's
liability.
Second, aside from the statements of account, Tan likewise adduced in
evidence the testimonies of his employees in his Petron outlet who testified
that Otero, on various occasions, indeed purchased on credit petroleum
products from the former and that he failed to pay for the same. It bears
stressing that the MTCC, the R TC and the CA all gave credence to the said
testimonial evidence presented by Tan and, accordingly, unanimously found
that Otero still has unpaid outstanding obligation in favor of Tan in the
amount of ₱ 270,818.01.
Well-established is the principle that factual findings of the trial court, when
adopted and confirmed by the CA, are binding and conclusive on this Court
and will generally not be reviewed on appeal.28 The Court sees no
compelling reason to depart from the foregoing finding of fact of the lower
courts.

Second Issue: The Material Allegations of the Complaint WHEREFORE, in consideration of the foregoing disquisitions, the petition
is DENIED. The Decision dated April 29, 2011 rendered by the Court of
In view of the inadmissibility of the statements of account presented by Tan, Appeals in CA-G.R. SP No. 02244 is AFFIRMED.
the remaining question that should be settled is whether the pieces of
evidence adduced by Tan during the ex parte presentation of his evidence, SO ORDERED.
excluding the said statements of account, sufficiently prove the material
allegations of his complaint against Otero.

We rule in the affirmative.

In civil cases, it is a basic rule that the party making allegations has the
burden of proving them by a preponderance of evidence. The parties must
rely on the strength of their own evidence and not upon the weakness of the
defense offered by their opponent.26 This rule holds true especially when the
latter has had no opportunity to present evidence because of a default order.
Needless to say, the extent of the relief that may be granted can only be so
much as has been alleged and proved with preponderant evidence required
under Section 1 of Rule 133.27

Notwithstanding the inadmissibility of the said statements of account, this

Court finds that Tan was still able to prove by a preponderance of evidence
the material allegations of his complaint against Otero.

[G.R. No. L-29333. February 27, 1969.]
MARIANO LL. BADELLES, Protestant-Appellant, v. CAMILO P.
CABILI, Protestee-Appellee.
[G.R. No. L-29334. February 27, 1969.]
BONIFACIO P. LEGASPI and CECILIO T. BARAZON, Protestants-
Appellants, v. FELIX Z. ACTUB, PROVIDENCIO P. ABRAGAN, MANUEL
E. CELDRAN, CASIMERO P. CABIGON and BENITO ONG, protestees-
appellees.
Bonifacio P. Legaspi for and in his own behalf.
Camilo P. Cabili, Gerardo B. Padilla and Ignacio Espanol & Voltaire I .
Roviro for Protestee-Appellee.
SYLLABUS
1. ELECTION LAW; ELECTION PROTEST; FAILURE TO ALLEGE
THEREIN THE DETAILS OF ELECTION IRREGULARITIES AND THAT
THEY WOULD AFFECT THE RESULT OF THE ELECTIONS; SUCH
FAILURE IS NOT A GROUND TO DISMISS AN ELECTION PROTEST
BASED ON IRREGULARITIES; INSTANT CASE. — A greater regard for the
cause of accuracy ought to have admonished the lower court from asserting
in an uncompromising tone the absence of an allegation that the protestants
in both cases failed to allege, that if the facts pleaded by them were proved
the result would not have been different. It is true the complaints could have
been more explicitly worded, but as they stood, the absence of such a claim
could not be so confidently asserted. Both protests were dismissed. We do
not discount a certain degree of plausibility attaching to the line of reasoning
thus pursued by the lower court. We are not unaware of the undeniable fact
that both petitions were not distinguished by skill in their drafting or precision
in their terminology. Nonetheless the seriousness and gravity of the imputed
failure to have the elections conducted freely and honestly, with such
irregularities alleged, give rise to doubts, rational and honest, as to who were
the duly elected officials. Such allegations, it is to be stressed, would have to
be accepted at their face value for the purpose of determining whether there
is a cause of action, a motion to dismiss amounting to a hypothetical
admission of facts thus pleaded. We cannot in law and in conscience then
sustain the order of dismissal. Without the lower court having so intended,
the dismissal would amount to judicial abnegation of a sworn duty to inquire
55
into and pass upon in an appropriate proceeding allegations of misconduct
and misdeeds of such character. Accordingly, we reverse.
2. ID.; ID.; PROPER REMEDY TO QUESTION ELECTION
IRREGULARITIES. — It would follow that if the grievance relied upon is the
widespread irregularities and the flagrant violations of the election law, the
proper remedy is the one availed of here, the protest. That such should be
the case should occasion no surprise. Time and time again, we have
stressed the importance of preserving inviolate the right of suffrage. If that
right be disregarded or frittered away, then popular sovereignty becomes a
myth. It may not always be thus unfortunately. That should be the ideal
however. If there be a failure to observe the mandates of the Election Code,
the aggrieved parties should not be left remediless. Under the law, as it
stands, it is precisely an election protest that fitly serves that purpose. It was
sought to be thus utilized in these two cases, perhaps in a rather awkward
and far from entirely satisfactory manner. That in itself is no reason for the
courts to slam the door against any opportunity for redress. Yet, that is what
would happen if the order of dismissal complained of were not set aside.
3. CONSTITUTIONAL LAW; REPUBLICANISM; RIGHT OF PEOPLE
THEREUNDER TO FREELY ELECT THEIR OFFICIALS. — A republic to be
true to its name requires that the government rests on the consent of the
people, consent freely given, intelligently arrived at, honestly recorded, and
thereafter counted. Only thus can they really be looked upon as the ultimate
sources of established authority. It is their undeniable right to have officials
of their unfettered choice. The election law has no justification except as a
means for assuring a free, honest and orderly expression of their views. It is
of the essence that corruption and irregularities should not be permitted to
taint the electoral process.
BARREDO, J., concurring:chanrob1es virtual 1aw library
1. ELECTION LAW; ELECTION PROTEST; WHEN THE SOLE PURPOSE
THEREOF IS TO ANNUL THE ELECTION, IT IS UNNECESSARY TO
INQUIRE INTO ITS EFFECT ON THE RESULT OF THE ELECTION. — I
believe that what should be emphasized in these cases is that ruling in Our
decision to the effect that in an election protest (otherwise entitled at times,
petition or complaint or motion of protest), it is not necessary to allege that
the true results of the election in question would be in favor of protestant and
against protestee on the basis of the legal votes, or that the proclaimed
results would be changed if the facts alleged are proven, when the sole
ground of the protest and the only purpose of protestant is to have the whole
election in a precinct or municipality annulled and set aside. In other words, I
like to make it clear that an election protest may be filed not only for the
purpose of having the protestant declared elected, but even for the purpose

alone of having the election annulled. Otherwise stated, protestants may
come to court, not necessarily to win an election, but even if solely to have
the court declare that no one has won because the election is void and that it
is obvious and pure common sense that in the latter case, the protestant
does not have to allege the probability of his being the real victor, for in such
a case, his prayer precisely is - that it be declared, using the language of the
law, "that none of them has been legally elected."cralaw virtua1aw library
2. ID.; ID.; DISMISSAL OF PROTEST BY THE TRIAL COURT FINDS NO
SUPPORT IN JURISPRUDENCE. — The ruling of the trial court must be
emphatically denounced as misreading by His Honor of the real import of the
authorities cited by him. Such proposition represents the most narrow
concept of the judicial remedies in matters of election. No single precedent
in extant jurisprudence whether here or in any other country can be found to
support it. I am equally confident that no thesis in any of the existing legal
publications can be referred to as upholding such an illogical idea. To
sanction such a ruling is to kill almost entirely all hopes for a clean, orderly
and honest suffrage in this country, which the Commission on Elections
alone may not be able to achieve in all possible cases. Indeed, as pointed
out by appellants the trial court would have been right if it had only adhered
to the decisions already rendered by this Court on the subject, cited by said
appellants in their brief.
3. ID.; ID.; THE REAL ISSUE IN THE INSTANT PROTEST IS WHETHER
THERE IS SUFFICIENT GROUND FOR ANNULMENT. — The real issue in
these election protests is whether or not the facts alleged in the respective
petitions of appellants constitute sufficient ground or grounds for annulment
of the election of Mayor and Councilors in Iligan City, held in November,
1967. On this score, it has to be admitted that, indeed, the petitions of
appellants which appear to have been prepared by a single counsel are not
as accurately and precisely worded as to fit exactly into the pattern that may
perhaps be most ideal in cases of this nature, but I cannot go along with His
Honor’s ruling that the allegations in said petitions are legally inadequate to
serve as a basis for the relief of annulment of the election therein prayed for.
His Honor seemed to be more concerned with what he considered the need
to direct averments that the irregularities and violations of the election law
alleged by appellants resulted in the destruction of the "secrecy and integrity
of the ballot cast," that "all the votes cast in said elections are illegal" and
that "the irregularities committed by the election officials would affect the
election in favor of the protestees." I feel that His Honor was asking too
much and unnecessarily because, as they appear to me, these allegations
as well as the others His Honor considered as indispensably required, are
more in the nature of legal conclusions, not supposed to be averred in the
pleadings, rather than statements of ultimate facts. The truth of the matter is
that, viewed as a whole, the petitions in question sufficiently lead to the
56
conclusion that what appellants are complaining about is that the elections
held in Iligan City in November, 1967 were characterized by general and
specific circumstances that leave rational doubt as to whether or not the true
will of the people of said City could be reflected in the proclaimed results.
4. ID.; ID.; DESIRABILITY OF DISCOURAGING THE FILING THEREOF;
DUE CARE NEEDED IN DISMISSING SUCH PROTEST; INSTANT CASE.
— While it is truly desirable that election protests should be discouraged
where they have hardly any basis in fact or in law, the earlier to free from
doubt the title to their respective offices of those chosen to direct the affairs
of our government, whether national or local, thereby giving them the peace
of mind and freedom of action gravely needed in the formulation of policies
and the implementation thereof, courts should also be careful in seeing to it
that their doors are not untimely shut to complaints regarding the
commission of electoral frauds, irregularities and illegalities, the most
despicable banes of popular suffrage, which though unhappily worded are
fairly indicative of a situation wherein the will of the electorate has not been
freely and clearly expressed. To my mind, the rule followed in an unbroken
time of decisions of this Court, to the effect that the commission of
irregularities by election officials, no matter how serious, and the actual
discovery of frauds and violations of law by either candidates or voters, are
not in themselves sufficient to cause the annulment of an election unless so
expressly provided by law, or that the frauds, illegalities and irregularities are
so rampant and diffusive as to place the result of such election in grave
doubt, is one that governs more the rendition of judgments in election cases
and the evaluation of the circumstances surrounding the elections in
question, as portrayed in the evidence already presented before the court,
rather than as a strict criterion for determining whether a complaint or
petition or motion of protest sufficiently states a cause of action for
annulment.
5. ID.; ID.; LIBERALITY IN THE INTERPRETATION OF PLEADINGS
THEREFOR. — I regard it as a sound rule that pleadings in election cases,
at least, should not be subjected to such minute examination as should be
done to facts duly established after proper hearing, if only because facts are
unerring manifestations of the truth, while allegations in pleadings often
suffer from the common flaws in the means of human expressions as well as
from the usual imperfections of human language. If words are but children of
thoughts, parents and offsprings do not always, as among men and animals,
look exactly alike. Pleadings in such cases must, therefore, be read with
more liberality so as to make it difficult, if not impossible for grievances
against the suppression in one form or another of the expression of the
popular will, well-grounded in fact, may not be thrown out merely because of
lack of skill and precision in the formulation of the corresponding protests.
More importance should be given to the substantial matters sufficiently

appearing in such pleadings as intended to be brought to the court for a
remedy, than to the form, at times, ambiguous and often ungrammatically
phrased, in which they are expressed. In any event, in case of doubt as to
which should be done, such doubt must be resolved in giving due course to
the protest, unless it is manifestly evident that the same has been filed for
other than legitimate purposes.
DECISION
FERNANDO, J.:
Two election protests against the duly proclaimed Mayor and Councilors of
Iligan City, after the Nov. 14, 1967 elections, based on the allegations of
flagrant violations of certain mandatory provisions of the Election Code, to
be more specifically set forth hereafter, were dismissed in a single order by
the Court of First instance of Lanao del Norte, the Honorable Teodulo C.
Tandayag presiding. The cases are now before us on
appeal.chanroblesvirtuallawlibrary
In one of them, 1 the election of Honorable Camilo P. Cabili to the Office of
City Mayor of Iligan City, was contested by protestant, now appellant,
Mariano Badelles. In the other, 2 the protestants are the now appellants,
Bonifacio P. Legaspi and Cecilio T. Barazon, who along with the five
protestees 3 were among those who were registered candidates voted for in
such election for councilors in the City of Iligan, with the protestees being
credited with the five highest number of votes, with protestants Legaspi and
Barazon obtaining sixth and seventh places respectively.
In such order of dismissal, it was admitted that while irregularities as well as
misconduct on the part of election officers were alleged in the election
protests filed, there was however an absence of an allegation that they
would change the result of the election in favor of the protestants and
against the protestees, that such irregularities would destroy the secrecy and
integrity of the ballots cast, or that the protestees knew of or participated in
the commission thereof. For the lower court then, the lack of a cause of
action was rather evident.
Hence the order of dismissal of March 23, 1968, which was sought to be
fortified by the invocation of the doctrines that voters should not be deprived
of their right to vote occasioned by the failure of the election officials to
57
comply with the formal prerequisites to the exercise of the right of suffrage
and that the rules and regulations for the conduct of elections while
mandatory before the voting should be considered directory thereafter. The
validity of such order of dismissal is now to be inquired into by us in this
appeal.
In the petition of protestant Badelles, dated December 8, 1967, and marked
as received the next day by the Clerk of Court of the Court of First Instance
of Lanao del Norte, 15th Judicial District, it was stated that both he and
protestee Camilo P. Cabili were the duly registered candidates for the Office
of City Mayor of Iligan City, both having filed their respective certificates of
candidacy in accordance with law and as such candidates voted for in the
November 14, 1967 election. It was then alleged that the Board of
Canvassers, on November 25, 1967, proclaimed as elected protestee for
having obtained 11,310 votes while protestant was credited with 8,966
votes. Protestant would impugn the election of Cabili on the ground that
there were "flagrant violations of mandatory provisions of law relating to or
governing elections . . ." in that more than 200 voters were registered per
precinct contrary to the provision limiting such number of 200 only and that
no publication of the list of voters for each precinct was made up to the
election day itself, enabling persons who under the law could not vote being
allowed to do so. As a result of such alleged "flagrant violations of the laws
relative to or governing elections" around 8,300 individuals were allowed to
vote illegally.
It was likewise asserted that not less than 8,000 qualified voters were unable
to exercise their right of suffrage in view of their failure, without any fault on
their part, to have the proper identification cards or the non-listing of their
names in the list of voters. It was stated further that even in the case of
those individuals provided with identification cards with their names included
in the list of voters, they could not avail themselves of their right of suffrage
as their applications for registration could not be found. Mention was also
made of the fact that the final lists of voters and the applications for
registration were delivered to their respective precincts late on election day
itself thus preventing them from voting. Moreover, confusion, so it was
alleged, was caused by the excessive number of voters being listed and
many having been assigned to precincts other than the correct ones.
What was thus objected to is the fact that illegal votes were cast by those
not qualified to do so, numbering 8,300 or more and that an approximately
equal number, who were duly registered with the Commission on Elections,
Iligan City, were unable to vote due to the above circumstances. The
proclamation then could not have reflected the true will of the electorate as
to who was the mayor elected, as the majority of protestee Cabili over the
protestant consisted of only 2,344 votes.

The prayer was among others for the proclamation of protestee as well as
other candidates for elective positions in the City of Iligan being set aside
and declared null and void, protestant pleading further that he be granted
other such relief as may be warranted in law and equity.
The protest of the candidates for councilor Legaspi and Barazon, in the other
case against protestees 4 was in substance similarly worded. The prayer
was for the setting aside and declaring null and void the proclamation of
protestees, with protestants seeking such other relief which should be theirs
according to law and to equity.
In the first case, protestee Cabili moved to dismiss the petition on the
following grounds: "1. That the protest was filed beyond the reglementary
period allowed by the Revised Election Code; 2. That [the lower court] has
no jurisdiction over the subject matter of the present case, the Commission
on Elections being the proper body to hear the same; 3. That the complaint
states no cause of action." 5 This very same grounds were relied upon in a
motion to dismiss by protestees Actub and Cabigon, filed in the other suit.
As above noted, in a single order of March 23, 1968, the two above election
protests were dismissed, the lower court being of the opinion that neither
petition alleged a cause of action "to justify [it] to try the same." The first
ground of the motion to dismiss to the effect that the protests in both cases
were filed beyond the reglementary period was rejected. The claim as to lack
of jurisdiction was likewise held to be without merit. The single order of
dismissal in both cases as indicated was based on the lack of a cause of
action.
The reasoning followed by the lower court in reaching the above conclusion
that there was no cause of action proceeded along these lines: "Mere
irregularities or misconduct on the part of election officers which do not tend
to affect the result of the elections are not of themselves either ground for
contest or for proper matters of inquiry. . . .There is no allegation in the
protest that the alleged irregularities committed by the election officers would
tend to change the result of the election in favor of the protestants and
against the protestees. There is no allegation in the petition that the 8,000
voters who failed to vote were all voters of protestants and the 8,300 illegal
voters who voted were for the protestees. There is, therefore, no legal and
practical justification for the court to inquire into the irregularities committed
by the election officials, as alleged in the petition, for it would not give any
benefit in favor of the protestants to the end that they will be declared the
duly elected mayor and councilors, respectively, of this City." 6
It was further stated in such order of dismissal: "There is no allegation in the
58
petition that the irregularities committed by the election officials have
destroyed the secrecy and integrity of the ballots cast. There is no allegation
in the petition that the non-compliance of the election officials of the
provisions of the election laws regarding the registration of voters were
intentional on their part for the purpose of committing frauds for the benefit of
the protestees. There is no allegation in the petition that because of the
alleged irregularities committed by the election officials in not following the
provisions of the election laws regarding the registration of voters and the
distribution of the precincts, that all the votes cast during said elections are
illegal, nor is there an allegation in the protests that the irregularities
committed by the election officials would affect the election in favor of the
protestees." 7
A greater regard for the cause of accuracy ought to have admonished the
lower court from asserting in an uncompromising tone the absence of an
allegation that the protestants in both cases failed to allege that if the facts
pleaded by them were proved the result would not have been different. It is
true the complaints could have been more explicitly worded, but as they
stood, the absence of such a claim could not be so confidently asserted.
To repeat, both protests were dismissed. We do not discount a certain
degree of plausibility attaching to the line of reasoning thus pursued by the
lower court. We are not unaware of the undeniable fact that both petitions
were not distinguished by skill in their drafting or precision in their
terminology. Nonetheless the seriousness and gravity of the imputed failure
to have the elections conducted freely and honestly, with such irregularities
alleged, give rise to doubts, rational and honest, as to who were the duly
elected officials. Such allegations, it is to be stressed, would have to be
accepted at their face value for the purpose of determining whether there is
a cause of action, a motion to dismiss amounting to a hypothetical admission
of facts thus pleaded. We cannot in law and in conscience then sustain the
order of dismissal.chanrobles virtual lawlibrary
Without the lower court having so intended, the dismissal would amount to
judicial abnegation of a sworn duty to inquire into and pass upon in an
appropriate proceeding allegations of misconduct and misdeeds of such
character. Accordingly, we reverse.
Abes v. Commission on Elections 8 points the way, but the lower court was
apparently impervious to its teaching. It may not be controlling, but it
furnishes more than a hint. It would seem, though, that for the court below,
its message did not ring out loud and clear.
The opinion in the Abes case, penned by Justice Sanchez, starts thus:
"Petitioner’s cry for relief, so their petition avers, is planted upon the

constitutional mandate of free, orderly, and honest elections. Specifically,
they list a number of repressible acts." Among those mentioned were that
blank official registration forms were taken from the office of the Quezon City
Comelec Register several weeks before election day, November 14, 1967;
that active campaigning within the polling places by Nacionalista leaders or
sympathizers of Nacionalista candidates were allowed; that voters were
permitted to vote on mere mimeographed notices of certain Nacionalista
candidates; that voters were compelled to fill their official ballots on open
tables, desks and in many precincts outside the polling places; that
thousands of voters sympathetic to the Nacionalista candidates were
allowed to vote beyond the hours for voting allowed by law; that identification
cards were delivered by partisan leaders of respondents Nacionalista
candidates, and those who did not signify their preference for Nacionalista
candidates were not given such cards; that the precinct books of voters were
not sealed within the deadline fixed by law; and that the resulting effect of
irregularities was to prevent fully fifty-one per cent of the registered voters
from voting.
One of the issues raised on the above facts is whether or not the
Commission on Elections could annul the aforesaid election in Quezon City
on the above allegations of fraud, terrorism and other illegal practices
committed before and during the election. The petition did not prosper; it was
dismissed. The remedy, we held, lay not with the Commission on Elections
but with the courts of justice in an election protest.
In the language of Justice Sanchez: "The boundaries of the forbidden area
into which Comelec may not tread are also marked by jurisprudence. That
Comelec is not the proper forum to seek annulment of an election based on
terrorism, frauds and other illegal practices, is a principle emphasized in
decisions of this Court." For as announced in Nacionalista Party v.
Commission on Elections, 9 assuming that there be a failure to conduct an
election in a free, orderly and honest manner, "the duty to cure or remedy
the resulting evil" did not rest with the Commission on Elections but in "some
other agencies of the Government." More specifically, with reference to
provincial and municipal officials, election contests "are entrusted to the
courts." Then came this express affirmation: "The power to decide election
contests necessarily includes the power to determine the validity or nullity of
the votes questioned by either of the contestants."cralaw virtua1aw library
As so emphatically observed in the Abes opinion, "there has been neither
deviation nor retreat from the foregoing pronouncement." After which came
the following: "The ratiocination advanced that there was failure of election
due to rampancy of terrorism, frauds, and other irregularities, before and
during elections, such that allegedly about 51% of the registered voters were
not able to vote, will not carry the day for petitioners. For, in the first place,
59
this is grounded upon bare assertions. Respondents contest the correctness
thereof. And in the answer of respondents Amoranto, Mathay and others,
they aver that out of 162,457 registered voters in Quezon City, 100, 382
voters actually cast their votes—about 62% of the registered voters. But
above all, as pointed out in City Board of Canvassers v. Moscoso, [the]
nullity of an election for municipal officials should be determined in a petition
contesting the election of municipal officers-elect to be filed before the Court
of First Instance."cralaw virtua1aw library
Why an election protest is more fitly and appropriately the procedure for
determining whether irregularities or serious violations of the electoral law
vitiated the conduct of elections was clearly and succinctly explained in the
Moscoso decision above cited, the opinion coming from Justice Makalintal.
10 Thus: "The question of whether or not there had been terrorism, vote-
buying and other irregularities in the 1959 elections in Tacloban City should
be ventilated in a regular election protest, pursuant to Section 174 of the
Election Code, and not in a petition to enjoin the city board of canvassers
from canvassing the election returns and proclaiming the winning candidates
for municipal offices."cralaw virtua1aw library
It would follow then that if the grievance relied upon is the widespread
irregularities and the flagrant violations of the election law, the proper
remedy is the one availed of here, the protest.
That such should be the case should occasion no surprise. Time and time
again, 11 we have stressed the importance of preserving inviolate the right
of suffrage. If that right be disregarded or frittered away, then popular
sovereignty becomes a myth.chanrobles.com.ph : virtual law library
As Justice Laurel correctly pointed out: "As long as popular government is
an end to be achieved and safeguarded, suffrage, whatever may be the
modality and form devised, must continue to be the means by which the
great reservoir of power must be emptied into the receptacular agencies
wrought by the people through their Constitution in the interest of good
government and the common weal. Republicanism, in so far as it implies the
adoption of a representative type of government, necessarily points to the
enfranchised citizen as a particle of popular sovereignty and as the ultimate
source of the established authority." 12
A republic then to be true to its name requires that the government rests on
the consent of the people, consent freely given, intelligently arrived at,
honestly recorded, and thereafter counted. Only thus can they be really
looked upon as the ultimate sources of established authority. It is their
undeniable right to have officials of their unfettered choice. The election law
has no justification except as a means for assuring a free, honest and
 60

orderly expression of their views. It is of the essence that corruption and

irregularities should not be permitted to taint the electoral process.

It may not always be thus unfortunately. That should be the ideal however. If
there be a failure to observe the mandates of the Election Code, the
aggrieved parties should not be left remediless. Under the law as it stands, it
is precisely an election protest that fitly serves that purpose.

It was sought to be thus utilized in these two cases, perhaps in a rather

awkward and far from entirely satisfactory manner. That in itself is no reason
for the courts to slam the door against any opportunity for redress. Yet, that
is what would happen if the order of dismissal complained of were not set
aside.

Hence the inevitability of its reversal. The scope of our decision must not be
misinterpreted however. All that it directs is that the protestees in both cases
be required to answer. Thereafter, if, as is not unlikely, there be a denial of
the serious imputations made as to the alleged irregularities, the lower court
could properly inquire into what actually transpired. After the facts are thus
ascertained in accordance with the accepted procedural rules, then the
appropriate law could be applied.

It must be clearly emphasized that we do not at this stage intimate any view
as to the merit, or lack of it, of either protest. That would be premature to say
the least. All we do is to set aside the order of dismissal. pred

WHEREFORE, the order of dismissal of March 23, 1968, is reversed and the
two cases remanded to the lower court for proceeding and trial in
accordance with this opinion and the law. Without costs.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Ruiz

Castro, Capistrano and Teehankee, JJ., concur.

G.R. No. 225035
CARSON REALTY & MANAGEMENT CORPORATION, Petitioner
vs.
RED ROBIN SECURITY AGENCY and MONINA C. SANTOS,
Respondents
DECISION
VELASCO, JR., J.:
Nature of the Case
This is a petition for review under Rule 45 of the Rules of Court, which seeks
to reverse and set aside the August 20, 2015 Decision1 and June 8, 2016
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 121983.
Factual Antecedents
The facts according to the CA are as follows:
On March 23, 2007, respondent Monina C. Santos (Santos) filed a
Complaint for Sum of Money and Damages against petitioner Carson Realty
& Management Corp. (Carson) with the Quezon City Regional Trial Court
(RTC), Branch 216. As per the Officer's Return dated April 12, 2007 of
Process Server Jechonias F. Pajila, Jr. (Process Server Pajila), a copy of the
Summons dated April 11, 2007, together with the Complaint and its
annexes, was served upon Carson at its business address at Unit 601
Prestige Tower Condominium, Emerald Avenue, Ortigas Center, Pasig City,
through its "corporate secretary," Precilla S. Serrano.3
Thereafter, the appointed Corporate Secretary and legal counsel of Carson,
Atty. Tomas Z. Roxas, Jr. (Atty. Roxas), filed an Appearance and Motion
dated April 25, 2007 with the court wherein the latter entered his appearance
and acknowledged that the Summons was served and received by one of
the staff assistants of Carson. Atty. Roxas prayed for an extension of fifteen
(15) days from April 27, 2007 within which to file a responsive pleading. The
RTC, in its Order dated May 3, 2007, noted the appearance of Atty. Roxas
as counsel for Carson and granted his request for extension of time to file a
responsive pleading.4
61
Instead of filing a responsive pleading, Atty. Roxas moved to dismiss the
complaint, alleging that the Summons dated April 11, 2007 was not served
on any of the officers and personnel authorized to receive summons under
the Rules of Court.5
In her Comment, Santos countered that while the Summons was initially
received by Serrano, who as it turned out was a staff assistant and not the
corporate secretary of Carson, the corporation acknowledged receipt of the
Summons when Atty. Roxas alleged in his Appearance and Motion that he
may not be able to comply with the 15-day prescribed period stated in the
Summons within which to file a responsive pleading. Thus, when Carson
sought for an affirmative relief of a 15-day extension from April 27, 2007 to
file its pleading, it already voluntarily submitted itself to the jurisdiction of the
RTC.6
The RTC denied Carson's Motion to Dismiss and directed the issuance of an
alias summons to be served anew upon the corporation. On November 9,
2007, Process Server Pajila submitted his Officer's Report stating in essence
that he attempted to serve the alias Summons dated September 24, 2007 on
the President and General Manager of Carson, as well as on the Board of
Directors and Corporate Secretary, but they were not around. Hence, he
was advised by a certain Lorie Fernandez, the "secretary" of the company,
to bring the alias Summons to the law office of Atty. Roxas. Process Server
Pajila attempted to serve the alias Summons at the law office of Atty. Roxas
twice, but to no avail. This prompted him to resort to substituted service of
the alias Summons by leaving a copy thereof with a certain Mr. JR Taganila,
but the latter also refused to acknowledge receipt of the alias Summons.7
Atty. Roxas filed a Manifestation stating that the alias Summons was again
improperly and invalidly served as his law office was not empowered to
receive summons on behalf of Carson. In relation thereto, Atty. Roxas
maintained that substituted service is not allowed if the party defendant is a
corporation. Thus, Atty. Roxas manifested his intention of returning the alias
Summons to the RTC.
On December 10, 2007, Santos filed a Motion to Declare Defendant in
Default. Finding that there was an improper service of summons on Carson,
the RTC denied the motion.
Thereafter, Santos requested the RTC for the issuance of another alias
Summons. The RTC granted this request and issued an alias Summons
dated September 9, 2008. Process Server Pajila submitted his Officer's

Return dated October 28, 2008 on the services of the alias Summons,
quoted hereunder in full:
THIS IS TO CERTIFY that on October 2, 2008 at around 12:51 in the
afternoon, when a copy of Alias Summons dated September 9, 2008 issued
in the above-entitled case together with a copy of the complaint and annexes
attached thereto was brought for service to the President/General Manager
of CARSON REALTY & MANAGEMENT CORP., in the person of Marcial M.
Samson and/or Nieva A. Cabrera at its office address at Unit 601 Prestige
Tower Condominium, Emerald Avenue, Ortigas Center, 1605 Pasig City,
undersigned was informed by the secretary of the company in the person of
Ms. Vina Azonza that the abovementioned persons were not around and
there was no one in the company authorized to receive the aforesaid
summons. That the undersigned went back to the said office on October 16,
2008 at around 3:08 in the afternoon and was entered by Ms. Lorie
Fernandez, also an employee of the company who is authorized to receive
the said process. On October 27, 2008, at around 2:23 in the afternoon,
undersigned tried again to serve the same process to the President/General
Manager of Carson Realty & Management Corp. but with the same result.
Finally, on October 28, 2008 at around 1:03 in the afternoon, the
undersigned went back to the said company to personally serve the Alias
Summons together with the other pertinent documents, just the same, the
President/General Manager of the company was not around, hence,
substituted service of summons was resorted to by leaving the copy of the
Alias Summons at the company's office through its employee, MS. LORIE
FERNANDEZ, however, she refused to acknowledge receipt of the process.
Loreta M. Fernandez (Fernandez), the receptionist who received the
September 9, 2008 alias Summons, filed a Manifestation before the RTC
signifying her intention of returning the alias Summons, together with the
Complaint. Fernandez posited that, as a mere receptionist, she had no
authority to receive the said documents and that there was an improper
service of summons.
Santos filed a second Motion to Declare Defendant in Default in January
2009. The RTC granted the motion and allowed her to present her
evidence ex-parte  in its Order dated June 29, 2009.8
On August 27, 2009, Carson filed an Urgent Motion to Set Aside Order of
Default9 alleging that the RTC has yet to acquire jurisdiction over its person
due to improper service of summons. The RTC denied the same in its
December 4, 2009 Order.10
62
Carson filed an Urgent Motion for Reconsideration and for Leave of Court to
Admit Responsive Pleading on March 17, 2010, appending thereto its
Answer with Counterclaims. This was opposed by Santos in her
Comment/Opposition. In the meantime, Santos filed an Ex-Parte Motion to
Set for Hearing and for Reception of Evidence Before the Branch Clerk of
Court.11 On November 22, 2010, the RTC rendered an Order12 denying
Carson's Urgent Motion for Reconsideration and granting Santos' Ex-Parte
Motion to Set Case for Hearing and for Reception of Evidence Before the
Branch Clerk.13
Carson filed a Motion for Clarification and prayed for the annulment of the
Orders dated June 29, 2009, December 4, 2009, and November 22, 2010.
The RTC, however, maintained its stance and denied the motion in its
Order14 dated September 9, 2011.
Thus, Carson filed a Petition for Certiorari15 dated November 9, 2011 under
Rule 65 of the Rules of Court with the CA, imputing grave abuse of
discretion amounting to lack or excess of jurisdiction to the RTC for issuing
the Orders dated June 29, 2009, December 4, 2009, November 22, 2010,
and September 9, 2011. Carson essentially questioned the validity of the
service of the second alias Summons dated September 9, 2008, received by
Fernandez, who is a receptionist assigned at its office in Ortigas.
Ruling of the Court of Appeals
The CA denied the petition and ruled that the RTC had properly acquired
jurisdiction over Carson due to its voluntary appearance in court. In ruling
thus, the CA considered Carson's act of requesting additional time to file its
responsive pleading as voluntary submission to the jurisdiction of the trial
court.
Even on the assumption that Carson did not voluntarily submit to the RTC's
jurisdiction, the CA maintained that the RTC still acquired jurisdiction over it
due to the substituted service of the alias Summons dated September 9,
2008. The appellate court reasoned that Fernandez is a competent person
charged with authority to receive court documents on behalf of the
corporation.16 Consequently, the CA upheld the Order dated June 29, 2009
declaring Carson in default.
Carson moved for reconsideration but was denied by the CA in its
Resolution dated June 8, 2016. Hence, this petition.

Carson, in the main, argues that the trial court did not acquire jurisdiction
over its person because the summons was not properly served upon its
officers as mandated under Section 11,17 Rule 14 of the Rules of Court.
Thus, Carson posits, the RTC improperly declared it in default and should
not have allowed Santos to present her evidence ex-parte.
Issues
The pertinent issues for the resolution of this Court can be summarized, as
follows:
(1) Whether the RTC acquired jurisdiction over Carson.
(2) Whether Carson was properly declared in default.
Our Ruling
The petition is bereft of merit.
In actions in personam,  such as the present case, the court acquires
jurisdiction over the person of the defendant through personal or substituted
service of summons. However, because substituted service is in derogation
of the usual method of service and personal service of summons is preferred
over substituted service, parties do not have unbridled right to resort to
substituted service of summons. Before substituted service of summons is
resorted to, the parties must: (a) indicate the impossibility of personal service
of summons within a reasonable time; (b) specify the efforts exerted to
locate the defendant; and (c) state that the summons was served upon a
person of sufficient age and discretion who is residing in the address, or who
is in charge of the office or regular place of business of the defendant.18
In relation to the foregoing, Manotoc v. Court of Appeals19 provides an
exhaustive discussion on what constitutes valid resort to substituted service
of summons:
(1) Impossibility of Prompt Personal Service
The party relying on substituted service or the sheriff must show that
defendant cannot be served promptly or there is impossibility of prompt
service. Section 8, Rule 14 provides that the plaintiff or the sheriff is given a
"reasonable time" to serve the summons to the defendant in person, but no
63
specific time frame is mentioned. "Reasonable time" is defined as "so much
time as is necessary under the circumstances for a reasonably prudent and
diligent man to do, conveniently, what the contract or duty requires that
should be done, having a regard for the rights and possibility of loss, if any,
to the other party." Under the Rules, the service of summons has no set
period.
However, when the court, clerk of court, or the plaintiff asks the sheriff to
make the return of the summons and the latter submits the return of
summons, then the validity of the summons lapses. The plaintiff may then
ask for an alias summons if the service of summons has failed. What then is
a reasonable time for the sheriff to effect a personal service in order to
demonstrate impossibility of prompt service? To the plaintiff, "reasonable
time" means no more than seven (7) days since an expeditious processing
of a complaint is what a plaintiff wants. To the sheriff, "reasonable time"
means 15 to 30 days because at the end of the month, it is a practice for the
branch clerk of court to require the sheriff to submit a return of the summons
assigned to the sheriff for service. The Sheriffs Return provides data to the
Clerk of Court, which the clerk uses in the Monthly Report of Cases to be
submitted to the Office of the Court Administrator within the first ten (10)
days of the succeeding month. Thus, one month from the issuance of
summons can be considered "reasonable time" with regard to personal
service on the defendant.
Sheriffs are asked to discharge their duties on the service of summons with
due care, utmost diligence, and reasonable promptness and speed so as not
to prejudice the expeditious dispensation of justice. Thus, they are enjoined
to try their best efforts to accomplish personal service on defendant. On the
other hand, since the defendant is expected to try to avoid and evade
service of summons, the sheriff must be resourceful, persevering, canny,
and diligent in serving the process on the defendant. For substituted service
of summons to be available, there must be several attempts by the sheriff to
personally serve the summons within a reasonable period [of one month]
which eventually resulted in failure to prove impossibility of prompt service.
"Several attempts" means at least three (3) tries, preferably on at least two
different dates. In addition, the sheriff must cite why such efforts were
unsuccessful. It is only then that impossibility of service can be confirmed or
accepted.
(2) Specific Details in the Return
The sheriff must describe in the Return of Summons the facts and
circumstances surrounding the attempted personal service. The efforts

made to find the defendant and the reasons behind the failure must be
clearly narrated in detail in the Return. The date and time of the attempts on
personal service, the inquiries made to locate the defendant, the name/s of
the occupants of the alleged residence or house of defendant and all other
acts done, though futile, to serve the summons on defendant must be
specified in the Return to justify substituted service. The form on Sheriffs
Return of Summons on Substituted Service prescribed in the Handbook for
Sheriffs published by the Philippine Judicial Academy requires a narration of
the efforts made to find the defendant personally and the fact of failure.
Supreme Court Administrative Circular No. 5 dated November 9, 1989
requires that "impossibility of prompt service should be shown by stating the
efforts made to find the defendant personally and the failure of such efforts,"
which should be made in the proof of service.
(3) A Person of Suitable Age and Discretion
If the substituted service will be effected at defendant's house or residence,
it should be left with a person of "suitable age and discretion then residing
therein." A person of suitable age and discretion is one who has attained the
age of full legal capacity (18 years old) and is considered to have enough
discernment to understand the importance of a summons. "Discretion" is
defined as "the ability to make decisions which represent a responsible
choice and for which an understanding of what is lawful, right or wise may be
presupposed". Thus, to be of sufficient discretion, such person must know
how to read and understand English to comprehend the import of the
summons, and fully realize the need to deliver the summons and complaint
to the defendant at the earliest possible time for the person to take
appropriate action. Thus, the person must have the "relation of confidence"
to the defendant, ensuring that the latter would receive or at least be notified
of the receipt of the summons. The sheriff must therefore determine if the
person found in the alleged dwelling or residence of defendant is of legal
age, what the recipient's relationship with the defendant is, and whether said
person comprehends the significance of the receipt of the summons and his
duty to immediately deliver it to the defendant or at least notify the defendant
of said receipt of summons. These matters must be clearly and specifically
described in the Return of Summons.
(4) A Competent Person in Charge
If the substituted service will be done at defendant's office or regular place of
business, then it should be served on a competent person in charge of the
place. Thus, the person on whom the substituted service will be made must
be the one managing the office or business of defendant, such as the
64
president or manager; and such individual must have sufficient knowledge to
understand the obligation of the defendant in the summons, its importance,
and the prejudicial effects arising from inaction on the summons. Again,
these details must be contained in the Return.
The substituted service of summons is valid
While Our pronouncement in Manotoc has been strictly applied to several
succeeding cases, We do not cling to such strictness in instances where the
circumstances justify substantial compliance with the requirements laid down
therein. It is the spirit of the procedural rules, not their letter, that governs.20
In Sagana v. francisco,21 the substituted service of summons was
questioned for non-compliance with the Rules, since the summons was not
allegedly served at defendant's residence or left with any person who was
authorized to receive it on behalf of the defendant. We upheld the validity of
the substituted service of summons due to the defendant's evident
avoidance to receive the summons personally despite the process server's
diligent efforts to effect personal service upon him. We explained:
We do not intend this ruling to overturn jurisprudence to the effect that
statutory requirements of substituted service must be followed strictly,
faithfully, and fully, and that any substituted service other than that
authorized by the Rules is considered ineffective. However, an overly strict
application of the Rules is not warranted in this case, as it would clearly
frustrate the spirit of the law as well as do injustice to the parties, who have
been waiting for almost 15 years for a resolution of this case. We are not
heedless of the widespread and flagrant practice whereby defendants
actively attempt to frustrate the proper service of summons by refusing to
give their names, rebuffing requests to sign for or receive documents, or
eluding officers of the court. Of course it is to be expected that defendants
try to avoid service of summons, prompting this Court to declare that, "the
sheriff must be resourceful, persevering, canny, and diligent in serving the
process on the defendant." However, sheriffs are not expected to be sleuths,
and cannot be faulted where the defendants themselves engage in
deception to thwart the orderly administration of justice.
Similarly, given the circumstances in the case at bench, We find that resort
to substituted service was warranted since the impossibility of personal
service is clearly apparent.
A perusal of the Officer's Return dated October 28, 2008 detailing the
circumstances surrounding the service of the second alias Summons dated

September 9, 2008 shows that the foregoing requirements for a valid
substituted service of summons were substantially complied with.
Indeed, the Return established the impossibility of personal service to
Carson's officers, as shown by the efforts made by Process Server Pajila to
serve the September 8, 2008 alias Summons on Carson's President/General
Manager. In particular, several attempts to serve the summons on these
officers were made on four separate occasions: October 2, 2008, October
16, 2008, October 27, 2008, and October 28, 2008, but to no avail.
On his fourth and final attempt, Process Server Pajila served the summons
on Fernandez, Carson's receptionist, due to the unavailability and difficulty to
locate the company's corporate officers. The pertinent portion of the Return
states:
[S]ubstituted service of summons was resorted to by leaving the copy of the
Alias Summons at the company's office through its employee, MS. LORIE
FERNANDEZ, however, she refused to acknowledge receipt of the process.
Based on the facts, there was a deliberate plan of Carson's for its officers
not to receive the Summons. It is a legal maneuver that is in derogation of
the rules on Summons. We cannot tolerate that.
The facts now show that the responsible officers did not intend to receive the
alias Summons through substituted service. The Summons is considered
validly served.1âwphi1
The RTC acquired jurisdiction over Carson
In any event, even if We concede the invalidity of the substituted service,
such is of little significance in view of the fact that the RTC had already
acquired jurisdiction over Carson early on due to its voluntary submission to
the jurisdiction of the court.
Courts acquire jurisdiction over the plaintiffs upon the filing of the complaint.
On the other hand, jurisdiction over the defendants in a civil case is acquired
either through the service of summons upon them or through their voluntary
appearance in court and their submission to its authority,22 as provided in
Section 20,23 Rule 14 of the Rules of Court.
On this score, Philippine Commercial International Bank v. Spouses
Dy24 instructs that:
65
As a general proposition, one who seeks an affirmative relief is deemed to
have submitted to the jurisdiction of the court. It is by reason of this rule that
we have had occasion to declare that the filing of motions to admit
answer, for additional time to file answer, for reconsideration of a default
judgment, and to lift order of default with motion for reconsideration, is
considered voluntary submission to the court's jurisdiction. This, however, is
tempered only by the concept of conditional appearance, such that a party
who makes a special appearance to challenge, among others, the court's
jurisdiction over his person cannot be considered to have submitted to its
authority. Prescinding from the foregoing, it is thus clear that:
(1) Special appearance operates as an exception to the general rule on
voluntary appearance;
(2) Accordingly, objections to the jurisdiction of the court over the person of
the defendant must be explicitly made, i.e., set forth in an unequivocal
manner; and
(3) Failure to do so constitutes voluntary submission to the jurisdiction of the
court, especially in instances where a pleading or motion seeking affirmative
relief is filed and submitted to the court for resolution. (underscoring
supplied)
We have, time and again, held that the filing of a motion for additional time to
file answer is considered voluntary submission to the jurisdiction of the
court.25 If the defendant knowingly does an act inconsistent with the right to
object to the lack of personal jurisdiction as to him, like voluntarily appearing
in the action, he is deemed to have submitted himself to the jurisdiction of
the court.26 Seeking an affirmative relief is inconsistent with the position that
no voluntary appearance had been made, and to ask for such relief, without
the proper objection, necessitates submission to the Court's jurisdiction.27
Carson voluntarily submitted to the jurisdiction of the RTC when it filed,
through Atty. Roxas, the Appearance and Motion dated April 25, 2007
acknowledging Carson's receipt of the Summons dated April 11, 2007 and
seeking additional time to file its responsive pleading. As noted by the CA,
Carson failed to indicate therein that the Appearance and Motion was being
filed by way of a conditional appearance to question the regularity of the
service of summons. Thus, by securing the affirmative relief of additional
time to file its responsive pleading, Carson effectively voluntarily submitted
to the jurisdiction of the RTC.
Carson was properly declared in default
 66

Section 3, Rule 9 of the Rules of Court states when a party may be properly
declared in default and the remedy available in such case:
SEC. 3. Default; declaration of- If the defending party fails to answer within
the time allowed therefor, the court shall, upon motion of the claiming party
with notice to the defending party, and proof of such failure, declare the
defending party in default. Thereupon, the court shall proceed to render
judgment granting the claimant such relief as his pleading may warrant,
unless the court in its discretion requires the claimant to submit evidence.
Such reception of evidence may be delegated to the clerk of court.
(a) Effect of order of default. - A party in default shall be entitled to notice of
subsequent proceedings but not to take part in the trial.1âwphi1
(b) Relief from order of default.- A party declared in default may at any time
after notice thereof and before judgment file a motion under oath to set aside
the order of default upon proper showing that his failure to answer was due
to fraud, accident, mistake or excusable negligence and that he has a
meritorious defense. In such case, the order of default may be set aside on
such terms and conditions as the judge may impose in the interest of justice.
(emphasis supplied)
(Prudential) moved to declare Atiko in default due to the latter's failure to file
its responsive pleading despite receipt of the summons. Acting on
Prudential's motion, the trial court declared Atiko in default. In affirming the
validity of the default order, We took note that the trial court acquired
jurisdiction over Atiko due to its voluntary submission to the jurisdiction of the
court by filing numerous pleadings seeking affirmative relief, and not on the
strength of the invalidly served summons.
In a similar vein, the erroneous basis cited in the June 29, 2009 Order, due
to the RTC' s mistaken belief that the substituted service vested it with
jurisdiction over Carson, does not render the pronouncement invalid in view
of the existence of a lawful ground therefor.
WHEREFORE, the petition is DENIED. The Decision dated August 20, 2015
and Resolution dated June 8, 2016 of the Court of Appeals in CA-G.R. SP
No. 121983 are AFFIRMED.

Carson moved to dismiss the complaint instead of submitting a responsive

pleading within fifteen (15) days from April 27, 2007 as prayed for in its
Appearance and Motion. Clearly, Carson failed to answer within the time
allowed for by the RTC. At this point, Carson could have already been validly
declared in default. However, believing that it has yet to acquire jurisdiction
over Carson, the RTC issued the September 24, 2007 and September 9,
2008 alias Summons. This culminated in the issuance of the assailed June
29, 2009 Order declaring Carson in default on the basis of the substituted
service of the September 9, 2008 alias Summons. While Carson filed its
Urgent Motion to Lift Order of Default, the CA found that the same failed to
comply with the requirement under Sec. 3(b) that the motion be under oath.

It bears noting that the propriety of the default order stems from Carson's
failure to file its responsive pleading despite its voluntary submission to the
jurisdiction of the trial court reckoned from its filing of the Appearance and
Motion, and not due to its failure to file its answer to the September 8, 2008
alias Summons. This conclusion finds support in Atiko Trans, Inc. and
Cheng Lie Navigation Co., Ltd. v. Prudential Guarantee and Assurance,
lnc.,28 wherein We upheld the trial court's order declaring petitioner Atiko
Trans, Inc. (Atiko) in default despite the invalid service of summons upon it.
In this case, respondent Prudential Guarantee and Assurance Inc.

G.R. No. 108538             January 22, 1996
LOURDES A. VALMONTE and ALFREDO D. VALMONTE, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, THIRD DIVISION and ROSITA
DIMALANTA, respondents.
DECISION
MENDOZA, J.:
Petitioner Lourdes A. Valmonte is a foreign resident. The question is
whether in an action for partition filed against her and her husband, who is
also her attorney, summons intended for her may be served on her husband,
who has a law office in the Philippines. The Regional Trial Court of Manila,
Branch 48, said no and refused to declare Lourdes A. Valmonte in default,
but the Court of Appeals said yes. Hence this petition for review on certiorari.
The facts of the case are as follows:
Petitioners Lourdes A. Valmonte and Alfredo D. Valmonte are husband and
wife. They are both residents of 90222 Carkeek Drive South Seattle,
Washington, U.S.A. Petitioner Alfredo D. Valmonte, who is a member of the
Philippine bar, however, practices his profession in the Philippines,
commuting for this purpose between his residence in the state of
Washington and Manila, where he holds office at S-304 Gedisco Centre,
1564 A. Mabini Ermita, Manila.
On March 9, 1992, private respondent Rosita Dimalanta, who is the sister of
petitioner Lourdes A. Valmonte, filed a complaint for partition of real property
and accounting of rentals against petitioners Lourdes A. Valmonte and
Alfredo D. Valmonte before the Regional Trial Court of Manila, Branch 48.
The subject of the action is a three-door apartment located in Paco, Manila.
In her Complaint, private respondent alleged:
The plaintiff is of legal age, a widow and is at present a resident of
14823 Conway Road, Chesterfield, Missouri, U.S.A., while the
defendants are spouses, of legal age and at present residents of
90222 Carkeek Drive, South Seattle, Washington, U.S.A., but, for
purposes of this complaint may be served with summons at
Gedisco Center, Unit 304, 1564 A. Mabini St., Ermita, Manila where
67
defendant Alfredo D. Valmonte as defendant Lourdes Arreola
Valmonte's spouse holds office and where he can be found.
Apparently, the foregoing averments were made on the basis of a letter
previously sent by petitioner Lourdes A. Valmonte to private respondent's
counsel in which, in regard to the partition of the property in question, she
referred private respondent's counsel to her husband as the party to whom
all communications intended for her should be sent. The letter reads:
July 4, 1991
Dear Atty. Balgos:
This is in response to your letter, dated 20 June 1991, which I
received on 3 July 1991. Please address all communications to my
lawyer, Atty. Alfredo D. Valmonte, whose address, telephone and
fax numbers appear below.
c/o Prime Marine
Gedisco Center, Unit 304
1564 A. Mabini, Ermita
Metro Manila
Telephone: 521-1736
Fax: 521-2095
Service of summons was then made upon petitioner Alfredo D. Valmonte,
who at the time, was at his office in Manila. Petitioner Alfredo D. Valmonte
accepted the summons, insofar as he was concerned, but refused to accept
the summons for his wife, Lourdes A. Valmonte, on the ground that he was
not authorized to accept the process on her behalf. Accordingly the process
server left without leaving a copy of the summons and complaint for
petitioner Lourdes A. Valmonte.
Petitioner Alfredo D. Valmonte thereafter filed his Answer with Counterclaim.
Petitioner Lourdes A. Valmonte, however, did not file her Answer. For this
reason private respondent moved to declare her in default. Petitioner Alfredo
D. Valmonte entered a special appearance in behalf of his wife and opposed
the private respondent's motion.
In its Order dated July 3, 1992, the trial court, denied private respondent's
motion to declare petitioner Lourdes A. Valmonte in default. A motion for
reconsideration was similarly denied on September 23, 1992. Whereupon,

private respondent filed a petition for certiorari, prohibition
and mandamus  with the Court of Appeals.
On December 29, 1992, the Court of Appeals rendered a decision granting
the petition and declaring Lourdes A. Valmonte in default. A copy of the
appellate court's decision was received by petitioner Alfredo D. Valmonte on
January 15, 1993 at his Manila office and on January 21, 1993 in Seattle,
Washington. Hence, this petition.
The issue at bar is whether in light of the facts set forth above, petitioner
Lourdes A. Valmonte was validly served with summons. In holding that she
had been, the Court of Appeals stated:1
[I]n her above-quoted reply, Mrs. Valmonte clearly and unequivocally
directed the aforementioned counsel of Dimalanta to address all
communications (evidently referring to her controversy with her sister Mrs.
Dimalanta over the Paco property, now the subject of the instant case) to her
lawyer who happens also to be her husband. Such directive was made
without any qualification just as was her choice/designation of her husband
Atty. Valmonte as her lawyer likewise made without any qualification or
reservation. Any disclaimer therefore on the part of Atty. Valmonte as to his
being his wife's attorney (at least with regard to the dispute vis-a-vis (sic) the
Paco property) would appear to be feeble or trifling, if not incredible.
This view is bolstered by Atty. Valmonte's subsequent alleged special
appearance made on behalf of his wife. Whereas Mrs. Valmonte had
manifestly authorized her husband to serve as her lawyer relative to her
dispute with her sister over the Paco property and to receive all
communications regarding the same and subsequently to appear on her
behalf by way of a so-called special appearance, she would nonetheless
now insist that the same husband would nonetheless had absolutely no
authority to receive summons on her behalf. In effect, she is asserting that
representation by her lawyer (who is also her husband) as far as the Paco
property controversy is concerned, should only be made by him when such
representation would be favorable to her but not otherwise. It would
obviously be inequitable for this Court to allow private respondent Lourdes
A. Valmonte to hold that her husband has the authority to represent her
when an advantage is to be obtained by her and to deny such authority
when it would turn out to be her disadvantage. If this be allowed, Our Rules
of Court, instead of being an instrument to promote justice would be made
use of to thwart or frustrate the same.
xxx       xxx       xxx
68
Turning to another point, it would not do for Us to overlook the fact
that the disputed summons was served not upon just an ordinary
lawyer of private respondent Lourdes A. Valmonte, but upon her
lawyer husband. But that is not all, the same lawyer/husband
happens to be also her co-defendant in the instant case which
involves real property which, according to her lawyer/husband/co-
defendant, belongs to the conjugal partnership of the defendants
(the spouses Valmonte). It is highly inconceivable and certainly it
would be contrary to human nature for the lawyer/husband/co-
defendant to keep to himself the fact that they (the spouses
Valmonte) had been sued with regard to a property which, he
claims to be conjugal. Parenthetically, there is nothing in the
records of the case before Us regarding any manifestation by
private respondent Lourdes A. Valmonte about her lack of
knowledge about the case instituted against her and her
lawyer/husband/co-defendant by her sister Rosita. . . .
PREMISES CONSIDERED, the instant petition for certiorari,
prohibition and mandamus is given due course. This Court hereby
Resolves to nullify the orders of the court a quo  dated July 3, 1992
and September 23, 1992 and further declares private respondent
Lourdes Arreola Valmonte as having been properly served with
summons.
Petitioners assail the aforequoted decision, alleging that the Court of
Appeals erred (1) in refusing to apply the provisions of Rule 14, §17 of the
Revised Rules of Court and applying instead Rule 14, §8 when the fact is
that petitioner Lourdes A. Valmonte is a nonresident defendant; and (2)
because even if Rule 14, §8 is the applicable provision, there was no valid
substituted service as there was no strict compliance with the requirement
by leaving a copy of the summons and complaint with petitioner Alfredo D.
Valmonte. Private respondent, upon the other hand, asserts that petitioners
are invoking a technicality and that strict adherence to the rules would only
result in a useless ceremony.
We hold that there was no valid service of process on Lourdes A. Valmonte.
To provide perspective, it will be helpful to determine first the nature of the
action filed against petitioners Lourdes A. Valmonte and Alfredo D. Valmonte
by private respondent, whether it is an action in personam, in rem  or quasi
in rem. This is because the rules on service of summons embodied in Rule
14 apply according to whether an action is one or the other of these actions.

In an action in personam, personal service of summons or, if this is not
possible and he cannot be personally served, substituted service, as
provided in Rule 14, §§7-82 is essential for the acquisition by the court of
jurisdiction over the person of a defendant who does not voluntarily submit
himself to the authority of the court.3 If defendant cannot be served with
summons because he is temporarily abroad, but otherwise he is a Philippine
resident, service of summons may, by leave of court, be made by
publication.4 Otherwise stated, a resident defendant in an action in
personam, who cannot be personally served with summons, may be
summoned either by means of substituted service in accordance with Rule
14, §8 or by publication as provided in §§ 17 and 18 of the same Rule.5
In all of these cases, it should be noted, defendant must be a resident of the
Philippines, otherwise an action in personam cannot be brought because
jurisdiction over his person is essential to make a binding decision.
On the other hand, if the action is in rem or quasi in rem, jurisdiction over the
person of the defendant is not essential for giving the court jurisdiction so
long as the court acquires jurisdiction over the res. If the defendant is a
nonresident and he is not found in the country, summons may be served
exterritorially in accordance with Rule 14, §17, which provides:
§17. Extraterritorial service. - When the defendant does not reside
and is not found in the Philippines and the action affects the
personal status of the plaintiff or relates to, or the subject of which
is, property within the Philippines, in which the defendant has or
claims a lien or interest, actual or contingent, or in which the relief
demanded consists, wholly or in part, in excluding the defendant
from any interest therein, or the property of the defendant has been
attached within the Philippines, service may, by leave of court, be
effected out of the Philippines by personal service as under section
7; or by publication in a newspaper of general circulation in such
places and for such time as the court may order, in which case a
copy of the summons and order of the court shall be sent by
registered mail to the last known address of the defendant, or in
any other manner the court may deem sufficient. Any order granting
such leave shall specify a reasonable time, which shall not be less
than sixty (60) days after notice, within which the defendant must
answer..
In such cases, what gives the court jurisdiction in an action in
rem or quasi in rem is that it has jurisdiction over the res, i.e.  the personal
69
status of the plaintiff who is domiciled in the Philippines or the property
litigated or attached.
Service of summons in the manner provided in §17 is not for the purpose of
vesting it with jurisdiction but for complying with the requirements of fair play
or due process, so that he will be informed of the pendency of the action
against him and the possibility that property in the Philippines belonging to
him or in which he has an interest may be subjected to a judgment in favor
of the plaintiff and he can thereby take steps to protect his interest if he is so
minded.6
Applying the foregoing rules to the case at bar, private respondent's action,
which is for partition and accounting under Rule 69, is in the nature of an
action quasi in rem. Such an action is essentially for the purpose of affecting
the defendant's interest in a specific property and not to render a judgment
against him. As explained in the leading case of Banco Español Filipino v.
Palanca :7
[An action quasi in rem  is] an action which while not strictly speaking an
action in rem partakes of that nature and is substantially such. . . . The
action quasi in rem  differs from the true action in rem in the circumstance
that in the former an individual is named as defendant and the purpose of
the proceeding is to subject his interest therein to the obligation or lien
burdening the property. All proceedings having for their sole object the sale
or other disposition of the property of the defendant, whether by attachment,
foreclosure, or other form of remedy, are in a general way thus designated.
The judgment entered in these proceedings is conclusive only between the
parties.
As petitioner Lourdes A. Valmonte is a nonresident who is not found in the
Philippines, service of summons on her must be in accordance with Rule 14,
§17. Such service, to be effective outside the Philippines, must be made
either (1) by personal service; (2) by publication in a newspaper of general
circulation in such places and for such time as the court may order, in which
case a copy of the summons and order of the court should be sent by
registered mail to the last known address of the defendant; or (3) in any
other manner which the court may deem sufficient.
Since in the case at bar, the service of summons upon petitioner Lourdes A.
Valmonte was not done by means of any of the first two modes, the question
is whether the service on her attorney, petitioner Alfredo D. Valmonte, can
be justified under the third mode, namely, "in any . . . manner the court may
deem sufficient."

We hold it cannot. This mode of service, like the first two, must be made
outside the Philippines, such as through the Philippine Embassy in the
foreign country where the defendant resides.8 Moreover, there are several
reasons why the service of summons on Atty. Alfredo D. Valmonte cannot
be considered a valid service of summons on petitioner Lourdes A.
Valmonte. In the first place, service of summons on petitioner Alfredo D.
Valmonte was not made upon the order of the court as required by Rule 14,
§17 and certainly was not a mode deemed sufficient by the court which in
fact refused to consider the service to be valid and on that basis declare
petitioner Lourdes A. Valmonte in default for her failure to file an answer.
In the second place, service in the attempted manner on petitioner was not
made upon prior leave of the trial court as required also in Rule 14, §17. As
provided in §19, such leave must be applied for by motion in writing,
supported by affidavit of the plaintiff or some person on his behalf and
setting forth the grounds for the application.
Finally, and most importantly, because there was no order granting such
leave, petitioner Lourdes A. Valmonte was not given ample time to file her
Answer which, according to the rules, shall be not less than sixty (60) days
after notice. It must be noted that the period to file an Answer in an action
against a resident defendant differs from the period given in an action filed
against a nonresident defendant who is not found in the Philippines. In the
former, the period is fifteen (15) days from service of summons, while in the
latter, it is at least sixty (60) days from notice.
Strict compliance with these requirements alone can assure observance of
due process. That is why in one case,9 although the Court considered
publication in the Philippines of the summons (against the contention that it
should be made in the foreign state where defendant was residing)
sufficient, nonetheless the service was considered insufficient because no
copy of the summons was sent to the last known correct address in the
Philippines..
Private respondent cites the ruling in De Leon v. Hontanosas, 67 SCRA
458,462-463 (1975), in which it was held that service of summons upon the
defendant's husband was binding on her. But the ruling in that case is
justified because summons were served upon defendant's husband in their
conjugal home in Cebu City and the wife was only temporarily absent,
having gone to Dumaguete City for a vacation. The action was for collection
of a sum of money. In accordance with Rule 14, §8, substituted service
could be made on any person of sufficient discretion in the dwelling place of
the defendant, and certainly defendant's husband, who was there, was
70
competent to receive the summons on her behalf. In any event, it appears
that defendant in that case submitted to the jurisdiction of the court by
instructing her husband to move for the dissolution of the writ of attachment
issued in that case.
On the other hand, in the case of Gemperle v.  Schenker, 10 it was held that
service on the wife of a nonresident defendant was found sufficient because
the defendant had appointed his wife as his attorney-in-fact. It was held that
although defendant Paul Schenker was a Swiss citizen and resident of
Switzerland, service of summons upon his wife Helen Schenker who was in
the Philippines was sufficient because she was her husband's representative
and attorney-in-fact in a civil case, which he had earlier filed against William
Gemperle. In fact Gemperle's action was for damages arising from allegedly
derogatory statements contained in the complaint filed in the first case. As
this Court said, "[i]n other words, Mrs. Schenker had authority to sue, and
had actually sued, on behalf of her husband, so that she was, also,
empowered to represent him in suits filed against him, particularly in a case,
like the one at bar, which is a consequence of the action brought by her on
his behalf" 11 Indeed, if instead of filing an independent action Gemperle filed
a counterclaim in the action brought by Mr. Schenker against him, there
would have been no doubt that the trial court could have acquired jurisdiction
over Mr. Schenker through his agent and attorney-in-fact, Mrs. Schenker.
In contrast, in the case at bar, petitioner Lourdes A. Valmonte did not
appoint her husband as her attorney-in-fact. Although she wrote private res-
pondent's attorney that "all communications" intended for her should be
addressed to her husband who is also her lawyer at the latter's address in
Manila, no power of attorney to receive summons for her can be inferred
therefrom. In fact the letter was written seven months before the filing of this
case below, and it appears that it was written in connection with the
negotiations between her and her sister, respondent Rosita Dimalanta,
concerning the partition of the property in question. As is usual in
negotiations of this kind, the exchange of correspondence was carried on by
counsel for the parties. But the authority given to petitioner's husband in
these negotiations certainly cannot be construed as also including an
authority to represent her in any litigation.
For the foregoing reasons, we hold that there was no valid service on
petitioner Lourdes A. Valmonte in this case.
WHEREFORE, the decision appealed from is REVERSED and the orders
dated July 3, 1992 and September 23, 1992 of the Regional Trial Court of
Manila, Branch 48 are REINSTATED.

G.R. No. 128803 September 25, 1998
ASIAVEST LIMITED, petitioner,
vs.
THE COURT OF APPEALS and ANTONIO HERAS, respondents.
DAVIDE, JR., J.:
In issue is the enforceability in the Philippines of a foreign judgment. The
antecedents are summarized in the 24 August 1990 Decision1 of Branch 107
of the Regional Trial Court of Quezon City in Civil Case No. Q-52452; thus:
The plaintiff Asiavest Limited filed a complaint on
December 3, 1987 against the defendant Antonio Heras
praying that said defendant be ordered to pay to the
plaintiff the amounts awarded by the Hong Kong Court
Judgment dated December 28, 1984 and amended on
April 13, 1987, to wit:
1) US$1,810,265.40 or its equivalent in Hong Kong currency at the time of
payment with legal interest from December 28, 1984 until fully paid;
2) interest on the sum of US$1,500.00 at 9.875% per annum from October
31, 1984 to December 28, 1984; and
3) HK$905.00 at fixed cost in the action; and
4) at least $80,000.00 representing attorney's fees, litigation expenses and
cost, with interest thereon from the date of the judgment until fully paid.
On March 3, 1988, the defendant filed a Motion to Dismiss. However, before
the court could resolve the said motion, a fire which partially razed the
Quezon City Hall Building on June 11, 1988 totally destroyed the office of
this Court, together with all its records, equipment and properties. On July
26, 1988, the plaintiff, through counsel filed a Motion for Reconstitution of
Case Records. The Court, after allowing the defendant to react thereto,
granted the said Motion and admitted the annexes attached thereto as the
reconstituted records of this case per Order dated September 6, 1988.
71
Thereafter, the Motion to Dismiss, the resolution of which had been deferred;
was denied by the Court in its Order of October 4, 1988.
On October 19, 1988, defendant filed his Answer. The case was then set for
pre-trial conference. At the conference, the parties could not arrive at any
settlement. However, they agreed on the following stipulations of facts:
1. The defendant admits the existence of the judgment dated December 28,
1984 as well as its amendment dated April 13, 1987, but not necessarily the
authenticity or validity thereof;
2. The plaintiff is not doing business and is not licensed to do business in the
Philippines;
3. The residence of defendant, Antonio Heras, is New Manila, Quezon City.
The only issue for this Court to determine is, whether or not the judgment of
the Hong Kong Court has been repelled by evidence of want of jurisdiction,
want of notice to the party, collusion, fraud or clear mistake of law or fact,
such as to overcome the presumption established in Section 50, Rule 39 of
the Rules of Court in favor of foreign judgments.
In view of the admission by the defendant of the existence of the
aforementioned judgment (Pls. See Stipulations of Facts in the Order dated
January 5, 1989 as amended by the Order of January 18, 1989), as well as
the legal presumption in favor of the plaintiff as provided for in paragraph (b);
Sec. 50, (Ibid.), the plaintiff presented only documentary evidence to show
rendition, existence, and authentication of such judgment by the proper
officials concerned (Pls. See Exhibits "A" thru "B", with their submarkings). In
addition, the plaintiff presented testimonial and documentary evidence to
show its entitlement to attorney's fees and other expenses of litigation. . . . .
On the other hand, the defendant presented two witnesses, namely.
Fortunata dela Vega and Russel Warren Lousich.
The gist of Ms. dela Vega's testimony is to the effect that no writ of summons
or copy of a statement of claim of Asiavest Limited was ever served in the
office of the Navegante Shipping Agency Limited and/or for Mr. Antonio
Heras, and that no service of the writ of summons was either served on the
defendant at his residence in New Manila, Quezon City. Her knowledge is
based on the fact that she was the personal secretary of Mr. Heras during
his JD Transit days up to the latter part of 1972 when he shifted or

diversified to shipping business in Hong Kong; that she was in-charge of all
his letters and correspondence, business commitments, undertakings,
conferences and appointments, until October 1984 when Mr. Heras left
Hong Kong for good; that she was also the Officer-in-Charge or Office
Manager of Navegante Shipping Agency LTD, a Hong Kong registered and
based company acting as ships agent, up to and until the company closed
shop sometime in the first quarter of 1985, when shipping business
collapsed worldwide; that the said company held office at 34-35 Connaught
Road, Central Hong Kong and later transferred to Carton House at Duddel
Street, Hong Kong, until the company closed shop in 1985; and that she was
certain of such facts because she held office at Caxton House up to the first
quarter of 1985.
Mr. Lousich was presented as an expert on the laws of Hong Kong, and as a
representative of the law office of the defendant's counsel who made a
verification of the record of the case filed by the plaintiff in Hong Kong
against the defendant, as well as the procedure in serving Court processes
in Hong Kong.
In his affidavit (Exh. "2") which constitutes his direct testimony, the said
witness stated that:
The defendant was sued on the basis of his personal guarantee of the
obligations of Compania Hermanos de Navegacion S.A. There is no record
that a writ of summons was served on the person of the defendant in Hong
Kong, or that any such attempt at service was made. Likewise, there is no
record that a copy of the judgment of the High Court was furnished or served
on the defendant; anyway, it is not a legal requirement to do so under Hong
Kong laws;
a) The writ of summons or claim can be served by the solicitor (lawyer) of
the claimant or plaintiff. In Hong Kong there are no Court personnel who
serve writs of summons and/or most other processes.
b) If the writ of summons or claim (or complaint) is not contested, the
claimant or the plaintiff is not required to present proof of his claim or
complaint nor present evidence under oath of the claim in order to obtain a
Judgment.
c) There is no legal requirement that such a Judgment or decision rendered
by the Court in Hong Kong [to] make a recitation of the facts or the law upon
which the claim is based.
72
d) There is no necessity to furnish the defendant with a copy of the
Judgment or decision rendered against him.
e) In an action based on a guarantee, there is no established legal
requirement or obligation under Hong Kong laws that the creditor must first
bring proceedings against the principal debtor. The creditor can immediately
go against the guarantor.
On cross examination, Mr. Lousich stated that before he was commissioned
by the law firm of the defendant's counsel as an expert witness and to verify
the records of the Hong Kong case, he had been acting as counsel for the
defendant in a number of commercial matters; that there was an application
for service of summons upon the defendant outside the jurisdiction of Hong
Kong; that there was an order of the Court authorizing service upon Heras
outside of Hong Kong, particularly in Manila or any other place in the
Philippines (p. 9, TSN, 2/14/90); that there must be adequate proof of
service of summons, otherwise the Hong Kong Court will refuse to render
judgment (p. 10, ibid); that the mere fact that the Hong Kong Court rendered
judgment, it can be presumed that there was service of summons; that in
this case, it is not just a presumption because there was an affidavit stating
that service was effected in [sic] a particular man here in Manila; that such
affidavit was filed by one Jose R. Fernandez of the firm Sycip Salazar on the
21st of December 1984, and stated in essence that "on Friday, the 23rd of
November 1984 he served the 4th defendant at No. 6 First Street, Quezon
City by leaving it at that address with Mr. Dionisio Lopez, the son-in-law of
the 4th defendant the copy of the writ and Mr. Lopez informed me and I
barely believed that he would bring the said writ to the attention of the 4th
defendant" (pp. 11-12,  ibid.); that upon filing of that affidavit, the Court was
asked and granted judgment against the 4th defendant; and that if the
summons or claim is not contested, the claimant of the plaintiff is not
required to present proof of his claim or complaint or present evidence under
oath of the claim in order to obtain judgment; and that such judgment can be
enforced in the same manner as a judgment rendered after full hearing.
The trial court held that since the Hong Kong court judgment had been duly
proved, it is a presumptive evidence of a right as between the parties;
hence, the party impugning it had the burden to prove want of jurisdiction
over his person. HERAS failed to discharge that burden. He did not testify to
state categorically and under oath that he never received summons. Even
his own witness Lousich admitted that HERAS was served with summons in
his Quezon City residence. As to De la Vega's testimony regarding non-
service of summons, the same was hearsay and had no probative value.

As to HERAS' contention that the Hong Kong court judgment violated the
Constitution and the procedural laws of the Philippines because it contained
no statements of the facts and the law on which it was based, the trial court
ruled that since the issue relate to procedural matters, the law of the
forum,  i.e., Hong Kong laws, should govern. As testified by the expert
witness Lousich, such legalities were not required under Hong Kong laws.
The trial Court also debunked HERAS' contention that the principle of
excussion under Article 2058 of the Civil Code of the Philippines was
violated. It declared that matters of substance are subject to the law of the
place where the transaction occurred; in this case, Hong Kong laws must
govern.
The trial court concluded that the Hong Kong court judgment should be
recognized and given effect in this jurisdiction for failure of HERAS to
overcome the legal presumption in favor of the foreign judgment. It then
decreed; thus:
WHEREFORE, judgment is hereby rendered ordering defendant to pay to
the plaintiff the following sums or their equivalents in Philippine currency at
the time of payment: US$1,810,265.40 plus interest on the sum of
US$1,500,000.00 at 9.875% per annum from October 31, 1984 to December
28, 1984, and HK$905 as fixed cost, with legal interests on the aggregate
amount from December 28, 1984, and to pay attorney's fees in the sum of
P80,000.00.
ASIAVEST moved for the reconsideration of the decision. It sought an award
of judicial costs and an increase in attorney's fees in the amount of
US$19,346.45 with interest until full payment of the said obligations. On the
other hand, HERAS no longer opposed the motion and instead appealed the
decision to the Court of Appeals, which docketed the appeal as CA-G.R. CV
No. 29513.
In its order2 of 2 November 1990, the trial court granted ASIAVEST's motion
for reconsideration by increasing the award of attorney's fees to
"US$19,345.65 OR ITS EQUIVALENT IN PHILIPPINE CURRENCY, AND
TO PAY THE COSTS OF THIS SUIT," provided that ASIAVEST would pay
the corresponding filing fees for the increase. ASIAVEST appealed the order
requiring prior payment of filing fees. However, it later withdrew its appeal
and paid the additional filing fees.
On 3 April 1997, the Court of Appeals rendered its decision3 reversing the
decision of the trial court and dismissing ASIAVEST's complaint without
prejudice. It underscored the fact that a foreign judgment does not of itself
73
have any extraterritorial application. For it to be given effect, the foreign
tribunal should have acquired jurisdiction over the person and the subject
matter. If such tribunal has not acquired jurisdiction, its judgment is void.
The Court of Appeals agreed with the trial court that matters of remedy and
procedure, such as those relating to service of summons upon the defendant
are governed by the  lex fori, which was, in this case, the law of Hong Kong.
Relative thereto, it gave weight to Lousich's testimony that under the Hong
Kong law, the substituted service of summons upon HERAS effected in the
Philippines by the clerk of Sycip Salazar Hernandez & Gatmaitan firm would
be valid provided that it was done in accordance with Philippine laws. It then
stressed that where the action is  in personam  and the defendant is in the
Philippines, the summons should be personally served on the defendant
pursuant to Section 7, Rule 14 of the Rules of Court.4 Substituted service
may only be availed of where the defendant cannot be promptly served in
person, the fact of impossibility of personal service should be explained in
the proof of service. It also found as persuasive HERAS' argument that
instead of directly using the clerk of the Sycip Salazar Hernandez &
Gatmaitan law office, who was not authorized by the judge of the court
issuing the summons, ASIAVEST should have asked for leave of the local
courts to have the foreign summons served by the sheriff or other court
officer of the place where service was to be made, or for special reasons by
any person authorized by the judge.
The Court of Appeals agreed with HERAS that "notice sent outside the state
to  a non-resident is unavailing to give jurisdiction in an action against him
personally for money recovery." Summons should have been personally
served on HERAS in Hong Kong, for, as claimed by ASIAVEST, HERAS
was physically present in Hong Kong for nearly 14 years. Since there was
not even an attempt to serve summons on HERAS in Hong Kong, the Hong
Kong Supreme Court did not acquire jurisdiction over HERAS. Nonetheless
it did not totally foreclose the claim of ASIAVEST; thus:
While We are not fully convinced that [HERAS] has a meritorious defense
against [ASIAVEST's] claims or that [HERAS] ought to be absolved of any
liability, nevertheless, in view of the foregoing discussion, there is a need to
deviate front the findings of the lower court in the interest of justice and fair
play. This, however, is without prejudice to whatever action [ASIAVEST]
might deem proper in order to enforce its claims against [HERAS].
Finally, the Court of Appeals also agreed with HERAS that it was necessary
that evidence supporting the validity of the foreign judgment be submitted,

and that our courts are not bound to give effect to foreign judgments which
contravene our laws and the principle of sound morality and public policy.
ASIAVEST forthwith filed the instant petition alleging that the Court of
Appeals erred in ruling that
I.
. . . IT WAS NECESSARY FOR [ASIAVEST] TO
PRESENT EVIDENCE "SUPPORTING THE VALIDITY
OF THE JUDGMENT";
II.
. . . THE SERVICE OF SUMMONS ON [HERAS] WAS
DEFECTIVE UNDER PHILIPPINES LAW;
III.
. . . SUMMONS SHOULD HAVE BEEN PERSONALLY
SERVED ON HERAS IN HONG KONG;
IV.
. . . THE HONG KONG SUMMONS SHOULD HAVE
BEEN SERVED WITH LEAVE OF PHILIPPINE COURTS;
V.
. . . THE FOREIGN JUDGMENT "CONTRAVENES
PHILIPPINE LAWS, THE PRINCIPLES OF SOUND
MORALITY, AND THE PUBLIC POLICY OF THE
PHILIPPINES.
Being interrelated, we shall take up together the assigned errors.
Under paragraph (b) of Section 50, Rule 39 of the Rules of Court,5 which
was the governing law at the time this case was decided by the trial court
and respondent Court of Appeals, a foreign judgment against a person
rendered by a court having jurisdiction to pronounce the judgment is
74
presumptive evidence of a right as between the parties and their successors
in interest by the subsequent title. However, the judgment may be repelled
by evidence of want of jurisdiction, want of notice to the party, collusion,
fraud, or clear mistake of law or fact.
Also, Section 3(n) of Rule 131 of the New Rules of Evidence provides that in
the absence of proof to the contrary, a court, or judge acting as such,
whether in the Philippines or elsewhere, is presumed to have acted in the
lawful exercise of jurisdiction.
Hence, once the authenticity of the foreign judgment is proved, the burden to
repel it on grounds provided for in paragraph (b) of Section 50, Rule 39 of
the Rules of Court is on the party challenging the foreign judgment —
HERAS in this case.
At the pre-trial conference, HERAS admitted the existence of the Hong Kong
judgment. On the other hand, ASIAVEST presented evidence to prove
rendition, existence, and authentication of the judgment by the proper
officials. The judgment is thus presumed to be valid and binding in the
country from which it comes, until the contrary is shown. 6 Consequently, the
first ground relied upon by ASIAVEST has merit. The presumption of validity
accorded foreign judgment would be rendered meaningless were the party
seeking to enforce it be required to first establish its validity.
The main argument raised against the Hong Kong judgment is that the Hong
Kong Supreme Court did not acquire jurisdiction over the person of HERAS.
This involves the issue of whether summons was properly and validly served
on HERAS. It is settled that matters of remedy and procedure such as those
relating to the service of process upon the defendant are governed by
the  lex fori or the law of the forum, 7 i.e., the law of Hong Kong in this case.
HERAS insisted that according to his witness Mr. Lousich, who was
presented as an expert on Hong Kong laws, there was no valid service of
summons on him.
In his counter-affidavit,8 which served as his direct testimony per agreement
of the parties,9 Lousich declared that the record of the Hong Kong case
failed to show that a writ of summons was served upon HERAS in Hong
Kong or that any such attempt was made. Neither did the record show that a
copy of the judgment of the court was served on HERAS. He stated further
that under Hong Kong laws (a) a writ of summons could be served by the
solicitor of the claimant or plaintiff; and (b) where the said writ or claim was
not contested, the claimant or plaintiff was not required to present proof
under oath in order to obtain judgment.

On cross-examination by counsel for ASIAVEST, Lousich' testified that the
Hong Kong court authorized service of summons on HERAS outside of its
jurisdiction, particularly in the Philippines. He admitted also the existence of
an affidavit of one Jose R. Fernandez of the Sycip Salazar Hernandez &
Gatmaitan law firm stating that he (Fernandez) served summons on HERAS
on 13 November 1984 at No. 6, 1st St., Quezon City, by leaving a copy with
HERAS's son-in-law Dionisio Lopez. 10 On redirect examination, Lousich
declared that such service of summons would be valid under Hong Kong
laws provided that it was in accordance with Philippine laws. 11
We note that there was no objection on the part of ASIAVEST on the
qualification of Mr. Lousich as an expert on the Hong Kong law. Under
Sections 24 and 25, Rule 132 of the New Rules of Evidence, the record of
public documents of a sovereign authority, tribunal, official body, or public
officer may be proved by (1) an official publication thereof or (2) a copy
attested by the officer having the legal custody thereof, which must be
accompanied, if the record is not kept in the Philippines, with a certificate
that such officer has the custody. The certificate may be issued by a
secretary of the embassy or legation, consul general, consul, vice consul, or
consular agent, or any officer in the foreign service of the Philippines
stationed in the foreign country in which the record is kept, and
authenticated by the seal of his office. The attestation must state, in
substance, that the copy is a correct copy of the original, or a specific part
thereof, as the case may be, and must be under the official seal of the
attesting officer.
Nevertheless, the testimony of an expert witness may be allowed to prove a
foreign law. An authority 12 on private international law thus noted:
Although it is desirable that foreign law be proved in accordance with the
above rule, however, the Supreme Court held in the case of Willamette Iron
and Steel Works v. Muzzal, 13 that Section 41, Rule 123 (Section 25, Rule
132 of the Revised Rules of Court) does not exclude the presentation of
other competent evidence to prove the existence of a foreign law. In that
case, the Supreme Court considered the testimony under oath of an
attorney-at-law of San Francisco, California, who quoted verbatim a section
of California Civil Code and who stated that the same was in force at the
time the obligations were contracted, as sufficient evidence to establish the
existence of said law. Accordingly, in line with this view, the Supreme Court
in the Collector of Internal Revenue v. Fisher et al., 14 upheld the Tax Court
in considering the pertinent law of California as proved by the respondents'
witness. In that case, the counsel for respondent "testified that as an active
member of the California Bar since 1951, he is familiar with the revenue and
taxation laws of the State of California. When asked by the lower court to
75
state the pertinent California law as regards exemption of intangible personal
properties, the witness cited Article 4, Sec. 13851 (a) & (b) of the California
Internal and Revenue Code as published in Derring's California Code, a
publication of Bancroft-Whitney Co., Inc. And as part of his testimony, a full
quotation of the cited section was offered in evidence by respondents."
Likewise, in several naturalization cases, it was held by the Court that
evidence of the law of a foreign country on reciprocity regarding the
acquisition of citizenship, although not meeting the prescribed rule of
practice, may be allowed and used as basis for favorable action, if, in the
light of all the circumstances, the Court is "satisfied of the authenticity of the
written proof offered." 15 Thus, in, a number of decisions, mere authentication
of the Chinese Naturalization Law by the Chinese Consulate General of
Manila was held to be competent proof of that law. 16
There is, however, nothing in the testimony of Mr. Lousich that touched on
the specific law of Hong Kong in respect of service of summons either in
actions in rem  or in personam, and where the defendant is either a resident
or nonresident of Hong Kong. In view of the absence of proof of the Hong
Kong law on this particular issue, the presumption of identity or similarity or
the so-called processual presumption shall come into play. It will thus be
presumed that the Hong Kong law on the matter is similar to the Philippine
law. 17
As stated in Valmonte vs. Court of Appeals, 18 it will be helpful to determine
first whether the action is  in personam,  in rem, or quasi in rem because the
rules on service of summons under Rule 14 of the Rules of Court of the
Philippines apply according to the nature of the action.
An action in personam is an action against a person on the basis of his
personal liability. An action  in rem is an action against the thing itself instead
of against the person. 19 An action quasi in rem is one wherein an individual
is named as defendant and the purpose of the proceeding is to subject his
interest therein to the obligation or lien burdening the property. 20
In an action in personam, jurisdiction over the person of the defendant is
necessary for the court to validly try and decide the case. Jurisdiction over
the person of a resident defendant who does not voluntarily appear in court
can be acquired by personal service of summons as provided under Section
7, Rule 14 of the Rules of Court. If he cannot be personally served with
summons within a reasonable time, substituted service may be made in
accordance with Section 8 of said Rule. If he is temporarily out of the
country, any of the following modes of service may be resorted to: (1)
substituted service set forth in Section 8; 21 (2) personal service outside the

country, with leave of court; (3) service by publication, also with leave of
court; 22 or (4) any other manner the court may deem sufficient. 23
However, in an action  in personam  wherein the defendant is a non-
resident who does not voluntarily submit himself to the authority of the court,
personal service of summons within the state is essential to the acquisition
of jurisdiction over her person. 24 This method of service is possible if such
defendant is physically present in the country. If he is not found therein, the
court cannot acquire jurisdiction over his person and therefore cannot validly
try and decide the case against him. 25 An exception was laid down
in Gemperle v. Schenker 26 wherein a non-resident was served with
summons through his wife, who was a resident of the Philippines and who
was his representatives and attorney-in-fact in a prior civil case filed by him;
moreover, the second case was a mere offshoot of the first case.
On the other hand, in a proceeding in rem  or quasi in rem, jurisdiction over
the person of the defendant is not a prerequisite to confer jurisdiction on the
court provided that the court acquires jurisdiction over the  res. Nonetheless
summons must be served upon the defendant not for the purpose of vesting
the court with jurisdiction but merely for satisfying the due process
requirements. 27 Thus, where the defendant is a non-resident who is not
found in the Philippines and (1) the action affects the personal status of the
plaintiff; (2) the action relates to, or the subject matter of which is property in
the Philippines in which the defendant has or claims a lien or interest; (3) the
action seeks the exclusion of the defendant from any interest in the property
located in the Philippines; or (4) the property of the defendant has been
attached in the Philippines — service of summons may be effected by (a)
personal service out of the country, with leave of court; (b) publication, also
with leave of court, or (c) any other manner the court may deem sufficient. 28
In the case at bar, the action filed in Hong Kong against HERAS was in
personam, since it was based on his personal guarantee of the obligation of
the principal debtor. Before we can apply the foregoing rules, we must
determine first whether HERAS was a resident of Hong Kong.
Fortunata de la Vega, HERAS's personal secretary in Hong Kong since 1972
until 1985, 29 testified that HERAS was the President and part owner of a
shipping company in Hong Kong during all those times that she served as
his secretary. He had in his employ a staff of twelve. 30 He had "business
commitments, undertakings, conferences, and appointments until October
1984 when [he] left Hong Kong for good," 31 HERAS's other witness, Russel
Warren Lousich, testified that he had acted as counsel for HERAS "for a
76
number of commercial matters." 32 ASIAVEST then infers that HERAS was a
resident of Hong Kong because he maintained a business there.
It must be noted that in his Motion to Dismiss, 33 as well as in his
Answer 34 to ASIAVEST's complaint for the enforcement of the Hong Kong
court judgment, HERAS maintained that the Hong Kong court did not have
jurisdiction over him because the fundamental rule is that jurisdiction in
personam over non-resident defendants, so as to sustain a money
judgment, must be based upon personal service of summons within the state
which renders the judgment. 35
For its part, ASIAVEST, in its Opposition to the Motion to
Dismiss 36 contended: "The question of Hong Kong court's 'want of
jurisdiction' is therefore a triable issue if it is to be pleaded by the defendant
to 'repel' the foreign judgment. Facts showing jurisdictional lack (e.g. that the
Hong Kong suit was in personam, that defendant was not a resident of
Hong Kong when the suit was filed or that he did not voluntarily submit to
the Hong Kong court's jurisdiction) should be alleged and proved by the
defendant." 37
In his Reply (to the Opposition to Motion to Dismiss), 38 HERAS argued that
the lack of jurisdiction over his person was corroborated by ASIAVEST's
allegation in the complaint that he "has his residence at No. 6, 1st St., New
Manila, Quezon City, Philippines." He then concluded that such judicial
admission amounted to evidence that he was and is not a resident of Hong
Kong.
Significantly, in the pre-trial conference, the parties came up with stipulations
of facts, among which was that "the residence of defendant, Antonio Heras,
is New Manila, Quezon City." 39
We note that the residence of HERAS insofar as the action for the
enforcement of the Hong Kong court judgment is concerned, was never in
issue. He never challenged the service of summons on him through a
security guard in his Quezon City residence and through a lawyer in his
office in that city. In his Motion to Dismiss, he did not question the jurisdiction
of the Philippine court over his person on the ground of invalid service of
summons. What was in issue was his residence as far as the Hong Kong
suit was concerned. We therefore conclude that the stipulated fact that
HERAS "is a resident of New Manila, Quezon City, Philippines" refers to his
residence at the time jurisdiction over his person was being sought by the
Hong Kong court. With that stipulation of fact, ASIAVEST cannot now claim
that HERAS was a resident of Hong Kong at the time.
 77

Accordingly, since HERAS was not a resident of Hong Kong and the action No costs.
against him was, indisputably, one in personam, summons should have
been personally served on him in Hong Kong. The extraterritorial service in
the Philippines was therefore invalid and did not confer on the Hong Kong
court jurisdiction over his person. It follows that the Hong Kong court
judgment cannot be given force and effect here in the Philippines for having
been rendered without jurisdiction.

Even assuming that HERAS was formerly a resident of Hong Kong, he was
no longer so in November 1984 when the extraterritorial service of summons
was attempted to be made on him. As declared by his secretary, which
statement was not disputed by ASIAVEST, HERAS left Hong Kong in
October 1984 "for good." 40 His absence in Hong Kong must have been the
reason why summons was not served on him therein; thus, ASIAVEST was
constrained to apply for leave to effect service in the Philippines, and upon
obtaining a favorable action on the matter, it commissioned the Sycip
Salazar Hernandez & Gatmaitan law firm to serve the summons here in the
Philippines.

In  Brown v. Brown, 41 the defendant was previously a resident of the

Philippines. Several days after a criminal action for concubinage was filed
against him, he abandoned the Philippines. Later, a proceeding  quasi in
rem was instituted against him. Summons in the latter case was served on
the defendant's attorney-in-fact at the latter's address. The Court held that
under the facts of the case, it could not be said that the defendant was "still a
resident of the Philippines because he ha[d] escaped to his country and
[was] therefore an absentee in the Philippines." As such, he should have
been "summoned in the same manner as one who does not reside and is
not found in the Philippines."

Similarly, HERAS, who was also an absentee, should have been served with
summons in the same manner as a non-resident not found in Hong Kong.
Section 17, Rule 14 of the Rules of Court providing for extraterritorial service
will not apply because the suit against him was in personam. Neither can we
apply Section 18, which allows extraterritorial service on a resident
defendant who is temporarily absent from the country, because even if
HERAS be considered as a resident of Hong Kong, the undisputed fact
remains that he left Hong Kong not only "temporarily" but "for good."

IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered

DENYING the petition in this case and AFFIRMING the assailed judgment of
the Court of Appeals in CA-G.R. CV No. 29513.

[G.R. NO. 147937 : November 11, 2004]
THE PHILIPPINE AMERICAN LIFE & GENERAL INSURANCE
COMPANY, Petitioner, v. HON. AUGUSTO V. BREVA, in his capacity as
Presiding Judge, Regional Trial Court, Davao City, Branch 10, and
MILAGROS P. MORALES, Respondents.
DECISION
CALLEJO, SR., J.:
Before us is a Petition for Review of the Decision1 of the Court of Appeals
(CA), dated October 24, 2000, dismissing the special civil action
for certiorari and prohibition filed by the petitioner, The Philippine American
Life & General Insurance Company, and the Resolution dated April 25,
2001, denying the petitioner's motion for reconsideration.
The petitioner is a domestic corporation duly organized under Philippine
laws with principal address at the Philamlife Building, United Nations
Avenue, Ermita, Manila, and with a regional office in Davao City.
The Antecedents
On September 22, 1999, respondent Milagros P. Morales filed a
Complaint2 for damages and reimbursement of insurance premiums against
the petitioner with the Regional Trial Court (RTC) of Davao City, Branch 10,
docketed as Civil Case No. 27554-99. The complaint specifically stated that
the petitioner could be served with summons and other court processes
through its Manager at its branch office located at Rizal St., Davao City.
Thereafter, Summons3 dated September 29, 1999, together with the
complaint, was served upon the petitioner's Davao regional office, and was
received by its Insurance Service Officer, Ruthie Babael, on November 19,
1999.4
On December 8, 1999, the petitioner filed a Motion to Dismiss5 the complaint
on the ground of lack of jurisdiction over its person due to improper service
of summons. It contended that summons was improperly served upon its
employee in its regional office at Davao City, and that the said employee
was not among those named in Section 11,6 Rule 14 of the 1997 Rules of
Civil Procedure upon whom service of summons may be properly made.
78
On December 9, 1999, the respondent filed an Amended
Complaint,7 alleging that summons and other court processes could also be
served at its principal office at the Philamlife Building, U.N. Avenue, Ermita,
Manila, through the president or any of its officers authorized to receive
summons.
On December 10, 1999, the RTC issued an Order8 denying the petitioner's
motion to dismiss and directing the issuance of an alias summons to be
served at its main office in Manila.9
The RTC held that the improper service of summons on the petitioner is not
a ground for dismissal of the complaint considering that the case was still in
its initial stage. It ruled that the remedy was to issue an alias summons to be
served at the principal office of the petitioner. It also held that the
jurisprudence cited by the petitioner was inapplicable, as it involved a case
already decided by a court which did not have jurisdiction over the defendant
therein due to improper service of summons.
On January 12, 2000, the petitioner filed a Motion for Reconsideration10 of
the said order. In the meantime, on December 14, 1999, the petitioner
received an Alias Summons11 together with a copy of the amended
complaint.
On January 14, 2000, the RTC issued an Order12 denying the petitioner's
motion for reconsideration and supplemental oral motion to strike out the
amended complaint. The RTC reiterated that it would be improper to dismiss
the case at its early stage because the remedy would be to issue an alias
summons. Anent the motion to strike out the amended complaint, the RTC
held that the complaint may be amended without leave of court considering
that the respondent had not yet filed an answer thereto.
On March 2, 2000, the petitioner filed with the CA a special action
for certiorari and prohibition under Rule 65, with application for a writ of
preliminary injunction and/or temporary restraining order, assailing the
Orders dated December 10, 1999 and January 14, 2000.
On October 24, 2000, the CA dismissed the petition and affirmed the
assailed orders of the RTC. The CA held that the service of the alias
summons on the amended complaint upon the authorized officers of the
petitioner at its principal office in Manila vested the RTC with jurisdiction over
its person. The CA, likewise, denied the petitioner's motion for
reconsideration of the said decision on April 25, 2001.

Hence, this Petition for Review .
The petitioner avers that the trial court committed grave abuse of discretion
when it denied the motion to dismiss on the ground of lack of jurisdiction
over its person because the service of the summons at its regional office
through an insurance service officer was improper. Sec. 11, Rule 14 of the
1997 Revised Rules of Civil Procedure is strict as to the persons upon whom
valid service of summons on a corporation can be made. The petitioner
argues that where summons is improperly served, it becomes ministerial
upon the trial court, on motion of the defendant, to dismiss the complaint
pursuant to Sec. 1(a),13 Rule 16 of the 1997 Revised Rules of Civil
Procedure.
The petitioner further avers that the trial court did not acquire jurisdiction
over it upon the service of alias summons on the amended complaint
because such alias summons was improperly issued. Sec. 5,14 Rule 14 of
the 1997 Revised Rules of Civil Procedure explicitly provides that the
previous summons must have been lost or unserved to warrant the issuance
of alias summons. The petitioner opines that the issuance of an alias
summons presupposes the existence of a previous valid summons which,
however, has not been served or has been lost. It maintains that considering
that there are specific circumstances that need to exist to warrant its
issuance, the alias summons cannot be treated as a matter of
nomenclature.15
The respondent, for her part, avers that the receipt of the amended
complaint together with the alias summons by the petitioner cured the
defects in the first service of summons. She argues that any procedural
defect on the service of alias summons is not sufficient to warrant the
dismissal of the case.16
The Court's Ruling
The core issues in this case are (1) whether the trial court committed grave
abuse of discretion in denying the motion to dismiss on the ground of lack of
jurisdiction over the person of the petitioner due to improper service of
summons, and (2) whether the trial court acquired jurisdiction over the
person of the petitioner as the defendant therein.
The petition is without merit.
79
The trial court did not commit grave abuse of discretion when it denied the
motion to dismiss filed by the petitioner due to lack of jurisdiction over its
person. In denying the motion to dismiss, the CA correctly relied on the
ruling in Lingner & Fisher GMBH v. Intermediate Appellate Court,17 thus:
A case should not be dismissed simply because an original summons was
wrongfully served. It should be difficult to conceive, for example, that when a
defendant personally appears before a Court complaining that he had not
been validly summoned, that the case filed against him should be dismissed.
An alias summons can be actually served on said defendant.18
In the recent case of Teh v. Court of Appeals,19 the petitioner therein also
filed a motion to dismiss before filing his answer as defendant in the trial
court on the ground of failure to serve the summons on him. In that case, the
Court agreed with the appellate court's ruling that there was no abuse of
discretion on the part of the trial court when the latter denied the petitioner's
motion to dismiss the complaint and ordered the issuance of an alias
summons.20
We note, however, that in this case, the complaint was amended after the
petitioner filed the motion to dismiss. The trial court even acknowledged this
when it rendered its order denying the motion to dismiss and ordered the
issuance of an alias summons. The Rules on Civil Procedure provide that
the amended complaint supersedes the complaint that it amends.21 Contrary
to the petitioner's claim, the summons issued on the amended complaint
does not become invalid. In fact, summons on the original complaint which
has already been served continues to have its legal effect. Thus, where the
defendant has already been served summons on the original complaint, the
amended complaint may be served upon him without need of another
summons. Conversely, when no summons has yet been validly served on
the defendant, new summons for the amended complaint must be served on
him.22
In the instant case, since at the time the complaint was amended no
summons had been properly served on the petitioner and it had not yet
appeared in court, new summons should have been issued on the amended
complaint.23 Hence, the CA was correct when it held that, technically, the
trial court should have ordered the issuance of an original summons, not an
alias summons.24 After all, an alias summons is merely a continuation of the
original summons. In this case, however, there was no sense in issuing an
alias summons on the original complaint since the complaint had already
been amended. The trial court should have instead issued a new summons
on the amended complaint.
 80

Nonetheless, the CA deemed it necessary to treat the alias summons as a

matter of nomenclature, considering that the rationale behind the service of
summons - to make certain that the corporation would promptly and properly
receive notice of the filing of an action against it - has been served in this
case. The CA held that it would be a great injustice to the respondent if the
complaint would be dismissed just because what was issued and served
was an alias summons; that she would be made to file a new complaint and
thus, incur further monetary burden.25

We agree with the CA. It is not pertinent whether the summons is designated
as an "original" or an "alias" summons as long as it has adequately served
its purpose. What is essential is that the summons complies with the
requirements under the Rules of Court and it has been duly served on the
defendant together with the prevailing complaint. In this case, the alias
summons satisfies the requirements under the Rules, both as to its content
and the manner of service. It contains all the information required under the
rules, and it was served on the persons authorized to receive the summons
on behalf of the petitioner at its principal office in Manila. Moreover, the
second summons was technically not an alias summons but more of a new
summons on the amended complaint. It was not a continuation of the first
summons considering that it particularly referred to the amended complaint
and not to the original complaint.

WHEREFORE, the petition is DENIED for lack of merit. The October 24,
2000 Decision and the April 25, 2001 Resolution of the Court of Appeals are
hereby AFFIRMED.

[G.R. NO. 169116 : March 28, 2007]
BANK OF THE PHILIPPINE ISLANDS, Petitioner, v. SPS. IRENEO M.
SANTIAGO and LIWANAG P. SANTIAGO, CENTROGEN, INC.,
REPRSENTED BY EDWIN SANTIAGO, Respondent.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari filed by petitioner
Bank of the Philippine Islands (BPI) seeking to reverse and set aside the
Decision1 of the Court of Appeals dated 3 March 2005 and its
Resolution2 dated 28 July 2005 affirming the Order3 of the Regional Trial
Court (RTC) of Santa Cruz, Laguna, Branch 91, dated 20 March 2003
enjoining the extrajudicial foreclosure sale of a parcel of land covered by
Transfer Certificate of Title (TCT) No. T-131382 registered under the name
of Spouses Ireneo and Liwanag Santiago. The dispositive portion of the
Court of Appeals Decision reads:
WHEREFORE, premises considered, the petition is DISMISSED. The
assailed orders dated March 20, 2003 and August 25, 2003 of the
respondent court in Civil Case No. SC-4259 are hereby AFFIRMED.
Petitioner BPI is a banking institution duly organized and existing as such
under the Philippine laws.
Private respondent Centrogen, Inc. (Centrogen) is a domestic corporation
engaged in pharmaceutical business, duly organized and existing as such
under the Philippine laws and represented in this act by its President, Edwin
Santiago, son of private respondents Spouses Ireneo M. Santiago and
Liwanag P. Santiago.
On several occasions, private respondent Centrogen obtained loans from
Far East Bank and Trust Company (FEBTC) in different amounts, the total of
which reached the sum P4,650,000.00, as evidenced by promissory notes
executed by Edwin Santiago.
As a security for a fraction of the loan obligation, Ireneo M. Santiago
executed a Real Estate Mortgage over a parcel of land covered by TCT No.
T-131382 registered under his name and located at Sta Cruz, Laguna, with
an area of 2,166 square meters (subject property).4 The mortgage secured
81
the principal loan in the amount of P490,000.00. Later on, the same property
secured another loan obligation in the amount of P1,504,280.00.5
Subsequently, however, Centrogen incurred default and therefore the loan
obligation became due and demandable.
Meanwhile, FEBTC merged with the BPI with the latter as the surviving
corporation. As a result, BPI assumed all the rights, privileges and
obligations of FEBTC.
On 13 December 2002, BPI filed an Extra-Judicial Foreclosure of Real
Estate Mortgage6 over the subject property before the RTC of Sta. Cruz,
Laguna. In order to validly effect the foreclosure, a Notice of Sale was issued
by the Provincial Sheriff on 21 January 2003. On the same day, the Spouses
Santiago were served with the copy of the Notice of Sale.
Upon receipt of the Notice of Sale, the Spouses Santiago and Centrogen
filed a Complaint seeking the issuance of a Temporary Restraining Order
and Preliminary and Final Injunction and in the alternative, for the annulment
of the Real Estate Mortgage with BPI.
The complaint alleged that the initial loan obligation in the amount
of P490,000.00, including interest thereon was fully paid as evidenced by
Union Bank Check No. 0363020895 dated 20 December 2001 in the amount
of P648,521.51 with BPI as payee. Such payment notwithstanding, the
amount was still included in the amount of computation of the arrears as
shown by the document of Extra-Judicial Foreclosure of Real Estate
Mortgage filed by the latter.
In addition, the Spouses Santiago and Centrogen asseverated that the
original loan agreement was for the amount of Five Million Pesos. Such
amount will be supposedly utilized to finance the squalene project of the
company. However, after the amount of Two Million Pesos was released and
was accordingly used in funding the erection of the structural details of the
project, FEBTC, in gross violation of the agreement, did not release the
balance of Three Million Pesos that will supposedly finance the purchase of
machineries and equipment necessary for the operation. As a result, the
squalene project failed and the company groped for funds to pay its loan
obligations.

On 27 February 2003, BPI was summoned to file and serve its Answer to the
Complaint filed by Spouses Santiago and Centrogen. On the same day, the
Sheriff served a copy of the summons to the Branch Manager of BPI Sta.
Cruz, Laguna Branch, as evidenced by the Sheriff's Return,7 which reads:
SHERIFF'S RETURN
Respectfully returned the original summons and order dated February 2003
with the information that on February 27, 2003 the undersigned served the
copy of summons together with the corresponding copy of complaint and its
Annexes and order dated February 27, 2003, to defendants (sic) Bank of the
Philippine Islands (BPI) thru the manager Ms. Glona Ramos at Sta. Cruz
Laguna Branch, at Sta. Cruz, Laguna, to defendant Sheriff Marcial Opinion
at the Office of the Provincial Sheriff of Laguna, R.T.C. (sic) Sta. Cruz,
Laguna as shown by their signatures on the original summons and order.
Instead of filing an Answer, BPI filed a Motion to Dismiss8 the complaint on
the ground of lack of jurisdiction over the person of the defendant and other
procedural infirmities attendant to the filing of the complaint. In its Motion to
Dismiss, BPI claimed that the Branch Manager of its Sta. Cruz, Laguna
Branch, was not one of those authorized by Section 11, Rule 14 of the
Revised Rules of Court9 to receive summons on behalf of the corporation.
The summons served upon its Branch Manager, therefore, did not bind the
corporation. In addition, it was alleged that the complaint filed by the
Spouses Santiago and Centrogen lacked a Certificate of Non-Forum
Shopping10 and was therefore dismissible. Finally, BPI underscored that the
person who verified the complaint was not duly authorized by Centrogen's
Board of Directors to institute the present action as required by Section 23 of
the Corporation Code.11
In an Order12 dated 28 February 2003, the RTC denied the Motion to
Dismiss and emphasized that the nature of the case merited its removal
from the purview of Section 11, Rule 14 of the Revised Rules of Court.
Based on the provisions of Section 5, Rule 58 of the Revised Rules of
Court,13 the RTC declared that the instant Order is still valid and binding
despite non-compliance with the provisions of Section 11, Rule 14 of the
same Rules. The dispositive portion of the Order reads:
WHEREFORE, premises considered, the motion to dismiss is hereby denied
because of the presence of extreme urgency wherein the Court has
jurisdiction to act on the TRO despite lack of proper service of summons. Let
the instant case be called for summary hearing on plaintiff's application for
temporary restraining order.
82
After summary hearing on the Spouses Santiago and Centrogen's
application for Temporary Restraining Order, the RTC, on 28 February 2003,
issued an Order14 enjoining the Provincial Sheriff from proceeding with the
extra-judicial foreclosure sale of the subject property until the propriety of
granting a preliminary injunction is ascertained. The decretal portion of the
said Order reads:
Wherefore, premises considered, the Court orders that pending the
resolution of the plaintiff's prayer for preliminary injunction:
1. The Defendant Provincial Sheriff, his deputies, employees, and agents
are enjoined from proceeding with the threatened extra-judicial foreclosure
sale (to be conducted today) of the parcel of land owned by plaintiffs
Spouses Ireneo M. Santiago and Liwanag P. Santiago located in (sic) Brgy.
Sto. Angel Norte, Sta. Cruz, Laguna.
2. The application for a preliminary injunction is hereby set for hearing on
March 10, 2003 at 1:30 pm. Further, the plaintiffs are hereby ordered to
immediately file a bond amounting to One Hundred Thousand Pesos
(P100,000.00) to answer for damages that Defendant Bank may sustain if
the court should finally decide that the plaintiffs are not entitled thereto.
On 6 March 2003, the RTC ordered the service of new summons to BPI in
accordance with the provisions of the Revised Rules of Court. The aforesaid
Order reads:
To avoid further argument as regards the proper service of summons to
Defendant Bank, the Branch Clerk of Court is hereby directed to issue
another summons and serve copy of the same together with the complaint
and its annexes to any of the officers of the Defendant Bank as provided by
the rules of civil procedure.15
In compliance with the aforesaid Order, the Branch Clerk of Court caused
the issuance of a new summons on 7 March 2003, a copy of which was
served upon the Office of the Corporate Secretary of the BPI on 11 March
2003, as evidenced by the Sheriff's Return,16 which reads:
Sheriff's Return
This is to Certify that on March 11, 2003 the undersigned caused the service
of summons together with the copy of complaint and its annexes to
defendant Bank of the Philippine Islands (BPI) and receive (sic) by the Office

of the Corporate Secretary dated March 11, 2003 at the BPI Building Ayala
Avenue, Makati City.
On 20 March 2003, the RTC issued an Order granting the application for the
issuance of a Writ of Preliminary Injunction filed by the Spouses Santiago
and Centrogen. It enjoined the extra-judicial foreclosure sale of the subject
property pending resolution of the main action for Annulment of Real Estate
Mortgage or until further orders of the trial court. In issuing the Writ of
Preliminary Injunction, it rationalized that to allow the foreclosure without
hearing the main case would work injustice to the complainant and since
Spouses Santiago and Centrogen claimed that the first loan in the amount
of P490,000.00 secured by the property subject of the extra-judicial sale had
long been paid by Centrogen through a Union Bank Check No. 0363020895
presented as evidence. The dispositive part of the Order reads:
Wherefore, premises considered, the Court orders that pending the
resolution of the main action for the annulment of the real estate mortgage,
etc., and /or order from this Court:
1. The Defendant Provincial Sheriff, his deputies, employees, and agents
are enjoined from proceeding with the threatened extra-judicial foreclosure
sale of the parcel of land covered by TCT No. T-131382 owned by Plaintiffs
Spouses Ireneo M. Santiago and Liwanag P. Santiago located in Brgy. Sto.
Angel, Sta. Cruz, Laguna.
2. The bond in the amount of One Hundred Thousand (P100,000.00) Pesos
ordered by the Court to be posted by the plaintiffs to answer for damages
that defendant bank may sustain if the court should finally decide that the
plaintiffs are entitled thereto still stands.
The Motion for Reconsideration filed by BPI was denied by the RTC in its
Order17 dated 25 August 2003.
Aggrieved, BPI filed a Petition for Certiorari before the Court of Appeals
seeking the reversal of the adverse Orders of the RTC.
On 3 March 2005, the Court of Appeals rendered a Decision18 affirming the
assailed Orders of the RTC and dismissing the Petition for Certiorari filed by
BPI. The Court of Appeals declared that jurisdiction was acquired upon the
service of new summons. Before the assailed Orders were therefore issued,
the RTC properly acquired jurisdiction over the person of BPI.
83
Undaunted, BPI filed this instant Petition for Review on Certiorari under Rule
45 of the Revised Rules of Court. For our resolution are the following issues:
I.
WHETHER OR NOT THE RTC ACQUIRED JURISDICTION OVER THE
PERSON OF BPI WHEN THE ORIGINAL SUMMONS WAS SERVED
UPON THE BRANCH MANAGER OF ITS STA. CRUZ, LAGUNA BRANCH.
II.
WHETHER OR NOT THE RTC COMMITTED A GRAVE ABUSE OF
DISCRETION IN ISSUING THE WRIT OF PRELIMINARY INJUNCTION.
BPI vehemently insists that the court a quo did not acquire jurisdiction over
its person and consequently, the Order issued by the RTC, permanently
enjoining the foreclosure sale, was therefore void and does not bind BPI.
We are not persuaded.
The pertinent provision of the Revised Rules of Court provides:
Sec. 11, Rule 14. Service upon domestic private juridical entity - When the
defendant is a corporation, partnership or association organized under the
laws of the Philippines with a juridical personality service may be made on
the president, managing partner, general manager, corporate secretary,
treasurer or in-house counsel.
Basic is the rule that a strict compliance with the mode of service is
necessary to confer jurisdiction of the court over a corporation. The officer
upon whom service is made must be one who is named in the statute;
otherwise, the service is insufficient.19 The purpose is to render it reasonably
certain that the corporation will receive prompt and proper notice in an action
against it or to insure that the summons be served on a representative so
integrated with the corporation that such person will know what to do with
the legal papers served on him.

Applying the aforestated principle in the case at bar, we rule that the service
of summons on BPI's Branch Manager did not bind the corporation for the
branch manager is not included in the enumeration of the statute of the
persons upon whom service of summons can be validly made in behalf of
the corporation. Such service is therefore void and ineffectual.
However, upon the issuance and the proper service of new
summons on 11 March 2003, before the Writ of Preliminary Injunction was
issued on 20 March 2003, whatever defect attended the service of the
original summons, was promptly and accordingly cured.
It bears stressing, that on 7 March 2003, the Branch Clerk of Court issued a
new summons which was properly served upon BPI's Corporate Secretary
on 11 March 2003, as evidenced by the Sheriff's Return.
The subsequent service of summons was neither disputed nor was it
mentioned by BPI except in a fleeting narration of facts and therefore enjoys
the presumption that official duty has been regularly performed.20 The
Process Server's Certificate of Service of Summons is a prima
facie evidence of facts set out in that certificate.21
Inarguably, before the Order granting the application for Writ of Preliminary
Injunction was issued, the RTC already acquired jurisdiction over the person
of BPI by virtue of the new summons validly served on the Corporate
Secretary. The fact that the original summons was invalidly served is of no
moment since jurisdiction over BPI was subsequently acquired by the
service of a new summons.
In the case of The Philippine American Life and General Insurance
Company v. Brevea,[22] we ruled:
A case should not be dismissed simply because an original summons
was wrongfully served. It should be difficult to conceive, for example, that
when a defendant personally appears before a Court complaining that he
had not been validly summoned, that the case against him should be
dismissed. An alias  summons can be actually served on said
defendant.
x   x   x
x x x It is not pertinent whether the summons is designated as an
"original" or an "alias" summons as long as it has adequately served
84
its purpose. What is essential is that the summons complies with the
requirements under the Rules of Court and it has been duly served on
the defendant together with the prevailing complaint. x x x Moreover, the
second summons was technically not an alias summons but more of a new
summons on the amended complaint. It was not a continuation of the first
summons considering that it particularly referred to the amended complaint
and not to the original complaint. (Emphases supplied.)
BPI's lamentation, at every turn, on the invalidity of the service of summons
made on the Branch Manager and its deliberate neglect to acknowledge the
fact that a new summons was accordingly served on its Corporate
Secretary, is an attempt in futility to mislead this Court into believing that the
court a quo never acquired jurisdiction over the case and thus the issuance
of the Writ of Preliminary Injunction was invalid.
We are not drawn into petitioner's sophistry.
In the case of G&G Trading Corporation v. Court of Appeals,23 this Court
made the following pronouncements:
Although it may be true that the service of summons was made on a person
not authorized to receive the same in behalf of the petitioner, nevertheless
since it appears that the summons and complaint were in fact received by
the corporation through its said clerk, the Court finds that there was
substantial compliance with the rule on service of summons. x x x The need
for speedy justice must prevail over a technicality.
In explaining the test on the validity of service of summons, Justice Florenz
Regalado24 stressed that substantial justice must take precedence over
technicality and thus stated:
The ultimate test on the validity and sufficiency on service of summons is
whether the same and the attachments thereto where ultimately received by
the corporation under such circumstances that no undue prejudice is
sustained by it from the procedural lapse and it was afforded full opportunity
to present its responsive pleadings. This is but in accord with the entrenched
rule that the ends of substantial justice should not be subordinated to
technicalities and, for which purpose, each case should be examined within
the factual milieu peculiar to it.

Prescinding from the above, we deem it best to underscore that there is no
hard and fast rule pertaining to the manner of service of summons. Rather,
substantial justice demands that every case should be viewed in light of the
peculiar circumstances attendant to each.
In any event, as it is glaringly evident from the records of the case that
jurisdiction over the person of the defendant was validly acquired by the
court by the valid service of a new summons before the writ of preliminary
injunction was issued and guided by jurisprudential pronouncements
heretofore adverted to, we hold that the proceedings attendant to the
issuance of the writ of preliminary injunction were regular.
Having settled this issue necessitates us to look into the propriety of the
issuance of the Writ of Preliminary Injunction.
BPI asserts that the RTC gravely abused its discretion in granting the
Spouses Santiago and Centrogen's application for the Writ of Preliminary
Injunction in the absence of showing that the latter have a clear legal right
sought to be protected.
Again, we do not agree.
An injunction is a preservative remedy for the protection of one's substantive
right or interest; it is not a cause of action by itself but merely a provisional
remedy, an adjunct to the main suit.25 The purpose of injunction is to prevent
threatened or continuous irremediable injury to some of the parties before
their claims can be thoroughly studied and educated. Its sole aim is to
preserve the status quo  until the merits of the case is heard fully.26
The issuance of the writ of preliminary injunction as an ancillary or
preventive remedy to secure the rights of a party in a pending case is
entirely within the discretion of the court taking cognizance of the case, the
only limitation being that the discretion should be exercised based upon the
grounds and in a manner provided by law. Before a writ of preliminary
injunction may be issued, the following requisites must be complied with: (1)
a right in esse or a clear or unmistakable right to be protected; (2) violation
of that right; and (3) that there is an urgent and permanent act and urgent
necessity for the writ to prevent serious damage.27
Verily, the aforestated requisites for the issuance of the Writ of Preliminary
Injunction have been fully complied with. The right of Spouses Santiago over
the property clearly exists since they are the registered owners thereof, and
85
the existence of a Real Estate Mortgage does not undermine the right of the
absolute owner over the property. The violation of such right is manifest in
the threatened foreclosure proceedings commenced by BPI amidst the claim
that the principal obligation has been fully paid. Finally, to allow the
foreclosure of the subject property without first calibrating the evidence of
opposing parties pertaining to the action for the annulment of mortgage
would cause irreparable damage to the registered owner.
The right of BPI to foreclose the subject property is under dispute upon the
claim interposed by the Spouses Santiago and Centrogen that payments for
the loan secured by the property subject to the threatened foreclosure
proceedings were already made. To support their assertions, Spouses
Santiago and Centrogen presented as evidence Union Bank Check No.
0363020895 dated 20 December 2001 in the amount of P648,521.51, with
BPI as payee. From this, we can deduce that the right of BPI to foreclose the
subject property is questionable. We cannot therefore allow the foreclosure
of the Real Estate Mortgage to proceed without first setting the main case for
hearing so that based on the evidence presented by the parties, the trial
court can determine who between them has the better right over the subject
property. To rule otherwise would cause a grave irreparable damage to the
Spouses Santiago and Centrogen.
Parenthetically, this petition affords us the opportunity to once again reiterate
the rule that the issuance of the writ of preliminary injunction rests entirely
within the discretion of the court and generally not interfered with except in
case of manifest abuse. The assessment and evaluation of evidence in the
issuance of the writ of preliminary injunction involve finding of facts ordinarily
left to the trial court for its conclusive determination.28
In Toyota Motor Phils. Corp. Workers' Association v. Court of
Appeals,29 citing Ubanes, Jr. v. Court of Appeals,30 we made the following
declaration:
[T]he matter of the issuance of writ of a preliminary injunction is addressed
to the sound discretion of the trial court, unless the court commits a grave
abuse of discretion. Grave abuse of discretion in the issuance of writs of
preliminary injunction implies a capricious and whimsical exercise of
judgment that is equivalent to lack of jurisdiction or whether the power is
exercised in an arbitrary or despotic manner by reason of passion, prejudice
or personal aversion amounting to an evasion of positive duty or to a virtual
refusal to perform the duty enjoined, or to act at all in contemplation of law. x
x x.
 86

In the case at bar, after summary hearing and evaluation of evidence

presented by both contending parties, the RTC ruled that justice would be
better served if status quo is preserved until the final determination of the
merits of the case, to wit:

For purposes of preliminary injunction, between the evidence presented by

[the spouses Santiago and Centrogen] and [BPI], the evidence of the former
carries more weight. The evidence of [the spouses Santiago and Centrogen]
established that to allow extra-judicial foreclosure without hearing the main
action for the annulment of mortgage would probably work injustice to the
plaintiffs and would probably violate their rights over the subject lot.

Furthermore, this case involves complicated issues that must be resolved

first before altering the status quo. The issue of payment and non-payment
of the loan and the issue of breach of the second loan directly affect the
rights of the plaintiffs over the subject lot. Hence, the last actual, peaceable,
uncontested status of the parties before the controversy must be preserved.

The unyielding posture of BPI that its right to foreclose the subject property
was violated since it is permanently barred from proceeding with the auction
sale is patently erroneous. The RTC, in the exercise of its discretion merely
intended to preserve the status quo while the principal action for the
annulment of mortgage is heard with the end view that no irreversible
damage may be caused to the opposing parties. We find nothing whimsical,
arbitrary or capricious in the exercise of the RTC of its discretion.

WHEREFORE, IN VIEW OF THE FOREGOING, the instant petition

is DENIED. The Decision dated 3 March 2005, and the Resolution dated 28
July 2005, rendered by the Court of Appeals in CA-G.R. SP No. 80643, are
hereby AFFIRMED. Costs against petitioner.

G.R. No. 177598              October 17, 2008
ROBERT SAN PEDRO, petitioner,
vs.
WILLY ONG and NORMITA CABALLES, 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 Robert San Pedro (San Pedro),
seeking to reverse and set aside the Decision1 of the Court of Appeals dated
29 December 2006 and its Resolution2 dated 13 April 2007 in CA-G.R. CV
No. 79399. In its assailed Decision, the Court of Appeals reversed the
Decision3 dated 21 February 2003 of the Regional Trial Court (RTC) of
Malolos, Bulacan, Branch 19, in Civil Case No. 515-M-99, declaring, inter
alia, that the deeds of real estate mortgage constituted on the subject
properties are null and void; while, in its assailed Resolution, the appellate
court denied San Pedro’s Motion for Reconsideration.
The factual and procedural antecedents of this case are as follows:
On 3 April 1996, San Pedro purchased from the spouses Guillermo Narciso
and Brigida Santiago (spouses Narciso) two parcels of land (subject
properties) covered by Transfer Certificates of Title TCTs No. T-82381 and
No. T-82382 of the Registry of Deeds of Bulacan, with areas of about 200
square meters and 150 square meters, respectively. San Pedro bought the
subject properties for ₱35,000.00, as evidenced by Deeds of Sale executed
in his favor by the spouses Narciso on 8 April 1996.4
In order to transfer in his name the TCTs covering the subject properties,
and upon the spouses Narciso’s recommendation, San Pedro hired the
services of Adora Dela Peña (Dela Peña) who is known to be very familiar
with the intricacies of real property transfers.5
87
After sometime, San Pedro inquired with the Registry of Deeds of Bulacan
as to the status of his application for the issuance in his name of new TCTs
for the subject properties. He was surprised to find out, however, that the
subject properties were still registered in the names of the Narciso spouses
and were mortgaged to Willy Ong (Ong).6
According to the annotation stamped at the back of TCTs No. T-82381 and
No. T-82382, the spouses Narciso, on 23 July 1998, executed Special
Powers of Attorney (SPAs) authorizing Dela Peña to mortgage the subject
properties to Ong. The SPAs were procured by Dela Peña from the spouses
Narciso with the help of one Rufino Landayan, a tricycle driver who
accompanied Dela Peña to the spouses Narciso’s residence. San Pedro
found out that it was Normita Caballes (Caballes), Ong’s agent, who caused
the registration of the mortgages with the Registry of Deeds of Bulacan and
the annotation thereof on the TCTs of the spouses Narciso.7
In order to free the subject properties from the said encumbrances, San
Pedro filed with the RTC on 7 May 1999 a Petition for Nullification of
Mortgage with Damages against the spouses Narciso, Dela Peña,
Landayan, Ong, and Caballes, docketed as Civil Case No. 515-M-99.
On 14 May 1991, the RTC issued summons to spouses Narciso, Dela Peña,
Landayan, Ong, and Caballes, directing them to file their Answers to San
Pedro’s Petition in Civil Case No. 515-M-99. On the same day, the Sheriff
served the summons on all concerned as evidenced by the Sheriff’s
Return,8 which reads:
SERVICE RETURN
THIS IS TO CERTIFY that on 14th day of May 1999, the undersigned served
a copies (sic) of Summons in connection in (sic) the above-entitled case
accompanying (sic) by the Complaints with annexes attached thereto upon
defendants, at their given address, to wit:
Spouses Brigida Santiago & thru their son Jaime Narciso/
Guillermo Narciso
-
Received & sign
Adora Dela Peña - thru her sister-in-law/

Received but refused to sign
Rufino Landayan thru his son Christopher
- According to Landayan, he came to know Dela Peña when the latter hired
Landayan/received & sign
Normita Caballes & thru Paul Caballes son of
Willy Ong - Normita Caballes/received
& sign
The original copy of Summons is, therefore, respectfully returned DULY
SERVED.
While the spouses Narciso, Landayan, Ong, and Caballes separately filed
their Answers in accordance with the summons, thereby voluntarily
submitting themselves to the jurisdiction of the RTC, Dela Peña failed to do
so and she was, thus, declared by the RTC to be in default.
In their Answer,9 the spouses Narciso admitted to selling the subject
properties to San Pedro, and denied authorizing the mortgage of the same
to Ong. Their signatures on the SPAs were fraudulently secured by Dela
Peña who misrepresented to them that such document was necessary to
facilitate the transfer of the TCTs of the subject properties to San Pedro. The
spouses Narciso denied that they participated in or benefited from the loan
obligation obtained by Dela Peña from Ong.
For their part, Caballes and Ong raised in their Joint Answer10 the defense of
mortgagee-in-good-faith. They claimed that they both relied in good faith on
the SPAs granting Dela Peña the authority to mortgage the subject
properties since there was nothing on the face thereof which would have
raised their suspicion as to the authenticity of the document. Ong alleged
that the subject properties were used by Dela Peña as collateral for the loan,
amounting to ₱170,000.00, which she obtained from Ong. Since the said
loan obligation already became due and demandable, Ong sought the
foreclosure of the subject properties. During the auction sale, Ong emerged
as the highest bidder but the TCTs of the subject properties were not yet
transferred to his name.
Landayan, in his Answer,11 denied any participation in the procurement of
the SPAs or in the mortgage of the subject properties, except that he was
hired by Dela Peña to bring her to the spouses Narciso’s residence at the
time the alleged SPAs were fraudulently procured.
88
After the Pre-Trial Conference, trial on the merits ensued.
During the trial, San Pedro presented Landayan to testify in his favor.
his tricycle. Landayan took Dela Peña and a woman, whom he identified as
Caballes’ sister, to the residence of the spouses Narciso to secure Guillermo
Narciso’s signature on a certain document. While Dela Peña and Caballes’
sister were inside the spouses Narciso’s house, Caballes was waiting for
them outside in a white car. After a few minutes, Dela Peña and Caballes’
sister came out, and together with Caballes, they visited and inspected the
subject properties; after which, Dela Peña and Caballes’ sister proceeded to
a restaurant to try and secure Brigida Santiago’s signature on the document
they carried. After somebody signed the document for Brigida Santiago,
Dela Peña asked Landayan to sign the same as witness, to which he
obliged.12
San Pedro himself took the witness stand. He testified that he bought the
subject properties from the spouses Narciso for ₱35,000.00. After the
execution of the Deeds of Sale and payment of the purchase price to the
spouses Narciso, possession of the subject properties were turned over to
him. San Pedro started to build his dream house on the subject properties,
spending about ₱2,000,000.00 thereon, only to find out later on that the
subject properties on which his house was built was encumbered by Dela
Peña to Ong on the strength of the SPAs executed by the spouses Narciso
in Dela Peña’s favor. When San Pedro confronted the spouses Narciso
about the mortgages, they denied authorizing the same.13
San Pedro’s sister, Luz San Pedro Tominago (Tominago), narrated before
the RTC that on 31 March 1991, she filed a complaint against Dela Peña
before the Philippine National Police (PNP) Station in Balagtas, Bulacan for
the latter’s failure to effect the transfer of the TCTs of the subject properties
in San Pedro’s name, as she was obliged to do. Tominago filed the
complaint on behalf of San Pedro, who was working abroad.14
Finally, a document examiner and handwriting expert from the National
Bureau of Investigation (NBI) was also presented as a witness for San
Pedro. He confirmed that the signature of Guillermo Narciso on one of the
SPAs was forged, while the signatures of his wife Brigida Santiago on both
SPAs were spurious.15
After San Pedro presented his evidence, Ong and Caballes filed a demurrer
to evidence, questioning the lack of jurisdiction of the RTC over the person
of Dela Peña. Since Dela Peña was an indispensable party in the case, they

claimed that no final determination of the same could be arrived at without
the said court acquiring jurisdiction over Dela Peña.16
In an Order dated 24 August 2001, the RTC denied the demurrer to
evidence filed by Ong and Caballes. Hence, trial proceeded with the
presentation of evidence by the defense.
Ong testified for the defense that Caballes informed him that she knew of
two parcels of land in Bulacan that were being offered as collaterals for a
loan. When Ong expressed interest in the subject properties, Caballes
showed him copies of the SPA executed by the spouses Narciso in favor of
Dela Peña. Ong then instructed Caballes to verify with the Registry of Deeds
whether the spouses Narciso were the real owners of the subject properties
and whether their TCTs were clean. Caballes returned with certified true
copies of the TCTs which were in the names of the spouses Narciso and
bore no encumbrances. Satisfied with the documents, Ong agreed to
release the amount of ₱170,000.00 as loan, secured by the subject
properties. Ong admitted that he was not able to personally talk to Dela
Peña or to the spouses Narciso. All negotiations pertaining to the loan and
mortgages were transacted through Caballes.17
Caballes also offered her testimony, in which she stated that she came to
know Dela Peña because the latter was looking for someone who can grant
her a loan with the subject properties as collateral. Dela Peña was armed
with the SPAs from the spouses Narciso authorizing her to mortgage the
subject properties. After Caballes examined the documents, she proceeded
to the Registry of Deeds of Bulacan to verify the status and ownership of the
subject properties. After she found out that the TCTs were in the name of the
spouses Narciso and were clean, Caballes went to Ong who released the
money for the loan. Dela Peña issued nine post-dated checks to Ong as
payment for her loan obligation. All nine checks were dishonored by the
drawee bank when presented for payment because Dela Peña’s account
was already closed. Ong, thus, instituted before the Municipal Trial Court
(MTC) of Balagtas, Bulacan, a case against Dela Peña for violation of Batas
Pambansa Blg. 22.18
On 21 February 2003, the RTC rendered a Decision in Civil Case No. 515-
M-99, declaring null and void the mortgages constituted over the subject
properties in Ong’s favor. According to the court a quo, Ong and Caballes
failed to exercise reasonable degree of diligence before they entered into
mortgage contracts with Dela Peña, who was not the registered owner of the
properties being mortgaged and was only purportedly authorized by the
registered owners thereof. The RTC, thus, ruled:
89
WHEREFORE, judgment is hereby rendered as follows:
1. Declaring [San Pedro] the legal and rightful owner of the two (2) parcels of
land subject of this litigation, covered by TCT No. T-82381 and TCT No.
82382 presently in the name of [the spouses Narciso].
2. Adjudging the sale by [the spouses Narciso] to [San Pedro], legal, valid,
subsisting and in all respect enforceable.
3. Resolving to declare the Special Power[s] of Attorney constituted in favor
of [Dela Peña] null and void.
4. Declaring the Deeds of Mortgage purportedly executed by [Dela Peña] as
Attorney-in-fact of [the spouses Narciso], in favor of [Ong] constituted in [sic]
TCT No. T-82381 and TCT No. 82382 void ab initio.
5. Ordering the Registry of Deeds for the Province of Bulacan to cancel the
recordings of mortgages in favor of Ong constituted in [sic]  TCT No. 82381
and TCT No. 82382 as well as any annotation of foreclosure proceedings if
there are any by [Ong].
6. Ordering [Ong] to return to [San Pedro] the owner’s duplicate copy of TCT
No. 82381 and TCT No. 82382 which are presently in his possession.
7. Ordering [Dela Peña] to pay [Ong] the sum of P245,000.00 plus legal
interest from September, 1998 until the whole obligation is fully extinguished.
All other claims, counterclaims and cross claims are ordered denied for lack
of merit.19
Without filing any Motion for Reconsideration before the RTC, Ong and
Caballes appealed the adverse RTC Decision to the Court of Appeals,
assigning as error the lack of jurisdiction of the RTC over the person of Dela
Peña which rendered all the proceedings held before said court fatally
defective. Their appeal was docketed as CA-G.R. CV No. 79399.
In a Decision20 dated 29 December 2006, the Court of Appeals granted the
appeal of Ong and Caballes, and accordingly reversed the RTC Decision
dated 21 February 2003. The appellate court justified its reversal of the
ruling of the RTC on its finding that the service of summons on Dela Peña
was invalid; thus, the RTC did not acquire jurisdiction over her person. The

substituted service of summons employed by the Sheriff was ineffective for
failure to comply with the statutory requirements before such mode of
service could be resorted to. The Sheriff in the present case used
substituted service without even showing that Dela Peña could not be
served personally with the summons within reasonable time. Since Dela
Peña was an indispensable party to the controversy, without her no final
determination of the case can be had. Thus, the dispositive portion of the
assailed Court of Appeals Decision reads:
WHEREFORE, all the above premises considered, the Decision, dated
February 21, 2003, of the Regional Trial Court of Malolos, Bulacan, Branch
19, is hereby set aside for want of jurisdiction. The instant case is hereby
remanded to the court a quo for appropriate proceedings. No costs.21
The Motion for Reconsideration filed by San Pedro was denied by the Court
of Appeals in its Resolution22 dated 13 April 2007 for the issues raised
therein were already sufficiently threshed out in its Decision.
San Pedro is now before this Court assailing the adverse decision rendered
by the Court of Appeals.23 For the resolution of this Court are the following
issues:
I.
WHETHER OR NOT THE RTC HAS JURISDICTION TO HEAR AND
DECIDE THE CASE FILED BY SAN PEDRO.
II.
WHETHER OR NOT DE LA PEÑA IS AN INDISPENSABLE PARTY TO
THE CASE.
III.
WHETHER OR NOT ONG WAS MORTGAGEE-IN-GOOD FAITH.
Vital to the resolution of the present controversy are the questions on
whether there was a valid service of summons upon Dela Peña; and if there
was none, whether the improper service of summons on Dela Peña
invalidates the entire proceedings before the court a quo.
90
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 may
acquire jurisdiction over his person. Any judgment without such service in
the absence of a valid waiver is null and void.24
To provide perspective, it is crucial to determine first whether the action is in
personam, in rem, or quasi in rem because the rules on service of summons
under Rule 14 of the Revised Rules of Court apply according to the nature of
the action.25
In the case at bar, Civil Case No. 515-M-99, instituted by San Pedro, is
anchored on his claim that he is the real and rightful owner of the subject
properties, thus, no one else has the right to mortgage them. The real estate
mortgages constituted on the subject properties in favor of Ong, annotated
on their TCTs, are encumbrances on said properties, which may be
considered a cloud on San Pedro’s title thereto.
Such cloud may be removed or San Pedro’s title quieted under Article 476 of
the Civil Code, which reads:
Art. 476. Whenever there is a cloud on title to real property or any interest
therein, by reason of any instrument, record, claim, encumbrance or
proceeding which is apparently valid or effective but is in truth and in fact
invalid, ineffective, voidable, or unenforceable, and may be prejudicial to
said title, an action may be brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title
to real property or any interest therein. (Emphasis ours.)
San Pedro alleged in his Petition in Civil Case No. 515-M-99 that the
mortgages in favor of Ong may, at first, appear valid and effective, but are
actually invalid or voidable for having been made without the knowledge and
authority of the spouses Narciso, the registered owners of the subject
properties and San Pedro’s predecessors-in-interest. In asking the
cancellation of the mortgages on the TCTs of the subject properties, San
Pedro was ultimately asking the RTC to remove a cloud on his title to the
same. It is, thus, irrefragable that Civil Case No. 515-M-99 is an action for
quieting of title.
Significantly, suits to quiet title are characterized as proceedings quasi in
rem. Technically, they are neither in rem nor in personam. In an action quasi
in rem, an individual is named as defendant. However, unlike suits in rem,

a quasi in rem judgment is conclusive only between the parties. A
proceeding quasi in rem is one brought against persons seeking to subject
the property of such persons to the discharge of the claims assailed. 26
In an action quasi in rem, an individual is named as defendant and the
purpose of the proceeding is to subject his interests therein to the obligation
or loan burdening the property. Actions quasi in rem deal with the status,
ownership or liability of a particular property but which are intended to
operate on these questions only as between the particular parties to the
proceedings and not to ascertain or cut off the rights or interests of all
possible claimants. The judgments therein are binding only upon the parties
who joined in the action.27
According to Section 6, Rule 14 of the Revised Rules of Court, summons on
the defendant in actions in personam must be served by handing a copy
thereof to the defendant in person, or, if he refuses to receive it, by tendering
it to him.28 Meanwhile, in actions in rem or quasi in rem, jurisdiction over the
person of the defendant is not a prerequisite to confer jurisdiction on the
court provided that the court acquires jurisdiction over the res, although
summons must be served upon the defendant in order to satisfy the due
process requirements.29
In Alba v. Court of Appeals, 30 the Court further elucidated that:
In an action in personam, jurisdiction over the person of the defendant is
necessary for the court to validly try and decide the case. In
a proceeding in rem or quasi in rem, jurisdiction over the person of the
defendant is not a prerequisite to confer jurisdiction on the court, provided
that the latter has jurisdiction over the res. Jurisdiction over the res is
acquired either (a) by the seizure of the property under legal process,
whereby it is brought into actual custody of the law; or (b) as a result of the
institution of legal proceedings, in which the power of the court is
recognized and made effective. The service of summons or notice to the
defendant is not for the purpose of vesting the court with jurisdiction but
merely for satisfying the due process requirements. (Emphasis supplied.)
Given that Civil Case No. 515-M-99 is a an action for quieting of title, settled
to be quasi in rem, the RTC was not required to acquire jurisdiction over the
persons of the defendants, it being sufficient for the said court to acquire
jurisdiction over the subject matter of the case. By San Pedro’s institution of
Civil Case No. 515-M-99, the RTC already acquired jurisdiction over the
subject properties – the res. Therefore, the service of summons to the
defendants in said case, including Dela Peña, did not affect the jurisdiction
91
of the RTC to hear and decide Civil Case No. 515-M-99, and did not
invalidate the proceedings held therein on the basis of jurisdiction.
Admittedly, there was a defect in the service of the summons on Dela Peña.
The Sheriff immediately resorted to substituted service of summons on Dela
Peña without attempting first to effect personal service within reasonable
time. The Sheriff’s Return31 merely stated that he served a copy of the
summons on Dela Peña’s sister-in-law who refused to sign the same.
Personal service of summons is preferred to substitute service. Only if the
former cannot be made promptly can the process server resort to the latter.
Moreover, the proof of service of summons must (a) indicate the
impossibility of service of summons within a reasonable time; (b) specify the
efforts exerted to locate the defendant; and (c) state that the summons was
served upon a person of sufficient age and discretion who is residing in the
address, or who is in charge of the office or regular place of business, of the
defendant. It is likewise required that the pertinent facts proving these
circumstances be stated in the proof of service or in the officer’s return. The
failure to comply faithfully, strictly and fully with all the foregoing
requirements of substituted service renders the service of summons
ineffective.32 Indisputably, the Sheriff did not comply with any of the
foregoing requirements, thus, rendering his service of summons on Dela
Peña invalid.
Nonetheless, the improper service of summons on Dela Peña did not void
the proceedings conducted by the RTC in Civil Case No. 515-M-99, for lack
of jurisdiction. As the Court has underscored herein, in quasi in
rem proceedings, the court need not acquire jurisdiction over the persons of
the defendants, for as long as it has acquired jurisdiction over the res. The
defect in the service of summons merely infringed Dela Peña’s right to due
process that precluded the RTC from rendering a valid judgment with
respect to her personal liability. And since Dela Peña’s right to due process
is personal and pertains to her alone, it could not be invoked by her other co-
defendants in Civil Case No. 515-M-99 so as to escape the judgment of
liability against them.
Contrary to the pronouncement of the Court of Appeals, Dela Peña
was not an indispensable party to this case, without whom, no final
conclusion of the case can be arrived at.
The Court defined indispensable party in Philippine National Bank v. Heirs of
Estanislao Militar and Deogracias Militar, 33 as follows:

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'
(sic) 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.
Conversely, a party is not indispensable to the suit if his interest in the
controversy or subject matter is distinct and divisible from the interest of the
other parties and will not necessarily be prejudiced by a judgment which
does complete justice to the parties in court. He is not indispensable if his
presence would merely permit complete relief between him and those
already parties to the action or will simply avoid multiple litigation. (Emphasis
supplied.)
Evidently, Dela Peña does not fall within the definition of an indispensable
party. As the Court has explained, Civil Case No. 515-M-99 is an action for
quieting of title, intended to remove any cloud upon San Pedro’s title to the
subject properties. The real estate mortgages in favor of Ong annotated on
the TCTs of the subject properties constitute the cloud to be removed. Thus,
the crux of the controversy is the title of San Pedro to the subject properties
vis-à-vis that of Ong, for the determination of which, Dela Peña’s
participation is not an absolute necessity. The judgment of the RTC
upholding San Pedro’s title to the subject properties over Ong’s, or even if it
were the other way around, would not have affected Dela Peña, because
Dela Peña never claimed title to the subject properties; she only
misrepresented that she had authority to mortgage the same on behalf of the
registered owners, namely, the spouses Narciso. After she successfully,
albeit, fraudulently, obtained the loan using the subject properties as
mortgage, her interest in the same had ended. She may have perpetrated
fraud for which she may be held liable but, clearly, these may be established
in a separate and subsequent case. Her presence in the proceedings before
the RTC would have only permitted complete relief since the said court could
have already determined therein her liability for the damages she had
caused to any of the parties, but it does not make her presence
indispensable.
San Pedro’s title proved to be superior to that of Ong’s. The subject
properties were sold to him prior to the mortgage of the same to Ong. The
spouses Narciso, registered owners of the subject properties, admitted the
sale thereof to San Pedro and denied giving any authority to Dela Peña to
mortgage the said properties. An expert witness affirmed that the signature
of Guillermo Narciso on one of the purported SPAs in favor of Dela Peña
92
was forged, while the signatures of his wife Brigida Santiago on both SPAs
were spurious. Ong and Caballes cannot even point out any defect in San
Pedro’s title to the subject properties. Ong can only assert better right to the
same as allegedly a mortgagee in good faith.
However, the well-entrenched legal principle in our jurisprudence requires a
higher degree of diligence to be exercised by the mortgagee when he is not
directly dealing with the registered owner of real property. As the Court
enunciated in Abad v. Guimba34:
While one who buys from the registered owner does not need to look behind
the certificate of title, one who buys from one who is not the registered
owner is expected to examine not only the certificate of title but all factual
circumstances necessary for [one] to determine if there are any flaws in the
title of the transferor, or in [the] capacity to transfer the land. Although the
instant case does not involve a sale but only a mortgage, the same rule
applies inasmuch as the law itself includes a mortgagee in the term
"purchaser."
The Court has stressed time and again that every person dealing with an
agent is put upon inquiry, and must discover upon his peril the authority of
the agent, and this is especially true where the act of the agent is of unusual
nature. If a person makes no inquiry, he is chargeable with knowledge of the
agent’s authority, and his ignorance of that authority will not be any excuse.35
In the more recent case of Bank of Commerce v. San Pablo, Jr.,36 the Court
elucidated:
The Bank of Commerce clearly failed to observe the required degree of
caution in ascertaining the genuineness and extent of the authority of Santos
to mortgage the subject property. It should not have simply relied on the face
of the documents submitted by Santos, as its undertaking to lend a
considerable amount of money required of it a greater degree of
diligence. That the person applying for the loan is other than the
registered owner of the real property being mortgaged should have
already raised a red flag and which should have induced the Bank of
Commerce to make inquiries into and confirm Santos’ authority to
mortgage the Spouses San Pablo’s property. A person who
deliberately ignores a significant fact that could create suspicion in an
otherwise reasonable person is not an innocent purchaser for
value (Emphasis ours.)
 93

Considering Ong’s undue haste in granting the loan without inquiring into the
ownership of the subject properties being mortgaged, as well as the
authority of the supposed agent to constitute the mortgages on behalf of the
owners, he cannot be considered a mortgagee-in-good-faith. Ong’s
averment that he exercised prudence in the loan-mortgage transaction is
debunked by his own admission that he merely relied on Caballes’
representations thereon, without personally meeting or speaking with Dela
Peña, the supposed agent, or the spouses Narciso, the registered owners of
the subject properties. Although he instructed Caballes to check the TCTs of
the subject properties, he did not bother to personally meet Dela Peña and
ascertain the genuineness and authenticity of the latter’s authority to
mortgage the same on behalf of the spouses Narciso especially considering
that the one mortgaging the property is not the registered owner.

The real estate mortgages constituted on the subject properties based on

false and fraudulent SPAs are void ab initio. In Veloso and Rosales v. La
Urbana,37 the Court ruled that forged powers of attorney are without force
and effect and, thus, nullified the mortgage constituted on the strength
thereof:

In view of the forgoing facts, the court held that pursuant to Article 1714 of
the Civil Code and under the Torrens Act in force in this jurisdiction, the
forged powers of attorney prepared by Del Mar were without force and effect
and that the registration of the mortgages constituted by virtue thereof were
likewise null and void and without force and effect, and that they could not in
any way prejudice the rights of the plaintiff as the registered owner of her
participations in the properties in question.

Consequently, the foreclosure proceedings on the mortgaged properties are

likewise void ab initio. Since Ong cannot be deemed a mortgagee-in-good-
faith nor an innocent purchaser for value of the subject properties at the
auction sale thereof, his claim to the said properties cannot prevail over that
of San Pedro. The Court’s ruling, however, is without prejudice to the right of
Ong to proceed against those who perpetrated the fraud to his prejudice.

WHEREFORE, in view of the foregoing, the instant Petition

is GRANTED. The Decision dated 29 December 2006 rendered by the Court
of Appeals in CA-G.R. CV No. 79399 is REVERSED and SET ASIDE. The
Decision dated 21 February 2003 of the Regional Trial Court of Malolos,
Bulacan, Branch 19, in Civil Case No. 515-M-99, is
hereby REINSTATED with the modification that the portion ordering Adora
Dela Peña to pay Willy G. Ong the sum of ₱245,000.00 plus legal interest,
is DELETED.

Santos vs PNOC
CORONA, J.:
1 2
This is a petition for review  of the September 22, 2005 decision  and
December 29, 2005 resolution3 of the Court of Appeals in CA-G.R. SP No.
82482.
On December 23, 2002, respondent PNOC Exploration Corporation filed a
complaint for a sum of money against petitioner Pedro T. Santos, Jr. in the
Regional Trial Court of Pasig City, Branch 167. The complaint, docketed as
Civil Case No. 69262, sought to collect the amount of P698,502.10
representing petitioner’s unpaid balance of the car loan4 advanced to him by
respondent when he was still a member of its board of directors.
Personal service of summons to petitioner failed because he could not be
located in his last known address despite earnest efforts to do so.
Subsequently, on respondent’s motion, the trial court allowed service of
summons by publication.
Respondent caused the publication of the summons in Remate, a
newspaper of general circulation in the Philippines, on May 20, 2003.
Thereafter, respondent submitted the affidavit of publication of the
advertising manager of Remate5 and an affidavit of service of respondent’s
employee6 to the effect that he sent a copy of the summons by registered
mail to petitioner’s last known address.
When petitioner failed to file his answer within the prescribed period,
respondent moved that the case be set for the reception of its evidence ex
parte. The trial court granted the motion in an order dated September 11,
2003.
Respondent proceeded with the ex parte presentation and formal offer of its
evidence. Thereafter, the case was deemed submitted for decision on
October 15, 2003.
On October 28, 2003, petitioner filed an "Omnibus Motion for
Reconsideration and to Admit Attached Answer." He sought reconsideration
of the September 11, 2003 order, alleging that the affidavit of service
submitted by respondent failed to comply with Section 19, Rule 14 of the
Rules of Court as it was not executed by the clerk of court. He also claimed
that he was denied due process as he was not notified of the September 11,
94
2003 order. He prayed that respondent’s evidence ex parte be stricken off
the records and that his answer be admitted.
Respondent naturally opposed the motion. It insisted that it complied with
the rules on service by publication. Moreover, pursuant to the September 11,
2003 order, petitioner was already deemed in default for failure to file an
answer within the prescribed period.
In an order dated February 6, 2004, the trial court denied petitioner’s motion
for reconsideration of the September 11, 2003 order. It held that the rules did
not require the affidavit of complementary service by registered mail to be
executed by the clerk of court. It also ruled that due process was observed
as a copy of the September 11, 2003 order was actually mailed to petitioner
at his last known address. It also denied the motion to admit petitioner’s
answer because the same was filed way beyond the reglementary period.
Aggrieved, petitioner assailed the September 11, 2003 and February 6, 2004
orders of the trial court in the Court of Appeals via a petition for certiorari. He
contended that the orders were issued with grave abuse of discretion. He
imputed the following errors to the trial court: taking cognizance of the case
despite lack of jurisdiction due to improper service of summons; failing to
furnish him with copies of its orders and processes, particularly the
September 11, 2003 order, and upholding technicality over equity and
justice.
During the pendency of the petition in the Court of Appeals, the trial court
rendered its decision in Civil Case No. 69262. It ordered petitioner to
pay P698,502.10 plus legal interest and costs of suit.7
Meanwhile, on September 22, 2005, the Court of Appeals rendered its
decision8 sustaining the September 11, 2003 and February 6, 2004 orders of
the trial court and dismissing the petition. It denied reconsideration.9 Thus,
this petition.
Petitioner essentially reiterates the grounds he raised in the Court of
Appeals, namely, lack of jurisdiction over his person due to improper service
of summons, failure of the trial court to furnish him with copies of its orders
and processes including the September 11, 2003 order and preference for
technicality rather than justice and equity. In particular, he claims that the
rule on service by publication under Section 14, Rule 14 of the Rules of
Court applies only to actions in rem, not actions in personam like a complaint
for a sum of money. He also contends that the affidavit of service of a copy

of the summons should have been prepared by the clerk of court, not
respondent’s messenger.
The petition lacks merit.
ProprietyOf
Service By Publication
Section 14, Rule 14 (on Summons) of the Rules of Court provides:
SEC. 14. Service upon defendant whose identity or whereabouts are
unknown. – In any action where the defendant is designated as an
unknown owner, or the like, or whenever his whereabouts are unknown
and cannot be ascertained by diligent inquiry, service may, by leave of
court, be effected upon him by publication in a newspaper of general
circulation and in such places and for such times as the court may order.
(emphasis supplied)
Since petitioner could not be personally served with summons despite
diligent efforts to locate his whereabouts, respondent sought and was
granted leave of court to effect service of summons upon him by publication
in a newspaper of general circulation. Thus, petitioner was properly served
with summons by publication.
Petitioner invokes the distinction between an action in rem and an action in
personam and claims that substituted service may be availed of only in an
action in rem. Petitioner is wrong. The in rem/in personam distinction was
significant under the old rule because it was silent as to the kind of action to
which the rule was applicable.10 Because of this silence, the Court limited the
application of the old rule to in rem actions only.11
This has been changed. The present rule expressly states that it applies "[i]n
any action where the defendant is designated as an unknown owner, or the
like, or whenever his whereabouts are unknown and cannot be ascertained
by diligent inquiry." Thus, it now applies to any action, whether in
personam, in rem or quasi in rem.12
Regarding the matter of the affidavit of service, the relevant portion of
Section 19,13 Rule 14 of the Rules of Court simply speaks of the following:
95
… an affidavit showing the deposit of a copy of the summons and order for
publication in the post office, postage prepaid, directed to the defendant by
registered mail to his last known address.
Service of summons by publication is proved by the affidavit of the printer,
his foreman or principal clerk, or of the editor, business or advertising
manager of the newspaper which published the summons. The service of
summons by publication  is complemented by service of summons
by registered mail to the defendant’s last known address. This
complementary service is evidenced by an affidavit "showing the deposit of a
copy of the summons and order for publication in the post office, postage
prepaid, directed to the defendant by registered mail to his last known
address."
The rules, however, do not require that the affidavit of complementary
service be executed by the clerk of court. While the trial court ordinarily does
the mailing of copies of its orders and processes, the duty to make the
complementary service by registered mail is imposed on the party who
resorts to service by publication.
Moreover, even assuming that the service of summons was defective, the
trial court acquired jurisdiction over the person of petitioner by his
own voluntary appearance in the action against him. In this connection,
Section 20, Rule 14 of the Rules of Court states:
SEC. 20. Voluntary appearance. – The defendant’s voluntary appearance
in the action shall be equivalent to service of summons. The inclusion in
a motion to dismiss of other grounds aside from lack of jurisdiction over the
person of the defendant shall not be deemed a voluntary appearance.
(emphasis supplied)
Petitioner voluntarily appeared in the action when he filed the "Omnibus
Motion for Reconsideration and to Admit Attached Answer."14 This was
equivalent to service of summons and vested the trial court with jurisdiction
over the person of petitioner.
EntitlementTo
Notice Of Proceedings
The trial court allowed respondent to present its evidence ex parte on
account of petitioner’s failure to file his answer within the prescribed period.

Petitioner assails this action on the part of the trial court as well as the said
court’s failure to furnish him with copies of orders and processes issued in
the course of the proceedings.
The effects of a defendant’s failure to file an answer within the time allowed
therefor are governed by Sections 3 and 4, Rule 9 (on Effect of Failure to
Plead) of the Rules of Court:
SEC. 3. Default; declaration of. – If the defending party fails to answer
within the time allowed therefor, the court shall, upon motion of the
claiming party with notice to the defending party, and proof of such
failure, declare the defending party in default. Thereupon, the court shall
proceed to render judgment granting the claimant such relief as his pleading
may warrant, unless the court in its discretion requires the claimant to submit
evidence. Such reception of evidence may be delegated to the clerk of court.
SEC. 4. Effect of order of default. – A party in default shall be entitled to
notice of subsequent proceedings but not to take part in the trial.
(emphasis supplied)
If the defendant fails to file his answer on time, he may be declared in default
upon motion of the plaintiff with notice to the said defendant. In case he is
declared in default, the court shall proceed to render judgment granting the
plaintiff such relief as his pleading may warrant, unless the court in its
discretion requires the plaintiff to submit evidence. The defaulting defendant
may not take part in the trial but shall be entitled to notice of subsequent
proceedings.
In this case, even petitioner himself does not dispute that he failed to file his
answer on time. That was in fact why he had to file an "Omnibus Motion for
Reconsideration and to Admit Attached Answer." But respondent moved
only for the ex parte presentation of evidence, not for the declaration of
petitioner in default. In its February 6, 2004 order, the trial court stated:
The disputed Order of September 11, 2003 allowing the presentation of
evidence ex-parte precisely ordered that "despite and notwithstanding
service of summons by publication, no answer has been filed with the Court
within the required period and/or forthcoming.["] Effectively[,] that was a
finding that the defendant [that is, herein petitioner] was in default for
failure to file an answer or any responsive pleading within the period
fixed in the publication as precisely the defendant [could not] be found and
for which reason, service of summons by publication was ordered. It is
simply illogical to notify the defendant of the Order of September 11, 2003
96
simply on account of the reality that he was no longer residing and/or found
on his last known address and his whereabouts unknown – thus the
publication of the summons. In other words, it was reasonable to expect that
the defendant will not receive any notice or order in his last known address.
Hence, [it was] impractical to send any notice or order to him. Nonetheless,
the record[s] will bear out that a copy of the order of September 11,
2003 was mailed to the defendant at his last known address but it was
not claimed. (emphasis supplied)
As is readily apparent, the September 11, 2003 order did not limit itself to
permitting respondent to present its evidence ex parte but in effect issued an
order of default. But the trial court could not validly do that as an order of
default can be made only upon motion of the claiming party.15 Since no
motion to declare petitioner in default was filed, no default order should have
been issued.
To pursue the matter to its logical conclusion, if a party declared in default is
entitled to notice of subsequent proceedings, all the more should a party
who has not been declared in default be entitled to such notice. But what
happens if the residence or whereabouts of the defending party is not known
or he cannot be located? In such a case, there is obviously no way notice
can be sent to him and the notice requirement cannot apply to him. The law
does not require that the impossible be done.16 Nemo tenetur ad impossibile.
The law obliges no one to perform an impossibility.17 Laws and rules must be
interpreted in a way that they are in accordance with logic, common sense,
reason and practicality.18
Hence, even if petitioner was not validly declared in default, he could not
reasonably demand that copies of orders and processes be furnished him.
Be that as it may, a copy of the September 11, 2003 order was nonetheless
still mailed to petitioner at his last known address but it was unclaimed.
CorrectnessOf
Non-Admission Of Answer
Petitioner failed to file his answer within the required period. Indeed, he
would not have moved for the admission of his answer had he filed it on
time. Considering that the answer was belatedly filed, the trial court did not
abuse its discretion in denying its admission.
 97

Petitioner’s plea for equity must fail in the face of the clear and express
language of the rules of procedure and of the September 11, 2003 order
regarding the period for filing the answer. Equity is available only in the
absence of law, not as its replacement.19 Equity may be applied only in the
absence of rules of procedure, never in contravention thereof.

WHEREFORE, the petition is hereby DENIED.


G.R. No. L-58340             July 16, 1991
KAWASAKI PORT SERVICE CORPORATION, NAIKAI SHIPPING CO.
LTD., NAIKAI TUG BOAT SERVICE CO., THE PORT SERVICE
CORPORATION, LICENSED LAND SEA PILOTS ASSOCIATION,
HAYAKOMA UNYU K.K., TOKYO KISEN COMPANY, LTD., OMORI
KAISOTEN, LTD., TOHOKU UNYU CO., LTD. AND SEITETSU UNYU CO.,
LTD., petitioners,
vs.
THE HON. AUGUSTO M. AMORES, Judge of Br. XXIV, Court of First
Instance of Manila, and C.F. SHARP & CO., INC., respondents.
Quasha, Asperilla, Ancheta, Peña & Nolasco for petitioners.
Chuidian Law Office for private respondent.
BIDIN,  J.:
This is a petition for certiorari seeking to set aside the orders of the then
Court of First Instance of Manila, * Branch XXIV in Civil Case No. 132077:
(a) dated July 13, 1981 denying the special appearances of petitioners as
defendants in said case to question the court's jurisdiction over the persons
of the defendants and (b) dated September 22, 1981, denying the motion for
reconsideration of said order.
The antecedents of this case are as follows:
On May 7, 1980, the private respondent C.F. Sharp & Co., Inc. filed a
complaint for injunction and/or declaratory relief in the then Court of First
Instance of Manila against seventy-nine (79) Japanese corporations as
defendants, among which are the petitioners herein. Said complaint was
docketed as Civil Case No. 132077. The complaint alleges, among others,
that the plaintiff is a corporation organized and existing under the laws of the
Philippines; that there is another corporation organized under the law of
Japan with the corporate name C.F. Sharp Kabushiki Kaisha; that the
plaintiff and C.F. Sharp Kabushiki Kaisha are in all respects separate and
distinct from each other; that C.F. Sharp Kabushiki Kaisha appears to have
incurred obligations to several creditors amongst which are defendants, also
foreign corporations organized and existing under the laws of Japan; that
due to financial difficulties, C.F. Sharp Kabushiki Kaisha failed and/or
98
refused to pay its creditors; and that in view of the failure and/or refusal of
said C.F. Sharp Kabushiki Kaisha to pay its alleged obligations to
defendants, the latter have been demanding or have been attempting to
demand from C.F. Sharp & Co., Inc., the payment of the alleged obligations
to them of C.F. Sharp Kabushiki Kaisha, notwithstanding that C.F. Sharp &
Co., Inc. is a corporation separate and distinct from that of C.F. Sharp
Kabushiki Kaisha and that the former had no participation whatsoever or
liability in connection with the transactions between the latter and the
defendants.
As alleged in the complaint, the private respondent prayed for injunctive
relief against the petitioners' demand from the private respondent for the
payment of C.F. Sharp Kabushiki Kaisha's liabilities to the petitioners.
As an alternative to injunction, the private respondent prayed that a judicial
declaration be made that, as a separate and independent corporation, it is
not liable for the obligations and liabilities of C.F. Sharp Kabushiki Kaisha.
Since the defendants are non-residents, without business addresses in the
Philippines but in Japan, the private respondent prayed for leave of court to
effect extraterritorial service of summons.
On June 11, 1980, the respondent judge issued an order authorizing the
private respondent to effect extraterritorial service of summons on
defendants therein.
Subsequently, private respondent filed an urgent ex-parte motion dated June
23, 1980 for Extraterritorial Service of Summons Upon Defendants by
registered mail with return cards pursuant to Section 17 of Rule 14 of the
Rules of Court.
Acting on said motion, the respondent judge issued an order dated June 30,
1980 granting the motion and authorizing extraterritorial service of summons
upon defendants to be effected by registered mail with return cards.
On March 11, 1981, five of the petitioners, Kawasaki Port Service
Corporation, Naikai Shipping Co., Ltd., Naikai Tug Boat Service Co., Ltd.,
The Port Service Corporation and Licensed Land Sea Pilots Association filed
their "Special Appearance to Question Jurisdiction of This Honorable Court
Over Persons of Defendants" contending that the lower court does not and
cannot acquire jurisdiction over the persons of defendants on the grounds
that private respondent's action does not refer to its personal status; that the

action does not have for subject matter property contemplated in Section 17
of Rule 14 of the Rules of Court, that the action does not pray that
defendants be excluded from any interest or property in the Philippines; that
no property of the defendants has been attached; that the action is in
personam; and that the action does not fall within any of the four cases
mentioned in Section 17, Rule 14 of the Rules of Court.
On March 17, 1981, another three of herein petitioners, Hayakoma Unyu
K.K., Tokyo Kisen Company, Ltd. and Omori Kaisoten, Ltd. also filed their
special appearance adopting the same arguments as that of the first five.
On April 28, 1981, the two other petitioners, Tohoku Unyu Co., Ltd. and
Seitetsu Unyu Co., Ltd., filed their "Special Appearance to Question the
Jurisdiction of the Honorable Court" over their persons adopting in toto as
theirs the "Special Appearance" dated March 11, 1981 of Kawasaki Port
Service.
On July 13, 1981, the respondent Court issued its order denying said special
appearances. The motion for reconsideration of said order filed by the
petitioners was also denied on September 22, 1981.
Hence, the present petition.
After the required pleadings were filed, the First Division of this Court, in the
resolution of April 14, 1982, gave due course to the petition and required
both parties to submit simultaneous memoranda within thirty (30) days from
notice. Both parties complied by submitting the required memoranda.
The main issue in this case is whether or not private respondent's complaint
for injunction and/or declaratory relief is within the purview of the provisions
of Section 17, Rule 14 of the Rules of Court.
The petitioners contend that the respondent judge acted contrary to the
provisions of Section 17 of Rule 14 for the following reasons: (1) private
respondent's prayer for injunction, as a consequence of its alleged non-
liability to the petitioners for debts of C.F. Sharp Kabushiki Kaisha of Japan,
conclusively establishes that private respondent's cause of action does not
affect its status; (2) the respondent court cannot take jurisdiction of actions
against the petitioners as they are non-residents and own no property within
the state; (3) the petitioners have not as yet claimed a lien or interest in the
property within the Philippines at the time the action was filed which is a
requirement under Section 17 of Rule 14; (4) extra-territorial service on a
99
non-resident defendant is authorized, among others, when the subject of the
action is property within the Philippines in which the relief demanded
consists in excluding defendant from any interest therein; and (5) inasmuch
as the reliefs prayed for by the private respondent in the complaint are in
personam, service by registered mail cannot be availed of because Section
17 of Rule 14 authorized this mode of service only in actions in rem or quasi
in rem.
For its part, the private respondent countered that (1) the action refers to its
status because the basic issue presented to the lower court for
determination is its status as a corporation which has a personality that is
separate, distinct and independent from the personality of another
corporation, i.e., C.F. Sharp Kabushiki Kaisha of Japan; (2) under Section 17
of Rule 14, the subject matter or property involved in the action does not
have to belong to the defendants. The provisions of said section
contemplate of a situation where the property belongs to the plaintiff but the
defendant has a claim over said property, whether that claim be actual or
contingent; (3) the prayer of the plaintiff that the defendants be excluded
from any interest in the properties of the plaintiff within the Philippines has
the effect of excluding the defendants from the properties of the plaintiff in
the Philippines for the purpose of answering for the debts of C.F. Sharp
Kabushiki Kaisha of Japan to the defendants in accordance with Section 17
of Rule 14; and (4) the action before the lower court is an action quasi in
rem as the remedies raised in the complaint affect the personal status of the
plaintiff as a separate, distinct and independent corporation and relates to
the properties of the plaintiff in the Philippines over which the petitioners
have or claim an interest, actual or contingent.
The petition is impressed with merit.
Section 17, Rule 14 of the Rules of Court provides:
Section 17. Extraterritorial service. — When the defendant does not
reside and is not found in the Philippines and the action affects the
personal status of the plaintiff or relates to, or the subject of which
is, property within the Philippines, in which the defendant has or
claims a lien or interest, actual or contingent, or in which the relief
demanded consists, wholly or in part, in excluding the defendant
from any interest therein, or the property of the defendant has been
attached within the Philippines, service may, by leave of court, be
effected out of the Philippines by personal service as under section
7; or by publication in a newspaper of general circulation in such
places and for such times as the court may order, in which case a

copy of the summons and order of the court shall be sent by
registered mail to the last known address of the defendant, or in
any other manner the court may deem sufficient. Any order granting
such leave shall specify a reasonable time, which shall not be less
than sixty (60) days after notice, within which the defendant must
answer.
This Court had ruled that extraterritorial service of summons is proper only in
four (4) instances, namely: "(1) when the action affects the personal status of
the plaintiffs: (2) when the action relates to, or the subject of which is,
property within the Philippines, in which the defendant has or claims a lien or
interest, actual or contingent; (3) when the relief demanded in such action
consists, wholly or in part, in excluding the defendant from any interest in
property located in the Philippines; and (4) when the defendant non-
resident's property has been attached within the Philippines." (De Midgely v.
Ferandos, 64 SCRA 23 [1975]; The Dial Corporation v. Soriano, 161 SCRA
737 [1988]).
In the case at bar, private respondent has two (2) alternative principal
causes of action, to wit: either for declaratory relief or for injunction.
Allegedly, in both cases, the status of the plaintiff is not only affected but is
the main issue at hand.
As defined, "Status means a legal personal relationship, not temporary in
nature nor terminable at the mere will of the parties, with which third persons
and the state are concerned" (Holzer v. Deutsche Reichsbahn Gesellschaft,
290 NYS 181; cited in 40 Words and Phrases, 129, Permanent Edition).
It is easy to see in the instant case, that what is sought is a declaration not
only that private respondent is a corporation for there is no dispute on that
matter but also that it is separate and distinct from C.F. Sharp Kabushiki
Kaisha and therefore, not liable for the latter's indebtedness. It is evident that
monetary obligations does not, in any way, refer to status, lights and
obligations. Obligations are more or less temporary, but status is relatively
permanent. But more importantly, as cited in the case of (Dy Poco v.
Commissioner of Immigration, et al.,  16 SCRA 618 [1966]), the prevailing
rule is that "where a declaratory judgment as to a disputed fact would be
determinative of issues rather than a construction of definite stated rights,
status and other relations, commonly expressed in written instrument, the
case is not one for declaratory judgment." Thus, considering the nature of a
proceeding for declaratory judgment, wherein relief may be sought only to
declare rights and not to determine or try issues, there is more valid reason
to adhere to the principle that a declaratory relief proceeding is unavailable
100
where judgment would have to be made, only after a judicial investigation of
disputed issues (ibid). In fact, private respondent itself perceives that
petitioners may even seek to pierce the veil of corporate identity (Rollo, p.
63).
Private respondent alleges that most if not all, of the petitioners have merely
demanded or have attempted to demand from the former the payment of the
obligations of C.F. Sharp K.K., (Rollo, p. 63). Otherwise stated, there is no
action relating to or the subject of which are the properties of the defendants
in the Philippines for it is beyond dispute that they have none in this
jurisdiction nor can it be said that they have claimed any lien or interest,
actual or contingent over any property herein, for as above stated, they
merely demanded or attempted to demand from private respondent payment
of the monetary obligations of C.F. Sharp K.K., No action in court has as yet
ensued. Verily, the fact that C.F. Sharp Philippines is an entity separate and
distinct from C.F. Sharp K.K., is a matter of defense that can be raised by
the former at the proper time.
Finally, the alternative relief sought is injunction, that is to enjoin petitioners
from demanding from private respondent the payment of the obligations of
C.F. Sharp K.K., It was not prayed that petitioners be excluded from any
property located in the Philippines, nor was it alleged, much less shown, that
the properties of the defendants, if any, have been attached.
Hence, as ruled by this Court, where the complaint does not involve the
personal status of plaintiff, nor any property in the Philippines in which
defendants have or claim an interest, or which the plaintiff has attached, but
purely an action for injunction, it is a personal action as well as an action in
personam, not an action in rem or quasi in rem. As a personal action,
personal or substituted service of summons on the defendants, not
extraterritorial service, is necessary to confer jurisdiction on the court. In an
action for injunction, extra-territorial service of summons and complaint upon
the non-resident defendants cannot subject them to the processes of the
regional trial courts which are powerless to reach them outside the region
over which they exercise their authority. Extra-territorial service of summons
will not confer on the court jurisdiction or Power to compel them to obey its
orders (Dial Corporation v. Soriano, 161 SCRA 738 [1988] citing Section 3-a
Interim Rules of Court, Section 21, subpar. 1, BP Blg. 129).
Considering that extra-territorial service of summons on the petitioners was
improper, the same was null and void.1âwphi1
 101

WHEREFORE, the petition is Granted and the questioned orders dated July
13, 1981 and September 22, 1981 of the respondent Judge, are Reversed
and Set Aside.

G.R. No. 177007               July 14, 2009
SANSIO PHILIPPINES, INC., Petitioner,
vs.
SPOUSES ALICIA AND LEODEGARIO MOGOL, JR., Respondents.
DECISION
CHICO-NAZARIO, J.:
Challenged in this Petition for Review on Certiorari1 under Rule 45 of the
Rules of Court are the Decision2 dated 21 November 2006 and the
Resolution3 dated 12 March 2007 of the Court of Appeals in CA-G.R. SP No.
70029. The assailed Decision reversed and set aside the Order4 dated 18
January 2002 of the Regional Trial Court (RTC) of Manila, Branch 33, in Civil
Case No. 01-101267, which dismissed the Petition for Certiorari, Prohibition
and/or Injunction filed by herein respondent spouses Alicia and Leodegario
Mogol, Jr. against herein petitioner Sansio Philippines, Inc. and Judge
Severino B. de Castro, Jr. of the Metropolitan Trial Court (MeTC) of Manila,
Branch 25. The assailed Resolution of the Court of Appeals denied the
Motion for Reconsideration of its earlier Decision.
Petitioner Sansio Philippines, Inc. is a domestic corporation that is engaged
in the business of manufacturing and selling appliances and other related
products.
On 12 July 2000, petitioner filed a Complaint for Sum of Money and
Damages5 against respondent spouses Mogol before the MeTC of Manila.
The case was docketed as Civil Case No. 167879CV and was raffled to
Branch 25 of said court.
Petitioner stated in the Complaint that respondent spouses Alicia and
Leodegario Mogol, Jr. were the owners and managers of MR Homes
Appliances, with residence at 1218 Daisy St., Employee Village, Lucena
City, where summons and other written legal processes of the court may be
served. Petitioner further alleged that on 15 November 1993 and 27 January
1994, respondent spouses Mogol purchased from petitioner air-conditioning
units and fans worth ₱217,250.00 and ₱5,521.20, respectively. Respondent
spouses Mogol apparently issued postdated checks as payment therefor,
but said checks were dishonored, as the account against which the checks
were drawn was closed. Respondent spouses Mogol made partial
payments, leaving a balance of ₱87,953.12 unpaid. Despite several
102
demands by petitioner, respondent spouses Mogol failed to settle their
obligation. Thus, petitioner prayed that respondent spouses Mogol be
ordered to pay the former, jointly and severally, the amount of ₱87,953.12,
with legal interest; as well as attorney’s fees in the sum of twenty-five (25%)
percent of the amount collectible, plus ₱2,000.00 for every appearance in
court; and costs of suit.
On 3 October 2000, at the request of herein petitioner, the process server of
the MeTC of Manila served the summons6 and the copy of the complaint on
respondent spouses Mogol at the courtroom of the MeTC of Manila, Branch
24. Respondent spouses were in the said premises, as they were waiting for
the scheduled hearing of the criminal cases filed by petitioner against
respondent Alicia Mogol for violations of Batas Pambansa Blg. 22. Upon
being so informed of the summons and the complaint, respondent spouses
Mogol referred the same to their counsel, who was also present in the
courtroom. The counsel of respondent spouses Mogol took hold of the
summons and the copy of the complaint and read the same.7 Thereafter, he
pointed out to the process server that the summons and the copy of the
complaint should be served only at the address that was stated in both
documents, i.e., at 1218 Daisy St., Employee Village, Lucena City, and not
anywhere else. The counsel of respondent spouses Mogol apparently gave
back the summons and the copy of the complaint to the process server and
advised his clients not to obtain a copy and sign for the same. As the
process server could not convince the respondent spouses Mogol to sign for
the aforementioned documents, he proceeded to leave the premises of the
courtroom.
On 4 October 2000, the process server of the MeTC of Manila issued a
Return on Service of Summons,8 declaring that:
RETURN ON SERVICE OF SUMMONS
This is to certify that on October 3, 2000, the undersigned tried to serve a
copy of the Summons issued by the Court in the above-entitled case
together with a copy of Complaint upon defendant Leodegario Mogol[,] Jr.
and Alicia Mogol doing business under the name/style of "Mr. Homes
Appliance" (sic) at MTC (sic) Branch 24 Ongpin (sic) (courtroom) as
requested by plaintiff counsel, but failed for the reason that they refused to
received (sic) with no valid reason at all.
The original and duplicate copies of the Summons are hereby respectfully
returned, (sic) UNSERVED.

Manila, Philippines, October 4, 2000.
(signed)
ALFONSO S. VALINO
Process Server (Emphases ours.)
Motion to Declare in Default
On 6 December 2000, petitioner filed a Motion to Declare [Respondents] in
Default.9 Petitioner averred that the summons and the copy of the complaint
were already validly served upon the respondent spouses Mogol at the
courtroom of the MeTC, Branch 24, which they refused to accept for no valid
reason at all. From the date of said service up to the time of the filing of the
above-stated motion, respondent spouses Mogol had yet to file any
responsive pleading. Petitioner, thus, prayed that judgment be rendered
against respondent spouses Mogol, and that the relief prayed for in its
Complaint be granted.
On 15 December 2000, through a special appearance of their counsel,
respondent spouses Mogol filed an Opposition10 to the Motion to Declare
[Respondents] in Default. They posited that Section 3, Rule 611 of the Rules
of Court requires that the complaint must contain the names and residences
of the plaintiff and defendant. Therefore, the process server should have
taken notice of the allegation of the complaint, which referred to the address
of respondent spouses Mogol wherein court processes may be served. If
such service, as alleged in the complaint, could not be complied with within a
reasonable time, then and only then may the process server resort to
substituted service. Respondent spouses Mogol further averred that there
was no quarrel as to the requirement that the respondents must be served
summons in person and, if they refused to receive and sign for it, by
tendering it to them. They merely reiterated that the service should have
been effected at the respondent spouses’ residential address, as stated in
the summons and the copy of the complaint.
On 6 April 2001, the MeTC of Manila, Branch 25, issued an Order,12 the fallo
of which provides:
WHEREFORE, premises considered, the Motion to Declare [Respondents]
in Default dated December 5, 2000 filed by counsel for [petitioner] is hereby
granted. ACCORDINGLY, [respondents] Leodegario Mogol, Jr. and Alicia
Mogol are hereby declared in default and [petitioner] is hereby allowed to
103
present its evidence ex-parte (sic) before the Branch Clerk of Court on May
25, 2001 at 8:30 a.m. (Emphasis ours.)
The MeTC of Manila, Branch 25 ruled that Section 6, Rule 1413 of the Rules
of Court does not specify where service is to be effected. For obvious
reasons, because service of summons is made by handing a copy thereof to
the defendant in person, the same may be undertaken wherever the
defendant may be found. Although the Return on the Service of Summons
indicated that the original and the duplicate copies thereof were returned
"UNSERVED," the same could not be taken to mean that respondent
spouses Mogol had not yet been served with summons. That allegation in
the return was clearly prompted by the statement in the first paragraph
thereof that respondents spouses Mogol "refused to received (sic) [the
summons and the copy of the complaint] with no valid reason at all."
Respondent spouses Mogol were, thus, validly served with summons and a
copy of the complaint. For failing to file any responsive pleading before the
lapse of the reglementary period therefor, the Motion to Declare
[Respondents] in Default filed by petitioner was declared to be meritorious.
Respondent spouses Mogol filed a Motion for Reconsideration14 on the
above Order, but the same was denied by the MeTC of Manila, Branch 25,
in an Order15 dated 11 June 2001.
On 17 July 2001, respondent spouses Mogol filed a Petition for Certiorari,
Prohibition and/or Injunction16 before the RTC of Manila against Judge
Severino B. de Castro, Jr. of the MeTC of Manila, Branch 25 and herein
petitioner. Said petition was docketed as Civil Case No. 01-101267 and
raffled to Branch 33 thereof.
Respondent spouses Mogol insisted there was no valid service of summons
per return of the process server, which was binding on the MeTC judge, who
did not acquire jurisdiction over the persons of respondent spouses. They
contended that the MeTC of Manila, Branch 25, acted with grave abuse of
discretion amounting to lack or excess of jurisdiction in declaring them in
default in Civil Case No. 167879CV, thereby depriving them of their right to
be heard with due process of law, despite their having a good defense
against petitioner’s complaint. Respondent spouses Mogol prayed that the
Orders dated 6 April 2001 and 11 June 2001 of the MeTC of Manila, Branch
25, be declared null and void.
On 18 January 2002, the RTC of Manila, Branch 33, issued an Order,
disposing of the petition in this wise:

WHEREFORE, viewed from the foregoing observations and findings, the
present petition is hereby DISMISSED for lack of merit.17
The RTC of Manila, Branch 33, held that Section 6, Rule 14 of the Rules of
Court does not mandate that summons be served strictly at the address
provided by the plaintiff in the complaint. Contrarily, said provision states that
the service of summons may be made wherever such is possible and
practicable. Therefore, it did not matter much that the summons and the
copy of the complaint in this case were served inside the courtroom of the
MeTC of Manila, Branch 24, instead of the address at 1218 Daisy St.,
Employee Village, Lucena City. The primordial consideration was that the
service of summons was made in the person of the respondent spouses
Mogol in Civil Case No. 167879CV. Lastly, the RTC of Manila, Branch 33,
did not find any error in the interpretation of the MeTC of Manila, Branch 25,
that summons had indeed been served on respondent spouses Mogol. On
the face of the Return on Service of Summons, it was unmistakable that the
summons and the copy of the complaint were served on respondent
spouses, and that they refused to receive the same for no valid reason at all.
Respondent spouses Mogol filed a Notice of Appeal18 on the above-
mentioned Order of the RTC of Manila, Branch 33, which was given due
course. The appeal was docketed in the Court of Appeals as CA-G.R. SP
No. 70029.
On 21 November 2006, the Court of Appeals rendered the assailed Decision
in CA-G.R. SP No. 70029, the relevant portions of which read:
We find the appeal meritorious.
After a careful perusal of the records, We hold that there was no valid
service of summons upon the [respondent] Mogol spouses in Civil Case No.
167879. Perforce, the MeTC [Branch 25] never acquired jurisdiction over
them. We explain.
xxxx
In this case, it is indubitable that the [respondent] Mogol spouses, as
defendants in Civil Case No. 167879, never received the summons against
them, whether personally or by substituted service. As stated earlier, the
process server failed to effect personal service of summons against the
[respondent] Mogol spouses at the courtroom of the MeTC of Manila, Branch
104
24, because the latter refused to receive it, arguing that the same should be
served at their residence, and not anywhere else.
Concomitant to the trial court’s duty to bring the defendant within its
jurisdiction by the proper service of summons is its duty to apprise the
plaintiff, as in the case of [petitioner] Sansio, whether or not the said
summons was actually served upon the defendant. The proof of service of
summons (or the lack of it) alluded to by the rules is found in Sec. 4, Rule 14
of the Revised Rules of Court, to wit:
SECTION 4. Return. – When the service has been completed, the server
shall, within five (5) days therefrom, serve a copy of the return, personally or
by registered mail, to the plaintiff’s counsel, and shall return the summons to
the clerk who issued it, accompanied by proof of service.
In this case, the process server’s Return of Service of Summons states, in
clear and unequivocal terms, that:
The original and duplicate copies of the Summons are hereby
returned, UNSERVED.
In the case of Spouses Madrigal v. Court of Appeals [G.R. No. 129955, 26
November 1999], it was held that the sheriff’s certificate of service of
summons is prima facie evidence of the facts therein set out. In the absence
of contrary evidence, a presumption exists that a sheriff has regularly
performed his official duties. To overcome the presumption arising from the
sheriff’s certificate, the evidence must be clear and convincing. In the instant
case, no proof of irregularity in the process server’s return was shown by
Sansio. A perusal of the said return readily shows that the summons
was unserved upon the Mogol spouses. From the foregoing, We hold that
the Mogol spouses were never in actual receipt of the summons in Civil
Case 167879. Perforce, the trial court did not acquire jurisdiction over them.
In one case, the Supreme Court ruled that the refusal of a defendant to
receive the summons is a technicality resorted to in an apparent attempt to
frustrate the ends of justice. It is precisely for this reason that the rules
provide a remedy that, in case the defendant refuses to receive and sign for
it, [the same is served] by tendering it to him. Moreover, even if tender of
summons upon the defendant proves futile, the trial court may further resort
to substituted service of summons, as provided under Sec. 7, Rule 14 of the
Revised Rules of Court.

Stated otherwise, the trial court is not left with any other remedy in case the
defendant refuses to receive and sign for his receipt of the summons, as in
this case. Unfortunately, however, after the incident at the courtroom of the
MeTC of Manila, Branch 24, there was no longer any further effort on the
part of the trial court to serve anew the summons, together with a copy of the
complaint, upon the Mogol spouses. Instead, the trial court assumed
jurisdiction over the Mogol spouses; declared them in default for failure to file
any responsive pleading; and, (sic) allowed Sansio to present its evidence
ex parte in Civil Case No. 167879.
xxxx
All told, it is clearly established that there was indeed no valid service of
summons upon the Mogol spouses in Civil Case No. 167879. Consequently,
the MeTC of Manila, Branch 24 did not acquire jurisdiction over their
persons. Perforce, the order declaring them in default in the said civil case is
nugatory and without effect, as it was issued with grave abuse of discretion
amounting to lack or in excess of jurisdiction.19 (Emphases ours.)
Thus, the Court of Appeals decreed:
WHEREFORE, premises considered, the Appeal is hereby GRANTED. The
assailed Order dated January 18, 2002 of the Regional Trial Court (RTC) of
Manila, National Capital Judicial Region, Branch 33, in SP Civil Case No.
01-101267 is hereby REVERSED and SET ASIDE. Accordingly, the Order
dated April 6, 2001 of the Metropolitan Trial Court (MeTC) of Manila, Branch
25, in Civil Case No. 167879 is declared NULL and VOID. No
pronouncement as to costs.20
Petitioner filed a Motion for Reconsideration21 thereon, but the same was
denied by the Court of Appeals in the assailed Resolution22 dated 12 March
2007.
Complaint for Sum of Money and Damages
In the interregnum, on 3 August 2001, petitioner presented its evidence ex
parte in the main case. On the basis thereof, on 17 August 2001, the MeTC
of Manila, Branch 25, rendered a Decision, adjudging that petitioner had
sufficiently established its entitlement to the grant of the reliefs prayed for in
its Complaint. The decretal portion of the Decision states:
105
WHEREFORE, premises considered, judgment is hereby rendered in favor
of the [petitioner] and against the [respondent spouses Mogol], ordering the
latter to pay the former jointly and severally the sum of ₱87,953.12 with
interest thereon at the legal rate from date of demand until the same is fully
paid; the sum equivalent to 25% of the amount due as and by way of
attorney’s fees, and the cost of suit.23 (Emphasis ours.)
Respondent spouses Mogol appealed24 the above Decision to the RTC of
Manila. The appeal was docketed as Civil Case No. 01-101963 and was
raffled to Branch 50 of the trial court.
On 19 March 2004, the RTC of Manila, Branch 50, promulgated its
Decision,25 affirming in toto the Decision of the MeTC of Manila, Branch 25.
The RTC declared that Section 6, Rule 14 of the Rules of Court clearly
reveals that there is no requirement that the summons should only be served
in the place stated in the summons. What is required is that a summons
must be served by handing a copy thereof to the defendant in person, or, if
he refuses to receive and sign for it, by tendering it to him. Under the
circumstances of the case, the service of the copy of the summons and the
complaint inside the courtroom of the MeTC of Manila, Branch 24 was the
most practicable act. The process server need not wait for the respondent
spouses Mogol to reach their given address before he could serve on the
latter with summons and the copy of the complaint. The refusal of
respondent spouses Mogol to receive the summons without valid cause was,
thus, equivalent to a valid service of summons that vested jurisdiction in the
MeTC of Manila, Branch 25.
Respondent spouses Mogol sought a reconsideration of the aforesaid
Decision, but the RTC of Manila, Branch 50, denied the same in an
Order26 dated 4 October 2004, finding no cogent reason to disturb its earlier
judgment. Thereafter, respondent spouses Mogol no longer filed any appeal
on the above Decision of the RTC of Manila, Branch 50.
On 26 April 2007, petitioner filed the instant Petition for Review, questioning
the rulings of the Court of Appeals in CA-G.R. SP No. 70029 and raising for
resolution the following legal issues:
1. Whether or not the service of summons in the courtroom, before
the hearing, [was] a valid service of summons;
2. Whether or not the clause "tendering it to him" when the
defendant refuses to receive and sign for the summons under
Section 6, Rule 14 of the Rules of Court means "leaving a copy of

the summons to her or in the premises where the defendant could
get it";
3. Whether or not summons refused to be received by [respondent
spouses Mogol], upon advice of their counsel, need to be served
anew to them;
4. Whether or not the court is bound by the conclusions of the
Process Server in his Return of Service of Summons; and
5. Whether or not the appeal before the Court of Appeals denying
the Petition for Certiorari, Prohibition and Injunction has become
moot and academic when the [RTC of Manila, Branch 50] rendered
a Decision affirming the Decision of the [MeTC of Manila, Branch
25], and which Decision of the [RTC of Manila, Branch 50] has
become final and executory.
Contrary to the ruling of the Court of Appeals, petitioner argues that the
service of summons inside the courtroom of the MeTC of Manila, Branch 24,
was already valid. Such was a more practicable and convenient procedure,
as opposed to requesting the process server to serve the summons and the
copy of the complaint upon the respondent spouses Mogol at their residence
in Lucena City. Petitioner further contends that, when the respondent
spouses Mogol declined to receive and sign for the summons, tendering of
the same was sufficient, and the summons need not be served anew.
Section 6, Rule 14 of the Rules of Court does not state that the personal
service of summons fails because the defendant refuses to receive and sign
for it. As regards the Return on Service of Summons, petitioner claims that
the second paragraph thereof was a mere conclusion of law, which does not
bind the independent conclusion of the courts. Although the second
paragraph stated that the summons was returned UNSERVED, the first
paragraph clearly indicated that, indeed, the summons and the copy of the
complaint were already personally served upon the Mogol spouses. They
merely refused to receive them for no valid reasons. Finally, petitioner
asserts that the assailed Decision dated 21 November 2006 of the Court of
Appeals has already become moot and academic. The Decision dated 19
March 2004 of the RTC of Manila, Branch 50, in Civil Case No. 01-101963,
which affirmed the Decision of the MeTC of Manila, Branch 25, on the merits
of the case has since become final and executory for failure of respondent
spouses Mogol to interpose an appeal of the same before the Court of
Appeals.
We find merit in the petition.
106
A summons is a writ by which the defendant is notified of the action brought
against him or her. In a civil action, jurisdiction over the defendant is
acquired either upon a valid service of summons or the defendant's
voluntary appearance in court. When the defendant does not voluntarily
submit to the court's jurisdiction, or when there is no valid service of
summons, any judgment of the court, which has no jurisdiction over the
person of the defendant, is null and void.27 Where the action is in
personam, i.e., one that seeks to impose some responsibility or liability
directly upon the person of the defendant through the judgment of a
court,28 and the defendant is in the Philippines, the service of summons may
be made through personal or substituted service in the manner provided for
in Sections 6 and 7, Rule 14 of the Rules of Court, which read:
SEC. 6. Service in person on defendant. – Whenever practicable, the
summons shall be served by handing a copy thereof to the defendant in
person, or, if he refuses to receive and sign for it, by tendering it to him.
SEC. 7. Substituted service. – If, for justifiable causes, the defendant cannot
be served within a reasonable time as provided in the preceding section,
service may be effected (a) by leaving copies of the summons at the
defendant’s residence with some person of suitable age and discretion then
residing therein; or (b) by leaving the copies at defendant’s office or regular
place of business with some competent person in charge thereof.
It is well-established that summons upon a respondent or a defendant must
be served by handing a copy thereof to him in person or, if he refuses to
receive it, by tendering it to him. Personal service of summons most
effectively ensures that the notice desired under the constitutional
requirement of due process is accomplished.29 The essence of personal
service is the handing or tendering of a copy of the summons to the
defendant himself,30 wherever he may be found; that is, wherever he may
be, provided he is in the Philippines.31
In the instant case, the Court finds that there was already a valid service of
summons in the persons of respondent spouses Mogol. To recapitulate, the
process server presented the summons and the copy of the complaint to
respondent spouses at the courtroom of the MeTC of Manila, Branch 24.
The latter immediately referred the matter to their counsel, who was present
with them in the aforesaid courtroom. At the express direction of his clients,
the counsel took the summons and the copy of the complaint, read the
same, and thereby informed himself of the contents of the said documents.
Ineluctably, at that point, the act of the counsel of respondent spouses
Mogol of receiving the summons and the copy of the complaint already

constituted receipt on the part of his clients, for the same was done with the
latter’s behest and consent. Already accomplished was the operative act of
"handing" a copy of the summons to respondent spouses in person. Thus,
jurisdiction over the persons of the respondent spouses Mogol was already
acquired by the MeTC of Manila, Branch 25. That being said, the
subsequent act of the counsel of respondent spouses of returning the
summons and the copy of the complaint to the process server was no longer
material.
Furthermore, the instruction of the counsel for respondent spouses not to
obtain a copy of the summons and the copy of the complaint, under the lame
excuse that the same must be served only in the address stated therein, was
a gross mistake. Section 6, Rule 14 of the Rules of Court does not require
that the service of summons on the defendant in person must be effected
only at the latter’s residence as stated in the summons. On the contrary, said
provision is crystal clear that, whenever practicable, summons shall be
served by handing a copy thereof to the defendant; or if he refuses to
receive and sign for it, by tendering it to him. Nothing more is required. As
correctly held by the RTC of Manila, Branch 50, the service of the copy of
the summons and the complaint inside the courtroom of the MeTC of Manila,
Branch 24 was the most practicable act under the circumstances, and the
process server need not wait for respondent spouses Mogol to reach their
given address, i.e., at 1218 Daisy St., Employee Village, Lucena City, before
he could serve on the latter the summons and the copy of the complaint.
Due to the distance of the said address, service therein would have been
more costly and would have entailed a longer delay on the part of the
process server in effecting the service of the summons.
Much more important than considerations of practicality, however, is the fact
that respondent spouses Mogol based their case on a wrong appreciation of
the above-stated provisions of the Rules of Court. Respondent spouses
Mogol principally argue that Section 6 of Rule 14 cannot be singled out
without construing the same with Section 7. They posit that, in a civil case,
summons must be served upon the defendants personally at the designated
place alleged in the complaint. If the defendants refuse to receive and sign
the summons, then the process server must tender the same to them by
leaving a copy at the residence of the defendants. If the summons cannot be
served in person because of the absence of the defendants at the address
stated, then the same can be served by (1) leaving copies of the summons
at the defendants’ residence with some person of suitable age and discretion
residing therein, or (2) leaving the copies at defendants’ office or regular
place of business with some competent person in charge thereof.
Said arguments must fail, for they have no leg to stand on.
107
Axiomatically, Sections 6 and 7 of Rule 14 of the Rules of Court cannot be
construed to apply simultaneously. Said provisions do not provide for
alternative modes of service of summons, which can either be resorted to on
the mere basis of convenience to the parties. Under our procedural rules,
service of summons in the persons of the defendants is generally preferred
over substituted service.32 Substituted service derogates the regular method
of personal service. It is an extraordinary method, since it seeks to bind the
respondent or the defendant to the consequences of a suit, even though
notice of such action is served not upon him but upon another whom the law
could only presume would notify him of the pending proceedings.33 For
substituted service to be justified, the following circumstances must be
clearly established: (a) personal service of summons within a reasonable
time was impossible; (b) efforts were exerted to locate the party; and (c) the
summons was served upon a person of sufficient age and discretion residing
at the party’s residence or upon a competent person in charge of the party’s
office or place of business.34
Relevantly, in Lazaro v. Rural Bank of Francisco Balagtas (Bulacan),
Inc.,35 very categorical was our statement that the service of summons to be
done personally does not mean that service is possible only at the
defendant’s actual residence. It is enough that the defendant is handed a
copy of the summons in person by anyone authorized by law. This is distinct
from substituted service under Section 7, Rule 14 of the Rules of Court. As
already discussed above, there was already a valid service of summons in
the persons of respondent spouses Mogol in the courtroom of the MeTC of
Manila, Branch 24, when their counsel, upon their explicit instructions,
received and read the same on their behalf. Contrary to the ruling of the
Court of Appeals, the fact that the summons was returned to the process
server and respondent spouses Mogul subsequently declined to sign for
them did not mean that the service of summons in the persons of
respondent spouses was a failure, such that a further effort was required to
serve the summons anew. A tender of summons, much less, a substituted
service of summons, need no longer be resorted to in this case.
Indeed, a contrary ruling by this Court would inevitably give every future
defendant to a case the unwarranted means to easily thwart the cardinal
procedures for the service of summons at the simple expedient of returning
the summons and the copy of the complaint to the process server and
refusing to sign for the same even after being already informed of their
contents. This the Court will never allow.
As to the reliance of the Court of Appeals on the second paragraph of the
Return on Service of Summons stating that the original and duplicate copies
of the Summons were returned "UNSERVED," the Court finds the same
 108

utterly misplaced. A simple reading of the first paragraph of the Return on No. 70029 are hereby REVERSED AND SET ASIDE. The Order dated 18
Service of Summons, which contains the circumstances surrounding the January 2002 of the Regional Trial Court of Manila, Branch 33, in Civil Case
service of the summons on the persons of the respondent spouses Mogol, No. 01-101267 is hereby AFFIRMED. No costs.
manifestly reveals that the summons and the copy of the complaint were
already validly served on the said respondents. They merely refused to
receive or obtain a copy of the same. The certificate of service of the
process server is prima facie evidence of the facts as set out therein. This is
fortified by the presumption of the regularity of performance of official duty.
To overcome the presumption of regularity of official functions in favor of
such sheriff’s return, the evidence against it must be clear and convincing.
Sans the requisite quantum of proof to the contrary, the presumption stands
deserving of faith and credit.36 In the instant case, it is worthwhile to note that
the facts stated in the first paragraph of the Return on Service of Summons
were not at all disputed by the respondent spouses Mogol.

Although We find lamentable the apparently erroneous statement made by

the process server in the aforesaid second paragraph – an error that
undoubtedly added to the confusion of the parties to this case – the same
was, nonetheless, a mere conclusion of law, which does not bind the
independent judgment of the courts. Indeed, it cannot be said that because
of such a statement, respondent spouses Mogol had the right to rely on said
return informing them that the summons had been unserved, thus justifying
their non-filing of any responsive pleading. To reiterate, respondent spouses
Mogol were validly served summons and a copy of the complaint against
them. At their explicit instructions, their counsel read the same and thereby
learned of the nature of the claim against them. After being made aware of
the complaint filed against them, they chose not to obtain a copy thereof and
pretended that it did not exist. They, thus, took a gamble in not filing any
responsive pleading thereto. Suffice it to say, they lost. The constitutional
requirement of due process exacts that the service be such as may be
reasonably expected to give the notice desired. Once the service provided
by the rules reasonably accomplishes that end, the requirement of justice is
answered; the traditional notions of fair play are satisfied and due process is
served.37

In fine, we rule that jurisdiction over the persons of the respondent spouses
Mogol was validly acquired by the MeTC, Branch 25 in this case. For their
failure to file any responsive pleading to the Complaint filed against them, in
violation of the order of the said court as stated in the summons, respondent
spouses Mogol were correctly declared in default.

WHEREFORE, premises considered, the Petition for Review on Certiorari

under Rule 45 is GRANTED. The Decision dated 21 November 2006 and
the Resolution dated 12 March 2007 of the Court of Appeals in CA-G.R. SP

G.R. No. 170926             September 15, 2006
GUIGUINTO CREDIT COOPERATIVE, INC. (GUCCI), petitioner,
vs.
AIDA TORRES, NONILO TORRES and SHERYL ANN TORRES-
HOLGADO, respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court
seeks to annul and set aside the Decision of the Court of Appeals dated
August 24, 20051 in CA-G.R. SP No. 89974, declaring the Decision of the
Regional Trial Court of Bulacan, Branch 14, dated September 15, 20042 in
Civil Case No. 232-M-2003 null and void for having been rendered without
jurisdiction, and its Resolution dated December 9, 2005,3 denying
petitioner’s motion for reconsideration.
Respondents are members of Guiguinto Credit Cooperative, Inc. (GUCCI).
They availed of loans from the cooperative but were unable to pay on the
due dates despite demands. Hence, on March 24, 2003, petitioner filed a
complaint before the Regional Trial Court of Bulacan for collection of sum of
money and damages which was docketed as Civil Case No. 232-M-2003
and raffled to Branch 14.
Summons against respondents were served through a certain Benita S.
Pagtalunan who received the same on April 22, 2003.4 The Return of
Summons was filed on April 24, 2003 by Process Server Valeriano P.
Badato which stated:
RESPECTFULLY RETURNED to the Honorable Court the herein
Summons, together with their Complaints and Annexes in
connection with the service of the same with the information that it
was received by Ms. BENITA C. PAGTALUNAN secretary of the
defendants on April 22, 2003 at their given address.
PROOF OF SERVICE CAN BE FOUND on the original copy of
Summons as shown by her signature therein.
RESPECTFULLY SUBMITTED.
109
Malolos, Bulacan, April 24, 2003.
(Sgd.) VALERIANO P. BADATO
Process Server5
On November 18, 2003, petitioner filed a motion to declare respondents in
default which was granted by the trial court thus:
Submitted is a Motion to Declare Defendants in Default [f]iled by
plaintiffs through counsel, Atty. Jose I. dela Rama, Jr.
Records show that on April 22, 2003, Summons together with the
complaint and its annexes were served to defendants Aida Torres,
Nonilo Torres and Sheryl Ann Torres through their Secretary Ms.
Benita C. Pagtalunan per process Server’s Return dated April 24,
2003. Despite receipt of the same defendants failed to file their
Answer and/or responsive pleading within the reglementary period.
WHEREFORE, in view of the foregoing premises, the Motion to
Declare Defendants in default is GRANTED. The defendants are
hereby declared in default.
The plaintiff is hereby allowed to present its evidence ex-parte
before the court on February 10, 2004 at 8:30 a.m.
SO ORDERED.6
After presenting petitioner’s evidence ex-parte, the trial court rendered
judgment on September 15, 2004, the dispositive portion of which reads:
ACCORDINGLY, judgment is hereby rendered, ordering the
defendants to pay plaintiff the following:
1. For Aida Torres:
a. The amount of P163,516.80 from April, 2004 plus legal interest
until the said amount is fully paid;
2. For Nonilo Torres:

a. The amount of P278,151.58 from April, 2004 plus legal interest
until the said amount is fully paid;
3. For Sheryl Ann Torres:
a. The amount of P15,903.93 from April, 2004 plus legal interest
until the said amount is fully paid;
4. To pay P10,000.00, jointly and severally, as attorney’s fees.
5. Costs of suit.
SO ORDERED.7
Petitioner thereafter moved for the issuance of a writ of execution, which
was granted and accordingly, the writ of execution was issued on even
date.8
On May 4, 2005, Sheriff Felixberto L. Samonte levied respondents’ house
and lot covered by Transfer Certificate of Title No. RT-22289 (T-285668) and
the same was scheduled to be sold at public auction on June 7, 2005 when
the Court of Appeals issued a temporary restraining order.9
On August 24, 2005, the Court of Appeals annulled the judgment of the trial
court on the ground that it did not acquire jurisdiction over the persons of
respondents since they were not validly served with summons and neither
did they voluntarily appear in court.10 According to the appellate court, the
service of summons to Pagtalunan was in violation of Section 6, Rule 14 of
the Rules of Court because there was no explanation why resort to
substituted service of summons was made. Thus, the appellate court held
that respondents were deprived of their right to due process.
The Court of Appeals denied petitioner’s motion for reconsideration,11 hence,
this petition on the following assignment of errors:
I were already paid, without the latter having presented any proof or evidence
The Court of Appeals erred when it granted the Annulment of
Judgment despite the active participation of the respondents in the
court proceeding without questioning the jurisdiction of the Court.
110
II
The Court of Appeals erred when it granted the Annulment of
Judgment despite the availability of legal remedies provided for by
law. Hence, respondents are barred by estoppel and laches to
question the jurisdiction of the court.
III
The Court of Appeals erred when it dismissed the Complaint and
absolved the respondents of any civil liability to the Cooperative
without evidence having been presented in the Court of Appeals.
The Court of Appeals likewise erred when it acted beyond what is
being prayed for.12
Petitioner alleges that the trial court rightly assumed jurisdiction over the
persons of respondents, asserting that No. 180 San Vicente Ferrer St.,
Rosaryville Subd., Sta. Cruz, Guiguinto, Bulacan, is the residence of all the
respondents as shown in (a) the Affidavit of Merit of Sheryl Ann Torres
attached to the Petition, (b) the Special Power of Attorney executed by
Nonilo and Aida Torres and (c) the Verification/Certification executed under
oath by Sheryl Ann Torres.13 Petitioner asserts that the service of summons
to Pagtalunan at the same address was valid pursuant to the rules and
applicable jurisprudence.
Petitioner avers that respondents cannot avail of the remedy of annulment of
judgment under Rule 47 since there are other available remedies under the
Rules of Court,14 such as a motion for new trial or reconsideration, petition
for relief from judgment, or an original action for certiorari under Rule 65.
Finally, petitioner asserts that the Court of Appeals erred in concluding that
the obligations of the respondents are guaranteed by their co-signors’ capital
investments. It claims that the appellate court completely disregarded that
the co-signors in the persons of Danilo Santos and Carmelita Reyes had
withdrawn their capital shares in the cooperative. The Court of Appeals,
according to petitioner, concluded that the obligations of the respondents
to that effect.15
On the other hand, respondents argue that the Court of Appeals did not
commit reversible error when it granted the annulment of judgment
considering that the trial court, which rendered the judgment, lacked

jurisdiction over their persons. They were not validly served with summons
nor did they voluntarily appear and submit themselves to the jurisdiction of
the trial court. Neither did they actively participate in the proceedings
conducted therein. Respondents assert that their right to due process was
violated when the trial court rendered the questioned decision.16
Respondents also aver that the filing of the petition for annulment of
judgment is proper there being no recourse to the ordinary remedies of new
trial, appeal, petition for relief or other appropriate remedies, which are no
longer available through no fault of their own. They assert that laches and
estoppel are not applicable to the case at bar.17
The issues to be resolved are: (a) whether summons was validly served on
the respondents; and (b) whether the judgment of the trial court was
correctly annulled by the Court of Appeals.
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.18 Jurisdiction over the person of the defendant is
acquired through coercive process, generally by the service of summons
issued by the court, or through the defendant’s voluntary appearance or
submission to the court.
Where the defendant is a natural person, service may be personal,
substituted, by publication and such other mode of service as the court may
deem sufficient.
In an action in personam, jurisdiction over the person of the defendant is
necessary for the court to validly try and decide the case. Jurisdiction over
the person of a resident defendant who does not voluntarily appear in court
can be acquired by personal service of summons as provided under Section
7, Rule 14 of the Rules of Court. If he cannot be personally served with
summons within a reasonable time, substituted service may be made in
accordance with Section 8 of the said Rule. If he is temporarily out of the
country, any of the following modes of service may be resorted to: (1)
substituted service set forth in Section 8; (2) personal service outside the
country, with leave of court; (3) service by publication, also with leave of
court; or (4) any other manner the court may deem sufficient.19
In these types of civil actions, summons on the defendant must be served by
handing a copy thereof to the defendant in person, or in case of refusal, by
tendering it to him. If efforts to find defendant personally makes prompt
service impossible, service may be effected by leaving copies of the
111
summons at the defendant’s dwelling house or residence with some person
of suitable age and discretion residing therein, or by leaving the copies at the
defendant’s office or regular place of business with some competent person
in charge thereof.20 The proper service of summons is a critical step in
litigation because upon such service rests the court’s acquisition of
jurisdiction over the person of the defendant. In the absence of a valid
waiver, trial and judgment without such service are null and void.
In the instant case, the Court of Appeals correctly ruled that since
substituted service was availed of in lieu of personal service, there should be
a report stating that Pagtalunan was one with whom respondents had a
relationship of trust and confidence that would ensure that the latter will
receive or be notified of the summons issued in their names. This is because
substituted service may only be availed of when the respondents could not
be served personally within a reasonable period of time, and such
impossibility of prompt service must be shown by stating that earnest efforts
have been made to find the respondents personally and that such efforts
have failed. Such requirements under Sections 6 and 7 of Rule 14 must be
followed strictly, faithfully and fully in order not to deprive any person of his
property by violating his constitutional right to due process. The statutory
requirements of substituted service must be strictly construed since it is an
extraordinary method of service in derogation of personal service of
summons, availed of only under certain conditions imposed by the Rules of
Court. Any substituted service other than that authorized under Section 7 is
deemed ineffective and contrary to law.
Granting that Pagtalunan is the personal secretary of Aida Torres, as
appearing in the Affidavit of Merit of Sheryl Ann Torres and attached to the
Petition of Annulment filed before the Court of Appeals, there is no showing
that the former had indeed a relationship of trust and confidence with the
three respondents. It appears that the process server hastily and
capriciously resorted to substituted service of summons without ascertaining
the whereabouts of the respondents. Such service of summons is not
binding upon respondents Nonilo and Sheryl Ann Torres whose relationship
with Pagtalunan was neither readily ascertained nor adequately explained in
the Return of Summons. Also, no earnest efforts were made to locate
respondent Aida Torres who was allegedly working abroad at the time
summons was served on her person. No explanation why substituted service
was resorted to through Pagtalunan was stated in the Return.
The Return of Summons by the process server showed that no effort was
exerted and no positive step was taken to locate and serve the summons
personally on respondents. Without specifying the details of the attendant
circumstances or of the efforts exerted to serve the summons, a general

statement that such efforts were made will not suffice for purposes of
complying with the rules of substituted service of summons.
It must be emphasized that personal service of summons is the mode which
must be adopted whenever practicable. It ought to be effected either by
handing a copy thereof to the defendant in person, or if he refuses, by
tendering it to him.
In Ang Ping v. Court of Appeals,21 we ruled:
Jurisdiction over the person of the defendant in civil cases is
acquired either by his voluntary appearance in court and his
submission to its authority or by service of summons. x x x
Well-settled is the rule that summons must be served upon the
defendant himself. It is only when the defendant cannot be served
personally within a reasonable time that substituted service may be
resorted to and such impossibility of prompt service should be
shown by stating that efforts have been made to find the defendant
personally and that such efforts have failed. This is necessary
because substituted service is in derogation of the usual method of
service. It is a method extraordinary in character and hence may be
used only as prescribed and in the circumstances authorized by
statute. The statutory requirements of substituted service must be
followed strictly, faithfully and fully, and any substituted service
other than that authorized by statute is considered ineffective.
It should be emphasized that the service of summons is not only
required to give the court jurisdiction over the person of the
defendant, but also to afford the latter an opportunity to be heard on
the claim made against him. Thus, compliance with the rules
regarding the service of summons is as much an issue of due
process as of jurisdiction.22
In Avon Insurance PLC v. Court of Appeals,23 we held:
Fundamentally, the service of summons is intended to give official
notice to the defendant or respondent that an action has been
commenced against it. The defendant or respondent is thus put on
guard as to the demands of the plaintiff as stated in the complaint.
The service of summons upon the defendant becomes an important
element in the operation of a court’s jurisdiction upon a party to a
112
suit, as service of summons upon the defendant is the means by
which the court acquires jurisdiction over his person. Without
service of summons, or when summons are improperly made, both
the trial and the judgment, being in violation of due process, are null
and void, unless the defendant waives the service of summons by
voluntarily appearing and answering the suit.
When a defendant voluntarily appears, he is deemed to have
submitted himself to the jurisdiction of the court. This is not,
however, always the case. Admittedly, and without subjecting
himself to the court’s jurisdiction, the defendant in an action can, by
special appearance object to the court’s assumption on the ground
of lack of jurisdiction. If he so wishes to assert this defense, he
must do so seasonably by motion for the purpose of objecting to
the jurisdiction of the court, otherwise, he shall be deemed to have
submitted himself to that jurisdiction. x x x
xxxx
If the defendant, besides setting up in a motion to dismiss his
objection to the jurisdiction of the court, alleges at the same time
any other ground for dismissing the action, or seeks an affirmative
relief in the motion, he is deemed to have submitted himself to the
jurisdiction of the court.24
In Laus v. Court of Appeals,25 we reiterated that substituted service must: (a)
indicate the impossibility of service of summons within a reasonable time, (b)
specify the efforts exerted to locate the petitioners, and (c) state that it was
served on a person of sufficient age and discretion residing therein.26 We
held that the pre-condition that substituted service may be resorted to only if
personal service cannot be made "within a reasonable time" must be strictly
followed.
In the instant case, there was an undue, if not indecent, haste to serve the
summons at the first attempt without making sure that personal service was
an impossibility because either the respondents had left for a foreign country
or an unknown destination with no definite date of returning within a
reasonable period, or had gone into hiding to avoid service of any process
from the courts. Since the substituted service was not validly effected, the
trial court did not acquire jurisdiction over the persons of the respondents.
The order of default, the judgment by default, the writ of execution issued by
it, as well as the auction sale of the respondents’ properties levied on
execution are, therefore, null and void.

Statutes prescribing modes other than personal service of summons must
be strictly complied with to give the court jurisdiction, and such compliance
must appear affirmatively on the return.27
In the case of Jose v. Boyon,28 we observed:
In the instant case, it appears that the process server hastily and
capriciously resorted to substituted service of summons without
actually exerting any genuine effort to locate respondents. A review
of the records reveals that the only effort he exerted was to go to
No. 32 Ariza Drive, Camella Homes, Alabang on July 22, 1998, to
try to serve the summons personally on respondents. While the
Return of Summons states that efforts to do so were ineffectual and
unavailing because Helen Boyon was in the United States and
Romeo Boyon was in Bicol, it did not mention exactly what efforts –
if any – were undertaken to find respondents. Furthermore, it did
not specify where or from whom the process server obtained the
information on their whereabouts. x x x
xxxx
The Return of Summons shows no effort was actually exerted and
no positive step taken by either the process server or petitioners to
locate and serve the summons personally on respondents. At best,
the Return merely states the alleged whereabouts of respondents
without indicating that such information was verified from a person
who had knowledge thereof. Certainly, without specifying the
details of the attendant circumstances or of the efforts exerted to
serve the summons, a general statement that such efforts were
made will not suffice for purposes of complying with the rules of
substituted service of summons.29
We explained in Venturanza v. Court of Appeals30 how the impossibility of
personal service should be shown by the process server:
The substituted service should be availed only when the defendant
cannot be served promptly in person. Impossibility of prompt
service should be shown by stating the efforts made to find the
defendant personally and the failure of such efforts. The statement
should be made in the proof of service. This is necessary because
substituted service is in derogation of the usual method of service.
It has been held that substituted service is a method extraordinary
in character, and hence may be used only as prescribed in the
113
circumstances authorized by statute. Thus, the statutory
requirements of substituted service must be followed strictly,
faithfully, and any substituted service other than that authorized by
the statute is considered ineffective.31
Jurisdiction over the persons of the respondents never vested with the trial
court since the manner of substituted service by the process server is
deemed invalid and ineffective. Clearly, there was a violation of due process
because of the defective service of summons. The judgment of the trial court
should be annulled on the ground of lack of jurisdiction, since the
respondents were not properly notified of the action filed against them, and
denied them the chance to answer the complaint before the court, thus
depriving them of an opportunity to be heard.
Under Section 2 of Rule 47, judgments may be annulled on grounds of
extrinsic fraud and lack of jurisdiction, which refers to either lack of
jurisdiction over the person of the defending party or over the subject matter
of the claim.32 A judgment of annulment sets aside the questioned judgment
or final order or resolution and renders the same null and void, without
prejudice to the original action being refiled in the proper court.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals
dated August 24, 2005 in CA-G.R. SP No. 89974, annulling the decision of
the Regional Trial Court of Bulacan, Branch 14, dated September 15, 2004
in Civil Case No. 232-M-2003 for having been rendered without jurisdiction
and the Resolution dated and December 9, 2005, denying the motion for
reconsideration, are AFFIRMED.

G.R. No. 159421             August 20, 2008
BENEDICTO B. POTENCIANO II, petitioner,
vs.
GREGORY P. BARNES, respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the Decision2 dated 26 August 2002 and the
Resolution dated 8 August 2003 of the Court of Appeals in CA-G.R. SP No.
68359.
The Facts
In February 2000, GP Barnes Group of Companies hired petitioner
Benedicto B. Potenciano II (Potenciano) as a member of the Management
Committee of the Barnes Marketing Concept which held office in Ortigas
Center, Pasig City. Potenciano was also designated as one of the managers
of the London Underground Bar and Restaurant, another member-company
of GP Barnes Group of Companies. In February 2001, Potenciano was
assigned as Operations Manager of Executive Dinner Club International,
also a member-company of GP Barnes Group of Companies.
On 9 May 2001, Potenciano filed with the Regional Trial Court of Muntinlupa
City, Branch 276 (trial court) a complaint for damages against respondent
Gregory P. Barnes (Barnes), the owner and president of GP Barnes Group
of Companies, for alleged harassment and maltreatment.
On 11 May 2001, a certain Jaime S. Herrera (Mr. Herrera), a representative
of E. Himan Law Office, secured from the trial court copies of the complaint
with annexes and the summons intended for Barnes. Mr. Herrera indicated
on the court’s copy of the summons that E. Himan Law Office was Barnes’
counsel. On the same date, the deputy sheriff issued a Return of Summons.
On 16 June 2001, Potenciano filed a motion to declare Barnes in default. On
22 June 2001, E. Himan Law Office, represented by Atty. Jose Valentino G.
Dave (Atty. Dave), by way of special appearance for the sole purpose of
114
questioning the validity of the service of summons, filed its
Comment/Manifestation, manifesting that the law office does not represent
Barnes because he has not yet engaged the services of the law office.
Hence, the law office has no authority to bind Barnes.
On 12 July 2001, the trial court issued an Order of Default. On 30 July 2001,
E. Himan Law Office, represented by Atty. Dave, by way of special
appearance, filed an urgent motion for reconsideration of the default order,
which the trial court denied.
On 8 August 2001, the trial court rendered a resolution, the dispositive
portion of which reads:
Prescinding, judgment is rendered for Plaintiff [Benedicto B.
Potenciano II], declaring Defendant Gregory Paul Barnes, by
himself and severally, jointly with his companies, being GP Barnes
Group of Companies, Barnes Marketing Concept, London
Underground Bar and Restaurant and Executive Dinner Club
International, with which Plaintiff was connected or working with, for
sometime during his employment with Mr. Barnes, for damages and
are therefore directed to personally, jointly and severally pay
Plaintiff as follows:
1. One Million Pesos (P1,000,000.00) as and by way of moral
damages;
2. Four Hundred Thousand Pesos (P400,000.00) as and by way of
nominal damages;
3. Four Hundred Thousand Pesos (P400,000.00) as and by way of
exemplary damages;
4. Two Hundred Thousand Pesos (P200,000.00) and Three
Thousand Pesos (P3,000.00) per appearance, as and by way of
attorney’s fees; and
5. Costs of the suit.
It is SO ORDERED.3

On 16 August 2001, Potenciano filed a Motion for Execution Pending
Appeal. On 25 August 2001, Barnes, now formally represented by Diores
Law Offices, filed a Motion for New Trial as Remedy Against Judgment by
Default with Opposition to Execution Pending Appeal, which the trial court
denied on 25 September 2001. Barnes moved for reconsideration, which the
trial court denied in its Order dated 26 October 2001.
Barnes filed a Petition for Certiorari, Prohibition, and Mandamus, with prayer
for a temporary restraining order or preliminary prohibitory injunction, praying
for the nullification of the following orders and resolution of the trial court: (1)
Order dated 12 July 2001; (2) Resolution dated 8 August 2001; (3) Order
dated 25 September 2001; and (4) Order dated 26 October 2001.
On 26 August 2002, the Court of Appeals rendered a decision, the
dispositive portion of which reads:
WHEREFORE, premises considered, the PETITION FOR
CERTIORARI, PROHIBITION and MANDAMUS is hereby
GRANTED. Accordingly, the Orders dated July 12, 2001,
September 25, 2001 and October 26, 2001 and Resolution dated
August 8, 2001 are hereby declared NULL AND VOID.
Let the entire record of the case be remanded to the court a quo for
further proceedings.
The application for issuance of a temporary restraining order and/or
preliminary prohibitory injunction is hereby declared moot and
academic.
SO ORDERED.4
Potenciano moved for reconsideration, which the Court of Appeals denied.
Hence, this petition for review.
The Ruling of the Trial Court
In its Order dated 25 September 2001, the trial court denied Barnes’ Motion
for New Trial. The trial court held that the sheriff did not commit fraud when
he certified in his Return of Summons that Barnes was duly served with the
summons when a representative of E. Himan Law Office, claiming as
counsel of Barnes, secured a copy of the summons and the complaint
against Barnes. The trial court ruled that when E. Himan Law Office received
115
the copy of the complaint and the summons, it was acting on behalf of
Barnes. Thus, Barnes was duly served with the summons through the
voluntary appearance of his counsel on his behalf.
The Ruling of the Court of Appeals
The Court of Appeals held that there was no valid service of summons since
neither Mr. Herrera nor E. Himan Law Office was the defendant. When Mr.
Herrera, as a representative of E. Himan Law Office, received a copy of the
summons, Barnes had not yet engaged the services of E. Himan Law Office.
The Court of Appeals ruled that the sheriff did not exert any effort to comply
with Section 6, Rule 14 of the Rules of Court, either by handing a copy of the
summons to Barnes in person and should Barnes refuse to receive and sign
the summons, by tendering it to him. Since there was no valid service of
summons on Barnes, the trial court therefore did not acquire jurisdiction over
Barnes.
The Issues
Potenciano raises the following issues:
1. Whether the Court of Appeals committed grievous error of law
when it impliedly ruled in favor of the propriety of the remedy of
special civil action of certiorari, prohibition, and mandamus; and
2. Whether the Court of Appeals committed grievous error of law
when it ruled that the trial court did not acquire jurisdiction over the
person of the respondent, and rendered the trial court’s
proceedings null and void.5
The Ruling of the Court
We find the petition without merit.
Service of summons on the defendant is the means by which the court
acquires jurisdiction over the defendant.6 Summons serves as a notice to the
defendant that an action has been commenced against him, thereby giving
him the opportunity to be heard on the claim made against him.7 This is in
accordance with the constitutional guaranty of due process of law which
requires notice and an opportunity to be heard and to defend oneself.

Section 6, Rule 14 of the Rules of Court underscores the importance of
actual delivery or tender of the summons to the defendant himself:
Section 6. Service in person on defendant. – Whenever practicable,
the summons shall be served by handing a copy thereof to the
defendant in person, or if he refuses to receive and sign for it, by
tendering it to him.
Under this provision, service of summons should be made on the defendant
himself. However, if for justifiable reasons the defendant cannot be served in
person within a reasonable time, substituted service of summons is proper.
Thus, Section 7, Rule 14 of the Rules of Court provides:
Section 7. Substituted service. – If, for justifiable causes, the
defendant cannot be served within a reasonable time as provided in
the preceding section, service may be effected (a) by leaving
copies of the summons at the defendant’s residence with some
person of suitable age and discretion then residing therein, or (b) by
leaving the copies at defendant’s office or regular place of business
with some competent person in charge thereof.
In this case, there was no attempt whatsoever on the part of the deputy
sheriff to serve the summons on Barnes himself, who was the defendant in
the complaint. The deputy sheriff just handed a copy of the summons,
complaint, and the annexes to a certain Mr. Herrera who is a representative
of E. Himan Law Office, which claimed to be the counsel of Barnes. The
Return of Summons of the trial court’s deputy sheriff reads:
THIS IS TO CERTIFY that on May 11, 2001, Mr. Jaime S. Herrera
Jr. came to this branch asking a copy of the Summons together
with the Complaint and its annexes on the above-entitled case and
when asked what is his participation in this case he answered that
he is the representative of E. Himan Law Office, the counsel for the
defendant Gregory Paul Barnes.
That he was told by the said Law Office to come to Branch 276,
R.T.C. Muntinlupa to get the copy of the Summons and the
Complaint and its annexes, so that the undersigned give [sic] him
the said documents, as evidenced by his signature appearing on
the original Summons.
116
Wherefore said original copy of Summons is hereto attached to the
record of the above-entitled case DULY SERVED.8
Clearly, there was no service of summons on Barnes himself. The handing
of a copy to Mr. Herrera cannot even qualify as substituted service under
Section 7 of Rule 14. The requisites of substituted service of summons are:
(1) the defendant cannot be served personally within a reasonable time; and
(2) the impossibility of prompt service should be shown by stating the efforts
made to find the defendant personally and the fact that such efforts failed,
and this statement should be made in the proof of service.9 In this case, the
deputy sheriff never made any effort to serve the summons on Barnes
himself. Neither was the copy of the summons served at Barnes’ residence
nor at his office or regular place of business, as provided under Section 7 of
Rule 14. The deputy sheriff just handed a copy of the summons to a
messenger of E. Himan Law Office who came to the office of the trial court
claiming that E. Himan Law Office was the counsel of Barnes. Giving a copy
of the summons to a messenger of a law firm, which was not even the
counsel of the defendant, cannot in any way be construed as equivalent to
service of summons on the defendant.
Since there was no service of summons on Barnes, the trial court never
acquired jurisdiction over Barnes and the trial court’s order of default and the
judgment by default are void.10 The trial court should have refrained from
issuing the default order when E. Himan Law Office manifested that it did not
represent Barnes who had not engaged its services. It would have been
more prudent for the trial court at that point to order the deputy sheriff to
serve the summons on Barnes himself by handing it to him personally.
Other than valid service of summons on the defendant, the trial court can still
acquire jurisdiction over the defendant by his voluntary appearance,11 in
accordance with Section 20, Rule 14 of the Rules of Court.12 However, this is
not the case here. There is no evidence on record that Barnes authorized E.
Himan Law Office to represent him in the case. In fact, E. Himan Law Office
filed a Comment/Manifestation to the Motion to Declare Defendant in
Default, alleging that Barnes had not yet engaged the services of E. Himan
Law Office, which could not therefore represent Barnes. Thus, the receipt of
the summons by E. Himan Law Office and its filing of a
Comment/Manifestation to the Motion to Declare Defendant in Default
cannot be considered as voluntary appearance on the part of Barnes.
It was only on 15 August 2001 that Barnes made his first appearance in the
trial court by filing a Motion for New Trial through his counsel of record,
Diores Law Offices. The motion was precisely to question the validity of the
 117

order of default and the subsequent judgment for lack of jurisdiction over the therefore correct in granting the petition for certiorari,  prohibition and
person of the defendant. mandamus.

This case is similar to the case of Cavili v. Hon. Vamenta, Jr.,13 where
summons was served only on one of the defendants. The two other
defendants were not served with summonses and neither did they authorize
the counsel of the other defendant to represent them in the case. The Court
held:
WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 26
August 2002 and the Resolution dated 8 August 2003 of the Court of
Appeals in CA-G.R. SP No. 68359.
SO ORDERED.

As shown in the return of the service of summons (Annex "B" of

Petition), which is not contested by the respondents, summons was
served on defendant Perfecta Cavili in Bayawan, Negros Oriental,
but not on defendants Quirino and Primitivo Cavili who were then
staying in Kabankalan, Negros Occidental. While Perfecta Cavili’s
counsel, Atty. Jose Alamillo, filed in behalf of all the three
defendants a motion for extension of time to file an answer upon
assurance of Perfecta Cavili that she would summon her brothers,
Quirino and Primitivo to Bayawan to authorize him to represent
them in the case, said counsel later on manifested before the
Court of First Instance of Negros Oriental that he desisted
from further appearing in the case since Perfecta Cavili’s
assurance that he would be authorized by the other two
defendants to represent them in the case was never carried
out. The motion for extension of time to file an answer cannot,
thus, be construed as a voluntary appearance in the case by
the defendants Quirino and Primitivo Cavili.

Neither can the motion for new trial filed later by Atty. Reuben
A. Espancho on behalf of the Cavili brothers cure the
jurisdictional defect brought about by the non-service of
summons on them precisely because the motion was
predicated on such lack and was intended to secure for said
defendants the opportunity to be heard in a new trial. It cannot
be construed as a waiver of the right to be heard.14 (Emphasis
supplied)

Thus, since the trial court never acquired jurisdiction over Barnes, either by
personal or substituted service of summons or by Barnes’ voluntary
appearance in court and submission to its authority, the trial court’s order of
default and the succeeding judgment are void for lack of jurisdiction over the
person of the defendant. The trial court should have granted Barnes’ Motion
for New Trial to afford him due process of law. The appellate court was