RULE 31 – CONSOLIDATION OR SEVERANCE (with Amendments)

G.R. No. 196592, April 06, 2015

SPOUSES JUVY MARAÑO AND MARIA LUISA G.

MARAÑO, Petitioners, v. PRYCE GASES, INCORPORATED, Respondent.

Facts of the Case

On August 1, 1998, spouses Juvy and Maria Luisa Maraño (petitioners) filed
a free patent application for a 9,074-square meter parcel of land in
Damulaan, Albuera, Leyte, denominated as Lot No. 4299.4 The free patent
application was subsequently granted, and, on December 17, 1998, Original
Certificate of Title No. P-43553 was issued to the petitioners over the subject
lot.5

On December 29, 1998, the petitioners filed an ejectment complaint6 against

Pryce Gases, Incorporated (respondent) alleging that the latter illegally
entered the subject lot and constructed a building thereon sometime in
March 1998.7 The Municipal Trial Court (MTC) of Albuera, Leyte granted the
petitioners' complaint,8 but the Regional Trial Court (RTC)9 reversed the MTC
decision on appeal. On further appeal, the CA, in a decision10 dated January
11, 2002 remanded the case to the MTC for trial as a reivindicatory action
under the ordinary rules of civil procedure. The case was docketed as Civil
Case No. 158 with the MTC.

In the interim, the respondent, on April 17, 1999, filed a protest on the free
patent application filed by the petitioners in August 1998.11 On December
29, 2000, the Department of Environment and Natural Resources (DENR)
rendered a decision recommending the filing of reversion proceedings
against the petitioners, which decision became final and executory.
However, no reversion proceedings were instituted against the petitioners.

On October 28, 2002, the petitioners filed an action13 to quiet title against
the respondent with the RTC, 8th Judicial Region, Branch 14, Baybay City,
Leyte.14 A month later, the respondent filed a complaint15 for reconveyance
against the petitioners before the same RTC. The petitioners moved to
dismiss the respondent's complaint, but the RTC denied their motion.

The respondent later moved to amend its complaint from reconveyance to

the cancellation of the petitioners' certificate of title. The petitioners again
moved to dismiss the respondent's amended complaint on the ground of litis
pendentia in view of the then pending reivindicatory action with the
MTC.17 The RTC, in a resolution dated March 6, 2006, dismissed the
petitioners' motion. The petitioners moved for reconsideration but their
motion was likewise denied by the RTC. The petitioners questioned the RTC's
March 6, 2006 resolution in a petition for certiorari with the CA. The case
was docketed as CA-G.R. CEB-SP No. 02025.

In the reivindicatory action at the MTC, the latter court rendered a

decision on June 18, 2010 ruling in the respondent's favour; it declared the
respondent as the owner of the subject lot and, thus, entitled to the
possession thereof. The petitioners appealed the MTC's decision to the
RTC. In the same year, the CA, acting on the petition for certiorari filed by
the petitioners, rendered a decision dated December 14, 2010 affirming the
RTC's resolution that dismissed the petitioners' motion to dismiss. The CA
held that no litis pendentia exists between the reivindicatory action (then
pending before the MTC) and the amended complaint for cancellation of
certificate of title filed by the respondent with the RTC. The petitioners
moved to reconsider the CA's decision but their motion was denied, hence,
the filing of the present petition for review on certiorari with this Court.

The Petition

The petitioners mainly argue that the respondent's complaint for cancellation
of title should be dismissed because the question of validity of the certificate
of title issued in their names over the subject lot is already being litigated in
the reivindicatory action case that is pending appeal before the RTC.

OUR RULING

We find merit in the present petition and resolve to reverse and set
aside the assailed decision of the CA.

In this jurisdiction, there are three kinds of actions to recover possession of

real property, namely: (1) actions for forcible entry or unlawful
detainer, also denominated as accion interdictal, which are summary
in nature and seek to recover only physical possession
(possession de facto) of the property, (2) an accion publiciana,
which is a plenary action to recover the right to possess the
property, without claim of title, and (3) an accion
reivindicatoria (or accion de reivindicacion) or a reivindicatory action, which
is a plenary action to recover not only possession of, but also
ownership of the real property.

Since a reivindicatory action includes a claim of title or ownership, the court

must necessarily inquire into the circumstances surrounding the plaintiffs
acquisition of his or her title to the real property sought to be recovered. The
petitioners point out that the MTC in the subject reivindicatory case already
conducted a full-blown trial on the issue of validity of their claim of
ownership and had, in fact, ruled that their certificate of title is inoperative
and has no binding effect. They argue that for the RTC to conduct another
full-blown trial in the cancellation of title case on the same issue would, in
effect, nullify the MTC's decision in the reivindicatory case.26

Instead of ordering the dismissal of the respondent's complaint for

cancellation of certificate of title, we find that the consolidation of the
reivindicatory action and the cancellation of certificate of title case
to be the appropriate remedy in the present situation. Consolidation
is proper when two or more actions pending, not necessarily, before the
same court involve a common question of law or fact. In such cases, the
court may: order a joint hearing or trial of any or all the matters in issue in
the actions, order all the actions consolidated, and make such orders
concerning the proceedings therein for the purpose of avoiding unnecessary
costs and delay.28

Considering that the validity of the petitioners' certificate of title is the

crucial issue in both the reivindicatory action pending appeal before the RTC
and the cancellation of certificate of title case filed by the respondent, these
two cases should be consolidated in order to avoid the possibility of
rendering conflicting decisions and for the orderly administration of
justice.29 And since the issue of validity of the petitioners' certificate of title
has been subjected to a full-blown trial before the MTC and is now the
subject of appeal before the RTC, allowing the cancellation of certificate of
title case to proceed independently and separately would be needlessly
circuitous and would necessarily delay the resolution of the present issue.

Also, we note that the respondent's complaint for cancellation of certificate

of title cannot simply be dismissed. Well-settled is the rule that the issue of
validity of a Torrens title, whether fraudulently issued or not, may be posed
only in an action brought to impugn or annul it.31 Section 48 of Presidential
Decree No. 152932 clearly provides that a certificate of title can never be the
subject of a collateral attack; it cannot be altered, modified, or cancelled
except in a direct proceeding instituted in accordance with law. Thus, the
present respondent has, in fact, resorted to proper procedure in filing a
direct action to attack or impugn the petitioners' certificate of title.

But to allow the pendency of the reivindicatory action and the

cancellation of certificate of title case in two different courts would
not subserve the orderly administration of justice as the subject cases
involve a common question of fact, i.e. the issue of validity of the
petitioners' certificate of title. In this situation, consolidation is the proper
procedure to prevent confusion, avoid multiplicity of suits, and save the
parties, as well as the courts, time and from incurring unnecessary cost and
expense.

WHEREFORE, premises considered, we hereby REVERSE and SET

ASIDE the Decision dated December 14, 2010 and resolution dated March
18, 2011 of the Court of Appeals in CA-G.R. CEB-SP No. 02025.

In the interest of orderly dispensation of justice, we order that the action for
the cancellation of the petitioners' certificate of title in Civil Case No. B-
2002-11-32 be CONSOLIDATED with the reivindicatory action in Civil Case
No. 158.

SO ORDERED.
RULE 32 – Trial by Commissioner (with Amendments)

G.R. No. 181892, September 08, 2015

 REPUBLIC OF THE PHILIPPINES, REPRESENTED BY EXECUTIVE
SECRETARY EDUARDO R. ERMITA, THE DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS, AND MANILA
INTERNATIONAL AIRPORT AUTHORITY, Petitioners, v. HON. JESUS M.
MUPAS, IN HIS CAPACITY AS ACTING PRESIDING JUDGE OF THE
REGIONAL TRIAL COURT, NATIONAL CAPITAL JUDICIAL REGION,
BRANCH 117, PASAY CITY, AND PHILIPPINE INTERNATIONAL AIR
TERMINALS CO., INC., Respondents.

(4 consolidated cases)
FACTS: On October 5, 1994, Asia’s Emerging Dragon Corp. (AEDC) submitted an unsolicited
proposal to the Government for the construction and development of the Ninoy Aquino
International Airport Passenger Terminal III (NAIA-IPT III) under a build-operate-and-transfer
(BOT) arrangement. The DOTC and the MIAA invited the public to submit competitive and
comparative proposals to AEDC’s unsolicited proposal. Both AEDC and Paircargo Consortium
offered to build the NAIA-IPT III for at least $350 million at no cost to the Government and to
pay the Government: 5% share in gross revenues for the first five years of operation, 7.5%
share in gross revenues for the next ten years of operation, and 10% share in gross revenues for
the last ten years of operation. However, Paircargo Consortium offered to pay the Government
a total of P17.75 billion as guaranteed payment for 27 years while AEDC offered to pay the
Government a total of P135 million for the same period. After the AEDC’s failure to match the
competitive bid, the DOTC awarded, the project to the Paircargo Consortium (that later
organized itself as PIATCO). On July 12, 1997, the Government executed a Concession
Agreement with PIATCO. On March 31, 2000, PIATCO engaged the services of Takenaka, a local
branch of a foreign corporation duly organized under the laws of Japan and doing business in
the Philippines, for the construction of the NAIA-IPT III. On the same date, PIATCO, likewise
contracted the services of Asahikosan, a foreign corporation duly organized under the laws of
Japan, for the design, manufacture, purchase, test and delivery of the Plant in the NAIA-IPT III.
On November 29, 2002, President Gloria Macapagal Arroyo declared in her speech that the
Government would not honor the PIATCO contracts. On the same day, Takenaka and
Asahikosan notified PIATCO that they were suspending the construction of the NAIA-IPT III for
PIATCO’s failure to provide adequate security.
On May 5, 200, in the Agan v. PIATCO Case, the Court nullified the PIATCO contracts after
finding that Paircargo Consortium (that later incorporated into PIATCO) was not a duly pre-
qualified bidder for failure to meet the minimum equity requirements for the NAIA-IPT III
project, as required under the BOT Law and the Bid Documents. On December 21, 2004 (The
Expropriation Case, Civil Case No. 04-0876), the Government filed a complaint for expropriation
of the NAIA-IPT III and informed the RTC that it had deposited with the Land Bank the amount
of P3,002,125,000.00, representing the NAIA-IPT III’s assessed value. On the same day, the RTC
issued a writ of possession in favor of the Government. On January 7, 2005, the RTC appointed
three Commissioners to determine just compensation without consulting the Government and
PIATCO. Due to these successive adverse rulings, the Government sought to inhibit Judge
Henrick F. Gingoyon, the RTC’s presiding judge, from hearing the case. (The judge was
ambushed and killed on December 31, 2005.) On December 14, 2005, Asahikosan filed a motion
for leave to intervene and Takenaka manifested its voluntary appearance before the RTC.
Pending the RTC’s resolution of Takenaka and Asahikosan’s motions for leave to intervene in
the expropriation case, the Government went directly to the Court seeking Judge Gingoyon’s
inhibition from the case; the nullification of the order of release of the sum of $62.3 million
(P3,002,125,000.00) to PIATCO; and the nullification as well of the appointment of the
commissioners.
On May 5, 2006, the RTC ordered the engagement of the services of an internationally accepted
independent appraiser who shall conduct the valuation of the NAIA-IPT III. Thereafter, the
Government and PIATCO submitted their list of nominees for the appointment of an
independent appraiser. On May 3, 2007, the RTC appointed DG Jones and Partners as
independent appraiser. The Government directly challenged the order in a petition for
certiorari with prayer for the issuance of a temporary restraining order and/or a writ of
preliminary injunction, which, the Court thereafter issued. Subsequently, the parties and the
BOC conducted a preliminary conference on April 22, 2010, to adopt an alternative course of
action to avoid further delay in the determination of just compensation. On August 5, 2010, the
RTC ordered the parties to submit their appraisal reports of NAIA-IPT III with supporting
documents and affidavits. The Government appraised the NAIA-IPT III at $149,448,037.00 while
PIATCO concluded that its replacement cost was $905,867,549.47. On the other hand,
Takenaka and Asahikosan claimed that the NAIA-IPT III’s construction cost amounted to
$360,969,790.82.
RTC: The RTC adopted the Government’s computed just compensation of $149,448,037.00. The
RTC rejected PIATCO, Takenaka, Asahikosan, and the BOC’s computation for lack of factual and
legal basis.
CA: the CA modified the RTC rulings and arrived at its own formula of the NAIA-IPT III’s cost.
ISSUE:
Whether or not the CA erred in computing just compensation in the expropriation of the NAIA-
IPT III.
HELD:

A. G.R. Nos. 209917, 209696 & 209731

The parties were afforded procedural

due process despite their non-receipt
of the BOC Final Report prior to
the promulgation of the RTC’s
May 23, 2011 Decision.
Before ruling on the substantive issues posed, we first resolve the issue of
whether the CA erred in ruling that the RTC’s May 23, 2011 decision is valid.

PIATCO, Takenaka and Asahikosan challenge the validity of the RTC’s

decision for alleged violation of their right to due process. They point out
that the RTC promulgated its decision in Civil Case No. 04-0876 on May 23,
2011, immediately after the release of the BOC’s Final Report on March 31,
2011. They complain that since the RTC’s clerk of court did not furnish the
parties copies of the Final Report, the trial court violated Sections 7 and 8,
Rule 67 of the Rules of Court as they failed to object to the Final Report’s
contents.

Rule 67 of the Rules of Court provides that the clerk of court shall serve
copies of the commissioners’ final report on all interested parties upon the
filing of the report. Each party shall have ten days within which to file their
objections to the report’s findings.170cralawrednad

Upon the expiration of the ten-day period or after all the parties have filed
their objections and after hearing, the trial court may: (a) accept the report
and render judgment in accordance therewith; (b) for cause shown,
recommit the report to the commissioners for further report of facts; (c) set
aside the report and appoint new commissioners; (d) partially accept the
report; and (e) make such order or render such judgment as shall secure to
the plaintiff the property essential to the exercise of his right of
expropriation; and to the defendant, the just compensation for the property
so taken.171cralawrednad

We rule that the parties’ failure to receive the Final Report did not
render the May 23, 2011 Decision null and void.

The essence of procedural due process is the right to be heard.172 The

procedural due process requirements in an eminent domain case are
satisfied if the parties are given the opportunity to present their evidence
before the commissioners whose findings (together with the pleadings,
evidence of the parties, and the entire record of the case) are reviewed and
considered by the expropriation court. It is the parties’ total failure to
present evidence on just compensation that renders the trial court’s ruling
void. The opportunity to present evidence during the trial remains to be the
vital requirement in the observance of due process.173cralawrednad

The record will show that the parties exhaustively discussed their positions
in this case before the BOC, the trial court, the appellate court, and this
Court. They had ample opportunity to refute and respond to each other’s
positions with the aid of their own appraisers and experts. Each party, in
fact, submitted countervailing evidence on the valuation of the NAIA-IPT III.
They also filed numerous and voluminous pleadings and motions before the
lower courts and before this Court.

The mere failure of the RTC’s clerk of court to send the parties copies of the
BOC Final Report is not substantial enough under the attendant
circumstances to affect and nullify the whole proceedings. Litigation is not a
game of technicalities. Strong public interests require that this Court
judiciously and decisively settle the amount of just compensation in the
expropriation of the NAIA-IPT III. We cannot further delay this more-than-a-
decade case and let interests accrue on just compensation by remanding the
case once more to the trial court.
Eminent domain is a fundamental state power that is inseparable from sovereignty. It is an
inherent power and is not conferred by the Constitution. The 1987 Constitution embodies two
constitutional safeguards against the arbitrary exercise of eminent domain: first, private
property shall not be taken for public use without just compensation; and second, no person
shall be deprived of life, liberty, or property without due process of law.
Just compensation is defined as “the full and fair equivalent of the property taken from its
owner by the expropriator. Simply stated, just compensation means that the former owner
must be returned to the monetary equivalent of the position that the owner had when the
taking occurred. To achieve this monetary equivalent, we use the standard value of “fair market
value” of the property at the time of the filing of the complaint for expropriation or at the time
of the taking of property, whichever is earlier.
Fair market value is the general standard of value in determining just compensation.
Jurisprudence broadly defines “fair market value” as the sum of money that a person desirous
but not compelled to buy, and an owner willing but not compelled to sell, would agree on as a
price to be given and received for a property.
While jurisprudence requires the “fair market value” to be the measure of recovery in
expropriation cases, it is not an absolute and exclusive standard or method of valuation. There
are exceptional cases where the property has no fair market value or where the fair market
value of the property is difficult to determine.
In cases where the fair market value of the property is difficult to ascertain, the court may use
other just and equitable market methods of valuation in order to estimate the fair market value
of a property.
In the case at bar, this Court exercises its judicial function to fix just compensation in eminent
domain cases on the basis of the law, the rules, and the evidence — including the appraisal
reports and the embedded formula on how the parties arrived at the amounts of just
compensation — presented by the parties before the trial court and the entire record of the
consolidated cases.
The determination of just compensation in eminent domain cases is essentially and exclusively
a judicial function. Fixing the formula with definitiveness and particularity in just compensation
is not the function of the executive nor of the legislative branches, much less of the parties in
this case. Any valuation for just compensation laid down in the statutes may not replace the
court’s own judgment as to what amount should be awarded and how this amount should be
arrived at. Legislative enactments, as well as executive issuances, providing the method of
computing just compensation are treated as mere guidelines in ascertaining the amount of just
compensation.
When acting within the parameters set by the law itself, courts are not strictly bound to apply
the formula to its minutest detail, particularly when faced with situations that do not warrant
the formula’s strict application. The courts may, in the exercise of their discretion, relax the
formula’s application to fit the factual situations before them.

As a final note, while we stated in Gingoyon that the RTC may validly

appoint commissioners in the appraisal of the NAIA-IPT III, the trial court
should have appointed commission members who possessed technical
expertise in the appraisal of a complex terminal building. Under Section 5,
Rule 67 of the Rules of Court, the BOC’s main functions are to ascertain and
report to the court the just compensation for the property sought to be
taken. The appointment of technical experts as commissioners would have
avoided the DG Jones aspect of the controversy as there would have been
no need for the trial court to hire an independent appraiser. This would have
avoided the duplication of tasks and delay in the proceedings.

RULE 33 – Demurrer to evidence (with Amendments)

G.R. No. 213286, August 26, 2015

 MAMERTA LOPEZ CLAUDIO, EDUARDO L. CLAUDIO, ASUNCION
CLAUDIO-CONTEGINO, ANA CLAUDIO-ISULAT, DOLORES CLAUDIO-
MABINI, AND FERMIN L. CLAUDIO, Petitioners, v. SPOUSES FEDERICO
AND NORMA SARAZA, Respondent.

The Facts

The case traces its roots to Civil Case No. 04-0661-CFM, for annulment of
sale, power of attorney and mortgage with prayer for damages filed before
the RTC on September 28, 2004 by petitioners Mamerta Lopez Claudio
(Mamerta), Eduardo L. Claudio, Asuncion Claudio-Contegino (Asuncion), Ana
Claudio-Isulat, Dolores Claudio-Mabini, and Fermin L. Claudio (Fermin)
against respondents Florentino Claudio (Florentino) and Spouses Federico
and Norma Saraza (Spouses Saraza).

The complaint alleged that Porfirio Claudio (Porfirio) and his wife, Mamerta,
during their marriage, acquired ten (10) parcels of land in Pasay City
including the property covered by Transfer Certificate of Title (TCT) No.
142989; that on June 18, 2004, Florentino made it appear that his parents,
Porfirio and Mamerta Claudio, sold to him the lot covered by TCT No. 142989
for P500,000.00 thru a deed of absolute sale sometime in October 2003;
that the said deed of sale was void because the signatures of the vendors
were forged and there was no consideration for the sale; that the signatures
of petitioners Fermin and Asuncion appearing in the same deed of sale,
expressing their conformity to the conveyance, were likewise forged; and
that subsequently, Florentino sought the registration of the said property in
his name before the Register of Deeds of Pasay City.

It was further averred in the complaint that on June 22, 2004, Florentino
executed a deed of real estate mortgage over the subject lot with special
power to sell the mortgaged property without judicial proceedings, in favor
of Spouses Saraza to secure the payment of a loan in the aggregate amount
of P1,000,000.00; that Spouses Saraza were mortgagees in bad faith
because they knew fully well that Florentino could not have acquired the
subject property from his parents because Porfirio had long been
deceased on May 31, 1997 while Mamerta was in the United States of
America at the time of the alleged sale; that Spouses Saraza did not
conduct a credit investigation on Florentino to ascertain the validity
of his title and his authority to mortgage the subject lot; that the real
estate mortgage was void because it emanated from a falsified deed
of absolute sale and void title; that the registration of the real estate
mortgage, together with the special power of attorney and deed of
conveyances, before the Register of Deeds was procured through fraud; that
it was only on June 28, 2004 that TCT No. 142989 was cancelled and, in lieu
thereof, TCT No. 145979 was issued in the name of Florentino; and that for
failure of mortgagor Florentino to redeem the subject property, it was
consolidated in the name of Spouses Saraza.

Spouses Saraza moved for the dismissal of the complaint contending that
the issue as to whether or not the petitioners had the legal right to proceed
against them could be resolved even without a trial. On May 18, 2005, the
RTC issued an order denying the motion to dismiss for lack of merit.

In their answer, Spouses Saraza interposed the defense that the lot now
covered by TCT No. 145979, which was used as collateral in the real estate
mortgage contract, was valid and that the mortgage was enforceable.

After the presentation of the petitioners' evidence in chief, Spouses Saraza

moved for leave of court to file a demurrer to evidence. On December 15,
2009, they filed their Demurrer to Evidence praying for the dismissal of the
civil case anchored on the ground of insufficiency of evidence.

On January 21, 2010, the RTC issued the assailed order, the dispositive
portion of which as quoted by the CA, reads:cralawlawlibrary

WHEREFORE, the Demurrer to Evidence with Leave filed by defendants

Sarazas is hereby GRANTED and the Complaint against them is hereby
Dismissed without prejudice.

SO ORDERED.3
The petitioners filed a motion for reconsideration of the January 21, 2010
Order, but it was denied by the RTC in its June 4, 2010 Order.4cralawrednad

Not in conformity, the petitioners appealed the order of dismissal of Civil

Case No. 04-0661-CFM before the CA.

In its assailed decision, dated October 24, 2013, the CA found no cogent
reason to disturb the findings and conclusions of the RTC. It held that
Spouses Saraza had the right to rely in good faith on TCT No. 145979, which
covered the lot given as security by Florentino, considering that there was
no showing of any sign to excite suspicion. Thus, they were under no
obligation to look beyond what appeared on the face of the certificate of title
and investigate it. The appellate court deemed Spouses Saraza as innocent
mortgagees for value and as such, the petitioners had shown no right to
relief against them. Thus, Spouses Saraza and their mortgage lien were
entitled to protection. The fallo of its decision states:cralawlawlibrary

WHEREFORE, the 21 January 2011 Order of the Regional Trial Court of Pasay
City, Branch 108 in Civil Case No. 04-0661-CFM is hereby AFFIRMED in toto.

Cost against appellants.

SO ORDERED.5
Unfazed, the petitioners filed the subject petition and presented for the
Court's review the following

ISSUES

WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT

THE RESPONDENTS ARE MORTGAGEES IN GOOD FAITH BECAUSE
WHEN THE MORTGAGE WAS ALLEGEDLY EXECUTED ON AUGUST 11,
2004 THE TITLE HAS BEEN TRANSFERRED TO FLORENTINO CLAUDIO
ON JUNE 28, 2004.

II
WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT
EVEN IF THE REAL ESTATE MORTGAGE WAS ENTERED INTO
BETWEEN THE MORTGAGOR AND THE MORTGAGEE ON JUNE 22,
2004, THERE WAS A DEED OF ABSOLUTE SALE WHICH DESCRIBED
THE PROPERTY INVOLVED AND WAS EXECUTED ON JUNE 10, 2004
BETWEEN VENDOR PORFIRIO CLAUDIO AND VENDEE FLORENTINO
CLAUDIO.

III

WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT

THE RESPONDENTS ARE NO LONGER DUTY BOUND TO LOOK BEYOND
THE TRANSFER CERTIFICATE OF TITLE AS THE LAND WAS
REGISTERED IN THE NAME OF FLORENTINO CLAUDIO.

IV

WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT

THE RESPONDENTS ARE MORTGAGEES IN GOOD FAITH BECAUSE THE
AGREEMENT WAS REGISTERED IN THE TITLE A FEW DAYS AFTER
THE AGREEMENT WAS EXECUTED.6
It is the position of the petitioners that Florentino had no title to the
mortgaged property, that he was not its registered owner at the time he
entered into a real estate mortgage agreement with Spouses Saraza on June
22, 2004; and that it was only on June 28, 2004 or six (6) days after the
execution of the mortgage contract that TCT No. 145979 was issued to
Florentino. The petitioners argue that the principle that a mortgagee for
value need not look beyond the face of the certificate of title finds no
application where the mortgagor is not the registered owner and has no
certificate of title at the time of the execution of the mortgage agreement.
They contend that the failure of Spouses Saraza to ascertain if there
was any flaw in the mortgagor's ownership over the subject
property, to examine its status and to determine the mortgagor's
right to mortgage the property as collateral of the loan would hardly
make them mortgagees in good faith.

Spouses Saraza, on the other hand, criticize the present petition as a mere
reiteration or rehash of the arguments set forth by the petitioners in their
pleadings filed before the RTC and the CA. Other than these issues already
judiciously considered and squarely passed upon, the petitioners failed to
advance any compelling reason for the modification, much less reversal, of
the assailed October 24, 2013 Decision of the CA.7cralawrednad

The petitioners, in reply, theorize that Spouses Saraza did not offer any
counter-argument in their comment because they failed to grasp the gravity
and substance of the issues raised in the subject petition, notably the issue
that the CA overlooked and misappreciated material facts which, if properly
taken into account would alter the outcome of the case.8cralawrednad

The Court's Ruling

The issue before this Court now is whether the RTC erred in granting
Spouses Saraza's demurrer to evidence. Corollary to this is the issue
of whether or not they were mortgagees in good faith.

The petition is meritorious. The Court finds that Spouses Saraza are not
mortgagees in good faith.

Preliminarily, the Court notes that the issue of whether a mortgagee is in

good faith generally cannot be entertained in a petition filed under Rule 45
of the Rules of Court. This is because the ascertainment of good faith or the
lack thereof, and the determination of negligence are factual matters which
lie outside the scope of a petition for review on certiorari. A recognized
exception to this rule, however, is when there is a misapprehension
of facts or when the inference drawn from the facts is manifestly
mistaken and, hence, a review of factual issues is allowed. The case
at bench falls under the exception.

In Cavite Development Bank v. Lim,11 the Court explained the doctrine of

mortgagee in good faith, thus:cralawlawlibrary

There is, however, a situation where, despite the fact that the mortgagor is
not the owner of the mortgaged property, his title being fraudulent, the
mortgage contract and any foreclosure sale arising therefrom are given
effect by reason of public policy. This is the doctrine of "the mortgagee in
good faith" based on the rule that all persons dealing with property covered
by a Torrens Certificate of Title, as buyers or mortgagees, are not required
to go beyond what appears on the face of the title. The public interest in
upholding the indefeasibility of a certificate of title, as evidence of the lawful
ownership of the land or of any encumbrance thereon, protects a buyer or
mortgagee who, in good faith, relied upon what appears on the face of the
certificate of title.
Verily, a mortgagee has a right to rely in good faith on the certificate of title
of the mortgagor and, in the absence of any sign that might arouse
suspicion, has no obligation to undertake further investigation. Accordingly,
even if the mortgagor is not the rightful owner of, or does not have a valid
title to, the mortgaged property, the mortgagee in good faith is entitled to
protection.This doctrine presupposes, however, that the mortgagor, who is
not the rightful owner of the property, has already succeeded in obtaining a
Torrens title over the property in his name and that, after obtaining the
said title, he succeeds in mortgaging the property to another who relies on
what appears on the said title.

In the assailed decision, the CA stated that as borne by the records, TCT No.
145979 had been issued days before Florentino and Spouses Saraza
executed a mortgage agreement on August 11, 2004. It was of the view that
Spouses Saraza had the right to rely on the correctness of TCT No. 145979
and, in the absence of any sign that might arouse suspicion, they were no
longer required to look beyond the certificate or obligated to undertake
further investigation to determine the actual owner or the real property.

The conclusion of the CA is specious as it is baseless and contrary to the

evidence on record.

Evidence shows that the real estate mortgage, constituted on the subject
property, was executed on June 22, 2004, while TCT No. 145979, in the
name of Florentino, was issued by the Register of Deeds only six (6) days
later or on June 28, 2004. Evidently, the property, offered as collateral to
the loan of P1 Million, was not in Florentino's name yet when he entered into
a mortgage agreement with Spouses Saraza.

A careful perusal of the special power to sell mortgaged property without

judicial proceedings,15 adduced by the petitioners before the RTC, would
readily reveal that the same mortgage contract was actually executed on
June 22, 2004. It appears that the date June 22, 2004 was twice
superimposed across "11th day of August 2004" which immediately preceded
the signatures of the parties as well as in the acknowledgment portion of the
mortgage contract. The fact that the mortgage contract was executed on
June 22, 2004 was clearly shown in the annotation of the mortgage deed at
the dorsal portion of TCT No. 145979, herein reproduced for ready
reference, to wit:cralawlawlibrary

(MEMORANDUM OF ENCUMBRANCES)16

ENTRY NO. 2004-4039/T-145979 - REAL ESTATE MORTGAGE - In favor of

SPS. FEDERICO and NORMA J. SARAZA (Mortgagees), covering the property
described herein to guarantee the credit facility or principal loan obligation in
the amount of ONE MILLION PESOS (P1,000,000.00), Philippine Currency,
upon terms and conditions setforth in Doc. No. 422; Page No. 85; Book No.
33; Series of 2004 acknowledged before Notary Public Jesus B. Bongon for
Pasay City.

Date of Instrument - June 22, 2004.

Date of Inscription - June 28, 2004 - 9:50 a.m.

ROBERT M. GUILLERMO,
17
Registrar of Deeds      [Emphases supplied]
Further, the Court finds it unusual that Florentino did not indicate the TCT
number in the mortgage contract, if indeed, one had already been issued in
his favor. The TCT number is essential to identify the title covering the
mortgaged land. Notwithstanding the said omission, Spouses Saraza still
allowed the loan and entered into a mortgage agreement with Florentino.
Considering the substantial loan involved in the agreement, Spouses Saraza
should have undertaken the necessary steps to ascertain any flaw in the title
of Florentino or to check his capacity to transfer any interest in the
mortgaged land. Instead, Spouses Saraza closed their eyes on a fact which
should put a reasonable man on guard as to the ownership of the property
being presented as security for a loan. A person who deliberately ignores a
significant fact that would create suspicion in an otherwise reasonable
person is not an innocent purchaser (mortgagee) for value.18cralawrednad

The Court also notes that the CA seemed perplexed in the latter part of
its ponencia as to what date it should declare as the date of execution of the
mortgage deed. The CA wrote:cralawlawlibrary

Certainly, defendant Florentino Claudio, as the mortgagor, is the owner of

the subject property when it was mortgaged to the appellees. In conformity
with good faith and as a matter of regular procedure, the Real Estate
Mortgage was registered and annotated in the title of the mortgagor a few
days after the Real Estate Mortgage Agreement was executed, hence, it is
valid and binding against the whole world. x x x.19 [Italics supplied]
The foregoing observation of the CA is not only contrary to the evidence on
record but also vague as it had previously declared that the mortgage
agreement was executed on August 11, 2004. It bears stressing that the
annotation of the mortgage contract on the back of TCT No. 145979 was
placed on June 28, 2004 which is definitely not "a few days after" August 11,
2004. Indeed, the above finding of the CA created an absurd
scenario wherein a mortgage contract was first annotated on the title
even before its execution by the parties on a much later date.
Curiously, Spouses Saraza never questioned or asked for the correction of
the entries pertaining to the date of the instrument and the date of
annotation considering that they were the ones who caused the mortgage
encumbrance to be annotated on TCT No. 145979.

The doctrine of mortgagee in good faith only applies when the mortgagor
has already obtained a certificate of title in his or her name at the time of
the mortgage.20 Accordingly, an innocent mortgagee for value is one who
entered into a mortgage contract with a mortgagor bearing a certificate of
title in his name over the mortgaged property. Such was not the situation of
Spouses Saraza. They cannot claim the protection accorded by law to
innocent mortgagees for value considering that there was no certificate of
title yet in the name of Florentino to rely on when the mortgaged contract
was executed.

Good faith connotes an honest intention to abstain from taking

unconscientious advantage of another.21 Spouses Saraza could not be
deemed to have acted in good faith because they knew that they were not
dealing with the registered owner of the property when it was mortgaged
and that the subject land had yet to be titled in the name of mortgagor
Florentino. To repeat, the protection accorded to a mortgagee in good faith
cannot be extended to a mortgagee who knowingly entered into a mortgage
agreement wherein the title to the mortgaged property presented was still in
the name of the rightful owner and the mortgagor has no legal authority yet
to mortgage the same.

The CA went on to explain that even if the mortgagor had no title to the
property at the time of the execution of the mortgage contract, Spouses
Saraza would still be considered mortgagees in good faith because a deed of
sale had already been executed prior thereto which made mortgagor
Florentino the absolute owner of the mortgaged lot, thus;

xxx And even if We would follow appellants' arguments that the Real Estate
Mortgage was entered into between the mortgagor and the mortgagees on
22 June 2004, there was the Deed of Absolute Sale which described the
property involved and was executed on 10 June 2004 between vendor
Porfirio Claudio and vendee Florentino Claudio and which was the same
property described in the Real Estate Mortgage. Eventually, the Transfer
Certificate of Title in the name of Florentino Claudio was issued on 28 June
2004 and the Real Estate Mortgage was duly registered in the office of the
Registry of Deeds of Pasay City.22
Apparently, the CA wrongly applied the doctrine of mortgagee in good faith.
This doctrine has been allowed in many instances but in situations dissimilar
from the case at bench. It is based on the rule that persons dealing with
properties covered by a Torrens certificate of title are not required to go
beyond what appears on the face of the title. It is not applicable, however,
to a situation where what the mortgagor presented to the mortgagee was a
mere deed of sale. In Abad v. Guimba,23 the Court
elucidated:cralawlawlibrary

The main purpose of land registration, covered by PD 1529, is to facilitate

transactions relative to real estate by giving the public the right to rely upon
the face of the Torrens certificate of title. Therefore, as a rule, the purchaser
is not required to explore further than what the Certificate indicates on its
face. This rule, however, applies only to innocent purchasers for value and in
good faith; it excludes a purchaser who has knowledge of a defect in the title
of the vendor, or of facts sufficient to induce a reasonably prudent man to
inquire into the status of the property. Under Section 32 of PD 1529, an
innocent purchaser for value is deemed to include an innocent mortgagee for
value.24
Besides, the evidence proffered by the petitioners tends to show that the
deed of absolute sale was a forgery because the alleged vendor, Porfirio,
was already dead at the time of the purported sale on June 10, 2004. In
the certificate of death25cralawred submitted by the petitioners, it appears
that Porfirio died on May 31, 1997 in Glendora, Los Angeles, U.S.A. It is a
well-entrenched rule that a forged or fraudulent deed is a nullity and
conveys no title. Moreover, where the deed of sale states that the purchase
price has been paid but, in fact, has never been paid, the deed of sale is void
ab initio for lack of consideration.26 Consequently, the purported buyer,
Florentino, could not have validly mortgaged the subject property. In a real
estate mortgage contract, it is essential that the mortgagor be the absolute
owner of the property to be mortgaged; otherwise, the mortgage is
void.27cralawrednad

A demurrer to evidence is a motion to dismiss on the ground of

insufficiency of evidence and is filed after the plaintiff rests his case.
It is an objection by one of the parties in an action to the effect that
the evidence, which his adversary produced, is insufficient in point
of law, whether true or not, to make out a case or sustain the
issue.28 In the case at bench, the petitioners' evidence, together with such
inferences and conclusions as may be reasonably drawn therefrom, amply
supports the allegations in their complaint necessary to their claim against
Spouses Saraza. The evidence in chief of the petitioner clearly made out a
very strong case against them which would warrant recovery from them.

All told, the Court holds that the petitioners' evidence, standing alone and in
the absence of controverting evidence, would afford sufficient basis for a
judgment in their favor and against Spouses Saraza. Despite the fact that
Spouses Saraza are deemed to have waived their right to present evidence
before the RTC pursuant to Section 1, Rule 3329 of the Rules of Court, still
this disposition is without prejudice to the judgment on the merits to be
handed down by the RTC.

WHEREFORE, the petition is GRANTED. The October 24, 2013 Decision and
the July 1, 2014 Resolution of the Court of Appeals in CA-G.R. CV No. 96051
are REVERSED and SET ASIDE. Civil Case No. 04-0661-CFM is
ordered REINSTATED as against Spouses Federico and Norma Saraza.

Let the case be REMANDED to the Regional Trial Court, Branch 108, Pasay
City, for further proceedings.

RULE 34 – Judgment on the pleadings (with Amendments)

G.R. No. 201427, March 18, 2015

TEOFILO B. ADOLFO, Petitioner, v. FE. T. ADOLFO, Respondent.

Civil Case No. MAN-4821

On April 14, 2004, petitioner Teofilo B. Adolfo filed with the RTC Mandaue a
Petition7 for judicial separation of property against his estranged wife,
respondent Fe Adolfo, nee Tudtud.  Docketed as Civil Case No. MAN-4821
and assigned to Branch 55, the petition alleged that the parties were
married on November 26, 1966; that the union bore one child; that during
the marriage, they acquired through conjugal funds Lot 1087-A-2-E, a
3,652-square meter property in Brgy. Cabancalan, Mandaue City, Cebu (the
subject property) covered by Transfer Certificate of Title No. (TCT) 18368;
that later on, the parties separated due to irreconcilable differences; that
since reunion was no longer feasible, petitioner suggested a separation of
the conjugal property, but respondent adamantly refused; that respondent
denied petitioner’s co-ownership of the subject property, claiming the same
as her paraphernal property; that several earnest efforts to amicably settle
the matter between them proved unavailing; and that a judicial separation
of property is proper under the circumstances and pursuant to Article 135(6)
of the Family Code.8  Petitioner thus prayed that judgment be rendered
decreeing a separation of the conjugal property and the subdivision or sale
thereof, to the end of dividing the same or the proceeds thereof; and
ordering respondent to pay petitioner P50,000.00 as attorney’s fees,
appearance fees (P2,000.00 per hearing), and P20,000.00 litigation costs.

In her Answer with counterclaim, respondent contended that while she

remained married to petitioner, she is the sole owner of the subject
property, the same being her paraphernal property which she inherited from
her mother; that petitioner is a lazy bum, gambler, drunkard, wife abuser,
and neglectful father; that respondent found all means to support the family
even as petitioner neglected it; that respondent bought on installment a
tricycle for the petitioner’s use in business, but he kept the proceeds thereof
to himself and used the same in his gambling and drinking sprees; that
respondent alone took the initiative to support the family and found ways to
take care of the daily needs of her child; that she caused to be built on a
portion of her mother’s land a house even while petitioner was bumming
around; that one day, petitioner destroyed the roof of the house that was
then being built; that petitioner subsequently abandoned her and their child
in 1968, and transferred to Davao City where he took a mistress and begot
four children by her; that in 1986, petitioner returned to Cebu City seeking
reconciliation with respondent; that respondent took petitioner back, but in
1987 they once more separated; that thereafter, respondent never again
saw or heard from petitioner.

Respondent claimed in her Answer that the subject property was a portion of
a bigger lot (mother lot) owned by her mother Petronila Tudtud which was
covered by TCT T-15941.  On October 11, 1967, her mother executed a
quitclaim deed transferring a portion of the mother lot – the subject property
– to respondent.  The mother title TCT T-15941 was then cancelled and a
new one, TCT (17216)-5415, was issued in respondent’s name.  Respondent
then sold the subject property to her brother on January 19, 1968, and a
new TCT (17833)-5515 was issued in her brother’s name.  Her brother then
mortgaged the property to Development Bank of the Philippines (DBP),
which foreclosed on the same.  TCT 18231 was issued in DBP’s name.  DBP
then sold the property to the spouses Antonio and Lucy Garcia (the Garcias),
and TCT 18266 was in turn issued in their name.  Finally, on May 25, 1983,
the Garcias sold back the subject property to respondent, and a new title –
TCT 1836810 – was then issued in the name of respondent “FE M. TUDTUD, x
x x married to Teofilo Adolfo.”

Respondent argued that she is the sole owner of the subject property, the
same being her paraphernal property which she alone redeemed from the
Garcias; that the inclusion of petitioner’s name in TCT 18368 does not make
him a co-owner of the property, but was merely necessary to describe
respondent’s civil status; and that under Article 13511 of the Civil Code, all
property brought by the wife to the marriage as well as all property she
acquires during the marriage in accordance with Article 148 12 of the same
Code constitutes paraphernal property.

Respondent thus prayed that the petition be dismissed.  By way of

counterclaim, she sought the payment of moral, exemplary, and nominal
damages, attorney’s fees, and litigation expenses.

Civil Case No. MAN-2683

In 1996, respondent’s sister Florencia Tudtud and her husband Juanito

Gingoyon (the Gingoyons) filed a case for partition with damages against
respondent.  The case was docketed as Civil Case No. MAN-2683 and raffled
to Branch 55 of the RTC Mandaue.  The Complaint13 therein alleged that in
1988, respondent executed a deed of sale in favor of the Gingoyons over a
300-square meter portion of the subject property, but that respondent
refused to partition/subdivide the same even after the Gingoyons paid the
taxes, fees and expenses of the sale.  For her defense, respondent claimed
in her Answer14 that when the sale to the Gingoyons was made, the subject
property constituted conjugal property of her marriage with petitioner; that
as early as 1983, or when the Garcias executed the deed of sale in her
favor, the subject property became a conjugal asset; since petitioner did not
sign the deed of sale in favor of the Gingoyons as he was in Davao at the
time and knew nothing about the sale, the sale was null and void.

On May 15, 2002, the trial court rendered its Decision15 in Civil Case No.
MAN-2683, declaring that the subject property constituted conjugal property
of the marriage.  It thus nullified the 1988 deed of sale executed by
respondent in favor of the Gingoyons for lack of consent on the part of
petitioner, citing Article 124 of the Family Code.16  The trial court likewise
awarded moral and exemplary damages, attorney's fees and litigation
expenses in favor of the respondent in the total amount of P107,000.00.

The Gingoyons filed an appeal with the CA, which was docketed as CA-G.R.
CV No. 78971.

Motion for Judgment Based on the Pleadings in Civil Case No. MAN-
4821

Meanwhile, during the pre-trial conference in Civil Case No. MAN-4821,

petitioner submitted as part of his evidence and for marking certified true
copies of the Gingoyons’ Complaint in Civil Case No. MAN-2683,
respondent’s Answer thereto, and the trial court’s May 15, 2002 Decision in
said case.

On August 1, 2005, petitioner filed a Request for Admission17 of 1) the

genuineness of the duly marked certified true copies of the Complaint,
Answer, and Decision in Civil Case No. MAN-2683 (Exhibits “F,” “G” and “H,”
respectively); 2) respondent’s declaration in said Answer that the subject
property constituted conjugal property of the marriage; and 3) the trial
court’s pronouncement in said case that the subject property forms part of
the conjugal estate.

Respondent failed to file her answer or response to the request for

admission.

On September 5, 2005, petitioner filed a Motion for Judgment Based on the

Pleadings,18 stating that since respondent failed to answer his request for
admission, the matters contained in the request are deemed admitted
pursuant to Rule 26, Section 2 of the 1997 Rules of Civil Procedure19 (1997
Rules); that as a consequence of the application of the rule, respondent is in
effect considered to have admitted that the subject property is a conjugal
asset of their subsisting marriage which may thus be the subject of his
petition for judicial separation of property; and that on account of said
admission, a hearing on the merits becomes unnecessary and, instead, Rule
34 of the 1997 Rules on judgments on the pleadings should apply. 
Petitioner thus prayed that the trial court render judgment in his favor based
on the pleadings.

Respondent filed an Opposition.  In her Opposition to Plaintiff’s

Memorandum,22 respondent argued among others that the request for
admission was premature considering that the decision in Civil Case No.
MAN-2683 was the subject of an appeal, and thus not yet final.

In an October 11, 2005 Order,23 the trial court directed the transfer of Civil
Case No. MAN-4821 to Branch 55 of the RTC Mandaue, since it is said court
which decided the closely related Civil Case No. MAN-2683.

On October 2, 2006, Branch 55 issued an Order 24 granting petitioner’s

motion for judgment on the pleadings.  It held as
follows:chanRoblesvirtualLawlibrary

This court has painstakingly exerted effort in going over the record and took
serious note of all the pleadings, documents and others on file.  After serious
consideration, the court believes and so holds that there is basis in rendering
judgment.  The Motion for Judgment Based on the Pleadings though
denominated as such but [sic] shall be treated as a move to seek summary
judgment. x x x

x x x x

The court in arriving at this resolution was guided by the following

pronouncements by the Supreme Court in the case of Diman vs. Alumbres,
G.R. No. 131466, November 27, 1998, 299 SCRA 459 x x x:
x x x x

In the same case, it was held –

“It is also the law which determines when a summary judgment is proper.  It
declares that although the pleadings on their face appear to raise issues of
fact – e.g., there are denials of, or a conflict in, factual allegations – if it is
shown by admissions, depositions or affidavits, that those issues are sham,
fictitious, or not genuine, or, in the language of the Rules, that ‘except as to
the amount of damages, there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter of law, the
Court shall render a summary judgment for the plaintiff or the defendant, as
the case may be. (Italics and underscoring supplied)

On the other hand, in the case of a summary judgment[,] issues apparently

exist – i.e.. facts are asserted in the complaint regarding which there is as
yet no admission, disavowal or qualification; or specific denials or affirmative
defenses are in truth set out in the answer – but the issues thus arising from
the pleadings are sham, fictitious, not genuine, as shown by [affidavits],
depositions or admissions.  In other words, as a noted authority remarks, a
judgment on the pleadings is a judgment on the facts as pleaded, while a
summary judgment is a judgment on the facts as summarily proven by
affidavits, depositions or admissions.” (Italics and underscoring supplied)

x x x xcralawlawlibrary

Defendant25 did not file any verified answer or a pleading denying under oath
the genuineness and authenticity of the documents attached to the Request
for Admission and of the other matters therein set forth.  This failure has far
reaching implications in that the following are deemed admitted: a) the
genuineness of Exhibits F, G and H, all attached to the Request for
Admission; b) that she admitted in paragraph 10 in her Answer to Civil Case
No. MAN-2683 that Lot 1087-A-2-E was no longer paraphernal property but
rather a conjugal property of Spouses Teofilo and Fe Adolfo and; c) that
RTC, Branch 55, Mandaue City, sustained and/or held the view of defendant
(Fe Tudtud) that Lot 1087-A-2-E is a conjugal property of Spouses Teofilo
and Fe Adolfo, thus, dismissed Civil Case No. MAN-2683 and awarded
damages to the defendant.

Judicial admissions may be made in (a) the pleadings filed by the parties,
(b) in the course of the trial either by verbal or written manifestations or
stipulations, or (c) in other stages of the judicial proceeding, as in the pre-
trial of the case.  Admissions obtained through depositions, written
interrogatories or requests for admission are also considered judicial
admissions.” Page 686, Remedial Law Compendium, Vol. II, 9th Rev. Ed.,
Regalado

With the admission that Lot 1087-A-2-E is a conjugal property, it follows as

its necessary and logical consequence, that plaintiff26 is entitled to the relief
demanded.chanrobleslaw

x x x x

A DECISION in Civil Case No. MAN-2683 had already been rendered by RTC,
Branch 55, on the 15th day of May 2002 with the court finding that Lot
1087-A-2-E is a conjugal property x x x –

x x x x

For reason[s] of expediency and convenience, the court may even take
judicial notice of its earlier decision finding Lot 1087-A-2-E as a conjugal
property.27cralawred

x x x x

Under the circumstances, judicial separation of property is proper.  Aware

that the separation has the effect of a dissolution of the conjugal partnership
property regime, the presumptive legitime of Nilo Adolfo (the only common
child of the spouses) has to be delivered in accordance with Article 51 in
relation to paragraph (8) Article 127 and Article 137 of the Family Code of
the Philippines.

WHEREFORE, premises considered, judgment is hereby rendered directing

the partition of Lot 1087-A-2-E between the plaintiff and the defendant in
equal share of what remains after allocating to Nilo Adolfo a portion of Nine
hundred thirteen (913) square meters representing his presumptive
legitime.

The plaintiff is directed to submit to this court the proposed subdivision plan
for its consideration before submitting the same for approval to the Bureau
of Lands.

In case of disagreement as to their respective location, the same shall be

done through raffle to be conducted by the sheriff who shall see to it that
judgment in this case shall be fully implemented.

SO ORDERED.28cralawlawlibrary

Respondent instituted an appeal with the CA, which was docketed as CA-
G.R. CV No. 01783.

Court of Appeals Decision in CA-G.R. CV No. 78971

Meanwhile, on May 30, 2007, the CA rendered its Decision29 in CA-G.R. CV

No. 78971.  It reversed the May 15, 2002 Decision of the trial court in Civil
Case No. MAN-2683.  It declared, among others, that the subject property
was respondent’s paraphernal property.  Thus, it
held:chanRoblesvirtualLawlibrary

Proceeding from the foregoing consideration, the finding that Lot No. 1087-
A-2-E is a conjugal property does not have any basis, hence, does not have
any merit at all.  On the contrary, plaintiffs-appellants30 sufficiently proved
that the aforesaid lot was defendant-appellee’s31 paraphernal property as the
latter even admitted that she inherited the same from her mother although
she claimed it as a conjugal property based on the TCT’s attached to her
answer.  Another strong indication that Lot No. 1087-A-2-E is solely owned
by defendant-appellee is the fact that in another case (Civil Case No. MAN-
2008) involving the same property and the same parties but for a different
issue (road right of way), defendant-appellee alone signed the compromise
agreement ceding a portion of the subject lot as a right of way perpetually
open and unobstructed for the benefit of plaintiffs-appellants, defendant-
appellee, their respective heirs, assigns and transferees and guests.  The
same compromise agreement which became the decision of the case
attained finality without defendant-appellee questioning the absence of her
husband’s signature.chanrobleslaw

x x x x

WHEREFORE, prescinding from the foregoing premises, the appeal is hereby

GRANTED and the Decision of the Regional Trial Court of Mandaue City,
Branch 55, dated 15 May 2002, in Civil Case No. MAN-2683 is REVERSED
and SET ASIDE.

Let the partition of Lot No. 1087-A-2-E consisting of 300 square meters
bought by plaintiffs-appellants from defendant-appellee be done in
accordance to [sic] the sketch plan executed for that purpose.

SO ORDERED.32cralawred
cralawlawlibrary

On June 23, 2007, the above CA decision became final and

executory.33cralawred

Ruling of the Court of Appeals in CA-G.R. CV No. 01783

In CA-G.R. CV No. 01783, respondent filed her Appellant’s Brief,34 where she

argued that the trial court erred in issuing its October 2, 2006 Order
directing the partition or sale of the subject property; that it was error for
the trial court to take judicial notice of its own judgment in Civil Case No.
MAN-2683 and thus declare that the subject property is conjugal, since the
issue of whether it constitutes conjugal or paraphernal property was still
pending in the appeal in CA-G.R. CV No. 78971; that since the proceedings
in Civil Case No. MAN-2683 have not been terminated and the issue
regarding the character of the subject property has not been resolved with
finality, then petitioner’s resort to a request for admission and motion for
judgment on the pleadings was premature; and that with the May 30, 2007
Decision in CA-G.R. CV No. 78971, petitioner and the trial court should
submit to the finding therein that the subject property is her paraphernal
property.

In his Appellee’s Brief,35 petitioner insisted that the trial court did not err in
treating his motion for judgment on the pleadings as one for summary
judgment; that respondent’s Answer in Civil Case No. MAN-2683 constituted
a judicial admission that the subject property was a conjugal asset, which
required no further proof; that respondent’s failure to reply to his written
request for admission also resulted in the acknowledgment that the subject
property is a conjugal asset; that the trial court correctly took judicial notice
of the proceedings in Civil Case No. MAN-2683, as they were relevant and
material to the resolution of Civil Case No. MAN-4821; that since it was not
respondent who appealed the May 15, 2002 decision in Civil Case No. MAN-
2683, then the finding therein that the subject property is conjugal should
bind her; and that the CA’s eventual finding in CA-G.R. CV No. 78971 that
the subject lot was respondent’s paraphernal property cannot bind him
because he was not a party to Civil Case No. MAN-2683.

On October 6, 2009, the CA issued the assailed Decision containing the

following decretal portion:chanRoblesvirtualLawlibrary

WHEREFORE, based from the foregoing premises, the Order of the Regional
Trial Court, Branch 55, Mandaue City, in Civil Case No. MAN-4821, is hereby
REVERSED and SET ASIDE and the records of this case are remanded to RTC
(Branch 55), Mandaue City, for further proceedings.

SO ORDERED.36cralawlawlibrary

In arriving at the above conclusion, the CA held that the trial court cannot
treat petitioner’s motion for judgment on the pleadings as one for summary
judgment.  It stated that in a proper case for judgment on the pleadings,
there are no ostensible issues at all on account of the defending party’s
failure to raise an issue in his answer, while in a proper case for summary
judgment, such issues exist, although they are sham, fictitious, or not
genuine as shown by affidavits, depositions or admissions.  In other words, a
judgment on the pleadings is a judgment on the facts as pleaded, while a
summary judgment is a judgment on the facts as summarily proved by
affidavits, depositions, or admissions.37 It added that respondent’s Answer
appeared on its face to tender an issue; it disputed petitioner’s claim that
the subject property is their conjugal property.  The next thing to be
determined is whether this issue is fictitious or sham as to justify a summary
judgment.

The CA added that although respondent was bound by the resulting

admission prompted by her failure to reply to petitioner’s request for
admission, her claims and documentary exhibits clearly contradict what
petitioner sought to be admitted in his request; that the trial court
disregarded the fact that the issue of whether the subject property is
conjugal was still unresolved as CA-G.R. CV No. 78971 was still pending;
and that finally, the trial court should have been guided by the principles
that trial courts have but limited authority to render summary judgments
and that summary judgments should not be rendered hastily.38cralawred
Petitioner moved to reconsider, but in a March 2, 2012 Resolution, he was
rebuffed.  Hence, the present Petition was filed on April 30, 2012.

In a March 20, 2013 Resolution,39 the Court resolved to give due course to

the instant Petition.chanroblesvirtuallawlibrary

Issue

Petitioner now claims that the Court of Appeals erred in deciding the case on
a question of substance not in accord with law, Rule 26 of the 1997 Rules,
and applicable jurisprudence.40cralawred

Petitioner’s Arguments

In his Petition seeking to reverse and set aside the assailed CA dispositions
and thus reinstate the October 2, 2006 Order of the trial court, petitioner
insists that respondent’s failure to reply to his written request for admission
resulted in her admitting that the subject property is a conjugal asset,
applying Rule 26, Section 2 of the 1997 Rules; that the CA grossly erred in
disregarding the rule; that with the resulting admission, there remains no
genuine issue to be resolved in Civil Case No. MAN-4821, such that
judgment based on the pleadings is proper.  Finally, petitioner adds that
respondent’s trifling with the law and rules of procedure – by conveniently
claiming in one case that the subject property is conjugal, and then in
another that it is paraphernal – should not be countenanced; she should be
held to her original declaration that the subject property is conjugal.

Respondent’s Arguments

In her Comment,41 respondent counters that, as correctly ruled by the CA,

petitioner elected the wrong remedy in filing a motion for judgment on the
pleadings when he should have moved for summary judgment; that in a
motion for judgment on the pleadings, the movant is deemed to admit the
truth of all of the opposing party’s material and relevant allegations, and rest
his motion on those allegations taken together with that of his own as are
admitted in the pleadings;42 that the effect of this is that petitioner is
deemed to have admitted that the subject property is paraphernal, as
claimed in her Answer; that with the final and executory May 30, 2007
Decision of the CA in CA-G.R. CV No. 78971, the subject property should
now be considered as her paraphernal property, and petitioner’s case for
partition on the claim that the subject property is conjugal should be
dismissed for being moot and academic.

Our Ruling

The Court denies the Petition.

Judgment on the pleadings is proper “where an answer fails to tender

an issue, or otherwise admits the material allegations of the adverse party’s
pleading.”43  Summary judgment, on the other hand, will be granted “if the
pleadings, supporting affidavits, depositions, and admissions on file, show
that, except as to the amount of damages, there is no genuine issue as to
any material fact and that the moving party is entitled to a judgment as a
matter of law.”

We have elaborated on the basic distinction between summary judgment

and judgment on the pleadings, thus:chanRoblesvirtualLawlibrary

The existence or appearance of ostensible issues in the pleadings, on the

one hand, and their sham or fictitious character, on the other, are what
distinguish a proper case for summary judgment from one for a judgment on
the pleadings.  In a proper case for judgment on the pleadings, there is no
ostensible issue at all because of the failure of the defending party’s answer
to raise an issue.  On the other hand, in the case of a summary judgment,
issues apparently exist ? i.e. facts are asserted in the complaint regarding
which there is as yet no admission, disavowal or qualification; or specific
denials or affirmative defenses are in truth set out in the answer?but the
issues thus arising from the pleadings are sham, fictitious or not genuine, as
shown by affidavits, depositions, or admissions.45cralawlawlibrary

An answer would “fail to tender an issue” if it “does not deny the material
allegations in the complaint or admits said material allegations of the
adverse party’s pleadings by confessing the truthfulness thereof and/or
omitting to deal with them at all. Now, if an answer does in fact specifically
deny the material averments of the complaint and/or asserts affirmative
defenses (allegations of new matter which, while admitting the material
allegations of the complaint expressly or impliedly, would nevertheless
prevent or bar recovery by the plaintiff), a judgment on the pleadings would
naturally be improper.”46cralawred

On the other hand, “whether x x x the issues raised by the Answer are
genuine is not the crux of inquiry in a motion for judgment on the
pleadings.  It is so only in a motion for summary judgment.  In a case for
judgment on the pleadings, the Answer is such that no issue is raised at all. 
The essential question in such a case is whether there are issues generated
by the pleadings.”47  “A ‘genuine issue’ is an issue of fact which requires the
presentation of evidence as distinguished from a sham, fictitious, contrived
or false claim.  When the facts as pleaded appear uncontested or
undisputed, then there is no real or genuine issue or question as to the
facts, and summary judgment is called for.”48cralawred

In rendering summary judgment, the trial court relied on respondent’s

failure to reply to petitioner’s request for admission, her admission in Civil
Case No. MAN-2683, as well as its May 15, 2002 Decision declaring that the
subject property is a conjugal asset.  It took judicial notice of the
proceedings in said case.  While there is nothing irregular with this – as
courts may “take judicial notice of a decision or the facts prevailing in
another case sitting in the same court if (1) the parties present them in
evidence, absent any opposition from the other party; or (2) the court, in its
discretion, resolves to do so”49 – the trial court however disregarded the fact
that its decision was then the subject of a pending appeal in CA-G.R. CV No.
78971.  It should have known that until the appeal is resolved by the
appellate court, it would be premature to render judgment on petitioner’s
motion for judgment on the pleadings; that it would be presumptuous to
assume that its own decision would be affirmed on appeal.  One of the
issues raised in the appeal is precisely whether the subject property is
conjugal, or a paraphernal asset of the respondent.  Thus, instead of
resolving petitioner’s motion for judgment on the pleadings, the trial court
should have denied it or held it in abeyance.  It should have guided
petitioner to this end, instead of aiding in the hasty resolution of his case. 
In the first place, Civil Case No. MAN-4821 was transferred to it from Branch
56 precisely for the reason that it was the court which tried the closely
related Civil Case No. MAN-2683.

Even if respondent is deemed to have admitted the matters contained in

petitioner’s request for admission by her failure to reply thereto, the trial
court should have considered the pending appeal in CA-G.R. CV No. 78971. 
It cannot take judicial notice solely of the proceedings in Civil Case No. MAN-
2683, and ignore the appeal in CA-G.R. CV No. 78971.  After all, CA-G.R. CV
No. 78971 is merely a continuation of Civil Case No. MAN-2683; an appeal is
deemed a continuation of the same case commenced in the lower
court.50cralawred

On the part of petitioner, it must be said that he could not have validly
resorted to a motion for judgment on the pleadings or summary judgment. 
While it may appear that under Rules 34 and 35 of the 1997 Rules, he may
file a motion for judgment on the pleadings or summary judgment as a
result of the consequent admission by respondent that the subject property
is conjugal, this is not actually the case.  Quite the contrary, by invoking the
proceedings and decision in Civil Case No. MAN-2683, petitioner is precluded
from obtaining judgment while the appeal in said case is pending, because
the result thereof determines whether the subject property is indeed
conjugal or paraphernal.  He may not preempt the appeal in CA-G.R. CV No.
78971.

While it is true that a judgment cannot bind persons who are not parties to
the action,51 petitioner cannot, after invoking the proceedings in Civil Case
No. MAN-2683 to secure affirmative relief against respondent and thereafter
failing to obtain such relief, be allowed to repudiate or question the CA’s
ruling in CA-G.R. CV No. 78971.  The principle of estoppel bars him from
denying the resultant pronouncement by the appellate court, which became
final and executory, that the subject property is respondent’s paraphernal
property.  “In estoppel, a person, who by his deed or conduct has induced
another to act in a particular manner, is barred from adopting an
inconsistent position, attitude or course of conduct that thereby causes loss
or injury to another.  It further bars him from denying the truth of a fact
which has, in the contemplation of law, become settled by the acts and
proceeding of judicial or legislative officers or by the act of the party himself,
either by conventional writing or by representations, express or implied or in
pais.”52cralawred

Finally, the Court notes that the appellate court overlooked the May 30,
2007 Decision in CA-G.R. CV No. 78971, which became final and executory
on June 23, 2007.  The respondent included this development in her
appellee’s brief, but the CA did not take it into account.  As an unfortunate
consequence, the case was not appreciated and resolved completely.

Thus, with the development in Civil Case No. MAN-2683 brought upon by the
final and executory decision in CA-G.R. CV No. 78971, petitioner’s case is
left with no leg to stand on.  There being no conjugal property to be divided
between the parties, Civil Case No. MAN-4821 must be dismissed.

WHEREFORE, the Petition is DENIED.  The October 6, 2009 Decision and

March 2, 2012 Resolution of the Court of Appeals in CA-G.R. CV No. 01783
are AFFIRMED WITH MODIFICATION in that Civil Case No. MAN-4821 is
ordered DISMISSED.

SO ORDERED.cralawlawlibrary