SCA1

1.) G.R. No.
152131 April 29, 2009
FLORAIDA TERAÑA, Petitioner,
vs.
HON. ANTONIO DE SAGUN, PRESIDING JUDGE, REGIONAL TRIAL COURT, BRANCH XIV, NASUGBU,
BATANGAS AND ANTONIO B. SIMUANGCO, Respondents.
DECISION
BRION, J.:
The petitioner Floraida Terana (petitioner) asks us to reverse and set aside, through this Petition for Review
on Certiorari,1 the September 7, 2001 Decision2 of the Court of Appeals (CA), and its subsequent
Resolution3 denying the petitioner’s motion for reconsideration.
THE FACTS
The respondent Antonio Simuangco (respondent) owned a house and lot at 138 J.P. Laurel St., Nasugbu,
Batangas, which he leased to the petitioner.4 Sometime in 1996, the petitioner demolished the leased house
and erected a new one in its place.5 The respondent alleged that this was done without his consent.6 The
Contract of Lease7 defining the respective rights and obligations of the parties contained the following provisions,
which the petitioner allegedly violated:
3. That the lessee obligated herself with the Lessor by virtue of this Lease, to do the following, to wit:
a) xxx
b) To keep the leased property in such repair and condition as it was in the commencement of the Lease
with the exception of portions or parts which may be impaired due to reasonable wear and tear;
c) xxx
d) Not to make any alterations in the Leased property without the knowledge and consent of the Lessor; x x
x
The petitioner allegedly also gave the materials from the demolished house to her sister, who built a house adjacent
to the respondent’s property.8 When the respondent discovered what the petitioner did, he immediately confronted
her and advised her to vacate the premises.9 She refused. On February 3, 1997, the respondent sent a letter
demanding the petitioner to vacate the leased property.10 Despite this letter of demand, which the petitioner received
on February 10,11 she still refused to vacate the said property.
The respondent thus filed a complaint for unlawful detainer12 against the petitioner on April 16, 1997 on the ground
of the petitioner’s violation of the terms of the Contract of Lease.13 The respondent prayed for the petitioner’s
ejectment of the leased property, and for the award of ₱70,000.00, representing the cost of the materials from the
demolished house, attorney’s fees, and costs.14
The presiding judge of the Municipal Trial Court (MTC) of Nasugbu, Batangas, Hon. Herminia Lucas, inhibited from
the case on the ground that she is related to the respondent.15
The petitioner denied allegations of the complaint in her "Sagot."16 She claimed that she demolished the old building
and built a new one with the knowledge and consent of the respondent; that the original house was old and was on
the verge of collapsing;17 that without the timely repairs made by the petitioner, the house’s collapse would have
caused the death of the petitioner and her family. The petitioner prayed for the court to: 1) dismiss the ejectment
case against her; and 2) award in her favor: a) ₱100,000.00 as moral damages, b) ₱200,000.00 as reimbursement
Special Civil Actions

for the expenses incurred in building the new house, c) ₱50,000.00 as attorney’s fees, and d) ₱10,000.00 as costs
incurred in relation to the suit.18
The trial court called for a preliminary conference under Section 7 of the Revised Rules of Summary Procedure
(RSP) and Section 8 of Rule 70 of the Rules of Court, and required the parties to file their position papers and
affidavits of their witnesses after they failed to reach an amicable settlement.19 Instead of filing their position papers,
both parties moved for an extension of time to file the necessary pleadings. The trial court denied both motions on
the ground that the RSP and the Rules of Court, particularly Rule 70, Section 13(5), prohibit the filing of a motion for
extension of time.20
The MTC framed the issues in the case as follows:
1. Whether or not there was a violation of the contract of lease when the old house was demolished and a
new house was constructed by the defendant; and
2. Whether or not defendant is entitled to be reimbursed for her expenses in the construction of the new
house.21
THE MTC’S DECISION22
The MTC rendered its decision on November 5, 199723 despite the parties’ failure to timely file their respective
position papers.24 The decision stated that: according to the parties’ Contract of Lease, the consent of the
respondent must be obtained before any alteration or repair could be done on the leased property; that the
petitioner failed to produce any evidence that the respondent had given her prior permission to demolish the leased
house and construct a new one; that even in her answer, she failed to give specific details about the consent given
to her; that in demolishing the old structure and constructing the new one, the petitioner violated the Contract of
Lease; that this violation of the terms of the lease was a ground for judicial ejectment under Article 1673(3) of the
Civil Code; and that since the demolition and construction of the new house was without the consent of the
respondent, there was no basis to order the respondent to reimburse the petitioner.
The MTC thus ruled:
IN VIEW OF THE FOREGOING, judgment is hereby rendered in favor of the plaintiff Antonio B. Simuangco and
against the defendant Aida Terana as follows:
1. Ordering the defendant Aida Terana and all persons claiming right under her to vacate and surrender
possession of the subject house to the plaintiff;
2. Ordering the said defendant to pay the amount of Five Thousand Pesos (P5,000.00) as Attorney’s fees;
and
3. To pay the costs of suit.
SO ORDERED.25
Unaware that a decision had already been rendered, the petitioner filed a letter entitled Kahilingan,26 to which she
attached her position paper and the affidavits of her witnesses.27 The submission was essentially a motion for
reconsideration of the denial of motion for extension of time. On November 6, 1977, the MTC denied the petitioner’s
Kahilingan as follows:
Defendant Aida Terania’s "KAHILINGAN" dated November 5, 1997 is DENIED for being moot and academic on
account of the decision on the merits rendered by this court dated November 4, 1997 relative to the instant case.
SO ORDERED.28

Petitioner then filed a Notice of Appeal on November 12, 1997. 29 The records of the case were ordered elevated to
the Regional Trial Court (RTC) where the case was docketed as Civil Case No. 439.
THE RTC’S DECISION30
The RTC rendered judgment affirming the decision of the MTC on February 26, 1998. The RTC ruled that: 1) the
ruling of the MTC was supported by the facts on record; 2) although the respondent failed to submit his position
paper and the affidavits of his witnesses, the MTC correctly rendered its decision on the basis of the pleadings
submitted by the parties, as well as the evidence on record; 3) the petitioner failed to show enough reason to
reverse the MTC’s decision. The court further declared that its decision was immediately executory, without
prejudice to any appeal the parties may take.
The petitioner filed a Motion for Reconsideration and/or for New Trial on March 3, 1998.31 The petitioner argued that
the appealed MTC decision was not supported by any evidence, and that the respondent failed to substantiate the
allegations of his complaint and to discharge the burden of proving these allegations after the petitioner denied them
in her Sagot. In effect, the petitioner argued that the allegations of the complaint should not have been the sole
basis for the judgment since she filed an answer and denied the allegations in the complaint; the RTC should have
also appreciated her position paper and the affidavit of her witnesses that, although filed late, were nevertheless not
expunged from the records.
In her motion for a new trial, the petitioner argued that her failure to submit her position paper and the affidavits of
her witnesses within the 10-day period was due to excusable negligence. She explained that she incurred delay
because of the distance of some of her witnesses’ residence. The petitioner alleged that she had a good and
meritorious claim against the respondent, and that aside from her position paper and the affidavits of her witnesses,
she would adduce receipts and other pieces of documentary evidence to establish the costs incurred in the
demolition of the old house and the construction of the new one.
On April 28, 1998, the RTC granted the motion for reconsideration, and thus reversed its February 26, 1998
judgment, as well as the November 5, 1997 decision of the MTC. It noted that: 1) the MTC rendered its decision
before the petitioner was able to file her position paper and the affidavit of her witnesses; 2) the rule on the
timeliness of filing pleadings may be relaxed on equitable considerations; and 3) the denial of the petitioner’s motion
for reconsideration and/or new trial will result to a miscarriage of justice. Thus, believing that it was equitable to relax
the rules on the timeliness of the filing of pleadings, the RTC remanded the case to the MTC for further proceedings,
after giving the respondent the opportunity to submit his position paper and the affidavits of his witnesses.
The fallo reads:
WHEREFORE, on considerations of equity and substantial justice, and in the light of Section 6, Rule 135 of the
Rules of Court, the judgment of this Court dated February 26, 1998, as well as the Decision dated November 4,
1997 of the Lower Court in Civil Case No. 1305, are hereby both set aside. The lower court to which the records
were heretofore remanded is hereby ordered to conduct further proceedings in this case, after giving the plaintiff-
appellee an opportunity to file his position paper and affidavits of witnesses as required by Section 10, Rule 70, of
the 1997 Rules of Civil Procedure. [Underscoring supplied.]
SO ORDERED.
On May 9, 1998, the petitioner challenged the order of remand through another motion for reconsideration.32 The
petitioner argued that since the original action for unlawful detainer had already been elevated from the MTC to the
RTC, the RSP no longer governed the disposal of the case. Before the RTC, the applicable rule is the Rules of
Court, particularly Section 6 of Rule 37, which reads:
Sec. 6. Effect of granting of motion for new trial. – If a new trial is granted in accordance with the provisions of this
Rule, the original judgment or final order shall be vacated, and the action shall stand for trial de novo; but the
recorded evidence taken upon the former trial, in so far as the same is material and competent to establish the
issues, shall be used at the new trial without retaking the same.

Thus, the RTC should have conducted a trial de novo instead of remanding the case to the MTC. The petitioner
further argued that a remand to the court a quo may only be ordered under Section 8, Rule 4033 of the Rules of
Court.
The RTC denied the motion noting that the petitioner missed the whole point of the reversal of the decision. First,
the reversal was made in the interest of substantial justice and the RTC hewed more to the "spirit that vivifieth than
to the letter that killeth,"34 and that "a lawsuit is best resolved on its full merits, unfettered by the stringent
technicalities of procedure." The RTC further emphasized that a remand is not prohibited under the Rules of Court
and that Section 6 of Rule 135 allows it:
Sec. 6. Means to carry jurisdiction into effect – When by law jurisdiction is conferred on a court or judicial officer, all
auxiliary writs, processes and other means necessary to carry it into effect may be employed by such court or
officer, and if the procedure to be followed in the exercise of such jurisdiction is not specifically pointed out by law or
by these rules, any suitable process or mode of proceeding may be adopted which appears conformable to the spirit
of said law or rules.
Second, Rule 40 governs appeals from the MTC to the RTC. Nowhere in Rule 40 is there a provision similar to
Section 6 of Rule 37.
Third, Section 6 of Rule 37 contemplates a motion for new trial and for reconsideration filed before a trial court a
quo. The RTC in this case was acting as an appellate court; the petitioner’s motion for new trial and reconsideration
was directed against the appellate judgment of the RTC, not the original judgment of the trial court.
Fourth, after Republic Act No. 6031 mandated municipal trial courts to record their proceedings, a trial de novo at
the appellate level may no longer be conducted. The appellate courts may instead review the evidence and records
transmitted to it by the trial court. Since the petitioner is asking the court to review the records of the MTC, inclusive
of her position paper and the affidavits of her witnesses, it is also important to give the respondent an opportunity to
file his position paper and the affidavits of his witnesses before the MTC renders a judgment. It is the MTC or the
trial court that has the jurisdiction to do that.
THE CA’S DECISION
The CA affirmed the RTC in a decision promulgated on September 7, 2001.35 The CA noted that the RTC’s order of
remand was not just based on equity and substantial justice, but was also based on law, specifically Section 6 of
Rule 135. Thus, the CA ruled that the RTC did not err in remanding the case to the MTC and ordering the conduct of
further proceedings after giving the respondent an opportunity to present his position paper and the affidavits of his
witnesses. This ruling did not satisfy petitioner, giving way to the present petition.
THE PETITION
Before this Court, the petitioner alleges: 1) that the respondent made a request for the petitioner to vacate the
subject property because his nearest of kin needed it; 2) that she was only going to vacate the premises if she were
reimbursed the actual cost incurred in building the said house;36 3) that the case be decided on the basis of the
entire record of the proceedings in the court of origin, including memoranda and briefs submitted by the parties,
instead of being remanded to the MTC.
In his Comment37 and Memorandum,38 the respondent joins the petitioner’s prayer for a ruling based on the records
instead of remanding the case to the MTC. He prays that, as the MTC ruled, the petitioner be ordered to vacate the
leased property, and that the petitioner’s claim for reimbursement be denied. The respondent argues that the MTC
correctly ruled on the basis of the parties’ pleadings, the stipulation of facts during the preliminary conference, and
the records of the proceedings.
ISSUES
The petitioner submits the following as the issue to be decided:

[W]hether under the Rules of Summary Procedure, the Regional Trial Court, as well as the Court of Appeals, may
order the case remanded to the MTC after the plaintiff, herein respondent, failed to submit evidence in support of his
complaint because his Position Paper, affidavit of witnesses and evidence, were not submitted on time and the
extension of time to file the same was denied because it is prohibited under the Rules on Summary Procedure.39
which we break down into the following sub-issues: 1) whether a remand is proper; 2) whether the Court should
appreciate the petitioner’s position paper and the affidavits of her witnesses; and 3) whether the complaint for
unlawful detainer should be dismissed.
THE COURT’S RULING
The petition is partly meritorious.
Remand Not Necessary
We find that a remand of the case to the lower courts is no longer necessary, given the pleadings and submissions
filed, and the records of the proceedings below. A remand would delay the overdue resolution of this case (originally
filed with the MTC on April 16, 1997), and would run counter to the spirit and intent of the RSP.40
Petitioner’s Position Paper and the Affidavits of Her Witnesses Cannot Be Admitted
Should the Court admit the petitioner’s position paper and the affidavits of her witnesses attached to her Kahilingan?
The intent and terms of the RSP both speak against the liberality that the petitioner sees. By its express terms, the
purpose of the RSP is to "achieve an expeditious and inexpensive determination" of the cases they cover, among
them, forcible entry and unlawful detainer cases.41 To achieve this objective, the RSP expressly prohibit certain
motions and pleadings that could cause delay, among them, a motion for extension of time to file pleadings,
affidavits or any other paper. If the extension for the filing of these submissions cannot be allowed, we believe it
illogical and incongruous to admit a pleading that is already filed late. Effectively, we would then allow indirectly what
we prohibit to be done directly. It is for this reason that in Don Tino Realty Development Corporation v.
Florentino,42 albeit on the issue of late filing of an answer in a summary proceeding, we stated that "[t]o admit a late
answer is to put a premium on dilatory measures, the very mischief that the rules seek to redress."
The strict adherence to the reglementary period prescribed by the RSP is due to the essence and purpose of these
rules. The law looks with compassion upon a party who has been illegally dispossessed of his property. Due to the
urgency presented by this situation, the RSP provides for an expeditious and inexpensive means of reinstating the
rightful possessor to the enjoyment of the subject property.43 This fulfills the need to resolve the ejectment case
quickly. Thus, we cannot reward the petitioner’s late filing of her position paper and the affidavits of her witnesses by
admitting them now.
The failure of one party to submit his position paper does not bar at all the MTC from issuing a judgment on the
ejectment complaint. Section 10 of the RSP states:
Section 10. Rendition of judgment. – Within thirty (30) days after receipt of the last affidavits and position papers, or
the expiration of the period for filing the same, the court shall render judgment. [Underscoring supplied.]
However, should the court find it necessary to clarify certain material facts, it may, during the said period, issue an
order specifying the matters to be clarified, and require the parties to submit affidavits or other evidence on the said
matters within ten (10) days from receipt of said order. Judgment shall be rendered within fifteen (15) days after the
receipt of the last affidavit or the expiration of the period for filing the same.
The court shall not resort to the foregoing procedure just to gain time for the rendition of the judgment.
Thus, the situation obtaining in the present case has been duly provided for by the Rules; it was correct to render a
judgment, as the MTC did, after one party failed to file their position paper and supporting affidavits.

That a position paper is not indispensable to the court’s authority to render judgment is further evident from what the
RSP provides regarding a preliminary conference: "on the basis of the pleadings and the stipulations and
admissions made by the parties, judgment may be rendered without the need for further proceedings, in which
event the judgment shall be rendered within 30 days from the issuance of the order."44 Thus, the proceedings may
stop at that point, without need for the submission of position papers. In such a case, what would be extant in the
record and the bases for the judgment would be the complaint, answer, and the record of the preliminary
conference.
Unlawful detainer
The special civil action for unlawful detainer has the following essential requisites:
1) the fact of lease by virtue of a contract, express or implied;
2) the expiration or termination of the possessor's right to hold possession;
3) withholding by the lessee of possession of the land or building after the expiration or termination of the
right to possess;
4) letter of demand upon lessee to pay the rental or comply with the terms of the lease and vacate the
premises; and
5) the filing of the action within one year from the date of the last demand received by the defendant.45
Requisites 1, 4, and 5 have been duly established. The presence of the Contract of Lease is undisputed; the letter
of demand was sent on February 3, 1997, and received by the petitioner on February 10, 1997; and the action was
filed on April 16, 1997, well within the one-year period from the letter of demand. For our determination is whether
the petitioner’s right to possess the subject property may be terminated by virtue of her violation of the terms of the
contract. If we answer in the affirmative, her continued detention of the property is illegal.
Section 1673(3) of the Civil Code answers this question by providing that the lessor may terminate the lease
contract for violation of any of the conditions or terms agreed upon,46 and may judicially eject the lessee.47 One of the
stipulated terms of the parties’ Contract of Lease, as narrated above, is that no alterations may be made on the
leased property without the knowledge and consent of the lessor. The issue in this case is beyond the fact of
alteration since it is not disputed that the petitioner demolished the house under lease and built a new one. The
crucial issue is whether the demolition was with or without the knowledge and consent of the respondent.
The petitioner contends that the Court should not give credence to the respondent’s claim that he neither had
knowledge of nor gave his consent to her acts. She argued that the respondent had the burden of proving this
allegation with positive evidence after she frontally denied it in her answer. Since the respondent failed to discharge
this burden, she argues that she no longer needed to prove her defense that the demolition and construction were
done with the respondent’s knowledge and consent.48
The petitioner’s contention is misplaced.
First, the material allegations in a complaint must be specifically denied by the defendant in his answer. Section 10,
Rule 8 of the 1997 Rules of Court, provides:
A defendant must specify each material allegation of fact the truth of which he does not admit and, whenever
practicable, shall set forth the substance of the matters upon which he relies to support his denial. Where a
defendant desires to deny only a part of an averment, he shall specify so much of it as is true and material and shall
deny the remainder. Where a defendant is without knowledge or information sufficient to form a belief as to the truth
of a material averment made in the complaint, he shall so state, and this shall have the effect of a denial.
Section 11, Rule 8 of the Rules of Court likewise provides that material allegations in the complaint which are not
specifically denied, other than the amount of unliquidated damages, are deemed admitted. A denial made without
setting forth the substance of the matters relied upon in support of the denial, even when to do so is practicable,
does not amount to a specific denial.49
The petitioner’s denial in her answer consists of the following:
1. Maliban sa personal na katangian at tirahan ng nasasakdal, ay walang katotuhanan ang mga isinasakdal
ng nagsasakdal;
2. Na hindi lumabag sa kasunduan ng upahan ang nasasakdal;
3. Na, ang pagpapagawa ng bahay na inuupahan ng nasasakdal ay sa kaalaman at kapahintulutan ng

nagsasakdal at higit na gumanda at tumibay ang bahay ng nagsasakdal sa pamamagitan ng pagpapagawa
ng nasasakdal; xxx50
We do not find this denial to be specific as the petitioner failed to set forth the substance of the matters in which she
relied upon to support her denial. The petitioner merely alleged that consent was given; how and why, she did not
say. If indeed consent were given, it would have been easy to fill in the details. She could have stated in her
pleadings that she verbally informed the respondent of the need for the repairs, or wrote him a letter. She could
have stated his response, and how it was conveyed, whether verbally or in writing. She could have stated when the
consent was solicited and procured. These, she failed to do. Ergo, the petitioner is deemed to have admitted the
material allegations in the complaint.
Second, both parties failed to present evidence other than the allegations in their pleadings. Thus, the court may
weigh the parties’ allegations against each other. The petitioner presented a general denial, while the respondent
set forth an affirmative assertion. This Court has time and again said that a general denial cannot be given more
weight than an affirmative assertion.51
Damages recoverable in an unlawful detainer action are limited to rentals or reasonable compensation for the use of
the property
This Court has no jurisdiction to award the reimbursement prayed for by both parties. Both parties seek damages
other than rentals or reasonable compensation for the use of the property, which are the only forms of damages that
may be recovered in an unlawful detainer case.52 Rule 70, Section 17 of the Rules of Court authorizes the trial court
to order the award of an amount representing arrears of rent or reasonable compensation for the use and
occupation of the premises if it finds that the allegations of the complaint are true.53
1avvphil.zw+
The rationale for limiting the kind of damages recoverable in an unlawful detainer case was explained in Araos v.
Court of Appeals,54 wherein the Court held that:
The rule is settled that in forcible entry or unlawful detainer cases, the only damage that can be recovered is the fair
rental value or the reasonable compensation for the use and occupation of the leased property. The reason for this
is that in such cases, the only issue raised in ejectment cases is that of rightful possession; hence, the damages
which could be recovered are those which the plaintiff could have sustained as a mere possessor, or those caused
by the loss of the use and occupation of the property, and not the damages which he may have suffered but which
have no direct relation to his loss of material possession.
An action for reimbursement or for recovery of damages may not be properly joined with the action for
ejectment. The former is an ordinary civil action requiring a full-blown trial, while an action for unlawful
detainer is a special civil action which requires a summary procedure. The joinder of the two actions is
specifically enjoined by Section 5 of Rule 2 of the Rules of Court, which provides:
Section 5. Joinder of causes of action. – A party may in one pleading assert, in the alternative or otherwise, as many
causes of action as he may have against an opposing party, subject to the following conditions:
(a) The party joining the causes of action shall comply with the rules on joinder of parties;

(b) The joinder shall not include special civil actions or actions governed by special rules;
(c) Where the causes of action are between the same parties but pertain to different venues or jurisdictions,
the joinder may be allowed in the Regional Trial Court provided one of the causes of action falls within the
jurisdiction of said court and the venue lies therein; and
(d) Where the claims in all the causes of action are principally for recovery of money, the aggregate amount
claimed shall be the test of jurisdiction. [Underscoring supplied.]
WHEREFORE, the petition is PARTIALLY GRANTED. The decision of the Court of Appeals in CA-G.R. No. SP-
48534 is REVERSED AND SET ASIDE. The petitioner FLORAIDA TERANA and all persons claiming right under
her are ordered to vacate and surrender possession of the subject property to the respondent ANTONIO
SIMUANGCO. No costs.

2.) G.R. No. 126911 April 30, 2003
PHILIPPINE DEPOSIT INSURANCE CORPORATION, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and JOSE ABAD, LEONOR ABAD, SABINA ABAD, JOSEPHINE
"JOSIE" BEATA ABAD-ORLINA, CECILIA ABAD, PIO ABAD, DOMINIC ABAD, TEODORA ABAD, respondents.
CARPIO MORALES, J.:
The present petition for review assails the decision of the Court of Appeals affirming that of the Regional Trial Court
of Iloilo City, Branch 30, finding petitioner Philippine Deposit Insurance Corporation (PDIC) liable, as statutory
insurer, for the value of 20 Golden Time Deposits belonging to respondents Jose Abad, Leonor Abad, Sabina Abad,
Josephine "Josie" Beata Abad-Orlina, Cecilia Abad, Pio Abad, Dominic Abad, and Teodora Abad at the Manila
Banking Corporation (MBC), Iloilo Branch.
Prior to May 22, 1997, respondents had, individually or jointly with each other, 71 certificates of time
deposits denominated as "Golden Time Deposits" (GTD) with an aggregate face value of P1,115,889.96.1
On May 22, 1987, a Friday, the Monetary Board (MB) of the Central Bank of the Philippines, now Bangko
Sentral ng Pilipinas, issued Resolution 5052 prohibiting MBC to do business in the Philippines, and placing its
assets and affairs under receivership. The Resolution, however, was not served on MBC until Tuesday the following
week, or on May 26, 1987, when the designated Receiver took over.3
On May 25, 1987, the next banking day following the issuance of the MB Resolution, respondent Jose Abad was
at the MBC at 9:00 a.m. for the purpose of pre-terminating the 71 aforementioned GTDs and re-depositing
the fund represented thereby into 28 new GTDs in denominations of P40,000.00 or less under the names of
herein respondents individually or jointly with each other.4 Of the 28 new GTDs, Jose Abad pre-terminated 8 and
withdrew the value thereof in the total amount of P320,000.00.5
Respondents thereafter filed their claims with the PDIC for the payment of the remaining 20 insured GTDs.6
On February 11, 1988, PDIC paid respondents the value of 3 claims in the total amount of P120,000.00. PDIC,
however, withheld payment of the 17 remaining claims after Washington Solidum, Deputy Receiver of MBC-
Iloilo, submitted a report to the PDIC7 that there was massive conversion and substitution of trust and
deposit accounts on May 25, 1987 at MBC-Iloilo.8 The pertinent portions of the report stated:
xxx xxx xxx
On May 25, 1987 (Monday) or a day prior to the official announcement and take-over by CB of the assets
and liabilities of The Manila Banking Corporation, the Iloilo Branch was found to have recorded an unusually
heavy movements in terms of volume and amount for all types of deposits and trust accounts. It appears
that the impending receivership of TMBC was somehow already known to many depositors on account of
the massive withdrawals paid on this day which practically wiped out the branch's entire cash position. . . .
xxx xxx xxx
. . . The intention was to maximize the availment of PDIC coverage limited to P40,000 by spreading
out big accounts to as many certificates under various nominees. . . .9
xxx xxx xxx
Because of the report, PDIC entertained serious reservation in recognizing respondents' GTDs as deposit
liabilities of MBC-Iloilo. Thus, on August 30, 1991, it filed a petition for declaratory relief against
respondents with the Regional Trial Court (RTC) of Iloilo City, for a judicial declaration determination of the
insurability of respondents' GTDs at MBC-Iloilo.10
In their Answer filed on October 24, 1991 and Amended Answer11 filed on January 9, 1992, respondents set
up a counterclaim against PDIC whereby they asked for payment of their insured deposits .12
In its Decision of February 22, 1994,13 Branch 30 of the Iloilo RTC declared the 20 GTDs of respondents to be
deposit liabilities of MBC, hence, are liabilities of PDIC as statutory insurer. It accordingly disposed as follows:
WHEREFORE, premises considered, judgment is hereby rendered:
1. Declaring the 28 GTDs of the Abads which were issued by the TMBC-Iloilo on May 25, 1987 as deposits
or deposit liabilities of the bank as the term is defined under Section 3 (f) of R.A. No. 3591, as amended;
2. Declaring PDIC, being the statutory insurer of bank deposits, liable to the Abads for the value of the
remaining 20 GTDs, the other 8 having been paid already by TMBC Iloilo on May 25,1987;
3. Ordering PDIC to pay the Abads the value of said 20 GTDs less the value of 3 GTDs it paid on
February 11, 1988, and the amounts it may have paid the Abads pursuant to the Order of this Court dated
September 8, 1992;
4. Ordering PDIC to pay immediately the Abads the balance of its admitted liability as contained in the
aforesaid Order of September 8, 1992, should there be any, subject to liquidation when this case shall have
been finally decide; and
5. Ordering PDIC to pay legal interest on the remaining insured deposits of the Abads from February 11,
1988 until they are fully paid.
SO ORDERED.
On appeal, the Court of Appeals, by the assailed Decision of October 21, 1996,14 affirmed the trial court's decision
except as to the award of legal interest which it deleted.
Hence, PDIC's present Petition for Review which sets forth this lone assignment of error:
THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE HOLDING OF THE TRIAL COURT THAT
THE AMOUNT REPRESENTED IN THE FACES OF THE SO CALLED "GOLDEN TIME DEPOSITS" WERE
INSURED DEPOSITS EVEN AS THEY WERE MERE DERIVATIVES OF RESPONDENTS' PREVIOUS ACCOUNT
BALANCES WHICH WERE PRE-TERMINATED/TERMINATED AT THE TIME THE MANILA BANKING
CORPORATION WAS ALREADY IN SERIOUS FINANCIAL DISTRESS.
In its supplement to the petition, PDIC adds the following assignment of error:
THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE HOLDING OF THE TRIAL COURT
ORDERING PETITIONER TO PAY RESPONDENTS' CLAIMS FOR PAYMENT OF INSURED DEPOSITS FOR
THE REASON THAT AN ACTION FOR DECLARATORY RELIEF DOES NOT ESSENTIALLY ENTAIL AN
EXECUTORY PROCESS AS THE ONLY RELIEF THAT SHOULD HAVE BEEN GRANTED BY THE TRIAL COURT
IS A DECLARATION OF THE RIGHTS AND DUTIES OF PETITIONER UNDER R.A. 3591, AS AMENDED,
PARTICULARLY SECTION 3(F) THEREOF AS CONSIDERED AGAINST THE SURROUNDING
CIRCUMSTANCES OF THE MATTER IN ISSUE SOUGHT TO BE CONSTRUED WITHOUT PREJUDICE TO
OTHER MATTERS THAT NEED TO BE CONSIDERED BY PETITIONER IN THE PROCESSING OF
RESPONDENTS' CLAIMS.
Under its charter,15 PDIC (hereafter petitioner) is liable only for deposits received by a bank "in the usual
course of business."16 Being of the firm conviction that, as the reported May 25, 1987 bank transactions were
so massive, hence, irregular, petitioner essentially seeks a judicial declaration that such transactions were
not made "in the usual course of business" and, therefore, it cannot be made liable for deposits subject
thereof.17

Petitioner points that as MBC was prohibited from doing further business by MB Resolution 505 as of May 22, 1987,
all transactions subsequent to such date were not done "in the usual course of business."
Petitioner further posits that there was no consideration for the 20 GTDs subject of respondents' claim. In support of
this submission, it states that prior to March 25, 1987, when the 20 GTDs were made, MBC had been experiencing
liquidity problems, e.g., at the start of banking operations on March 25, 1987, it had only P2,841,711.90 cash on
hand and at the end of the day it was left with P27,805.81 consisting mostly of mutilated bills and coins.18 Hence,
even if respondents had wanted to convert the face amounts of the GTDs to cash, MBC could not have complied
with it.
Petitioner theorizes that after MBC had exhausted its cash and could no longer sustain further withdrawal
transactions, it instead issued new GTDs as "payment" for the pre-terminated GTDs of respondents to make sure
that all the newly-issued GTDs have face amounts which are within the statutory coverage of deposit insurance.
Petitioner concludes that since no cash was given by respondents and none was received by MBC when the new
GTDs were transacted, there was no consideration therefor and, thus, they were not validly transacted "in the usual
course of business" and no liability for deposit insurance was created.19
Petitioner's position does not persuade.
While the MB issued Resolution 505 on May 22, 1987, a copy thereof was served on MBC only on May 26, 1987.
MBC and its clients could be given the benefit of the doubt that they were not aware that the MB resolution had
been passed, given the necessity of confidentiality of placing a banking institution under receivership.20
The evident implication of the law, therefore, is that the appointment of a receiver may be made by the
Monetary Board without notice and hearing but its action is subject to judicial inquiry to insure the protection
of the banking institution. Stated otherwise, due process does not necessarily require a prior hearing; a
hearing or an opportunity to be heard may be subsequent to the closure. One can just imagine the dire
consequences of a prior hearing: bank runs would be the order of the day, resulting in panic and hysteria. In
the process, fortunes may be wiped out, and disillusionment will run the gamut of the entire banking
community. (Emphasis supplied).21
Mere conjectures that MBC had actual knowledge of its impending closure do not suffice. The MB resolution could
not thus have nullified respondents' transactions which occurred prior to May 26, 1987.
That no actual money in bills and/or coins was handed by respondents to MBC does not mean that the transactions
on the new GTDs did not involve money and that there was no consideration therefor. For the outstanding balance
of respondents' 71 GTDs in MBC prior to May 26, 198722 in the amount of P1,115,889.15 as earlier mentioned
was re-deposited by respondents under 28 new GTDs. Admittedly, MBC had P2,841,711.90 cash on hand — more
than double the outstanding balance of respondent's 71 GTDs — at the start of the banking day on May 25, 1987.
Since respondent Jose Abad was at MBC soon after it opened at 9:00 a.m. of that day, petitioner should not
presume that MBC had no cash to cover the new GTDs of respondents and conclude that there was no
consideration for said GTDs.
Petitioner having failed to overcome the presumption that the ordinary course of business was followed,23 this Court
finds that the 28 new GTDs were deposited "in the usual course of business" of MBC.
In its second assignment of error, petitioner posits that the trial court erred in ordering it to pay the balance
of the deposit insurance to respondents, maintaining that the instant petition stemmed from a petition for
declaratory relief which does not essentially entail an executory process, and the only relief that should
have been granted by the trial court is a declaration of the parties' rights and duties. As such, petitioner
continues, no order of payment may arise from the case as this is beyond the office of declaratory relief
proceedings.24
Without doubt, a petition for declaratory relief does not essentially entail an executory process. There is
nothing in its nature, however, that prohibits a counterclaim from being set-up in the same action.25

Now, there is nothing in the nature of a special civil action for declaratory relief that proscribes the
filing of a counterclaim based on the same transaction, deed or contract subject of the complaint. A
special civil action is after all not essentially different from an ordinary civil action, which is
generally governed by Rules 1 to 56 of the Rules of Court, except that the former deals with a special
subject matter which makes necessary some special regulation. But the identity between their
fundamental nature is such that the same rules governing ordinary civil suits may and do apply to
special civil actions if not inconsistent with or if they may serve to supplement the provisions of the
peculiar rules governing special civil actions.26
Petitioner additionally submits that the issue of determining the amount of deposit insurance due respondents was
never tried on the merits since the trial dwelt only on the "determination of the viability or validity of the deposits" and
no evidence on record sustains the holding that the amount of deposit due respondents had been finally
determined.27 This issue was not raised in the court a quo, however, hence, it cannot be raised for the first time in
the petition at bar.28
Finally, petitioner faults respondents for availing of the statutory limits of the PDIC law, presupposing that, based on
the conduct of respondent Jose Abad on March 25, 1987, he and his co respondents "somehow knew" of the
impending closure of MBC. Petitioner ascribes bad faith to respondent Jose Abad in transacting the questioned
deposits, and seeks to disqualify him from availing the benefits under the law. 29
Good faith is presumed. This, petitioner failed to overcome since it offered mere presumptions as evidence of bad
faith.
WHEREFORE, the assailed decision of the Court of Appeals is hereby AFFIRMED.

3.) G.R. No. 193494
LUI ENTERPRISES, INC., Petitioners,

vs.
ZUELLIG PHARMA CORPORATION and the PHILIPPINE BANK OF COMMUNICATIONS, Respondents.
DECISION
LEONEN, J.:
There should be no inexplicable delay in the filing of a motion to set aside order of default. Even when a motion is
filed within the required period, excusable negligence must be properly alleged and proven.
This is a petition for review on certiorari of the Court of Appeals' decision dated May 24, 2010 and resoluticm dated
1 2
August 13, 2010 in CA- G.R. CV No. 88023. The Court of Appeals affirmed in toto the Regional
Trial Court of Makati’s decision dated July 4, 2006.

3
The facts as established from the pleadings of the parties are as follows:
On March 9, 1995, Lui Enterprises, Inc. and Zuellig Pharma Corporation entered into a 10-year contract of
lease over a parcel of land located in Barrio Tigatto, Buhangin, Davao City. The parcel of land was covered by
4
Transfer Certificate of Title No. T-166476 and was registered under Eli L. Lui. 5
On January 10, 2003, Zuellig Pharma received a letter from the Philippine Bank of Communications.
6
Claiming to be the new owner of the leased property, the bank asked Zuellig Pharma to pay rent directly to
it. Attached to the letter was a copy of Transfer Certificate of Title No. 336962 under the name of the Philippine
Bank of Communications. Transfer Certificate ofTitle No. 336962 was derived fromTransfer Certificate ofTitle No.T-
7
166476. 8
Zuellig Pharma promptly informed Lui Enterprises of the Philippine Bank of Communications’ claim. On January 28,
2003, Lui Enterprises wrote to Zuellig Pharma and insisted on its right to collect the leased property’srent. 9
Due to the conflicting claims of Lui Enterprises and the Philippine Bank of Communications over the rental
payments, Zuellig Pharma filed a complaint for interpleader with the Regional Trial Court of Makati. In its
10
complaint, Zuellig Pharma alleged that it already consigned in court P604,024.35 as rental payments. Zuellig
Pharma prayed that it be allowed to consign in court its succeeding monthly rental payments and that Lui
Enterprises and the Philippine Bank of Communications be ordered to litigate their conflicting claims. 11
The Philippine Bank of Communications filed its answer to the complaint. On the other hand, Lui Enterprises filed
12
a motion to dismiss on the ground that Zuellig Pharma’s alleged representative did not have authority to
13
file the complaint for interpleader on behalf of the corporation. Under the secretary’s certificate dated May 6,
14
2003 attached to the complaint, Atty. Ana L.A. Peralta was only authorized to "initiate and represent [Zuellig
Pharma] in the civil proceedings for consignation of rental payments to be filed against Lui Enterprises, Inc.
and/or [the Philippine Bank of Communications]." 15
According to Lui Enterprises, an earlier filed nullification of deed of dation in payment case pending with
the Regional Trial Court of Davao barred the filing of the interpleader case. Lui Enterprises filed this
16
nullification case against the Philippine Bank of Communications with respect to several properties it
dationed to the bank in payment of its obligations. The property leased by Zuellig Pharma was among those
allegedly dationed to the Philippine Bank of Communications. 17
In the nullification of deed of dation in payment case, Lui Enterprises raised the issue of which corporation
had the better right over the rental payments. Lui Enterprises argued that the same issue was involved in
18

the interpleader case. To avoid possible conflicting decisions of the Davao trial court and the Makati trial
court on the same issue, Lui Enterprises argued that the subsequently filed interpleader case be dismissed.
To support its argument, Lui Enterprises cited a writ of preliminary injunction dated July 2, 2003 issued by the
19
Regional Trial Court of Davao, ordering Lui Enterprises and the Philippine Bank of Communications "[to
maintain] status quo" with respect to the rent. By virtue of the writ of preliminary injunction, Lui Enterprises
20
argued that it should continue collecting the rental payments from its lessees until the nullification of deed of dation
in payment case was resolved. The writ of preliminary injunction dated July 2, 2003 reads:
WHEREAS, on June 30, 2003, the Court issued an Order, a portion of which is quoted:
WHEREFORE, PREMISES CONSIDERED, let a Writ of Preliminary Injunction issue, restraining and enjoining
[the Philippine Bank of Communications], its agents or [representative], the Office of the Clerk of Court-
Sheriff and all persons acting on their behalf, from conducting auction sale on the properties of [Lui
Enterprises] in EJF-REM Case No. 6272-03 scheduled on July 3, 2003 at 10:00 a.m. at the Hall of Justice, Ecoland,
Davao City, until the final termination of the case, upon plaintiff [sic] filing of a bond in the amount of P1,000,000.00
to answer for damages that the enjoined parties may sustain by reason of the injunction if the Court should finally
decide that applicant is not entitled thereto.
WHEREAS, that plaintiff posted a bond of P1,000,000.00 duly approved by this Court.
IT IS HEREBY ORDERED by the undersigned Judge that, until further orders, [the Philippine Bank of
Communications] and all [its] attorneys, representatives, agents and any other persons assisting [the bank], are
directed to restrain from conducting auction sale on the Properties of [Lui Enterprises] in EJF-REM Case No. 6272-
03 scheduled on July 3, 2003 at 10:00 a.m. at the Hall of Justice, Ecoland, Davao City, until the final termination of
the case.21
Zuellig Pharma filed its opposition to the motion to dismiss. It argued that the motion to dismiss should be denied
22
for having been filed late. Under Rule 16, Section 1 of the 1997 Rules of Civil Procedure, a motion to dismiss should
be filed within the required time given to file an answer to the complaint, which is 15 days from service of summons
on the defendant. Summons was served on Lui Enterprises on July 4, 2003. It had until July 19, 2003 to file a
23
motion to dismiss, but Lui Enterprises filed the motion only on July23, 2003. 24
As to Lui Enterprises’ claim that the interpleader case was filed without authority, Zuellig Pharma argued that an
action interpleader "is a necessary consequence of the action for consignation." Zuellig Pharma consigned its
25
rental payments because of "the clearly conflicting claims of [Lui Enterprises] and [the Philippine Bank of
Communications]." Since Atty. Ana L.A. Peralta was authorized to file a consignation case, this authority
26
necessarily included an authority to file the interpleader case.
Nevertheless, Zuellig Pharma filed in court the secretary’s certificate dated August 28, 2003, which expressly
27
stated that Atty. Ana L.A. Peralta was authorized to file a consignation and interpleader case on behalf of Zuellig
Pharma. 28
With respect to the nullification of deed of dation in payment case, Zuellig Pharma argued that its pendency
did not bar the filing of the interpleader case. It was not a party to the nullification case. 29
As to the writ of preliminary injunction issued by the Regional Trial Court of Davao, Zuellig Pharma argued that the
writ only pertained to properties owned by Lui Enterprises. Under the writ of preliminary injunction, the Regional Trial
Court of Davao enjoined the July 3, 2003 auction sale of Lui Enterprises’ properties, the proceeds of which were
supposed to satisfy its obligations to the Philippine Bank of Communications. As early as April 21, 2001, however,
the Philippine Bank of Communications already owned the leased property as evidenced by Transfer Certificate of
Title No. 336962. Thus, the writ of preliminary injunction did not apply to the leased property.30
Considering that Lui Enterprises filed its motion to dismiss beyond the 15-day period to file an answer,
Zuellig Pharma moved that Lui Enterprises be declared in default. 31

In its compliance dated September 15, 2003, the Philippine Bank of Communications "[joined Zuellig Pharma] in
32
moving to declare [Lui Enterprises] in default, and in [moving for] the denial of [Lui Enterprises’] motion to dismiss." 33
The Regional Trial Court of Makati found that Lui Enterprises failed to file its motion to dismiss within the
reglementary period. Thus, in its order dated October 6, 2003, the trial court denied Lui Enterprises’motion to
34
dismiss and declared it in default. 35
Lui Enterprises did not move for the reconsideration of the order dated October 6, 2003. Thus, the Makati trial
court heard the interpleader case without Lui Enterprises’participation.
Despite having been declared in default, Lui Enterprises filed the manifestation with prayer dated April 15, 2004.
36
It manifested that the Regional Trial Court of Davao allegedly issued the order dated April 1, 2004, ordering
37
all of Lui Enterprises’ lessees to "observe status quo with regard to the rental payments" and continue
38
remitting their rental payments to Lui Enterprises while the nullification of deed of dation in payment case was being
resolved. The order dated April 1, 2004 of the Regional Trial Court of Davao reads:
ORDER
Posed for Resolution is the Motion for Amendment of Order filed by [Lui Enterprises] on September 23, 2003
seeking for the preservation of status quo on the payment/remittance of rentals to [it] and the disposal/construction
of the properties subject matter of this case.
xxxx
As elsewhere stated, [the Philippine Bank of Communications] did not oppose the instant motion up to the present.
In fact, during the hearing held on March 15, 2004, [the bank’s] counsel manifested in open court that except for the
rentals due from [Zuellig Pharma] which are the subject of a consignation suit before a Makati Court, the other rental
payments are continuously received by [Lui Enterprises].
There being no objection from [the Philippine Bank of Communications], and in order to protect the right of [Lui
Enterprises] respecting the subject of the action during the pendency of this case, this Court, in the exercise of its
discretion hereby grants the motion.
Accordingly, consistent with the order of this Court dated June 30, 2003, the parties are hereby directed to further
observe status quo with regard to the rental payments owing or due from the lessees of the properties subject of the
first set of deeds of dacion and that the defendants are enjoined from disposing of the properties located at Green
Heights Village, Davao City until the case is finally resolved.
With the order dated April 1, 2004 issued by the Regional Trial Court of Davao as basis, Lui Enterprises argued that
Zuellig Pharma must remit its rental payments to it and prayed that the interpleader case be dismissed.
The Regional Trial Court of Makati only noted the manifestation with prayer dated April 15, 2004. 39
It was only on October 21, 2004, or one year after the issuance of the order of default, that Lui Enterprises filed a
motion to set aside order of default in the Makati trial court on the ground of excusable negligence. Lui Enterprises
40
argued that its failure to file a motion to dismiss on time "was caused by the negligence of [Lui Enterprises’] former
counsel." This negligence was allegedly excusable because "[Lui Enterprises] was prejudiced and prevented from
41
fairly presenting [its] case."

42
For its allegedly meritorious defense, Lui Enterprises argued that the earlier filed nullification of deed of dation
in payment case barred the filing of the interpleader case. The two actions allegedly involved the same parties
and the same issue of which corporation had the better right over the rental payments. To prevent "the possibility of
two courts x x x rendering conflicting rulings [on the same issue]," Lui Enterprises argued that the subsequently
43
filed interpleader case be dismissed.

Zuellig Pharma filed its opposition to the motion to set aside order of default. It argued that a counsel’s failure to file
44
a timely answer was inexcusable negligence which bound his client.
Further, Zuellig Pharma argued that the pending case for nullification of deed of dation in payment "[did] not
preclude [Zuellig Pharma] from seeking the relief prayed for in the [interpleader case]." 45
While the motion to set aside order of default was still pending for resolution, Lui Enterprises filed the
manifestation and motion to dismiss dated April 21, 2005 in the Makati trial court. It manifested that the
46
Davao trial court issued another order dated April 18, 2005 in the nullification of deed of dation in payment
47
case. In this order, the Davao trial court directed the Philippine Bank of Communications to inform Zuellig Pharma to
pay rent to Lui Enterprises while the Davao trial court’s order dated April 1, 2004 was subsisting. The order dated
April 18, 2005 of the Davao trial court reads:
ORDER
Plaintiffs move for execution or implementation of the Order dated September 14, 2004. In substance, [Lui
Enterprises] seek[s] to compel the remittance in their favor of the rentals from [Zuellig Pharma], one of the lessees
alluded to in the September 14, 2004 Order whose rental payments "must be remitted to and collected by [Lui
Enterprises]." [The Philippine Bank of Communications] did not submit any opposition.
It appears from the records that sometime in February 2003, after being threatened with a lawsuit coming from [the
Philippine Bank of Communications], [Zuellig Pharma] stopped remitting its rentals to [Lui Enterprises] and instead,
has reportedly deposited the monthly rentals before a Makati court for consignation.
As aptly raised by the plaintiffs, a possible impasse may insist should the Makati Court’s ruling be contrary to or in
conflict with the status quo order issued by this Court. To preclude this spectacle, Zuellig Pharma should accordingly
be advised with the import of the Order dated September 14, 2004, the salient portion of which is quoted:
x x x prior to the institution of the instant case and by agreement of the parties, plaintiffs were given as they did
exercise the right to collect, receive and enjoy rental payments x x x.
Since the April 1, 2004 status quo order was a necessary implement of the writ of preliminary injunction issued on
June 30, 2003, it follows that plaintiff's right to collect and receive rental payments which he enjoyed prior to the
filing of this case, must be respected and protected and maintained until the case is resolved. As such, all rentals
due from the above-enumerated lessees must be remitted to and collected by the Plaintiffs.
Status quo simply means the last actual peaceable uncontested status that preceded the actual controversy.
(Searth Commodities Corp. v. Court ofAppeals, 207 SCRA 622).
As such, the [Philippine Bank of Communications] [is] hereby directed to forthwith inform [Zuellig Pharma] of the
April 1, 2004 status quo order and the succeeding September 14, 2004 Order, and consequently, for the said lessee
to remit all rentals due from February 23, 2003 and onwards to [Lui Enterprises] in the meanwhile that the status
quo order is subsisting.
In its manifestation and motion to dismiss, Lui Enterprises reiterated its prayer for the dismissal of the interpleader
case to prevent "the possibility of [the Regional Trial Court, Branch 143, Makati City] and [the Regional Trial Court,
Branch 16, Davao City] rendering conflicting rulings [on the same issue of which corporation has the better right to
the rental payments]." 48
Without resolving the motion to set aside order of default, the Makati trial court denied the manifestation with motion
to dismiss dated April 21, 2005 on the ground that Lui Enterprises already lost its standing in court. 49
Lui Enterprises did not file any motion for reconsideration of the denial of the manifestation and motion to dismiss
dated April 21, 2005.

In its decision dated July 4, 2006, the Regional Trial Court of Makati ruled that Lui Enterprises "[was] barred from
50
any claim in respect of the [rental payments]" since it was declared in default. Thus, according to the trial court,
51
there was no issue as to which corporation had the better right over the rental payments. The trial court awarded
52
the total consigned amount of P6,681,327.30 to the Philippine Bank of Communications and ordered Lui Enterprises
to pay Zuellig Pharma P50,000.00 in attorney’s fees. 53
Lui Enterprises appealed to the Court of Appeals. 54
The Court of Appeals found Lui Enterprises’ appellant’s brief insufficient. Under Rule 44, Section 13 of the 1997
Rules of Civil Procedure, an appellant’s brief must contain a subject index, page references to the record, table of
cases, textbooks and statutes cited, and the statement of issues, among others. However, Lui Enterprises’
appellant’s brief did not contain these requirements. 55
As to the denial of Lui Enterprises’ motion to dismiss, the Court of Appeals sustained the trial court. The Court of
Appeals found that Lui Enterprises filed its motion to dismiss four days late. 56
With respect to Lui Enterprises’ motion to set aside order of default, the Court ofAppeals found that Lui Enterprises
failed to show the excusable negligence that prevented it from filing its motion to dismiss on time. On its allegedly
meritorious defense, the Court of Appeals ruled that the nullification of deed of dation in payment case did not bar
the filing of the interpleader case, with Zuellig Pharma not being a party to the nullification case. 57
On the award of attorney’s fees, the Court of Appeals sustained the trial court since "Zuellig Pharma x x x was
constrained to file the action for interpleader with consignation inorder to protect its interests x x x." 58
Thus, in its decision promulgated on May 24, 2010, the Court of Appeals dismissed Lui Enterprises’ appeal
59
and affirmed in toto the Regional Trial Court of Makati’s decision.
Lui Enterprises filed a motion for reconsideration. 60
The Court of Appeals denied Lui Enterprises’ motion for reconsideration in its resolution promulgated on August 13,
2010. Hence, this petition.
61
In this petition for review on certiorari, Lui Enterprises argued that the Court of Appeals applied "the rules of
62
procedure strictly" and dismissed its appeal on technicalities. According to Lui Enterprises, the Court of Appeals
63
should have taken a liberal stance and allowed its appeal despite the lack of subject index, page references to the
record, table of cases, textbooks and statutes cited, and the statement of issues in its appellant’s brief. 64
Lui Enterprises also claimed that the trial court should have set aside the order of default since its failure to file a
motion to dismiss on time was due to excusable negligence. 65
For its allegedly meritorious defense, Lui Enterprises argued that the pending nullification of deed of dation
in payment case barred the filing of the interpleader case.The nullification of deed of dation in payment
case and the interpleader case allegedly involved the same issue of which corporation had the better right
to the rent. To avoid conflicting rulings on the same issue, Lui Enterprises argued that the subsequently
filed interpleader case be dismissed. 66
No attorney’s fees should have been awarded to Zuellig Pharma as argued by Lui Enterprises. Zuellig Pharma filed
the interpleader case despite its knowledge of the nullification of deed of dation in payment case filed in the Davao
trial court where the same issue of which corporation had the better right over the rental payments was being
litigated. Thus, Zuellig Pharma filed the interpleader case in bad faith for which it was not entitled to attorney’s fees. 67
The Philippine Bank of Communications filed its comment on the petition for review on certiorari. It argued that Lui
68
Enterprises failed to raise any error of law and prayed that we affirm in toto the Court of Appeals’ decision.
For Zuellig Pharma, it manifested that it was adopting the Philippine Bank of Communications’arguments in its
comment. 69

The issues for our resolution are:
I. Whether the Court of Appeals erred in dismissing Lui Enterprises’ appeal for lack of subject index, page
references to the record, table of cases, textbooks and statutes cited, and the statement of issues in Lui
Enterprises’appellant’s brief;
II. Whether the Regional Trial Court of Makati erred in denying Lui Enterprises’motion to set aside order of
default;
III. Whether the annulment of deed of dation in payment pending in the Regional Trial Court of Davao
barred the subsequent filing of the interpleader case in the Regional Trial Court of Makati; and
IV. Whether Zuellig Pharma was entitled to attorney’s fees.
Lui Enterprises’ petition for review on certiorari is without merit. However, we delete the award of attorney’s fees.
Lui Enterprises did not comply with the rules on the contents of the appellant’s brief
Under Rule 50, Section 1, paragraph (f) of the 1997 Rules of Civil Procedure, the Court of Appeals may, on its own
motion or that of the appellee, dismiss an appeal should the appellant’s brief lack specific requirements under Rule
44, Section 13, paragraphs (a), (c), (d), and (f):
Section 1. Grounds for dismissal of appeal. – An appeal may be dismissed by the Court of Appeals, on its own
motion or on that of the appellee, on the following grounds:
xxxx
(f) Absence of specific assignment of errors in the appellant’s brief, or of page references to the record as required
in Section 13, paragraphs (a), (c), (d), and (f) of Rule 44.
These requirements are the subject index of the matter in brief, page references to the record, and a table of cases
alphabetically arranged and with textbooks and statutes cited:
Section 13. Contents of the appellant’s brief. – The appellant’s brief shall contain, in the order herein indicated, the
following:
(a) A subject index of the matter in brief with a digest of the arguments and page references, and a table of cases
alphabetically arranged, textbooks and statutes cited with references to the pages where they are cited;
xxxx
(c) Under the heading "Statement of the Case," a clear and concise statement of the nature of the action, a
summary of the proceedings, the appealed rulings and orders of the court, the nature of the controversy, with page
references to the record;
(d) Under the heading "Statement of Facts," a clear and concise statement in a narrative form of the facts admitted
by both parties and of those in controversy, together with the substance of the proof relating thereto in sufficient
detail to make it clearly intelligible, with page references to the record;
xxxx

(f) Under the heading "Argument," the appellant’s arguments on each assignment of error with page references to
the record. The authorities relied upon shall be cited by the page of the report at which the case begins and the
page of the report on which the citation isfound;
xxxx
Lui Enterprises’ appellant’s brief lacked a subject index, page references to the record, and table of cases,
textbooks and statutes cited. Under Rule 50, Section 1 of the 1997 Rules of Civil Procedure, the Court of Appeals
correctly dismissed Lui Enterprises’ appeal.
Except for cases provided in the Constitution, appeal is a "purely statutory right." The right to appeal "must be
70 71
exercised in the manner prescribed by law" and requires strict compliance with the Rules of Court on
72
appeals. Otherwise, the appeal shall be dismissed, and its dismissal shall not be a deprivation of due process of
73
law.
In Mendoza v. United Coconut Planters Bank, Inc., this court sustained the Court of Appeals’ dismissal of
74
Mendoza’s appeal. Mendoza’s appellant’s brief lacked a subject index, assignment of errors, and page references
to the record. In De Liano v. Court of Appeals, this court also sustained the dismissal of De Liano’s appeal. De
75
Liano’s appellant’s brief lacked a subject index, a table of cases and authorities, and page references to the record.
There are exceptions to this rule. In Philippine Coconut Authority v. Corona International, Inc., the Philippine
76
Coconut Authority’s appellant’s brief lacked a clear and concise statement of the nature of the action, a summary of
the proceedings, the nature of the judgment, and page references to the record. However, this court found that the
Philippine Coconut Authority substantially complied with the Rules. Its appellant’s brief "apprise[d] [the Court of
Appeals] of the essential facts and nature of the case as well as the issues raised and the laws necessary [to
dispose of the case]." This court "[deviated] from a rigid enforcement of the rules" and ordered the Court of
77 78
Appeals to resolve the Philippine Coconut Authority’s appeal.
In Go v. Chaves, Go’s 17-page appellant’s brief lacked a subject index. However, Go subsequently filed a subject
79
index. This court excused Go’s procedural lapse since the appellant’s brief "[consisted] only of 17 pages which [the
Court of Appeals] may easily peruse to apprise it of [the case] and of the relief sought." This court ordered the
80
Court of Appeals to resolve Go’s appeal "in the interest of justice." 81
In Philippine Coconut Authority and Go, the appellants substantially complied with the rules on the contents of the
appellant’s brief. Thus, this court excused the appellants’procedural lapses.
In this case, Lui Enterprises did not substantially comply with the rules on the contents of the appellant’s brief. It
admitted that its appellant’s brief lacked the required subject index, page references to the record, and table of
cases, textbooks, and statutes cited. However, it did not even correct its admitted "technical omissions" by filing an
82
amended appellant’s brief with the required contents. Thus, this case does not allow a relaxation of the rules. The
83
Court of Appeals did not err in dismissing Lui Enterprises’ appeal.
Rules on appeal "are designed for the proper and prompt disposition of cases before the Court ofAppeals." With84
respect to the appellant’s brief, its required contents are designed "to minimize the [Court ofAppeals’] labor in
[examining]the record uponwhich the appeal is heard and determined." 85
The subject index serves as the brief’s table of contents. Instead of "[thumbing] through the [appellant’s
86
brief]" every time the Court of Appeals Justice encounters an argument or citation, the Justice deciding the case
87
only has to refer to the subject index for the argument or citation he or she needs. This saves the Court ofAppeals
88
time in reviewing the appealed case. Efficiency allows the justices of the appellate court to substantially attend to
this case as well as other cases.
Page references to the record guarantee that the facts stated in the appellant’s brief are supported by the
record. Astatement of fact without a page reference to the record creates the presumption that it is unsupported by
89
the record and, thus, "may be stricken or disregarded altogether." 90

As for the table of cases, textbooks, and statutes cited, this is required so that the Court of Appeals can easily verify
the authorities cited "for accuracy and aptness." 91
Lui Enterprises’ appellant’s brief lacked a subject index, page references to the record, and a table of cases,
textbooks, and statutes cited. These requirements "were designed to assist the appellate court in the
accomplishment of its tasks, and, overall, to enhance the orderly administration of justice." This court will not 92
disregard rules on appeal "in the guise of liberal construction." For this court to liberally construe the Rules, the
93
party must substantially comply with the Rules and correct its procedural lapses. Lui Enterprises failed to remedy
94
these errors.
All told, the Court of Appeals did not err in dismissing Lui Enterprises’ appeal. It failed to comply with Rule 44,
Section 13, paragraphs (a), (c), (d), and (f) of the 1997 Rules of Civil Procedure on the required contents of the
appellant’s brief.
II
Lui Enterprises failed to show that its failure to answer the complaint within the required period was due to
excusable negligence
When a defendant is served with summons and a copy of the complaint, he or she is required to answer within 15
days from the day he or she was served with summons. The defendant may also move to dismiss the complaint
95
"[w]ithin the time for but before filing the answer." 96
Fifteen days is sufficient time for a defendant to answer with good defenses against the plaintiff’s allegations in the
complaint. Thus, a defendant who fails to answer within 15 days from service of summons either presents no
defenses against the plaintiff’s allegations in the complaint or was prevented from filing his or her answer within the
required period due to fraud, accident, mistake or excusable negligence. 97
In either case, the court may declare the defendant in default on plaintiff’s motion and notice to defendant. The 98
court shall then try the case until judgment without defendant’s participation and grant the plaintiff such relief as his
99
or her complaint may warrant. 100
A defendant declared in default loses his or her standing in court. He or she is "deprived of the right to take part in
101
the trial and forfeits his [or her] rights as a party litigant," has no right "to present evidence [supporting his or her]
102
allegations," and has no right to "control the proceedings [or] cross-examine witnesses." Moreover, he or she
103 104
"has no right to expect that [the court] would [act] upon [his or her pleadings]" or that he or she "may
105
[oppose]motions filed against him [or her]." 106
However, the defendant declared in default "does not [waive] all of [his or her] rights." He or she still has the right
107
to "receive notice of subsequent proceedings." Also, the plaintiff must still present evidence supporting his or her
108
allegations "despite the default of [the defendant]." 109
Default, therefore, is not meant to punish the defendant but to enforce the prompt filing of the answer to the
complaint. For a defendant without good defenses, default saves him or her "the embarrassment of openly
appearing to defend the indefensible." As this court explained in Gochangco v. The Court of First Instance of
110
Negros Occidental, Branch
IV:
111
It does make sense for a defendant without defenses, and who accepts the correctness of the specific relief prayed
for in the complaint, to forego the filing of the answer or any sort of intervention in the action at all. For even if he did
intervene, the result would be the same: since he would be unable to establish any good defense, having none in
fact, judgment would inevitably go against him. And this would be an acceptable result, if not being in his power to
alter or prevent it, provided that the judgment did not go beyond or differ from the specific relief stated in the
complaint. x x x. (Emphasis in the original)
112

On the other hand, for a defendant with good defenses, "it would be unnatural for him [or her] not to set x x x up [his
or her defenses] properly and timely." Thus, "it must be presumed that some insuperable cause prevented him [or
113
her] from [answering the complaint]." In which case, his or her proper remedy depends on when he or she
114
discovered the default and whether the default judgment was already rendered by the trial court.
After notice of the declaration of default but before the court renders the default judgment, the defendant may file,
under oath, a motion to set aside order of default. The defendant must properly show that his or her failure to
answer was due to fraud, accident, mistake or excusable negligence. The defendant must also have a
115 116 117
meritorious defense. Rule 9, Section 3, paragraph (b) of the1997 Rules of Civil Procedure provides:
Section 3. Default; declaration of. – x x x x
(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.
If the defendant discovers his or her default after judgment but prior to the judgment becoming final and executory,
he or she may file a motion for new trial under Rule 37, Section 1, paragraph (a) of the 1997 Rules of Civil
Procedure. If he or she discovers his or her default after the judgment has become final and executory, a petition
118
for relief from judgment under Rule 38, Section 1 of the 1997 Rules of Civil Procedure may be filed. 119
Appeal is also available to the defendant declared in default. He or she may appeal the judgment for being contrary
to the evidence or to the law under Rule 41, Section 2 of the 1997 Rules of Civil Procedure. He or she may do so
120
even if he or she did not file a petition to set aside order of default. 121
A petition for certiorari may also be filed if the trial court declared the defendant in default with grave abuse of
discretion.
122
The remedies of the motion to set aside order of default, motion for new trial, and petition for relief from judgment
are mutually exclusive, not alternative or cumulative. This is to compel defendants to remedy their default at the
earliest possible opportunity. Depending on when the default was discovered and whether a default judgment was
already rendered, a defendant declared in default may avail of onlyone of the three remedies.
Thus, if a defendant discovers his or her default before the trial court renders judgment, he or she shall file a motion
to set aside order of default. If this motion to set aside order of default is denied, the defendant declared in default
cannot await the rendition of judgment, and he or she cannot file a motion for new trial before the judgment
becomes final and executory, or a petition for relief from judgment after the judgment becomes final and executory.
Also, the remedies against default become narrower and narrower as the trial nears judgment. The defendant
enjoys the most liberality from this court with a motion to set aside order of default, as he or she has no default
judgment to contend with, and he or she has the whole period before judgment to remedy his or her default.
With a motion for new trial, the defendant must file the motion within the period for taking an appeal or within 15
123
days from notice of the default judgment. Although a default judgment has already been rendered, the filing of the
motion for new trial tolls the reglementary period of appeal, and the default judgment cannot be executed against
the defendant.
A petition for relief from judgment is filed after the default judgment has become final and executory. Thus, the filing
of the petition for relief from judgment does not stay the execution of the default judgment unless a writ of
preliminary injunction is issued pending the petition’s resolution.124
Upon the grant of a motion to set aside order of default, motion for new trial, or a petition for relief from judgment,
the defendant is given the chance to present his or her evidence against that of plaintiff’s. With an appeal, however,

the defendant has no right to present evidence on his or her behalf and can only appeal the judgment for being
contrary to plaintiff’s evidence or the law.
Similar to an appeal, a petition for certiorari does not allow the defendant to present evidence on his or her behalf.
The defendant can only argue that the trial court committed grave abuse of discretion in declaring him or her in
default.
Thus, should a defendant prefer to present evidence on his or her behalf, he or she must file either a motion to set
aside order of default, motion for new trial, or a petition for relief from judgment.
In this case, Lui Enterprises had discovered its default before the Regional Trial Court of Makati rendered judgment.
Thus, it timely filed a motion to set aside order of default, raising the ground of excusable negligence.
Excusable negligence is "one which ordinary diligence and prudence could not have guarded against." The 125
circumstances should be properly alleged and proved. In this case, we find that Lui Enterprises’ failure to answer
within the required period is inexcusable.
Lui Enterprises’ counsel filed its motion to dismiss four days late. It did not immediately take steps to remedy its
default and took one year from discovery of default to file a motion to set aside order of default. In its motion to set
aside order of default, Lui Enterprises only "conveniently blamed its x x x counsel [for the late filing of the
answer]" without offering any excuse for the late filing. This is not excusable negligence under Rule 9, Section 3,
126
paragraph (b) of the 1997 Rules of Civil Procedure. Thus, the Regional Trial Court of Makati did not err in refusing
127
to set aside the order of default.
Lui Enterprises argued that the Regional Trial Court of Makati should have been liberal in setting aside its order of
default. After it had been declared in default, Lui Enterprises filed several manifestations informing the Makati trial
court of the earlier filed nullification of deed of dation in payment case which barred the filing of the interpleader
case. Lui Enterprises’ president, Eli L. Lui, and counsel even flew in from Davao to Makati to "formally [manifest
that] a [similar] action between [Lui Enterprises] and [the Philippine Bank of Communications]" was already
128
pending in the Regional Trial Court of Davao. However, the trial court did not recognize Lui Enterprises’standing
incourt.
The general rule is that courts should proceed with deciding cases on the merits and set aside orders of default as
default judgments are "frowned upon." As much as possible, cases should be decided with both parties "given
129
every chance to fight their case fairly and in the open, without resort to technicality."
130
However, the basic requirements of Rule 9, Section 3, paragraph (b) of the 1997 Rules of Civil Procedure must first
be complied with. The defendant’s motion to set aside order of default must satisfy three conditions. First is the
131
time element. The defendant must challenge the default order before judgment. Second, the defendant must have
been prevented from filing his answer due to fraud, accident, mistake or excusable negligence. Third, he must have
a meritorious defense. As this court held in SSS v. Hon. Chaves: 132
Procedural rules are not to be disregarded or dismissed simply because their non-observance may have resulted in
prejudice to a party’s substantive rights. Like all rules[,] they are to be followed, except only when for the most
persuasive of reasons they may be relaxed to relieve a litigant of an injustice not commensurate with the degree of
his thoughtlessness in not complying with the procedure prescribed. x x x. 133
As discussed, Lui Enterprises never explained why its counsel failed to file the motion to dismiss on time. It just
argued that courts should be liberal in setting aside orders of default. Even assuming that it had a meritorious
defense and that its representative and counsel had to fly in from Davao to Makati to personally appear and
manifest in court its meritorious defense, Lui Enterprises must first show that its failure to answer was due to fraud,
accident, mistake or excusable negligence. This Lui Enterprises did not do.
Lui Enterprises argued that Zuellig Pharma filed the interpleader case to compel Lui Enterprises and the Philippine
Bank of Communications to litigate their claims. Thus, "[d]eclaring the other claimant in default would ironically

defeat the very purpose of the suit." The RegionalTrial Court of Makati should not have declared Lui Enterprises in
134
default.
Under Rule 62, Section 1 of the 1997 Rules of Civil Procedure, a person may file a special civil action for
interpleader if conflicting claims are made against him or her over a subject matter in which he or she has no
interest. The action is brought against the claimants to compel them to litigate their conflicting claims among
themselves. Rule 62, Section 1 of the 1997 Rules of Civil Procedure provides:
Section 1. When interpleader proper. – Whenever conflicting claims upon the same subject matter are or may be
made against a person who claims no interest whatever in the subject matter, or an interest which in whole or in part
is not disputed bythe claimants, he may bring an action against the conflicting claimants to compel them to
interplead and litigate their several claims among themselves.
An interpleader complaint may be filed by a lessee against those who have conflicting claims over the rent due for
the property leased. This remedy is for the lessee to protect him or her from "double vexation in respect of one
135
liability." He or she may file the interpleader case to extinguish his or her obligation to pay rent, remove him or her
136
from the adverse claimants’dispute, and compel the parties with conflicting claims to litigate among themselves.
In this case, Zuellig Pharma filed the interpleader case to extinguish its obligation to pay rent. Its purpose in filing the
interpleader case "was not defeated" when the Makati trial court declared Lui Enterprises in default.
137
At any rate, an adverse claimant in an interpleader case may be declared in default. Under Rule 62, Section 5 of the
1997 Rules of Civil Procedure, a claimant who fails to answer within the required period may, on motion, be
declared in default. The consequence of the default is that the court may "render judgment barring [the defaulted
claimant] from any claim in respect to the subject matter." The Rules would not have allowed claimants in
138
interpleader cases to be declared in default if it would "ironically defeat the very purpose of the suit."139
The Regional Trial Court of Makati declared Lui Enterprises in default when it failed to answer the complaint within
the required period. Lui Enterprises filed a motion to set aside order of default without an acceptable excuse why its
counsel failed to answer the complaint. It failed to prove the excusable negligence. Thus, the Makati trial court did
not err in refusing to set aside the order of default.
III
The nullification of deed in dation in payment case did not bar the filing of the interpleader case. Litis
pendentia is not present in this case.
Lui Enterprises allegedly filed for nullification of deed of dation in payment with the Regional Trial Court of Davao. It
sought to nullify the deed of dation in payment through which the Philippine Bank of Communications acquired title
over the leased property. Lui Enterprises argued that this pending nullification case barred the Regional Trial Court
of Makati from hearing the interpleader case. Since the interpleader case was filed subsequently to the nullification
case, the interpleader case should be dismissed.
Under Rule 16, Section 1, paragraph (e) of the 1997 Rules of Civil Procedure, a motion to dismiss may be filed on
the ground of litis pendentia:
Section 1. Grounds. – Within the time for but before filing the answer to the complaint or pleading asserting
a claim, a motion to dismiss may be made on any of the following grounds:
xxxx
(e)That there is another action pending between the same parties for the same cause;
xxxx

Litis pendentia is Latin for "a pending suit." It exists when "another action is pending between the same parties for
140
the same cause of actionx x x." The subsequent action is "unnecessary and vexatious" and is instituted to
141 142
"harass the respondent [in the subsequent action]." 143
The requisites of litis pendentia are:
(1)Identity of parties or at least such as represent the same interest in both actions;
(2)Identity of rights asserted and reliefs prayed for, the reliefs being founded on the same facts; and
(3)The identity in the two cases should be such that the judgment that may be rendered in one
would, regardless of which party is successful, amount to res judicata in the other. 144
All of the requisites must be present. Absent one requisite, there is no litis pendentia.
145 146
In this case, there is no litis pendentia since there is no identity of parties in the nullification of deed of
dation in payment case and the interpleader case. Zuellig Pharma is not a party to the nullification case filed
in the Davao trial court.
There is also no identity of rights asserted and reliefs prayed for. Lui Enterprises filed the first case to
nullify the deed of dation in payment it executed in favor of the Philippine Bank of Communications. Zuellig
Pharma subsequently filed the interpleader case to consign in court the rental payments and extinguish its
obligation as lessee. The interpleader case was necessary and was not instituted to harass either Lui
Enterprises or the Philippine Bank of Communications.
Thus, the pending nullification case did not bar the filing of the interpleader case.
Lui Enterprises cited Progressive Development Corporation, Inc. v. Court of Appeals as authority to set aside the
147
subsequently filed interpleader case. In this cited case, petitioner Progressive Development Corporation, Inc.
entered into a lease contract with Westin Seafood Market, Inc. The latter failed to pay rent. Thus, Progressive
Development Corporation, Inc. repossessed the leased premises, inventoried the movable properties inside the
leased premises, and scheduled the public sale of the inventoried properties as they agreed upon in their lease
contract.
Westin Seafood Market, Inc. filed for forcible entry with damages against Progressive Development Corporation,
Inc. It subsequently filed an action for damages against Progressive Development Corporation for its "forcible
takeover of the leased premises." 148
This court ordered the subsequently filed action for damages dismissed as the pending forcible entry with damages
case barred the subsequently filed damages case.
Progressive Development Corporation, Inc. does not apply in this case. The action for forcible entry with damages
and the subsequent action for damages were filed by the same plaintiff against the same defendant. There is
identity of parties in both cases.
In this case, the nullification of deed of dation in payment case was filed by Lui Enterprises against the Philippine
Bank of Communications. The interpleader case was filed by Zuellig Pharma against Lui Enterprises and the
Philippine Bank of Communications. A different plaintiff filed the interpleader case against Lui Enterprises and the
Philippine Bank of Communications. Thus, there is no identity of parties, and the first requisite of litis pendentia is
absent.
As discussed, Lui Enterprises filed the nullification of deed of dation in payment to recover ownership of the leased
premises. Zuellig Pharma filed the interpleader case to extinguish its obligation to pay rent. There is no identity of
reliefs prayed for, and the second requisite of litis pendentia is absent.

Since two requisites of litis pendentia are absent, the nullification of deed of dation in payment case did not bar the
filing of the interpleader case.
Lui Enterprises alleged that the Regional Trial Court of Davao issued a writ of preliminary injunction against the
Regional Trial Court of Makati. The Regional Trial Court of Davao allegedly enjoined the Regional Trial Court of
Makati from taking cognizance of the interpleader case. Lui Enterprises argued that the Regional Trial Court of
Makati "should have respected the orders issued by the Regional Trial Court of Davao." Lui Enterprises cited
149
Compania General de Tabacos de Filipinas v. Court of Appeals where this court allegedly held:
150
x x x [T]he issuance of the said writ by the RTC ofAgoo, La Union not only seeks to enjoin Branch 9 of the RTC of
Manila from proceeding with the foreclosure case but also has the effect of pre-empting the latter’s orders. x x x. 151
Compania General de Tabacos de Filipinas is not an authority for the claim that a court can issue a writ of
preliminary injunction against a co- equal court. The cited sentence was taken out of context. In Compania General
1âwphi1
de Tabacos de Filipinas, this court held that the Regional Trial Court ofAgoo had no power to issue a writ of
preliminary injunction against the Regional Trial Court of Manila. Acourt cannot enjoin the proceedings of a co-
152
equal court.
Thus, when this court said that the Regional Trial Court of Agoo’s writ of preliminary injunction "not only seeks to
enjoin x x x [the Regional Trial Court of Manila] from proceeding with the foreclosure case but also has the effect of
pre-empting the latter’s orders," this court followed with "[t]his we cannot countenance."
153 154
At any rate, the Regional Trial Court of Davao’s order datedApril 18, 2005 was not a writ of preliminary injunction. It
was a mere order directing the Philippine Bank of Communications to inform Zuellig Pharma to pay rent to Lui
Enterprises while the status quo order between Lui Enterprises and the Philippine Bank of Communications was
subsisting. The Regional Trial Court of Davao did not enjoin the proceedings before the Regional Trial Court of
Makati.The order datedApril 18, 2005 provides:
As such, [the Philippine Bank of Communications] [is] hereby directed to forthwith inform Zuellig Pharma Corp., of
the April 1, 2004 status quo order and the succeeding September 14, 2004 Order, and consequently, for the said
lessee to remit all rentals due from February 23, 2003 and onwards to plaintiff Lui Enterprises, Inc., in the
meanwhile that the status quo order is subsisting. 155
Thus, the Regional Trial Court of Davao did not enjoin the Regional Trial Court of Makati from hearing the
interpleader case.
All told, the trial court did not err in proceeding with the interpleader case. The nullification of deed of dation in
payment case pending with the Regional Trial Court of Davao did not bar the filing of the interpleader case with the
RegionalTrial Court of Makati.
IV
The Court of Appeals erred in awarding attorney’s fees
In its ordinary sense, attorney’s fees "represent the reasonable compensation [a client pays his or her lawyer] [for
legal service rendered]." In its extraordinary sense, attorney’s fees "[are] awarded x x x as indemnity for damages
156
[the losing party pays the prevailingparty]."

157
The award of attorney’s fees is the exception rather than the rule. It is not awarded to the prevailing party "as a
158
matter of course." Under Article 2208 of the Civil Code, attorney’s fees cannot be recovered in the absence of
159
stipulation, except under specific circumstances:
(1)When exemplary damages are awarded;
(2)When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur
expenses to protect his interest;
(3)In criminal cases of malicious prosecution against the plaintiff;
(4)In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5)Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid,
just and demandable claim;
(6)In actions for legal support;
(7)In actions for the recovery of wages of household helpers, laborers and skilled workers;
(8)In actions for indemnity under workmen’s compensation and employer’s liability laws;
(9)In a separate civil action to recover civil liability arising froma crime;
(10)When at least double judicial costs are awarded;
(11)In any other case where the court deems it just and equitable that attorney's fees and expenses of
litigation should be recovered. 160
Even if a party is "compelled to litigate with third persons or to incur expenses to protect his [or her]
rights," attorney's fees will not be awarded if no bad faith "could be reflected in a party's persistence in a case."
161 162
To award attorney's fees, the court must have "factual, legal, [and] equitable justification." The court must state the
163
award's basis in its decision. These rules are based on the policy that "no premium should be placed.on the right to
164
litigate."
165
In this case, the Court of Appeals awarded attorney's fees as "[Zuellig Pharma] was compelled to litigate with third
persons or to incur expenses to protect [its] interest[s]." This is not a compelling reason to award attorney's fees.
166
That Zuellig Pharma had to file an interpleader case to consign its rental payments did not mean that Lui
Enterprises was in bad faith in insisting that rental payments be paid to it. Thus, the Court. of Appeals erred in
awarding attorney's fees to Zuellig Pharma.
All told, the Court of Appeals' award of P50,000.00 as attorney's fees must be deleted.
WHEREFORE, in view of the foregoing, the petition for review on certiorari is DENIED. The Court of Appeals'
decision and resolution in CA- G.R. CV No. 88023 are AFFIRMED with MODIFICATION. The award of PS0,000.00
attorney's fees to Zuellig Pharma Corporation is DELETED.

4.) G.R. No. 127913 September 13, 2001
RIZAL COMMERCIAL BANKING CORPORATION, petitioner,

vs.
METRO CONTAINER CORPORATION, respondent.
KAPUNAN, J.:
Assailed in this petition for review on certiorari are the Decision, promulgated on 18 October 1996 and the
Resolution, promulgated on 08 January 1997, of the Court of Appeals in CA-G.R. SP No. 41294.
The facts of the case are as follows:
On 26 September 1990, Ley Construction Corporation (LEYCON) contracted a loan from Rizal Commercial Banking
Corporation (RCBC) in the amount of Thirty Million Pesos (P30,000,000.00). The loan was secured by a real estate
mortgage over a property, located in Barrio Ugong, Valenzuela, Metro Manila (now Valenzuela City) and covered by
TCT No. V-17223. LEYCON failed to settle its obligations prompting RCBC to institute an extrajudicial foreclosure
proceedings against it.
After LEYCON's legal attempts to forestall the action of RBCB failed, the foreclosure took place on 28 December
1992 with RCBC as the highest bidder.
LEYCON promptly filed an action for Nullification of Extrajudicial Foreclosure Sale and Damages against RCBC.
The case, docketed as Civil Case No. 4037-V-93, was raffled to the Regional Trial Court (RTC) of Valenzuela,
Branch 172. Meanwhile, RCBC consolidated its ownership over the property due to LEYCON's failure to redeem it
within the 12-month redemption period and TCT No. V-332432 was issued if favor of the bank. By virtue thereof,
RCBC demanded rental payments from Metro Container Corporation (METROCAN) which was leasing the property
from LEYCON.
On 26 May 1994, LEYCON filed an action for Unlawful Detainer, docketed as Civil Case No. 6202, against
METROCAN before the Metropolitan Trial Court (MeTC) of Valenzuela, Branch 82.
On 27 May 1994, METROCAN filed a complaint for Interpleader, docketed as Civil Case No. 4398-V-94 before the
Regional Trial Court of Valenzuela, Metro Manila; Branch 75 against LEYCON and RCBC to compel them to
interplead and litigate their several claims among themselves and to determine which among them shall rightfully
receive the payment of monthly rentals on the subject property .On 04 July 1995, during the pre-trial conference in
Civil Case No. 4398-V-94, the trial court ordered the dismissal of the case insofar as METROCAN and LEYCON
were concerned in view of an amicable settlement they entered by virtue of which METROCAN paid back rentals to
LEYCON.
On 31 October 1995, judgment was rendered in Civil Case No.6202, which among other things, ordered
METROCAN to pay LEYCON whatever rentals due on the subject premises. The MeTC decision became final and
executory.
On 01 February 1996, METROCAN moved for the dismissal of Civil Case No. 4398-V-94 for having become moot
and academic due to the amicable settlement it entered with LEYCON on 04 July 1995 and the decision in Civil
Case No. 6202 on 31 October 1995. LEYCON, likewise, moved for the dismissal of the case citing the same
grounds cited by METROCAN.
On 12 March 1996, the two motions were dismissed for lack of merit. The motions for reconsideration filed by
METROCAN and LEYCON were also denied prompting METROCAN to seek relief from the Court of Appeals via a
petition for certiorari and prohibition with prayer for the issuance of a temporary restraining order and a writ of
preliminary injunction. LEYCON, as private respondent, also sought for the nullification of the RTC orders.

In its Decision, promulgated on 18 October 1996, the Court of Appeals granted the petition and set aside the 12
March 1996 and 24 June 1996 orders of the RTC. The appellate court also ordered the dismissal of Civil Case No.
4398-V-94. RCBC's motion for reconsideration was denied for lack of merit in the resolution of 08 January 1997.
Hence, the present recourse.
RCBC alleged, that:
(1) THE DECISION OF THE METROPOLITAN TRIAL COURT IN THE EJECTMENT CASE BETWEEN
METROCAN AND LEYCON DOES NOT AND CANNOT RENDER THE INTERPLEADER ACTION MOOT
AND ACADEMIC.
(2) WHILE A PARTY WHO INITIATES AN INTERPLEADER ACTION MAY NOT BE COMPELLED TO
LITIGATE IF HE IS NO LONGER INTERESTED TO PURSUE SUCH CAUSE OF ACTION, SAID PARTY
MAY NOT UNILATERALLY CAUSE THE DISMISSAL OF THE CASE AFTER THE ANSWER HA VE
BEEN FILED. FURTHER, THE DEFENDANTS IN AN INTERPLEADER SUIT SHOULD BE GIVEN FULL
OPPORTUNITY TO LITIGATE THEIR RESPECTIVE CLAIMS.1
We sustain the Court of Appeals.
Section 1, Rule 63 of the Revised Rules of Court2 provides:
Section 1. - Interpleader when proper. - Whenever conflicting claims upon the same subject matter are or
may be made against a person, who claims no interest whatever in the subject matter, or an interest which
in whole or in part is not disputed by the claimants, he may bring an action against the conflicting claimants
to compel them to interplead and litigate their several claims among themselves.
In the case before us, it is undisputed that METROCAN filed the interpleader action (Civil Case No. 4398-V-94)
because it was unsure which between LEYCON and RCBC was entitled to receive the payment of monthly rentals
on the subject property. LEYCON was claiming payment of the rentals as lessor of the property while RCBC was
making a demand by virtue of the consolidation of the title of the property in its name.
It is also undisputed that LEYCON, as lessor of the subject property filed an action for unlawful detainer (Civil Case
No. 6202) against its lessee METROCAN. The issue in Civil Case No. 6202 is limited to the question of physical or
material possession of the premises.3 The issue of ownership is immaterial therein4 and the outcome of the case
could not in any way affect conflicting claims of ownership, in this case between RCBC and LEYCON. This was
made clear when the trial court, in denying RCBC's "Motion for Inclusion x x x as an Indispensable Party" declared
that "the final determination of the issue of physical possession over the subject premises between the plaintiff and
the defendant shall not in any way affect RCBC's claims of ownership over the said premises, since RCBC is neither
a co-lessor or co- lessee of the same, hence he has no legal personality to join the parties herein with respect to the
issue of physical possession vis-a-vis the contract of lease between the parties."5 As aptly pointed by the MeTC, the
issue in Civil Case No. 6202 is limited to the defendant LEYCON's breach of the provisions of the Contract of Lease
Rentals.6
Hence, the reason for the interpleader action ceased when the MeTC rendered judgment in Civil Case No. 6202
whereby the court directed METROCAN to pay LEYCON "whatever rentals due on the subject premises x x x."
While RCBC, not being a party to Civil Case No. 6202, could not be bound by the judgment therein, METROCAN is
bound by the MeTC decision. When the decision in Civil Case No. 6202 became final and executory, METROCAN
has no other alternative left but to pay the rentals to LEYCON. Precisely because there was already a judicial fiat to
METROCAN, there was no more reason to continue with Civil Case No. 4398-V-94. Thus, METROCAN moved for
the dismissal of the interpleader action not because it is no longer interested but because there is no more need for
it to pursue such cause of action.
It should be remembered that an action of interpleader is afforded to protect a person not against double liability but
against double vexation in respect of one liability.7 It requires, as an indespensable requisite, that "conflicting claims
upon the same subject matter are or may be made against the plaintiff-in-interpleader who claims no interest

whatever in the subject matter or an interest which in whole or in part is not disputed by the claimants."8 The
decision in Civil Case No. 6202 resolved the conflicting claims insofar as payment of rentals was concerned.
Petitioner is correct in saying that it is not bound by the decision in Civil Case No. 6202. It is not a party thereto.
However, it could not compel METROCAN to pursue Civil Case No. 4398-V-94. RCBC has other avenues to prove
its claim. Is not bereft of other legal remedies. In fact, he issue of ownership can very well be threshed out in Civil
Case No. 4037-V-93, the case for Nullification of Extrajudicial foreclosure Sale and Damages filed by LEYCON
against RCBC. 1âwphi1.nêt
WHEREFORE, the petition for review is DENIED and the Decision of the Court of Appeals, promulgated on 18
October 1996, as well as its Resolution promulgated on 08 January 1997, are AFFIRMED.

5.) G.R. No.147812. April 6, 2005
LEONARDO R. OCAMPO, Petitioners,
vs.
LEONORA TIRONA, Respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review to annul the Decision dated 29 November 2000 of the Court of Appeals ("appellate
1 2
court") in CA-G.R. SP No. 41686, and its Resolution dated 16 April 2001 denying the motion for reconsideration.
The appellate court set aside the Decision dated 27 June 1996 of Branch 110 of the Regional Trial Court of Pasay
3
City ("RTC") in Civil Case No. 96-0209. The RTC affirmed the Decision dated 29 December 1995 of Branch 47 of
4
the Metropolitan Trial Court of Pasay City ("MTC") in Civil Case No. 754-95 ordering respondent Leonora Tirona
("Tirona") to vacate and surrender possession of the property under litigation to petitioner Leonardo R. Ocampo
("Ocampo"). The MTC also ordered Tirona to pay Ocampo rentals in arrears, attorney’s fees, and costs of suit.
Antecedent Facts
Ocampo alleged that he is the owner of a parcel of land ("subject land") described in Transfer Certificate of Title
("TCT") No. 134359, with an approximate area of 500 square meters, located at Alvarez Street, Pasay City. Ocampo
bought the subject land from Rosauro Breton, heir of the subject land’s registered owner Alipio Breton Cruz.
Possession and administration of the subject land are claimed to be already in Ocampo’s management even though
the TCT is not yet in his name. Tirona, on the other hand, is a lessee occupying a portion of the subject land. The
5
MTC established the following facts:
According to [Ocampo], upon acquisition of ownership of the subject premises, a formal written notice was given to
[Tirona] which was received by the latter on 9 March 1995, copy of the said formal written agreement marked as
Annex "A" and likewise copy of the registry return receipt showing that [Tirona] received Annex "A" was marked as
Annex "A-1". In recognition of [Ocampo’s] right of ownership over the subject premises, [Tirona] paid some monthly
rentals due, however, on July 5, 1995, [Ocampo] received a letter from Callejo Law Office of Room 513 Borja Bldg.,
645 Sta. Cruz, Manila stating among others, that, in view of the fact that the subject premises was declared under
area for priority development, [Tirona] is invoking her right of first refusal and in connection thereto [Tirona] will
temporarily stop paying her monthly rentals until and unless the National Housing Authority have processed the
pertinent papers as regards the amount due to [Ocampo] by reason of the implementation of the above law, a copy
of the said letter marked as Annex "B" of the Complaint. In reply to Annex "B", [Ocampo] sent a letter dated 17 July
1995 addressed to the said Callejo Law Office, copy furnished [Tirona]. A copy of the said reply of [Ocampo] marked
as Annex "C" of the Complaint, a copy of the Registry Return Receipt showing that [Tirona] received said Annex "C"
on 20 July 1995 marked as Annex "C-1" of the Complaint, while as the original copy which was sent to Callejo Law
Office was also received by said office. On 7 August 1995, [Ocampo] wrote a letter to [Tirona] demanding upon
[Tirona] to pay the rentals in arrears for the months of April, May, June, July and August at the rate of ₱1,200 a
month and to vacate the premises, copy of the said letter dated 7 August 1995 marked as Annex "D" of the
Complaint and the signature at the bottom portion of Annex "D" clearly shows that the same was received by
[Tirona] on 8 August 1995. Despite receipt of said letter, [Tirona] failed and refused and still fails and refuses to
heed [Ocampo’s] demands. 6
On 11 September 1995, Ocampo filed a complaint docketed as Civil Case No. 754-95 for unlawful detainer and
damages against Tirona before the MTC.
Tirona filed her answer on 27 September 1995. Tirona asserted that Doña Lourdes Rodriguez Yaneza actually
owns the subject land. The allegations in the answer state thus:

1. That the Assignor [one Edison A. Hindap, Sr.] is the General Overseer and Attorney-in-Fact of DOÑA LOURDES
RODRIGUEZ YANEZA, Heir/Owner of TITULO DE PROPRIEDAD DE TERENOS of 1891, Royal Degree 01-4
Protocol, the real owner of a parcel of land allegedly claimed by [Ocampo].
2. That the Title of [Ocampo] was overlapped [sic] the Original Land Title of the Assignor.
3. That [Tirona], hereby recognized by the Assignor as co-owner by possession and hereby cede, transfer and
assign the said parcel of land in [Tirona’s] favor.
4. That [Tirona] hereby denied [sic] and discontinued [sic] all the obligations imposed by [Ocampo], for the simple
reason, the property in question is not owned by [Ocampo], but rather owned by the Assignor, as proof of evidence
herein Assignor issued a Certification for Occupancy and Assignment in favor of [Tirona] herein attached with [sic],
and the other evidence shall be presented upon the proper hearing on the merits of this case. 7
Ocampo filed a motion to strike out the answer filed and a motion for judgment on 10 October 1995. Ocampo
claimed that the answer was not verified; therefore, it was as if no answer was filed.
On 12 October 1995, Tirona filed a motion with leave to amend defendant’s answer. She alleged that she filed her
8
answer without the assistance of a lawyer due to fear that she might be unable to file the required pleading on time.
In her amended answer, Tirona maintained that Ocampo is not the owner of the subject land. She stated that the
certificate of title to the subject land is not even registered under Ocampo’s name. Tirona also alleged that she has
a right of first refusal in case of sale of the land, pursuant to Presidential Decree ("PD") Nos. 1517, 1893 and
9 10
1968. The area where the subject land is located was certified as an area under priority development. Tirona asked
11 12
for attorney’s fees and moral and exemplary damages.
In the spirit of substantial justice, the MTC granted Tirona’s motion to amend her answer on 20 October 1995. On 15
November 1995, the MTC directed Ocampo and Tirona to submit their respective position papers and other
evidence after the termination of the pre-trial conference.
The issue considered by the MTC for resolution was whether Ocampo may eject Tirona because of non-payment of
rent and because of the termination of Tirona’s right to possess and occupy the subject land.
The MTC’s Ruling
The MTC ruled that Tirona does not have any reason to suspend payment of rents until after PD No. 1517, in
relation to PD Nos. 1893 and 1968, is implemented in her favor. Tirona’s non-payment of rents rendered her
occupation of the subject land illegal. As owner of the subject land, Ocampo is entitled to its use and enjoyment, as
well as to recover its possession from any person unlawfully withholding it.
The dispositive part of the MTC’s decision reads:
WHEREFORE, judgment is hereby rendered in favor of [Ocampo] and against [Tirona]:
1. Ordering [Tirona] and all other persons claiming possession under her to vacate and surrender possession to
[Ocampo] the premises known as, parcel of land located at 2132 Alvarez St., Pasay City, covered by Transfer
Certificate of Title No. 134359 of the Register of Deeds of Pasay City;
2. Ordering [Tirona] to pay the rentals in arrears covering the period from April 1995 until such time [Tirona] shall
have finally vacated the subject premises at the rate of ₱1,200 a month, with interest at a legal rate;
3. Ordering [Tirona] to pay the sum of ₱5,000 for and as attorney’s fees; and
4. Ordering [Tirona] to pay the cost of the suit.
SO ORDERED. 13

Ocampo filed a motion for execution pending appeal on 24 January 1996, while Tirona filed a notice of appeal on 25
January 1996. The MTC directed its clerk of court to transmit the records of the case, as well as the motion for
execution pending appeal, through an order issued on 29 January 1996. The RTC issued an order on 26 February
1996 ordering both parties to file their respective memoranda.
On 4 March 1996, Maria Lourdes Breton-Mendiola, who claimed to be the owner of the subject land, filed a motion
with leave to file intervention before the RTC.
The RTC’s Ruling
In an order dated 11 March 1996, the RTC issued a writ of execution pending appeal for the enforcement of the
MTC’s decision. The RTC stated that although Tirona perfected her appeal on time, the record showed that she
failed to pay the required supersedeas bond as well as deposit the current rentals as mandated by Section 8, Rule
70 of the 1964 Rules of Court. In a separate order issued on the same date, the RTC denied Maria Lourdes Breton-
Mendiola’s motion with leave to file intervention. The RTC stated that granting the motion to intervene would violate
the 1964 Rules of Court and jurisprudence.
Ocampo filed his memorandum on 21 March 1996. He emphasized that Tirona’s assertion of a "preferential right of
14
first refusal" is a recognition of the sale by Rosauro Breton of the subject land to him. Moreover, Tirona is not
qualified to claim this preferential right because she is no longer a legitimate tenant. The payment of Tirona’s
monthly rent was already in arrears at the time Ocampo filed the complaint against Tirona.
On 25 March 1996, Tirona filed a manifestation which stated that she paid both the supersedeas bond and rent on
the subject land. The RTC considered Tirona’s manifestation as a motion for reconsideration of its previous order
issuing a writ of execution pending appeal. In its order dated 15 April 1996, the RTC recalled its 11 March 1996
order and cancelled the writ of execution.
Tirona filed her memorandum also on 25 March 1996. For the first time, Tirona disclosed that Alipio Breton is the
registered owner of the subject land and that he is her landlord since 1962. When Alipio Breton died in 1975, his
children, Rosauro Breton and Maria Lourdes Breton-Mendiola, inherited the subject land. Tirona claims she has
never stopped paying her rent to Maria Lourdes Breton-Mendiola. Tirona also stated that Rosauro Breton could not
transfer ownership to the subject land to Ocampo. On 14 July 1978, Rosauro Breton executed a deed of
conveyance and waiver in favor of his sister, Maria Lourdes Breton-Mendiola. Rosauro Breton executed another
deed of conveyance and waiver in favor of Maria Lourdes Breton-Mendiola on 9 March 1995. Thus, Tirona claims,
Ocampo cannot legally acquire title from Rosauro Breton in view of the waivers. Maria Lourdes Breton-Mendiola is
Tirona’s lessor, and is the only person who can validly file an ejectment suit against Tirona. 15
After quoting the findings of the MTC, the RTC held thus:
This Court after a careful review of the complete record of this case particularly the evidences, applicable laws and
jurisprudence relied upon by the [MTC] in finding for [Ocampo] and declaring that [Tirona] can be lawfully ejected
from the subject premises, concurs with the findings thereof. There is therefore nothing in the record which would
warrant the Court to disturb the findings of fact and law and the conclusions reached by the [MTC].
This Court finds the decision of the lower court fully justified in granting the reliefs to [Ocampo].
WHEREFORE, judgment is hereby rendered AFFIRMING IN TOTO the decision of the [MTC] with costs against
[Tirona].
SO ORDERED. 16
In its petition before the appellate court, Tirona stated that the RTC erred in the following grounds:
1. ORDERING THE EJECTMENT OF [TIRONA] IN VIOLATION OF SECTION 2 OF PD [NO.] 2016. 17

2. NOT RULING THAT [TIRONA] HAS A BETTER RIGHT OF POSSESSION OVER THE PROPERTY IN
QUESTION.
3. RULING THAT THE SUCCESSOR-IN-INTEREST OF AN UNDIVIDED IDEAL ONE-HALF PORTION, [OCAMPO]

MAY DEPRIVE THE OTHER CO-OWNER OF THE ADMINISTRATION OF ONE-HALF PORTION BY EJECTING
HER LESSEE, [TIRONA]. 18
The appellate court stated that the principal issue for its resolution is whether Ocampo, being the buyer of the
subject land which is not yet partitioned among the heirs, can validly evict Tirona. 19
The Appellate Court’s Ruling
The appellate court considered partition of the estate of Alipio Breton as a prerequisite to Ocampo’s action. The
appellate court ruled that "[u]ntil the partition of the estate is ordered by the Regional Trial Court of Pasay City in the
pending partition proceedings and the share of each co-heir is determined by metes and bounds, [Ocampo] cannot
rightfully claim that what he bought is part of the property occupied by [Tirona]." The dispositive part of the appellate
20
court’s decision reads thus:
WHEREFORE, the decision of the respondent court is hereby SET ASIDE and judgment is hereby rendered
dismissing the complaint of the private respondent in the court below.
SO ORDERED. 21
Hence, the instant petition.
The Issues
Ocampo assigned three errors to the appellate court. Ocampo stated that the appellate court erred in:
1. ENTERTAINING AND NOT DISMISSING THE PETITION FOR REVIEW (with prayer for its issuance of Writ of
Preliminary Injunction and immediate issuance of TRO), THE SAME HAVING BEEN FILED BEYOND THE
REGLAMENTARY PERIOD.
2. CONSIDERING AND RESOLVING AN ISSUE RAISED IN THE PETITION FOR REVIEW FOR THE FIRST TIME
ON APPEAL.
3. DECLARING THAT LEONARDO R. OCAMPO HAS NO RIGHT TO EJECT LEONORA TIRONA, NOR DEMAND
PAYMENT OF RENTALS FROM HER FOR THE USE AND OCCUPANCY OF THE LOT INVOLVED IN THE
PRESENT CASE. 22
The Ruling of the Court
The petition has merit.
We agree with Ocampo’s observation that Tirona changes her theory of the case each time she appeals. For this 23
reason, we shall limit our ruling to the propriety of Ocampo’s unlawful detainer case against Tirona.
Moreover, we have assessed the evidence on record and found that the appellate court did not contradict the
findings of facts of the MTC and RTC. Thus, we see no reason to deviate from their findings of facts.
Unlawful Detainer
Elements to be Proved

Unlawful detainer cases are summary in nature. The elements to be proved and resolved in unlawful detainer cases
are the fact of lease and expiration or violation of its terms. To support their conclusion that there was an existing
24
lease, the MTC and RTC found that:
(1) Ocampo informed Tirona through a letter dated 1 March 1995 that he bought the subject land, upon which
Tirona’s house stands, from the previous owner and lessor Rosauro Breton; 25
(2) Tirona’s continued occupancy of the subject land signifies Tirona’s acceptance of Ocampo’s conditions of lease
stated in the 1 March 1995 letter; and
26
(3) In asserting her right to possess the subject land, Tirona admitted that Ocampo is her lessor. In the 5 July 1995
letter, Tirona was referred to as "the hereinmentioned tenant of yours." 27
In Mirasol v. Magsuci, et al., we ruled that the sale of a leased property places the vendee into the shoes of the
28
original lessor to whom the lessee bound himself to pay. The vendee acquires the right to evict the lessee from the
premises and to recover the unpaid rentals after the vendee had notified the lessee that he had bought the leased
property and that the rentals on it should be paid to him, and the lessee refused to comply with the demand.
The following facts support the conclusion that there was a violation of the lease agreement:
(1) Tirona, through Callejo Law Office, sent a letter dated 5 July 1995 which stated that Tirona will temporarily stop
paying her monthly obligation until the National Housing Authority has processed the pertinent papers regarding the
amount due to Ocampo in view of PD 1517; 29
(2) As of August 1995, Tirona has not paid her rent to Ocampo corresponding to April to August 1995; and 30
(3) In a letter dated 7 August 1995, Ocampo demanded from Tirona unpaid rent payments. 31
In view of these facts, we hold that Tirona is estopped from denying her possession under a lease and that there
32
was a violation of the lease agreement. Thus, the MTC and RTC correctly ruled against Tirona.
Ownership as an Issue
When Tirona filed her answer before the MTC, she raised the issue of ownership and ascribed ownership of the
subject lot to one Doña Lourdes Rodriguez Yaneza. Tirona later changed her strategy and filed an amended answer
that ascribed ownership of the subject lot to Maria Lourdes Breton-Mendiola. Tirona justified the amendment by
stating that she did not ask for the assistance of a lawyer for fear of not being able to file her answer on time. This
excuse is flimsy considering that Tirona first communicated to Ocampo through Callejo Law Office. However, the
MTC still allowed Tirona to amend her answer. Tirona stated that there was no violation of the lease agreement
because she paid her rent to the real owner, Maria Lourdes Breton-Mendiola.
Contrary to Tirona’s position, the issue of ownership is not essential to an action for unlawful detainer. The fact of
the lease and the expiration of its term are the only elements of the action. The defense of ownership does not
change the summary nature of the action. The affected party should raise the issue of ownership in an appropriate
action, because a certificate of title cannot be the subject of a collateral attack. Although a wrongful possessor may
33
at times be upheld by the courts, this is merely temporary and solely for the maintenance of public order. The
question of ownership is to be settled in the proper court and in a proper action. 34
In actions for forcible entry and [unlawful] detainer, the main issue is possession de facto, independently of any
claim of ownership or possession de jure that either party may set forth in his pleadings, and an appeal does not
operate to change the nature of the original action. On appeal, in an ejectment case, it is within the discretion of the
court to look into the evidence supporting the assigned errors relating to the alleged ownership of appellant insofar
as said evidence would indicate or determine the nature of appellant’s possession of the controverted premises.
Said court should not however resolve the issue raised by such assigned errors. The resolution of said issues would
effect an adjudication on ownership which is not sanctioned in the summary action for unlawful detainer. 35

Unlawful detainer being a summary proceeding, it was error for the appellate court to include the issue of
ownership. Had the appellate court limited its ruling to the elements to be proved in a case of unlawful detainer,
Ocampo need not even prove his ownership. When the appellate court ruled that the case of unlawful detainer had
to wait for the results of the partition proceedings, it effectively put ownership as the main issue in the case. The
issue of ownership opens a virtual Pandora’s Box for Tirona and her supposed intervenor, Maria Lourdes Breton-
Mendiola. 36
Interpleader
The good faith of Tirona is put in question in her preference for Maria Lourdes Breton-Mendiola. As a
stakeholder, Tirona should have used reasonable diligence in hailing the contending claimants to court.
Tirona need not have awaited actual institution of a suit by Ocampo against her before filing a bill of
interpleader. An action for interpleader is proper when the lessee does not know the person to whom to
37
pay rentals due to conflicting claims on the property. 38
The action of interpleader is a remedy whereby a person who has property whether personal or real, in his
possession, or an obligation to render wholly or partially, without claiming any right in both, or claims an interest
which in whole or in part is not disputed by the conflicting claimants, comes to court and asks that the persons who
claim the said property or who consider themselves entitled to demand compliance with the obligation, be required
to litigate among themselves, in order to determine finally who is entitled to one or the other thing. The remedy is
afforded not to protect a person against a double liability but to protect him against a double vexation in
respect of one liability. When the court orders that the claimants litigate among themselves, there arises in
reality a new action and the former are styled interpleaders, and in such a case the pleading which initiates
the action is called a complaint of interpleader and not a cross-complaint. 39
Ocampo has the right to eject Tirona from the subject land. All the elements required for an unlawful detainer case
to prosper are present. Ocampo notified Tirona that he purchased the subject land from Tirona’s lessor. Tirona’s
continued occupation of the subject land amounted to acquiescence to Ocampo’s terms. However, Tirona
eventually refused to pay rent to Ocampo, thus violating the lease.
Finally, legal interest at the annual rate of 6% is due on the unpaid monthly rentals starting from 7 August 1995
when Ocampo made an extrajudicial demand on Tirona for payment of the monthly rental. On finality of our
40
decision, annual interest at 12%, in lieu of 6% annual interest, is due on the amounts the MTC awarded until full
payment. 41
WHEREFORE, we GRANT the instant petition for review. The Decision dated 27 June 1996 of Branch 110 of the
RTC in Civil Case No. 96-0209, which affirmed the Decision dated 29 December 1995 of Branch 47 of the MTC in
Civil Case No. 754-95, is REINSTATED. The Decision dated 29 November 2000 of the appellate court in CA-G.R.
SP No. 41686, and its Resolution dated 16 April 2001 denying the motion for reconsideration, are SET ASIDE.

6.) [G.R. No. 120060. March 9, 2000.]
CEBU WOMAN’S CLUB, Petitioner, v. HON. LORETO D. DE LA VICTORIA, in his capacity as

Presiding Judge of RTC, Br. 6, Cebu City, CAMSAC International, Inc. & Phanuel
Señoron, Respondents.
DECISION
BUENA, J.:
Petitioner seeks to set aside the Orders of the Regional Trial Court (RTC), dated March 9, 1995 and
April 11, 1995, in Civil Case No. CEB-17126, which dismissed its complaint for interpleader and
damages against private respondent CAMSAC International Inc. (hereinafter referred to as
"CAMSAC"), Arc Asia Philippines, Inc., Triple A Marketing Development Corporation, Trinidad
Patigayon, Signal Trading Corporation and Malayan Insurance Co., Inc., due to the pendency of two
other cases. chanrobles.com : red
The present controversy started with the construction of the Cebu School of Midwifery Building
owned by petitioner. In a bidding held on January 7, 1994, the construction of the building was
awarded by petitioner to respondent CAMSAC represented by its President/General Manager,
Architect Catalino M. Salazar. The corresponding construction contract was executed between the
parties on January 26, 1994 with a stipulation on retention fee of ten (10%) percent to be deducted
by petitioner from all progress payments to the contractor, herein respondent CAMSAC, which shall
be released thirty (30) calendar days after inspection and acceptance by petitioner of the project and
the submission of a sworn statement by respondent CAMSAC that all obligations, including but not
limited to salaries, materials used and taxes due in connection with the construction have been duly
paid.chanroblesvirtual|awlibrary
On February 4, 1994, respondent CAMSAC entered into a "Sub-Contract Agreement" with respondent
Señoron to undertake the construction of the subject building. After one year, respondent Señoron
filed a complaint for "sum of money with application for a writ of preliminary injunction" against
petitioner and respondent CAMSAC anchored on the "Sub-Contract Agreement" he entered with the
latter. Respondent Señoron sought to prevent petitioner from paying or releasing any amount to
respondent CAMSAC relative to the construction of the subject building in the event that petitioner
heeds CAMSAC’s request for the release of the retention fee.
In the meantime, petitioner allegedly received demand-letters from the suppliers-creditors as well as
from respondent CAMSAC for the release of the 10% retention fee, hence, on February 22, 1995, it
filed before the trial court a complaint for interpleader and damages against respondent
CAMSAC, Arc Asia Philippines, Inc., Triple A Marketing Development Corporation, Trinidad
Patigayon, Signal Trading Corporation and Malayan Insurance Co., Inc., in order for them
to interplead with one another to determine their respective rights and claims on the
retention fee.
On February 23, 1995, respondent CAMSAC filed an action for sum of money and damages against
petitioner 1 for failure of the latter to release the 10% retention fee. On March 9, 1995, the trial
court issued the first assailed Order dismissing the complaint for interpleader to prevent
multiplicity of suits, as there are pending cases before the respondent court filed by
respondent Señoron for sum of money against petitioner and respondent CAMSAC which
also involved the ten (10%) retention fee. The trial court held: jgc:chanrobles.com.ph
"As herein before-stated, there is already a pending case by Señoron against the herein plaintiff,
Camsac International Inc., and Catalino M. Salazar, as president of the Camsac and in his personal
capacity. Consequently, to give due course to this present action would indeed result in a multiplicity
of suits. Plaintiff’s proper move here would be to file an answer, — which it has not yet done up to
this point in time although it managed to file this complaint posthaste — assert a counterclaim and/or
a cross claim, etc.. in Civil Case No. CEB-17079. The other defendants herein may intervene therein
if they so desire to protect their respective interest in the same way that one of them, Arc Asia Phil.
Inc., had already filed its motion for intervention, dated March 6, 1995, in order that all their claims,
may be tried and decided in one proceeding. chanrobles.com : virtual law library
WHEREFORE, the complaint for interpleader is hereby denied due course, and the same should be, as
it is hereby ordered dismissed.
SO ORDERED." 2
Petitioner filed a motion for reconsideration which was denied in the second assailed Order dated
April 11, 1995. Hence, petitioner’s immediate resort to this Court by a petition for review
on certiorari raising the following issues: 3
1. Respondent court acted with grave abuse of discretion, as it had no jurisdiction, to exercise "due
course" authority and to motu proprio dismiss petitioner’s action for interpleader.
2. Respondent court erred when it correlated the "allegation of fact" between the petitioner’s
complaint in Civil Case No. CEB-17126 with that of the complaint in Civil Case No. CEB-17079, and to
thereafter issue baseless and unwarranted conclusions patently adverse to petitioner.
3. Although no hearing has as yet been conducted and in what may amount to be a judgment on the
pleadings, respondent court’s 9 March 1995 Order is replete with "conclusions of fact and law" which,
if allowed to remain unchallenged, may amount to a prejudgment of certain issues of fact and law
that are yet to be substantiated.chanrobles.com : law library
Petitioner’s direct resort to this Court is erroneous. Under the Rules of Court, a party may directly
appeal to the Supreme Court from a decision of the trial court only on pure questions of law. 4 The
case at bench does not involve pure questions of law as to entitle petitioner to seek immediate
redress from this court. A question of law arises when the doubt or difference arises as to what the
law is on a certain set of facts as distinguished from a question of fact which occurs when the doubt
or difference arises as to the truth or falsehood of the alleged facts. 5
A scrutiny of the issues raised in this case shows that it includes factual matters. The resolution of
the interpleader case necessitates a determination of whether the other pending cases
relied upon by the trial court in dismissing the former case involves the same matters
covered by the latter cases. There is a need to determine whether the pending civil cases arise out
of the same facts and circumstances as those involved in the interpleader case. As such, petitioner’s
direct resort to this court must fail considering that this court is not a trier of facts. 6 Besides, in a
petition for review on certiorari, the trial judge should not even be made a party to the case as
petitioner erroneously did. 7
Petitioner’s imputation of grave abuse of discretion to respondent court as alleged in its petition is a
vain attempt to justify its erroneous mode of challenging the trial court’s decision. There is no
question that grave abuse of discretion or errors of jurisdiction may be corrected only by the special
civil action of certiorari. 8 Such special remedy does not avail in instances of error of judgment which
can be corrected by appeal or by a petition for review. 9 Since petitioner availed of the remedy under
Rule 45, recourse to Rule 65 cannot be allowed either as an add-on or as a substitute for appeal. 10
Verily, the alleged grave abuse of discretion and lack of jurisdiction raised in the petition is
misplaced. First, there is no question that the trial court has jurisdiction over the interpleader case.
Second, petitioner’s claim that the trial court failed to observe the procedure for an interpleader
action does not constitute grave abuse of discretion for the extraordinary writ to issue. It is only an
error of judgment correctible by an ordinary appeal. The extraordinary writ does not issue to correct
errors of procedure or mistake in the findings and conclusions of the judge. 11 Finally, on the
assumption that this is a proper subject of a certiorari case, petitioner should have observed the
hierarchy of courts and not seek an immediate recourse to the highest tribunal. The original
jurisdiction of the Court of Appeals over special civil actions for certiorari is concurrent with the
Supreme Court and the Regional Trial Court. 12
ACCORDINGLY, the petition is denied for lack of merit. c

7.) [G.R. No. 133113. August 30, 2001.]
EDGAR H. ARREZA, Petitioner, v. MONTANO M. DIAZ, JR., Respondent.
DECISION
QUISUMBING, J.:
This petition assails the decision 1 promulgated on December 24, 1997, and the resolution 2 dated
March 6, 1998, by the Court of Appeals in CA-G.R SP No. 43895. That decision dismissed the petition
for certiorari questioning the order 3 dated February 4, 1997 of the Regional Trial Court of Makati
City, Branch 59, in Civil Case No. 96-1372, which had denied petitioner’s motion to dismiss the
complaint filed against him on grounds of res adjudicata. chanrob1es virtua1 1aw library
The factual antecedents of the present petition are culled from the findings of the Court of Appeals.
Bliss Development Corporation is the owner of a housing unit located at Lot 27. Block 30 New Capitol
Estates I, Barangay Matandang Balara, Quezon City. In the course of a case involving a conflict of
ownership between petitioner Edgar H. Arreza and respondent Montano M. Diaz, Jr., 4 docketed as
Civil Case No. 94-2086 before the Regional Trial Court of Makati, Branch 146, Bliss Development
Corporation filed a complaint for interpleader.
chanrob1es virtua1 1aw 1ibrary
In a decision dated March 27, 1996, the trial court resolved the conflict by decreeing as follows: chanrob1es virtual 1aw library
WHEREFORE, premises considered, the herein interpleader is resolved in favor of defendant Edgar H.
Arreza, and plaintiff Bliss Development is granted cognizance of the May 6, 1991 transfer of rights by
Emiliano and Leonila Melgazo thru Manuel Melgazo, to said defendant Edgar Arreza. The case is
dismissed as against defendant Montano M. Diaz, Jr.
The third-party complaint is likewise dismissed.
SO ORDERED.
The decision became final and was duly executed with Bliss executing a Contract to Sell the
aforementioned property to petitioner Arreza. Respondent Diaz was constrained to deliver the
property with all its improvements to petitioner.
Thereafter respondent Diaz filed a complaint against Bliss Development Corporation, Edgar H. Arreza,
and Domingo Tapay in the Regional Trial Court of Makati, Branch 59, docketed as Civil Case No. 96-
1372. He sought to hold Bliss Development Corporation and petitioner Arreza liable for
reimbursement to him of P1,706,915;58 representing the cost of his acquisition and improvements
on the subject property with interest at 8% per annum.
Petitioner Arreza filed a Motion to Dismiss the case, citing as grounds res adjudicata or
conclusiveness of the judgment in the interpleader case as well as lack of cause of action.
In an Order dated February 4, 1997, the motion was denied for lack of merit.
A Motion for Reconsideration filed by Arreza was likewise denied on March 20, 1997. chanrob1es virtua1 1aw 1ibrary
On April 16, 1997, Arreza filed a petition for certiorari before the Court of Appeals alleging that the
Orders dated February 4 and March 20, 1997, were issued against clear provisions of pertinent laws,
the Rules of Court, and established jurisprudence such that respondent court acted without or in
excess of jurisdiction, or grave abuse of discretion amounting to lack or excess of jurisdiction.
The petition was dismissed for lack of merit. The Court of Appeals said: chanrob1es virtual 1aw library
The decision invoked by the petitioner as res adjudicata resolved only the issue of who between
Edgar H. Arreza and Montano Diaz has the better right over the property under litigation. It did not
resolve the rights and obligations of the parties.
The action filed by Montano M. Diaz against Bliss Development Corporation, Et. Al. seeks principally
the collection of damages in the form of the payments Diaz made to the defendant and the value of
the improvements he introduced on the property — matters that were not adjudicated upon in the
previous case for interpleader.
x x x
WHEREFORE, this petition is hereby DISMISSED with costs against the petitioner.
SO ORDERED. 5
Petitioner’s motion to reconsider the decision of the Court of Appeals was denied. 6 Hence, the
present petition, where petitioner raises the following grounds for review: chanrob1es virtual 1aw library
THE CAUSE OF ACTION EMBODIED IN THE PRESENT RTC CASE PERTAINING TO MR. DIAZ’S CLAIMS
FOR REIMBURSEMENT OF AMOUNTS WHICH HE ALLEGEDLY PAID TO BLISS BY WAY OF PREMIUM OR
INSTALLMENT PAYMENTS FOR THE ACQUISITION OF THE PROPERTY WAS ERRONEOUSLY BROUGHT
AGAINST MR. ARREZA. ALSO, SAID CLAIMS ARE BARRED BY RES ADJUDICATA OR
CONCLUSIVENESS OF A PRIOR JUDGMENT IN THE PRIOR RTC CASE WHICH WAS ULTIMATELY
AFFIRMED BY THIS HONORABLE COURT IN G.R. NO. 128726. chanrob1es virtua1 1aw 1ibrary
II
THE CAUSE OF ACTION EMBODIED IN THE PRESENT RTC CASE PERTAINING TO MR. DIAZ’S CLAIMS
FOR REIMBURSEMENT OF THE COST OF IMPROVEMENTS HE ALLEGEDLY INTRODUCED TO THE
PROPERTY IS LIKEWISE BARRED BY RES ADJUDICATA OR CONCLUSIVENESS OF A PRIOR JUDGMENT
IN THE PRIOR RTC CASE WHICH WAS ULTIMATELY AFFIRMED BY THIS HONORABLE COURT IN G.R
NO. 128726.
III.
THE RULING IN THE PRIOR CA PETITION (CA-G.R. SP. NO. 41974) WHICH WAS ULTIMATELY
AFFIRMED BY THIS HONORABLE COURT IN G.R. NO. 128726 THAT THE DECISION IN THE PRIOR RTC
CASE SETTLED ALL CLAIMS WHICH MESSRS. DIAZ AND ARREZA HAD AGAINST EACH OTHER
CONSTITUTES THE LAW OF THE CASE BETWEEN THEM AND SERVES AS BAR TO THE FILING OF THE
PRESENT RTC CASE INVOLVING THE SAME CLAIMS.
IV.
IN ITS ENTIRETY, THE AMENDED COMPLAINT IN THE PRESENT RTC CASE IS DISMISSIBLE ON THE

GROUND OF LACK OF CAUSE OF ACTION. 7
The issue for our resolution now is whether respondent Diaz’s claims for reimbursement
against petitioner Arreza are barred by res adjudicata.
The elements of res adjudicata are: (a) that the former judgment must be final; (b) the court which
rendered judgment had jurisdiction over the parties and the subject matter; (c) it must be a
judgment on the merits; and (d) there must be between the first and second causes of action identity
of the parties, subject matter, and cause of action. 8
Worthy of note, the prior case for interpleader filed with Branch 146 of the Regional Trial Court of
Makati, Civil Case No. 94-2086, was settled with finality with this Court’s resolution in G.R. No.
128726. 9 The judgment therein is now final. chanrob1es virtua1 1aw 1ibrary
When the Regional Trial Court of Makati (Branch 146) rendered judgment, it had priorly acquired
jurisdiction over the parties and the subject matter. Respondent, however, contends that the trial
court did not acquire jurisdiction over the property subject of the action, as the action was instituted
in Makati City while the subject unit is situated in Quezon City.
We find, however, that in his answer to the complaint dated October 3, 1994, respondent alleged: chanrob1es virtual 1aw library
20. That should the said additional provision be declared valid and in the remote possibility that the
alleged conflicting claimant is adjudged to possess better right herein answering defendant is
asserting his right as a buyer for value and in good faith against all persons/parties concerned. 10
(Emphasis supplied)
Respondent in his answer also prayed that: chanrob1es virtual 1aw library
D. Should the said additional provision be found valid and in the event his co-defendant is found to
possess better rights, to adjudge him (Diaz) entitled to rights as a buyer in good faith and for value.
11
By asserting his right as a buyer for value and in good faith of the subject property, and asking for
relief arising therefrom, respondent invoked the jurisdiction of the trial court. Having invoked the
jurisdiction of the Regional Trial Court of Makati (Branch 146) by filing his answer to secure
affirmative relief against petitioner, respondent is now estopped from challenging the jurisdiction of
said court after it had decided the case against him. Surely we cannot condone here the undesirable
practice of a party submitting his case for decision and then accepting the judgment only if favorable,
but attacking it on grounds of jurisdiction when adverse. 12
Respondent also claims that there is no identity of causes of action between Civil Case No. 94-2086,
the prior case, and Civil Case No. 96-1372, the present case subject of this petition, as the former
involved a complaint for interpleader while the latter now involves an action for a sum of money and
damages. He avers that a complaint for interpleader is nothing more than the determination of rights
over the subject matter involved. chanrobles virtual law library
In its assailed decision, respondent Court of Appeals pointed out that the 1997 Rules of Civil
Procedure provide that in a case for interpleader, the court shall determine the respective rights and
obligations of the parties and adjudicate their respective claims. 13 The appellate court noted,
however, that the defendants in that interpleader case, namely Diaz and Arreza, did not pursue the
issue of damages and reimbursement although the answer of respondent Diaz did pray for
affirmative relief arising out of the rights of a buyer in good faith. 14
Following the same tack, respondent Diaz now alleges that the issues in the prior case, Civil Case No.
94-2086, were delimited by the pre-trial order which did not include matters of damages and
reimbursement as an issue. He faults petitioner for not raising such issues in the prior case, with the
result that the trial court did not resolve the rights and obligations of the parties. There being no
such resolution, no similar cause of action exists between the prior case and the present case,
according to respondent Diaz.
Respondent in effect argues that it was incumbent upon petitioner as a party in Civil Case
No. 94-2086 to put in issue respondent’s demands for reimbursement. However, it was not
petitioner’s duty to do the lawyering for Respondent. As stated by the Court of Appeals,
the court in a complaint for interpleader shall determine the rights and obligations of the
parties and adjudicate their respective claims. Such rights, obligations, and claims could
only be adjudicated if put forward by the aggrieved party in assertion of his rights. That
party in this case referred to respondent Diaz. The second paragraph of Section 5 of Rule
62 of the 1997 Rules of Civil Procedure provides that the parties in an interpleader action
may file counterclaims, cross-claims, third party complaints and responsive pleadings
thereto, "as provided by these Rules." The second paragraph was added to Section 5 to
expressly authorize the additional pleadings and claims enumerated therein, in the
interest of a complete adjudication of the controversy and its incidents. 15
Pursuant to said Rules, respondent should have filed his claims against petitioner Arreza in
the interpleader action. Having asserted his rights as a buyer in good faith in his answer, and
praying relief therefor, respondent Diaz should have crystallized his demand into specific claims for
reimbursement by petitioner Arreza. This he failed to do. Such failure gains significance in light of our
ruling in Baclayon v. Court of Appeals, 182 SCRA 761, 771-772 (1990), where this Court said: chanrob1es virtua1 1aw 1ibrary
A corollary question that We might as well resolve now (although not raised as an issue in the
present petition, but conformably with Gayos, Et. Al. v. Gayos, Et Al., G.R. No. L-27812, September
26, 197S, 67 SCRA 146, that it is a cherished rule of procedure that a court should always strive to
settle the entire controversy in a single proceeding leaving no root or branch to bear the seeds in
future litigation) is whether or not the private respondents can still file a separate complaint against
the petitioners on the ground that they are builders in good faith and consequently, recover the value
of the improvements introduced by them on the subject lot. The case of Heirs of Laureano Marquez
v. Valencia, 99 Phil. 740, provides the answer: chanrob1es virtual 1aw library
If, aside from relying solely on the deed of sale with a right to repurchase and failure on the part of
the vendors to purchase it within the period stipulated therein, the defendant had set up an
alternative though inconsistent defense that he had inherited the parcel of land from his late
maternal grandfather and presented evidence in support of both defenses, the overruling of the first
would not bar the determination by the court of the second. The defendant having failed to set up
such alternative defenses and chosen or elected to rely on one only, the overruling thereof was a
complete determination of the controversy between the parties which bars a subsequent action based
upon an unpleaded defense, or any other cause of action, except that of Failure of the complaint to
state a cause of action and of lack of jurisdiction of the Court. The determination of the issue joined
by the parties constitutes res judicata. (Emphasis supplied)
Although the alternative defense of being builders in good faith is only permissive, the counterclaim
for reimbursement of the value of the improvements is in the nature of a compulsory counterclaim.
Thus, the failure by the private respondents to set it up bars their right to raise it in a subsequent
litigation (Rule 9, Section 4 of the Rules of Court). While We realize the plight of the private
respondents, the rule on compulsory counterclaim is designed to enable the disposition of the whole
controversy at one time and in one action. The philosophy of the rule is to discourage multiplicity of
suits. (Emphasis supplied) chanrob1es virtua1 1aw 1ibrary
Having failed to set up his claim for reimbursement, said claim of respondent Diaz being in
the nature of a compulsory counterclaim is now barred. 16

In cases involving res adjudicata, the parties and the causes of action are identical or substantially
the same in the prior as well as the subsequent action. The judgment in the first action is conclusive
as to every matter offered and received therein and as to any other matter admissible therein and
which might have been offered for that purpose, hence said judgment is an absolute bar to a
subsequent action for the same cause. 17 The bar extends to questions "necessarily involved in an
issue, and necessarily adjudicated, or necessarily implied in the final judgment, although no specific
finding may have been made in reference thereto, and although such matters were directly referred
to in the pleadings and were not actually or formally presented" 18 Said prior judgment is conclusive
in a subsequent suit between the same parties on the same subject matter, and on the same cause
of action, not only as to matters which were decided in the first action, but also as to every other
matter which the parties could have properly set up in the prior suit. 19
In the present case, we find there is an identity of causes of action between Civil Case No. 94-2086
and Civil Case No. 96-1372. Respondent Diaz’s cause of action in the prior case, now the crux of his
present complaint against petitioner, was in the nature of an unpleaded compulsory counterclaim,
which is now barred. There being a former final judgment on the merits in the prior case, rendered in
Civil Case No. 94-2086 by Branch 146 of the Regional Trial Court of Makati, which acquired
jurisdiction over the same parties, the same subject property, and the same cause of action, the
present complaint of respondent herein (Diaz) against petitioner Arreza docketed as Civil Case No.
96-1372 before the Regional Trial of Makati, Branch 59 should be dismissed on the ground of res
adjudicata. chanrob1es virtua1 1aw 1ibrary
WHEREFORE, the instant petition is GRANTED. The decision dated December 24, 1997 and the
resolution dated March 6, 1998 of the Court of Appeals in CA-G.R. SP No. 43895 are REVERSED and
SET ASIDE. Civil Case No. 96-1372 before the Regional Trial Court of Makati City, Branch 59, is
hereby ordered DISMISSED as against herein petitioner Edgar H. Arreza. Costs against Respondent.

8.) G.R. No. 181723 August 11, 2014
ELIZABETH DEL CARMEN, Petitioner,

vs.
SPOUSES RESTITUTO SABORDO and MIMA MAHILUM-SABORDO, Respondents.
DECISION
PERALTA, J.:
This treats of the petition for review on certiorari assailing the Decision and Resolution of the Court of Appeals
1 2
(CA), dated May 25, 2007 and January 24, 2008, respectively, in CA-G.R. CV No. 75013.
The factual and procedural antecedents of the case are as follows:
Sometime in 1961, the spouses Toribio and Eufrocina Suico (Suico spouses), along with several business partners,
entered into a business venture by establishing a rice and com mill at Mandaue City, Cebu. As part of their capital,
they obtained a loan from the Development Bank of the Philippines (DBP), and to secure the said loan, four parcels
of land owned by the Suico spouses, denominated as Lots 506, 512, 513 and 514, and another lot owned by their
business partner, Juliana Del Rosario, were mortgaged. Subsequently, the Suico spouses and their business
partners failed to pay their loan obligations forcing DBP to foreclose the mortgage. After the Suico spouses and their
partners failed to redeem the foreclosed properties, DBP consolidated its ownership over the same. Nonetheless,
DBP later allowed the Suico spouses and Reginald and Beatriz Flores (Flores spouses), as substitutes for Juliana
Del Rosario, to repurchase the subject lots by way of a conditional sale for the sum of ₱240,571.00. The Suico and
Flores spouses were able to pay the downpayment and the first monthly amortization, but no monthly installments
were made thereafter. Threatened with the cancellation of the conditional sale, the Suico and Flores spouses sold
their rights over the said properties to herein respondents Restituto and Mima Sabordo, subject to the condition that
the latter shall pay the balance of the sale price. On September 3, 1974, respondents and the Suico and Flores
spouses executed a supplemental agreement whereby they affirmed that what was actually sold to respondents
were Lots 512 and 513, while Lots 506 and 514 were given to them as usufructuaries. DBP approved the sale of
rights of the Suico and Flores spouses in favor of herein respondents. Subsequently, respondents were able to
repurchase the foreclosed properties of the Suico and Flores spouses.
On September 13, 1976, respondent Restituto Sabordo (Restituto) filed with the then Court of First Instance of
Negros Occidental an original action for declaratory relief with damages and prayer for a writ of preliminary
injunction raising the issue of whether or not the Suico spouses have the right to recover from respondents Lots 506
and 514.
In its Decision dated December 17, 1986, the Regional Trial Court (RTC) of San Carlos City, Negros Occidental,
ruled in favor of the Suico spouses directing that the latter have until August 31, 1987 within which to redeem or buy
back from respondents Lots 506 and 514.
On appeal, the CA, in its Decision in CA-G.R. CV No. 13785, dated April 24, 1990, modified the RTC decision by
3
giving the Suico spouses until October 31, 1990 within which to exercise their option to purchase or redeem the
subject lots from respondents by paying the sum of ₱127,500.00. The dispositive portion of the CADecision reads
as follows:
xxxx
For reasons given, judgment is hereby rendered modifying the dispositive portion of [the] decision of the lower court
to read:
1) The defendants-appellees are granted up to October 31, 1990 within which toexercise their option to
purchase from the plaintiff-appellant Restituto Sabordo and Mima Mahilum Lot No. 506, covered by Transfer
Certificate of Title No. T-102598 and Lot No. 514, covered by Transfer Certificate of Title No. T-102599, both
of Escalante Cadastre, Negros Occidental by reimbursing or paying to the plaintiff the sum of ONE
HUNDRED TWENTY-SEVEN THOUSAND FIVE HUNDRED PESOS (₱127,500.00);
2) Within said period, the defendants-appellees shall continue to have usufructuary rights on the coconut
trees on Lots Nos. 506 and 514, Escalante Cadastre, Negros Occidental;
3) The Writ of Preliminary Injunction dated August 12, 1977 shall be effective untildefendants-appellees shall
have exercised their option to purchase within said period by paying or reimbursing to the plaintiff-appellant
the aforesaid amount.
No pronouncement as to costs.
SO ORDERED. 4
In a Resolution dated February 13, 1991, the CA granted the Suico spouses an additional period of 90 days from
5
notice within which to exercise their option to purchase or redeem the disputed lots.
In the meantime, Toribio Suico (Toribio) died leaving his widow, Eufrocina, and several others, including herein
petitioner, as legal heirs. Later, they discovered that respondents mortgaged Lots 506 and 514 with Republic
Planters Bank (RPB) as security for a loan which, subsequently, became delinquent.
Thereafter, claiming that they are ready with the payment of ₱127,500.00, but alleging that they cannot determine
as to whom such payment shall be made, petitioner and her co-heirs filed a Complaint with the RTC of San Carlos
6
City, Negros Occidental seeking to compel herein respondents and RPB to interplead and litigate between
themselves their respective interests on the abovementioned sum of money. The Complaint also prayed that
1âwphi1
respondents be directed to substitute Lots 506 and 514 with other real estate properties as collateral for their
outstanding obligation with RPB and that the latter be ordered toaccept the substitute collateral and release the
mortgage on Lots 506 and 514. Upon filing of their complaint, the heirs of Toribio deposited the amount of
₱127,500.00 with the RTC of San Carlos City, Branch 59.
Respondents filed their Answer with Counterclaim praying for the dismissal of the above Complaint on the grounds
7
that (1) the action for interpleader was improper since RPB is not laying any claim on the sum of ₱127,500.00; (2)
that the period within which the complainants are allowed to purchase Lots 506 and 514 had already expired; (3)
that there was no valid consignation, and (4) that the case is barred by litis pendencia or res judicata.
On the other hand, RPB filed a Motion to Dismiss the subject Complaint on the ground that petitioner and her co-
heirs had no valid cause of action and that they have no primary legal right which is enforceable and binding against
RPB.
On December 5, 2001, the RTC rendered judgment, dismissing the Complaint of petitioner and her co-heirs for lack
of merit. Respondents' Counterclaim was likewise dismissed.
8
Petitioner and her co-heirs filed an appeal with the CA contending that the judicial deposit or consignation of the
amount of ₱127,500.00 was valid and binding and produced the effect of payment of the purchase price of the
subject lots.
In its assailed Decision, the CA denied the above appeal for lack of merit and affirmed the disputed RTC Decision.
Petitioner and her co-heirs filed a Motion for Reconsideration, but it was likewise denied by the CA.
9
Hence, the present petition for review on certiorariwith a lone Assignment of Error, to wit:
THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE LOWER COURT WHICH HELD
THAT THE JUDICIAL DEPOSIT OF ₱127,500.00 MADE BY THE SUICOS WITH THE CLERK OF COURT OF
THE RTC, SAN CARLOS CITY, IN COMPLIANCE WITH THE FINAL AND EXECUTORY DECISION OF THE
COURT OF APPEALS IN CA-G.R. CV-13785 WAS NOT VALID. 10

Petitioner's main contention is that the consignation which she and her co-heirs made was a judicial deposit based
on a final judgment and, as such, does not require compliance with the requirements of Articles 1256 and 1257 of
11 12
the Civil Code.
The petition lacks merit. At the outset, the Court quotes with approval the discussion of the CA regarding the
definition and nature of consignation, to wit: … consignation [is] the act of depositing the thing due with the court or
judicial authorities whenever the creditor cannot accept or refuses to accept payment, and it generally requires a
prior tender of payment. It should be distinguished from tender of payment which is the manifestation by the debtor
to the creditor of his desire to comply with his obligation, with the offer of immediate performance. Tender is the
antecedent of consignation, that is, an act preparatory to the consignation, which is the principal, and from which are
derived the immediate consequences which the debtor desires or seeks to obtain. Tender of payment may be
extrajudicial, while consignation is necessarily judicial, and the priority of the first is the attempt to make a private
settlement before proceeding to the solemnities of consignation. Tender and consignation, where validly made,
produces the effect of payment and extinguishes the obligation. 13
In the case of Arzaga v. Rumbaoa, which was cited by petitioner in support of his contention, this Court ruled that
14
the deposit made with the court by the plaintiff-appellee in the saidcase is considered a valid payment of the amount
adjudged, even without a prior tender of payment thereof to the defendants-appellants,because the plaintiff-
appellee, upon making such deposit, expressly petitioned the court that the defendants-appellees be notified to
receive the tender of payment. This Court held that while "[t]he deposit, by itself alone, may not have been sufficient,
but with the express terms of the petition, there was full and complete offer of payment made directly to defendants-
appellants." In the instant case, however, petitioner and her co-heirs, upon making the deposit with the RTC,
15
did not ask the trial court that respondents be notified to receive the amount that they have deposited. In
fact, there was no tender of payment. Instead, what petitioner and her co-heirs prayed for is that
respondents and RPB be directed to interplead with one another to determine their alleged respective rights
over the consigned amount; that respondents be likewise directed to substitute the subject lots with other real
properties as collateral for their loan with RPB and that RPB be also directed to accept the substitute real properties
as collateral for the said loan. Nonetheless,the trial court correctly ruled that interpleader is not the proper remedy
because RPB did notmake any claim whatsoever over the amount consigned by petitioner and her co-heirs with the
court.
In the cases of Del Rosario v. Sandico and Salvante v. Cruz, likewise cited as authority by petitioner, this Court
16 17
held that, for a consignation or deposit with the court of an amount due on a judgment to be considered as
payment, there must be prior tender to the judgment creditor who refuses to accept it. The same principle
was reiterated in the later case of Pabugais v. Sahijwani. As stated above, tender of payment involves a positive
18
and unconditional act by the obligor of offering legal tender currency as payment to the obligee for the former’s
obligation and demanding that the latter accept the same. In the instant case, the Court finds no cogent reason to
19
depart from the findings of the CA and the RTC that petitioner and her co-heirs failed to make a prior valid tender of
payment to respondents.
It is settled that compliance with the requisites of a valid consignation is mandatory. Failure to comply strictly with
20
any of the requisites will render the consignation void. One of these requisites is a valid prior tender of payment. 21
Under Article 1256, the only instances where prior tender of payment is excused are: (1) when the creditor is absent
or unknown, or does not appear at the place of payment; (2) when the creditor is incapacitated to receive the
payment at the time it is due; (3) when, without just cause, the creditor refuses to give a receipt; (4) when two or
more persons claim the same right to collect; and (5) when the title of the obligation has been lost. None of these
instances are present in the instant case. Hence, the fact that the subject lots are in danger of being foreclosed
does not excuse petitioner and her co-heirs from tendering payment to respondents, as directed by the court.
WHEREFORE, the instant petition is DENIED. The Decision of the Court of Appeals, dated May 25, 2007, and its
Resolution dated January 24, 2008, both in CA-G.R. CV No. 75013, are AFFIRMED.

9.) G.R. No. 136409 March 14, 2008
SUBHASH C. PASRICHA and JOSEPHINE A. PASRICHA, Petitioners,

vs.
DON LUIS DISON REALTY, INC., Respondent.
DECISION
NACHURA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal of the Decision1 of
the Court of Appeals (CA) dated May 26, 1998 and its Resolution2 dated December 10, 1998 in CA-G.R. SP No.
37739 dismissing the petition filed by petitioners Josephine and Subhash Pasricha.
The facts of the case, as culled from the records, are as follows:
Respondent Don Luis Dison Realty, Inc. and petitioners executed two Contracts of Lease 3 whereby the
former, as lessor, agreed to lease to the latter Units 22, 24, 32, 33, 34, 35, 36, 37 and 38 of the San Luis
Building, located at 1006 M.Y. Orosa cor. T.M. Kalaw Streets, Ermita, Manila. Petitioners, in turn, agreed to pay
monthly rentals, as follows:
For Rooms 32/35:
From March 1, 1991 to August 31, 1991 – ₱5,000.00/₱10,000.00
From September 1, 1991 to February 29, 1992 – ₱5,500.00/₱11,000.00
From March 1, 1992 to February 28, 1993 – ₱6,050.00/₱12,100.00
For Rooms 22 and 24:
Effective July 1, 1992 – ₱10,000.00 with an increment of 10% every two years.5
For Rooms 33 and 34:
Effective April 1, 1992 – ₱5,000.00 with an increment of 10% every two years.6
For Rooms 36, 37 and 38:

Effective when tenants vacate said premises – ₱10,000.00 with an increment of 10% every two years.7
Petitioners were, likewise, required to pay for the cost of electric consumption, water bills and the use of telephone
cables.8
The lease of Rooms 36, 37 and 38 did not materialize leaving only Rooms 22, 24, 32, 33, 34 and 35 as subjects of
the lease contracts.9 While the contracts were in effect, petitioners dealt with Francis Pacheco (Pacheco), then
General Manager of private respondent. Thereafter, Pacheco was replaced by Roswinda Bautista (Ms.
Bautista).10 Petitioners religiously paid the monthly rentals until May 1992.11 After that, however, despite
repeated demands, petitioners continuously refused to pay the stipulated rent. Consequently, respondent was
constrained to refer the matter to its lawyer who, in turn, made a final demand on petitioners for the payment of the
accrued rentals amounting to ₱916,585.58.12 Because petitioners still refused to comply, a complaint for ejectment
was filed by private respondent through its representative, Ms. Bautista, before the Metropolitan Trial Court (MeTC)
of Manila.13 The case was raffled to Branch XIX and was docketed as Civil Case No. 143058-CV.
Petitioners admitted their failure to pay the stipulated rent for the leased premises starting July until November 1992,
but claimed that such refusal was justified because of the internal squabble in respondent company as to the
person authorized to receive payment.14 To further justify their non-payment of rent, petitioners alleged that they
were prevented from using the units (rooms) subject matter of the lease contract, except Room 35. Petitioners
eventually paid their monthly rent for December 1992 in the amount of ₱30,000.00, and claimed that respondent
waived its right to collect the rents for the months of July to November 1992 since petitioners were prevented from
using Rooms 22, 24, 32, 33, and 34.15 However, they again withheld payment of rents starting January 1993
because of respondent’s refusal to turn over Rooms 36, 37 and 38.16 To show good faith and willingness to pay the
rents, petitioners alleged that they prepared the check vouchers for their monthly rentals from January 1993 to
January 1994.17 Petitioners further averred in their Amended Answer18 that the complaint for ejectment was
prematurely filed, as the controversy was not referred to the barangay for conciliation.
For failure of the parties to reach an amicable settlement, the pre-trial conference was terminated. Thereafter, they
submitted their respective position papers.
On November 24, 1994, the MeTC rendered a Decision dismissing the complaint for ejectment.19 It considered
petitioners’ non-payment of rentals as unjustified. The court held that mere willingness to pay the rent did not
amount to payment of the obligation; petitioners should have deposited their payment in the name of respondent
company. On the matter of possession of the subject premises, the court did not give credence to petitioners’ claim
that private respondent failed to turn over possession of the premises. The court, however, dismissed the complaint
because of Ms. Bautista’s alleged lack of authority to sue on behalf of the corporation.
Deciding the case on appeal, the Regional Trial Court (RTC) of Manila, Branch 1, in Civil Case No. 94-72515,
reversed and set aside the MeTC Decision in this wise:
WHEREFORE, the appealed decision is hereby reversed and set aside and another one is rendered ordering
defendants-appellees and all persons claiming rights under them, as follows:
(1) to vacate the leased premised (sic) and restore possession thereof to plaintiff-appellant;
(2) to pay plaintiff-appellant the sum of ₱967,915.80 representing the accrued rents in arrears as of
November 1993, and the rents on the leased premises for the succeeding months in the amounts stated in
paragraph 5 of the complaint until fully paid; and
(3) to pay an additional sum equivalent to 25% of the rent accounts as and for attorney’s fees plus the costs
of this suit.
SO ORDERED.20
The court adopted the MeTC’s finding on petitioners’ unjustified refusal to pay the rent, which is a valid ground for
ejectment. It, however, faulted the MeTC in dismissing the case on the ground of lack of capacity to sue. Instead, it
upheld Ms. Bautista’s authority to represent respondent notwithstanding the absence of a board resolution to that
effect, since her authority was implied from her power as a general manager/treasurer of the company.21
Aggrieved, petitioners elevated the matter to the Court of Appeals in a petition for review on certiorari.22 On March
18, 1998, petitioners filed an Omnibus Motion23 to cite Ms. Bautista for contempt; to strike down the MeTC and RTC
Decisions as legal nullities; and to conduct hearings and ocular inspections or delegate the reception of evidence.
Without resolving the aforesaid motion, on May 26, 1998, the CA affirmed24 the RTC Decision but deleted the award
of attorney’s fees.25
Petitioners moved for the reconsideration of the aforesaid decision.26 Thereafter, they filed several motions asking
the Honorable Justice Ruben T. Reyes to inhibit from further proceeding with the case allegedly because of his
close association with Ms. Bautista’s uncle-in-law.27
In a Resolution28 dated December 10, 1998, the CA denied the motions for lack of merit. The appellate court
considered said motions as repetitive of their previous arguments, irrelevant and obviously dilatory.29 As to the
motion for inhibition of the Honorable Justice Reyes, the same was denied, as the appellate court justice stressed
that the decision and the resolution were not affected by extraneous matters.30 Lastly, the appellate court granted
respondent’s motion for execution and directed the RTC to issue a new writ of execution of its decision, with the
exception of the award of attorney’s fees which the CA deleted.31
Petitioners now come before this Court in this petition for review on certiorari raising the following issues:
I.
Whether this ejectment suit should be dismissed and whether petitioners are entitled to damages for the
unauthorized and malicious filing by Rosario (sic) Bautista of this ejectment case, it being clear that
[Roswinda] – whether as general manager or by virtue of her subsequent designation by the Board of
Directors as the corporation’s attorney-in-fact – had no legal capacity to institute the ejectment suit,
independently of whether Director Pacana’s Order setting aside the SEC revocation Order is a mere scrap
of paper.
II.
Whether the RTC’s and the Honorable Court of Appeals’ failure and refusal to resolve the most fundamental
factual issues in the instant ejectment case render said decisions void on their face by reason of the
complete abdication by the RTC and the Honorable Justice Ruben Reyes of their constitutional duty not only
to clearly and distinctly state the facts and the law on which a decision is based but also to resolve the
decisive factual issues in any given case.
III.
Whether the (1) failure and refusal of Honorable Justice Ruben Reyes to inhibit himself, despite his
admission – by reason of his silence – of petitioners’ accusation that the said Justice enjoyed a $7,000.00
scholarship grant courtesy of the uncle-in-law of respondent "corporation’s" purported general manager and
(2), worse, his act of ruling against the petitioners and in favor of the respondent "corporation" constitute an
unconstitutional deprivation of petitioners’ property without due process of law.32
In addition to Ms. Bautista’s lack of capacity to sue, petitioners insist that respondent company has no standing to
sue as a juridical person in view of the suspension and eventual revocation of its certificate of registration.33 They
likewise question the factual findings of the court on the bases of their ejectment from the subject premises.
Specifically, they fault the appellate court for not finding that: 1) their non-payment of rentals was justified; 2) they
were deprived of possession of all the units subject of the lease contract except Room 35; and 3) respondent
violated the terms of the contract by its continued refusal to turn over possession of Rooms 36, 37 and 38.
Petitioners further prayed that a Temporary Restraining Order (TRO) be issued enjoining the CA from enforcing its
Resolution directing the issuance of a Writ of Execution. Thus, in a Resolution34 dated January 18, 1999, this Court

directed the parties to maintain the status quo effective immediately until further orders. (were they rightfully
ejected?)
The petition lacks merit.
We uphold the capacity of respondent company to institute the ejectment case. Although the Securities and
Exchange Commission (SEC) suspended and eventually revoked respondent’s certificate of registration on
February 16, 1995, records show that it instituted the action for ejectment on December 15, 1993. Accordingly,
when the case was commenced, its registration was not yet revoked.35 Besides, as correctly held by the appellate
court, the SEC later set aside its earlier orders of suspension and revocation of respondent’s certificate, rendering
the issue moot and academic.36
We likewise affirm Ms. Bautista’s capacity to sue on behalf of the company despite lack of proof of authority to so
represent it. A corporation has no powers except those expressly conferred on it by the Corporation Code and those
that are implied from or are incidental to its existence. In turn, a corporation exercises said powers through its board
of directors and/or its duly authorized officers and agents. Physical acts, like the signing of documents, can be
performed only by natural persons duly authorized for the purpose by corporate by-laws or by a specific act of the
board of directors.37 Thus, any person suing on behalf of the corporation should present proof of such authority.
Although Ms. Bautista initially failed to show that she had the capacity to sign the verification and institute the
ejectment case on behalf of the company, when confronted with such question, she immediately presented the
Secretary’s Certificate38 confirming her authority to represent the company.
There is ample jurisprudence holding that subsequent and substantial compliance may call for the relaxation of the
rules of procedure in the interest of justice.39 In Novelty Phils., Inc. v. Court of Appeals,40 the Court faulted the
appellate court for dismissing a petition solely on petitioner’s failure to timely submit proof of authority to sue on
behalf of the corporation. In Pfizer, Inc. v. Galan,41 we upheld the sufficiency of a petition verified by an employment
specialist despite the total absence of a board resolution authorizing her to act for and on behalf of the corporation.
Lastly, in China Banking Corporation v. Mondragon International Philippines, Inc,42 we relaxed the rules of procedure
because the corporation ratified the manager’s status as an authorized signatory. In all of the above cases, we
brushed aside technicalities in the interest of justice. This is not to say that we disregard the requirement of prior
authority to act in the name of a corporation. The relaxation of the rules applies only to highly meritorious cases, and
when there is substantial compliance. While it is true that rules of procedure are intended to promote rather than
frustrate the ends of justice, and while the swift unclogging of court dockets is a laudable objective, we should not
insist on strict adherence to the rules at the expense of substantial justice.43 Technical and procedural rules are
intended to help secure, not suppress, the cause of justice; and a deviation from the rigid enforcement of the rules
may be allowed to attain that prime objective, for, after all, the dispensation of justice is the core reason for the
existence of courts.44
As to the denial of the motion to inhibit Justice Reyes, we find the same to be in order. First, the motion to inhibit
came after the appellate court rendered the assailed decision, that is, after Justice Reyes had already rendered his
opinion on the merits of the case. It is settled that a motion to inhibit shall be denied if filed after a member of the
court had already given an opinion on the merits of the case, the rationale being that "a litigant cannot be permitted
to speculate on the action of the court x x x (only to) raise an objection of this sort after the decision has been
rendered."45 Second, it is settled that mere suspicion that a judge is partial to one of the parties is not enough; there
should be evidence to substantiate the suspicion. Bias and prejudice cannot be presumed, especially when weighed
against a judge’s sacred pledge under his oath of office to administer justice without regard for any person and to do
right equally to the poor and the rich. There must be a showing of bias and prejudice stemming from an extrajudicial
source, resulting in an opinion on the merits based on something other than what the judge learned from his
participation in the case.46 We would like to reiterate, at this point, the policy of the Court not to tolerate acts of
litigants who, for just about any conceivable reason, seek to disqualify a judge (or justice) for their own purpose,
under a plea of bias, hostility, prejudice or prejudgment.47
We now come to the more substantive issue of whether or not the petitioners may be validly ejected from
the leased premises.
Unlawful detainer cases are summary in nature. In such cases, the elements to be proved and resolved are the fact
of lease and the expiration or violation of its terms.48 Specifically, the essential requisites of unlawful detainer are: 1)
the fact of lease by virtue of a contract, express or implied; 2) the expiration or termination of the possessor’s right to
hold possession; 3) withholding by the lessee of possession of the land or building after the expiration or termination
of the right to possess; 4) letter of demand upon lessee to pay the rental or comply with the terms of the lease and
vacate the premises; and 5) the filing of the action within one year from the date of the last demand received by the
defendant.49
It is undisputed that petitioners and respondent entered into two separate contracts of lease involving nine (9) rooms
of the San Luis Building. Records, likewise, show that respondent repeatedly demanded that petitioners vacate the
premises, but the latter refused to heed the demand; thus, they remained in possession of the premises. The only
contentious issue is whether there was indeed a violation of the terms of the contract: on the part of petitioners,
whether they failed to pay the stipulated rent without justifiable cause; while on the part of respondent, whether it
prevented petitioners from occupying the leased premises except Room 35.
This issue involves questions of fact, the resolution of which requires the evaluation of the evidence presented. The
MeTC, the RTC and the CA all found that petitioners failed to perform their obligation to pay the stipulated rent. It is
settled doctrine that in a civil case, the conclusions of fact of the trial court, especially when affirmed by the Court of
Appeals, are final and conclusive, and cannot be reviewed on appeal by the Supreme Court.50 Albeit the rule admits
of exceptions, not one of them obtains in this case.51
To settle this issue once and for all, we deem it proper to assess the array of factual findings supporting the court’s
conclusion.
The evidence of petitioners’ non-payment of the stipulated rent is overwhelming. Petitioners, however, claim that
such non-payment is justified by the following: 1) the refusal of respondent to allow petitioners to use the leased
properties, except room 35; 2) respondent’s refusal to turn over Rooms 36, 37 and 38; and 3) respondent’s refusal
to accept payment tendered by petitioners.
Petitioners’ justifications are belied by the evidence on record. As correctly held by the CA, petitioners’
communications to respondent prior to the filing of the complaint never mentioned their alleged inability to use the
rooms.52 What they pointed out in their letters is that they did not know to whom payment should be made, whether
to Ms. Bautista or to Pacheco.53 In their July 26 and October 30, 1993 letters, petitioners only questioned the method
of computing their electric billings without, however, raising a complaint about their failure to use the
rooms.54 Although petitioners stated in their December 30, 1993 letter that respondent failed to fulfill its part of the
contract,55 nowhere did they specifically refer to their inability to use the leased rooms. Besides, at that time, they
were already in default on their rentals for more than a year.
If it were true that they were allowed to use only one of the nine (9) rooms subject of the contract of lease, and
considering that the rooms were intended for a business purpose, we cannot understand why they did not
specifically assert their right. If we believe petitioners’ contention that they had been prevented from using the rooms
for more than a year before the complaint for ejectment was filed, they should have demanded specific performance
from the lessor and commenced an action in court. With the execution of the contract, petitioners were already in a
position to exercise their right to the use and enjoyment of the property according to the terms of the lease
contract.56 As borne out by the records, the fact is that respondent turned over to petitioners the keys to the leased
premises and petitioners, in fact, renovated the rooms. Thus, they were placed in possession of the premises and
they had the right to the use and enjoyment of the same. They, likewise, had the right to resist any act of intrusion
into their peaceful possession of the property, even as against the lessor itself. Yet, they did not lift a finger to
protect their right if, indeed, there was a violation of the contract by the lessor.
What was, instead, clearly established by the evidence was petitioners’ non-payment of rentals because
ostensibly they did not know to whom payment should be made. However, this did not justify their failure to
pay, because if such were the case, they were not without any remedy. They should have availed of the
provisions of the Civil Code of the Philippines on the consignation of payment and of the Rules of Court on
interpleader.
Article 1256 of the Civil Code provides:

Article 1256. If the creditor to whom tender of payment has been made refuses without just cause to accept
it, the debtor shall be released from responsibility by the consignation of the thing or sum due.
Consignation alone shall produce the same effect in the following cases:
xxxx
(4) When two or more persons claim the same right to collect;
x x x x.
Consignation shall be made by depositing the things due at the disposal of a judicial authority, before whom the
tender of payment shall be proved in a proper case, and the announcement of the consignation in other cases.57
In the instant case, consignation alone would have produced the effect of payment of the rentals. The rationale for
consignation is to avoid the performance of an obligation becoming more onerous to the debtor by reason of causes
not imputable to him.58 Petitioners claim that they made a written tender of payment and actually prepared vouchers
for their monthly rentals. But that was insufficient to constitute a valid tender of payment. Even assuming that it was
valid tender, still, it would not constitute payment for want of consignation of the amount. Well-settled is the rule that
tender of payment must be accompanied by consignation in order that the effects of payment may be produced.59
Moreover, Section 1, Rule 62 of the Rules of Court provides:
Section 1. When interpleader proper. – Whenever conflicting claims upon the same subject matter are or may be
made against a person who claims no interest whatever in the subject matter, or an interest which in whole or in part
is not disputed by the claimants, he may bring an action against the conflicting claimants to compel them to
interplead and litigate their several claims among themselves.
Otherwise stated, an action for interpleader is proper when the lessee does not know to whom payment of rentals
should be made due to conflicting claims on the property (or on the right to collect).60 The remedy is afforded not to
protect a person against double liability but to protect him against double vexation in respect of one liability.61
Notably, instead of availing of the above remedies, petitioners opted to refrain from making payments.
Neither can petitioners validly invoke the non-delivery of Rooms 36, 37 and 38 as a justification for non-payment of
rentals. Although the two contracts embraced the lease of nine (9) rooms, the terms of the contracts - with their
particular reference to specific rooms and the monthly rental for each - easily raise the inference that the parties
intended the lease of each room separate from that of the others. There is nothing in the contract which would lead
lavvphil
to the conclusion that the lease of one or more rooms was to be made dependent upon the lease of all the nine (9)
rooms. Accordingly, the use of each room by the lessee gave rise to the corresponding obligation to pay the monthly
rental for the same. Notably, respondent demanded payment of rentals only for the rooms actually delivered to, and
used by, petitioners.
It may also be mentioned that the contract specifically provides that the lease of Rooms 36, 37 and 38 was to take
effect only when the tenants thereof would vacate the premises. Absent a clear showing that the previous tenants
had vacated the premises, respondent had no obligation to deliver possession of the subject rooms to petitioners.
Thus, petitioners cannot use the non-delivery of Rooms 36, 37 and 38 as an excuse for their failure to pay the
rentals due on the other rooms they occupied. 1avvphil
In light of the foregoing disquisition, respondent has every right to exercise his right to eject the erring lessees. The
parties’ contracts of lease contain identical provisions, to wit:
In case of default by the LESSEE in the payment of rental on the fifth (5th) day of each month, the amount owing
shall as penalty bear interest at the rate of FOUR percent (4%) per month, to be paid, without prejudice to the right
of the LESSOR to terminate his contract, enter the premises, and/or eject the LESSEE as hereinafter set forth;62

Moreover, Article 167363 of the Civil Code gives the lessor the right to judicially eject the lessees in case of non-
payment of the monthly rentals. A contract of lease is a consensual, bilateral, onerous and commutative contract by
which the owner temporarily grants the use of his property to another, who undertakes to pay the rent therefor.64 For
failure to pay the rent, petitioners have no right to remain in the leased premises.
WHEREFORE, premises considered, the petition is DENIED and the Status Quo Order dated January 18, 1999 is
hereby LIFTED. The Decision of the Court of Appeals dated May 26, 1998 and its Resolution dated December 10,
1998 in CA-G.R. SP No. 37739 are AFFIRMED.

10.) G.R. No. 154599 January 21, 2004
THE LIGA NG MGA BARANGAY NATIONAL, petitioner,

vs.
THE CITY MAYOR OF MANILA, HON. JOSE ATIENZA, JR., and THE CITY COUNCIL OF MANILA, respondents.
DECISION
DAVIDE, JR., C.J.:
This petition for certiorari under Rule 65 of the Rules of Court seeks the nullification of Manila City Ordinance No.
8039, Series of 2002,1 and respondent City Mayor’s Executive Order No. 011, Series of 2002,2 dated 15 August
2002 , for being patently contrary to law.
The antecedents are as follows:
Petitioner Liga ng mga Barangay National (Liga for brevity) is the national organization of all the barangays
in the Philippines, which pursuant to Section 492 of Republic Act No. 7160, otherwise known as The Local
Government Code of 1991, constitutes the duly elected presidents of highly-urbanized cities, provincial
chapters, the metropolitan Manila Chapter, and metropolitan political subdivision chapters.
Section 493 of that law provides that "[t]he liga at the municipal, city, provincial, metropolitan political
subdivision, and national levels directly elect a president, a vice-president, and five (5) members of the
board of directors." All other matters not provided for in the law affecting the internal organization of the
leagues of local government units shall be governed by their respective constitution and by-laws, which must
always conform to the provisions of the Constitution and existing laws.3
On 16 March 2000, the Liga adopted and ratified its own Constitution and By-laws to govern its internal
organization.4 Section 1, third paragraph, Article XI of said Constitution and By-Laws states:
All other election matters not covered in this Article shall be governed by the "Liga Election Code" or such
other rules as may be promulgated by the National Liga Executive Board in conformity with the provisions of
existing laws.
By virtue of the above-cited provision, the Liga adopted and ratified its own Election Code.5 Section 1.2, Article I of
the Liga Election Code states:
1.2 Liga ng mga Barangay Provincial, Metropolitan, HUC/ICC Chapters. There shall be nationwide

synchronized elections for the provincial, metropolitan, and HUC/ICC chapters to be held on the third
Monday of the month immediately after the month when the synchronized elections in paragraph 1.1 above
was held. The incumbent Liga chapter president concerned duly assisted by the proper government agency,
office or department, e.g. Provincial/City/NCR/Regional Director, shall convene all the duly elected
Component City/Municipal Chapter Presidents and all the current elected Punong Barangays (for HUC/ICC)
of the respective chapters in any public place within its area of jurisdiction for the purpose of reorganizing
and electing the officers and directors of the provincial, metropolitan or HUC/ICC Liga chapters. Said
president duly assisted by the government officer aforementioned, shall notify, in writing, all the above
concerned at least fifteen (15) days before the scheduled election meeting on the exact date, time, place
and requirements of the said meeting.
The Liga thereafter came out with its Calendar of Activities and Guidelines in the Implementation of the Liga Election
Code of 2002,6 setting on 21 October 2002 the synchronized elections for highly urbanized city chapters, such as
the Liga Chapter of Manila, together with independent component city, provincial, and metropolitan chapters. lawphi1.net
On 28 June 2002, respondent City Council of Manila enacted Ordinance No. 8039, Series of 2002, providing,
among other things, for the election of representatives of the District Chapters in the City Chapter of Manila and
setting the elections for both chapters thirty days after the barangay elections. Section 3 (A) and (B) of the assailed
ordinance read:
SEC. 3. Representation Chapters. — Every Barangay shall be represented in the said Liga Chapters … by
the Punong Barangay…or, in his absence or incapacity, by the kagawad duly elected for the purpose among
its members….
A. District Chapter
All elected Barangay Chairman in each District shall elect from among themselves the President, Vice-
President and five (5) members of the Board….
B. City Chapter
The District Chapter representatives shall automatically become members of the Board and they shall elect
from among themselves a President, Vice-President, Secretary, Treasurer, Auditor and create other
positions as it may deem necessary for the management of the chapter.
The assailed ordinance was later transmitted to respondent City Mayor Jose L. Atienza, Jr., for his signature
and approval.
On 16 July 2002, upon being informed that the ordinance had been forwarded to the Office of the City
Mayor, still unnumbered and yet to be officially released, the Liga sent respondent Mayor of Manila a letter
requesting him that said ordinance be vetoed considering that it encroached upon, or even assumed, the
functions of the Liga through legislation, a function which was clearly beyond the ambit of the powers of the
City Council.7
Respondent Mayor, however, signed and approved the assailed city ordinance and issued on 15 August 2002
Executive Order No. 011, Series of 2002, to implement the ordinance.
Hence, on 27 August 2002, the Liga filed the instant petition raising the following issues:
WHETHER OR NOT THE RESPONDENT CITY COUNCIL OF MANILA COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION, WHEN IT ENACTED CITY
ORDINANCE NO. 8039 S. 2002 PURPOSELY TO GOVERN THE ELECTIONS OF THE MANILA CHAPTER OF
THE LIGA NG MGA BARANGAYS AND WHICH PROVIDES A DIFFERENT MANNER OF ELECTING ITS
OFFICERS, DESPITE THE FACT THAT SAID CHAPTER’S ELECTIONS, AND THE ELECTIONS OF ALL OTHER
CHAPTERS OF THE LIGA NG MGA BARANGAYS FOR THAT MATTER, ARE BY LAW MANDATED TO BE
GOVERNED BY THE LIGA CONSTITUTION AND BY-LAWS AND THE LIGA ELECTION CODE.
II
WHETHER OR NOT THE RESPONDENT CITY MAYOR OF MANILA COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION WHEN HE ISSUED EXECUTIVE
ORDER NO. 011 TO IMPLEMENT THE QUESTIONED CITY ORDINANCE NO. 8039 S. 2002.
In support of its petition, the Liga argues that City Ordinance No. 8039, Series of 2002, and Executive Order
No. 011, Series of 2002, contradict the Liga Election Code and are therefore invalid. There exists neither
rhyme nor reason, not to mention the absence of legal basis, for the Manila City Council to encroach upon, or even
assume, the functions of the Liga by prescribing, through legislation, the manner of conducting the Liga elections
other than what has been provided for by the Liga Constitution and By-laws and the Liga Election Code.
Accordingly, the subject ordinance is an ultra vires act of the respondents and, as such, should be declared null and
void.

As for its prayer for the issuance of a temporary restraining order, the petitioner cites as reason therefor the fact that
under Section 5 of the assailed city ordinance, the Manila District Chapter elections would be held thirty days after
the regular barangay elections. Hence, it argued that the issuance of a temporary restraining order and/or
preliminary injunction would be imperative to prevent the implementation of the ordinance and executive order.
On 12 September 2002, Barangay Chairman Arnel Peña, in his capacity as a member of the Liga ng mga Barangay
in the City Chapter of Manila, filed a Complaint in Intervention with Urgent Motion for the Issuance of Temporary
Restraining Order and/or Preliminary Injunction.8 He supports the position of the Liga and prays for the declaration
of the questioned ordinance and executive order, as well as the elections of the Liga ng mga Barangay pursuant
thereto, to be null and void. The assailed ordinance prescribing for an "indirect manner of election" amended, in
effect, the provisions of the Local Government Code of 1991, which provides for the election of the Liga officers at
large. It also violated and curtailed the rights of the petitioner and intervenor, as well as the other 896 Barangay
Chairmen in the City of Manila, to vote and be voted upon in a direct election.
On 25 October 2002, the Office of the Solicitor General (OSG) filed a Manifestation in lieu of Comment.9 It supports
the petition of the Liga, arguing that the assailed city ordinance and executive order are clearly inconsistent with the
express public policy enunciated in R.A. No. 7160. Local political subdivisions are able to legislate only by virtue of a
valid delegation of legislative power from the national legislature. They are mere agents vested with what is called
the power of subordinate legislation. Thus, the enactments in question, which are local in origin, cannot prevail
against the decree, which has the force and effect of law.
On the issue of non-observance by the petitioners of the hierarchy-of-courts rule, the OSG posits that technical rules
of procedure should be relaxed in the instant petition. While Batas Pambansa Blg. 129, as amended, grants original
jurisdiction over cases of this nature to the Regional Trial Court (RTC), the exigency of the present petition,
however, calls for the relaxation of this rule. Section 496 (should be Section 491) of the Local Government Code of
1991 primarily intended that the Liga ng mga Barangay determine the representation of the Liga in the sanggunians
for the immediate ventilation, articulation, and crystallization of issues affecting barangay government
administration. Thus, the immediate resolution of this petition is a must.
On the other hand, the respondents defend the validity of the assailed ordinance and executive order and pray for
the dismissal of the present petition on the following grounds: (1) certiorari under Rule 65 of the Rules of Court is
unavailing; (2) the petition should not be entertained by this Court in view of the pendency before the Regional Trial
Court of Manila of two actions or petitions questioning the subject ordinance and executive order; (3) the petitioner
is guilty of forum shopping; and (4) the act sought to be enjoined is fait accompli.
The respondents maintain that certiorari is an extraordinary remedy available to one aggrieved by the decision of a
tribunal, officer, or board exercising judicial or quasi-judicial functions. The City Council and City Mayor of Manila are
not the "board" and "officer" contemplated in Rule 65 of the Rules of Court because both do not exercise judicial
functions. The enactment of the subject ordinance and issuance of the questioned executive order are legislative
and executive functions, respectively, and thus, do not fall within the ambit of "judicial functions." They are both
within the prerogatives, powers, and authority of the City Council and City Mayor of Manila, respectively.
Furthermore, the petition failed to show with certainty that the respondents acted without or in excess of jurisdiction
or with grave abuse of discretion.
The respondents also asseverate that the petitioner cannot claim that it has no other recourse in
addressing its grievance other than this petition for certiorari. As a matter of fact, there are two cases
pending before Branches 33 and 51 of the RTC of Manila (one is for mandamus; the other, for declaratory
relief) and three in the Court of Appeals (one is for prohibition; the two other cases, for quo warranto),
which are all akin to the present petition in the sense that the relief being sought therein is the declaration
of the invalidity of the subject ordinance. Clearly, the petitioner may ask the RTC or the Court of Appeals
the relief being prayed for before this Court. Moreover, the petitioner failed to prove discernible compelling
reasons attending the present petition that would warrant cognizance of the present petition by this Court.
Besides, according to the respondents, the petitioner has transgressed the proscription against forum-shopping in
filing the instant suit. Although the parties in the other pending cases and in this petition are different individuals or
entities, they represent the same interest.

With regard to petitioner's prayer for temporary restraining order and/ or preliminary injunction in its petition, the
respondents maintain that the same had become moot and academic in view of the elections of officers of the City
Liga ng mga Barangay on 15 September 2002 and their subsequent assumption to their respective offices.10 Since
the acts to be enjoined are now fait accompli, this petition for certiorari with an application for provisional remedies
must necessarily fail. Thus, where the records show that during the pendency of the case certain events or
circumstances had taken place that render the case moot and academic, the petition for certiorari must be
dismissed.
After due deliberation on the pleadings filed, we resolve to dismiss this petition for certiorari.
First, the respondents neither acted in any judicial or quasi-judicial capacity nor arrogated unto themselves any
judicial or quasi-judicial prerogatives. A petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure is a
special civil action that may be invoked only against a tribunal, board, or officer exercising judicial or quasi-judicial
functions.
Section 1, Rule 65 of the 1997 Rules of Civil Procedure provides:
SECTION 1. Petition for certiorari. — When any tribunal, board or officer exercising judicial or quasi-judicial
functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting
to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the
ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging
the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of
such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.
Elsewise stated, for a writ of certiorari to issue, the following requisites must concur: (1) it must be directed
against a tribunal, board, or officer exercising judicial or quasi-judicial functions; (2) the tribunal, board, or
officer must have acted without or in excess of jurisdiction or with grave abuse of discretion amounting lack
or excess of jurisdiction; and (3) there is no appeal or any plain, speedy, and adequate remedy in the
ordinary course of law.
A respondent is said to be exercising judicial function where he has the power to determine what the law is
and what the legal rights of the parties are, and then undertakes to determine these questions and
adjudicate upon the rights of the parties.11
Quasi-judicial function, on the other hand, is "a term which applies to the actions, discretion, etc., of public
administrative officers or bodies … required to investigate facts or ascertain the existence of facts, hold hearings,
and draw conclusions from them as a basis for their official action and to exercise discretion of a judicial nature."12
Before a tribunal, board, or officer may exercise judicial or quasi-judicial acts, it is necessary that there be a law that
gives rise to some specific rights of persons or property under which adverse claims to such rights are made, and
the controversy ensuing therefrom is brought before a tribunal, board, or officer clothed with power and authority to
determine the law and adjudicate the respective rights of the contending parties.13
The respondents do not fall within the ambit of tribunal, board, or officer exercising judicial or quasi-judicial
functions. As correctly pointed out by the respondents, the enactment by the City Council of Manila of the assailed
ordinance and the issuance by respondent Mayor of the questioned executive order were done in the exercise of
legislative and executive functions, respectively, and not of judicial or quasi-judicial functions. On this score alone,
certiorari will not lie.
Second, although the instant petition is styled as a petition for certiorari, in essence, it seeks the
declaration by this Court of the unconstitutionality or illegality of the questioned ordinance and executive
order. It, thus, partakes of the nature of a petition for declaratory relief over which this Court has only
appellate, not original, jurisdiction.14 Section 5, Article VIII of the Constitution provides:
Sec. 5. The Supreme Court shall have the following powers:

(1) Exercise original jurisdiction over cases affecting ambassadors, other public ministers and
consuls, and over petitions for certiorari, prohibition, mandamus, quo warranto, and habeas corpus.
(2) Review, revise, reverse, modify, or affirm on appeal or certiorari as the law or the Rules of Court
may provide, final judgments and orders of lower courts in:
(a) All cases in which the constitutionality or validity of any treaty, international or executive
agreement, law, presidential decree, proclamation, order, instruction, ordinance, or
regulation is in question. (Italics supplied).
As such, this petition must necessary fail, as this Court does not have original jurisdiction over a
petition for declaratory relief even if only questions of law are involved.15
Third, even granting arguendo that the present petition is ripe for the extraordinary writ of certiorari, there is here a
clear disregard of the hierarchy of courts. No special and important reason or exceptional and compelling
circumstance has been adduced by the petitioner or the intervenor why direct recourse to this Court should be
allowed.
We have held that this Court’s original jurisdiction to issue a writ of certiorari (as well as of prohibition,
mandamus, quo warranto, habeas corpus and injunction) is not exclusive, but is concurrent with the Regional Trial
Courts and the Court of Appeals in certain cases. As aptly stated in People v. Cuaresma:16
This concurrence of jurisdiction is not, however, to be taken as according to parties seeking any of the writs
an absolute, unrestrained freedom of choice of the court to which application therefor0 will be directed.
There is after all a hierarchy of courts. That hierarchy is determinative of the venue of appeals, and also
serves as a general determinant of the appropriate forum for petitions for the extraordinary writs. A
becoming regard of that judicial hierarchy most certainly indicates that petitions for the issuance of
extraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court, and
those against the latter, with the Court of Appeals. A direct invocation of the Supreme Court’s original
jurisdiction to issue these writs should be allowed only when there are special and important reasons
therefor, clearly and specifically set out in the petition. This is [an] established policy. It is a policy necessary
to prevent inordinate demands upon the Court’s time and attention which are better devoted to those
matters within its exclusive jurisdiction, and to prevent further over-crowding of the Court’s docket.
As we have said in Santiago v. Vasquez,17 the propensity of litigants and lawyers to disregard the hierarchy of courts
in our judicial system by seeking relief directly from this Court must be put to a halt for two reasons: (1) it would be
an imposition upon the precious time of this Court; and (2) it would cause an inevitable and resultant delay, intended
or otherwise, in the adjudication of cases, which in some instances had to be remanded or referred to the lower
court as the proper forum under the rules of procedure, or as better equipped to resolve the issues because this
Court is not a trier of facts.
Thus, we shall reaffirm the judicial policy that this Court will not entertain direct resort to it unless the redress desired
cannot be obtained in the appropriate courts, and exceptional and compelling circumstances justify the availment of
the extraordinary remedy of writ of certiorari, calling for the exercise of its primary jurisdiction.18
Petitioner’s reliance on Pimentel v. Aguirre19 is misplaced because the non-observance of the hierarchy-of-courts
rule was not an issue therein. Besides, what was sought to be nullified in the petition for certiorari and prohibition
therein was an act of the President of the Philippines, which would have greatly affected all local government units.
We reiterated therein that when an act of the legislative department is seriously alleged to have infringed the
Constitution, settling the controversy becomes the duty of this Court. The same is true when what is seriously
alleged to be unconstitutional is an act of the President, who in our constitutional scheme is coequal with Congress.
We hesitate to rule that the petitioner and the intervenor are guilty of forum-shopping. Forum-shopping exists where
the elements of litis pendentia are present or when a final judgment in one case will amount to res judicata in the
other. For litis pendentia to exist, the following requisites must be present: (1) identity of parties, or at least such
parties as are representing the same interests in both actions; (2) identity of rights asserted and reliefs prayed for,

the reliefs being founded on the same facts; and (3) identity with respect to the two preceding particulars in the two
cases, such that any judgment that may be rendered in the pending case, regardless of which party is successful,
would amount to res judicata in the other case.20
In the instant petition, and as admitted by the respondents, the parties in this case and in the alleged other pending
cases are different individuals or entities; thus, forum-shopping cannot be said to exist. Moreover, even assuming
that those five petitions are indeed pending before the RTC of Manila and the Court of Appeals, we can only guess
the causes of action and issues raised before those courts, considering that the respondents failed to furnish this
Court with copies of the said petitions.
WHEREFORE, the petition is DISMISSED.

11.) G.R. No. L-11357 May 31, 1962
FELIPE B. OLLADA, etc., petitioner-appellant,

vs.
CENTRAL BANK OF THE PHILIPPINES, respondent-appellee.
Antonio V. Sanchez as amicus curiae.

Felipe B. Ollada for and in his own behalf as petitioner-appellant.
Nat. M. Balboa for respondent-appellee.
DIZON, J.:
Felipe B. Ollada is a certified public accountant, having passed the examination given by the Board of Accountancy,
and is duly qualified to practice his profession. On July 22, 1952, his name was placed in the rolls of certified public
accountants authorized and accredited to practice accountancy in the office of the Central Bank of the Philippines.
In December, 1955, by reason of a requirement of the Import-Export Department of said bank that CPAs submit to
an accreditation under oath before they could certify financial statements of their clients applying for import dollar
allocations with its office, Ollada's previous accreditation was nullified.
Pursuant to the new requirement, the Import-Export Department of the Central Bank issued APPLICATION FOR
ACCREDITATION OF CERTIFIED PUBLIC ACCOUNTANTS (CB-IED Form No. 5) and ACCREDITATION CARD
FOR CERTIFIED PUBLIC ACCOUNTANTS (CB-IED, Form No. 6) for CPAs to accomplish under oath. Assailing
said accreditation requirement on the ground that it was (a) an unlawful invasion of the jurisdiction of the Board
of Accountancy, (b) in excess of the powers of the Central Bank and (c) unconstitutional in that it unlawfully
restrained the legitimate pursuit of one's trade, Ollada, for himself and allegedly on behalf of numerous other CPAs,
filed a petition for Declaratory Relief in the Court of First Instance of Manila to nullify said accreditation
requirement.
On April 16, 1956 the Central Bank filed a motion to dismiss the petition for Declaratory Relief for lack of
cause of action. Its main contention was that the Central Bank has the responsibility of administering the Monetary
Banking System of the Republic and is authorized to prepare and issue, through its Monetary Board, rules and
regulations to make effective the discharge of such responsibility; that the accreditation requirement alleged in the
petition was issued in the exercise of such power and authority; that the purpose of such requirement is not to
regulate the practice of accountancy in the Philippines but only the manner in which certified public accountants
should transact business with the Central Bank.
On May 3, 1956, petitioner Ollada applied for a writ of preliminary injunction to restrain the respondent Central Bank
of the Philippines from enforcing the accreditation requirement aforesaid until final adjudication of the case. In a
memorandum submitted by said respondent opposing the issuance of the writ, it manifested that it was willing to
delete paragraph 13 from its CB-IED Form No. 5 (Application for accreditation of certified public accountants), which
required CPAs to answer the query whether they agreed, if accredited with the Import-Export Department, Central
Bank of the Philippines, to follow strictly the rules and regulations promulgated by the Philippine Institute of
Accountants and, if not, to state their reasons therefor, and that it was also willing to modify paragraph 14 of the
same form to read as follows:
14. Do you agree, if accredited with the Import-Export Department, to follow strictly the rules and regulations
of the Central Bank of the Philippines concerning the practice of your profession as CPA, with reference to
its importing licensing functions which may hereinafter be promulgated and which are not inconsistent with
the rules and regulations promulgated by the Board of Accountancy of the Philippines, and to give written
notice(s) of any change(s) in your professional status as practitioner, or the name and style under which you
practice your profession as Certified Public Accountant(s)? . . . If not, state your reasons: . . .
On May 22, 1956 the trial court required respondent to submit within ten days from notice, proof that it had deleted
paragraph 13 and modified paragraph 14 of its CB-IED Form No. 5, as manifested in its memorandum, otherwise
the writ of preliminary injunction prayed for by petitioner would be granted. Having complied with said order by

submitting CB-ID Form No. 5 (formerly CB-IED Form No. 5) showing that paragraph 13 of CB-IED Form No. 5 had
been deleted, and paragraph 14 thereof had been modified, the court, on June 27, 1956, denied the petition for
preliminary injunction. On June 29, 1956, petitioner filed a motion for reconsideration alleging that, despite the
deletion of paragraph 13 from respondent's CB-IED Form No. 5, it was still enforcing the rules and regulations of the
Philippine Institute of Accountants in its CB-IED Form No. 6 (ACCREDITATION CARD FOR CERTIFIED PUBLIC
ACCOUNTANTS) which was still a part of the questioned accreditation requirement. All this notwithstanding,
however, on July 5, 1956 petitioner, in the interests of its clients, filed his application for accreditation with the CB
under protest.1äwphï1.ñët
On July 7, 1956, the court reconsidered its previous order and issued another granting the petition for the writ of
preliminary injunction upon the filing of a bond in the sum of P2,000.00 on the ground that CPAs applying for
accreditation with respondent were still required to execute under oath CB-IED Form No. 6 (Accreditation card for
certified public accountants) to be governed by the rules and regulations of the Philippine Institute of Accountants. In
a motion for the reconsideration of this last order, respondent stated that CB-IED Form No. 6 of its Import-Export
Department had been modified by CB-ID Form No. 6 wherein the requirement that the applicant should sign a
statement under oath has been eliminated, and that, upon accreditation, a CPA would be governed by the rules and
regulations of the Central Bank and not by those of the Philippine Institute of Accountants. The modified form (CB-ID
Form No. 6) read as follows:
I/We hereby agree to be governed by your rules and regulations relating to the practice of my/our profession
as Certified Public Accountant(s), particularly Memorandum to Accredited CPAs No. 1 of the Central Bank of
the Philippines dated June 15, 1956. Please recognize my/our certification(s) of exhibit(s), of statement(s),
schedule(s), or other form(s) of accountancy work issued in behalf of my/our clients under the following
signature(s).
Consequently, on July 12, 1956, the court set aside its order of July 7, 1956 granting the writ of preliminary
injunction.
Finally, on July 31, 1956, the lower court, resolving the motion to dismiss filed by respondent, dismissed the
complaint. The order to that effect says, in part, the following:
The only issue in this case is whether or not the respondent Central Bank of the Philippines has the authority
under its charter to require petitioner and all other certified public accountants to accredit themselves before
they can transact business with respondent's Import and Export Department.
This Court is of the opinion that the respondent is not barred from promulgating internal rules and
regulations necessary to carry out its purpose pursuant to the charter creating it provided, however, that
such rules and regulations are not contrary to law, public morals or public policy.
The only objectionable features of respondent's aforementioned requirement have already been eliminated
by said respondent having deleted from its CB-IED Form No. 5, known as Application for Accreditation of
Certified Public Accountants (Annex B of petitioner's Petition), paragraph 13 and modified paragraph 14
thereof, as well as by modifying CB-IED Form No. 6 known as Accreditation Card for Certified Public
Accountants (Annex C of Petitioner's Petition).
It appears, therefore, that after respondent had eliminated said objectionable features, the petition for
declaratory relief has become groundless and should be dismissed.
Upon motion of petitioner, We issued a resolution dated November 5, 1956 granting a writ of preliminary injunction
restraining respondent from requiring CPAs to comply with the accreditation requirement of its Import-Export
Department, on the ground that there was nothing in the record showing that the same was issued by its Monetary
Board or by someone else duly authorized by the latter.
The main issue involved in this appeal is whether upon the facts alleged in the petition for Declaratory
Relief and others elicited from the parties and made of record by them prior to the issuance of the order
appealed from, this case was properly dismissed.

The Monetary Board of the Central Bank has authority to prepare and issue such rules and regulations it may
consider necessary for the effective discharge of the responsibilities and exercise of the powers assigned to it and to
the Central Bank under the provisions of Section 1 (a), Republic Act No. 265. The Governor of the Central Bank is
also authorized to delegate his power to represent the Bank "to other officers of the Bank upon his own
responsibility" (See. 17[d], Rep. Act 265).
To implement its authority to temporarily suspend or restrict sales of exchange by the Central Bank and subject all
transactions in gold and foreign exchange to license by the latter (Sec. 74, Rep. Act 265), the Monetary Board,
approved Resolution No. 1528, Minutes No. 80 dated August 30, 1955 authorizing the Import-Export Department to
revise quota allocations and to prepare revised procedures for the determination of violations of Central Bank
Import-Export regulations. Among the revised procedures adopted by the aforesaid Department was its
accreditation system, the purpose of which was to correct certain irregularities committed by some CPAs in their
certification of the financial statements of their clients applying for dollar allocations.
As held by the lower court, "the only objectionable feature of respondent's aforementioned requirement had already
been eliminated . . . from its CB-IED Form No. 5" and that CB-IED form No. 6 had also been modified. For this
reason, the court held that "the petition for declaratory relief has become groundless" and, as a result, ordered its
dismissal.
Without deciding the question of whether the petition under consideration has, in reality "become
groundless", we believe that, upon the facts appearing of record, said petition was correctly dismissed.
As stated heretofore, in connection with the motion to dismiss filed by respondent, petitioner filled a written
opposition in which he alleged that his petition
has sufficiently alleged ultimate facts which violated his right as a duly qualified and accredited Certified
Public Accountant by the Board of Accountancy (which is the only Government body with absolute powers to
regulate the practice of CPAs), and in addition to such allegations, he has also alleged that by virtue of the
violation of his right and that of numerous CPAs, he has suffered serious injury in that the questioned
requirement which is collaterally attacked by this action (in the honest belief of the petitioner that the same)
is an unlawful restraint of the fee pursuit and practice of petitioner's profession as a CPA; and also that the
action of the respondent Central Bank of the Philippines complained of, is also an unlawful invasion into the
exclusive jurisdiction of the Board of Accountancy as the sole body vested by our laws to lay down rules and
regulations for the practice of public accountancy in the Philippines. . . .
In order to dismiss an action under the aforecited ground, Sutherland, Code of Pleadings, Practice and
Form, 167, has laid down the essential test which should serve as the controlling guide in determining
whether a petition states a cause of action, to wit:
1. Does the complaint show the plaintiff suffered an injury?
2. Is it an injury the law recognizes as a wrong?
3. Is the defendant liable for the alleged wrong?
4. If the defendant is liable, to what extent is he liable and what will be the legal remedy from such
injury? (Sutherland, Code of Pleadings, supra.)
It is clear from the allegations of the petition that the petitioner has sufficiently stated facts to satisfy the
foregoing requisites of a pleading in order that petitioner's action should be given due course by this Court.
Petitioner submits that the respondent's requirement complained of (CB-IED Forms Nos. 5 and 6) is an act
of constituting a violation of the Constitution and also a violation of the petitioners right to freely practice his
profession anywhere and in any government office in the Philippines .... It is undisputed that the only body
that can regulate the practice of accountancy in the Philippines is the Board of Accountancy. The action thus
of the respondent in requiring the accreditation of CPAs before they can practice with the Central Bank of
the Philippines is an unlawful invasion into the exclusive jurisdiction of the said Board of Accountancy. Why
was petitioner's right as a CPA violated by the respondent? Because the respondent's placing of a ban to
CPAs including the petitioner with respect to certification of financial statements of their clients applying for
dollar(s) allocation in the Central Bank of the Philippines has resulted in the unlawful restraint in the practice
of CPAs in the office of the Central Bank of the Philippines. (Emphasis supplied.) (Rec. on Appeal, pp. 17,
18-20.)
Again, in his brief petitioner reiterates the same view in the following language:
On April 20, 1956, petitioner-appellant filed his opposition to respondent's motion to dismiss on the simple
and fundamental ground that, from its face, the complaint's allegations of facts make clear showing
of petitioner's rights having been violated by respondent, and that the (petitioner) has suffered serious injury
therefrom that such injury is recognized by law as a wrong, and that the respondent is liable therefrom to a
great extent. (Emphasis supplied.) (Petitioner's brief, p. 5.)
Petitioner commenced this action as, and clearly intended it to be one for Declaratory Relief under the
provisions of Rule 66 of the Rules of Court. On the question of when a special civil action of this nature
would prosper, we have already held that the complaint for declaratory relief will not prosper if filed after a
contract, statute or right has been breached or violated. In the present case such is precisely the situation
arising from the facts alleged in the petition for declaratory relief. As vigorously claimed by petitioner
himself, respondent had already invaded or violated his right and caused him injury — all these giving him
a complete cause of action enforceable in an appropriate ordinary civil action or proceeding. The dismissal
of the action was, therefore, proper in the light of our ruling in De Borja vs. Villadolid, 47 O.G. (5) p. 2315,
and Samson vs. Andal, G.R. No. L-3439, July 31, 1951, where we held that an action for declaratory relief should be
filed before there has been a breach of a contract, statutes or right, and that it is sufficient to bar such action, that
there had been a breach — which would constitute actionable violation. The rule is that an action for Declaratory
Relief is proper only if adequate relief is not available through the means of other existing forms of action or
proceeding (1 C.J.S. 1027-1028).
WHEREFORE, the order of dismissal appealed from is hereby affirmed, without prejudice to the aggrieved party
seeking relief in another appropriate action. The writ of preliminary injunction issued by Us on November 5, 1956 is
hereby set aside, and the motion for contempt filed by petitioner on September 30, 1957 is denied. With costs
against appellant.

12.) [G.R. No. 128991. April 12, 2000.]
YOLANDA ROSELLO-BENTIR, SAMUEL PORMIDA and CHARITO PORMIDA, Petitioners, v.

HONORABLE MATEO M. LEANDA, in his capacity as Presiding Judge of RTC, Tacloban City,
Branch 8, and LEYTE GULF TRADERS, INC., Respondents.
DECISION
KAPUNAN, J.:
Reformation of an instrument is that remedy in equity by means of which a written

instrument is made or construed so as to express or conform to the real intention of the
parties when some error or mistake has been committed. 1 It is predicated on the equitable
maxim that equity treats as done that which ought to be done. 2 The rationale of the doctrine is that
it would be unjust and unequitable to allow the enforcement of a written instrument which does not
reflect or disclose the real meeting of the minds of the parties. 3 However, an action for reformation
must be brought within the period prescribed by law, otherwise, it will be barred by the mere lapse of
time. The issue in this case is whether or not the complaint for reformation filed by respondent Leyte
Gulf Traders, Inc. has prescribed and in the negative, whether or not it is entitled to the remedy of
reformation sought. chanrobles.com.ph : red
On May 15, 1992, respondent Leyte Gulf Traders, Inc. (herein referred to as respondent corporation)
filed a complaint for reformation of instrument, specific performance, annulment of conditional sale
and damages with prayer for writ of injunction against petitioners Yolanda Rosello-Bentir and the
spouses Samuel and Charito Pormida. The case was docketed as Civil Case No. 92-05-88 and raffled
to Judge Pedro S. Espina, RTC, Tacloban City, Branch 7. Respondent corporation alleged that it
entered into a contract of lease of a parcel of land with petitioner Bentir for a period of
twenty (20) years starting May 5, 1968. According to respondent corporation, the lease was
extended for another four (4) years or until May 31, 1992. On May 5, 1989, petitioner Bentir sold
the leased premises to petitioner spouses Samuel Pormada and Charito Pormada.
Respondent corporation questioned the sale alleging that it had a right of first refusal.
Rebuffed, it filed Civil Case No. 92-05-88 seeking the reformation of the expired contract of lease on
the ground that its lawyer inadvertently omitted to incorporate in the contract of lease executed
in 1968, the verbal agreement or understanding between the parties that in the event
petitioner Bentir leases or sells the lot after the expiration of the lease, respondent
corporation has the right to equal the highest offer.
In due time, petitioners filed their answer alleging that the inadvertence of the lawyer who prepared
the lease contract is not a ground for reformation. They further contended that respondent
corporation is guilty of laches for not bringing the case for reformation of the lease contract within
the prescriptive period of ten (10) years from its execution.
Respondent corporation then filed its reply and on November 18, 1992, filed a motion to admit
amended complaint. Said motion was granted by the lower court. 4
Thereafter, petitioners filed a motion to dismiss reiterating that the complaint should be dismissed on
the ground of prescription.
On December 15, 1995, the trial court through Judge Pedro S. Espina issued an order dismissing the
complaint premised on its finding that the action for reformation had already prescribed. The order
reads:chanrob1es virtual 1aw library
ORDER
Resolved here is the defendants’ MOTION TO DISMISS PLAINTIFF’S complaint on ground of
prescription of action.
It is claimed by plaintiff that he and defendant Bentir entered into a contract of lease of a parcel of
land on May 5, 1968 for a period of 20 years (and renewed for an additional 4 years thereafter) with
the verbal agreement that in case the lessor decides to sell the property after the lease, she shall
give the plaintiff the right to equal the offers of other prospective buyers. It was claimed that the
lessor violated this right of first refusal of the plaintiff when she sureptitiously (sic) sold the land to
co-defendant Pormida on May 5, 1989 under a Deed of Conditional Sale. Plaintiff’s right was further
violated when after discovery of the final sale, plaintiff ordered to equal the price of co-defendant
Pormida was refused and again defendant Bentir surreptitiously executed a final deed of sale in favor
of co-defendant Pormida in December 11, 1991.
The defendant Bentir denies that she bound herself to give the plaintiff the right of first refusal in
case she sells the property. But assuming for the sake of argument that such right of first refusal was
made, it is now contended that plaintiff’s cause of action to reform the contract to reflect such right
of first refusal, has already prescribed after 10 years, counted from May 5, 1988 when the contract of
lease incepted. Counsel for defendant cited Conde v. Malaga, L-9405 July 31, 1956 and Ramos v.
Court of Appeals, 180 SCRA 635, where the Supreme Court held that the prescriptive period for
reformation of a written contract is ten (10) years under Article 1144 of the Civil Code.
This Court sustains the position of the defendants that this action for reformation of contract has
prescribed and hereby orders the dismissal of the case.
SO ORDERED. 5
On December 29, 1995, respondent corporation filed a motion for reconsideration of the order
dismissing the complaint.
On January 11, 1996, respondent corporation filed an urgent ex-parte motion for issuance of an
order directing the petitioners, or their representatives or agents to refrain from taking possession of
the land in question.
Considering that Judge Pedro S. Espina, to whom the case was raffled for resolution, was assigned to
the RTC, Malolos, Bulacan, Branch 19, Judge Roberto A. Navidad was designated in his place.
On March 28, 1996, upon motion of herein petitioners, Judge Navidad inhibited himself from hearing
the case. Consequently, the case was re-raffled and assigned to RTC, Tacloban City, Branch 8,
presided by herein respondent judge Mateo M. Leanda.
On May 10, 1996, respondent judge issued an order reversing the order of dismissal on the grounds
that the action for reformation had not yet prescribed and the dismissal was "premature and
precipitate", denying respondent corporation of its right to procedural due process. The order reads:
virtual 1aw library
chanrob1es
ORDER
Stated briefly, the principal objectives of the twin motions submitted by the plaintiffs, for resolution
are: chanrob1es virtual 1aw library
(1) for the reconsideration of the Order of 15 December 1995 of the Court (RTC, Br. 7), dismissing
this case, on the sole ground of prescription of one (1) of the five (5) causes of action of plaintiff in
its complaint for "reformation" of a contract of lease; and,
(2) for issuance by this Court of an Order prohibiting the defendants and their privies-in-interest,
from taking possession of the leased premises, until a final court order issues for their exercise of
dominical or possessory right thereto.
The records of this case reveal that co-defendant BENTER (Yolanda) and plaintiff Leyte Gulf Traders
Incorporation, represented by Chairman Benito Ang, entered into a contract of lease of a parcel of
land, denominated as Lot No. 878-D, located at Sagkahan District, Tacloban City, on 05 May 1968,
for a period of twenty (20) years, (later renewed for an additional two (2) years). Included in said
covenant of lease is the verbal understanding and agreement between the contracting parties, that
when the defendant (as lessor) will sell the subject property, the plaintiff as (lessee) has the "right of
first refusal", that is, the right to equal the offer of any other prospective third-party buyer. This
agreement (sic) is made apparent by paragraph 4 of the lease agreement stating: jgc:chanrobles.com.ph
"4. IMPROVEMENT. The lessee shall have the right to erect on the leased premises any building or
structure that it may desire without the consent or approval of the Lessor . . . provided that any
improvements existing at the termination of the lease shall remain as the property of the Lessor
without right to reimbursement to the Lessee of the cost or value thereof." cralaw virtua1aw library
That the foregoing provision has been included in the lease agreement if only to convince the
defendant-lessor that plaintiff desired a priority right to acquire the property (ibid) by purchase, upon
expiration of the effectivity of the deed of lease.
chanrobles. com.ph:red
In the course of the interplay of several procedural moves of the parties herein, the defendants filed
their motion to admit their amended answer to plaintiff’s amended complaint. Correspondingly, the
plaintiff filed its opposition to said motion. The former court branch admitted the amended answer, to
which order of admission, the plaintiff seasonably filed its motion for reconsideration. But, before the
said motion for reconsideration was acted upon by the court, the latter issued an Order on 15
December 1995, DISMISSING this case on the lone ground of prescription of the cause of action of
plaintiff’s complaint on "reformation" of the lease contract, without anymore considering the
remaining cause of action, viz.: (a) on Specific Performance; (b) an Annulment of Sale and Title; (c)
on Issuance of a Writ of Injunction, and (d) on Damages.
With due respect to the judicial opinion of the Honorable Presiding Judge of Branch 7 of this Court,
the undersigned, to whom this case was raffled to after the inhibition of Judge Roberto Navidad, as
acting magistrate of Branch 7, feels not necessary any more to discuss at length that even the cause
of action for "reformation" has not, as yet, prescribed.
To the mind of this Court, the dismissal order adverted to above, was obviously premature and
precipitate, thus resulting denial upon the right of plaintiff that procedural due process. The other
remaining four (4) causes of action of the complaint must have been deliberated upon before that
court acted hastily in dismissing this case.
WHEREFORE, in the interest of substantial justice, the Order of the court, (Branch 7, RTC) dismissing
this case, is hereby ordered RECONSIDERED and SET ASIDE.
Let, therefore, the motion of plaintiff to reconsider the Order admitting the amended answer and the
Motion to Dismiss this case (ibid), be set for hearing on May 24, 1996, at 8:30 o’clock in the
morning. Service of notices must be effected upon parties and counsel as early as possible before
said scheduled date.
Concomitantly, the defendants and their privies-in-interest or agents, are hereby STERNLY WARNED
not to enter, in the meantime, the litigated premises, before a final court order issues granting them
dominical as well as possessory right thereto.
To the motion or petition for contempt, filed by plaintiff, thru Atty. Bartolome C. Lawsin, the
defendants may, if they so desire, file their answer or rejoinder thereto, before the said petition will
be set for hearing. The latter are given ten (10) days to do so, from the date of their receipt of a
copy of this Order.
SO ORDERED. 6
On June 10, 1996, respondent judge issued an order for status quo ante, enjoining petitioners to
desist from occupying the property. 7
Aggrieved, petitioners herein filed a petition for certiorari to the Court of Appeals seeking the
annulment of the order of respondent court with prayer for issuance of a writ of preliminary
injunction and temporary restraining order to restrain respondent judge from further hearing the
case and to direct respondent corporation to desist from further possessing the litigated premises
and to turn over possession to petitioners.
On January 17, 1997, the Court of Appeals, after finding no error in the questioned order nor grave
abuse of discretion on the part of the trial court that would amount to lack, or in excess of
jurisdiction, denied the petition and affirmed the questioned order. 8 A reconsideration of said
decision was, likewise, denied on April 16, 1997. 9
Thus, the instant petition for review based on the following assigned errors, viz: chanrob1es virtual 1aw library
6.01 THE COURT OF APPEALS ERRED IN HOLDING THAT AN ACTION FOR REFORMATION IS PROPER
AND JUSTIFIED UNDER THE CIRCUMSTANCES OF THE PRESENT CASE;
6.02 THE COURT OF APPEALS ERRED IN HOLDING THAT THE ACTION FOR REFORMATION HAS NOT
YET PRESCRIBED;
6.03 THE COURT OF APPEALS ERRED IN HOLDING THAT AN OPTION TO BUY IN A CONTRACT OF
LEASE IS REVIVED FROM THE IMPLIED RENEWAL OF SUCH LEASE; AND,
6.04 THE COURT OF APPEALS ERRED IN HOLDING THAT A STATUS QUO ANTE ORDER IS NOT AN
INJUNCTIVE RELIEF THAT SHOULD COMPLY WITH THE PROVISIONS OF RULE 58 OF THE RULES OF
COURT. 10
The petition has merit.
The core issue that merits our consideration is whether the complaint for reformation of instrument
has prescribed.
The remedy of reformation of an instrument is grounded on the principle of equity where, in order to
express the true intention of the contracting parties, an instrument already executed is allowed by
law to be reformed. The right of reformation is necessarily an invasion or limitation of the parol
evidence rule since, when a writing is reformed, the result is that an oral agreement is by court
decree made legally effective. 11 Consequently, the courts, as the agencies authorized by law to
exercise the power to reform an instrument, must necessarily exercise that power sparingly and with
great caution and zealous care. Moreover, the remedy, being an extraordinary one, must be subject
to limitations as may be provided by law. Our law and jurisprudence set such limitations, among
which is laches. A suit for reformation of an instrument may be barred by lapse of time. The
prescriptive period for actions based upon a written contract and for reformation of an instrument is
ten (10) years under Article 1144 of the Civil Code. 12 Prescription is intended to suppress stale and
fraudulent claims arising from transactions like the one at bar which facts had become so obscure
from the lapse of time or defective memory. 13 In the case at bar, respondent corporation had
ten (10) years from 1968, the time when the contract of lease was executed, to file an
action for reformation. Sadly, it did so only on May 15, 1992 or twenty-four (24) years
after the cause of action accrued, hence, its cause of action has become stale, hence, time-
barred.
In holding that the action for reformation has not prescribed, the Court of Appeals upheld the ruling
of the Regional Trial Court that the 10-year prescriptive period should be reckoned not from the
execution of the contract of lease in 1968, but from the date of the alleged 4-year extension of the
lease contract after it expired in 1988. Consequently, when the action for reformation of instrument
was filed in 1992 it was within ten (10) years from the extended period of the lease. Private
respondent theorized, and the Court of Appeals agreed, that the extended period of lease was an
"implied new lease" within the contemplation of Article 1670 of the Civil Code, 14 under which
provision, the other terms of the original contract were deemed revived in the implied new lease.
We do not agree. First, if, according to respondent corporation, there was an agreement between the
parties to extend the lease contract for four (4) years after the original contract expired in 1988,
then Art. 1670 would not apply as this provision speaks of an implied new lease (tacita reconduccion)
where at the end of the contract, the lessee continues to enjoy the thing leased "with the
acquiescence of the lessor", so that the duration of the lease is "not for the period of the original
contract, but for the time established in Article 1682 and 1687." In other words, if the extended
period of lease was expressly agreed upon by the parties, then the term should be exactly what the
parties stipulated, not more, not less. Second, even if the supposed 4-year extended lease be
considered as an implied new lease under Art. 1670, "the other terms of the original contract"
contemplated in said provision are only those terms which are germane to the lessee’s right of
continued enjoyment of the property leased. 15 The prescriptive period of ten (10) years provided for
in Art. 1144 16 applies by operation of law, not by the will of the parties. Therefore, the right of
action for reformation accrued from the date of execution of the contract of lease in 1968.
Even if we were to assume for the sake of argument that the instant action for reformation
is not time-barred, respondent corporation’s action will still not prosper. Under Section 1,
Rule 64 of the New Rules of Court, 17 an action for the reformation of an instrument is
instituted as a special civil action for declaratory relief. Since the purpose of an action for
declaratory relief is to secure an authoritative statement of the rights and obligations of
the parties for their guidance in the enforcement thereof, or compliance therewith, and not
to settle issues arising from an alleged breach thereof, it may be entertained only before
the breach or violation of the law or contract to which it refers. 18 Here, respondent
corporation brought the present action for reformation after an alleged breach or violation
of the contract was already committed by petitioner Bentir. Consequently, the remedy of
reformation no longer lies.
We no longer find it necessary to discuss the other issues raised considering that the same are
predicated upon our affirmative resolution on the issue of the prescription of the action for
reformation.
WHEREFORE, the petition is hereby GRANTED. The Decision of the Court of Appeals dated January
17, 1997 is REVERSED and SET ASIDE. The Order of the Regional Trial Court of Tacloban City,
Branch 7, dated December 15, 1995 dismissing the action for reformation is REINSTATED.

13.) SECOND DIVISION
G.R. No. 191176, October 14, 2015
DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT (DILG), Petitioner, v. RAUL V.

GATUZ, Respondent.
DECISION
BRION, J.:*
We resolve the petition for review on certiorari challenging the 18 January 2010 decision of the
Regional Trial Court of Malolos, Bulacan, Branch 19 (RTC) in Civil Case No. 808-M-2009.1 The RTC
permanently prohibited the Department of the Interior and Local Government (DILG/the Department)
from implementing the Ombudsman's decision in Domingo v. Gatuz, OMB-L-A-08-0126-C2 and
declared void the October 22, 2009 DILG memorandum implementing this decision.
In 2008, the respondent, Raul Gatuz, was the Barangay Captain of Barangay Tabang, Plaridel,
Bulacan.
On February 21, 2008, Felicitas L. Domingo filed an administrative complaint before the Office of the
Ombudsman against the respondent for Abuse of Authority and Dishonesty. The complaint was
docketed as Administrative Case No. OMB-L-A-08-0126-C.
In a decision dated November 17, 2008, the Office of the Deputy Ombudsman for Luzon found the
respondent guilty of Dishonesty and imposed the penalty of three months suspension without pay.3
On May 20, 2009, the Deputy Ombudsman for Luzon indorsed its decision to the Secretary of the
Interior and Local Government for immediate implementation.
The Department received the indorsement on May 29, 2009.
On June 30, 2009, the respondent received a copy of the Deputy Ombudsman's decision. The
respondent moved for reconsideration on July 7, 2009.
The Department deferred the implementation of the decision in view of the respondent's pending
motion for reconsideration. The Department also inquired with the Ombudsman about the
effect of this Court's ruling in the then recent case of Office of the Ombudsman v.
Samaniego.4Samaniego held that in administrative cases where the Ombudsman imposes a
penalty other than public censure or reprimand, suspension of not more than one month,
or a fine not equivalent to one month salary, the filing of an appeal stays the execution of
the decision.
On July 10, 2009, the Ombudsman denied the reconsideration prayed for.
On September 22, 2009, the Office of the Ombudsman answered the Department's inquiry and
pointed out its Memorandum Circular (MC) No. 1, Series of 2006. The MC states that the filing of a
motion for reconsideration or a petition for review of the decisions, orders, or resolutions of the
Ombudsman does not stay its implementation unless a temporary restraining order (TRO) or a writ of
injunction is in force.
On October 22, 2009, the Department issued a memorandum5 addressed to the DILG

Regional Director for Region III, directing him to implement the respondent's suspension.

On November 17, 2009, the respondent filed a Petition for Declaratory Relief and Injunction
with a Prayer for a Temporary Restraining Order or a writ of Preliminary Injunction before
the RTC. The respondent asked the RTC to explain his rights pending the resolution of his
motion for reconsideration and to restrain the Department from implementing his
suspension. The respondent argued that the filing of a motion for reconsideration or an appeal
automatically stays the execution of the Ombudsman's decisions in administrative cases pursuant
to Samaniego and Lapid v. Court of Appeals.6 The petition was docketed as Civil Case No. 808-M-
2009.
On November 20, 2009, the RTC issued a TRO.
On December 15, 2009, the Department filed its answer arguing that: (1) the Samaniego ruling only
applies to appeals, not motions for reconsideration; (2) Samaniego had not yet attained finality
because there was a pending motion for reconsideration; (3) MC No. 1, Series of 2006 is applicable
in the case; and (4) the RTC had no jurisdiction because the action was effectively against the
decision of the Ombudsman.
On January 18, 2010, the RTC issued the assailed decision declaring the October 22, 2009 DILG
memorandum void; the court prohibited the respondent from implementing the memorandum. The
RTC relied on Samaniego, and held that a motion for reconsideration is a precursor to an appeal. It
also brushed aside the objections to the finality of Samaniego, but did not touch on the objections to
its jurisdiction.
On March 26, 2010, the Department filed the present petition for review on certiorari of the RTC
decision in Civil Case No. 808-M-2009.
Meanwhile on June 15, 2010, the respondent filed a Petition for Review of OMB-L-A-08-0126-
C before the Court of Appeals (CA). chanrobleslaw
The Petition
The Department argues: (1) that the RTC cannot issue injunctive reliefs in an action for
declaratory relief; (2) that the RTC had no jurisdiction to issue what was effectively an
injunction against a decision of the Ombudsman; (3) that Samaniego had not yet attained
finality because of the pending motion for reconsideration before this Court; and (4) that under MC
No. 1, s. 2006, a motion for reconsideration does not stay the execution of the Ombudsman's
decision.
In its comment, the respondent counters: (1) that the RTC had jurisdiction over the case for
declaratory relief and injunction; (2) that the filing of an appeal or a motion for reconsideration stays
the execution of the Ombudsman's suspension Order pursuant to Lapid and Samaniego; and (3) that
the case has been rendered moot because he has already appealed the Ombudsman case to the
Court of Appeals. chanrobleslaw
Our Ruling
We find the petition meritorious.
The respondent cites the cases of Office of the Ombudsman v. Hon. Ibay7 and Marquez v.
Ombudsman Desierto8 to support his argument that the RTC has jurisdiction over actions for
declaratory relief with injunction against the Office of the Ombudsman. 9 The respondent maintains
that the controversy concerns the extent of the Department's power to implement the decision of the
Ombudsman pending resolution of his motion for reconsideration in the light of this Court's rulings
in Lapid and Samaniego. He posits that the controversy was a proper subject of declaratory relief.
We disagree with the respondent as the facts of Marquez and Ibay are considerably different from
the present case.
Marquez and Ibay both involved Lourdes Marquez, a bank manager, who was ordered by the
Ombudsman to produce bank documents in relation with certain bank accounts under investigation.
Faced with the dilemma of violating the Bank Secrecy Law, on one hand, and the threat of being
cited in direct contempt by the Ombudsman on the other, Marquez filed a petition for declaratory
relief before the RTC. In both cases, we upheld the jurisdiction of the RTC over the action for
declaratory relief and injunction. However, our rulings in Marquez and Ibay only related to the
investigatory power of the Ombudsman.
As the respondent himself admits, the DILG Memorandum subject of his petition for
declaratory relief was an implementation of the Ombudsman's decision in OMB-L-A-08-
0126-C: the memorandum was in the nature of a writ of execution. Therefore, the
declaratory relief action was essentially against a quasi-judicial action of the Ombudsman
- a subject matter beyond the RTC's declaratory relief jurisdiction.
Court orders or decisions cannot be the subject matter of declaratory relief. 10 They are not
included within the purview of the words "other written instrument." 11 The same principle
applies to orders, resolutions, or decisions of quasi-judicial bodies. The fundamental
rationale for this is the principle of res judicata.12 Parties are not permitted to litigate the
same issue more than once. Judgment rendered by a court or a quasi-judicial body is
conclusive on the parties subject only to appellate authority. The losing party cannot
modify or escape the effects of judgment under the guise of an action for declaratory
relief.
Another reason why judicial or quasi-judicial orders or decisions cannot be the subject
matter of declaratory relief is the doctrine of judicial stability or noninterference. Courts
and tribunals with the same or equal authority - even those exercising concurrent and
coordinate jurisdiction are not permitted to interfere with each other's respective cases,
much less their orders or judgments. 13 This is an elementary principle of higher importance
essential to the orderly administration of justice.14 Its observance is not required on the
grounds of judicial comity and courtesy alone; it is enforced to prevent unseemly,
expensive, and dangerous conflicts of jurisdiction and of processes.15
Where the decisions of certain administrative bodies are appealable to the Court of
Appeals, these adjudicative bodies are co-equal with the Regional Trial Courts in terms of
rank and stature; their actions are logically beyond the control of the RTC, a co-equal
body.16 Notably, the decisions of the Ombudsman in disciplinary cases are appealable to
the CA via a Petition for Review under Rule 43 of the Rules of Court. 17 As a co-equal body,
the RTC has no jurisdiction to interfere with or to restrain the execution of the
Ombudsman's decisions in disciplinary cases.
Finally, we already reconsidered the 2008 Samaniego decision in our
resolution dated October 5, 2010.18 We unanimously held en bane that the decisions of the
Ombudsman in disciplinary cases are immediately executory and cannot be stayed by the filing of an
appeal or the issuance of an injunctive writ.19 This legal question has been settled with finality.
All things considered, the RTC clearly erred in taking cognizance of the petition for declaratory relief
and in restraining the execution of the Ombudsman's decision.
WHEREFORE, the petition is GRANTED. We hereby REVERSE and SET ASIDE the decision of the

Regional Trial Court of Malolos, Bulacan, Branch 19 in Civil Case No. 808-M-2009.
14.) G.R. No. 133643 June 6, 2002
RITA SARMING, RUFINO SARMING, MANUEL SARMING, LEONORA VDA. DE LOY, ERLINDA DARMING,
NICANDRA SARMING, MANSUETA SARMING, ARTURO CORSAME, FELY CORSAME, FEDERICO
CORSAME, ISABELITA CORSAME, NORMA CORSAME, CESAR CORSAME, RUDY CORSAME, ROBERTA
CORSAME, ARTEMIO CORSAME, ELPIDIO CORSAME, ENRIQUITA CORSAME, and GUADALUPE CORSAME
TAN, petitioners,
vs.
CRESENCIO DY, LUDIVINA DY-CHAN, TRINIDAD FLORES, LUISA FLORES, SATURNINA ORGANISTA,
REMEDIOS ORGANISTA, OFELIA ORGANISTA, LYDIA ORGANISTA, ZOSIMO ORGANISTA, DOMISIANO
FLORES, FLORITA FLORES, EDUARDO FLORES, BENIGNA FLORES, ANGELINA FLORES, MARCIAL
FLORES, and MARIO FLORES, respondents.
QUISUMBING, J.:
This petition for review assails the decision1 dated September 23, 1997 of the Court of Appeals in CA-G.R. CV No.
39401, which affirmed the decision2 of the Regional Trial Court, Branch 41 in Negros Oriental, Dumaguete City and
the resolution3 dated April 21, 1998 denying petitioners' motion for reconsideration.
The facts as culled from records are as follows:
Petitioners are the successors-in-interest of original defendant Silveria Flores, while respondents Cresencio Dy and
Ludivina Dy-Chan are the successors-in-interest of the original plaintiff Alejandra Delfino, the buyer of one of the lots
subject of this case. They were joined in this petition by the successors-in-interest of Isabel, Juan, Hilario, Ruperto,
Tomasa, and Luisa and Trinidad themselves, all surnamed Flores, who were also the original plaintiffs in the lower
court. They are the descendants of Venancio4 and Jose5, the brothers of the original defendant Silveria Flores.
In their complaint for reformation of instrument against Silveria Flores, the original plaintiffs alleged that they, with
the exception of Alejandra Delfino, are the heirs of Valentina Unto Flores, who owned, among others, Lot 5734,
covered by OCT 4918-A; and Lot 4163, covered by OCT 3129-A, both located at Dumaguete City.
After the death of Valentina Unto Flores, her three children, namely: Jose, Venancio, and Silveria, took possession
of Lot 5734 with each occupying a one-third portion. Upon their death, their children and grandchildren took
possession of their respective shares. The other parcel, Lot 4163 which is solely registered under the name of
Silveria, was sub-divided between Silveria and Jose. Two rows of coconut trees planted in the middle of this lot
serves as boundary line.
In January 1956, Luisa, Trinidad, Ruperto and Tomasa, grandchildren of Jose and now owners of one-half of Lot
4163, entered into a contract with plaintiff Alejandra Delfino, for the sale of one-half share of Lot 4163 after offering
the same to their co-owner, Silveria, who declined for lack of money. Silveria did not object to the sale of said
portion to Alejandra Delfino.
Before preparing the document of sale, the late Atty. Deogracias Pinili, Alejandra's lawyer, called Silveria and the
heirs of Venancio to a conference where Silveria declared that she owned half of the lot while the other half
belonged to the vendors; and that she was selling her three coconut trees found in the half portion offered to
Alejandra Delfino for P15. When Pinili asked for the title of the land, Silveria Flores, through her daughter, Cristita
Corsame, delivered Original Certificate of Title No. 4918-A, covering Lot No. 5734, and not the correct title covering
Lot 4163. At that time, the parties knew the location of Lot 4163 but not the OCT Number corresponding to said lot.
Believing that OCT No. 4918-A was the correct title corresponding to Lot 4163, Pinili prepared a notarized
Settlement of Estate and Sale (hereinafter "deed") duly signed by the parties on January 19, 1956. As a result, OCT
No. 4918-A was cancelled and in lieu thereof, TCT No. 5078 was issued in the names of Silveria Flores and
Alejandra Delfino, with one-half share each. Silveria Flores was present during the preparation and signing of the
deed and she stated that the title presented covered Lot No. 4163.

Alejandra Delfino immediately took possession and introduced improvements on the purchased lot, which was
actually one-half of Lot 4163 instead of Lot 5734 as designated in the deed.
Two years later, when Alejandra Delfino purchased the adjoining portion of the lot she had been occupying, she
discovered that what was designated in the deed, Lot 5734, was the wrong lot. She sought the assistance of Pinili
who approached Silveria and together they inquired from the Registry of Deeds about the status of Lot 4163. They
found out that OCT No. 3129-A covering Lot 4163 was still on file. Alejandra Delfino paid the necessary fees so that
the title to Lot 4163 could be released to Silveria Flores, who promised to turn it over to Pinili for the reformation of
the deed of sale. However, despite repeated demands, Silveria did not do so, prompting Alejandra and the vendors
to file a complaint against Silveria for reformation of the deed of sale with damages before the Regional Trial Court
of Negros Oriental, Branch 41, docketed as Civil Case No. 3457.
In her answer, Silveria Flores claimed that she was the sole owner of Lot 4163 as shown by OCT No. 3129-A and
consequently, respondents had no right to sell the lot. According to her, the contract of sale clearly stated that the
property being sold was Lot 5734, not Lot 4163. She also claimed that respondents illegally took possession of one-
half of Lot 4163. She thus prayed that she be declared the sole owner of Lot 4163 and be immediately placed in
possession thereof. She also asked for compensatory, moral, and exemplary damages and attorney's fees.
The case lasted for several years in the trial court due to several substitutions of parties. The complaint was
amended several times. Moreover, the records had to be reconstituted when the building where they were kept was
razed by fire. But, earnest efforts for the parties to amicably settle the matters among themselves were made by the
trial court to no avail.
On September 29, 1992, the trial court found in favor of herein respondents, who were the plaintiffs below,
decreeing as follows:
WHEREFORE, this Court finds the preponderance of evidence in favor of the plaintiffs and veritably against
the defendants and, as such, renders judgment accordingly, thereby ORDERING the defendants, the heirs
of the deceased-defendant SILVERIA FLORES and her successors-in-interest the following:
1) To enter into the reformation of the subject contract or execute a mutual conveyance of sale, by making
the one-half (1/2) eastern portion of Lot 4163, the subject of the document of sale, in favor of plaintiff, the
late Alejandra Delfino or her heirs and/or successors-in-interest;
2) To sign a document ceding to the heirs of the heirs of Maxima Flores and Venancio Flores the excess of
her one-third (1/3) share; and further ordering the heirs of the late Alejandra Delfino to correspondingly sign
a document for the return of the one-half (1/2) portion of Lot 5734 to the original registered owners, in
exchange thereby;
3) To pay to the heirs of the late plaintiff Alejandra Delfino, the sum of P5,000.00 as actual damages and the
sum of P10,000.00 as moral damages;
4) To pay P2,000.00 as attorney's fees plus the costs of this suit.
SO ORDERED.6
According to the trial court, the claims of herein respondents were anchored on valid grounds. It noted that
Alejandra had been occupying one-half portion of Lot 4163 since 1956 and it was the one pointed to her by the
vendors. Citing the case of Atilano vs. Atilano7, it ruled that when one sells or buys real property, he sells or buys the
said property as is shown to her and as he sees it, at its actual setting and by its physical metes and bounds, not by
the mere lot number assigned to it in the certificate of title. Thus, it concluded that from the facts and circumstances
of the case, it is clear that the object of the sale, as understood by the parties, was that portion "Y" of Lot 4163 and
that its designation as Lot 5734 in the document of sale was a simple mistake in the drafting of the document, which
mistake, however, did not vitiate the consent of the parties or affect the validity and the binding effect of the contract
between them. Hence, the remedy of reformation of instrument is proper.8

Petitioners appealed the decision to the Court of Appeals, which affirmed the ruling of the trial court as follows:
WHEREFORE, the appealed decision is hereby AFFIRMED. Costs against defendants-appellants.
SO ORDERED.9
In affirming the decision of the trial court, the Court of Appeals agreed that the real intention of the parties was for
the sale of Lot 4163 which Alejandra Delfino had been occupying, and the designation of Lot 5734 in the deed was
a mistake in the preparation of the document. It noted that Silveria Flores did not object when Alejandra Delfino took
possession of one-half portion of Lot 4163 immediately after the sale, considering that it was Silveria's son, Michael
Corsame, who developed the area purchased by Alejandra.10
Aggrieved but undeterred, the successors-in-interest of defendant Silveria Flores seasonably filed their petition for
review under Rule 45 of the Rules of Court. They assail the decision of the Court of Appeals on the following
grounds:
1. THE COURT OF APPEALS COMMITTED AN ERROR IN LAW WHEN IT FAILED TO ORDER THE
DISMISSAL OF CIVIL CASE NO. 3457 FOR LACK OF CAUSE OF ACTION.
2. THE COURT OF APPEALS AND THE TRIAL COURT COMMITTED A REVERSIBLE ERROR IN LAW
AND JURISPRUDENCE WHEN IT FAILED TO RULE THAT, BASED ON THE UNDISPUTED EVIDENCE
ON RECORD AND THE SETTLEMENT OF ESTATE AND SALE ITSELF, THE PLAINTIFFS HAVE NO
CAUSE OF ACTION AGAINST SILVERIA FLORES BECAUSE SHE DID NOT SELL HER LAND TO
ALEJANDRA DELFINO. HENCE SILVERIA FLORES CANNOT BE BOUND NOR PREJUDICED BY THE
CONTRACT OF SALE ENTERED BY ALEJANDRA DELFINO AND HER CO-PLAINTIFFS (CAPITOL
INSURANCE & SURETY CO INC. V. CENTRAL AZUCARERA DEL DAVAO, 221 SCRA 98; OZAETA V.
CA, 228 SCRA 350).
3. THE COURT OF APPEALS AND THE TRIAL COURT COMMITTED A REVERSIBLE ERROR WHEN IT
FAILED TO PRONOUNCE THAT SILVERIA FLORES WHO IS NOT A PARTY TO THE CONTRACT OF
SALE INVOLVING LOT NO. 5734 COVERED BY OCT NO. 4918-A CANNOT BE LEGALLY COMPELLED
BY ALEJANDRA DELFINO THRU AN ACTION FOR REFORMATION OF CONTRACT TO EXECUTE A
"CONVEYANCE OF SALE" INVOLVING LOT NO. 4163 COVERED BY OCT NO. 3129-A OWNED AND
REGISTERED SOLELY IN THE NAME OF SILVERIA FLORES.
4. THE COURT OF APPEALS AND THE TRIAL COURT GROSSLY MISAPPREHENDED THE FACTS
WHEN IT RULED THAT THE OBJECT OF THE CONTRACT OF SALE WAS LOT NO. 4163 COVERED BY
OCT NO. 3129-A, DESPITE THE UNASSAILABLE FACT THAT THE OBJECT OF THE SETTLEMENT
AND SUBJECT OF THE CONTRACT OF SALE WAS LOT NO. 5734 COVERED BY OCT NO. 4918-A.
5. THE COURT OF APPEALS AND THE TRIAL COURT GROSSLY MISAPPREHENDED THE FACTS IN
NOT UPHOLDING THAT THERE WAS NO MISTAKE IN THE DRAFTING OF THE DOCUMENT AS WELL
AS IN THE OBJECT OF THE SETTLEMENT OF ESTATE AND SALE BECAUSE THE DOCUMENT WAS
PREPARED BY ATTY. DEOGRACIAS PINILI, THE LAWYER OF ALEJANDRA DELFINO.
6. THE COURT OF APPEALS AND THE TRIAL COURT GROSSLY MISAPPREHENDED THE FACTS
WHEN IT RULED THAT THE GRANDCHILDREN OF JOSE FLORES ARE OWNERS AND COULD SELL
THE ONE-HALF (1/2) PORTION OF LOT NO. 4163 TO ALEJANDRA DELFINO DESPITE THE
INCONTROVERTIBLE EVIDENCE THAT LOT NO. 4163 COVERED BY OCT NO. 3129-A IS
REGISTERED AND SOLELY OWNED BY SILVERIA FLORES WHO IS PAYING THE REAL PROPERTY
TAXES.
7. THE COURT OF APPEALS AND THE TRIAL COURT COMMITTED A REVERSIBLE ERROR IN LAW
WHEN IT DISREGARDED ARTICLE 1370 OF THE CIVIL CODE OF THE PHILIPPINES AND PERTINENT
JURISPRUDENCE RELEVANT TO THIS CASE EVEN IF THE TERMS OF THE SETTLEMENT OF

ESTATE AND SALE ARE CLEAR AND LEAVE NO DOUBT ON THE INTENTION OF THE CONTRACTING
PARTIES.
8. THE COURT OF APPEALS AND THE TRIAL COURT GRAVELY ERRED IN DISREGARDING SETTLED
JURISPRUDENCE THAT A PUBLIC DOCUMENT EXECUTED AND ATTESTED THROUGH THE
INTERVENTION OF A NOTARY PUBLIC IS EVIDENCE OF THE FACTS IN CLEAR, UNEQUIVOCAL
MANNER AND TO CONTRADICT IT THERE MUST BE CLEAR AND CONVINCING EVIDENCE NOT
MERELY PREPONDERANT EVIDENCE (GEVERO VS. INTERMEDIATE APPELLATE COURT, G.R. NO.
77029, AUGUST 30, 1990; ZAMBO V. COURT OF APPEALS, 224 SCRA 855; REBULDEDA V. IAC, 155
SCRA 520; CHILIANCHIN V. COQUINCO, 84 PHIL. 714; CENTENERA V. GARCIA PALICIO, 29 PHIL.
470).
9. THE COURT OF APPEALS AND THE TRIAL COURT COMMITTED A REVERSIBLE ERROR WHEN IT
SUBSTITUTED, REVISED AND MODIFIED THE AGREEMENT OF THE PARTIES DESPITE THE
ABSENCE OF FRAUD, MISTAKE, INEQUITABLE CONDUCT OR ACCIDENT.
10. THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN LAW WHEN IT FAILED TO
RULE ON THE ISSUE OF WHETHER THE TRIAL COURT GRAVELY ERRED IN ORDERING THE HEIRS
OF SILVERIA FLORES TO PAY ACTUAL AND MORAL DAMAGES AS WELL AS ATTORNEY'S FEES TO
THE HEIRS OF ALEJANDRA DELFINO.11
After careful consideration, we find the following relevant issues for our resolution: (1) whether or not there is a
cause of action for reformation of instrument against Silveria Flores, and consequently the petitioners; (2)
whether or not reformation of the subject deed is proper by reason of mistake in designating the correct lot
number; and (3) whether or not the heirs of Alejandra Delfino are entitled to actual and moral damages including
attorney's fees.
In seeking the reversal of the appellate court's decision, the heirs of Silveria Flores, herein petitioners, ascribe to the
appellate court several errors: first, the Court of Appeals committed error in failing to appreciate that there is no
cause of action against Silveria as she was never a party to the contract of sale; second, the appellate court erred in
giving probative value to the biased testimony of Trinidad Flores to the effect that Lot No. 4163 was subdivided into
two, one-half of which is occupied by her and her siblings; and third, the appellate court erred in not considering the
fact that Silveria is the only registered owner of Lot 4163. Petitioners submit that the evidence adduced is insufficient
to sustain a decision in respondents' favor.
Respondents, for their part, maintain that the present petition is pro forma as it does not raise any new matter worth
considering. They also assert that the arguments and issues raised by petitioners have been more than adequately
and exhaustively discussed by the trial court as well as the Court of Appeals.12
On the first issue, petitioners contend that there is no cause of action against them and their predecessor-in-interest,
Silveria Flores, because she and they were not parties to the contract sought to be reformed.
However, a close perusal of the deed would show that Silveria Flores was a party to the contract. She is not only the
seller of the coconut trees worth P15 but she was also one of the heirs entitled to the estate of Venancio and
Maxima, one of the heirs of Jose Flores. Her name did not appear as one of the sellers of one-half lot to Alejandra
Delfino because she never sold her share. What was sold was the one-half share of Jose Flores, as represented by
his heirs. It is also established that it was Silveria Flores herself who delivered the subject lot to the vendee
Alejandra Delfino. Said the lower court:
The truth of the matter, is that what the plaintiffs-vendors really intended to sell and what Alejandra Delfino
intended to buy, of which both of the parties agreed to be the subject of the transaction, was actually that
parcel of land, with two rows of coconut trees as the dividing line, and which lot is known as Lot 4163. This
lot, on the western portion, was the very portion which was pointed to and delivered to Alejandra Delfino by
the original defendant Silveria Flores and her two children, together with the vendors on January 19, 1956.
When the title to the said property was delivered to the notary public, for the preparation of the document of
sale, the title that was delivered was for Lot 5734. So, the document, that was executed, was done by
reason of mistake, inequitable conduct and accident, because the said document did not express the true
and real agreement and intention of the contracting parties. What was made to appear in the said document
was the sale of the one-half portion of another lot. Lot 5734, when in truth and in fact, the subject property
sold was Lot 4163.13 (Underscoring and italics supplied.)
Through her actions, Silveria Flores had made the parties to the deed believe that the lot intended to be the
object of the contract was the same lot described in the deed. Thus, by mistake or accident, as well as
inequitable conduct, neither she nor her successors-in-interest could deny involvement in the transaction
that resulted in a deed that now ought to be reformed.
Worth stressing, the existence of a cause of action is not determined by one's involvement in a contract.
Participation in a contract is not an element to determine the existence of a cause of action. The rule is that only the
allegations in the complaint may properly be considered in ascertaining the existence of a cause of action. Lack of
cause of action must appear on the face of the complaint and its existence may be determined only by the
allegations of the complaint. Consideration of other facts is proscribed and any attempt to prove extraneous
circumstances is not allowed.14
The test of sufficiency of the facts found in a complaint as constituting a cause of action is whether or not, admitting
the facts alleged, the court can render a valid judgment upon the same in accordance with the prayer in the
complaint.15 An examination of the complaint16 shows herein respondents, as plaintiffs in the trial court, are entitled to
the relief of reformation of instrument if the following factual allegations of respondents are deemed admitted, to wit:
(1) that Silveria is a co-owner of Lots No. 5734 and 4163, in different shares; (2) that the heirs of Jose, her co-owner
in Lot No. 4163, offered to sell to her their one-half share but she declined for lack of money; (3) that said share was
later sold to Alejandra; (4) that Silveria was asked to deliver the title of Lot No. 4163 but instead she delivered the
title of Lot No. 5734; (5) that after the sale, Alejandra occupied one-half portion of Lot No. 4163 while Lot No. 5734
was still in the possession of Venancio and the heirs of Maxima and Silveria; (6) that it was only when Alejandra was
about to buy the adjacent lot that she realized that what was indicated in the Settlement of Estate and Sale was Lot
No. 5734 and not 4163. In sum, we find that the original plaintiffs in the trial court alleged sufficient facts in the
complaint that properly constituted a cause of action against the defendants.
On the second issue, petitioners contend respondents failed to show, specifically, a cause of action for the
reformation of the instrument in question. Reformation is that remedy in equity by means of which a written
instrument is made or construed so as to express or conform to the real intention of the parties.17 As
provided in Article 1359 of the Civil Code:
Art. 1359. When, there having been a meeting of the minds of the parties to a contract, their true intention is
not expressed in the instrument purporting to embody the agreement by reason of mistake, fraud,
inequitable conduct or accident, one of the parties may ask for the reformation of the instrument to the end
that such true intention may be expressed.
If mistake, fraud, inequitable conduct, or accident has prevented a meeting of the minds of the parties, the
proper remedy is not reformation of the instrument but annulment of the contract.
An action for reformation of instrument under this provision of law may prosper only upon the concurrence
of the following requisites: (1) there must have been a meeting of the minds of the parties to the contact; (2)
the instrument does not express the true intention of the parties; and (3) the failure of the instrument to
express the true intention of the parties is due to mistake, fraud, inequitable conduct or accident. 18
All of these requisites, in our view, are present in this case. There was a meeting of the minds between the parties
to the contract but the deed did not express the true intention of the parties due to mistake in the designation of the
lot subject of the deed. There is no dispute as to the intention of the parties to sell the land to Alejandra Delfino but
there was a mistake as to the designation of the lot intended to be sold as stated in the Settlement of Estate and
Sale.
While intentions involve a state of mind which may sometimes be difficult to decipher, subsequent and
contemporaneous acts of the parties as well as the evidentiary facts as proved and admitted can be reflective of
one's intention. The totality of the evidence clearly indicates that what was intended to be sold to Alejandra Delfino
was Lot 4163 and not Lot 5734. As found by both courts below, there are enough bases to support such conclusion.
We particularly note that one of the stipulated facts during the pre-trial is that one-half of Lot 4163 is in the
possession of plaintiff Alejandra Delfino "since 1956 up to the present."19 Now, why would Alejandra occupy and
possess one-half of said lot if it was not the parcel of land which was the object of the sale to her? Besides, as found
by the Court of Appeals, if it were true that Silveria Flores was the sole owner of Lot 4163, then she should have
objected when Alejandra Delfino took possession of one-half thereof immediately after the sale. Additionally, we find
no cogent reason to depart from the conclusion of both the Court of Appeals and the trial court, based on the
evidence on record, that Silveria Flores owns only one-half of Lot 4163. The other half belongs to her brother Jose,
represented now by his grandchildren successors-in-interest. As such, the latter could rightfully sell the land to
Alejandra Delfino.
Furthermore, on record, it has been shown that a spot investigation conducted by a duly licensed surveyor revealed
that Lot 4163 is subdivided into two portions, one belonging to Silveria Flores and the other to the heirs of Jose
Flores.20 As found by the trial court, if indeed it was Lot 5734 that was sold, then Silveria Flores was occupying more
than her share of the inherited lot. Thus:
x x x That, with respect to Lot No. 5734 and Lot No. 4292, in an on-the-spot investigation, made by a
licensed surveyor, Mr. Rilthe Dorado, his findings thereon show that Silveria Flores is in possession on the
western portion of Lot 5734, with an area of more than one-half and, to be exact, with an area of 2,462, in
spite of the fact that she is the registered owner only of a one-third (1/3) share; and admitting, for the sake of
argument, that it was the one-half portion, of Lot 5734, that was sold, why should Silveria Flores possess
more than 2,190 square meters, which is the 1/2 of Lot 5734, Isabel Flores, the daughter of Venancio Flores
is possessing the middle portion, with an area of only 884 square meters; and Trinidad Flores Nodado, in
representation of her aunt, Maxima Flores, is possessing an area of 1,034 sq. m.21
As a matter of fact, the trial court also found that in spite of her title over Lot 4163, Silveria recognized the right of
Jose's grandchildren over one-half portion of the property.22 The trial court gave credence to the testimony of
Trinidad Flores, one of the grandchildren, who testified as follows:
Q: During the lifetime of Jose and Silveria when they were possessing Lot 4163, did they subdivide it
because they were possessing it in common?
A: They subdivided it into two halves.
xxx
Q: And after Jose and Silveria subdivided Lot 4163, they possessed their respective shares of Lot
4163?
A: Yes.
xxx
Q: Now you said that you are the heirs of Jose and Roman Flores (father and son) and so when they
died this portion of Lot 4163 devolved on you, did you ever take possession of Lot 4163?
A: Yes, we, the brothers and sisters immediately took possession of it.23
On cross-examination, Trinidad sufficiently explained why the title to Lot No. 4163 is in the name of Silveria Flores
alone. Thus:
Q: Now, this Lot No. 4163, do you know if this lot is also titled?
A: Yes, it was titled, only in the name of Silveria Flores because my aunt was not able to go with her;
only my aunt was alone at that time.24
xxx
Q: And as you have stated earlier, that what you are intending to sell was Lot 4163 to plaintiff Alejandra
Delfino, and during this time that you sold this intended lot 4163, you were not aware this particular lot 4163
was titled exclusively in the name of Silveria Flores, is that correct?
A: I knew already that the said lot was already titled, but it was titled only in the name of Silveria Flores
because she was the only one who went there to have it titled in her name. And at the time of the sale of the
lot, we demanded for the title from Silveria Flores, and what she delivered was the 5734 (sic).25
Petitioners now claim that the foregoing testimony of Trinidad Flores was biased. But we note that the appellate
court sustained the trial court's reliance on her testimony, which both found to be credible. As consistently held,
factual findings of the trial court, especially when affirmed by the appellate court, are binding upon this Court26 and
entitled to utmost respect.27 Considering these findings, we see no reason to disturb the trial court's finding, affirmed
by the Court of Appeals, that the object of the contract of sale, as intended and understood by the parties, was Lot
4163 covered by OCT 3129-A which Alejandra, and now her heirs, have been occupying. The designation of the lot
in the deed of sale as Lot 5734, covered by OCT 4918-A, was a mistake in the preparation of the document. Thus,
we concur in the conclusion reached by the courts a quo that reformation of the instrument is proper.
However, on the matter of damages, the award of actual damages in the amount of P5,000 lacks evidentiary
support. Actual damages if not supported by the evidence on record cannot be granted.28 Moral damages
for P10,000 was also improperly awarded, absent a specific finding and pronouncement from the trial court that
petitioners acted in bad faith or with malice. However, the award of attorney's fees for P2,000 is justified under
Article 2208(2) of the Civil Code,29 in view of the trial court's finding that the unjustified refusal of petitioners to reform
or to correct the document of sale compelled respondents to litigate to protect their interest.
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 39401 is AFFIRMED with MODIFICATION.
It is hereby ordered that the document entitled Settlement of Estate and Sale be reformed by changing the phrase
"Lot 5734" to "Lot 4163" found in the sixth paragraph of the deed, thereby ceding in favor of respondents one-half
portion of Lot 4163 instead of Lot 5734. The award to respondents of attorney's fees in the amount of P2,000 is
affirmed. However, the award of actual damages in the amount of P5,000 and of moral damages in the amount
of P10,000 are both SET ASIDE. No pronouncement as to costs.

15.) FIRST DIVISION
[G.R. NO. 158901 - March 9, 2004]
PROCESO QUIROS and LEONARDA VILLEGAS, Petitioners, v. MARCELO ARJONA, TERESITA

BALARBAR, JOSEPHINE ARJONA, and CONCHITA ARJONA, Respondents.
DECISION
YNARES-SANTIAGO, J.:
Assailed in this Petition for Review is the decision of the Court of Appeals in an action for the
execution/enforcement of amicable settlement between petitioners Proceso Quiros and Leonarda
Villegas and respondent Marcelo Arjona. Appellate court reversed the decision of the Regional Trial
Court of Dagupan City-Branch 44 and reinstated the decision of the Municipal Trial Court of San
Fabian-San Jacinto, Pangasinan.
On December 19, 1996, petitioners Proceso Quiros and Leonarda Villegas filed with the
office of the barangay captain of Labney, San Jacinto, Pangasinan, a complaint for
recovery of ownership and possession of a parcel of land located at Labney, San Jacinto,
Pangasinan. Petitioners sought to recover from their uncle Marcelo Arjona, one of the
respondents herein, their lawful share of the inheritance from their late grandmother Rosa
Arjona Quiros alias Doza, the same to be segregated from the following parcels of land:
a) A parcel of land (Lot 1, plan Psu-189983, L.R. Case No. D-614, LRC Record No. N- 22630),
situated in the Barrio of Labney, Torud, Municipality of San Jacinto, Province of Pangasinan
x x x Containing an area of Forty Four Thousand Five Hundred and Twenty (44,520) square meters,
more or less, covered by Tax Decl. No. 607; chanroblesvirtuallawlibrary
b) A parcel of Unirrig. riceland situated at Brgy. Labney, San Jacinto, San Jacinto, Pangasinan
with an area of 6450 sq. meters, more or less declared under Tax Decl. No. 2066 of the land records
of San Jacinto, Pangasinan assessed at P2390.00 x x x; chanroblesvirtuallawlibrary
c) A parcel of Unirrig. riceland situated at Brgy. Labney, San Jacinto, Pangasinan with an area of
6450 sq. meters, more or less, declared under Tax Declaration No. 2047 of the land records of San
Jacinto, Pangasinan assessed at P1700.00 x x x
d) A parcel of Unirrig. riceland situated at Brgy. Labney, San Jacinto, Pangasinan assessed at
P5610.00 x x x; chanroblesvirtuallawlibrary
e) A parcel of Cogon land situated at Brgy. Labney, San Jacinto, Pangasinan, with an area of 14133
sq. meters, more or less declared under Tax Declaration No. 14 of the land records of San Jacinto,
Pangasinan assessed at P2830.00 x x x.1
On January 5, 1997, an amicable settlement was reached between the parties. By reason thereof,
respondent Arjona executed a document denominated as "PAKNAAN" ("Agreement", in
Pangasinan dialect), which reads:
AGREEMENT
I, MARCELO ARJONA, of legal age, resident of Barangay Sapang, Buho, Palayan City, Nueva Ecija,
have a land consisting of more or less one (1) hectare which I gave to Proceso Quiros and

Leonarda Villegas, this land was inherited by Doza that is why I am giving the said land to
them for it is in my name, I am affixing my signature on this document for this is our agreement
besides there are witnesses on the 5th day (Sunday) of January 1997.
Signed in the presence of:
(Sgd) Avelino N. De la Masa, Jr.
(Sgd) Marcelo Arjona
Witnesses:
1) (Sgd.) Teresita Balarbar
2) (Sgd.) Josephine Arjona
3) (Sgd.) Conchita Arjona
On the same date, another "PAKNAAN" was executed by Jose Banda, as follows:
AGREEMENT
I, JOSE BANDA, married to Cecilia L. Banda, of legal age, and resident of Sitio Torrod, Barangay
Labney, San Jacinto, Pangasinan. There is a land in which they entrusted to me and the same land is
situated in Sitio Torrod, Brgy. Labney, San Jacinto, Pangasinan, land of Arjona family.
I am cultivating/tilling this land but if ever Leonarda Villegas and Proceso Quiros would like to
get this land, I will voluntarily surrender it to them.
In order to attest to the veracity and truthfulness of this agreement, I affixed (sic) my signature
voluntarily below this document this 5th day (Sunday) of January 1997.
(Sgd.) Jose Banda
Signed in the presence of:
(Sgd) Avelino N. de la Masa, Sr.

Barangay Captain
Brgy. Labney, San Jacinto
Pangasinan
Witnesses:
1) Irene Banda
(sgd.)
2) Jose (illegible) x x x
Petitioners filed a complaint with the Municipal Circuit Trial Court with prayer for the
issuance of a writ of execution of the compromise agreement which was denied because
the subject property cannot be determined with certainty.

The Regional Trial Court reversed the decision of the municipal court on appeal and
ordered the issuance of the writ of execution.
Respondents appealed to the Court of Appeals, which reversed the decision of the Regional
Trial Court and reinstated the decision of the Municipal Circuit Trial Court.2
Hence, this petition on the following errors:
THE PAKNAAN BEING A FINAL AND EXECUTORY JUDGMENT UNDER THE LAW IS AN IMMUTABLE
JUDGMENT CAN NOT BE ALTERED, MODIFIED OR CHANGED BY THE COURT INCLUDING THE
HIGHEST COURT; and
II
THE SECOND PAKNAAN ALLEGEDLY EXECUTED IN CONJUNCTION WITH THE FIRST PAKNAAN WAS
NEVER ADDUCED AS EVIDENCE BY EITHER OF THE PARTIES, SO IT IS ERROR OF JURISDICTION TO
CONSIDER THE SAME IN THE DECISION MAKING.
The pivotal issue is the validity and enforceability of the amicable settlement between the
parties and corollary to this, whether a writ of execution may issue on the basis thereof.
In support of their stance, petitioners rely on Section 416 of the Local Government Code which
provides that an amicable settlement shall have the force and effect of a final judgment upon the
expiration of 10 days from the date thereof, unless repudiated or nullified by the proper court. They
argue that since no such repudiation or action to nullify has been initiated, the municipal court has no
discretion but to execute the agreement which has become final and executory.
Petitioners likewise contend that despite the failure of the Paknaan to describe with certainty the
object of the contract, the evidence will show that after the execution of the agreement, respondent
Marcelo Arjona accompanied them to the actual site of the properties at Sitio Torod, Labney, San
Jacinto, Pangasinan and pointed to them the 1 hectare property referred to in the said agreement.
In their Comment, respondents insist that respondent Arjona could not have accompanied petitioners
to the subject land at Torrod, Labney because he was physically incapacitated and there was no
motorized vehicle to transport him to the said place.
The Civil Code contains salutary provisions that encourage and favor compromises and do
not even require judicial approval. Thus, under Article 2029 of the Civil Code, the courts
must endeavor to persuade the litigants in a civil case to agree upon some fair
compromise. Pursuant to Article 2037 of the Civil Code, a compromise has upon the parties
the effect and authority of res judicata, and this is true even if the compromise is not
judicially approved. Articles 2039 and 2031 thereof also provide for the suspension of pending
actions and mitigation of damages to the losing party who has shown a sincere desire for a
compromise, in keeping with the Codes policy of encouraging amicable settlements. 3
Cognizant of the beneficial effects of amicable settlements, the Katarungang Pambarangay Law (P.D.
1508) and later the Local Government Code provide for a mechanism for conciliation where party-
litigants can enter into an agreement in the barangay level to reduce the deterioration of the quality
of justice due to indiscriminate filing of court cases. Thus, under Section 416 of the said Code, an
amicable settlement shall have the force and effect of a final judgment of the court upon the
expiration of 10 days from the date thereof, unless repudiation of the settlement has been made or a
petition to nullify the award has been filed before the proper court
Petitioners submit that since the amicable settlement had not been repudiated or impugned before
the court within the 10-day prescriptive period in accordance with Section 416 of the Local
Government Code, the enforcement of the same must be done as a matter of course and a writ of
execution must accordingly be issued by the court.
Generally, the rule is that where no repudiation was made during the 10-day period, the
amicable settlement attains the status of finality and it becomes the ministerial duty of the
court to implement and enforce it. However, such rule is not inflexible for it admits of certain
exceptions. In Santos v. Judge Isidro,4 the Court observed that special and exceptional
circumstances, the imperatives of substantial justice, or facts that may have transpired after the
finality of judgment which would render its execution unjust, may warrant the suspension of
execution of a decision that has become final and executory. In the case at bar, the ends of
justice would be frustrated if a writ of execution is issued considering the uncertainty of
the object of the agreement. To do so would open the possibility of error and future
litigations.
The Paknaan executed by respondent Marcelo Arjona purports to convey a parcel of land
consisting of more or less 1 hectare to petitioners Quiros and Villegas. Another Paknaan,
prepared on the same date, and executed by one Jose Banda who signified his intention to
vacate the parcel of land he was tilling located at Torrod, Brgy. Labney, San Jacinto,
Pangasinan, for and in behalf of the Arjona family. On ocular inspection however, the
municipal trial court found that the land referred to in the second Paknaan was different
from the land being occupied by petitioners. Hence, no writ of execution could be issued
for failure to determine with certainty what parcel of land respondent intended to convey.
In denying the issuance of the writ of execution, the appellate court ruled that the contract is null
and void for its failure to describe with certainty the object thereof. While we agree that no writ of
execution may issue, we take exception to the appellate courts reason for its denial.
Since an amicable settlement, which partakes of the nature of a contract, is subject to the same legal
provisions providing for the validity, enforcement, rescission or annulment of ordinary contracts,
there is a need to ascertain whether the Paknaan in question has sufficiently complied with the
requisites of validity in accordance with Article 1318 of the Civil Code.5
There is no question that there was meeting of the minds between the contracting parties. In
executing the Paknaan, the respondent undertook to convey 1 hectare of land to petitioners who
accepted. It appears that while the Paknaan was prepared and signed by respondent Arjona,
petitioners acceded to the terms thereof by not disputing its contents and are in fact now seeking its
enforcement. The object is a 1-hectare parcel of land representing petitioners inheritance
from their deceased grandmother. The cause of the contract is the delivery of petitioners
share in the inheritance. The inability of the municipal court to identify the exact location
of the inherited property did not negate the principal object of the contract. This is an
error occasioned by the failure of the parties to describe the subject property, which is
correctible by reformation and does not indicate the absence of the principal object as to
render the contract void. It cannot be disputed that the object is determinable as to its
kind, i.e.1 hectare of land as inheritance, and can be determined without need of a new
contract or agreement.6 Clearly, the Paknaan has all the earmarks of a valid contract.
Although both parties agreed to transfer one-hectare real property, they failed to include
in the written document a sufficient description of the property to convey. This error is not
one for nullification of the instrument but only for reformation.
Article 1359 of the Civil Code provides: chanroblesvirtua1awlibrary

When, there having been a meeting of the minds of the parties to a contract, their true intention is
not expressed in the instrument purporting to embody the agreement by reason of mistake, fraud,
inequitable conduct or accident, one of the parties may ask for the reformation of the instrument to
the end that such true intention may be expressed.
If mistake, fraud, inequitable conduct, or accident has prevented a meeting of the minds of the
parties, the proper remedy is not reformation of the instrument but annulment of the contract.
Reformation is a remedy in equity whereby a written instrument is made or construed so

as to express or conform to the real intention of the parties where some error or mistake
has been committed.7 In granting reformation, the remedy in equity is not making a new
contract for the parties, but establishing and perpetuating the real contract between the
parties which, under the technical rules of law, could not be enforced but for such
reformation.
In order that an action for reformation of instrument as provided in Article 1359 of the
Civil Code may prosper, the following requisites must concur: (1) there must have been a
meeting of the minds of the parties to the contract; (2) the instrument does not express
the true intention of the parties; and (3) the failure of the instrument to express the true
intention of the parties is due to mistake, fraud, inequitable conduct or accident. 8
When the terms of an agreement have been reduced to writing, it is considered as containing all the
terms agreed upon and there can be, between the parties and their successors in interest, no
evidence of such terms other than the contents of the written agreement, except when it fails to
express the true intent and agreement of the parties thereto, in which case, one of the parties may
bring an action for the reformation of the instrument to the end that such true intention may be
expressed.9
Both parties acknowledge that petitioners are entitled to their inheritance, hence, the remedy of
nullification, which invalidates the Paknaan, would prejudice petitioners and deprive them of their
just share of the inheritance. Respondent can not, as an afterthought, be allowed to renege on his
legal obligation to transfer the property to its rightful heirs. A refusal to reform the Paknaan under
such circumstances would have the effect of penalizing one party for negligent conduct, and at the
same time permitting the other party to escape the consequences of his negligence and profit
thereby. No person shall be unjustly enriched at the expense of another.
WHEREFORE, in view of the foregoing, the petition is DENIED. The Decision dated March 21, 2003 of
the Court of Appeals, which reversed the decision of the Regional Trial Court and reinstated the
decision of the Municipal Trial Court, is AFFIRMED. This is without prejudice to the filing by either
party of an action for reformation of the Paknaan executed on January 5, 1997.

16.) G.R. No. 161400 September 2, 2005
ZENAIDA ORTEGA, represented by Her Attorney-in Fact OCTAVIO ALVAREZ and/or ZEMVE ORTEGA
ALVAREZ, Petitioners,
vs.
THE QUEZON CITY GOVERNMENT, THE NATIONAL HOUSING AUTHORITY & THE NATIONAL HOME
MORTGAGE CORP., Respondent.
DECISION
CARPIO MORALES, J.:
Petitioner Zenaida Ortega comes directly to this Court assailing the validity of Quezon City Ordinance No.
SP 1304, Series of 2003, and praying that the following agencies, National Housing Authority (NHA), Housing and
Land Use Regulatory Board (HLURB), Department of Environment and Natural Resources – Bureau of Land
Management, National Home Mortgage Financing Corporation, and Home Insurance Guarantee Corporation, be
restrained from implementing the said ordinance.
Proposed Ordinance No. 2002-07 (PO 2002-07) was filed on January 10, 2002 before the City Council. PO 2002-
07 sought to approve "the Subdivision Plan of Samahang Kapitbahayan ng Barangay Vasra (Samahang
Kapitbahayan), a Socialized Housing Project (B.P. Blg. 220) with seventeen (17) lots (Community Mortgage
Program) containing [a total] area of Six Hundred Sixty Seven (667) square meters, covered by Original
Certificate of Title No. 735, owned by the City Government of Quezon City (Vendor) located at a portion of
[an] easement [in] Barangay Vasra, Quezon City, Metro Manila, as applied for by the Samahang Kapitbahayan
ng Barangay Vasra (Vendee) subject to the conditions prescribed under Quezon City Ordinance No. SP-56, S-93
and Batas Pambansa Blg. 220."1
Proposed Resolution No. 2003-13 (PR 2003-13) was subsequently filed on January 20, 2002 to complement
PO 2002-07. The proposed resolution sought to authorize Quezon City Mayor Feliciano R. Belmonte to enter
into a contract to sell a portion of an easement located at Barangay Vasra, Quezon City with the
SAMAHANG KAPITBAHAYAN to be represented by its President, through the Community Mortgage Program
(CMP) of the National Home Mortgage Finance Corporation (NHMFC).2
On August 5, 2003, the Quezon City government enacted Ordinance No. SP-1304, Series of 2003 (the
ordinance), which is being challenged in the present petition,3 reclassifying "as residential or converted
from its original classification to residential for distribution or for sale to its informal settlers" a "parcel of
land which may be considered an accretion/excess lot and previously conceived and referred to in Proposed
Ordinance No. 2002-07 and Proposed [Resolution] 2002-13 as portion of [an] easement situated between Block 14,
Psd-39577 of the original subdivision plan and Culiat Creek, Barangay Vasra, Quezon City."4
The provisions of the assailed ordinance read:
SECTION 1. A parcel of land which may be considered an accretion/excess lot and previously conceived
and referred to in proposed ordinance no. PO 2002-07 and proposed ordinance no. PO 2002-13 as portion of
easement, situated between Block 14. Psd-39577 of the original subdivision plan and Culiat Creek,
Barangay Vasra, Quezon City, is hereby classified as residential or converted from its original classification
to residential for distribution or for sale to its informal settlers.
SECTION 2. This Ordinance shall take effect immediately upon its approval.5
Petitioner, who claims to be the rightful owner of the land subject of the ordinance, alleges that in enacting
the ordinance, her various letter-protests to the City Council against proposed Resolutions No. 2002-13, 2002-07
and 2002-2396 were not heeded in the City Council, thus violating her constitutional rights to due process and equal
protection of the law.

Petitioner further claims that the lot referred to in the ordinance overlaps her properties as their technical
descriptions in Transfer Certificates of Title Nos. RT-70472 (296026) and N-152137 issued in her name
show;7 and that assuming that there exists accretion or easement of the Culiat Creek, she, being the owner
of the adjoining land, is the rightful owner thereof following Articles 4578 and Article 6209 of the Civil Code.
Petitioner likewise claims that the intended beneficiaries under the proposed ordinance and resolution are not
informal settlers as required under City Ordinance No. SP-56, Series of 1993,10 but lessees of her properties who
had been ordered ejected after she filed several unlawful detainer cases against them.11
By Comment12 filed on April 14, 2004, the Quezon City Government, through the Office of the City Attorney,
alleges that the present petition is premature and raises questions of fact which entail reception of
evidence; and that petitioner has not yet established her right of ownership over the property referred to in
the ordinance, whereas its clear right thereover is evidenced by Original Certificate of Title No. 735 issued
in its name.13
The NHA, by Comment14 filed on May 17, 2004, prayed for the dismissal of the petition, pointing out that the
petition is actually one for declaratory relief under Section 1, Rule 63 of the Rules of Court over which this
Court has no original jurisdiction.
The NHMFC, by Comment15 filed on June 17, 2004, alleged that it is not a party to any of the transactions with any
of the parties in the present case. It nevertheless adopted the comment of the Quezon City government that the
petition is premature and alleges facts which still need to be proven.16
The petition must be dismissed.
Article VIII, Section 5 of the Constitution provides:
SECTION 5. The Supreme Court shall have the following powers:
xxx
(2) Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or the Rules of Court may
provide, final judgments and orders of lower courts in:
(a) All cases in which the constitutionality or validity of any treaty, international or executive agreement,
law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question.
x x x (Emphasis and underscoring supplied).
This Court can thus only review, revise, reverse, modify on appeal or certiorari final judgments and orders
of lower courts in all cases in which the constitutionality or validity of, among other things, an ordinance is
in question. Foremost, therefore, is that there must be first a final judgment rendered by an inferior court17 before
this Court can assume jurisdiction over a case of this nature.
Verily, this Court does not conduct original and full trial of a main factual issue like what petitioner is raising in the
present petition.18 It does not analyze or weigh evidence brought before it at the first instance, otherwise, it would
preempt the primary function of the lower court to try the case on the merits, receive evidence, and decide the case
definitively.19 Its jurisdiction in cases which assail the validity of an ordinance is limited to reviewing or revising final
judgments or orders of lower courts and applying the law based on their findings of facts brought before it.20
In another vein, if this petition was to be considered as one for declaratory relief, as observed by the OSG, it
is not embraced within the original jurisdiction of this Court.21 Rule 63 of the Rules of Court provides:
SECTION 1. Who may file petition. Any person interested under a deed, will, contract or other written
instrument, or whose rights are affected by a statute, executive order or regulation, ordinance, or any other
government regulation may, before breach or violation thereof, bring an action in the appropriate Regional
Trial Court to determine any question of construction or validity arising from, and for a declaration of his
rights or duties, thereunder.
An action for the reformation of an instrument, or to quiet title to real property or remove clouds therefrom, or to
consolidate ownership under Article 1607 of the Civil Code may be brought under this Rule.
xxx
SEC. 4. Local government ordinances. – In any action involving the validity of a local government ordinance, the
corresponding prosecutor or attorney of the local government unit involved shall be similarly notified and entitled to
be heard. (Emphasis and underscoring supplied)
Respecting petitioner’s contention that since the ordinance violates national laws, the present petition delves on
questions of law over which this Court has original jurisdiction,22 the same fails.
As reflected above, petitioner’s assertion that the invalidity of the ordinance is premised on her claim that she has a
better right to the parcel of land referred to in the ordinance is a factual issue.
At all events, even if this petition delves on questions of law, there is no statutory or jurisprudential basis for
according to this Court original and exclusive jurisdiction over declaratory relief which advances only questions of
law.23
Finally, while a petition for declaratory relief may be treated as one for prohibition if it has far reaching implications
and raises questions that need to be resolved,24 there is no allegation of facts by petitioner tending to show that she
is entitled to such a writ. The judicial policy must thus remain that this Court will not entertain direct resort to it,
except when the redress sought cannot be obtained in the proper courts or when exceptional and compelling
circumstances warrant availment of a remedy within and calling for the exercise of this Court’s primary jurisdiction.25
WHEREFORE, the petition is hereby DISMISSED.

17.) [G.R. NO. 181303 : September 17, 2009] 3:20 - 17750700
CARMEN DANAO MALANA, MARIA DANAO ACORDA, EVELYN DANAO, FERMINA DANAO,
LETICIA DANAO and LEONORA DANAO, the last two are represented herein by their
Attorney-in-Fact, MARIA DANAO ACORDA, Petitioners, v. BENIGNO TAPPA, JERRY REYNA,
SATURNINO CAMBRI and SPOUSES FRANCISCO AND MARIA LIGUTAN, Respondents.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Certiorari under Rule 65 of the Rules of Court, assailing the Orders 1 dated 4 May
2007, 30 May 2007, and 31 October 2007, rendered by Branch 3 of the Regional Trial Court (RTC) of
Tuguegarao City, which dismissed, for lack of jurisdiction, the Complaint of petitioners Carmen Danao
Malana, Leticia Danao, Maria Danao Accorda, Evelyn Danao, Fermina Danao, and Leonora Danao,
against respondents Benigno Tappa, Jerry Reyna, Saturnino Cambri, Francisco Ligutan and Maria
Ligutan, in Civil Case No. 6868.
Petitioners filed before the RTC their Complaint for Reivindicacion, Quieting of Title, and
Damages2 against respondents on 27 March 2007, docketed as Civil Case No. 6868. Petitioners
alleged in their Complaint that they are the owners of a parcel of land covered by Transfer
Certificate of Title (TCT) No. T-1279373 situated in Tuguegarao City, Cagayan (subject property).
Petitioners inherited the subject property from Anastacio Danao (Anastacio), who died
intestate.4 During the lifetime of Anastacio, he had allowed Consuelo Pauig (Consuelo), who
was married to Joaquin Boncad, to build on and occupy the southern portion of the subject
property. Anastacio and Consuelo agreed that the latter would vacate the said land at any
time that Anastacio and his heirs might need it.5
Petitioners claimed that respondents, Consuelo's family members, 6 continued to occupy the subject
property even after her death, already building their residences thereon using permanent materials.
Petitioners also learned that respondents were claiming ownership over the subject
property. Averring that they already needed it, petitioners demanded that respondents
vacate the same. Respondents, however, refused to heed petitioners' demand.7
Petitioners referred their land dispute with respondents to the Lupong Tagapamayapa of Barangay
Annafunan West for conciliation. During the conciliation proceedings, respondents asserted that
they owned the subject property and presented documents ostensibly supporting their claim
of ownership.
According to petitioners, respondents' documents were highly dubious, falsified, and

incapable of proving the latter's claim of ownership over the subject property;
nevertheless, they created a cloud upon petitioners' title to the property. Thus, petitioners
were compelled to file before the RTC a Complaint to remove such cloud from their
title.8 Petitioners additionally sought in their Complaint an award against respondents for actual
damages, in the amount of P50,000.00, resulting from the latter's baseless claim over the subject
property that did not actually belong to them, in violation of Article 19 of the Civil Code on Human
Relations.9 Petitioners likewise prayed for an award against respondents for exemplary damages, in
the amount of P50,000.00, since the latter had acted in bad faith and resorted to unlawful means to
establish their claim over the subject property. Finally, petitioners asked to recover from
respondents P50,000.00 as attorney's fees, because the latter's refusal to vacate the property
constrained petitioners to engage the services of a lawyer. 10

Before respondents could file their answer, the RTC issued an Order dated 4 May 2007
dismissing petitioners' Complaint on the ground of lack of jurisdiction. The RTC referred to
Republic Act No. 7691,11 amending Batas Pambansa Blg. 129, otherwise known as the Judiciary
Reorganization Act of 1980, which vests the RTC with jurisdiction over real actions, where the
assessed value of the property involved exceeds P20,000.00. It found that the subject
property had a value of less than P20,000.00; hence, petitioners' action to recover the
same was outside the jurisdiction of the RTC. The RTC decreed in its 4 May 2007 Order that:
The Court has no jurisdiction over the action, it being a real action involving a real property with
assessed value less than P20,000.00 and hereby dismisses the same without prejudice. 12
Petitioners filed a Motion for Reconsideration of the aforementioned RTC Order dismissing
their Complaint. They argued that their principal cause of action was for quieting of title;
the accion reivindicacion was included merely to enable them to seek complete relief from
respondents. Petitioner's Complaint should not have been dismissed, since Section 1, Rule
63 of the Rules of Court13 states that an action to quiet title falls under the jurisdiction of
the RTC.14
In an Order dated 30 May 2007, the RTC denied petitioners' Motion for Reconsideration. It
reasoned that an action to quiet title is a real action. Pursuant to Republic Act No. 7691, it is
the Municipal Trial Court (MTC) that exercises exclusive jurisdiction over real actions
where the assessed value of real property does not exceed P20,000.00. Since the assessed
value of subject property per Tax Declaration No, 02-48386 was P410.00, the real action involving
the same was outside the jurisdiction of the RTC. 15
Petitioners filed another pleading, simply designated as Motion, in which they prayed that the RTC
Orders dated 4 May 2007 and 30 May 2007, dismissing their Complaint, be set aside. They reiterated
their earlier argument that Section 1, Rule 63 of the Rules of Court states that an action to quiet title
falls under the exclusive jurisdiction of the RTC. They also contended that there was no obstacle to
their joining the two causes of action, i.e., quieting of title and reivindicacion, in a single Complaint,
citing Rumarate v. Hernandez.16 And even if the two causes of action could not be joined, petitioners
maintained that the misjoinder of said causes of action was not a ground for the dismissal of their
Complaint.17
The RTC issued an Order dated 31 October 2007 denying petitioners' Motion. It clarified that their
Complaint was dismissed, not on the ground of misjoinder of causes of action, but for lack of
jurisdiction. The RTC dissected Section 1, Rule 63 of the Rules of Court, which provides:
Section 1. Who may file petition. Any person interested under a deed, will, contract or other written
instrument, or whose rights are affected by a statute, executive order or regulation, ordinance, or
any other governmental regulation may, before breach or violation thereof, bring an action in the
appropriate Regional Trial Court to determine any question of construction or validity arising, and for
a declaration of his rights or duties, thereunder.
An action for the reformation of an instrument, to quiet title to real property or remove clouds
therefrom, or to consolidate ownership under Article 1607 of the Civil Code, may be brought under
this Rule.
The RTC differentiated between the first and the second paragraphs of Section 1, Rule 63
of the Rules of Court. The first paragraph refers to an action for declaratory relief, which
should be brought before the RTC. The second paragraph, however, refers to a different
set of remedies, which includes an action to quiet title to real property. The second
paragraph must be read in relation to Republic Act No. 7691, which vests the MTC with jurisdiction
over real actions, where the assessed value of the real property involved does not

exceed P50,000.00 in Metro Manila and P20,000.00 in all other places.18 The dispositive part of the
31 October 2007 Order of the RTC reads:
This Court maintains that an action to quiet title is a real action. [Herein petitioners] do not dispute
the assessed value of the property at P410.00 under Tax Declaration No. 02-48386. Hence, it has no
jurisdiction over the action.
In view of the foregoing considerations, the Motion is hereby denied. 19
Hence, the present Petition, where petitioners raise the sole issue of:
WHETHER OR NOT THE RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION

IN DISMISSING THE COMPLAINT OF THE PETITIONERS MOTU PROPRIO. 20
Petitioners' statement of the issue is misleading. It would seem that they are only challenging the
fact that their Complaint was dismissed by the RTC motu proprio. Based on the facts and arguments
set forth in the instant Petition, however, the Court determines that the fundamental issue for its
resolution is whether the RTC committed grave abuse of discretion in dismissing petitioners'
Complaint for lack of jurisdiction.
The Court rules in the negative.
An action for declaratory relief should be filed by a person interested under a deed, a will, a contract
or other written instrument, and whose rights are affected by a statute, an executive order, a
regulation or an ordinance. The relief sought under this remedy includes the interpretation and
determination of the validity of the written instrument and the judicial declaration of the parties'
rights or duties thereunder.21
Petitions for declaratory relief are governed by Rule 63 of the Rules of Court. The RTC
correctly made a distinction between the first and the second paragraphs of Section 1,
Rule 63 of the Rules of Court.
The first paragraph of Section 1, Rule 63 of the Rules of Court, describes the general circumstances
in which a person may file a petition for declaratory relief, to wit:
Any person interested under a deed, will, contract or other written instrument, or whose rights are
affected by a statute, executive order or regulation, ordinance, or any other governmental regulation
may, before breach or violation thereof, bring an action in the appropriate Regional Trial Court to
determine any question of construction or validity arising, and for a declaration of his rights or
duties, thereunder. (Emphasis ours.)
As the afore-quoted provision states, a petition for declaratory relief under the first paragraph
of Section 1, Rule 63 may be brought before the appropriate RTC.
Section 1, Rule 63 of the Rules of Court further provides in its second paragraph that:
An action for the reformation of an instrument, to quiet title to real property or remove
clouds therefrom, or to consolidate ownership under Article 1607 of the Civil Code, may be
brought under this Rule. (Emphasis ours.)

The second paragraph of Section 1, Rule 63 of the Rules of Court specifically refers to (1)
an action for the reformation of an instrument, recognized under Articles 1359 to 1369 of
the Civil Code; (2) an action to quiet title, authorized by Articles 476 to 481 of the Civil
Code; and (3) an action to consolidate ownership required by Article 1607 of the Civil Code
in a sale with a right to repurchase. These three remedies are considered similar to
declaratory relief because they also result in the adjudication of the legal rights of the
litigants, often without the need of execution to carry the judgment into effect. 22
To determine which court has jurisdiction over the actions identified in the second
paragraph of Section 1, Rule 63 of the Rules of Court, said provision must be read together
with those of the Judiciary Reorganization Act of 1980, as amended.
It is important to note that Section 1, Rule 63 of the Rules of Court does not categorically
require that an action to quiet title be filed before the RTC. It repeatedly uses the word
"may" - that an action for quieting of title "may be brought under [the] Rule" on petitions
for declaratory relief, and a person desiring to file a petition for declaratory relief "may x x
x bring an action in the appropriate Regional Trial Court." The use of the word "may" in a
statute denotes that the provision is merely permissive and indicates a mere possibility, an
opportunity or an option.23
In contrast, the mandatory provision of the Judiciary Reorganization Act of 1980, as amended, uses
the word "shall" and explicitly requires the MTC to exercise exclusive original jurisdiction over all civil
actions which involve title to or possession of real property where the assessed value does not
exceed P20,000.00, thus:
Section 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial
Courts in Civil Cases. Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial
Courts shall exercise:
xxx
(3) Exclusive original jurisdiction in all civil actions which involve title to, possession of, real property,
or any interest therein where the assessed value of the property or interest therein does not exceed
Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value
does not exceeds Fifty thousand pesos (P50,000.00) exclusive of interest, damages of whatever kind,
attorney's fees, litigation expenses and costs: x x x (Emphasis ours.)
As found by the RTC, the assessed value of the subject property as stated in Tax
Declaration No. 02-48386 is only P410.00; therefore, petitioners' Complaint involving title
to and possession of the said property is within the exclusive original jurisdiction of the
MTC, not the RTC.
Furthermore, an action for declaratory relief presupposes that there has been no actual
breach of the instruments involved or of rights arising thereunder. 24 Since the purpose of an
action for declaratory relief is to secure an authoritative statement of the rights and obligations of the
parties under a statute, deed, or contract for their guidance in the enforcement thereof, or
compliance therewith, and not to settle issues arising from an alleged breach thereof, it may be
entertained only before the breach or violation of the statute, deed, or contract to which it refers. A
petition for declaratory relief gives a practical remedy for ending controversies that have not reached
the state where another relief is immediately available; and supplies the need for a form of action
that will set controversies at rest before they lead to a repudiation of obligations, an invasion of
rights, and a commission of wrongs.25

Where the law or contract has already been contravened prior to the filing of an action for
declaratory relief, the courts can no longer assume jurisdiction over the action. In other words, a
court has no more jurisdiction over an action for declaratory relief if its subject has already been
infringed or transgressed before the institution of the action. 26
In the present case, petitioners' Complaint for quieting of title was filed after petitioners
already demanded and respondents refused to vacate the subject property. In fact, said
Complaint was filed only subsequent to the latter's express claim of ownership over the subject
property before the Lupong Tagapamayapa, in direct challenge to petitioners' title.
Since petitioners averred in the Complaint that they had already been deprived of the
possession of their property, the proper remedy for them is the filing of an accion
publiciana or an accion reivindicatoria, not a case for declaratory relief. An accion publiciana
is a suit for the recovery of possession, filed one year after the occurrence of the cause of action or
from the unlawful withholding of possession of the realty. An accion reivindicatoria is a suit that has
for its object one's recovery of possession over the real property as owner. 27 Ï‚Î·Î±Ã±rÎ¿blÎµÅ¡ Î½Î¹râ€ Ï…Î±l lÎ±Ï‰ lÎ¹brÎ±rÃ ¿
Petitioners' Complaint contained sufficient allegations for an accion reivindicatoria. Jurisdiction over
such an action would depend on the value of the property involved. Given that the subject property
herein is valued only at P410.00, then the MTC, not the RTC, has jurisdiction over an action to
recover the same. The RTC, therefore, did not commit grave abuse of discretion in dismissing,
without prejudice, petitioners' Complaint in Civil Case No. 6868 for lack of jurisdiction.
As for the RTC dismissing petitioners' Complaint motu proprio, the following pronouncements of the
Court in Laresma v. Abellana28 proves instructive:
It is axiomatic that the nature of an action and the jurisdiction of a tribunal are determined by the
material allegations of the complaint and the law at the time the action was commenced. Jurisdiction
of the tribunal over the subject matter or nature of an action is conferred only by law and not by the
consent or waiver upon a court which, otherwise, would have no jurisdiction over the subject matter
or nature of an action. Lack of jurisdiction of the court over an action or the subject matter of
an action cannot be cured by the silence, acquiescence, or even by express consent of the
parties. If the court has no jurisdiction over the nature of an action, it may dismiss the
same ex mero motu or motu proprio. x x x. (Emphasis supplied.)
Since the RTC, in dismissing petitioners' Complaint, acted in complete accord with law and
jurisprudence, it cannot be said to have done so with grave abuse of discretion amounting to lack or
excess of jurisdiction. An act of a court or tribunal may only be considered to have been committed
in grave abuse of discretion when the same was performed in a capricious or whimsical exercise of
judgment, which is equivalent to lack of jurisdiction. The abuse of discretion must be so patent and
gross as to amount to an evasion of a positive duty or to a virtual refusal to perform a duty enjoined
by law or to act at all in contemplation of law, as where the power is exercised in an arbitrary and
despotic manner by reason of passion or personal hostility. 29 No such circumstances exist herein as
to justify the issuance of a writ of certiorari.
IN VIEW OF THE FOREGOING, the instant Petition is DISMISSED. The Orders dated 4 May 2007,
30 May 2007 and 31 October 2007 of the Regional Trial Court of Tuguegarao City, Branch 3,
dismissing the Complaint in Civil Case No. 6868, without prejudice, are AFFIRMED. The Regional Trial
Court is ordered to REMAND the records of this case to the Municipal Trial Court or the court of
proper jurisdiction for proper disposition. Costs against the petitioners.

18.) G.R. NO. 174129 July 5, 2010
HONESTO V. FERRER, JR., and ROMEO E. ESPERA, Petitioners,

vs.
Mayor SULPICIO S. ROCO, JR., in his capacity as Mayor of Naga City, Sangguniang Panglungsod of the City
of Naga, and Peñafrancia Memorial Park Corporation, Respondents.
DECISION
MENDOZA, J.:
At bench is a petition for review under Rule 45 of the Rules of Court. filed by petitioners Honesto V. Ferrer, Jr. and
Romeo E. Espera against respondents Mayor Sulpicio S. Roco, Jr., in his capacity as mayor of Naga City; the
Sangguniang Panglungsod of the City of Naga; and Peñafrancia Memorial Park Corporation or "PMPC" (formerly
ARE Square Realty Development Corporation).
The petition challenges (1) the April 21, 2006 Decision of the Court of Appeals1 affirming in toto the April 17, 2001
Order2 of the Regional Trial Court, Naga City, Branch 24; and (2) its August 9, 2006 Resolution3 denying the Motion
for Reconsideration filed by the petitioners.
THE RELEVANT ANTECEDENTS:
Wenceslao D. San Andres, Jose A. Ocampo, Crisensana M. Vargas, Honesto V. Ferrer, Jr., Alfonso N. Peralta,
Otilla C. Sierra, Jovito A. delos Santos, William Tan, Felipe Sese, and Romeo E. Espera filed a Petition for
Declaratory Relief and/or Injunction with prayer for Temporary Restraining Order (TRO)4 questioning Resolution No.
2000-263,5 Resolution No. 2000-3546 and Ordinance No. 2000-0597 issued by the respondents, Mayor Sulpicio S.
Roco, Jr. and the members of the Sangguniang Panglungsod of Naga City. The said resolutions and ordinance
read:
RESOLUTION NO. 2000-263
WHEREAS, received by the Sanggunian for appropriate action was the application of Mr. Robert L. Obiedo of ARE
Square Realty Development Corporation for Preliminary Approval for Locational Clearance (PALC) for a First Class
Memorial Park located at Barangay Balatas, City of Naga;
WHEREAS, the City Planning & Development Office evaluated and reviewed the documents submitted by Mr.
Robert L. Obiedo for the purpose and found that the substantial requirements have been complied with;
x x x x x x x x x'
BE IT RESOLVED, as it is hereby resolved, to approve the application of Mr. Robert L. Obiedo of ARE Square
Realty Development Corporation for Preliminary Approval for Locational Clearance (PALC) for a First Class
Memorial Park located at Barangay Balatas, City of Naga.
RESOLUTION NO. 2000-354
WHEREAS, received by the Sangguniang Panglungsod for consideration was the letter dated September 4, 2000 of
Mr. Robert L. Obiedo through his official representative Mrs. Alice C. Enojado of the ARE Square Realty
Development Corporation applying for a Development Permit (DP) for their proposed Eternal Gardens Memorial
Park with a total area of 60, 781 sq. m. located at Barangay Balatas, this city;
WHEREAS, in the Technical Evaluation Report dated October 2, 2000, the City Planning & Development Officer
manifested that after evaluation and review of the submitted documents they found that the applicant has
substantially complied with the requirements;

x x x x x x x x x'
BE IT RESOLVED, as it is hereby resolved, to approve the application for Development Permit (DP) of Mr. Robert L.
Obiedo of the ARE Square Realty Development Corporation to develop the Eternal Gardens Memorial Park located
at Barangay Balatas, this city, subject to the following conditions and compliance of all existing laws, ordinances,
rules and regulations and further favorably endorsing the same to the Housing Land Use and Regulatory Board
(HLURB) for appropriate action, to wit:
x x x x x x x x x[Emphasis supplied]
ORDINANCE NO. 2000-059
Be it ordained by the Sangguniang Panglungsod of the City of Naga, that:
SECTION 1. - Ordinance No. 401, s. 1972, entitled: "An Ordinance Regulating the Establishment, Maintenance and
Operation of Private Memorial Park-Type Cemetery or Burial Ground within the Jurisdiction of Naga City, and
Providing Penalties for Violation Thereof"; specifically sub-paragraph (2) of paragraph (c) under Section 3 and sub-
paragraph (a) under Section 5 thereof, on the minimum area of the proposed cemetery and Mayor’s Permit and
License Fees, respectively, is hereby amended, now to read follows:
‘SECTION 3. – the operation and maintenance of the private memorial park-type cemetery established pursuant to
this Ordinance shall be subject to the provisions of the cemetery law and/or other pertinent laws as well as rules and
regulations promulgated or as may be promulgated by the Municipal Board, subject further to the following
conditions:
x x x x x x x x x'
(c) No application for the establishment of a private cemetery shall be considered:
x x x x x x x x x'
(2) if the proposed private cemetery site is less than five (5) hectares;
x x x x x x x x x'
Respondents filed a Motion to Dismiss8 for lack of jurisdiction. Finding the motion to be well-taken, the RTC
dismissed the petition in an order dated April 17, 2001.9 The RTC found that the prayer of petitioners was premature
as the questioned resolutions and ordinance were merely promulgated to pave the way for the endorsement of the
application of the private respondent to the HLURB. It recognized that the HLURB is the entity which will decide
whether the application of the private respondent will be granted or not.
Apparently not in conformity with the order of dismissal, the petitioners appealed to the Court of Appeals premised
on the following errors ---
"THE TRIAL COURT ERRED IN HOLDING THAT HLURB HAS JURISDICTION OVER THE CASE.
THE TRIAL COURT ERRED IN NOT GRANTING APPELLANTS’ PRAYER FOR TRO AND OR WRIT OF
PRELIMINARY INJUNCTION."10
As earlier stated, the Court of Appeals affirmed in toto the April 17, 2001 Order of the RTC.11 Pertinently, the Court
of Appeals wrote:
"Indeed, the doctrine of administrative remedies requires that resort be first made to the administrative authorities in
cases falling under their jurisdiction to allow them to carry out their functions and discharge their liabilities within the
specialized areas of their competence. This is because the administrative agency concerned is in the best position

to correct any previous error committed in its forum. Clearly, the filing of the petition for declaratory relief with the
trial court had no basis, as there can be no issue ripe for judicial determination when the matter is within the primary
jurisdiction of an administrative agency, the HLURB.
Consequently, inasmuch as the filing of the petition below was premature, appellant’s application for temporary
restraining order and/or writ of preliminary injunction, which is merely ancillary to the petition, has no leg to stand
on."
Petitioners filed a Motion for Reconsideration but it was denied by the Court of Appeals in its August 9, 2006
Resolution.12
Hence, this Petition (filed by Honesto V. Ferrer and Romeo E. Espera only)13 wherein the following arguments have
been presented —
"THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE PETITION FOR DECLARATORY
RELIEF FILED WITH THE TRIAL COURT AS PREMATURE AND HAVING NO BASIS, ON THE PRETEXT THAT
THE ISSUE RAISED THEREIN IS NOT YET RIPE FOR ADJUDICATION.
THE COURT OF APPEALS GRAVELY ERRED IN NOT APPLYING THE EXCEPTIONS TO THE GENERAL
RULE ON THE EXHAUSTION OF ADMINISTRATIVE REMEDIES BEFORE RESORT TO COURTS.
THE COURT OF APPEALS GRAVELY ERRED IN NOT RECONSIDERING ITS DECISION."14
On June 23, 2008, after the submission of the separate comments by the private respondent PMC15 and the public
respondents,16 and of the reply17 by the petitioners, the petition was given due course and the parties were directed
to submit their respective memoranda.18
After a thorough study of the respective positions of the parties on the issue at hand, the Court has reached the
conclusion that the petition lacks merit.
Declaratory relief is defined as an action by any person interested in a deed, will, contract or other written
instrument, executive order or resolution, to determine any question of construction or validity arising from the
instrument, executive order or regulation, or statute, and for a declaration of his rights and duties thereunder. The
only issue that may be raised in such a petition is the question of construction or validity of the provisions in an
instrument or statute.
It is settled that the requisites of an action for declaratory relief are: 1] the subject matter of the controversy must be
a deed, will, contract or other written instrument, statute, executive order or regulation, or ordinance; 2] the terms of
said documents and the validity thereof are doubtful and require judicial construction; 3] there must have been no
breach of the documents in question; 4] there must be an actual justiciable controversy or the "ripening seeds" of
one between persons whose interests are adverse; 5] the issue must be ripe for judicial determination; and
6] adequate relief is not available through other means or other forms of action or proceeding.19 [emphasis
supplied]1avvphi1
In this case, the issue raised by petitioners is clearly not yet ripe for judicial determination. Nowhere in the
assailed resolutions and ordinance does it show that the public respondents acted on private respondent’s
application with finality. What appears therefrom is that the application of private respondent for
development permit has been endorsed to the Housing and Land Use Regulatory Board (HLURB) for
appropriate action, the latter being the sole regulatory body for housing and land development.
Under the doctrine of primary administrative jurisdiction, courts cannot or will not determine a controversy
where the issues for resolution demand the exercise of sound administrative discretion requiring the
special knowledge, experience, and services of the administrative tribunal to determine technical and
intricate matters of fact. In other words, if a case is such that its determination requires the expertise,
specialized training and knowledge of an administrative body, relief must first be obtained in an

administrative proceeding before resort to the courts is had even if the matter may well be within their
proper jurisdiction.20
WHEREFORE, the April 21, 2006 Decision of the Court of Appeals and its August 9, 2006 Resolution are hereby
AFFIRMED.

19.) G.R. No. 169466 May 9, 2007
DEPARTMENT OF BUDGET AND MANAGEMENT, represented by SECRETARY ROMULO L. NERI,

PHILIPPINE NATIONAL POLICE, represented by POLICE DIRECTOR GENERAL ARTURO L. LOMIBAO,
NATIONAL POLICE COMMISSION, represented by CHAIRMAN ANGELO T. REYES, AND CIVIL SERVICE
COMMISSION, represented by CHAIRPERSON KARINA C. DAVID, Petitioners,
vs.
MANILA’S FINEST RETIREES ASSOCIATION, INC., represented by P/COL. FELICISIMO G. LAZARO (RET.),
AND ALL THE OTHER INP RETIREES, Respondents.
DECISION
GARCIA, J.:
Assailed and sought to be set aside in this petition for review on certiorari under Rule 45 of the Rules of Court are
the following issuances of the Court of Appeals (CA) in CA-G.R. CV No. 78203, to wit:
1. Decision1 dated July 7, 2005 which affirmed in toto the decision of the Regional Trial Court of Manila,
Branch 32, in Civil Case No. 02-103702, a suit for declaratory relief, declaring the herein respondents
entitled to the same retirement benefits accorded upon retirees of the Philippine National Police (PNP) under
Republic Act (R.A.) No. 6975, as amended by R.A. No. 8551, and ordering the herein petitioners to
implement the proper adjustments on respondents’ retirement benefits; and
2. Resolution2 dated August 24, 2005 which denied the petitioners’ motion for reconsideration.
The antecedent facts:
In 1975, Presidential Decree (P.D.) No. 765 was issued constituting the Integrated National Police (INP) to be
composed of the Philippine Constabulary (PC) as the nucleus and the integrated police forces as components
thereof. Complementing P.D. No. 765 was P.D. No. 11843 dated August 26, 1977 (INP Law, hereinafter) issued to
professionalize the INP and promote career development therein.
On December 13, 1990, Republic Act (R.A.) No. 6975, entitled "AN ACT ESTABLISHING THE PHILIPPINE
NATIONAL POLICE UNDER A REORGANIZED DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT,
AND FOR OTHER PURPOSES," hereinafter referred to as PNP Law, was enacted. Under Section 23 of said law,
the Philippine National Police (PNP) would initially consist of the members of the INP, created under P.D. No. 765,
as well as the officers and enlisted personnel of the PC. In part, Section 23 reads:
SEC. 23. Composition. – Subject to the limitation provided for in this Act, the Philippine National Police, hereinafter
referred to as the PNP, is hereby established, initially consisting of the members of the police forces who were
integrated into the Integrated National Police (INP) pursuant to Presidential Decree No. 765, and the officers and
enlisted personnel of the Philippine Constabulary (PC).
A little less than eight (8) years later, or on February 25, 1998, R.A. No. 6975 was amended by R.A. No. 8551,
otherwise known as the "PHILIPPINE NATIONAL POLICE REFORM AND REORGANIZATION ACT OF 1998."
Among other things, the amendatory law reengineered the retirement scheme in the police organization. Relevantly,
PNP personnel, under the new law, stood to collect more retirement benefits than what INP members of equivalent
rank, who had retired under the INP Law, received.
The INP retirees illustrated the resulting disparity in the retirement benefits between them and the PNP retirees as
follows:4
Retirement Rank Monthly Pension Difference

INP PNP INP PNP
Corporal SPO3 P 3,225.00 P 11,310.00 P 8,095.00
Captain P. Sr. Insp. P 5,248.00 P 15,976.00 P10,628.00
Brig. Gen. P. Chief Supt. P 10,054.24 P 18,088.00 P 8,033.76
Hence, on June 3, 2002, in the Regional Trial Court (RTC) of Manila, all INP retirees, spearheaded by the Manila’s
Finest Retirees Association, Inc., or the MFRAI (hereinafter collectively referred to as the INP Retirees), filed a
petition for declaratory relief,5 thereunder impleading, as respondents, the Department of Budget and Management
(DBM), the PNP, the National Police Commission (NAPOLCOM), the Civil Service Commission (CSC) and the
Government Service Insurance System (GSIS). Docketed in the RTC as Civil Case No. 02-103702, which was
raffled to Branch 22 thereof, the petition alleged in gist that INP retirees were equally situated as the PNP retirees
but whose retirement benefits prior to the enactment of R.A. No. 6975, as amended by R.A. No. 8551, were
unconscionably and arbitrarily excepted from the higher rates and adjusted benefits accorded to the PNP retirees.
Accordingly, in their petition, the petitioning INP retirees pray that a –
DECLARATORY JUDGMENT be rendered in their favor, DECLARING with certainty that they, as INP-retirees, are
truly absorbed and equally considered as PNP-retirees and thus, entitled to enjoy the SAME or IDENTICAL
retirement benefits being bestowed to PNP-retirees by virtue of said PNP Law or Republic Act No. 6975, as
amended by Republic Act 8551, with the corollary mandate for the respondents-government agencies to effect the
immediate adjustment on their previously received disparate retirement benefits, retroactive to its effectivity, and
with due payment thereof.
The GSIS moved to dismiss the petition on grounds of lack of jurisdiction and cause of action. On the other hand,
the CSC, DBM, NAPOLCOM and PNP, in their respective answers, asserted that the petitioners could not claim the
more generous retirement benefits under R.A. No. 6975 because at no time did they become PNP members, having
retired prior to the enactment of said law. DBM, NAPOLCOM and PNP afterwards filed their respective pre-trial
briefs.
The ensuing legal skirmish is not relevant to the disposition of the instant case. The bottom line is that, on March 21,
2003, the RTC came out with its decision6 holding that R.A. No. 6975, as amended, did not abolish the INP but
merely provided for the absorption of its police functions by the PNP, and accordingly rendered judgment for the INP
retirees, to wit:
WHEREFORE, this Court hereby renders JUDGMENT DECLARING the INP Retirees entitled to the same or
identical retirement benefits and such other benefits being granted, accorded and bestowed upon the PNP Retirees
under the PNP Law (RA No. 6975, as amended).
The respondents Government Departments and Agencies shall IMMEDIATELY EFFECT and IMPLEMENT the
proper adjustments on the INP Retirees’ retirement and such other benefits, RETROACTIVE to its date of effectivity,
and RELEASE and PAY to the INP Retirees the due payments of the amounts.
SO ORDERED.
On April 2, 2003, the trial court issued what it denominated as Supplement to the Decision whereunder it granted
the GSIS’ motion to dismiss and thus considered the basic petition as withdrawn with respect to the latter.
From the adverse decision of the trial court, the remaining respondents, namely, DBM, PNP, NAPOLCOM and CSC,
interposed an appeal to the CA whereat their appellate recourse was docketed as CA-G.R. CV No. 78203.
As stated at the threshold hereof, the CA, in its decision of July 7, 2005,7 affirmed that of the trial court upholding the
entitlement of the INP retirees to the same or identical retirement benefits accorded upon PNP retirees under R.A.
No. 6975, as amended.

Their motion for reconsideration having been denied by the CA in` its equally assailed resolution of August 24,
2005,8 herein petitioners are now with this Court via the instant recourse on their singular submission that -
THE COURT OF APPEALS COMMITTED A SERIOUS ERROR IN LAW IN AFFIRMING THE DECISION OF THE
TRIAL COURT NOTWITHSTANDING THAT IT IS CONTRARY TO LAW AND ESTABLISHED JURISPRUDENCE.
We DENY.
In the main, it is petitioners’ posture that R.A. No. 6975 clearly abolished the INP and created in its stead a new
police force, the PNP. Prescinding therefrom, petitioners contend that since the PNP is an organization entirely
different from the INP, it follows that INP retirees never became PNP members. Ergo, they cannot avail themselves
of the retirement benefits accorded to PNP members under R.A. No. 6975 and its amendatory law, R.A. No. 8551.
A flashback at history is proper.
As may be recalled, R.A. No. 6975 was enacted into law on December 13, 1990, or just about four (4) years after
the 1986 Edsa Revolution toppled down the dictatorship regime. Egged on by the current sentiment of the times
generated by the long period of martial rule during which the police force, the PC-INP, had a military character,
being then a major service of the Armed Forces of the Philippines, and invariably moved by a fresh constitutional
mandate for the establishment of one police force which should be national in scope and, most importantly, purely
civilian in character,9 Congress enacted R.A. No. 6975 establishing the PNP and placing it under the Department of
Interior and Local Government. To underscore the civilian character of the PNP, R.A. No. 6975 made it emphatically
clear in its declaration of policy the following:
Section 2. Declaration of policy - It is hereby declared to be the policy of the State to promote peace and order,
ensure public safety and further strengthen local government capability aimed towards the effective delivery of the
basic services to the citizenry through the establishment of a highly efficient and competent police force that is
national in scope and civilian in character. xxx.
The police force shall be organized, trained and equipped primarily for the performance of police functions. Its
national scope and civilian character shall be paramount. No element of the police force shall be military nor shall
any position thereof be occupied by active members of the [AFP]. (Emphasis and word in bracket supplied.)
Pursuant to Section 23, supra, of R.A. No. 6975, the PNP initially consisted of the members of the police forces who
were integrated into the INP by virtue of P.D. No. 765, while Section 8610 of the same law provides for the
assumption by the PNP of the police functions of the INP and its absorption by the former, including its
appropriations, funds, records, equipment, etc., as well as its personnel.11 And to govern the statute’s
implementation, Section 85 of the Act spelled out the following absorption phases:
Phase I – Exercise of option by the uniformed members of the [PC], the PC elements assigned with the Narcotics
Command, CIS, and the personnel of the technical services of the AFP assigned with the PC to include the regular
CIS investigating agents and the operatives and agents of the NAPOLCOM Inspection. Investigation and
Intelligence Branch, and the personnel of the absorbed National Action Committee on Anti-Hijacking (NACAH) of the
Department of National Defense to be completed within six (6) months from the date of the effectivity of this Act. At
the end of this phase, all personnel from the INP, PC, AFP Technical Services, NACAH, and NAPOLCOM
Inspection, Investigation and Intelligence Branch shall have been covered by official orders assigning them to the
PNP, Fire and Jail Forces by their respective units.
Phase II – Approval of the table of organization and equipment of all bureaus and offices created under this Act,
preparation and filling up of their staffing pattern, transfer of assets to the [DILG] and organization of the
Commission, to be completed within twelve (12) months from the effectivity date hereof. At the end of this phase, all
personnel to be absorbed by the [DILG] shall have been issued appointment papers, and the organized
Commission and the PNP shall be fully operational.
The PC officers and enlisted personnel who have not opted to join the PNP shall be reassigned to the Army, Navy
or Air Force, or shall be allowed to retire under existing AFP rules and regulations. Any PC-INP officer or enlisted

personnel may, within the twelve-month period from the effectivity of this Act, retire and be paid retirement benefits
corresponding to a position two (2) ranks higher than his present grade, subject to the conditions that at the time he
applies for retirement, he has rendered at least twenty (20) years of service and still has, at most, twenty-four (24)
months of service remaining before the compulsory retirement age as provided by existing law for his office.
Phase III – Adjustment of ranks and establishment of one (1) lineal roster of officers and another for non-officers,
and the rationalization of compensation and retirement systems; taking into consideration the existing compensation
schemes and retirement and separation benefit systems of the different components of the PNP, to ensure that no
member of the PNP shall suffer any diminution in basic longevity and incentive pays, allowances and retirement
benefits due them before the creations of the PNP, to be completed within eighteen (18) months from the effectivity
of this Act. xxx.
Upon the effectivity of this Act, the [DILG] Secretary shall exercise administrative supervision as well as operational
control over the transferred, merged and/or absorbed AFP and INP units. The incumbent Director General of the
PC-INP shall continue to act as Director General of the PNP until … replaced …. (Emphasis and words in brackets
supplied.)
From the foregoing, it appears clear to us that the INP was never, as posited by the petitioners, abolished or
terminated out of existence by R.A. No. 6975. For sure, nowhere in R.A. No. 6975 does the words "abolish" or
"terminate" appear in reference to the INP. Instead, what the law provides is for the "absorption," "transfer," and/or
"merger" of the INP, as well as the other offices comprising the PC-INP, with the PNP. To "abolish" is to do away
with, to annul, abrogate or destroy completely;12 to "absorb" is to assimilate, incorporate or to take in.13 "Merge"
means to cause to combine or unite to become legally absorbed or extinguished by merger14 while "transfer"
denotes movement from one position to another. Clearly, "abolition" cannot be equated with "absorption."
True it is that Section 9015 of R.A. No. 6975 speaks of the INP "[ceasing] to exist" upon the effectivity of the law. It
ought to be stressed, however, that such cessation is but the logical consequence of the INP being absorbed by the
PNP. 1a\^/phi1.net
Far from being abolished then, the INP, at the most, was merely transformed to become the PNP, minus of course
its military character and complexion.
Even the petitioners’ effort at disclosing the legislative intent behind the enactment of R.A. No. 6975 cannot support
their theory of abolition. Rather, the Senate and House deliberations on the bill that eventually became R.A. No.
6975 reveal what has correctly been held by the CA in its assailed decision: that the PNP was precisely created to
erase the stigma spawned by the militarization of the police force under the PC-INP structure. The rationale behind
the passage of R.A. No. 6975 was adequately articulated by no less than the sponsor16 of the corresponding House
bill in his sponsorship speech, thus:
By removing the police force from under the control and supervision of military officers, the bill seeks to restore and
underscore the civilian character of police work - an otherwise universal concept that was muddled up by the martial
law years.
Indeed, were the legislative intent was for the INP’s abolition such that nothing would be left of it, the word "abolish"
or what passes for it could have easily found its way into the very text of the law itself, what with the abundant use of
the word during the legislative deliberations. But as can be gleaned from said deliberations, the lawmakers’ concern
centered on the fact that if the entire PC-INP corps join the PNP, then the PC-INP will necessarily be abolished, for
who then would be its members? Of more consequence, the lawmakers were one in saying that there should never
be two national police agencies at the same time.
With the conclusion herein reached that the INP was not in fact abolished but was merely transformed to become
the PNP, members of the INP which include the herein respondents are, therefore, not excluded from availing
themselves of the retirement benefits accorded to PNP retirees under Sections 7417 and 7518 of R.A. No. 6975, as
amended by R.A. No. 8551. It may be that respondents were no longer in the government service at the time of the
enactment of R.A. No. 6975. This fact, however, without more, would not pose as an impediment to the
respondents’ entitlement to the new retirement scheme set forth under the aforecited sections. As correctly
ratiocinated by the CA to which we are in full accord:
For sure, R.A. No. 6975 was not a retroactive statute since it did not impose a new obligation to pay the INP retirees
the difference between what they received when they retired and what would now be due to them after R.A. No.
6975 was enacted. Even so, that did not render the RTC’s interpretation of R.A. No. 6975 any less valid. The
[respondents’] retirement prior to the passage of R.A. No. 6975 did not exclude them from the benefits provided by
R.A. No. 6975, as amended by R.A. No. 8551, since their membership in the INP was an antecedent fact that
nonetheless allowed them to avail themselves of the benefits of the subsequent laws. R.A. No. 6975 considered
them as PNP members, always referring to their membership and service in the INP in providing for their retirement
benefits. 19
Petitioners maintain, however, that NAPOLCOM Resolution No. 8,20 particularly Section 1121 thereof, bars the
payment of any differential in retirement pay to officers and non-officers who are already retired prior to the
effectivity of R.A. No. 6975.
The contention does not commend itself for concurrence.
Under the amendatory law (R.A. No. 8551), the application of rationalized retirement benefits to PNP members who
have meanwhile retired before its (R.A. No. 8551) enactment was not prohibited. In fact, its Section 3822 explicitly
states that the rationalized retirement benefits schedule and program "shall have retroactive effect in favor of PNP
members and officers retired or separated from the time specified in the law." To us, the aforesaid provision should
be made applicable to INP members who had retired prior to the effectivity of R.A. No. 6975. For, as afore-held, the
INP was, in effect, merely absorbed by the PNP and not abolished.
Indeed, to bar payment of retirement pay differential to INP members who were already retired before R.A. No. 6975
became effective would even run counter to the purpose of NAPOLCOM Resolution No. 8 itself, as expressed in its
preambulatory clause, which is to rationalize the retirement system of the PNP taking into consideration existing
retirement and benefit systems (including R.A. No. 6975 and P.D. No. 1184) of the different components thereof "to
ensure that no member of the PNP shall suffer any diminution in the retirement benefits due them before the
creation of the PNP."23
Most importantly, the perceived restriction could not plausibly preclude the respondents from asserting their
entitlement to retirement benefits adjusted to the level when R.A. No. 6975 took effect. Such adjustment hews with
the constitutional warrant that "the State shall, from time to time, review to upgrade the pensions and other benefits
due to retirees of both the government and private sectors,"24 and the implementing mandate under the Senior
Citizen’s Law25 that "to the extent practicable and feasible, retirement benefits xxx shall be upgraded to be at par
with the current scale enjoyed by those in actual service."1awphi1.nét
Certainly going for the respondents in their bid to enjoy the same retirement benefits granted to PNP retirees, either
under R.A. No. 6975 or R.A. No. 8551, is Section 34 of the latter law which amended Section 75 of R.A. No. 6975
by adding thereto the following proviso:
Section 75. Retirement benefits. x x x: Provided, finally, That retirement pay of the officers/non-officers of the PNP
shall be subject to adjustments based on the prevailing scale of base pay of police personnel in the active service.
Then, too, is the all familiar rule that:
Retirement laws should be liberally construed in favor of the retiree because their intention is to provide for his
sustenance and hopefully, even comfort, when he no longer has the stamina to continue earning his livelihood. The
liberal approach aims to achieve the humanitarian purposes of the law in order that efficiency, security and well-
being of government employees may be enhanced.26
The petitioners parlay the notion of prospective application of statutes, noting in this regard that R.A. No. 6975, as
amended, cannot be applied retroactively, there being no provision to that effect.
We are not persuaded.

As correctly found by the appellate court, R.A. No. 6975 itself contextually provides for its retroactive application to
cover those who had retired prior to its effectivity. In this regard, we invite attention to the three (3) phases of
implementation under Section 85 for the absorption and continuation in the service of, among others, the INP
members under the newly-established PNP.
In a further bid to scuttle respondents’ entitlement to the desired retirement benefits, the petitioners fault
the trial court for ordering the immediate adjustments of the respondents’ retirement benefits when the
basic petition filed before it was one for declaratory relief. To the petitioners, such petition does not
essentially entail an executory process, the only relief proper under that setting being a declaration of the
parties’ rights and duties.
Petitioners’ above posture is valid to a point. However, the execution of judgments in a petition for declaratory relief
is not necessarily indefensible. In Philippine Deposit Insurance Corporation[PDIC] v. Court of Appeals,27 wherein the
Court affirmed the order for the petitioners therein to pay the balance of the deposit insurance to the therein
respondents, we categorically ruled:
Now, there is nothing in the nature of a special civil action for declaratory relief that proscribes the filing of
a counterclaim based on the same transaction, deed or contract subject of the complaint. A special civil
action is after all not essentially different from an ordinary civil action, which is generally governed by
Rules 1 to 56 of the Rules of Court, except that the former deals with a special subject matter which makes
necessary some special regulation. But the identity between their fundamental nature is such that the same
rules governing ordinary civil suits may and do apply to special civil actions if not inconsistent with or if
they may serve to supplement the provisions of the peculiar rules governing special civil actions.28
Similarly, in Matalin Coconut Co., Inc. v. Municipal Council of Malabang, Lanao del Sur:29 the Court upheld the lower
court’s order for a party to refund the amounts paid by the adverse party under the municipal ordinance therein
questioned, stating:
x x x Under Sec. 6 of Rule 64, the action for declaratory relief may be converted into an ordinary action and
the parties allowed to file such pleadings as may be necessary or proper, if before the final termination of
the case "a breach or violation of an … ordinance, should take place." In the present case, no breach or
violation of the ordinance occurred. The petitioner decided to pay "under protest" the fees imposed by the
ordinance. Such payment did not affect the case; the declaratory relief action was still proper because the
applicability of the ordinance to future transactions still remained to be resolved, although the matter could also be
threshed out in an ordinary suit for the recovery of taxes paid …. In its petition for declaratory relief, petitioner-
appellee alleged that by reason of the enforcement of the municipal ordinance by respondents it was forced to pay
under protest the fees imposed pursuant to the said ordinance, and accordingly, one of the reliefs prayed for by the
petitioner was that the respondents be ordered to refund all the amounts it paid to respondent Municipal Treasurer
during the pendency of the case. The inclusion of said allegation and prayer in the petition was not objected to by
the respondents in their answer. During the trial, evidence of the payments made by the petitioner was introduced.
Respondents were thus fully aware of the petitioner's claim for refund and of what would happen if the ordinance
were to be declared invalid by the court.
The Court sees no reason for treating this case differently from PDIC and Matalin. This disposition
1awphi1.nét
becomes all the more appropriate considering that the respondents, as petitioners in the RTC, pleaded for
the immediate adjustment of their retirement benefits which, significantly, the herein petitioners, as
respondents in the same court, did not object to. Being aware of said prayer, the petitioners then already
knew the logical consequence if, as it turned out, a declaratory judgment is rendered in the respondents’
favor.
At bottom then, the trial court’s judgment forestalled multiplicity of suits which, needless to stress, would only entail a
long and arduous process. Considering their obvious advanced years, the respondents can hardly afford another
protracted proceedings. It is thus for this Court to already write finis to this case.
WHEREFORE, the instant petition is DENIED and the assailed decision and resolution of the CA, respectively dated
July 7, 2005 and August 24, 2005, are AFFIRMED.

20.) G.R. No. 167391 June 8, 2011
PHIL-VILLE DEVELOPMENT AND HOUSING CORPORATION, Petitioner,

vs.
MAXIMO BONIFACIO, CEFERINO R. BONIFACIO, APOLONIO B. TAN, BENITA B. CAINA, CRISPINA B.
PASCUAL, ROSALIA B. DE GRACIA, TERESITA S. DORONIA, CHRISTINA GOCO AND ARSENIO C.
BONIFACIO, in their capacity as the surviving heirs of the late ELEUTERIA RIVERA VDA. DE
BONIFACIO, Respondents.
VILLARAMA, JR., J.:
This petition for review on certiorari1 seeks to set aside the Decision2 dated January 31, 2005 and Resolution3 dated
March 15, 2005 of the Court of Appeals in CA-G.R. SP No. 62211. The Court of Appeals dismissed the
Complaint4 for Quieting of Title and Damages filed by Phil-Ville Development and Housing Corporation (Phil-Ville)
and denied its Motion for Reconsideration.5
The factual antecedents, as culled from the records, are as follows.
Phil-Ville Development and Housing Corporation is the registered owner of three parcels of land designated as Lots
1-G-1, 1-G-2 and 1-G-3 of the subdivision plan Psd-1-13-006209, located in Caloocan City, having a total area of
8,694 square meters and covered by Transfer Certificates of Title (TCT) Nos. 270921,6 2709227 and 270923.8 Prior
to their subdivision, the lots were collectively designated as Lot 1-G of the subdivision plan Psd-2731 registered in
the name of Phil-Ville under TCT No. T-148220.9 Said parcels of land form part of Lot 23-A of the Maysilo Estate
originally covered by Original Certificate of Title (OCT) No. 99410 registered on May 3, 1917 in the name of Isabel Gil
de Sola as the judicial administratrix of the estate of Gonzalo Tuason and thirty-one (31) others. Phil-Ville acquired
the lots by purchase from N. Dela Merced and Sons, Inc. on July 24, 1984.
Earlier, on September 27, 1961, a group composed of Eleuteria Rivera, Bartolome P. Rivera, Josefa R. Aquino,
Gregorio R. Aquino, Pelagia R. Angeles, Modesta R. Angeles, Venancio R. Angeles, Felipe R. Angeles Fidela R.
Angeles and Rosauro R. Aquino, claiming to be the heirs of Maria de la Concepcion Vidal, a co-owner to the extent
of 1-189/1000% of the properties covered by OCT Nos. 982, 983, 984, 985 and 994 of the Hacienda Maysilo, filed a
petition with the Court of First Instance (CFI) of Rizal in Land Registration Case No. 4557. They prayed for the
substitution of their names on OCT No. 994 in place of Maria de la Concepcion Vidal. Said petition was granted by
the CFI in an Order11 dated May 25, 1962.
Afterwards, the alleged heirs of Maria de la Concepcion Vidal filed a petition for the partition of the properties
covered by OCT Nos. 982, 983, 984, 985 and 994. The case was docketed as Civil Case No. C-424 in the CFI of
Rizal, Branch 12, Caloocan City. On December 29, 1965, the CFI granted the petition and appointed three
commissioners to determine the most equitable division of the properties.12 Said commissioners, however, failed to
submit a recommendation.
Thirty-one (31) years later, on May 22, 1996, Eleuteria Rivera filed a Supplemental Motion13 in Civil Case No. C-424,
for the partition and segregation of portions of the properties covered by OCT No. 994. The Regional Trial Court
(RTC), Branch 120, of Caloocan City, through Judge Jaime D. Discaya, to whom the case was transferred, granted
said motion. In an Order14 dated September 9, 1996, Judge Discaya directed the segregation of portions of Lots 23,
28-A-1 and 28-A-2 and ordered the Register of Deeds of Caloocan City to issue to Eleuteria Rivera new certificates
of title over them. Three days later, the Register of Deeds of Caloocan, Yolanda O. Alfonso, issued to Eleuteria
Rivera TCT No. C-31453715 covering a portion of Lot 23 with an area of 14,391.54 square meters. On December 12,
1996, the trial court issued another Order directing the acting Branch Clerk to issue a Certificate of Finality of the
Order dated September 9, 1996.
Thereafter, one Rosauro R. Aquino filed a petition for certiorari contesting said Order of December 12, 1996 and
impugning the partial partition and adjudication to Eleuteria Rivera of Lots 23, 28-A-1 and 28-A-2 of the Maysilo
Estate. The case was docketed as CA-G.R. SP No. 43034 at the Court of Appeals.
Meanwhile, a writ of possession16 was issued in Eleuteria Rivera’s favor on December 26, 1996 upon the Order17 of
Judge Discaya issued on the same date. Accordingly, Sheriff Cesar L. Cruz served a Notice to Vacate18 dated
January 2, 1997 upon Phil-Ville, requiring it to vacate Lots 23-A and 28. Bonifacio Shopping Center, Inc., which
occupied Lot 28-A-2, was also served a copy of the notice. Aggrieved, Bonifacio Shopping Center, Inc. filed a
petition for certiorari and prohibition, docketed as CA-G.R. SP No. 43009, before the Court of Appeals. In a
Decision19 dated February 19, 1997, the appellate court set aside and declared as void the Order and Writ of
Possession dated December 26, 1996 and the Notice to Vacate dated January 2, 1997. The appellate court
explained that a party who has not been impleaded in a case cannot be bound by a writ of possession issued in
connection therewith.
Subsequently, on February 22, 1997, Eleuteria Rivera Vda. de Bonifacio died at the age of 96.20
On April 23, 1997, the Secretary of Justice issued Department Order No. 137 creating a special committee to
investigate the circumstances surrounding the issuance of OCT No. 994 and its derivative titles.
On April 29, 1997, the Court of Appeals rendered a Decision21 in CA-G.R. SP No. 43034 granting Rosauro R.
Aquino’s petition and setting aside the RTC’s Order of September 9, 1996, which granted Eleuteria Rivera’s prayer
for partition and adjudicated in her favor portions of Lots 23, 28-A-1 and 28-A-2 of the Maysilo Estate. The appellate
court likewise set aside the Order and the Writ of Possession dated December 26, 1996.
Nonetheless, on June 5, 1997, petitioner filed a complaint for quieting of title and damages against the
surviving heirs of Eleuteria Rivera Vda. de Bonifacio (namely Maximo R. Bonifacio, Ceferino R. Bonifacio,
Apolonia B. Tan, Benita B. Caina, Crispina B. Pascual, Rosalia B. de Gracia, Teresita S. Doronia, Christina
B. Goco, Arsenio C. Bonifacio, Carmen B. Bernardino and Danilo C. Bonifacio) and the Register of Deeds of
Caloocan City. The case was docketed as Civil Case No. C-507 in the RTC of Caloocan City, Branch 122.
On October 7, 1997, then Senator Marcelo B. Fernan filed P.S. Resolution No. 1032 directing the Senate
Committees on Justice and Human Rights and on Urban Planning, Housing and Resettlement to conduct a
thorough investigation, in aid of legislation, of the irregularities surrounding the titling of the properties in the Maysilo
Estate.
In a Decision22 dated March 24, 2000, the Caloocan RTC ordered the quieting of Phil-Ville’s titles over Lots 1-
G-1, 1-G-2 and 1-G-3, declaring as valid TCT Nos. 270921, 270922 and 270923 in Phil-Ville’s name. The fallo of
said Decision reads:
WHEREFORE, and in view of the foregoing, judgment is hereby rendered as follows:
1. Ordering the quieting of title of the plaintiff over Lots 1-G-1, 1-G-2 and 1-G-3, all the subd. plan Psd-1-13-
006209, being a portion of Lot 1-G, Psd-2731, LRC Rec. No. 4429, situated in Kalookan City, as owner
thereof in fee simple and with full faith and credit;
2. Declaring Transfer Ce[r]tificates of Title Nos. 270921, 270922 and 270923 in the name of Phil-Ville
Development and Housing Corporation over the foregoing parcels of land issued by the Registry of Deeds
for Kalookan City, as valid and effective;
3. Declaring Transfer Certificate of Title No. C-314537 over Lot 23, being a portion of Maysilo Estate
situated in Maysilo, Kalookan City, in the name of Eleuteria Rivera, issued by the Registry of Deeds for
Kalookan City, as null and void and with no force and effect;
4. Ordering the private defendants to surrender to the Registry of Deeds for Kalookan City, thru this Court,
the Owner’s Duplicate Certificate of said Transfer Certificate of Title No. C-314537 in the name of Eleuteria
Rivera;
5. Directing the public defendant, Register of Deeds of Kalookan City to cancel both Transfer Certificate of
Title Nos. C-314537 in the name of Eleuteria Rivera on file with the Register of Deeds for Kalookan City, and

the Owner’s Duplicate copy of Transfer Certificate of Title No. C-314537 being required to be surrendered
by the private defendants; and
6. Ordering the private defendants to pay plaintiff, jointly and severally, the sum of ₱10,000.00, as and by
way of attorney’s fees, plus the costs of suit.
SO ORDERED.23
In upholding Phil-Ville’s titles, the trial court adopted the conclusion in Senate Committee Report No.
103124 dated May 25, 1998 that there is only one OCT No. 994, registered on May 3, 1917, and that OCT No.
994, purportedly registered on April 19, 1917 (from which Eleuteria Rivera’s title originated) does not exist.
The trial court also found that it was physically impossible for respondents to be the heirs of Eleuteria Rivera’s
grandmother, Maria de la Concepcion Vidal, one of the registered owners of OCT No. 994, because Maria de la
Concepcion was born sometime in 1903, later than Eleuteria Rivera who was born in 1901.25 Lastly, the RTC
pointed out that contrary to the contentions of Rivera’s heirs, there is no overlapping of titles inasmuch as Lot 23 lies
far from Lot 23-A, where Phil-Ville’s lands are located.
On April 13, 2000, Atty. K.V. Faylona, on behalf of respondents, addressed a letter26 to the Branch Clerk of Court of
the Caloocan City RTC requesting the complete address of Phil-Ville and its counsel. Supposedly, respondents’
counsels of record, Attys. Nicomedes Tolentino and Jerry D. Bañares, had abandoned the defense but still kept the
records of the case. Thus, the Notice of Appeal27 on behalf of respondents was filed by Atty. Faylona while two of
the heirs, Danilo Bonifacio and Carmen Bernardino, filed a separate Notice of Appeal28 through their own counsel.
The appeals were consolidated and docketed as CA-G.R. CV No. 66547.
On April 17, 2000, respondents withdrew their appeal and instead filed before this Court a Petition for Review on
Certiorari,29 which was docketed as G.R. No. 142640. In a Resolution30 dated September 25, 2000, the Court
referred the petition to the Court of Appeals for adjudication on the merits since the case does not involve pure
questions of law. Respondents moved for reconsideration of the Resolution, but the Court denied their motion.
Thus, respondents’ petition was transferred to the Court of Appeals and docketed as CA-G.R. SP No. 62211.
Meanwhile, on October 17, 2002, the Court of Appeals rendered a Decision31 in CA-G.R. CV No. 66547, dismissing
the appeal as regards Danilo Bonifacio and Carmen Bernardino. Yet, along with Danilo and Carmen, respondents
moved for reconsideration on the contention that they are not bound by the judgment since they had withdrawn their
appeal therein. The Court of Appeals denied said motion in a Resolution dated June 7, 2004. Danilo, Carmen and
respondents elevated the case to the Supreme Court through a Petition for Review on Certiorari, which was
docketed as G.R. No. 163397. Said petition, however, was denied by this Court in a Resolution dated September 8,
2004 for being filed out of time.
Subsequently, on January 31, 2005, the Court of Appeals promulgated its assailed Decision in CA-G.R. SP No.
62211, setting aside the RTC judgment and dismissing Phil-Ville’s complaint. The appellate court held that the RTC
had no jurisdiction to hear Phil-Ville’s complaint as it effectively seeks to annul the Order dated May 25, 1962 of the
CFI in LRC No. 4557, which directed the substitution of the late Eleuteria Rivera and her co-heirs in place of Maria
de la Concepcion Vidal as registered owners on OCT No. 994. The appellate court likewise affirmed the validity of
OCT No. 994 registered on April 19, 1917 citing the Supreme Court Decisions in Metropolitan Waterworks and
Sewerage Systems v. Court of Appeals32 and Heirs of Luis J. Gonzaga v. Court of Appeals33 as precedents.
Phil-Ville sought reconsideration34 of the decision, but the Court of Appeals denied its motion in the assailed
Resolution dated March 15, 2005. Hence, this petition.
Petitioner alleges that:
I.
THE HONORABLE COURT OF APPEALS (FORMER NINTH DIVISION) ACTED WITHOUT

JURISDICTION ON THE PETITION FOR REVIEW OF RESPONDENTS MAXIMO BONIFACIO, ET AL. IN

CA-G.R SP NO. 62211 BECAUSE OF THE EARLIER DISMISSAL OF THEIR APPEAL IN CA-G.R NO.
66547.
II.
THE HONORABLE COURT OF APPEALS (FORMER NINTH DIVISION) ACTED WITHOUT

JURISDICTION ON THE PETITION FOR REVIEW FILED BY RESPONDENTS MAXIMO BONIFACIO, ET
AL. IN CA-G.R. NO. SP 62211 WHICH DOES NOT RAISE PURE QUESTION[S] OF LAW OR ISSUE[S] OF
JURISDICTION AND THEREFORE THE PROPER REMEDY AVAILABLE TO THEM IS ORDINARY
APPEAL WHICH, AS STATED, HAD ALREADY BEEN DISMISSED IN CA-G.R. CV NO. 66547.
III.
THE HONORABLE COURT OF APPEALS (FORMER NINTH DIVISION) COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN HOLDING THAT THE TRIAL
COURT HAS NO JURISDICTION ON THE COMPLAINT FOR QUIETING OF TITLE FILED BY
PETITIONER PHIL-VILLE IN CIVIL CASE NO. C-507, OR IN THE ALTERNATIVE, IN FAILING TO
DECLARE RESPONDENTS MAXIMO [BONIFACIO], ET AL. ALREADY IN ESTOPPEL TO RAISE THE
SAID ISSUE OF JURISDICTION.35
Condensed, petitioner puts in issue the following: (1) whether the Court of Appeals committed grave abuse of
discretion in taking cognizance of respondents’ petition; and (2) whether the Court of Appeals committed
grave abuse of discretion in declaring that the trial court had no jurisdiction over Civil Case No. C-507.
Pertinently, however, the genuine issue in this case is whether TCT No. C-314537 in the name of Eleuteria Rivera
constitutes a cloud over petitioner’s titles over portions of Lot 23-A of the Maysilo Estate.
Petitioner argues mainly that the Court of Appeals acted without jurisdiction in resolving respondents’ petition for
review since it had dismissed their appeal in CA-G.R. CV No. 66547 for failure to file brief. Petitioner also points out
that respondents’ petition is defective because Maximo Bonifacio alone signed its verification and certification of
non-forum shopping without proof that he was authorized to sign for the other respondents. It contends that the
ruling in MWSS v. Court of Appeals and Heirs of Gonzaga v. Court of Appeals will not invalidate its titles because it
is not a party to any of said cases. As well, petitioner invokes the finding in the joint investigation by the Senate and
the Department of Justice (DOJ) that there is only one OCT No. 994, that is, the one registered on May 3, 1917. It
maintains that the trial court had jurisdiction to hear its action since it is one for quieting of title and not for
annulment of the CFI Order dated May 25, 1962.
Conversely, respondents rely on MWSS v. Court of Appeals and Heirs of Gonzaga v. Court of Appeals that upheld
the titles emanating from OCT No. 994 registered on April 19, 1917. Therefore, they insist that petitioner has no
cause of action to seek the nullification of their title which is a derivative of said OCT. Respondents reiterate that
since they had withdrawn their appeal in CA-G.R. CV No. 66547, the Court of Appeals decision therein applies only
to Danilo Bonifacio and Carmen Bernardino. Lastly, they believe that petitioner’s action is one for annulment of
judgment, which is foreign to the jurisdiction of the trial court.
Petitioner argues in its first two assignments of errors that the Court of Appeals acted with grave abuse of discretion
in entertaining respondents’ petition. However, said contention deserves scant consideration since the Court of
Appeals, in CA-G.R. SP No. 62211, properly assumed jurisdiction over respondents’ case after the same was
referred to it by this Court through our Resolution dated September 25, 2000. The issue raised by respondents, as
petitioners in G.R. No. 142640, was purely a question of fact that is beyond the power of this Court to resolve.
Essentially, respondents asked the Court to determine the ownership of the lots purportedly covered by petitioner’s
titles.
Neither do we find merit in petitioner’s contention that the dismissal of the appeal in CA-G.R. CV No. 66547 is
binding on respondents. The appellate court itself recognized the withdrawal of appeal filed by respondents, thus:

… However, defendants Maximo R. Bonifacio, et al. withdrew their appeal so that the only appellants herein are
defendants-appellants Danilo R. Bonifacio, et al.36
So did the trial court err in taking cognizance of petitioner’s action for quieting of title contrary to respondents’
assertion that it is actually one for annulment of the CFI Order dated May 25, 1962? To this query, we rule in the
negative.
The nature of an action is determined by the material allegations of the complaint and the character of the relief
sought by plaintiff, and the law in effect when the action was filed irrespective of whether he is entitled to all or only
some of such relief.37
In its complaint, petitioner alleges:
27. That said TCT No. C-314537 of the late Eleuteria Rivera, although apparently valid and effective, are in truth
and in fact invalid and ineffective[;]
27.1. An examination of Decree No. 36455 issued on April 19, 1917 in LRC Case No. 4429 and also of OCT
No. 994 which was issued … pursuant thereto will show that Lot 23 covered by the said TCT No. C-3145[3]7
of the late Eleuteria Rivera is not one of the 34 parcels of land covered by said Decree No. 36455 and OCT
994;
27.2. That, as hereinbefore stated, the same TCT No. C-314537 of the late Eleuteria Rivera is a direct
transfer from OCT No. 994 which was registered on April 19, 1917. The fact, however, is that there is only
one OCT No. 994 which was issued … pursuant to Decree No. 36455 in LRC Case No. 4429 and said OCT
994 was registered with the Register of Deeds of Rizal on May 3, 1917. The Office of the Register of Deeds
of Caloocan City or of Malabon or of Pasig City has no record of any OCT No. 994 that was allegedly
registered on April 19, 1917;
27.3. That said TCT No. C-314537 of the late Eleuteria Rivera could not cover Lot 23-A or any portion/s
thereof because, as hereinbefore recited, the whole of Lot 23-A had been totally disposed of as early as July
24, 1923 and she and/or any of her alleged predecessors-in-interest is not among those named in the
memorandum of encumbrances of OCT No. 994 as vendees or vendors of said Lot 23-A;38
Ultimately, petitioner submits that a cloud exists over its titles because TCT No. C-314537 in the name of
Eleuteria Rivera purports to cover the same parcels of land covered by petitioner’s TCT Nos. 270921,
270922 and 270923. It points out that what appears to be a valid and effective TCT No. C-314537 is, in truth,
invalid because it covers Lot 23 which is not among those described in the OCT No. 994 on file with the
Register of Deeds of Rizal and registered on May 3, 1917. Petitioner notes that the OCT No. 994 allegedly
registered on April 19, 1917 and from which TCT No. C-314537 was derived, is not found in the records of
the Register of Deeds. In other words, the action seeks the removal of a cloud from Phil-Ville’s title and/or
the confirmation of its ownership over the disputed properties as the successor-in-interest of N. Dela
Merced and Sons, Inc.
Quieting of title is a common law remedy for the removal of any cloud upon, doubt, or uncertainty affecting title to
real property. Whenever there is a cloud on title to real property or any interest in real property by reason of any
instrument, record, claim, encumbrance, or proceeding that 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. In such action, the competent court is tasked to determine the respective
rights of the complainant and the other claimants, not only to place things in their proper places, and make the
claimant, who has no rights to said immovable, respect and not disturb the one so entitled, but also for the benefit of
both, so that whoever has the right will see every cloud of doubt over the property dissipated, and he can thereafter
fearlessly introduce any desired improvements, as well as use, and even abuse the property.39
In order that an action for quieting of title may prosper, two requisites must concur: (1) the plaintiff or complainant
has a legal or equitable title or interest in the real property subject of the action; and (2) the deed, claim,

encumbrance, or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or
inoperative despite its prima facie appearance of validity or legal efficacy.40
As regards the first requisite, we find that petitioner was able to establish its title over the real properties
subject of this action. Petitioner submitted in evidence the Deed of Absolute Sale41 by which it acquired the
subject property from N. Dela Merced and Sons, Inc., as well as copies of OCT No. 994 dated May 3, 1917
and all the derivative titles leading to the issuance of TCT Nos. 270921, 270922 and 270923 in petitioner’s
name as follows:
1avvphi1
Title No. Registration Date Holder
8004 July 24, 1923 Vedasto Galino
8059 September 3, 1923 -ditto-
8160 October 24, 1923 -ditto-
8164 November 6, 1923 Juan Cruz Sanchez
8321 February 26, 1924 -ditto-
8734 September 11, 1924 Emilio Sanchez
12946 November 21, 1927 -ditto-
28315 July 16, 1935 Eastern Syndicate Mining Co., Inc.
39163 November 18, 1939 Royal Lawrence Rutter
43559 July 26, 1941 Mapua Institute of Technology
18767 June 16, 1950 Sofia Nepomuceno
57541 March 13, 1958 Leona N. de Jesus, Pacifico Nepomuceno, Sofia Nepomuceno,
Soledad Nepomuceno de Jesus
81679 December 15, 1960 Pacifico Nepomuceno, Sofia N. Jugo, Soledad N. de Jesus
(81680) December 15, 1960 Pacifico Nepomuceno & Co.

17745
C-13794 April 21, 1978 Pacifico Nepomuceno & Co. Inc.
C-14603 May 16, 1978 N. de La Merced & Sons, Inc.
T-148220 April 22, 1987 Phil-Ville Development and Housing Corp.42
Petitioner likewise presented the Proyecto de particion de la Hacienda de Maysilo43 to prove that Lot 23-A, of which
petitioner’s Lots 1-G-1, 1-G-2 and 1-G-3 form part, is among the 34 lots covered by OCT No. 994 registered on May
3, 1917. It produced tax receipts accompanied by a Certification44 dated September 15, 1997 issued by the City
Treasurer of Caloocan stating that Phil-Ville has been religiously paying realty taxes on the lots. Its documentary
evidence also includes a Plan45 prepared by the Chief of the Geodetic Surveys Division showing that Lot 23-A of the
Maysilo Estate is remotely situated from Lot 23 portion of the Maysilo Estate. Petitioner ties these pieces of
evidence to the finding in the DOJ Committee Report46 dated August 28, 1997 and Senate Committee Report No.
1031 dated May 25, 1998 that, indeed, there is only one OCT No. 994, that is, the one registered on May 3, 1917.
On the other hand, respondents have not adduced competent evidence to establish their title to the contested
property or to dispute petitioner’s claim over the same. It must be noted that the RTC Order dated September 9,
1996 in Civil Case No. C-424, which resulted in the issuance of TCT No. C-314537 in the name of Eleuteria Rivera

had long been set aside by the Court of Appeals in CA-G.R. SP No. 43034. Clearly, respondents’ claim anchored
primarily on TCT No. C-314537 lacks legal basis. Rather, they rely simply on the Court’s pronouncement in MWSS
v. Court of Appeals and Heirs of Gonzaga v. Court of Appeals that OCT No. 994 registered on May 3, 1917 and all
titles emanating from it are void.
The Supreme Court sustained said decisions in the case of Manotok Realty, Inc. v. CLT Realty Development
Corporation47 promulgated on November 29, 2005. In said case, the Court declared void the titles of the Manotoks
and Aranetas which were derived from OCT No. 994 registered on May 3, 1917 consistent with its ruling
in MWSS and Gonzaga. The Court disregarded the DOJ and Senate reports on the alleged anomalies surrounding
the titling of the Maysilo Estate.
However, on motion for reconsideration, the Court issued a Resolution48 dated December 14, 2007 which created a
Special Division of the Court of Appeals to hear the consolidated cases on remand. The Special Division was tasked
to hear and receive evidence, conclude the proceedings and submit to the Court a report on its findings as well as
recommend conclusions within three months from the finality of said Resolution. However, to guide the proceedings
before the Special Division, the Court laid the following definitive conclusions:
… First, there is only one OCT 994. As it appears on the record, that mother title was received for transcription by
the Register of Deeds on 3 May 1917, and that should be the date which should be reckoned as the date of
registration of the title. It may also be acknowledged, as appears on the title, that OCT No. 994 resulted from the
issuance of the decree of registration on [19] April 1917, although such date cannot be considered as the date of the
title or the date when the title took effect.
Second. Any title that traces its source to OCT No. 994 dated [19] April 1917 is void, for such mother title is
inexistent. The fact that the Dimson and CLT titles made specific reference to an OCT No. 994 dated [19] April
1917 casts doubt on the validity of such titles since they refer to an inexistent OCT. This error alone is, in fact,
sufficient to invalidate the Dimson and CLT claims over the subject property if singular reliance is placed by them on
the dates appearing on their respective titles.
Third. The decisions of this Court in MWSS v. Court of Appeals and Gonzaga v. Court of Appeals cannot apply to
the cases at bar, especially in regard to their recognition of an OCT No. 994 dated 19 April 1917, a title which we
now acknowledge as inexistent. Neither could the conclusions in MWSS [and] Gonzaga with respect to an OCT No.
994 dated 19 April 1917 bind any other case operating under the factual setting the same as or similar to that at
bar.49 (Emphasis supplied.)
Eventually, on March 31, 2009, the Supreme Court issued a Resolution50 reversing its Decision of November 29,
2005 and declaring certain titles in the names of Araneta and Manotok valid. In the course of discussing the flaws of
Jose Dimson’s title based on his alleged 25% share in the hereditary rights of Bartolome Rivera, Eleuteria Rivera’s
co-petitioner in LRC No. 4557, the Court noted:
… However, the records of these cases would somehow negate the rights of Rivera to claim from Vidal. The
Verification Report of the Land Registration Commission dated 3 August 1981 showed that Rivera was 65 years old
on 17 May 1963 (as gathered from the records of Civil Case Nos. 4429 and 4496). It can thus be deduced that, if
Rivera was already 65 years old in 1963, then he must have been born around 1898. On the other hand, Vidal was
only nine (9) years in 1912; hence, she could have been born only on [1903]. This alone creates an unexplained
anomalous, if not ridiculous, situation wherein Vidal, Rivera’s alleged grandmother, was seven (7) years younger
than her alleged grandson. Serious doubts existed as to whether Rivera was in fact an heir of Vidal, for him to claim
a share in the disputed portions of the Maysilo Estate.51
The same is true in this case. The Death Certificate52 of Eleuteria Rivera reveals that she was 96 years old when
she died on February 22, 1997. That means that she must have been born in 1901. That makes Rivera two years
older than her alleged grandmother Maria de la Concepcion Vidal who was born in 1903. Hence, it was physically
impossible for Eleuteria Rivera to be an heir of Maria de la Concepcion Vidal.
Moreover, the Partition Plan of the Maysilo Estate shows that Lot 23-A was awarded, not to Maria de la Concepcion
Vidal, but to Isabel Tuason, Esperanza Tuason, Trinidad Jurado, Juan O’ Farrell and Angel O’ Farrell.53 What Vidal

received as her share were Lot 6 and portions of Lots 10 and 17, all subject to the usufructuary right of her mother
Mercedes Delgado. This was not at all disputed by respondents.
On the other hand, Vedasto Galino, who was the holder of TCT No. 8004 registered on July 24, 1923 and to whom
petitioner traces its titles, was among the successful petitioners in Civil Case No. 391 entitled Rosario Negrao, et al.
v. Concepcion Vidal, et al., who sought the issuance of bills of sale in favor of the actual occupants of certain
portions of the Maysilo Estate.
Be that as it may, the second requisite in an action for quieting of title requires that the deed, claim, encumbrance,
or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative despite
its prima facie appearance of validity or legal efficacy. Article 476 of the Civil Code provides:
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.
Thus, the cloud on title consists of: (1) any instrument, record, claim, encumbrance or proceeding; (2)
which is apparently valid or effective; (3) but is in truth and in fact invalid, ineffective, voidable, or
unenforceable; and (4) may be prejudicial to the title sought to be quieted. The fourth element is not present
in the case at bar.
While it is true that TCT No. C-314537 in the name of Eleuteria Rivera is an instrument that appeared to be
valid but was subsequently shown to be invalid, it does not cover the same parcels of land that are
described in petitioner’s titles. Foremost, Rivera’s title embraces a land measuring 14,391.54 square meters
while petitioner’s lands has an aggregate area of only 8,694 square meters. On the one hand, it may be
argued that petitioner’s land could be subsumed within Rivera’s 14,391.54-square meter property. Yet, a
comparison of the technical descriptions of the parties’ titles negates an overlapping of their boundaries.
The technical description of respondents’ TCT No. C-314537 reads:
A parcel of land (Lot 23, being a portion of Maysilo Estate) situated in Maysilo, Caloocan, Metro Manila, Island of
Luzon. Bounded on the NW., along line 1-2 by Blk. 2; on the SW., along line 2-3 by Jacinto Street, along lines 3-4-
5 by Blk. 4; along line 5-6 by Bustan St., and San Diego St., on the S., along lines 6-7-8 by Blk. 13, all of Caloocan
Cadastre; on the NE., along line 8-9 by Caloocan Cadastre; and on the N., along line 9-1 by Epifanio de los
Santos Avenue. Beginning at a point marked "1" on plan, being S. 28 deg. 30’E., 530.50 m. from MBM No. 1,
Caloocan Cadastre; thence S. 07 deg. 20’W., 34.00 m. to point 2; S. 17 deg. 10’E., 12.00 m. to point 3; (0/illegible)
S. 15 deg. 31’E., 31.00 m. to point 4; S. 27 deg. 23’E., 22.50 m. to point 5;
S. 38 deg. 41’E., 43.20 m. to point 6; S. 71 deg. 35’E., 10.60 m. to point 7;
N. 84 deg. 30’E., 38.80 m. to point 8; N. 11 deg. 40’W., 131.20 m. to point 9;
N. 89 deg. 10’W., 55.00 m. to the point of beginning; containing an area of FOURTEEN THOUSAND
THREE HUNDRED NINETY ONE SQUARE METERS AND FIFTY FOUR SQUARE DECIMETERS
(14,391.54). more or less. All points referred to are indicated on the plan and are marked on the ground by
Old Ps. cyl. conc. mons. 15 x 60 cm.; bearings true;54 (Emphasis supplied).
On the other hand, the technical description of petitioner’s lands before they were subdivided under TCT No. T-
148220 is as follows:
A parcel of land (Lot No. 1-G of the subdivision plan Psd-2731, being a portion of Lot 23-A, Maysilo Estate, GLRO
Rec. No. 4429), situated in the Municipality of Caloocan, Province of Rizal. Bounded on the North., by Calle A.
Samson; on the East., by properties of Gregoria de Jesus, Arcadio de Jesus and Felix de Jesus; on the
South., by properties of Lucas Bustamante and Patricio Galauran; and on the West., by property of Patricio
Galauran; and Lot No. 1-E of the subdivision plan. Beginning at a point marked "1" on plan, being N.69 deg. 27’E.,
1600.19 m. from BLLM No. 1, Mp. of Caloocan, more or less, thence S. 21 deg. 25’E., 44.78 m. to point 2; thence S.
14 deg. 57’E., 37.24 m. to point 3; thence S. 81 deg. 11’W., 20.28 m. to point 4; thence S. 86 deg. 06’W., 15.45 m.
to point 5; thence N. 67 deg. 20’W., 15.91 m. to point 6; thence N. 35 deg. 19’W., 37.56 m. to point 7; thence N. 27
deg. 11’W., 12.17 m. to point 8; thence N. 19 deg. 26’W., 23.32 m. to point 9; thence N. 13 deg. 08’W., 28.25 m. to
point 10; thence S. 78 deg. 45’W., 13.00 m. to point 11; thence N. 0 deg. 56’E., 48.92 m. to point 12; thence N. 89
deg. 13’E., 53.13 m. to point 13; thence S. 21 deg. 24’E., 67.00 m. to the point of beginning; containing an area
of EIGHT THOUSAND SIX HUNDRED NINETY FOUR (8,694) SQUARE METERS, more or less. All points referred
to are indicated on the plan and are marked on the ground points 1,2,3 and 13 by Old PLS conc. mons. point 4,6,7,8
and 9 by Old PLS stone mons.; points 5 to 10 and old stakes points 11 and 12 by PLS conc. mons. bearings true,
declination 1 deg. 08’E., date of the original survey, Sept. 8-27, Oct. 4-21 and Nov. 17-18, 1911 and that of the
subdivision survey, Oct. 14 and 15, 1927.55 (Emphasis supplied).
Such disparity in location is more vividly illustrated in the Plan prepared by Engr. Privadi J.G. Dalire, Chief of the
Geodetic Surveys Division, showing the relative positions of Lots 23 and 23-A. As it appears on the Plan, the land
covered by respondents’ TCT No. C-314537 lies far west of petitioner’s lands under TCT Nos. 270921, 270922 and
270923. Strictly speaking, therefore, the existence of TCT No. C-314537 is not prejudicial to petitioner’s titles insofar
as it pertains to a different land.
Significantly, an action to quiet title is characterized as a proceeding quasi in rem.56 In an action quasi in rem, an

individual is named a defendant and the purpose of the proceeding is to subject his interests 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 judgment therein is binding only upon
the parties who joined in the action.57
Yet, petitioner was well aware that the lots encompassed by its titles are not the same as that covered by
respondents’ title. In its complaint, Phil-Ville alleges:
27.4. That Lot 23, being a portion of Maysilo Estate, as described in said TCT No. C-314537 of the late Eleuteria
Rivera when plotted using its tie line to MBM No. 1, Caloocan Cadastre is outside Lot 23-A of the Maysilo Estate.
This must be so because Lot 23 is not [a] portion of Lot 23-A, Maysilo Estate….58
This brings petitioner’s action within the purview of Rule 63 of the Rules of Court on Declaratory Relief. Section 1 of
Rule 63 provides:
SECTION 1. Who may file petition.-Any person interested under a deed, will, contract or other written instrument,
whose rights are affected by a statute, executive order or regulation, ordinance or any other governmental
regulation may, before breach or violation thereof, bring an action in the appropriate Regional Trial Court to
determine any question of construction or validity arising, and for a declaration of his rights or duties,
thereunder.
An action for the reformation of an instrument, to quiet title to real property or remove clouds therefrom, or to
consolidate ownership under Article 1607 of the Civil Code, may be brought under this Rule. (Emphasis supplied).
An action for declaratory relief presupposes that there has been no actual breach of the instruments involved or of
the rights arising thereunder. Since the purpose of an action for declaratory relief is to secure an authoritative
statement of the rights and obligations of the parties under a statute, deed, or contract for their guidance in the
enforcement thereof, or compliance therewith, and not to settle issues arising from an alleged breach thereof, it may
be entertained before the breach or violation of the statute, deed or contract to which it refers. A petition for
declaratory relief gives a practical remedy for ending controversies that have not reached the state where another
relief is immediately available; and supplies the need for a form of action that will set controversies at rest before
they lead to a repudiation of obligations, an invasion of rights, and a commission of wrongs.

In the present case, petitioner filed a complaint for quieting of title after it was served a notice to vacate but
before it could be dispossessed of the subject properties. Notably, the Court of Appeals, in CA-G.R. SP No.
43034, had earlier set aside the Order which granted partial partition in favor of Eleuteria Rivera and the Writ
of Possession issued pursuant thereto. And although petitioner’s complaint is captioned as Quieting of
Title and Damages, all that petitioner prayed for, is for the court to uphold the validity of its titles as against
that of respondents’. This is consistent with the nature of the relief in an action for declaratory relief where
the judgment in the case can be carried into effect without requiring the parties to pay damages or to
perform any act.59
Thus, while petitioner was not able to demonstrate that respondents’ TCT No. C-314537 in the name of Eleuteria
Rivera constitutes a cloud over its title, it has nevertheless successfully established its ownership over the subject
properties and the validity of its titles which entitles it to declaratory relief.
WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated January 31, 2005 and
Resolution dated March 15, 2005 of the Court of Appeals in CA-G.R. SP No. 62211 are SET ASIDE. The Decision
dated March 24, 2000 of the Caloocan RTC in Civil Case No. C-507 is hereby REINSTATED and UPHELD.

21.) G.R. No. 193978 February 28, 2012
JELBERT B. GALICTO, Petitioner,
vs.
H.E. PRESIDENT BENIGNO SIMEON C. AQUINO III, in his capacity as President of the Republic of the
Philippines; ATTY. PAQUITO N. OCHOA, JR., in his capacity as Executive Secretary; and FLORENCIO B.
ABAD, in his capacity as Secretary of the Department of Budget and Management, Respondents.
RESOLUTION
BRION, J.:
Before us is a Petition for Certiorari and Prohibition with Application for Writ of Preliminary Injunction and/or
Temporary Restraining Order, seeking to nullify and enjoin the implementation of Executive Order No. (EO) 7 issued
1
by the Office of the President on September 8, 2010. Petitioner Jelbert B. Galicto asserts that EO 7 is
unconstitutional for having been issued beyond the powers of the President and for being in breach of existing laws.
The petitioner is a Filipino citizen and an employee of the Philippine Health Insurance Corporation (PhilHealth). He
2
is currently holding the position of Court Attorney IV and is assigned at the PhilHealth Regional Office CARAGA. 3
Respondent Benigno Simeon C. Aquino III is the President of the Republic of the Philippines (Pres. Aquino); he
issued EO 7 and has the duty of implementing it. Respondent Paquito N. Ochoa, Jr. is the incumbent Executive
Secretary and, as the alter ego of Pres. Aquino, is tasked with the implementation of EO 7. Respondent Florencio B.
Abad is the incumbent Secretary of the Department of Budget and Management (DBM) charged with the
implementation of EO 7. 4
The Antecedent Facts
On July 26, 2010, Pres. Aquino made public in his first State of the Nation Address the alleged excessive
allowances, bonuses and other benefits of Officers and Members of the Board of Directors of the Manila
Waterworks and Sewerage System – a government owned and controlled corporation (GOCC) which has been
unable to meet its standing obligations. Subsequently, the Senate of the Philippines (Senate), through the Senate
5
Committee on Government Corporations and Public Enterprises, conducted an inquiry in aid of legislation on the
reported excessive salaries, allowances, and other benefits of GOCCs and government financial institutions (GFIs). 6
Based on its findings that "officials and governing boards of various [GOCCs] and [GFIs] x x x have been granting
themselves unwarranted allowances, bonuses, incentives, stock options, and other benefits [as well as other]
irregular and abusive practices," the Senate issued Senate Resolution No. 17 "urging the President to order the
7
immediate suspension of the unusually large and apparently excessive allowances, bonuses, incentives and other
perks of members of the governing boards of [GOCCs] and [GFIs]." 8
Heeding the call of Congress, Pres. Aquino, on September 8, 2010, issued EO 7, entitled "Directing the
Rationalization of the Compensation and Position Classification System in the [GOCCs] and [GFIs], and for Other
Purposes." EO 7 provided for the guiding principles and framework to establish a fixed compensation and position
classification system for GOCCs and GFIs. A Task Force was also created to review all remunerations of GOCC
and GFI employees and officers, while GOCCs and GFIs were ordered to submit to the Task Force information
regarding their compensation. Finally, EO 7 ordered (1) a moratorium on the increases in the salaries and other
forms of compensation, except salary adjustments under EO 8011 and EO 900, of all GOCC and GFI employees for
an indefinite period to be set by the President, and (2) a suspension of all allowances, bonuses and incentives of
9
members of the Board of Directors/Trustees until December 31, 2010. 10
EO 7 was published on September 10, 2010. It took effect on September 25, 2010 and precluded the Board of
11
Directors, Trustees and/or Officers of GOCCs from granting and releasing bonuses and allowances to members of
the board of directors, and from increasing salary rates of and granting new or additional benefits and allowances to
their employees.
The Petition
The petitioner claims that as a PhilHealth employee, he is affected by the implementation of EO 7, which was issued
with grave abuse of discretion amounting to lack or excess of jurisdiction, based on the following arguments:
I.
EXECUTIVE ORDER NO. 7 IS NULL AND VOID FOR LACK OF LEGAL BASIS DUE TO THE FOLLOWING
GROUNDS:
A. P.D. 985 IS NOT APPLICABLE AS BASIS FOR EXECUTIVE ORDER NO. 7 BECAUSE THE
GOVERNMENT-OWNED AND CONTROLLED CORPORATIONS WERE SUBSEQUENTLY
GRANTED THE POWER TO FIX COMPENSATION LONG AFTER SUCH POWER HAS BEEN
REVOKED BY P.D. 1597 AND R.A. 6758.
B. THE GOVERNMENT-OWNED AND CONTROLLED CORPORATIONS DO NOT NEED TO

HAVE ITS COMPENSATION PLANS, RATES AND POLICIES REVIEWED BY THE DBM AND
APPROVED BY THE PRESIDENT BECAUSE P.D. 1597 REQUIRES ONLY THE GOCCs TO
REPORT TO THE OFFICE TO THE PRESIDENT THEIR COMPENSATION PLANS AND RATES
BUT THE SAME DOES NOT GIVE THE PRESIDENT THE POWER OF CONTROL OVER THE
FISCAL POWER OF THE GOCCs.
C. J.R. NO. 4, [SERIES] 2009 IS NOT APPLICABLE AS LEGAL BASIS BECAUSE IT HAD NOT
RIPENED INTO X X X LAW, THE SAME NOT HAVING BEEN PUBLISHED.
D. ASSUMING ARGUENDO THAT J.R. NO. 1, S. 2004 (sic) AND J.R. 4, S. 2009 ARE VALID,
STILL THEY ARE NOT APPLICABLE AS LEGAL BASIS BECAUSE THEY ARE NOT LAWS WHICH
MAY VALIDLY DELEGATE POWER TO THE PRESIDENT TO SUSPEND THE POWER OF THE
BOARD TO FIX COMPENSATION.
II.
EXECUTIVE ORDER NO. 7 IS INVALID FOR DIVESTING THE BOARD OF DIRECTORS OF [THE]
GOCCS OF THEIR POWER TO FIX THE COMPENSATION, A POWER WHICH IS A LEGISLATIVE
GRANT AND WHICH COULD NOT BE REVOKED OR MODIFIED BY AN EXECUTIVE FIAT.
III.
EXECUTIVE ORDER NO. 7 IS BY SUBSTANCE A LAW, WHICH IS A DEROGATION OF

CONGRESSIONAL PREROGATIVE AND IS THEREFORE UNCONSTITUTIONAL.
IV.
THE ACTS OF SUSPENDING AND IMPOSING MORATORIUM ARE ULTRA VIRES ACTS BECAUSE J.R.
NO. 4 DOES NOT EXPRESSLY AUTHORIZE THE PRESIDENT TO EXERCISE SUCH POWERS.
V.
EXECUTIVE ORDER NO. 7 IS AN INVALID ISSUANCE BECAUSE IT HAS NO SUFFICIENT STANDARDS

AND IS THEREFORE ARBITRARY, UNREASONABLE AND A VIOLATION OF SUBSTANTIVE DUE
PROCESS.
VI.

EXECUTIVE ORDER NO. 7 INVOLVES THE DETERMINATION AND DISCRETION AS TO WHAT THE
LAW SHALL BE AND IS THEREFORE INVALID FOR ITS USURPATION OF LEGISLATIVE POWER.
VII.
CONSISTENT WITH THE DECISION OF THE SUPREME COURT IN PIMENTEL V. AGUIRRE CASE,
EXECUTIVE ORDER NO. 7 IS ONLY DIRECTORY AND NOT MANDATORY. 12
The Case for the Respondents
On December 13, 2010, the respondents filed their Comment. They pointed out the following procedural defects as
grounds for the petition’s dismissal: (1) the petitioner lacks locus standi; (2) the petitioner failed to attach a board
resolution or secretary’s certificate authorizing him to question EO 7 in behalf of PhilHealth; (3) the petitioner’s
signature does not indicate his PTR Number, Mandatory Continuing Legal Education (MCLE) Compliance Number
and Integrated Bar of the Philippines (IBP) Number; (4) the jurat of the Verification and Certification of Non-Forum
Shopping failed to indicate a valid identification card as provided under A.M. No. 02-8-13-SC; (5) the President
should be dropped as a party respondent as he is immune from suit; and (6) certiorari is not applicable to this case. 13
The respondents also raised substantive defenses to support the validity of EO 7. They claim that the President
exercises control over the governing boards of the GOCCs and GFIs; thus, he can fix their compensation packages.
In addition, EO 7 was issued in accordance with law for the purpose of controlling the grant of excessive salaries,
allowances, incentives and other benefits to GOCC and GFI employees. They also advocate the validity of Joint
Resolution (J.R.) No. 4, which they point to as the authority for issuing EO 7. 14
Meanwhile, on June 6, 2011, Congress enacted Republic Act (R.A.) No. 10149, otherwise known as the "GOCC
15
Governance Act of 2011." Section 11 of RA 10149 expressly authorizes the President to fix the compensation
framework of GOCCs and GFIs.
The Court’s Ruling
We resolve to DISMISS the petition for its patent formal and procedural infirmities, and for having been mooted by
subsequent events.
A. Certiorari is not the proper remedy.
Under the Rules of Court, petitions for Certiorari and Prohibition are availed of to question judicial, quasi-
judicial and mandatory acts. Since the issuance of an EO is not judicial, quasi-judicial or a mandatory act, a
petition for certiorari and prohibition is an incorrect remedy; instead a petition for declaratory relief under
Rule 63 of the Rules of Court, filed with the Regional Trial Court (RTC), is the proper recourse to assail the
validity of EO 7:
Section 1. Who may file petition. Any person interested under a deed, will, contract or other written instrument,
whose rights are affected by a statute, executive order or regulation, ordinance, or any other governmental
regulation may, before breach or violation thereof, bring an action in the appropriate Regional Trial Court to
determine any question of construction or validity arising, and for a declaration of his rights or duties, thereunder.
(Emphases ours.)
Liga ng mga Barangay National v. City Mayor of Manila is a case in point. In Liga, we dismissed the petition for
16 17
certiorari to set aside an EO issued by a City Mayor and insisted that a petition for declaratory relief should have
been filed with the RTC. We painstakingly ruled:
After due deliberation on the pleadings filed, we resolve to dismiss this petition for certiorari.
First, the respondents neither acted in any judicial or quasi-judicial capacity nor arrogated unto themselves any
judicial or quasi-judicial prerogatives. A petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure is a

special civil action that may be invoked only against a tribunal, board, or officer exercising judicial or quasi-judicial
functions.
Section 1, Rule 65 of the 1997 Rules of Civil Procedure provides:
SECTION 1. Petition for certiorari. — When any tribunal, board or officer exercising judicial or quasi-judicial
functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack
or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course
of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty
and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and
granting such incidental reliefs as law and justice may require.
Elsewise stated, for a writ of certiorari to issue, the following requisites must concur: (1) it must be directed against a
tribunal, board, or officer exercising judicial or quasi-judicial functions; (2) the tribunal, board, or officer must have
acted without or in excess of jurisdiction or with grave abuse of discretion amounting [to] lack or excess of
jurisdiction; and (3) there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law.
A respondent is said to be exercising judicial function where he has the power to determine what the law is and
what the legal rights of the parties are, and then undertakes to determine these questions and adjudicate upon the
rights of the parties.
Quasi-judicial function, on the other hand, is "a term which applies to the actions, discretion, etc., of public
administrative officers or bodies … required to investigate facts or ascertain the existence of facts, hold hearings,
and draw conclusions from them as a basis for their official action and to exercise discretion of a judicial nature."
Before a tribunal, board, or officer may exercise judicial or quasi-judicial acts, it is necessary that there be a law that
gives rise to some specific rights of persons or property under which adverse claims to such rights are made, and
the controversy ensuing therefrom is brought before a tribunal, board, or officer clothed with power and authority to
determine the law and adjudicate the respective rights of the contending parties.
The respondents do not fall within the ambit of tribunal, board, or officer exercising judicial or quasi-judicial
functions. As correctly pointed out by the respondents, the enactment by the City Council of Manila of the assailed
ordinance and the issuance by respondent Mayor of the questioned executive order were done in the exercise of
legislative and executive functions, respectively, and not of judicial or quasi-judicial functions. On this score
alone, certiorari will not lie.
Second, although the instant petition is styled as a petition for certiorari, in essence, it seeks the
declaration by this Court of the unconstitutionality or illegality of the questioned ordinance and executive
order. It, thus, partakes of the nature of a petition for declaratory relief over which this Court has only
appellate, not original, jurisdiction. Section 5, Article VIII of the Constitution provides:
Sec. 5. The Supreme Court shall have the following powers:
(1) Exercise original jurisdiction over cases affecting ambassadors, other public ministers and consuls, and
over petitions for certiorari, prohibition, mandamus, quo warranto, and habeas corpus.
(2) Review, revise, reverse, modify, or affirm on appeal or certiorari as the law or the Rules of Court may
provide, final judgments and orders of lower courts in:
(a) All cases in which the constitutionality or validity of any treaty, international or executive
agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in
question. (Italics supplied).
As such, this petition must necessar[ily] fail, as this Court does not have original jurisdiction over a petition
for declaratory relief even if only questions of law are involved. 18

Likewise, in Southern Hemisphere Engagement Network, Inc. v. Anti Terrorism Council, we similarly dismissed the
19
petitions for certiorari and prohibition challenging the constitutionality of R.A. No. 9372, otherwise known as the
"Human Security Act of 2007," since the respondents therein (members of the Anti-Terrorism Council) did not
exercise judicial or quasi-judicial functions.
While we have recognized in the past that we can exercise the discretion and rulemaking authority we are granted
under the Constitution, and set aside procedural considerations to permit parties to bring a suit before us at the first
20
instance through certiorari and/or prohibition, this liberal policy remains to be an exception to the general rule, and
21
thus, has its limits. In Concepcion v. Commission on Elections (COMELEC), we emphasized the importance of
22
availing of the proper remedies and cautioned against the wrongful use of certiorari in order to assail the quasi-
legislative acts of the COMELEC, especially by the wrong party. In ruling that liberality and the transcendental
doctrine cannot trump blatant disregard of procedural rules, and considering that the petitioner had other
available remedies (such as a petition for declaratory relief with the appropriate RTC under the terms of
Rule 63 of the Rules of Court), as in this case, we categorically ruled:
The petitioner’s unusual approaches and use of Rule 65 of the Rules of Court do not appear to us to be the
result of any error in reading Rule 65, given the way the petition was crafted. Rather, it was a backdoor
approach to achieve what the petitioner could not directly do in his individual capacity under Rule 65. It
was, at the very least, an attempted bypass of other available, albeit lengthier, modes of review that the
Rules of Court provide. While we stop short of concluding that the petitioner’s approaches constitute an
abuse of process through a manipulative reading and application of the Rules of Court, we nevertheless
resolve that the petition should be dismissed for its blatant violation of the Rules. The transgressions alleged
in a petition, however weighty they may sound, cannot be justifications for blatantly disregarding the rules of
procedure, particularly when remedial measures were available under these same rules to achieve the petitioner’s
objectives. For our part, we cannot and should not – in the name of liberality and the "transcendental importance"
doctrine – entertain these types of petitions. As we held in the very recent case of Lozano, et al. vs. Nograles, albeit
from a different perspective, our liberal approach has its limits and should not be abused. [emphasis supplied]
23
B. Petitioner lacks locus standi.
"Locus standi or legal standing has been defined as a personal and substantial interest in a case such that the party
has sustained or will sustain direct injury as a result of the governmental act that is being challenged. The gist of the
question on standing is whether a party alleges such personal stake in the outcome of the controversy as to assure
that concrete adverseness which sharpens the presentation of issues upon which the court depends for illumination
of difficult constitutional questions." This requirement of standing relates to the constitutional mandate that this
24
Court settle only actual cases or controversies. 25
Thus, as a general rule, a party is allowed to "raise a constitutional question" when (1) he can show that he will
personally suffer some actual or threatened injury because of the allegedly illegal conduct of the government; (2) the
injury is fairly traceable to the challenged action; and (3) the injury is likely to be redressed by a favorable action.
26
Jurisprudence defines interest as "material interest, an interest in issue and to be affected by the decree, as
distinguished from mere interest in the question involved, or a mere incidental interest. By real interest is meant a
present substantial interest, as distinguished from a mere expectancy or a future, contingent, subordinate, or
consequential interest." 27
To support his claim that he has locus standi to file the present petition, the petitioner contends that as an employee
of PhilHealth, he "stands to be prejudiced by [EO] 7, which suspends or imposes a moratorium on the grants of
salary increases or new or increased benefits to officers and employees of GOCC[s] and x x x curtail[s] the
prerogative of those officers who are to fix and determine his compensation." The petitioner also claims that he has
28
standing as a member of the bar in good standing who has an interest in ensuring that laws and orders of the
Philippine government are legally and validly issued and implemented.
The respondents meanwhile argue that the petitioner is not a real party-in-interest since future increases in salaries
and other benefits are merely contingent events or expectancies. The petitioner, too, is not asserting a public right
29
for which he is entitled to seek judicial protection. Section 9 of EO 7 reads:

Section 9. Moratorium on Increases in Salaries, Allowances, Incentives and Other Benefits. –Moratorium on
increases in the rates of salaries, and the grant of new increases in the rates of allowances, incentives and other
benefits, except salary adjustments pursuant to Executive Order No. 8011 dated June 17, 2009 and Executive
Order No. 900 dated June 23, 2010, are hereby imposed until specifically authorized by the President. [emphasis
ours]
In the present case, we are not convinced that the petitioner has demonstrated that he has a personal stake or
material interest in the outcome of the case because his interest, if any, is speculative and based on a mere
expectancy. In this case, the curtailment of future increases in his salaries and other benefits cannot but be
characterized as contingent events or expectancies. To be sure, he has no vested rights to salary increases and,
therefore, the absence of such right deprives the petitioner of legal standing to assail EO 7.
It has been held that as to the element of injury, such aspect is not something that just anybody with some
grievance or pain may assert. It has to be direct and substantial to make it worth the court’s time, as well as the
effort of inquiry into the constitutionality of the acts of another department of government. If the asserted injury is
more imagined than real, or is merely superficial and insubstantial, then the courts may end up being importuned to
decide a matter that does not really justify such an excursion into constitutional adjudication. The rationale for this
30
constitutional requirement of locus standi is by no means trifle. Not only does it assure the vigorous adversary
presentation of the case; more importantly, it must suffice to warrant the Judiciary’s overruling the determination of a
coordinate, democratically elected organ of government, such as the President, and the clear approval by
Congress, in this case. Indeed, the rationale goes to the very essence of representative democracies. 31
Neither can the lack of locus standi be cured by the petitioner’s claim that he is instituting the present petition as a
member of the bar in good standing who has an interest in ensuring that laws and orders of the Philippine
government are legally and validly issued. This supposed interest has been branded by the Court in Integrated Bar
of the Phils. (IBP) v. Hon. Zamora, "as too general an interest which is shared by other groups and [by] the whole
32
citizenry." Thus, the Court ruled in IBP that the mere invocation by the IBP of its duty to preserve the rule of law and
33
nothing more, while undoubtedly true, is not sufficient to clothe it with standing in that case. The Court made a
similar ruling in Prof. David v. Pres. Macapagal-Arroyo and held that the petitioners therein, who are national
34
officers of the IBP, have no legal standing, having failed to allege any direct or potential injury which the IBP, as an
institution, or its members may suffer as a consequence of the issuance of Presidential Proclamation No. 1017 and
General Order No. 5. 35
We note that while the petition raises vital constitutional and statutory questions concerning the power of the
President to fix the compensation packages of GOCCs and GFIs with possible implications on their officials and
employees, the same cannot "infuse" or give the petitioner locus standi under the transcendental importance or
paramount public interest doctrine. In Velarde v. Social Justice Society, we held that even if the Court could have
36
exempted the case from the stringent locus standi requirement, such heroic effort would be futile because the
transcendental issue could not be resolved any way, due to procedural infirmities and shortcomings, as in the
present case. In other words, giving due course to the present petition which is saddled with formal and procedural
37
infirmities explained above in this Resolution, cannot but be an exercise in futility that does not merit the Court’s
liberality. As we emphasized in Lozano v. Nograles, "while the Court has taken an increasingly liberal approach
38
to the rule of locus standi, evolving from the stringent requirements of ‘personal injury’ to the broader
‘transcendental importance’ doctrine, such liberality is not to be abused." 39
Finally, since the petitioner has failed to demonstrate a material and personal interest in the issue in dispute, he
cannot also be considered to have filed the present case as a representative of PhilHealth. In this regard, we cannot
ignore or excuse the blatant failure of the petitioner to provide a Board Resolution or a Secretary’s Certificate from
PhilHealth to act as its representative.
C. The petition has a defective jurat.
The respondents claim that the petition should be dismissed for failing to comply with Section 3, Rule 7 of the Rules
of Civil Procedure, which requires the party or the counsel representing him to sign the pleading and indicate an
address that should not be a post office box. The petition also allegedly violated the Supreme Court En Banc
Resolution dated November 12, 2001, requiring counsels to indicate in their pleadings their Roll of Attorneys
Number, their PTR Number and their IBP Official Receipt or Lifetime Member Number; otherwise, the pleadings
would be considered unsigned and dismissible. Bar Matter No. 1922 likewise states that a counsel should note
down his MCLE Certificate of Compliance or Certificate of Exemption in the pleading, but the petitioner had failed to
do so.40
We do not see any violation of Section 3, Rule 7 of the Rules of Civil Procedure as the petition bears the petitioner’s
signature and office address. The present suit was brought before this Court by the petitioner himself as a party
litigant and not through counsel. Therefore, the requirements under the Supreme Court En Banc Resolution dated
November 12, 2001 and Bar Matter No. 1922 do not apply. In Bar Matter No. 1132, April 1, 2003, we clarified that a
party who is not a lawyer is not precluded from signing his own pleadings as this is allowed by the Rules of Court;
the purpose of requiring a counsel to indicate his IBP Number and PTR Number is merely to protect the public from
bogus lawyers. A similar construction should be given to Bar Matter No. 1922, which requires lawyers to indicate
their MCLE Certificate of Compliance or Certificate of Exemption; otherwise, the provision that allows parties to sign
their own pleadings will be negated.
However, the point raised by the respondents regarding the petitioner’s defective jurat is correct. Indeed, A.M. No.
02-8-13-SC, dated February 19, 2008, calls for a current identification document issued by an official agency
bearing the photograph and signature of the individual as competent evidence of identity. Nevertheless, we hasten
to clarify that the defective jurat in the Verification/Certification of Non-Forum Shopping is not a fatal defect, as we
held in In-N-Out Burger, Inc. v. Sehwani, Incorporated. The verification is only a formal, not a jurisdictional,
41
requirement that the Court may waive.
D. The petition has been mooted by supervening events.
Because of the transitory nature of EO 7, it has been pointed out that the present case has already been rendered
moot by these supervening events: (1) the lapse on December 31, 2010 of Section 10 of EO 7 that suspended the
allowances and bonuses of the directors and trustees of GOCCs and GFIs; and (2) the enactment of R.A. No.
10149 amending the provisions in the charters of GOCCs and GFIs empowering their board of directors/trustees to
determine their own compensation system, in favor of the grant of authority to the President to perform this act.
With the enactment of the GOCC Governance Act of 2011, the President is now authorized to fix the compensation
framework of GOCCs and GFIs. The pertinent provisions read:
Section 5. Creation of the Governance Commission for Government-Owned or -Controlled Corporations. — There is
hereby created an advisory, monitoring, and oversight body with authority to formulate, implement and coordinate
policies to be known as the Governance Commission for Government-Owned or-Controlled Corporations,
hereinafter referred to as the GCG, which shall be attached to the Office of the President. The GCG shall have the
following powers and functions:
xxxx
h) Conduct compensation studies, develop and recommend to the President a competitive compensation and
remuneration system which shall attract and retain talent, at the same time allowing the GOCC to be financially
sound and sustainable;
xxxx
Section 8. Coverage of the Compensation and Position Classification System. — The GCG, after conducting a
compensation study, shall develop a Compensation and Position Classification System which shall apply to all
officers and employees of the GOCCs whether under the Salary Standardization Law or exempt therefrom and shall
consist of classes of positions grouped into such categories as the GCG may determine, subject to approval of the
President.
Section 9. Position Titles and Salary Grades. — All positions in the Positions Classification System, as determined
by the GCG and as approved by the President, shall be allocated to their proper position titles and salary grades in
accordance with an Index of Occupational Services, Position Titles and Salary Grades of the Compensation and
Position Classification System, which shall be prepared by the GCG and approved by the President.

xxxx
[N]o GOCC shall be exempt from the coverage of the Compensation and Position Classification System developed
by the GCG under this Act.
As may be gleaned from these provisions, the new law amended R.A. No. 7875 and other laws that enabled certain
GOCCs and GFIs to fix their own compensation frameworks; the law now authorizes the President to fix the
compensation and position classification system for all GOCCs and GFIs, as well as other entities covered by the
law. This means that, the President can now reissue an EO containing these same provisions without any legal
constraints.1âwphi1
A moot case is "one that ceases to present a justiciable controversy by virtue of supervening events, so that a
declaration thereon would be of no practical use or value." "[A]n action is considered ‘moot’ when it no longer
42
presents a justiciable controversy because the issues involved have become academic or dead[,] or when the
matter in dispute has already been resolved and hence, one is not entitled to judicial intervention unless the issue is
likely to be raised again between the parties x x x. Simply stated, there is nothing for the x x x court to resolve as
[its] determination x x x has been overtaken by subsequent events." 43
This is the present situation here. Congress, thru R.A. No. 10149, has expressly empowered the President to
establish the compensation systems of GOCCs and GFIs. For the Court to still rule upon the supposed
unconstitutionality of EO 7 will merely be an academic exercise. Any further discussion of the constitutionality of EO
7 serves no useful purpose since such issue is moot in its face in light of the enactment of R.A. No. 10149. In the
words of the eminent constitutional law expert, Fr. Joaquin Bernas, S.J., "the Court normally [will not] entertain a
petition touching on an issue that has become moot because x x x there would [be] no longer x x x a ‘flesh and
blood’ case for the Court to resolve."
44
All told, in view of the supervening events rendering the petition moot, as well as its patent formal and procedural
infirmities, we no longer see any reason for the Court to resolve the other issues raised in the certiorari petition.
WHEREFORE, premises considered, the petition is DISMISSED. No costs.

22.) G.R. No. 179579 February 1, 2012
COMMISSIONER OF CUSTOMS and the DISTRICT COLLECTOR OF THE PORT OF SUBIC, Petitioners,

vs.
HYPERMIX FEEDS CORPORATION, Respondent.
DECISION
SERENO, J.:
Before us is a Petition for Review under Rule 45, assailing the Decision and the Resolution of the Court of Appeals
1 2 3
(CA), which nullified the Customs Memorandum Order (CMO) No. 27-2003 on the tariff classification of wheat
4
issued by petitioner Commissioner of Customs.
The antecedent facts are as follows:
On 7 November 2003, petitioner Commissioner of Customs issued CMO 27-2003. Under the Memorandum, for tariff
purposes, wheat was classified according to the following: (1) importer or consignee; (2) country of origin; and (3)
port of discharge. The regulation provided an exclusive list of corporations, ports of discharge, commodity
5
descriptions and countries of origin. Depending on these factors, wheat would be classified either as food grade
or feed grade. The corresponding tariff for food grade wheat was 3%, for feed grade, 7%.
CMO 27-2003 further provided for the proper procedure for protest or Valuation and Classification Review
Committee (VCRC) cases. Under this procedure, the release of the articles that were the subject of protest required
the importer to post a cash bond to cover the tariff differential. 6
A month after the issuance of CMO 27-2003, on 19 December 2003, respondent filed a Petition for Declaratory
Relief with the Regional Trial Court (RTC) of Las Piñas City. It anticipated the implementation of the regulation on
7
its imported and perishable Chinese milling wheat in transit from China. Respondent contended that CMO 27-2003
8
was issued without following the mandate of the Revised Administrative Code on public participation, prior notice,
and publication or registration with the University of the Philippines Law Center.
Respondent also alleged that the regulation summarily adjudged it to be a feed grade supplier without the
benefit of prior assessment and examination; thus, despite having imported food grade wheat, it would be
subjected to the 7% tariff upon the arrival of the shipment, forcing them to pay 133% more than was proper.
Furthermore, respondent claimed that the equal protection clause of the Constitution was violated when the
regulation treated non-flour millers differently from flour millers for no reason at all.
Lastly, respondent asserted that the retroactive application of the regulation was confiscatory in nature.
On 19 January 2004, the RTC issued a Temporary Restraining Order (TRO) effective for twenty (20) days from
notice. 9
Petitioners thereafter filed a Motion to Dismiss. They alleged that: (1) the RTC did not have jurisdiction over the
10
subject matter of the case, because respondent was asking for a judicial determination of the classification of wheat;
(2) an action for declaratory relief was improper; (3) CMO 27-2003 was an internal administrative rule and not
legislative in nature; and (4) the claims of respondent were speculative and premature, because the Bureau of
Customs (BOC) had yet to examine respondent’s products. They likewise opposed the application for a writ of
preliminary injunction on the ground that they had not inflicted any injury through the issuance of the regulation; and
that the action would be contrary to the rule that administrative issuances are assumed valid until declared
otherwise.

On 28 February 2005, the parties agreed that the matters raised in the application for preliminary injunction and the
Motion to Dismiss would just be resolved together in the main case. Thus, on 10 March 2005, the RTC rendered its
Decision without having to resolve the application for preliminary injunction and the Motion to Dismiss.
11
The trial court ruled in favor of respondent, to wit:
WHEREFORE, in view of the foregoing, the Petition is GRANTED and the subject Customs Memorandum Order 27-
2003 is declared INVALID and OF NO FORCE AND EFFECT. Respondents Commissioner of Customs, the District
Collector of Subic or anyone acting in their behalf are to immediately cease and desist from enforcing the said
Customs Memorandum Order 27-2003.
SO ORDERED. 12
The RTC held that it had jurisdiction over the subject matter, given that the issue raised by respondent concerned
the quasi-legislative powers of petitioners. It likewise stated that a petition for declaratory relief was the proper
remedy, and that respondent was the proper party to file it. The court considered that respondent was a regular
importer, and that the latter would be subjected to the application of the regulation in future transactions.
With regard to the validity of the regulation, the trial court found that petitioners had not followed the basic
requirements of hearing and publication in the issuance of CMO 27-2003. It likewise held that petitioners had
"substituted the quasi-judicial determination of the commodity by a quasi-legislative predetermination." The lower
13
court pointed out that a classification based on importers and ports of discharge were violative of the due process
rights of respondent.
Dissatisfied with the Decision of the lower court, petitioners appealed to the CA, raising the same allegations in
defense of CMO 27-2003. The appellate court, however, dismissed the appeal. It held that, since the regulation
14
affected substantial rights of petitioners and other importers, petitioners should have observed the requirements of
notice, hearing and publication.
Hence, this Petition.
Petitioners raise the following issues for the consideration of this Court:
I. THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE WHICH IS NOT IN ACCORD

WITH THE LAW AND PREVAILING JURISPRUDENCE.
II. THE COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT THE TRIAL COURT HAS
JURISDICTION OVER THE CASE.
The Petition has no merit.
We shall first discuss the propriety of an action for declaratory relief.
Rule 63, Section 1 provides:
Who may file petition. – Any person interested under a deed, will, contract or other written instrument, or whose
rights are affected by a statute, executive order or regulation, ordinance, or any other governmental regulation may,
before breach or violation thereof, bring an action in the appropriate Regional Trial Court to determine any question
of construction or validity arising, and for a declaration of his rights or duties, thereunder.
The requirements of an action for declaratory relief are as follows: (1) there must be a justiciable controversy; (2)
the controversy must be between persons whose interests are adverse; (3) the party seeking declaratory
relief must have a legal interest in the controversy; and (4) the issue involved must be ripe for judicial
determination. We find that the Petition filed by respondent before the lower court meets these requirements.
15

First, the subject of the controversy is the constitutionality of CMO 27-2003 issued by petitioner
Commissioner of Customs. In Smart Communications v. NTC, we held: 16
The determination of whether a specific rule or set of rules issued by an administrative agency contravenes the law
or the constitution is within the jurisdiction of the regular courts. Indeed, the Constitution vests the power of judicial
review or the power to declare a law, treaty, international or executive agreement, presidential decree, order,
instruction, ordinance, or regulation in the courts, including the regional trial courts. This is within the scope of
judicial power, which includes the authority of the courts to determine in an appropriate action the validity of the acts
of the political departments. Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of
the Government. (Emphasis supplied)
Meanwhile, in Misamis Oriental Association of Coco Traders, Inc. v. Department of Finance Secretary, we said:
17
xxx [A] legislative rule is in the nature of subordinate legislation, designed to implement a primary legislation by
providing the details thereof. xxx
In addition such rule must be published. On the other hand, interpretative rules are designed to provide guidelines to
the law which the administrative agency is in charge of enforcing.
Accordingly, in considering a legislative rule a court is free to make three inquiries: (i) whether the rule is within the
delegated authority of the administrative agency; (ii) whether it is reasonable; and (iii) whether it was issued
pursuant to proper procedure. But the court is not free to substitute its judgment as to the desirability or wisdom of
the rule for the legislative body, by its delegation of administrative judgment, has committed those questions to
administrative judgments and not to judicial judgments. In the case of an interpretative rule, the inquiry is not into the
validity but into the correctness or propriety of the rule. As a matter of power a court, when confronted with an
interpretative rule, is free to (i) give the force of law to the rule; (ii) go to the opposite extreme and substitute its
judgment; or (iii) give some intermediate degree of authoritative weight to the interpretative rule. (Emphasis
supplied)
Second, the controversy is between two parties that have adverse interests. Petitioners are summarily
imposing a tariff rate that respondent is refusing to pay.
Third, it is clear that respondent has a legal and substantive interest in the implementation of CMO 27-2003.
Respondent has adequately shown that, as a regular importer of wheat, on 14 August 2003, it has actually made
shipments of wheat from China to Subic. The shipment was set to arrive in December 2003. Upon its arrival, it
would be subjected to the conditions of CMO 27-2003. The regulation calls for the imposition of different tariff rates,
depending on the factors enumerated therein. Thus, respondent alleged that it would be made to pay the 7% tariff
applied to feed grade wheat, instead of the 3% tariff on food grade wheat. In addition, respondent would have to go
through the procedure under CMO 27-2003, which would undoubtedly toll its time and resources. The lower court
correctly pointed out as follows:
xxx As noted above, the fact that petitioner is precisely into the business of importing wheat, each and every
importation will be subjected to constant disputes which will result into (sic) delays in the delivery, setting aside of
funds as cash bond required in the CMO as well as the resulting expenses thereof. It is easy to see that business
uncertainty will be a constant occurrence for petitioner. That the sums involved are not minimal is shown by the
discussions during the hearings conducted as well as in the pleadings filed. It may be that the petitioner can later on
get a refund but such has been foreclosed because the Collector of Customs and the Commissioner of Customs are
bound by their own CMO. Petitioner cannot get its refund with the said agency. We believe and so find that
Petitioner has presented such a stake in the outcome of this controversy as to vest it with standing to file this
petition. (Emphasis supplied)
18
Finally, the issue raised by respondent is ripe for judicial determination, because litigation is inevitable for the
19
simple and uncontroverted reason that respondent is not included in the enumeration of flour millers classified as
food grade wheat importers. Thus, as the trial court stated, it would have to file a protest case each time it imports
food grade wheat and be subjected to the 7% tariff.
It is therefore clear that a petition for declaratory relief is the right remedy given the circumstances of the
case.
Considering that the questioned regulation would affect the substantive rights of respondent as explained above, it
therefore follows that petitioners should have applied the pertinent provisions of Book VII, Chapter 2 of the Revised
Administrative Code, to wit:
Section 3. Filing. – (1) Every agency shall file with the University of the Philippines Law Center three (3) certified
copies of every rule adopted by it. Rules in force on the date of effectivity of this Code which are not filed within
three (3) months from that date shall not thereafter be the bases of any sanction against any party of persons.
x x x x x x x x x
Section 9. Public Participation. - (1) If not otherwise required by law, an agency shall, as far as practicable, publish
or circulate notices of proposed rules and afford interested parties the opportunity to submit their views prior to the
adoption of any rule.
(2) In the fixing of rates, no rule or final order shall be valid unless the proposed rates shall have been
published in a newspaper of general circulation at least two (2) weeks before the first hearing thereon.
(3) In case of opposition, the rules on contested cases shall be observed.
When an administrative rule is merely interpretative in nature, its applicability needs nothing further than its bare
issuance, for it gives no real consequence more than what the law itself has already prescribed. When, on the other
hand, the administrative rule goes beyond merely providing for the means that can facilitate or render least
cumbersome the implementation of the law but substantially increases the burden of those governed, it behooves
the agency to accord at least to those directly affected a chance to be heard, and thereafter to be duly informed,
before that new issuance is given the force and effect of law. 20
Likewise, in Tañada v. Tuvera, we held:

21
The clear object of the above-quoted provision is to give the general public adequate notice of the various laws
which are to regulate their actions and conduct as citizens. Without such notice and publication, there would be no
basis for the application of the maxim "ignorantia legis non excusat." It would be the height of injustice to punish or
otherwise burden a citizen for the transgression of a law of which he had no notice whatsoever, not even a
constructive one.
Perhaps at no time since the establishment of the Philippine Republic has the publication of laws taken so vital
significance that at this time when the people have bestowed upon the President a power heretofore enjoyed solely
by the legislature. While the people are kept abreast by the mass media of the debates and deliberations in the
Batasan Pambansa – and for the diligent ones, ready access to the legislative records – no such publicity
accompanies the law-making process of the President. Thus, without publication, the people have no means of
knowing what presidential decrees have actually been promulgated, much less a definite way of informing
themselves of the specific contents and texts of such decrees. (Emphasis supplied)
Because petitioners failed to follow the requirements enumerated by the Revised Administrative Code, the assailed
regulation must be struck down.
Going now to the content of CMO 27-3003, we likewise hold that it is unconstitutional for being violative of the equal
protection clause of the Constitution.
The equal protection clause means that no person or class of persons shall be deprived of the same protection of
laws enjoyed by other persons or other classes in the same place in like circumstances. Thus, the guarantee of the
equal protection of laws is not violated if there is a reasonable classification. For a classification to be reasonable, it
must be shown that (1) it rests on substantial distinctions; (2) it is germane to the purpose of the law; (3) it is not
limited to existing conditions only; and (4) it applies equally to all members of the same class. 22

Unfortunately, CMO 27-2003 does not meet these requirements. We do not see how the quality of wheat is affected
by who imports it, where it is discharged, or which country it came from.
Thus, on the one hand, even if other millers excluded from CMO 27-2003 have imported food grade wheat, the
product would still be declared as feed grade wheat, a classification subjecting them to 7% tariff. On the other hand,
even if the importers listed under CMO 27-2003 have imported feed grade wheat, they would only be made to pay
3% tariff, thus depriving the state of the taxes due. The regulation, therefore, does not become disadvantageous to
respondent only, but even to the state.
It is also not clear how the regulation intends to "monitor more closely wheat importations and thus prevent their
misclassification." A careful study of CMO 27-2003 shows that it not only fails to achieve this end, but results in the
opposite. The application of the regulation forecloses the possibility that other corporations that are excluded from
the list import food grade wheat; at the same time, it creates an assumption that those who meet the criteria do not
import feed grade wheat. In the first case, importers are unnecessarily burdened to prove the classification of their
wheat imports; while in the second, the state carries that burden.
Petitioner Commissioner of Customs also went beyond his powers when the regulation limited the customs officer’s
duties mandated by Section 1403 of the Tariff and Customs Law, as amended. The law provides:
Section 1403. – Duties of Customs Officer Tasked to Examine, Classify, and Appraise Imported Articles. – The
customs officer tasked to examine, classify, and appraise imported articles shall determine whether the packages
designated for examination and their contents are in accordance with the declaration in the entry, invoice and other
pertinent documents and shall make return in such a manner as to indicate whether the articles have been truly and
correctly declared in the entry as regard their quantity, measurement, weight, and tariff classification and not
imported contrary to law. He shall submit samples to the laboratory for analysis when feasible to do so and when
such analysis is necessary for the proper classification, appraisal, and/or admission into the Philippines of imported
articles.
Likewise, the customs officer shall determine the unit of quantity in which they are usually bought and sold, and
appraise the imported articles in accordance with Section 201 of this Code.
Failure on the part of the customs officer to comply with his duties shall subject him to the penalties prescribed
under Section 3604 of this Code. 1âwphi1
The provision mandates that the customs officer must first assess and determine the classification of the imported
article before tariff may be imposed. Unfortunately, CMO 23-2007 has already classified the article even before the
customs officer had the chance to examine it. In effect, petitioner Commissioner of Customs diminished the powers
granted by the Tariff and Customs Code with regard to wheat importation when it no longer required the customs
officer’s prior examination and assessment of the proper classification of the wheat.
It is well-settled that rules and regulations, which are the product of a delegated power to create new and additional
legal provisions that have the effect of law, should be within the scope of the statutory authority granted by the
legislature to the administrative agency. It is required that the regulation be germane to the objects and purposes of
the law; and that it be not in contradiction to, but in conformity with, the standards prescribed by law.
23
In summary, petitioners violated respondent’s right to due process in the issuance of CMO 27-2003 when they failed
to observe the requirements under the Revised Administrative Code. Petitioners likewise violated respondent’s right
to equal protection of laws when they provided for an unreasonable classification in the application of the regulation.
Finally, petitioner Commissioner of Customs went beyond his powers of delegated authority when the regulation
limited the powers of the customs officer to examine and assess imported articles.
WHEREFORE, in view of the foregoing, the Petition is DENIED.

23.) G.R. No. 181359 August 5, 2013
SPOUSES CLEMENCIO C. SABITSANA, JR. and MA. ROSARIO M. SABITSANA, Petitioners,

vs.
JUANITO F. MUERTEGUI, represented by his Attorney-in-Fact DOMINGO A. MUERTEGUI, JR., Respondent.
DECISION
DEL CASTILLO, J.:
A lawyer may not, for his own personal interest and benefit, gamble on his client's word, believing it at one time and
disbelieving it the next. He owes his client his undivided loyalty.
Assailed in this Petition for Review on Certiorari1 are the January 25, 2007 Decision2 of the Court of Appeals (CA)
which denied the appeal in CA-G.R. CV No. 79250, and its January 11, 2008 Resolution3 denying petitioner’s Motion
for Reconsideration.4
Factual Antecedents
On September 2, 1981, Alberto Garcia (Garcia) executed an unnotarized Deed of Sale5 in favor of respondent
Juanito Muertegui6 (Juanito) over a 7,500-square meter parcel of unregistered land (the lot) located in Dalutan
Island, Talahid, Almeira, Biliran, Leyte del Norte covered by Tax Declaration (TD) No. 1996 issued in 1985 in
Garcia’s name.7
Juanito’s father Domingo Muertegui, Sr. (Domingo Sr.) and brother Domingo Jr. took actual possession of the lot
and planted thereon coconut and ipil-ipil trees. They also paid the real property taxes on the lot for the years 1980
up to 1998.
On October 17, 1991, Garcia sold the lot to the Muertegui family lawyer, petitioner Atty. Clemencio C. Sabitsana, Jr.
(Atty. Sabitsana), through a notarized deed of absolute sale.8 The sale was registered with the Register of Deeds on
February 6, 1992.9 TD No. 1996 was cancelled and a new one, TD No. 5327,10 was issued in Atty. Sabitsana’s
name. Although Domingo Jr. and Sr. paid the real estate taxes, Atty. Sabitsana also paid real property taxes in
1992, 1993, and 1999. In 1996, he introduced concrete improvements on the property, which shortly thereafter were
destroyed by a typhoon.
When Domingo Sr. passed away, his heirs applied for registration and coverage of the lot under the Public Land Act
or Commonwealth Act No. 141. Atty. Sabitsana, in a letter11 dated August 24, 1998 addressed to the Department of
Environment and Natural Resources’ CENRO/PENRO office in Naval, Biliran, opposed the application, claiming that
he was the true owner of the lot. He asked that the application for registration be held in abeyance until the issue of
conflicting ownership has been resolved.
On April 11, 2000, Juanito, through his attorney-in-fact Domingo Jr., filed Civil Case No. B-109712 for quieting
of title and preliminary injunction, against herein petitioners Atty. Sabitsana and his wife, Rosario, claiming
that they bought the lot in bad faith and are exercising acts of possession and ownership over the same,
which acts thus constitute a cloud over his title. The Complaint13 prayed, among others, that the Sabitsana Deed
of Sale, the August 24, 1998 letter, and TD No. 5327 be declared null and void and of no effect; that petitioners be
ordered to respect and recognize Juanito’s title over the lot; and that moral and exemplary damages, attorney’s
fees, and litigation expenses be awarded to him.
In their Answer with Counterclaim,14 petitioners asserted mainly that the sale to Juanito is null and void absent
the marital consent of Garcia’s wife, Soledad Corto (Soledad); that they acquired the property in good faith
and for value; and that the Complaint is barred by prescription and laches. They likewise insisted that the Regional
Trial Court (RTC) of Naval, Biliran did not have jurisdiction over the case, which involved title to or interest in a
parcel of land the assessed value of which is merely ₱1,230.00.

The evidence and testimonies of the respondent’s witnesses during trial reveal that petitioner Atty. Sabitsana was
the Muertegui family’s lawyer at the time Garcia sold the lot to Juanito, and that as such, he was consulted by the
family before the sale was executed; that after the sale to Juanito, Domingo Sr. entered into actual, public, adverse
and continuous possession of the lot, and planted the same to coconut and ipil-ipil; and that after Domingo Sr.’s
death, his wife Caseldita, succeeded him in the possession and exercise of rights over the lot.
On the other hand, Atty. Sabitsana testified that before purchasing the lot, he was told by a member of the
Muertegui family, Carmen Muertegui Davies (Carmen), that the Muertegui family had bought the lot, but she could
not show the document of sale; that he then conducted an investigation with the offices of the municipal and
provincial assessors; that he failed to find any document, record, or other proof of the sale by Garcia to Juanito, and
instead discovered that the lot was still in the name of Garcia; that given the foregoing revelations, he concluded
that the Muerteguis were merely bluffing, and that they probably did not want him to buy the property because they
were interested in buying it for themselves considering that it was adjacent to a lot which they owned; that he then
proceeded to purchase the lot from Garcia; that after purchasing the lot, he wrote Caseldita in October 1991 to
inform her of the sale; that he then took possession of the lot and gathered ipil-ipil for firewood and harvested
coconuts and calamansi from the lot; and that he constructed a rip-rap on the property sometime in 1996 and 1997.
Ruling of the Regional Trial Court
On October 28, 2002, the trial court issued its Decision15 which decrees as follows:
WHEREFORE, in view of the foregoing considerations, this Court finds in favor of the plaintiff and against the
defendants, hereby declaring the Deed of Sale dated 2 September 1981 as valid and preferred while the Deed of
Absolute Sale dated 17 October 1991 and Tax Declaration No. 5327 in the name of Atty. Clemencio C. Sabitsana,
Jr. are VOID and of no legal effect.
The Provincial Assessor and the Municipal Assessor of Naval are directed to cancel Tax Declaration No. 5327 as
void and done in bad faith.
Further, Atty. Clemencio C. Sabitsana, Jr. is ordered to pay plaintiff Juanito Muertigui, represented by his attorney-
in-fact Domingo Muertigui, Jr. the amounts of:
a) ₱30,000.00 as attorney’s fees;
b) ₱10,000.00 as litigation expenses; and
c) Costs.
SO ORDERED.16
The trial court held that petitioners are not buyers in good faith. Petitioner Atty. Sabitsana was the Muertegui family’s
lawyer, and was informed beforehand by Carmen that her family had purchased the lot; thus, he knew of the sale to
Juanito. After conducting an investigation, he found out that the sale was not registered. With this information in
mind, Atty. Sabitsana went on to purchase the same lot and raced to register the sale ahead of the Muerteguis,
expecting that his purchase and prior registration would prevail over that of his clients, the Muerteguis. Applying
Article 1544 of the Civil Code,17 the trial court declared that even though petitioners were first to register their sale,
the same was not done in good faith. And because petitioners’ registration was not in good faith, preference should
be given to the sale in favor of Juanito, as he was the first to take possession of the lot in good faith, and the sale to
petitioners must be declared null and void for it casts a cloud upon the Muertegui title.
Petitioners filed a Motion for Reconsideration18 but the trial court denied19 the same.
Ruling of the Court of Appeals
Petitioners appealed to the CA20 asserting that the sale to Juanito was null and void for lack of marital consent; that
the sale to them is valid; that the lower court erred in applying Article 1544 of the Civil Code; that the Complaint
should have been barred by prescription, laches and estoppel; that respondent had no cause of action; that
respondent was not entitled to an award of attorney’s fees and litigation expenses; and that they should be the ones
awarded attorney’s fees and litigation expenses.
The CA, through its questioned January 25, 2007 Decision,21 denied the appeal and affirmed the trial court’s
Decision in toto. It held that even though the lot admittedly was conjugal property, the absence of Soledad’s
signature and consent to the deed did not render the sale to Juanito absolutely null and void, but merely voidable.
Since Garcia and his wife were married prior to the effectivity of the Family Code, Article 173 of the Civil
Code22 should apply; and under the said provision, the disposition of conjugal property without the wife’s consent is
not void, but merely voidable. In the absence of a decree annulling the deed of sale in favor of Juanito, the same
remains valid.
The CA added that the fact that the Deed of Sale in favor of Juanito was not notarized could not affect its validity. As
against the notarized deed of sale in favor of petitioners, the CA held that the sale in favor of Juanito still prevails.
Applying Article 1544 of the Civil Code, the CA said that the determining factor is petitioners’ good faith, or the lack
of it. It held that even though petitioners were first to register the sale in their favor, they did not do so in good faith,
for they already knew beforehand of Garcia’s prior sale to Juanito. By virtue of Atty. Sabitsana’s professional and
confidential relationship with the Muertegui family, petitioners came to know about the prior sale to the Muerteguis
and the latter’s possession of the lot, and yet they pushed through with the second sale. Far from acting in good
faith, petitioner Atty. Sabitsana used his legal knowledge to take advantage of his clients by registering his purchase
ahead of them.
Finally, the CA declared that Juanito, as the rightful owner of the lot, possessed the requisite cause of action to
institute the suit for quieting of title and obtain judgment in his favor, and is entitled as well to an award for attorney’s
fees and litigation expenses, which the trial court correctly held to be just and equitable under the circumstances.
The dispositive portion of the CA Decision reads:
WHEREFORE, premises considered, the instant appeal is DENIED and the Decision dated October 28, 2002 of the
Regional Trial Court, 8th Judicial Region, Branch 16, Naval, Biliran, is hereby AFFIRMED. Costs against
defendants-appellants.
SO ORDERED.23
Issues
Petitioners now raise the following issues for resolution:
I. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE REGIONAL TRIAL COURT DID NOT
HAVE JURISDICTION OVER THE CASE IN VIEW OF THE FACT THAT THE ASSESSED VALUE OF THE
SUBJECT LAND WAS ONLY ₱1,230.00 (AND STATED MARKET VALUE OF ONLY ₱3,450.00).
II. THE COURT OF APPEALS ERRED IN APPLYING ART. 1544 OF THE CIVIL CODE INSTEAD OF THE
PROPERTY REGISTRATION DECREE (P.D. NO. 1529) CONSIDERING THAT THE SUBJECT LAND
WAS UNREGISTERED.
III. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE COMPLAINT WAS ALREADY
BARRED [BY] LACHES AND THE STATUTE OF LIMITATIONS.
IV. THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE REGIONAL TRIAL
COURT ORDERING THE PETITIONERS TO PAY ATTORNEY’S FEES AND LITIGATION EXPENSES TO
THE RESPONDENT.24
Petitioners’ Arguments

Petitioners assert that the RTC of Naval, Biliran did not have jurisdiction over the case. They argue that
since the assessed value of the lot was a mere ₱1,230.00, jurisdiction over the case lies with the first level
courts, pursuant to Republic Act No. 7691,25 which expanded their exclusive original jurisdiction to include
"all civil actions which involve title to, or possession of, real property, or any interest therein where the
assessed value of the property or interest therein does not exceed Twenty thousand pesos (₱20,000.00) or,
in civil actions in Metro Manila, where such assessed value does not exceed Fifty thousand pesos
(₱50,000.00) exclusive of interest, damages of whatever kind, attorney’s fees, litigation expenses and
costs."26 Petitioners thus conclude that the Decision in Civil Case No. B-1097 is null and void for lack of jurisdiction.
Petitioners next insist that the lot, being unregistered land, is beyond the coverage of Article 1544 of the Civil Code,
and instead, the provisions of Presidential Decree (PD) No. 1529 should apply. This being the case, the Deed of
Sale in favor of Juanito is valid only as between him and the seller Garcia, pursuant to Section 113 of PD 1529;27 it
cannot affect petitioners who are not parties thereto.
On the issue of estoppel, laches and prescription, petitioners insist that from the time they informed the Muerteguis
in writing about their purchase of the lot, or in October 1991, the latter did not notify them of their prior purchase of
the lot, nor did respondent interpose any objection to the sale in their favor. It was only in 1998 that Domingo Jr.
showed to petitioners the unnotarized deed of sale. According to petitioners, this seven-year period of silence and
inaction on the Muerteguis’ part should be taken against them and construed as neglect on their part to assert their
rights for an unreasonable length of time. As such, their action to quiet title should be deemed barred by laches and
estoppel.
Lastly, petitioners take exception to the award of attorney’s fees and litigation expenses, claiming that since there
was no bad faith on their part, such award may not be considered just and equitable under the circumstances. Still,
an award of attorney’s fees should remain the exception rather than the rule; and in awarding the same, there must
have been an express finding of facts and law justifying such award, a requirement that is absent in this case.
Petitioners thus pray for the reversal of the questioned CA Decision and Resolution; the dismissal of the Complaint
in Civil Case No. B-1097; the deletion of the award of attorney’s fees and litigation expenses in respondent’s favor;
and a declaration that they are the true and rightful owners of the lot.
Respondent’s Arguments
Respondent, on the other hand, counters that a suit for quieting of title is one whose subject matter is
incapable of pecuniary estimation, and thus falls within the jurisdiction of the RTC. He likewise insists that
Article 1544 applies to the case because there is a clear case of double sale of the same property to different
buyers, and the bottom line thereof lies in petitioners’ lack of good faith in entering into the subsequent sale. On the
issue of laches/estoppel, respondent echoes the CA’s view that he was persistent in the exercise of his rights over
the lot, having previously filed a complaint for recovery of the lot, which unfortunately was dismissed based on
technicality.
On the issue of attorney’s fees and litigation expenses, respondent finds refuge in Article 2208 of the Civil
Code,28 citing three instances which fortify the award in his favor – petitioners’ acts compelled him to litigate and
incur expenses to protect his interests; their gross and evident bad faith in refusing to recognize his ownership and
possession over the lot; and the justness and equitableness of his case.
Our Ruling
The Petition must be denied.
The Regional Trial Court has jurisdiction over the suit for quieting of title.
On the question of jurisdiction, it is clear under the Rules that an action for quieting of title may be
instituted in the RTCs, regardless of the assessed value of the real property in dispute. Under Rule 63 of the
Rules of Court,29 an action to quiet title to real property or remove clouds therefrom may be brought in the
appropriate RTC.

It must be remembered that the suit for quieting of title was prompted by petitioners’ August 24, 1998 letter-
opposition to respondent’s application for registration. Thus, in order to prevent30 a cloud from being cast upon his
application for a title, respondent filed Civil Case No. B-1097 to obtain a declaration of his rights. In this sense, the
action is one for declaratory relief, which properly falls within the jurisdiction of the RTC pursuant to Rule 63 of the
Rules.
Article 1544 of the Civil Code does not apply to sales involving unregistered land.
Both the trial court and the CA are, however, wrong in applying Article 1544 of the Civil Code. Both courts seem to
have forgotten that the provision does not apply to sales involving unregistered land. Suffice it to state that the issue
of the buyer’s good or bad faith is relevant only where the subject of the sale is registered land, and the purchaser is
buying the same from the registered owner whose title to the land is clean. In such case, the purchaser who relies
on the clean title of the registered owner is protected if he is a purchaser in good faith for value.31
Act No. 3344 applies to sale of unregistered lands.
What applies in this case is Act No. 3344,32 as amended, which provides for the system of recording of transactions
over unregistered real estate. Act No. 3344 expressly declares that any registration made shall be without prejudice
to a third party with a better right. The question to be resolved therefore is: who between petitioners and respondent
has a better right to the disputed lot?
Respondent has a better right to the lot.
The sale to respondent Juanito was executed on September 2, 1981 via an unnotarized deed of sale, while the sale
to petitioners was made via a notarized document only on October 17, 1991, or ten years thereafter. Thus, Juanito
who was the first buyer has a better right to the lot, while the subsequent sale to petitioners is null and void,
because when it was made, the seller Garcia was no longer the owner of the lot. Nemo dat quod non habet.
The fact that the sale to Juanito was not notarized does not alter anything, since the sale between him and Garcia
remains valid nonetheless. Notarization, or the requirement of a public document under the Civil Code,33 is only for
convenience, and not for validity or enforceability.34 And because it remained valid as between Juanito and Garcia,
the latter no longer had the right to sell the lot to petitioners, for his ownership thereof had ceased.
Nor can petitioners’ registration of their purchase have any effect on Juanito’s rights. The mere registration of a sale
in one’s favor does not give him any right over the land if the vendor was no longer the owner of the land, having
previously sold the same to another even if the earlier sale was unrecorded.35 Neither could it validate the purchase
thereof by petitioners, which is null and void. Registration does not vest title; it is merely the evidence of such title.
Our land registration laws do not give the holder any better title than what he actually has.36
Specifically, we held in Radiowealth Finance Co. v. Palileo37 that:
Under Act No. 3344, registration of instruments affecting unregistered lands is ‘without prejudice to a third party with
a better right.’ The aforequoted phrase has been held by this Court to mean that the mere registration of a sale in
one’s favor does not give him any right over the land if the vendor was not anymore the owner of the land having
previously sold the same to somebody else even if the earlier sale was unrecorded.
Petitioners’ defense of prescription, laches and estoppel are unavailing since their claim is based on a null and void
deed of sale. The fact that the Muerteguis failed to interpose any objection to the sale in petitioners’ favor does not
change anything, nor could it give rise to a right in their favor; their purchase remains void and ineffective as far as
the Muerteguis are concerned.
The award of attorney’s fees and litigation expenses is proper because of petitioners’ bad faith.
Petitioners’ actual and prior knowledge of the first sale to Juanito makes them purchasers in bad faith. It also
appears that petitioner Atty. Sabitsana was remiss in his duties as counsel to the Muertegui family. Instead of
advising the Muerteguis to register their purchase as soon as possible to forestall any legal complications that
accompany unregistered sales of real property, he did exactly the opposite: taking advantage of the situation and
the information he gathered from his inquiries and investigation, he bought the very same lot and immediately
caused the registration thereof ahead of his clients, thinking that his purchase and prior registration would prevail.
The Court cannot tolerate this mercenary attitude. Instead of protecting his client’s interest, Atty. Sabitsana
practically preyed on him.
Petitioner Atty. Sabitsana took advantage of confidential information disclosed to him by his client, using the same to
defeat him and beat him to the draw, so to speak. He rushed the sale and registration thereof ahead of his client. He
may not be afforded the excuse that he nonetheless proceeded to buy the lot because he believed or assumed that
the Muerteguis were simply bluffing when Carmen told him that they had already bought the same; this is too
convenient an excuse to be believed. As the Muertegui family lawyer, he had no right to take a position, using
information disclosed to him in confidence by his client, that would place him in possible conflict with his duty. He
may not, for his own personal interest and benefit, gamble on his client’s word, believing it at one time and
disbelieving it the next. He owed the Muerteguis his undivided loyalty. He had the duty to protect the client, at all
hazards and costs even to himself.38
Petitioner Atty. Sabitsana is enjoined to "look at any representation situation from the point of view that there are
possible conflicts, and further to think in terms of impaired loyalty, that is, to evaluate if his representation in any way
will impair his loyalty to a client."39
Moreover, as the Muertegui family’s lawyer, Atty. Sabitsana was under obligation to safeguard his client's property,
and not jeopardize it. Such is his duty as an attorney, and pursuant to his general agency.40
Even granting that Atty. Sabitsana has ceased to act as the Muertegui family's lawyer, he still owed them his
loyalty. The termination of attorney-client relation provides no justification for a lawyer to represent an interest
1âwphi1
adverse to or in conflict with that of the former client on a matter involving confidential information which the lawyer
acquired when he was counsel. The client's confidence once reposed should not be divested by mere expiration of
professional employment.41 This is underscored by the fact that Atty. Sabitsana obtained information from Carmen
which he used to his advantage and to the detriment of his client.
from the foregoing disquisition, it can be seen that petitioners are guilty of bad faith in pursuing the sale of the lot
despite being apprised of the prior sale in respondent's favor. Moreover, petitioner Atty. Sabitsana has exhibited a
lack of loyalty toward his clients, the Muerteguis, and by his acts, jeopardized their interests instead of protecting
them. Over and above the trial court's and the CA's findings, this provides further justification for the award of
attorney's fees, litigation expenses and costs in favor of the respondent.
Thus said, judgment must be rendered in favor of respondent to prevent the petitioners' void sale from casting a
cloud upon his valid title.
WHEREFORE, premises considered, the Petition is DENIED. The January 25, 2007 Decision and the January 11,
2008 Resolution of the Court of Appeals in CA-G.R. CV No. 79250 are AFFIRMED. Costs against petitioners.

24.) G.R. No. 189571, January 21, 2015
THE HONORABLE MONETARY BOARD AND GAIL U. FULE, DIRECTOR, SUPERVISION AND
EXAMINATION DEPARTMENT II, AND BANGKO SENTRAL NG
PILIPINAS, Petitioners, v. PHILIPPINE VETERANS BANK, Respondent.
DECISION
PERALTA, J.:
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to reverse
and set aside the Decision1 dated June 15, 2009 and Order2 dated August 25, 2009 of the Regional
Trial Court (RTC) of Makati City in Civil Case No. 07-271.
The factual antecedents follow.
Respondent established a pension loan product for bona fide veterans or their surviving spouses, as
well as salary loan product for teachers and low-salaried employees pursuant to its mandate under
Republic Act (RA) Nos. 35183 and 71694 to provide financial assistance to veterans and teachers.
As its clientele usually do not have real estate or security to cover their pension or salary loan, other
than their continuing good health and/or employment, respondent devised a program by charging a
premium in the form of a higher fee known as Credit Redemption Fund (CRF) from said borrowers.
Resultantly, Special Trust Funds were established by respondent for the pension loans of the veteran-
borrowers, salary loans of teachers and low-salaried employees. These trust funds were, in turn,
managed by respondent’s Trust and Investment Department, with respondent as beneficiary. The
fees charged against the borrowers were credited to the respective trust funds, which would be used
to fully pay the outstanding obligation of the borrowers in case of death.
On April 30, 2002, an examination was conducted by the Supervision and Examination Department
(SED) II of the Bangko Sentral ng Pilipinas (BSP). It found, among other things, that respondent’s
collection of premiums from the proceeds of various salary and pension loans of borrowers to
guarantee payment of outstanding loans violated Section 54 of RA No. 8791 5 which states that banks
shall not directly engage in insurance business as insurer.
Subsequently, respondent wrote a letter to petitioners justifying the existence of the CRF.
In a letter dated March 17, 2003, the BSP notified respondent about the Insurance Commission’s
opinion that the CRF is a form of insurance. Thus, respondent was requested to discontinue the
collection of said fees.
On February 24, 2004, respondent complied with the BSP’s directive and discontinued the collection
of fees for CRF.
On September 16, 2005, petitioners issued Monetary Board (MB) Resolution No. 1139
directing respondent’s Trust and Investment Department to return to the borrowers all the
balances of the CRF in the amount of P144,713,224.54 as of August 31, 2004, and to preserve
the records of borrowers who were deducted CRFs from their loan proceeds pending resolution or
ruling of the Office of the General Counsel of the BSP. Thus, respondent requested reconsideration of
said MB Resolution. However, the same was denied in a letter dated December 5, 2006.
Accordingly, respondent filed a Petition for Declaratory Relief with the RTC of Makati City.

In response, petitioners filed a Motion to Dismiss alleging that the petition for declaratory relief
cannot prosper due to respondent’s prior breach of Section 54 of RA No. 8791.
In an Order6 dated September 24, 2007, the RTC dismissed respondent’s petition for declaratory
relief and held as follows: chanroblesvirtuallawlibrary
Upon a thorough analysis of the allegations of the petition and the documents attached thereto as
annexes, the arguments of both parties in support of their respective position on the incident up for
resolution, the Court finds that an ordinary civil action or other else but certainly not the present
action for declaratory relief, is the proper remedy.
Clearly, as gleaned from the very documents attached to the petition, and as correctly pointed out by
the [petitioners], [respondent], as found by the BSP examiners and confirmed by the Monetary
Board, violated Section 54 of RA No. 8791, subject matter of the instant case, by engaging in an
insurance activity which is prohibited by such law. To be precise, the law so provides thus:
“SEC. 54. Prohibition to Act as Insurer. A bank shall not directly engaged (sic) in the business as the
insurer.”
Hence, the issue of whether or not petitioner violated the foregoing law can only be fittingly resolved
thru an ordinary action. For which reason, the Court has no recourse but to put an end to this case.
In view of the foregoing, the Court deems it unnecessary to tackle the other grounds relied upon by
[petitioners] in their motion to dismiss.
WHEREFORE, for reasons afore-stated, the petition is hereby DISMISSED.
SO ORDERED.
Almost a year later, respondent filed a Motion to Admit its Motion for Reconsideration against said
order alleging that it did not receive a copy thereof until September 3, 2008.
Petitioners opposed said motion on the ground that per Certification of the Philippine Postal Office, an
official copy of the RTC’s Order was duly served and received by respondent on October 17, 2007.
Despite the foregoing, the RTC allowed respondent’s motion for reconsideration and required
petitioners to file their answer.
In a Decision dated June 15, 2009, the RTC of Makati City granted respondent’s petition for
declaratory relief disposing as follows: chanroblesvirtuallawlibrary
WHEREFORE, premises considered, it is hereby DECLARED that [respondent], when it collected

additional fees known as “Credit Redemption Fund (CRF)” from its loan borrowers was not directly
engaged in insurance business as insurer; hence, it did not violate Sec. 54, R.A. 8791, otherwise
known as the “General Banking Law of 2000.”
The Monetary Board Resolution No. 1139 dated August 26, 2005 is hereby DECLARED null and void.
SO ORDERED.7
Petitioners filed a motion for reconsideration against said decision, but the same was denied in an
Order dated August 25, 2009.
Hence, the present petition wherein petitioners raise the following grounds to support their
petition:chanroblesvirtuallawlibrary

I.
THE COURT A QUO GRIEVOUSLY ERRED IN TAKING COGNIZANCE OF THE PETITION FOR

DECLARATORY RELIEF DESPITE: chanroblesvirtuallawlibrary
(i) THE FINALITY OF THE BSP MB RESOLUTION: (a) DECLARING RESPONDENT VETERANS
BANK’S CRF SCHEME AS VIOLATIVE OF SECTION 54 OF RA 8791; and (b) DIRECTING
RESPONDENT TO RETURN THE ILLEGAL PROCEEDS THEREOF TO ITS BORROWERS; and
(ii) THE BLATANT IMPROPRIETY OF RESORTING TO SUCH PETITION FOR DECLARATORY
RELIEF, CONSIDERING RESPONDENT VETERANS BANK’S PRIOR BREACH OF THE
MONETARY BOARD RESOLUTION SUBJECT THEREOF [ASSUMING ARGUENDO THAT THE
SUBJECT BSP RESOLUTION HAS NOT BECOME FINAL];
II.
THE COURT A QUO’S ORDER, DISMISSING THE PETITION FOR DECLARATORY RELIEF HAS LONG
BECOME FINAL AND EXECUTORY AND MAY NO LONGER BE DISTURBED. cralawred
III.
PETITIONERS’ FINDING, THAT RESPONDENT VETERANS BANK IS ENGAGED IN “INSURANCE

BUSINESS,” IS IN ACCORD WITH LAW.8
In essence, the issue is whether or not the petition for declaratory relief is proper.
We rule in the negative.
Section 1, Rule 63 of the Rules of Court governs petitions for declaratory relief, viz.: chanroblesvirtuallawlibrary
SECTION 1. Who may file petition. – Any person interested under a deed, will, contract or other
written instrument, whose rights are affected by a statute, executive order or regulation, ordinance,
or any other governmental regulation may, before breach or violation thereof, bring an action in the
appropriate Regional Trial Court to determine any question of construction or validity arising, and for
a declaration of his rights or duties, thereunder.
Declaratory relief is defined as an action by any person interested in a deed, will, contract or other
written instrument, executive order or resolution, to determine any question of construction or
validity arising from the instrument, executive order or regulation, or statute; and for a declaration of
his rights and duties thereunder. The only issue that may be raised in such a petition is the question
of construction or validity of provisions in an instrument or statute. 9
chanRoblesvirtualLawlibrary
Ergo, the Court, in CJH Development Corporation v. Bureau of Internal Revenue,10 held that in the
same manner that court decisions cannot be the proper subjects of a petition for declaratory
relief, decisions of quasi-judicial agencies cannot be subjects of a petition for declaratory
relief for the simple reason that if a party is not agreeable to a decision either on questions
of law or of fact, it may avail of the various remedies provided by the Rules of Court.
In view of the foregoing, the decision of the BSP Monetary Board cannot be a proper
subject matter for a petition for declaratory relief since it was issued by the BSP Monetary
Board in the exercise of its quasi-judicial powers or functions.
The authority of the petitioners to issue the questioned MB Resolution emanated from its
powers under Section 3711 of RA No. 765312 and Section 6613 of RA No. 879114 to impose,
at its discretion, administrative sanctions, upon any bank for violation of any banking law.

The nature of the BSP Monetary Board as a quasi-judicial agency, and the character of its
determination of whether or not appropriate sanctions may be imposed upon erring banks, as an
exercise of quasi-judicial function, have been recognized by this Court in the case of United Coconut
Planters Bank v. E. Ganzon, Inc.,15 to wit:chanroblesvirtuallawlibrary
A perusal of Section 9(3) of Batas Pambansa Blg. 129, as amended, and Section 1, Rule 43 of the
1997 Rules of Civil Procedure reveals that the BSP Monetary Board is not included among the quasi-
judicial agencies explicitly named therein, whose final judgments, orders, resolutions or awards are
appealable to the Court of Appeals. Such omission, however, does not necessarily mean that the
Court of Appeals has no appellate jurisdiction over the judgments, orders, resolutions, or awards of
the BSP Monetary Board.
It bears stressing that Section 9(3) of Batas Pambansa Blg. 129, as amended, on the appellate
jurisdiction of the Court of Appeals, generally refers to quasi-judicial agencies, instrumentalities,
boards or commissions. The use of the word “including” in the said provision, prior to the naming of
several quasi-judicial agencies, necessarily conveys the very idea of non-exclusivity of the
enumeration. The principle of expressio unius est exclusio alterius does not apply where other
circumstances indicate that the enumeration was not intended to be exclusive, or where the
enumeration is by way of example only.
Similarly, Section 1, Rule 43 of the 1997 Revised Rules of Civil Procedure merely mentions several
quasi-judicial agencies without exclusivity in the phraseology. The enumeration of the agencies
therein mentioned is not exclusive. The introductory phrase “[a]mong these agencies are” preceding
the enumeration of specific quasi-judicial agencies only highlights the fact that the list is not meant
to be exclusive or conclusive. Further, the overture stresses and acknowledges the existence of other
quasi-judicial agencies not included in the enumeration but should be deemed included.
A quasi-judicial agency or body is an organ of government other than a court and other than a
legislature, which affects the rights of private parties through either adjudication or rule-making. The
very definition of an administrative agency includes its being vested with quasi-judicial powers. The
ever increasing variety of powers and functions given to administrative agencies recognizes the need
for the active intervention of administrative agencies in matters calling for technical knowledge and
speed in countless controversies which cannot possibly be handled by regular courts. A “quasi-judicial
function” is a term which applies to the action, discretion, etc. of public administrative officers or
bodies, who are required to investigate facts, or ascertain the existence of facts, hold hearings, and
draw conclusions from them, as a basis for their official action and to exercise discretion of a judicial
nature.
Undoubtedly, the BSP Monetary Board is a quasi-judicial agency exercising quasi-judicial

powers or functions. As aptly observed by the Court of Appeals, the BSP Monetary Board is
an independent central monetary authority and a body corporate with fiscal and
administrative autonomy, mandated to provide policy directions in the areas of money,
banking, and credit. It has the power to issue subpoena, to sue for contempt those
refusing to obey the subpoena without justifiable reason, to administer oaths and compel
presentation of books, records and others, needed in its examination, to impose fines and
other sanctions and to issue cease and desist order. Section 37 of Republic Act No. 7653,
in particular, explicitly provides that the BSP Monetary Board shall exercise its discretion
in determining whether administrative sanctions should be imposed on banks and quasi-
banks, which necessarily implies that the BSP Monetary Board must conduct some form of
investigation or hearing regarding the same.16
A priori, having established that the BSP Monetary Board is indeed a quasi-judicial body
exercising quasi-judicial functions, then its decision in MB Resolution No. 1139 cannot be
the proper subject of declaratory relief.
Lastly, also worth noting is the fact that the court a quo’s Order dated September 24, 2007, which
dismissed respondent’s petition for declaratory relief, had long become final and executory.
To recall, said Order was duly served on and received by respondent on October 17, 2007, as
evidenced by the Certification issued by the Philippine Postal Corporation. Almost a year later,
however, or on October 15, 2008, respondent moved for reconsideration of the court a quo’s Order of
dismissal, claiming it received a copy of said Order only on September 3, 2008. Thus, respondent’s
self-serving claim should not have prevailed over the Certification issued by the Philippine Postal
Corporation. It was error for the trial court to entertain it for the second time despite the lapse of
almost a year before respondent filed its motion for reconsideration against said Order.
chanrobleslaw
WHEREFORE, premises considered, the instant petition is hereby GRANTED. The Decision dated
June 15, 2009 and Order dated August 25, 2009 of the Regional Trial Court of Makati City in Civil
Case No. 07-271 are REVERSED and SET ASIDE. The Order dated September 24, 2007 of the
Regional Trial Court of Makati City is hereby REINSTATED.

25.) G.R. No. 180076 November 21, 2012
DIONISIO MANANQUIL, LAUDENCIA MANANQUIL-VILLAMOR, ESTANISLAO MANANQUIL, and DIANITA

MANANQUIL-RABINO, represented by OTILLO RABINO, Petitioners,
vs.
ROBERTO MOICO, Respondent.**
DECISION
DEL CASTILLO, J.:
In order that an action for quieting of title may proper, it is essential that the plaintiff must have legal or equitable title
to, or interest in, the property which is the subject-matter of the action. Legal title denotes registered ownership,
while equitable title means beneficial ownership. In the absence of such legal or equitable title, or interest, there is
no cloud to be prevented or removed.
This Petition for Review on Certiorari assails the March 13, 2007 Decision of the Court of Appeals (CA) in CA-G.R.
1 2
CV No. 81229, which reversed and set aside the January 2, 2001 Decision of the Malabon Regional Trial Court,
3
Branch 74 in Civil Case No. 2741-MN, thus dismissing the said civil case for quieting of title.
Factual Antecedents
Lots 18 and 19 in Dagat-Dagatan, Navotas form part of the land previously expropriated by the National
Housing Authority (NHA) and placed under its Tondo Dagat-Dagatan Foreshore Development Project – where
occupants, applicants or beneficiaries may purchase lots on installment basis. In October 1984, Lot 18 was
awarded to spouses Iluminardo and Prescilla Mananquil under a Conditional Contract to Sell. Lot 19, on the
other hand, was sold to Prescilla in February 1980 by its occupant.
In 1991, Iluminardo and Prescilla died without issue, but it turned out that Prescilla had a child by a previous
marriage – namely Eulogio Francisco Maypa (Eulogio). After the spouses’ death, Iluminardo’s supposed heirs
(Mananquil heirs) – his brothers and sisters and herein petitioners Dionisio and Estanislao Mananquil
(Estanislao), Laudencia Mananquil-Villamor (Laudencia), and Dianita Mananquil-Rabino (Dianita) – executed
an Extrajudicial Settlement Among Heirs and adjudicated ownership over Lots 18 and 19 in favor of Dianita.
They took possession of Lots 18 and 19 and leased them out to third parties.
Sometime later, the Mananquil heirs discovered that in 1997, Eulogio and two others, Eulogio Baltazar Maypa
and Brenda Luminugue, on the claim that they are surviving heirs of Iluminardo and Prescilla, had executed
an Extrajudicial Settlement of Estate with Waiver of Rights and Sale, and a Deed of Absolute Sale in favor of
Roberto Moico (Moico).
In May 1997, Moico began evicting the Mananquils’ tenants and demolishing the structures they built on Lots 18 and
19. In June, the Mananquils instituted Civil Case No. 2741-MN for quieting of title and injunctive relief.
Ruling of the Regional Trial Court
The trial court issued a temporary restraining order, thus suspending eviction and demolition. After trial on the
merits, a Decision was rendered in favor of the Mananquils. The dispositive portion thereof reads:
WHEREFORE, premises considered, judgment is hereby rendered:
1. Ordering that a permanent injunction be issued enjoining defendant Roberto Moico to refrain from
threatening the tenants and destroying the improvements standing on the subject properties and from filing
the ejectment suits against the tenants;

2. Ordering the Extrajudicial Settlement of Estate with Waiver of Rights and Sale and the Deed of Absolute
Sale dated January 9, 1997 cancelled for having no force and effect;
3. Declaring plaintiffs to be rightfully entitled to the subject properties and the Extrajudicial Settlement of
Heirs of the plaintiffs to be valid and enforceable;
4. Ordering defendants to pay jointly and severally the plaintiffs the following, to wit:
a. P50,000.00 as moral damages;
b. P50,000.00 as exemplary damages;
c. P50,000.00 for and as attorney’s fees; and
d. Costs of suit.
SO ORDERED. 4
Ruling of the Court of Appeals
Moico appealed to the CA, which reversed the trial court. It held that the petitioners have failed to show that
Iluminardo and Prescilla have –
x x x perfected their grant/award from the NHA so as to secure a firm, perfect and confirmed title over the subject
lots. It must be stressed that the Conditional Contract to Sell that covers Lot No. 18 stipulates several terms and
conditions before a grantee of the NHA may legally acquire perfect title over the land, and there should be no
mistake that the same stipulations hold true with respect to Lot No. 19. Inter alia, the more vital contractual
conditions, are: (a) payment in installment of the price for a specified period, (b) personal use of and benefit to the
land by the grantee, and (c) explicit prohibition from selling, assigning, encumbering, mortgaging, leasing, or sub-
leasing the property awarded x x x. 5
The CA noted that Lots 18 and 19 must still belong to the NHA, in the absence of proof that Iluminardo and Prescilla
have completed installment payments thereon, or were awarded titles to the lots. And if the couple disposed of
these lots even before title could be issued in their name, then they may have been guilty of violating conditions of
the government grant, thus disqualifying them from the NHA program. Consequently, there is no right in respect to
these properties that the Mananquils may succeed to. If this is the case, then no suit for quieting of title could
prosper, for lack of legal or equitable title to or interest in Lots 18 and 19.
Issues
The present recourse thus raises the following issues for the Court’s resolution:
THE COURT OF APPEALS GRAVELY ERRED IN PASSING UPON AN ISSUE NOT BEING ASSIGNED
AS ERROR IN THE APPELLANTS’ BRIEF OF PRIVATE RESPONDENTS AND NOT TOUCHED UPON
DURING THE TRIAL IN THE COURT A QUO PARTICULARLY THE ALLEGED VIOLATION OF THE
SPOUSES ILUMINARDO AND PRESCILLA MANANQUIL OF THE CONDITIONAL CONTRACT TO SELL
PURPORTEDLY COVERING THE PROPERTIES IN QUESTION, TO SUIT ITS RATIONALIZATION IN ITS
QUESTIONED DECISION JUSTIFYING THE REVERSAL OF THE DECISION OF THE COURT A QUO.
II
THE COURT OF APPEALS ALSO COMMITTED A GRIEVOUS ERROR IN CONSTRUING THE

PROVISIONS OF ARTICLES 476 AND 477 OF THE CIVIL CODE AGAINST PETITIONERS

NOTWITHSTANDING THE POSITIVE CIRCUMSTANCES OBTAINING IN THIS CASE POINTING TO THE
PROPRIETY OF THE CAUSE OF ACTION FOR QUIETING OF TITLE. 6
Petitioners’ Arguments
Petitioners argue that the CA cannot touch upon matters not raised as issues in the trial court, stressing that the
NHA did not even intervene during the proceedings below to ventilate issues relating to the rights of the parties to
Lots 18 and 19 under the Tondo Dagat-Dagatan Foreshore Development Project. Petitioners claim that since the
issue of violation of the terms of the grant may be resolved in a separate forum between the Mananquils and the
NHA, it was improper for the CA to have pre-empted the issue.
On quieting of title, petitioners advance the view that since they are the legal heirs of Iluminardo Mananquil, then
they possess the requisite legal or equitable title or interest in Lots 18 and 19, which thus permits them to pursue
Civil Case No. 2741-MN; whatever rights Iluminardo had over the lots were transmitted to them from the moment of
his death, per Article 777 of the Civil Code. And among these rights are the rights to continue with the amortizations
covering Lots 18 and 19, as well as to use and occupy the same; their interest as successors-in-interest, though
imperfect, is enough to warrant the filing of a case for quieting of title to protect these rights.
Respondent Moico’s Arguments
Moico, on the other hand, argues that because the issue relating to Iluminardo and Prescilla’s possible violation of
the terms and conditions of the NHA grant is closely related to the issue of ownership and possession over
Lots 18 and 19, then the CA possessed jurisdiction to pass upon it.
Moico supports the CA view that petitioners failed to prove their title or interest in the subject properties, just as he
has proved below that it was his predecessor, Eulogio, who paid all obligations relative to Lots 18 and 19 due and
owing to the NHA, for which reason the NHA released and cleared the lots and thus paved the way for their proper
transfer to him.
Our Ruling
The petition lacks merit.
An action for quieting of title is essentially a common law remedy grounded on equity. The competent court is
1âwphi1
tasked to determine the respective rights of the complainant and other claimants, not only to place things in their
proper place, to make the one who has no rights to said immovable respect and not disturb the other, but also for
the benefit of both, so that he who has the right would see every cloud of doubt over the property dissipated, and he
could afterwards without fear introduce the improvements he may desire, to use, and even to abuse the property as
he deems best. But "for an action to quiet title to prosper, two indispensable requisites must concur, namely: (1) the
plaintiff or complainant has a legal or an equitable title to or interest in the real property subject of the action; and (2)
the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be shown to be in fact
invalid or inoperative despite its prima facie appearance of validity or legal efficacy." 7
Contrary to petitioners’ stand, the issue relating to the grant of rights, title or award by the NHA determines
whether the case for quieting of title may be maintained. If the petitioners are legitimate successors to or
beneficiaries of Iluminardo upon his death – under the certificate of title, award, or grant, or under the special law or
specific terms of the NHA program/project – then they possess the requisite interest to maintain suit; if not, then Civil
Case No. 2741-MN must necessarily be dismissed.
From the evidence adduced below, it appears that the petitioners have failed to show their qualifications or
right to succeed Iluminardo in his rights under the NHA program/project. They failed to present any title,
award, grant, document or certification from the NHA or proper government agency which would show that
Iluminardo and Prescilla have become the registered owners/beneficiaries/ awardees of Lots 18 and 19, or
that petitioners are qualified successors or beneficiaries under the Dagat-Dagatan program/project, taking
over Iluminardo’s rights after his death. They did not call to the witness stand competent witnesses from the NHA
who can attest to their rights as successors to or beneficiaries of Lots 18 and 19. They failed to present proof, at the

very least, of the specific law, provisions, or terms that govern the Tondo Dagat-Dagatan Foreshore Development
Project which would indicate a modicum of interest on their part. For this reason, their rights or interest in the
property could not be established.
It was erroneous, however, for the CA to assume that Iluminardo and Prescilla may have violated the conditions of
the NHA grant under the Tondo Dagat-Dagatan Foreshore Development Project by transferring their rights prior to
the issuance of a title or certificate awarding Lots 18 and 19 to them. In the absence of proof, a ruling to this effect is
speculative. Instead, in resolving the case, the trial court – and the CA on appeal – should have required proof that
petitioners had, either: 1) a certificate of title, award, or grant from the proper agency (NHA or otherwise) in the
name of their predecessor Iluminardo, or, in the absence thereof, 2) a right to succeed to Iluminardo’s rights to Lots
18 and 19, not only as his heirs, but also as qualified legitimate successors/beneficiaries under the Tondo Dagat-
Dagatan Foreshore Development Project terms and conditions as taken over by the NHA. Petitioners should have
8
shown, to the satisfaction of the courts that under the NHA program project governing the grant of Lots 18 and 19,
they are entitled and qualified to succeed or substitute for Iluminardo in his rights upon his death. As earlier stated,
this takes the form of evidence apart from proof of heirship, of course – of the specific law, regulation or terms
covering the program/project which allows for a substitution or succession of rights in case of death; the certificate of
title, award or grant itself; or the testimony of competent witnesses from the NHA.
Proof of heirship alone does not suffice; the Mananquils must prove to the satisfaction of the courts that they have a
right to succeed Iluminardo under the law or terms of the NHA project, and are not disqualified by non-payment,
prohibition, lack of qualifications, or otherwise.
WHEREFORE, premises considered, the Petition is DENIED for lack of merit. The March 13, 2007 Decision of the
Court of Appeals in CA-G.R. CV No. 81229 is AFFIRMED.

26.) G.R. No. 154262, February 11, 2015
HERMINIO M. DE GUZMAN, FOR HIMSELF AND AS ATTORNEY-IN-FACT OF: NILO M. DE

GUZMAN, ANGELINO DE GUZMAN, JOSEFINO M. DE GUZMAN, ESTRELLA M. DE GUZMAN,
TERESITA DE GUZMAN, ELSA MARGARITA M. DE GUZMAN, EVELYN M. DE GUZMAN, MA.
NIMIA M. DE GUZMAN, ANTOLIN M. DE GUZMAN, AND FERDINAND M. DE
GUZMAN, Petitioners, v. TABANGAO REALTY INCORPORATED, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure filed by
petitioners Herminio M. de Guzman (Herminio), Nilo M. de Guzman, Angelino de Guzman, Josefino M.
de Guzman, Estrella M. de Guzman, Teresita de Guzman, Elsa Margarita M. de Guzman, Evelyn M. de
Guzman, Ma. Nimia M. de Guzman, Antolin M. de Guzman, and Ferdinand M. de Guzman,
challenging, based on pure questions of law, the (a) Order 1 dated March 4, 2002 of the Regional Trial
Court (RTC), Branch 23, of Trece Martires City, in Civil Case No. TM-1118, which granted the Motion
to Dismiss filed by respondent Tabangao Realty, Inc.; and (b) Order 2 dated May 21, 2002 of the
same court in said case, which denied petitioners’ Motion for Reconsideration of the earlier Order.
The instant Petition arose from the following facts:
Sometime in 1980, Serafin de Guzman (Serafin) and Josefino de Guzman 3 (Josefino) applied for, and
were granted, authority to distribute oil and lubricating products manufactured and marketed by
Filipinas Shell Petroleum Corporation (FSPC). In the course of their business, Serafin and Josefino
purchased on credit oil and lubricating products from FSPC, but they eventually failed to pay for their
credit purchases from FSPC. Thus, FSPC filed before the RTC of Manila a complaint for sum of money
against Serafin and Josefino, docketed as Civil Case No. 120680. After trial, RTC-Manila rendered
judgment ordering Serafin and Josefino to pay their outstanding obligations to FSPC. Since Serafin
and Josefino no longer appealed, the judgment of RTC-Manila in Civil Case No. 120680 became final
and executory. RTC-Manila granted the motion of FSPC and ordered the issuance of a writ of
execution on May 3, 1983. On June 30, 1983, FSPC levied upon a parcel of land, with an area of
74,415 square meters, situated in Sta. Cruz de Malabon, Trece Martires City, Cavite Province (subject
property), covered by Transfer Certificate of Title (TCT) No. 3531 in the name of spouses Serafin and
Amelia de Guzman (spouses De Guzman). According to the Sheriff’s Certificate of Sale dated
February 4, 1988, the subject property was sold, after due publication and notice, at a public auction,
in favor of respondent, which gave the highest bid of P70,000.00. The Sheriff’s Certificate of Sale was
annotated on TCT No. 3531 on April 13, 1988. The spouses De Guzman did not redeem the subject
property within one year from registration of the Sherifff’s Certificate of Sale on TCT No. 3531.
On October 19, 2001, petitioners filed a Complaint for quieting of title against respondent
before RTC-Trece Martires, docketed as Civil Case No. TM-1118. Petitioners alleged in their
Complaint that:
1. They are of legal age, Filipinos and represented herein by their attorney-in-fact, [co-petitioner]
HERMINIO M. DE GUZMAN x x x.
xxxx
3. [Petitioners] are the children and only heirs of the spouses Serafin and Amelia de Guzman who
died both intestate on April 23, 2001 and January 01, 1997.

4. The spouses were the owners of a parcel of land situated at Sta. Cruz de Malabon, Trece Martires
City, Cavite Province, with area of 74,415 square meters covered by Transfer Certificate of Title No.
T-3531 (T-95734), a copy is attached as Annex “A.”
5. [Petitioners] inherited the property by intestate succession upon the death of their parents. They
are now therefore its owners and are the ones in possession of the property.
6. Annotated on [petitioners’] TCT No. 3531 (T-95734) in the name of their deceased parents are the
following entries of encumbrances, to wit:
a. Entry No. 8616-23 (sic) – Execution - Covering the parcel of land described in the title, as per
Execution: entitled FILIPINAS SHELL PETROLEUM [CORP.], Plaintiff vs. SERAFIN & JOSEFINO
DE GUZMAN, ET AL., Defendants, issued by the Regional Trial Court of Manila, National Capital
Judicial Region, on file in this Registry. Date of Inscription (sic) - May 3, 1983; Date of
Inscription - July 01, 1983.
b. Entry No. 8619-23 - Notice of Levy - Covering the parcel of land described in this title, as per
Notice of Levy: entitled FILIPINAS SHELL PETROLEUM CORP. vs. SERAFIN & JOSEFINO DE
GUZMAN, ET AL., Defendants, under Civil Case No. 120680 of the Regional Trial Court of
Manila, Br. XX, copy on file in this Registry. Date of instrument - June 30, 1983. Date of
Inscription - July 01, 1983.
c. Entry No. 1487 - Certificate of Sale - In favor of TABANGAO REALTY INCORPORATED -

Covering the parcel of land described in this title, by virtue of the sheriff’s certificate of sale
exec. by Jose R. Bawalan, Clerk of Court & Ex-Officio Sheriff of Cavite and approved by
PROCESO P. SILANGCRUZ, acting etc. Judge of Branch 23, TMC. Date of instrument - Feb. 4,
1988. Date of Inscription - April 13, 1988.
d. Entry No. 1488 - BIR certification - In favor of TABANGAO REALTY INCORPORATED - That
SERAFIN DE GUZMAN as per certification issued by the BIR. Date of instrument - April 13,
1988. Date of Inscription - April 13, 1988.
7. The foregoing entries/encumbrances are apparently valid and subsisting but in fact and in law,
they are void and ineffective or otherwise had been terminated and extinguished or barred by
prescription, estoppel and laches.
8. Specifically, the Certificate of Sale, annotated on TCT No. 3531 (T-95734) as Entry No. 1487,
which supposedly emanated from the Execution (Entry No. 8616-23 [sic]) and Notice of Levy (Entry
No. 8619-23) is void for the following reasons:
a. The Sheriff’s Certificate of Sale dated February 4, 1988 (copy is attached as Annex “B”) recites
that “on June 30, 1983 LEVY was made upon the right, titles, interests and participation of
defendants SERAFIN and JOSEFINO DE GUZMAN and sold at public auction sale in front of the Capitol
Building of Cavite situated at Trece Martires City, after due publication of the Sheriff’s Sale in the
Record Newsweekly, and after the Notice of Sheriff’s Sale was posted in three (3) conspicuous places
and later sold in favor of Tabangao Realty Incorporated, x x x as the highest bidder for the amount of
SEVENTY THOUSAND PESOS (P70,000) Philippine Currency, x x x
xxxx
The truth is there was no such Sheriff’s Sale conducted on June 30, 1983 and it was legally
impossible to do the levy and execution sale on the same date.
b. Assuming an execution sale was indeed conducted on any other date the same was void for lack of
the required notice and publication.
c. Assuming an execution sale was indeed conducted with due notice and publication, still
[respondent’s] acquisition was void because [respondent] was not and up to now is not capacitated
to own and acquire agricultural land and its aggregate area of landholding exceeds the retention limit
fixed by law. Being legally incapacitated to own this agricultural land the execution of the Certificate
of Sale in its favor was void and did not create any legal effect.
9. Assuming there was a valid execution sale conducted, the Sheriff’s Certificate of Sale has lost its
effectivity as it had been terminated and extinguished by prescription, laches and estoppel, more
than 13 years having elapsed from its registration on 13 April 1988 without the buyer, [respondent]
herein, taking any step to consolidate its ownership and/or take possession of the property. In the
meantime [petitioners] and their predecessors have introduced on the land improvements of
considerable value and are the ones paying the real property taxes and performing all the tasks and
paying all the expenses of preserving the land and protecting it from intruders.
10. Assuming there was a valid execution sale executed, [respondent] is guilty of fraud and bad
faith in suspending indefinitely the consolidation of title in its name. Its motive is to conceal its
acquisition of the land from the public and the government, particularly the Department of Agrarian
Reform, and project in the public records the [petitioners’] title, who are otherwise qualified under
the law to retain it, and thereby evade its obligation to strip itself of this landholding within the
period required by law and thus indefinitely keep the land away from the coverage of agrarian reform
laws. Being guilty of fraud and bad faith [respondent] cannot under the principle of “in pari
delicto” recover the land from the [petitioners], especially after the lapse of an unreasonably long
period of time. Or at the very least, because of its guilt, [respondent] should not be allowed to deny
the [petitioners] the right to redeem the land by paying the amount of P70,000.00 and the legal
interest from its purchase.
11. No valid execution sale having been conducted within the ten[-]year period from the finality of
the judgment against Serafin and Josefino de Guzman in the case mentioned being executed, the
writ of execution (Entry No. 8618-23) and Notice of Levy (Entry No. 8619-23) are now ineffective,
having been terminated and extinguished by [the] lapse of more than eighteen (18) years from the
date they were taken or annotated on July 1, 1983. The judgment itself sought to be executed had
prescribed.
12. The existence of the Sheriff’s Certificate of Sale and the continued annotation of the above-cited
encumbrances on TCT No. T-3531 (T-95734) cast a cloud on and are prejudicial to [petitioners’] title
and are one of those which the law allows to be removed in order to quiet [petitioners’] title. 4
At the end of their Complaint, petitioners prayed for judgment:
a. Declaring the Sheriff’s Certificate of Sale (Annex “B”), its entry as well as the entries of execution
and notice of levy and BIR Certification on TCT No. T-3531 (T-95734) and all the claims of the
[respondent] against the land by virtue of these documents void or as already ineffective or
terminated and extinguished by prescription, laches and estoppel;
b. Ordering the Register of Deeds of Trece Martires City to cancel the annotations of Entries Nos.
8618-28, 8619-23, 1487, and 1488 on TCT No. T-3531 (T-95734).
c. Or otherwise allowing the [petitioners] to exercise their right of redemption within a certain period
and compelling the [respondent] to accept from the [petitioners] the amount of P70,000.00 and its
legal interest since April 1988 as redemption price.
d. Granting the [petitioners] other just and equitable reliefs. 5
Respondent filed a Motion for Extension of Time to File Answer, which the RTC granted in an Order
dated January 4, 2002. However, instead of filing an answer, respondent filed a Motion to Dismiss
based on two grounds: (a) the Complaint failed to comply with the requirements on certification
against forum shopping; and (b) the Complaint failed to state a cause of action.
Respondent averred that the Certification against Forum Shopping attached to the Complaint did not
comply with the mandatory requirements set forth in Rule 7, Section 5 of the 1997 Rules of Court.
Assuming that all petitioners are indeed the children and only heirs of the spouses De Guzman who
inherited the subject property by intestate succession, as alleged in the Complaint, then all 11
petitioners should have executed the Certification against Forum Shopping, but only Herminio signed
said Certification. Since it was not indicated in the Certification that Herminio was authorized by his
co-petitioners to execute the same on their behalf, then the said Certification was Herminio’s sole
act.
Respondent also argued that the Complaint did not state any cause of action. Petitioners did not have
any existing right or interest over the subject property as to entitle them to the relief prayed for in
the Complaint. The subject property had long been levied upon and sold to respondent at an
execution sale. The only remaining right of petitioners’ predecessors-in-interest over the subject
property was the right to redeem the same within a period of one year from the date of registration
of the Sheriff’s Certificate of Sale with the Registry of Deeds on April 13, 1988. When petitioners’
predecessors-in-interest failed to redeem the subject property within the one-year period, they were
divested of their rights, title, and interest over the subject property, which were then acquired by
respondent. Respondent further asserted that its acquisition of the subject property at the execution
sale conducted on June 30, 1983 was valid and legal; a civil action to consolidate ownership was not
necessary before title to the subject property completely vested in respondent; the real right of
respondent over the subject property would prescribe only after thirty years; there were no legal
and/or factual bases for petitioners’ contention that respondent was incapacitated to acquire and own
the subject property; and the RTC had no jurisdiction over issues involving land reform.
In their Opposition (To Motion To Dismiss), petitioners countered that there was no more need for all
of them to execute and sign the Certification against Forum Shopping. The first paragraph of the
Complaint already stated that petitioners were represented by their attorney-in-fact. Petitioners also
attached a Special Power of Attorney in which the other petitioners gave their co-petitioner Herminio
the authority to sue and be sued for the recovery of and/or protection of their title, rights, and
interests over all the properties left by their deceased parents, the spouses De Guzman. The
delegation by the other petitioners to their co-petitioner Herminio of the authority to sue and be sued
necessarily included the authority to sign the Certification against Forum Shopping integrated in the
Complaint. In addition, petitioners contended that instead of taking off from a hypothetical admission
of the basic allegations in their Complaint, the Motion to Dismiss of respondent proceeded from a
refutation of those allegations. Respondent’s arguments had no place in a motion to dismiss
predicated on the supposed failure of the complaint to state a cause of action, if only for the simple
reason that they controvert rather than admit the basic allegations of the Complaint and offer new
allegations the truth of which could be determined only after the parties have presented their
respective evidence. Lastly, the issue raised in the Complaint was not the right of retention of
respondent, but the validity of the Sheriff’s Certificate of Sale. There was no tenancy relationship or
agrarian dispute between the parties over which the Department of Agrarian Reform Arbitration
Board had jurisdiction.
On March 4, 2002, RTC-Trece Martires issued an Order, ruling in this wise:
It appearing from the Sheriff’s Certificate of Sale (Annex “B” of the Complaint) dated February 4,
1988 that proper steps had been undertaken thereto prior to issuance of such document (Annex “B”
of the Complaint), i.e., on June 30, 1983 a levy (Entry No. 8619-23-Notice of Levy, dorsal portion,
Annex “A” of the Complaint) was conducted as a preliminary step prior to satisfaction of judgment
rendered in favor of Filipinas Shell Petroleum Corp. in a civil case the latter filed against [petitioners’]
predecessors-in-interest; that due publication of the Sheriff’s Sale was executed in the Record
Newsweekly together with the posting of the Notice of Sheriff’s Sale in 3 conspicuous places. After
substantial compliance with the notice and publication requirements as provided for by law,
particularly Rule 39, Sec. 15, of the Revised Rules of Court, an execution sale was conducted on the
subject property in favor of [respondent] herein Tabangao Realty Incorporated, thenceforth the
questioned Sheriff’s Certificate of Sale (Entry No. 1487, Certificate of Sale, Annex “A,” of the
Complaint) dated February 4, 1988 is valid, and its subsequent registration with the Registry of
Deeds on April 13, 1988 and the failure of the [petitioners’] predecessors-in-interest to redeem the
property within the one year period from the date of registration of the Sheriff’s Certificate of Sale,
pursuant to Rule 39, Section 33 of the Revised Rules of Court, purchaser-[respondent] herein,
Tabangao Realty shall be substituted to and acquires all the rights, title, interest and claim over the
subject property, regardless of the fact that [respondent] had not taken any steps to consolidate its
ownership and/or take possession of the property hereof, subject of this litigation, against
[petitioners] in this case.
Considering all matters in their respective pleadings, both the Motion to Dismiss as well as the
Opposition thus filed, the Court is of the opinion and so holds that the Certificate of Sale remains
valid and that Tabangao Realty’s right has not yet prescribed as provided for in Art. 1141 of the New
Civil Code, thus, the Opposition (To Motion to Dismiss) is hereby denied.
Accordingly, finding merit in the Motion to Dismiss filed by [respondent] Tabangao Realty, Inc.,
herein, this case is hereby dismissed. No costs.6
Petitioners filed a Motion for Reconsideration of the foregoing Order, but RTC-Trece Martires denied
the Motion in an Order dated May 21, 2002.
Hence, petitioners directly seek recourse from this Court through the Petition at bar, assailing the
Orders dated March 4, 2002 and May 21, 2002 of RTC-Trece Martires in Civil Case No. TM-1118 on
pure questions of law, viz:
4.3. Foremost among the questions of law that this petition raises is what rule governs the
prescriptive period for a buyer in execution sale to demand or compel the Sheriff to execute and
deliver to him the final deed of conveyance in order that it may consolidate its title. Should it be
Article 1141 which provides for thirty (30) years within which to bring real actions (as the court a
quo has concluded), or should it be either Article 1149 (five years in cases where the Code or the law
is silent); or Article 1144 (ten years in obligations created by law), as suggested by the petitioners.
4.4. Another question to be raise[d] is whether Sec. 33 (par. 2), Rule 39 of the 1997 Rules of Civil
Procedure can be given retroactive effect in this case. As can be seen, the rights of the respondent
over the property as buyer in execution sale should not be governed by Sec. 33 (2nd paragraph),
Rule 39 of the 1997 Rules of Civil Procedure but by the old Sec. 35, Rule 39 of the Rules of Court
which was the law in force at the time of the execution sale and expiration of the period of
redemption. This issue is very pivotal in determining the conflicting claims of the parties. Because
whereas in the 1997 Rules the buyer in execution sale acquires all the rights of judgment debtor in
the property automatically upon the lapse of the period of redemption under old Rules of Court, the
buyer in execution sale acquires the right of the owner only upon the execution and delivery of the
final deed of conveyance. Hence, if this is the rule applicable – as petitioners will show – then
respondent has up to now not acquired right on the property and could not now assert any right
based on the Certificate of Sale by reason of prescription.
4.5. In effect this petition will also raise the constitutionality of the amendment introduced [b]y the
1997 Rules of Civil Procedure to 2nd paragraph of Sec. 35 of Rule 39 of the Old Rules of Court. To
petitioners’ mind the subject of the amendment deals with substantive rights.
4.6. Finally, this petition shall raise the very basic question of whether or not the allegations of the
petitioners’ complaint in the court below are sufficient to constitute a cause of action. 7
Ultimately, at the crux of the present Petition is the question of whether or not RTC-Trece Martires
committed reversible error in dismissing petitioners’ Complaint for Quieting of Title on the ground of
failure to state a cause of action.
The Court rules in the negative.
In Baricuatro, Jr. v. Court of Appeals,8 the Court described the nature of an action for quieting of
title, thus:
Regarding the nature of the action filed before the trial court, quieting of title is a common law
remedy for the removal of any cloud upon or doubt or uncertainty with respect to title to real
property. Originating in equity jurisprudence, its purpose is to secure “x x x an adjudication that a
claim of title to or an interest in property, adverse to that of the complainant, is invalid, so that the
complainant and those claiming under him may be forever afterward free from any danger of hostile
claim.” In an action for quieting of title, the competent court is tasked to determine the respective
rights of the complainant and other claimants, “x x x not only to place things in their proper place, to
make the one who has no rights to said immovable respect and not disturb the other, but also for
the benefit of both, so that he who has the right would see every cloud of doubt over the property
dissipated, and he could afterwards without fear introduce the improvements he may desire, to use,
and even to abuse the property as he deems best x x x.” (Citation omitted.)”
Under the Civil Code, the remedy may be availed of under the following circumstances:
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.
Art. 478. There may also be an action to quiet title or remove a cloud therefrom when the contract,
instrument or other obligation has been extinguished or has terminated, or has been barred by
extinctive prescription.
Article 477 of the Civil Code further provides that the plaintiff in an action to quiet title must have
legal or equitable title to or interest in the real property, which is the subject matter of the action,
but need not be in possession of said property.
For an action to quiet title to prosper, two indispensable requisites must concur: (1) the plaintiff or
complainant has a legal or equitable title or interest in the real property subject of the action; and
(2) the deed, claim, encumbrance, or proceeding claimed to be casting a cloud on his title must be
shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal
efficacy.9
Petitioners’ Complaint in Civil Case No. TM-1118 failed to allege these two requisites for an action to
quiet title.
Petitioners alleged in their Complaint that they were the children and only heirs of the deceased
spouses De Guzman and that the subject property was still registered in spouses De Guzman’s
names under TCT No. 3531. However, these allegations are insufficient to establish petitioners’ title
to the subject property.
It is worthy to note that petitioners also alleged in their Complaint that TCT No. 3531 bears the
following annotations: (1) the writ of execution dated May 3, 1983 issued by RTC-Manila in Civil Case
No. 120680, inscribed on said certificate of title on July 1, 1983; (2) Notice of Levy dated June 30,
1983 issued in the same case, inscribed on July 1, 1983; (3) Sheriff’s Certificate of Sale dated
February 4, 1988 in favor of respondent covering the subject property, inscribed on April 13, 1988;
and (4) BIR Certification dated April 13, 1988 stating that respondent paid taxes on the sale,
inscribed on April 13, 1988. Petitioners attached to the Complaint copies of TCT No. 3531 with the
aforementioned annotations; and the Sheriff’s Certificate of Sale dated February 4, 1988 which
stated that the subject property was levied upon and sold in an execution sale to respondent for
P70,000.00.
Equally notable is the absence of any allegation in the Complaint that Serafin and/or Josefino, as the
judgment obligors in Civil Case No. 120680, or their successors-in-interest, redeemed the subject
property from respondent within the one-year redemption period, which, reckoned from the date of
registration of the Sheriff’s Certificate of Sale on TCT No. 3531 on April 13, 1988, expired on April 13,
1989.
It must be remembered that the period of redemption is not a prescriptive period but a condition
precedent provided by law to restrict the right of the person exercising redemption. 10 If no
redemption is made in the manner and within the period prescribed, Rule 39, Section 33 of the 1997
Rules of Court, as amended, provides:
SEC. 33. Deed and possession to be given at expiration of redemption period; by whom executed or
given. – If no redemption be made within one (1) year from the date of the registration of the
certificate of sale, the purchaser is entitled to a conveyance and possession of the property; or, if so
redeemed whenever sixty (60) days have elapsed and no other redemption has expired, the last
redemptioner is entitled to the conveyance and possession; but in all cases the judgment obligor
shall have the entire period of one (1) year from the date of the registration of the sale to redeem
the property. The deed shall be executed by the officer making the sale or by his successor in office,
and in the latter case shall have the same validity as though the officer making the sale had
continued in office and executed it.
Upon the expiration of the right of redemption, the purchaser or redemptioner shall be
substituted to and acquire all the rights, title, interest and claim of the judgment obligor to
the property as of the time of the levy. The possession of the property shall be given to the
purchaser or last redemptioner by the same officer unless a third party is actually holding the
property adversely to the judgment obligor. (Emphasis supplied.)
Based on the allegations in the Complaint and the applicable rules, respondent was already
substituted to and acquired all the rights, title, interest, and claim of the Spouses De Guzman to the
subject property on April 13, 1989, when the one-year redemption period expired. Upon the deaths
of Amelia de Guzman on January 1, 1997 and her husband Serafin de Guzman on April 23, 2001,
they had no more rights, title, interest, and claim to the subject property to pass on by succession to
petitioners as their heirs.
Petitioners, though, insist that Rule 39, Section 33 of the 1997 Rules of Court should not be applied
retroactively. According to petitioners, when the execution sale was purportedly conducted in 1988
and the redemption period expired in 1989, it was Rule 39, Section 35 of the 1964 Rules of Court
which was in effect, and it read:
Sec. 35. Deed and possession to be given at expiration of redemption period. By whom executed or
given.— If no redemption be made within twelve (12) months after the sale, the purchaser, or his
assignee, is entitled to a conveyance and possession of the property; or, if so redeemed whenever
sixty (60) days have elapsed and no other redemption has been made and notice thereof given, and
the time for redemption has expired, the last redemptioner, or his assignee, is entitled to the
conveyance and possession; but in all cases the judgment debtor shall have the entire period of
twelve (12) months from the date of the sale to redeem the property. The deed shall be executed by
the officer making the sale or by his successor in office, and in the latter case shall have the same
validity as though the officer making the sale had continued in office and executed it.
Upon the execution and delivery of said deed the purchaser, or redemptioner, or his
assignee, shall be substituted to and acquire all the right, title, interest and claim of the
judgment debtor to the property as of the time of the levy, except as against the judgment
debtor in possession, in which case the substitution shall be effective as of the date of the
deed. The possession of the property shall be given to the purchaser or last redemptioner by the
same officer unless a third party is actually holding the property adversely to the judgment debtor.
(Emphasis supplied.)
Under the 1964 Rules of Court, the purchaser, or redemptioner, or his assignee, shall be substituted
to and acquire all the rights, title, interest, and claim of the judgment debtor to the property only
after execution and delivery of the deed of conveyance. Petitioners point out that respondent has yet
to secure such a deed.
The issue of the retroactive application of procedural rules is not novel and had been squarely
addressed by the Court in Calacala v. Republic of the Philippines,11 as follows:
To start with, petitioners base their claim of legal title not on the strength of any independent writing
in their favor but simply and solely on respondent Republic’s failure to secure the Certificate of Final
Sale, execute an Affidavit of Consolidation of Ownership and obtain a writ of possession over the
property in dispute within ten (10) years from the registration of the Certificate of Sale.
Petitioners’ reliance on the foregoing shortcomings or inactions of respondent Republic cannot stand.
For one, it bears stressing that petitioners’ predecessors-in-interest lost whatever right they had over
land in question from the very moment they failed to redeem it during the 1-year period of
redemption. Certainly, the Republic’s failure to execute the acts referred to by the petitioners within
ten (10) years from the registration of the Certificate of Sale cannot, in any way, operate to restore
whatever rights petitioners’ predecessors-in-interest had over the same. For sure, petitioners have
yet to cite any provision of law or rule of jurisprudence, and we are not aware of any, to the effect
that the failure of a buyer in a foreclosure sale to secure a Certificate of Final Sale, execute an
Affidavit of Consolidation of Ownership and obtain a writ of possession over the property thus
acquired, within ten (10) years from the registration of the Certificate of Sale will operate to bring
ownership back to him whose property has been previously foreclosed and sold. x x x.
Quite the contrary, Section 33, Rule 39 of the 1997 Rules of Civil Procedure explicitly provides that
“[u]pon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted
to and acquire all the rights, title, interest and claim of the judgment obligor to the property as of the
time of the levy.”
Concededly, the 1997 Rules of Civil Procedure was yet inexistent when the facts of this case
transpired. Even then, the application thereof to this case is justified by our pronouncement
in Lascano vs. Universal Steel Smelting Co., Inc., et al., to wit:
Procedural laws are construed to be applicable to actions pending and undetermined at the time of
their passage, and are deemed retroactive in that sense and to that extent. As a general rule, the
retroactive application of procedural laws cannot be considered violative of any personal rights
because no vested right may attach to nor arise therefrom.
Moreover, with the rule that the expiration of the 1-year redemption period forecloses the obligor’s
right to redeem and that the sale thereby becomes absolute, the issuance thereafter of a final deed
of sale is at best a mere formality and mere confirmation of the title that is already vested in the
purchaser. As this Court has said in Manuel vs. Philippine National Bank, et al.:

Note must be taken of the fact that under the Rules of Court the expiration of that one-year period
forecloses the owner’s right to redeem, thus making the sheriff’s sale absolute. The issuance
thereafter of a final deed of sale becomes a mere formality, an act merely confirmatory of
the title that is already in the purchaser and constituting official evidence of that fact.
With the reality that petitioners are not holders of any legal title over the property subject of this
case and are bereft of any equitable claim thereon, the very first requisite of an action to quiet
title, i.e., that the plaintiff or complainant has a legal or an equitable title to or interest in the real
property subject matter of the action, is miserably wanting in this case. (Emphasis supplied, citations
omitted.)
Calacala thus settled that Rule 39, Section 33 of the 1997 Rules of Court can be applied retroactively
to cases still pending and undetermined at the time of its passage, 12 such as the present case. By
virtue of said provision, the expiration of the one-year redemption period foreclosed the right to
redeem of the spouses De Guzman (as well as petitioners, as their successors-in-interest) and the
sale of the subject property to respondent became absolute, so that the issuance thereafter of a final
deed of sale and/or conveyance is at best a mere formality and mere confirmation of the title that
was already vested in respondent.
The allegations in petitioners’ Complaint also do not support the second requisite for an action to
quiet title, i.e., that the deed, claim, encumbrance or proceeding alleged to cast cloud on a plaintiff's
title is in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy.
Petitioners argue that respondent, in filing a Motion to Dismiss the Complaint based on failure to
state a cause of action, was deemed to have admitted all the allegations in said Complaint, including
those under paragraphs 8 to 11, viz: that no execution sale was actually conducted on June 30, 1983
as it was legally impossible for the levy and execution sale to have been done on the same day; that
an execution sale conducted on any other date was void for lack of notice and publication; that an
execution sale with due notice and publication was still void because respondent was not capacitated
to acquire and own agricultural land with an area exceeding the retention limits set by law; that
assuming there was a valid execution sale conducted, the Sheriff’s Certificate of Sale had lost its
effectivity because of prescription, laches, and estoppel; that assuming there was a valid execution
sale conducted, respondent is guilty of fraud and bad faith in suspending indefinitely the
consolidation of the title in its name for the purpose of concealing the acquisition of the subject
property from the public and the government, more particularly, the Department of Agrarian Reform
(DAR); and that there being no valid execution sale conducted 10 years from finality of judgment in
Civil Case No. 120680, said judgment had already prescribed and the writ of execution and Notice of
Levy issued pursuant to the same had become ineffective. By these allegations, petitioners posit, the
Sheriff’s Certificate of Sale annotated on TCT No. 3531 is either void or ineffective, and constitutes a
cloud on their title to the subject property.
The Court is not persuaded.
While the general rule is that a motion to dismiss on the ground of failure to state a cause of action
in the complaint hypothetically admits the truth of the facts alleged therein, there are exceptions to
the general rule as explicated by the Court in Vergel de Dios v. Bristol Laboratories Phils., Inc.13:
Before discussing whether or not those allegations in the complaint referred to sufficiently state a
cause or causes of action, it may be well to state beforehand the rule, uniformly held by this Court,
that in order to sustain a dismissal on the ground that the complaint states no cause of action, the
insufficiency of the cause of action must appear on the face of the complaint, and the test of the
sufficiency of the facts alleged in the complaint to constitute a cause of action is whether or not,
admitting the facts alleged, the court could render a valid judgment upon the same in accordance
with the prayer of the complaint. For the purpose, the motion to dismiss must hypothetically admit
the truth of the facts alleged in the complaint. The admission, however, is limited only to all material
and relevant facts which are well pleaded in the complaint. Thus, it has been ruled that a demurrer
admits only such matters of fact as are sufficiently pleaded; that the demurrer does not admit the
truth of mere epithets charging fraud; nor allegations of legal conclusions; nor an erroneous
statement of law. The admission of the truth of material and relevant facts well pleaded does not
extend to render a demurrer an admission of inferences or conclusions drawn therefrom, even if
alleged in the pleading; nor mere inferences or conclusions from facts not stated; nor conclusions of
law; nor matters of evidence; nor surplusage and irrelevant matter. Examples of allegations
considered by this Court as conclusions of law are: that defendant had incurred damages as a
consequence of the “malicious and unjustified” institution of the action; that “with intent of
circumventing the constitutional prohibition that ‘no officer or employee in the civil service shall be
removed or suspended except for cause as provided by law,’ respondents “maliciously and illegally
for the purpose of political persecution and political vengeance, reverted the fund of the salary item x
x x and furthermore eliminated or abolished the said position effective July 1, 1960”; that the
“defendant usurped the office of Senator of the Philippines.” From American jurisprudence come the
following examples:
“Bare allegations in employee’s action for breach of employment contract that master had breached
or violated the contract or discharged him in a wrongful, illegal, unlawful, unjust, arbitrary or
fraudulent manner or without authority are compulsory and insufficient in absence of additional
allegations and raise no triable issue.” Wise vs. Southern Pacific Co., 35 Cal. Rptr. 652.
“Allegations that defendants acted maliciously and unreasonably were conclusionary.” Norkin vs. U.S.
Fire Ins. Co., 47 Cal. Rptr. 15.
“Allegations that acts of defendants are arbitrary, capricious, fraudulent, wrongful, and unlawful are
mere conclusions of law not admitted by demurrer.” Burt vs. Irvine Co., 47 Cal. Rptr. 362.
“A bare characterization in a petition of unlawfulness, is merely a legal conclusion and a wish of the
pleader, and such a legal conclusion unsubstantiated by facts which could give it life, has no standing
in any court where issues must be presented and determined by facts in ordinary and concise
language.” Petty vs. Dayton Musicians’ Ass’n., 153 NE2d 218, affirmed 153 NE2d 223.
“Where acts of defendants were described as willful, wanton and malicious and an abuse of process,
such descriptions were mere conclusions of the pleader and were not admitted by motion to dismiss.”
Burr vs. State Bank of St. Charles, 100 NE2d 773, 344 Ill. App. 332.
xxxx
As quoted above, paragraph 5 of the complaint avers that the “defendants actuated by ulterior
motives, contrary to law and morals, with abuse of their advantageous position as employers, in
gross and evident bad faith and without giving plaintiff Alfredo Vergel de Dios his due, willfully,
maliciously, unlawfully, and in a summary and arbitrary manner, dismissed said plaintiff Alfredo
Vergel de Dios by means of a libelous letter.” It further avers that the “charges and statements
mentioned in said letter are not true” and that the “defendants knowingly made the same in order to
justify their dismissal of Alfredo Vergel de Dios.” In the light of the examples cited above, the
allegations that the defendants-appellees were “actuated by ulterior motives, contrary to law and
morals, with abuse of their advantageous position as employers, in gross and evident bad faith and
without giving plaintiff Alfredo Vergel de Dios his due, willfully, maliciously, unlawfully, and in a
summary and arbitrary manner,” are conclusions of law, inferences from facts not alleged and
expressions of opinion unsupported by factual premises. For nowhere in the complaint can be found
any particular factual allegations as to the ulterior motives of the defendants-appellees; as to how
they abused their position as employer; as to how or why there was bad faith; and as to how plaintiff
Alfredo Vergel de Dios was deprived of his due. Likewise, the allegation characterizing the letter of
dismissal as a “libelous letter” is a conclusion of law without factual basis. And the allegations that
the “charges and statements mentioned in said letter are not true,” and that defendants “knowingly
made the same,” are legal conclusions or mere expressions of opinion, there being no factual
premises showing why the charges and statements in the letter are not true; nor is there stated any
particular fact or circumstance upon which the defendants-appellees’ knowledge of the falsity thereof
can be predicated.
Pursuant, therefore, to the rule stated above that conclusions of law, inferences or conclusions from
facts not stated, and mere expressions of opinion, are not deemed admitted by the motion to
dismiss, what should be deemed admitted in paragraph 5 of the complaint would be the bare
allegation that Alfredo Vergel de Dios was dismissed from employment on September 15, 1965, per
letter of dismissal of even date, a copy of which was attached to the complaint and made part thereof
as Annex “A”. At this juncture, it should be pointed out that the succeeding allegations of the
complaint are anchored on the allegations in paragraph 5, except the later part of paragraph 9
alleging refusal of the defendants-appellees to make an accounting of funds which allegation is an
inference from facts not alleged, there being no allegation in the pleading to the effect that any
amount is due the plaintiffs-appellants and that the amount is being withheld by the defendants-
appellees. Since the only fact alleged and deemed admitted by the motion to dismiss is that Alfredo
Vergel de Dios was dismissed from employment on September 15, 1965, the other allegations
premised on the allegations in paragraph 5 must be considered in that light alone.
Applying now the test of the sufficiency of the facts alleged to constitute a cause of action, can the
court render a valid judgment upon the facts alleged and deemed admitted, in accordance with the
prayer of the complaint? Certainly not, there being no alleged and admitted fact showing that the
defendants-appellees have committed acts constituting a “delict or wrong” by which the defendants-
appellees violated the right of the plaintiffs-appellants causing them loss or injury. Or more
specifically, there is no alleged and admitted fact that defendants-appellees fabricated a false ground
to dismiss Alfredo Vergel de Dios from employment, the admitted fact being that his dismissal was
for a just cause, as shown by the letter of dismissal, Annex “A” of the complaint. In this regard, while
the letter of dismissal is being attached to the complaint to show its existence and character, in the
absence of material facts well pleaded in the complaint and admitted, showing the nature of the
dismissal, the complaint should be read and interpreted with the aid of the exhibit, Annex “A”, which,
on its face, shows that the dismissal was for a just cause. (Citations omitted.)
Upon scrutiny, the allegations in paragraphs 8 to 11 of petitioners’ Complaint consisted of conclusions

of law; inferences or conclusions drawn from facts not alleged in the Complaint; expressions of
opinions unsupported by factual premises; and mere epithets charging fraud, which respondent was
not deemed to have admitted when it filed its Motion to Dismiss on the ground of failure to state a
cause of action.
In particular, petitioners’ allegation that no actual execution sale was conducted on June 30, 1983 or,
in the alternative, that the execution sale conducted on another date was void for not complying with
notice and publication requirements, was purely based on the following sentence in the Sheriff’s
Certificate of Sale:
[O]n June 30, 1983, LEVY was made upon the right, titles, interests and participation of defendants
SERAFIN & JOSEFINO DE GUZMAN and sold at public auction sale in front of the Capitol Building of
Cavite situated at Trece Martires City, after due publication of the Sheriff’s Sale in the Record
Newsweekly, and after the Notice of Sheriff’s Sale was posted in three (3) conspicuous places and
later sold in favor of Tabangao Realty Incorporated, with address at 4th Floor, Insular Life Bldg.,
Ayala Ave., Makati, Metro Manila as the highest bidder for the amount of SEVENTY THOUSAND
PESOS (P70,000.00) Philippine Currency, the properties of said defendants x x x. 14
Concededly, the aforequoted sentence, read as is, imply that the levy and execution sale of the
subject property both took place on June 30, 1983. However, the annotations on TCT No. 3531,
attached to petitioners’ Complaint, show that it was only the Notice of Levy which was executed on
June 30, 1983 and inscribed on the said certificate of title on July 1, 1983; while the Sheriff’s
Certificate of Sale, evidencing the execution sale itself, was subsequently executed almost five years
later on February 4, 1988 and inscribed on the certificate of title on April 13, 1988. In the regular
course of executing judgments, the levy upon the real property precedes the execution sale because
the latter can only take place after compliance with notice and publication requirements. The Court
stresses that the Sheriff’s Certificate of Sale had been executed and signed by Jose R. Bawalan, as
Clerk of Court and Ex-Officio Sheriff of Cavite, and approved by Acting Judge Proceso P. Silangcruz of
RTC-Trece Martires, who are both presumed to have regularly performed their official duties. The
validity of such Certificate cannot be so easily overcome by mere inferences from a lone sentence
that, unfortunately, was vaguely constructed or imprecisely worded, and unsupported by any factual
premise.
Equally unavailing is petitioners’ charge of bad faith and fraud on the part of respondent for delaying
the consolidation of title despite the expiration of the one-year redemption period in order to conceal
its purchase of the subject property from the DAR and evade the application of agrarian reform laws.
Not only was such charge consisted purely of petitioners’ opinions and conclusions of law and devoid
of any factual premise, it also pertained to purported actions of respondent subsequent to the
issuance of the Sheriff’s Certificate of Sale and would have no bearing on the validity or legal efficacy
of said Certificate.
Lastly, petitioners assert that because of respondent’s failure to secure a final deed of sale and/or
conveyance 13 years after registration of the Sheriff’s Certificate of Title on TCT No. 3531, the said
Certificate had lost its effectivity and was deemed terminated and extinguished by prescription,
laches, and estoppel. They also maintain that there being no valid execution sale, respondent had
likewise lost to prescription its right to have the judgment in Civil Case No. 120680 executed more
than 10 years from finality of the same.
There is no merit in petitioners’ arguments.
The Court reiterates that all rights, title, interest, and claim of the spouses De Guzman to the subject
property was already acquired by respondent upon the expiration of the one-year redemption period
without redemption being made. The execution of the final deed of sale and/or conveyance to
respondent is a mere formality and confirmation of the title already vested in respondent. Rule 39,
Section 33 of the 1997 Rules of Court states that “[t]he deed [of conveyance] shall be executed by
the officer making the sale or by his successor in office,” who, in the present case, is the Sheriff of
RTC-Trece Martires. There is nothing in the Rules requiring the institution of a separate action for
execution of such a deed, therefore, no prescriptive period for any action has begun to run.
Respondent will only have to seek recourse from the courts if the Sheriff refuses to execute the deed,
and only then will there be a cause of action for respondent to compel the Sheriff to execute the deed
and the prescriptive period for such an action begin to run.
Moreover, the Court, in Ching v. Family Savings Bank,15 granted the “Motion to Retrieve Records, for
Issuance of Final Deed of Conveyance, to Order the Register of Deeds of Makati City to Transfer Title
and For Writ of Possession” filed by Family Savings Bank, the highest bidder, even after more than
two decades since the levy and auction sale. The Court held that:
The arguments and contentions of the Spouses Ching cannot be upheld.
First, the Spouses Ching's reliance on prescription is unavailing in the case at bar. The Spouses Ching
are implying that the RTC violated Section 6, Rule 39 of the Rules of Court, viz.:
Sec. 6. Execution by motion or by independent action. – A final and executory judgment or order
may be executed on motion within five (5) years from the date of its entry. After the lapse of such
time, and before it is barred by the statute of limitations, a judgment may be enforced by action. The
revived judgment may also be enforced by motion within five (5) years from the date of its entry and
thereafter by action before it is barred by the statute of limitations.
However, it must be noted that contrary to their allegation, the summary judgment of the RTC in
Civil Case No. 142309 had in fact already been enforced. During the pendency of the case, the
subject property was already levied upon. Subsequently, after summary judgment and while the case
was on appeal, the RTC granted the Bank’s motion for execution pending appeal. Consequently, on
October 10, 1983, an auction sale of the subject property was conducted, with the Bank emerging as
the highest bidder. Later, a Certificate of Sale in its favor was executed by the Sheriff and,
thereafter, inscribed as a memorandum of encumbrance on TCT No. S-3151.
It is settled that execution is enforced by the fact of levy and sale. The result of such execution was
that title over the subject property was vested immediately in the purchaser subject only to the
Spouses Ching’s right to redeem the property within the period provided for by law. The right
acquired by the purchaser at an execution sale is inchoate and does not become absolute until after
the expiration of the redemption period without the right of redemption having been exercised. But
inchoate though it be, it is, like any other right, entitled to protection and must be respected until
extinguished by redemption. Since, the Spouses Ching failed to redeem the subject property within
the period allowed by law, they have been divested of their rights over the property.
Verily, the Bank’s “Motion to Retrieve Records, for Issuance of Final Deed of Conveyance, to Order
the Register of Deeds of Makati City to Transfer Title and for Writ of Possession” was merely a
consequence of the execution of the summary judgment as the judgment in Civil Case No. 142309
had already been enforced when the lot was levied upon and sold at public auction, with the Bank as
the highest bidder.16
Given that neither of the two requisites for an action to quiet title could be gleaned from the
allegations in petitioners’ Complaint, said Complaint was properly dismissed by RTC-Trece Martires
for failure to state a cause of action.
WHEREFORE, the Petition is DENIED and the Orders dated March 4, 2002 and May 21, 2002 of the
RTC, Branch 23, Trece Martires City in Civil Case No. TM-1118 are AFFIRMED.

27.) G.R. No. 199777, June 17, 2015
HEIRS OF DATU DALANDAG KULI, REPRESENTED BY DATU CULOT

DALANDAG, Petitioners, v. DANIEL R. PIA, FILOMENA FOLLOSCO, AND JOSE FOLLOSCO,
SR., Respondent.
DECISION
SERENO, C.J.:
The present case stems from a Petition for Review 1 filed by the heirs of Datu Dalandag Kuli
(petitioners), praying for the reversal of the Decision 2 of the Court of Appeals (CA), Cagayan de Oro
City dated 28 January 2011 and subsequent Resolution 3 dated 6 December 2011. The CA affirmed
the Judgment4 rendered by the Regional Trial Court (RTC), Branch 18, Midsayap Cotobato, on 16
January 2004, dismissing the case for the quieting of title filed by petitioners. The RTC found that
petitioners failed to overcome the presumption of regularity in the issuance of Transfer Certificate of
Title (TCT) No. 1608 in the name of Daniel R. Pia (respondent Pia).
The parcel of land subject of this case (Lot 2327) was awarded to Datu Kuli through cadastral
proceedings.5 Thereafter, the Register of Deeds of Cotobato City registered the property in his name
on 12 November 1935 as evidenced by Original Certificate of Title (OCT) No. 1654. When Datu Kuli
died on 8 July 1985, the possession of Lot 2327 was passed on to his heirs, the present petitioners,
who continue to hold possession thereof.
When petitioners sought to have Datu Kuli's title reconstituted, they were informed by the
Register of Deeds that a different title had already been issued in the name of Jose
Follosco, Sr. (respondent Jose).6
It appears from the records that on 21 December 1940, TCT 1608 covering Lot 2327 was issued in
respondent Pia's name. Although the Register of Deeds could no longer produce a copy of the
alleged Deed of Sale,7 it issued a Certification that a Deed of Sale executed by Datu Kuli in
respondent Pia's favor had been presented to it.8 On the strength of this deed, Datu Kuli's OCT
1654 was cancelled, and TCT 1608 issued.
On 14 July 1948, the Register of Deeds administratively reconstituted TCT 1608 using a duplicate of
respondent Pia's title as the source.9 On even date, after another Deed of Conveyance was
supposedly executed by respondent Pia in favor of Filomena Follosco (respondent Filomena), 10 the
former's reconstituted title was cancelled and a new title (TCT T-374) issued in the name of
respondent Filomena. Again, on 22 September 1954, the latter title was cancelled and TCT T-2911
issued in the name of respondent Jose.11
Claiming that they had always been in possession of the property and that Datu Kuli never
sold the property to any of the respondents, petitioners filed a Complaint for Quieting of
Title with the RTC, praying for the restoration of OCT No. 1654 and the annulment of all the
subsequently issued titles covering Lot 2327 under the names of respondents. 12
Upon the filing of the Complaint, efforts were made to serve summons on respondents. Because none
of these could be served on any of them, on 12 May 1999 petitioners moved for the service of
summons by publication. In an Order dated 24 May 1999, the RTC granted petitioners' motion. The
branch clerk of court then issued summons by publication on 30 June 1999. 13
On 12 July 2000, the RTC issued its Order granting petitioners' motion to declare respondents in
default. This Order was likewise published. 14

After evaluating the evidence presented by petitioners, the RTC, in its Judgment dated 16 January
2004, ruled in respondents' favor. According to the trial court, even though Atty. Maria Theresa B.
Pescadera (Atty. Pescadera), an officer of the Register of Deeds of Cotabato City, was not able to
produce the Deed of Conveyance stating that Datu Kuli had sold Lot 2327 to respondent Pia, 15 it was
convinced that "there was indeed a conveyance from Datu Dalandag Kuli to Daniel R. Pia over Lot No.
2327."16
The dispositive portion of the RTC Judgment reads: chanroblesvirtuallawlibrary
WHEREFORE, in the light of all the foregoing considerations, the court finds and so holds that the
plaintiffs were not able to prove their affirmative allegations and the existence of a valid cause of
action. The court, therefore, renders Judgment in favor of the defendants and against the plaintiffs:
(1) Holding as valid the issuance of Transfer Certificate of Title No. RT-168 (1608) in the name of
Daniel R. Pia.
(2) Holding as valid the subsequent transfer and issuance of TCT No. T-374 and TCT No. T-2911 in
the names of Filomena Follosco and Jose Follosco, Sr. respectively.
(3) Dismissing this case for lack of a valid cause of action.
IT IS SO DECIDED.17 cralawlawlibrary
Petitioners appealed the foregoing to the CA, which dismissed their Petition on 28 January 2011.
Hence, the present Petition for Review on Certiorari.18
In a Resolution19 dated 21 March 2012, the Court ordered respondents to Comment on the Petition,
but copies of the Resolution were returned unserved. 20 It made several attempts to resend the
copies, but all were returned to this Court with the following notations: "RTS-insufficient address"
and "RTS-party deceased."21 The Court hereby resolves to consider the Resolution as served.
Petitioners ask that this Court declare that the CA committed error in upholding the validity of TCT
1608.
The Petition is denied. The Court affirms the appreciation of the evidence by the CA as well as by the
RTC.
In the Complaint for Quieting of Title filed with the RTC, petitioners prayed for the restoration of OCT
No. 1654 and the annulment of all the subsequently issued titles covering Lot 2327 under the names
of respondents.22
The following requisites must concur, so that an action for quieting of title may prosper: (1) the
plaintiff or complainant has a legal or an equitable title to or interest in the real property, subject of
the action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting a cloud on the
title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity
or legal efficacy.23
Assuming arguendo that the continued possession of the property by petitioners establishes their

legal or equitable interest thereon and thus fulfills the first requisite, the RTC still correctly declared
that they failed to establish that they had a valid cause of action, 24 because they did not succeed in
proving that respondent Pia had failed to present a copy of the Deed of Sale with the Register of
Deeds or that even if they did, it is invalid.
Petitioners insist that the failure of the Register of Deeds to produce a copy of the Deed of
Conveyance used as basis to cancel Datu Kuli's OCT proves that the property was never
sold to respondent Pia.
The argument of petitioners holds no water. While the law requires the Register of Deeds to obtain a
copy of the Deed of Conveyance before cancelling the seller's title, its subsequent failure to produce
the copy, after a new title had already been issued is not a sufficient evidence to hold that the
claimed sale never actually happened.
We agree with the RTC and rule that even though copies of the Deed of Sale and the OCT of
Datu Kuli can no longer be produced now, the evidence presented sufficiently shows that
the deed conveying the property to respondent Pia was presented to the Register of Deeds
on 21 December 1940, and that this deed was the basis for the cancellation of Datu Kuli's
original title.
The failure on the part of the Register of Deeds to present a copy of the Deed of Sale when required
by the trial court was duly explained by them. It appears that the records containing the Deed
of Sale are no longer readable, because they are "very much mutilated." 25 Nevertheless,
the Register of Deeds was able to certify that the following entry or notation was found in
the first volume of its Primary Entry Book:26 ChanRoblesVirtualawlibrary
Entry No. 7512

Date of
Dec. 21, 1940 at 7:58am
Registration:
Nature of
Deed of Sale
Document:
Date of
(Dilapidated Portion)
Document:
Executed by: Datu Dalandag Kuli
In favor of: Daniel R. Pia
Amount: P390.00
Although the Deed of Sale itself can no longer be located, we agree with the RTC's conclusion that
the above notation proves that "there was at one time in the past such document recorded in the
Register of Deeds but that with the passage of time, the same became tattered, unreadable, badly
dilapidated, and mutilated and could not be found or recognized to boot." 27
All in all, it becomes clear that TCT 1608 was issued on 21 December 1940, because respondent Pia
was able to present the requisite Deed of Sale as proven by the certification issued by the Register of
Deeds.
Section 57 of the Property Registration Decree provides the procedure for the registration of
conveyances, viz: chanroblesvirtuallawlibrary
SECTION 57. Procedure in Registration of Conveyances. — An owner desiring to convey his

registered land in fee simple shall execute and register a deed of conveyance in a form sufficient in
law. The Register of Deeds shall thereafter make out in the registration book a new certificate of title
to the grantee and shall prepare and deliver to him an owner's duplicate certificate. The Register of
Deeds shall note upon the original and duplicate certificate the date of transfer, the volume and page
of the registration book in which the new certificate is registered and a reference by number to the
last preceding certificate. The original and the owner's duplicate of the grantor's certificate shall be
stamped "cancelled". The deed of conveyance shall be filed and indorsed with the number and the
place of registration of the certificate of title of the land conveyed.
The evidence and the records prove that the proper procedure for the issuance of TCT 1608 was
followed. The title was validly issued.
Deserving scant consideration is petitioners' claim that the failure of the Register of Deeds to produce
a copy of the Deed of Conveyance proves that Datu Kuli never sold Lot 2327 to anyone. Other than
their self-serving claim that the sale never happened, petitioners failed to present any other evidence
to prove that Lot 2327 had never been purchased by respondent Pia. It requires more than
petitioners' bare allegation to defeat TCT 1608, which on its face enjoys the legal presumption of
regularity of issuance.28
With respect to the allegation of petitioner that the administrative reconstitution of TCT 1608 is
invalid, we agree with the CA and rule that the Register of Deeds administratively reconstituted TCT
1608 in accordance with Republic Act No. 26,29 which is the law that provides the procedure for the
reconstitution of lost titles. Section 3 thereof reads: chanroblesvirtuallawlibrary
SECTION 3. Transfer certificates of title shall be reconstituted from such of the sources hereunder
enumerated as may be available, in the following order: chanroblesvirtuallawlibrary
(a) The owner's duplicate of the certificate of title;
(b) The co-owner's, mortgagee's, or lessee's duplicate of the certificate of title;
(c) A certified copy of the certificate of title, previously issued by the register of deeds or by a legal
custodian thereof;
(d) The deed of transfer or other document, on file in the registry of deeds, containing the
description of the property, or an authenticated copy thereof, showing that its original had been
registered, and pursuant to which the lost or destroyed transfer certificate of title was issued;
(e) A document, on file in the registry of deeds, by which the property, the description of which is
given in said document, is mortgaged, leased or encumbered, or an authenticated copy of said
document showing that its original had been registered; and
(f) Any other document which, in the judgment of the court, is sufficient and proper basis for
reconstituting the lost or destroyed certificate of title.
The owner's duplicate of the certificate of title is the primary source from which transfer certificates
of title may be reconstituted. Because of the presence of the owner's duplicate copy of TCT 1608 in
the Register of Deeds, it was no longer necessary for the registrar to compel respondent Pia to
produce his copy before reconstituting his title.30 Having been issued in accordance with the
procedure laid down in Republic Act No. 26, the Court upholds the validity of the administratively
reconstituted TCT 1608.
Since petitioners failed to prove the invalidity of TCT 1608, it follows that they cannot now cast doubt
on the validity of the titles derived therefrom.cralawred
WHEREFORE, the instant Petition is DENIED. The Court of Appeals Decision dated 28 January 2011
and subsequent Resolution dated 6 December 2011 in CA-G.R. CV No. 00033-MIN, affirming the
Judgment of the Regional Trial Court in Civil Case No. 99-014 dated 16 January 2004,
are AFFIRMED.

28.) G.R. No. 201248 March 11, 2015
LETICIA NAGUIT AQUINO, MELVIN NAGUIT, ROMMEL NAGUIT, ELMA NAGUIT TAYAG, YSSEL L. NAGUIT,
ROSALINA NAGUIT AUMENTADO, RIZEL NAGUIT CUNANAN, CARIDAD NAGUIT PARAJAS, MILLIE NAGUIT
FLORENDO, MARNEL NAGUIT, EDUARDO NAGUIT, JOSE NAGUIT, ZOILO NAGUIT, AND AMELIA NAGUIT
DIZON, represented by YSSEL L. NAGUIT, Petitioners,
vs.
CESAR B. QUIAZON, AMANDA QUIAZON, JOSE B. QUIAZON AND REYNALDO B. QUIAZON, represented by
JAIME B. QUIAZON, Respondents.
DECISION
MENDOZA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the March 13,
2012 Decision of the Court of Appeals (CA), in CA-G.R. CV No. 92887, which affirmed the Orders of the Regional
1 2
Trial Court (RTC), Angeles City, Branch 59, in SP Civil Case No. 05-076, dismissing the complaint for quieting of
title filed by the petitioners.
The Facts
On December 16, 2005, a complaint for Annulment and Quieting of Title was filed before the RTC-Branch59 by the
3
petitioners, namely, Leticia Naguit Aquino, Melvin Naguit, Rommel Naguit, Elma Naguit Tayag, Yssel L. Naguit,
Rosalina Naguit Aumentado, Rizel Naguit Cunanan, Caridad Naguit Parajas, Millie Naguit Florendo, Marnel Naguit,
Eduardo Naguit, Jose Naguit, Zoilo Naguit, and AmeliaNaguit Dizon, represented by Yssel L. Naguit (petitioners).
They alleged that they were the heirs of the late Epifanio Makam and Severina Bautista, who acquired a house and
lot situated in Magalang, Pampanga, consisting of 557 square meters, by virtue of a Deed of Sale, dated April 20,
1894; that since then, they and their predecessors-in-interest had been in open, continuous, adverse, and notorious
possession for more than a hundred years, constructing houses and paying real estate taxes on the property;that
sometime in June 2005, they received various demand letters from the respondents, namely, Cesar B.
Quiazon, Amanda Quiazon, Jose B. Quiazon, and Reynaldo B. Quiazon, represented by Jaime B. Quiazon
(respondents), claiming ownership over the subject property and demanding that they vacate the same; that
upon inquiry with the Register of Deeds of San Fernando, Pampanga, they confirmed that the property had
been titled in the name of respondents under Transfer Certificate of Title (TCT) No. 213777-R; that the said
title was invalid, ineffective, voidable or unenforceable; and that they were the true owners of the property.
Hence, they prayed that the title be cancelled and a new title be issued in their favor.
In their Answer, respondents asserted that they were the absolute owners of the subject land as per TCT No.
4
213777-R; that they had inherited the same from their predecessor-in-interest, Fausta Baluyut, one of the
registered owners under Original Certificate of Title (OCT) No. RO-1138 (11376), as per the Project of
Partition and Deed of Agreement, dated January 2, 1974; and that petitioners had been occupying the
property by mere tolerance. They denied the allegations in the complaint and proffered affirmative defenses with
counterclaims.
They argued that: First, the petitioners "have no valid, legal and sufficient cause of action" against them,
5
because their deed of sale was spurious and could not prevail over Land Registration Decree No. 122511
issued on June 28, 1919 in Land Registration Case No. 5, LRC Records No. 128, by the Court of First
Instance of Pampanga, in favor of their predecessor-in-interest. The predecessors-in-interest of petitioners
were among the oppositors in the land registration proceeding but, nevertheless, after the trial, the subject
lot was awarded, decreed and titled in favor of respondents’ predecessor-in-interest, as per OCT No. RO-
1138 (11376) of the Registry of Deeds of Pampanga. Second, the action was barred by prescription and that
petitioners were guilty of laches in asserting their interest over the subject lot, considering that Land
Registration Decree No. 122511 was issued on June 28, 1919 and OCT No. RO-1138 (11376) was issued on
May 12, 1922. Hence, it was much too late for petitioners to institute the action after more than 80 years.

They also raised the settled rule that a title registered under the Torrens system could not be defeated by adverse,
open and notorious possession, or by prescription. Third, the action was also barred by res judicata and violated the
prohibition against forum shopping, considering that petitioners had earlier filed a similar case for quieting of title
against respondents, docketed as Civil Case No. 5487, which the RTC-Br. 56 dismissed. Petitioners filed their
Comment to Defendant’s Affirmative Defenses. Anent the alleged lack of cause of action due to the spurious deed
6
of sale, petitioners argued that this contention was a matter of evidence which might only be resolved in a full-blown
trial. They insisted that the deed of sale was genuine and authentic and was issued and certified by the Deputy
Clerk of Court of the RTC. They added that the settled rule was that to determine the sufficiency of the cause of
action, only the facts alleged in the complaint should be considered, and that the allegations in their complaint
sufficiently stated a cause of action.
As regards the allegation of prescription, the petitioners countered that an action to quiet title did not
prescribe if the plaintiffs were in possession of the property in question. They argued that they were neither
guilty of laches nor were they in possession of the property by mere tolerance, their possession being in
the concept of owner for more than a hundred years.
Lastly, regarding the argument on res judicata, petitioners explained that they were not the same plaintiffs in Civil
Case No. 5487 and that the case was dismissed without prejudice.
The RTC set a preliminary hearing on the affirmative defenses.
Respondents presented Atty. Charlemagne Tiqui Calilung, RTC Clerk of Court of San Fernando, Pampanga, who
presented the record of Cadastral Case No. 5, dated June 28, 1919, as well as Decree No. 122511. They also
presented Luis Samuel Ragodon, the Registration Examiner of the Registry of Deeds of San Fernando, Pampanga,
who presented the original copy of OCT No. 11376, reconstituted as RO-1138, and testified that the title was
derived from Decree No. 122511. He further testified that the original title had been cancelled pursuant to a project
of partition, which was registered on December 17, 1984, and in lieu thereof, TCT Nos. 213775, 213776, 213777,
213778, 213779, 213780, and 213781 were issued. He presented the original copy of TCT No. 213777-R issued in
the names of respondents.
Henry Y. Bituin, the court interpreter who translated the June 28, 1919 decision of the Court of First Instance of
Pampanga in Land Registration Case No. 5 from Spanish to English, also testified.
Petitioners manifested that they were opting to submit the incident for resolution without presenting evidence,
relying on their position that only the facts alleged in the complaint should be considered.
In their formal offer of evidence, respondents offered the following documents: (1) the June 28, 1919 Decision and
7
its English translation; (2) Transmittal Letter, dated May 6, 1922; (3) Decree No. 122511; (4) OCT No. RO-1138; (5)
TCT No. 213777-R; (6) the petition, dated July 29, 1988, and its annexes in Civil Case No. 5487;(7) the September
7, 1990 Order dismissing Civil Case No. 5487, without prejudice; and (8) the July 29, 1916 Decision in Expediente
No. 132, G.L.R.O. Record No. 11958 and its English translation.
In their comment/opposition to the formal offer of evidence, petitioners argued (1) that the claims of Epifanio Makam
8
and Severina Bautista, their predecessors-in-interest, were not adjudicated in the June 28, 1919 decision and, thus,
res judicata was inapplicable; (2) that Civil Case No. 5487 was dismissed without prejudice and that they were not
the plaintiffs therein; (3) that the allegedly spurious nature of the deed of sale and the supposed in defeasibility of
respondents’ title were matters of evidence to be resolved in a full-blown trial and the trial court was only confined to
the allegations in the complaint; (4) that their action was not barred by prescription because an action toquiet title
did not prescribe if the plaintiffs were in possession of the subject property and that they had been in possession in
the concept of owner for more than 100 years; and (5) that respondents were guilty of laches having taken more
than 80 years to attempt to enforce their claimed title to the property.
Ruling of the RTC
On July 14, 2008, the RTC-Br. 59 issued the Order dismissing petitioners’ complaint. It found that based on the
decision, dated June 28, 1919, in Cadastral Case No. 5, the Baluyut siblings, respondents’ predecessors-in-interest,

were declared the absolute owners of the subject property, over the claim of Jose Makam, the predecessor-in-
interest of petitioners, who was one of the oppositors in the said case. From this decision, OCT No. RO-1138
(11376) was derived, which later became the subject of a project of partition and deed of agreement among the
Baluyut siblings, dated January 2, 1972, which, in turn, was annotated on the OCT as Entry No. 8132. TCT No.
213777-R, covering the subject lot, was later derived from the partition. The RTC-Br. 59 also noted that it was stated
in the said decision that in 1907, a warehouse was constructed on the subject lot by virtue of an agreement between
the Chairman of Magalang and Enrique Baluyut, with no objection from the Makams. It was further noted that the
deed of sale being asserted by petitioners was not mentioned in the 1919 decision despite the claim of their
predecessors-in-interest.
The RTC-Br. 59, thus, ruled that the deed of sale had become invalid by virtue of the June 28, 1919 decision. It held
that although the deed of sale dated, April 20, 1894, was never challenged, it was nevertheless unenforceable by
virtue of the June 28, 1919 decision. It found that petitioners had lost whatever right they had on the property from
the moment the said decision was rendered and an OCT was issued. Finding that petitioners were not holders of
any legal title over the property and were bereft of any equitable claim thereon, the RTC-Branch 59 stated that the
first requisite of an action to quiet title was miserably wanting. It also found the second requisite to be wanting
because respondents had proved that the TCT registered in their names was valid.
Anent petitioners’ argument that only the complaint may be considered in determining the sufficiency of the cause of
action, the RTC Br. 59 ruled that under Section 2 in relation to Section 6, Rule 16 of the Rules of Court, a
preliminary hearing on the affirmative defense in the answer might be had at the discretion of the court, during which
the parties could present their arguments and their evidence.
On December 22, 2008, the RTC-Br. 59 denied petitioners’ motion for reconsideration. It stated that the court
may consider evidence presented in hearings related to the case, which was an exception to the general
rule that only the complaint should be taken into consideration. It stated that petitioners were without legal
or equitable title to the subject property, thus, lacking the legal personality to file an action for quieting of
title and, therefore, "the complaint was properly dismissed for failing to state a cause of action." 9
Ruling of the CA
In the assailed Decision, dated March 13, 2012, the CA dismissed petitioners’ appeal. It explained that under
Section 6, Rule 16 of the Rules of Court, a court is allowed to conduct a preliminary hearing, motu proprio, on the
defendant’s affirmative defenses, including the ground of "lack of cause of action or failure to state a cause of
action." It gave the reason that because the rule spoke in general terms, its manifest intention was to apply it to all
10
grounds for a motion to dismiss under the rules which were pleaded as affirmative defenses in the responsive
pleading. Thus, it held that the trial court might consider other evidence aside from the averments in the complaint in
determining the sufficiency of the cause of action. The CA explained:
But as shown in the foregoing rule, the holding of a preliminary hearing on any of the grounds for a motion to
dismiss which is pleaded as an affirmative defense is within the full discretion of the trial court. The rule speaks of
affirmative defenses that are grounds for a motion to dismiss. Indubitably, lack of cause of action or failure to state a
cause of action, being one of the grounds for a motion to dismiss, is included thereby.
Since the rule allows the trial court to conduct a preliminary hearing on this kind of an affirmative defense, it follows
then that evidence could be submitted and received during the proceedings which the court may consider in forming
its decision. It would be plain absurdity if the evidence already presented therein would not be allowed to be
considered in resolving whether the case should be dismissed or not. To rule otherwise would render nugatory the
provision of Section 6, Rule 16 and would make the holding of a preliminary hearing a plain exercise in futility. No
well-meaning judge would hold a preliminary hearing and receive evidence only to disregard later the evidence
gathered in the course thereof. If the intention of the rule is for the trial court to confine itself to the allegations in the
complaint in determining the sufficiency of the cause of action, as the plaintiffs-appellants would want to impress
upon this Court, then it should have been so expressly stated by barring the court from conducting a preliminary
hearing based on the said ground. The fact, however, that the said rule speaks in general terms, it is its manifest
intention to apply it in all grounds for a motion to dismiss under the rules which are pleaded as an affirmative
defense in the responsive pleading. Thus, we find that that trial court did not err in considering the evidence already
presented and in not confining itself to the allegations in the plaintiffs-appeallants’ complaint. 11

The CA gave credence to the evidence presented by respondents and noted that, except for petitioners’ bare
allegation that respondents’ title was invalid, there was nothing more to support the same. It further noted that the
deed of sale was written in a local dialect without the translation and with no ascertainable reference to the area of
the property being conveyed. The CA, therefore, found that petitioners did not have the title required to avail of the
remedy of quieting of title, while respondents had sufficiently proven the validity of their Torrens title. Hence, the
subject petition.
ISSUE
Whether the CA erred in affirming the dismissal of petitioners’ complaint on the ground of lack of cause of action or
failure to state a cause of action.
Petitioners argue that the CA gravely erred in considering external factors beyond the allegations in the petition.
They aver that it is a settled rule that to determine the sufficiency of a cause of action, only facts alleged in the
complaint shall be considered, and it is error for the court to take cognizance of external facts or hold a preliminary
hearing to determine their existence. Respondents, on the other hand, echo the ruling of the CA that it was within
the disrection of the trial court to conduct a preliminary hearing on the affirmative defense of lack of cause of action
or failure to state a cause of action, where both parties were given the chance to submit arguments and evidence for
or against the dismissal of the complaint. Furthermore, they argue that the Court has previously upheld cases where
the court took into account external factors in the dismissal of the complaint on the ground of lack of cause of action.
They assert that since petitioners were given reasonable opportunity to present evidence to prove their cause of
action, they are now estopped from invoking the rule that only allegations in the complaint should be considered. 12
Petitioners reiterate that they have been in possession of the property in the concept of owner for more than 119
years, where they built their houses, reared their families, and paid realty taxes thereon. They point out that their
possession was never disputed by respondents, and that respondents had only attempted to enforce their supposed
rights over the property in 2005, or 86 years after the purported decree awarding the property to them. Petitioners
argue that respondents had abandoned their right to the subject property which, thus, rendered invalid whatever title
they might have had. They argue that it has been held that a registered owner’s right to recover possession and title
to property may be converted into a stale demand by virtue of laches. They also claim that the allegations contained
in their complaint sufficiently state a cause of action, and that it was an error for the trial court to declare it
unenforceable considering that the deed of sale should be considered hypothetically admitted when determining
whether the complaint sufficiently states a cause of action. 13
Ruling of the Court
Preliminary matters
The Court notes that respondents raised the affirmative defense in their Answer that petitioners "have no valid, legal
and sufficient cause of action," raising factual matters, which is effectively the ground of "lack of cause of action."
14
Respondents’ arguments made no assertion that the complaint failed to state a cause of action. The ground of "lack
of cause of action" has been frequently confused with the ground of "failure to state a cause of action," and this is
the situation prevailing in the present case. The terms were, in fact, used interchangeably by both the respondents
and the lower courts.
The distinction between the grounds of "failure to state a cause of action" and "lack of cause of action" was aptly
discussed in Dabuco vs. Court of Appeals, to wit:
As a preliminary matter, we wish to stress the distinction between the two grounds for dismissal of an action: failure
to state a cause of action, on the one hand, and lack of cause of action, on the other hand. The former refers to the
insufficiency of allegation in the pleading, the latter to the insufficiency of factual basis for the action. Failure to state
a cause may be raised in a Motion to Dismiss under Rule 16, while lack of cause may be raised any time. Dismissal
for failure to state a cause can be made at the earliest stages of an action. Dismissal for lack of cause is usually
made after questions of fact have been resolved on the basis of stipulations, admissions or evidence presented. 15

Although the two grounds were used interchangeably, it can be gleaned from the decisions of both the trial court
and the CA that respondents’ defense of "lack of cause of action" was actually treated as a "failure to state a cause
of action," which is a ground for a motion to dismiss under Rule 16. This is apparent from their reliance on Section 6
of Rule 16, which pertains to grounds of a motion to dismiss raised as affirmative defenses; as well as the doctrines
cited in resolving the case. The CA even referred to both as one and the same ground for a motion to dismiss when
it stated that: "Indubitably, lack of cause of action or failure to state a cause of action, being one of the grounds for a
motion to dismiss, is included thereby." 16
Also confused, respondents, on their part, asserted that "it is within the discretion of the Court a quo to conduct a
preliminary hearing on the affirmative defense of lack of cause of action or failure to state a cause of action," the
17
very basis of their argument being hinged on the application of Section 6. They also insisted on the applicability of
the exceptions to the general rule that only averments in the complaint must be considered, which pertains to the
ground of "failure to state a cause of action."
The trial court held a preliminary hearing resolving the ground of "lack of cause of action" pursuant to Section 6 of
Rule 16, which allows the court to hold a preliminary hearing on grounds for dismissal provided in the same rule that
have been raised as an affirmative defense in the answer. The ground of "lack of cause of action," as already
18
explained, however, is not one of the grounds for a motion to dismiss under Rule 16, and hence, not proper for
resolution during a preliminary hearing held pursuant to Section 6. On this point alone, the trial court clearly erred in
receiving evidence on the ground of "lack of cause of action" during the preliminary hearing. The factual matters
raised by respondents in their affirmative defense arguing the non-existence of a cause of action, should have been
duly resolved during a trial on the merits of the case.
In any case, even if the Court were to treat respondents’ argument as a "failure to state a cause of action," their
defense would still fail. Court limited to averments in the complaint
Rule 16 of the Rules of Court enumerates the grounds for a motion to dismiss. The pertinent ground is found under
Section 1(g), which reads as follows:
xxxx
(g) That the pleading asserting the claim states no cause of action; xxxx (Emphasis supplied) The test for
determining the existence of a cause of action was amply discussed in Insular Investment and Trust Corporation v.
Capital One Equities Corporation, citing Perpetual Savings Bank v. Fajardo, to wit:
19 20
The familiar test for determining whether a complaint did or did not state a cause of action against the defendants is
whether or not, admitting hypothetically the truth of the allegations of fact made in the complaint, a judge may validly
grant the relief demanded in the complaint. In Rava Development Corporation v. Court of Appeals, the Court
elaborated on this established standard in the following manner:
"The rule is that a defendant moving to dismiss a complaint on the ground of lack of cause of action is regarded as
having hypothetically admitted all the averments thereof. The test of the sufficiency of the facts found in a petition as
constituting a cause of action is whether or not, admitting the facts alleged, the court can render a valid judgment
upon the same in accordance with the prayer thereof (Consolidated Bank and Trust Corp. v. Court of Appeals, 197
SCRA 663 [1991]).
In determining the existence of a cause of action, only the statements in the complaint may properly be considered.
It is error for the court to take cognizance of external facts or hold preliminary hearings to determine their existence.
If the allegation in a complaint furnish sufficient basis by which the complaint may be maintained, the same should
not be dismissed regardless of the defenses that may be assessed by the defendants (supra). 21
Thus, in determining the existence of a cause of action, only the allegations in the complaint may properly be
considered. For the court to do otherwise would be a procedural error and a denial of the plaintiff’s right to due
process. 22

In the case at bench, petitioners’ cause of action relates to an action to quiet title under Article 476 of the Civil Code,
which provides:
Article 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 title.
An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein.
A "cloud on title" is an outstanding instrument, record, claim, encumbrance or proceeding which is actually invalid or
inoperative, but which may nevertheless impair or affect injuriously the title to property. The matter complained of
must have a prima facie appearance of validity or legal efficacy. The cloud on title is a semblance of title which
appears in some legal form but which is in fact unfounded. The invalidity or in operativeness of the instrument is not
apparent on the face of such instrument, and it has to be proved by extrinsic evidence. 23
In order that an action for quieting of title may prosper, two requisites must concur: (1) the plaintiff or
complainant has a legal or equitable title or interest in the real property subject of the action; and (2) the
deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be shown to be in
fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy. 24
Turning then to petitioners’ complaint, the relevant allegations as to the cause of action for quieting of title read as
follows:
3. Plaintiffs are the heirs of the late Epifanio Makam and Severina Bautista who acquired a house and lot on
20 April 1894 situated in Magalang, Pampanga, consisting of Five Hundred Seventy Seven (577) square
meters more or less, by virtue of a Deed of Sale, hereby quoted for ready reference:
xxx
4. From 1894 and up to the present, plaintiffs and through their predecessors-in-interest have been in open,
continuous, adverse and notorious possession for more than a hundred years of the piece of property
mentioned above, constructed their houses thereon and dutifully and faithfully paid the real estate taxes on
the said property;
5. That sometime in June 2005, plaintiffs received various demand letters from defendants demanding
plaintiffs to vacate the premises, claiming ownership of the subject property;
6. That when plaintiffs inquired from the Office of the Register of Deeds of San Fernando, Pampanga, they
were able to confirm that their property had been titled in the name of herein defendants under TCT No.
213777-R;
7. That the said title is in fact invalid, ineffective, voidable or unenforceable, the existence of which is pre-
judicial to the ownership and possession of plaintiffs who are the true owners and actual possessors of the
above described real property;
8. That equity demands that the said title be surrendered by defendants and cancelled as it is a cloud upon
the legal or equitable title to or interest of plaintiffs over the subject property.
25
It is readily apparent from the complaint that petitioners alleged that (1) they had an interest over the subject
property by virtue of a Deed of Sale, dated April 20, 1894; and that (2) the title of respondents under TCT No.
213777-R was invalid, ineffective, voidable or unenforceable. Hypothetically admitting these allegations as true, as
is required in determining whether a complaint fails to state a cause of action, petitioners may be granted their claim.
Clearly, the complaint sufficiently stated a cause of action. In resolving whether or not the complaint stated
a cause of action, the trial court should have limited itself to examining the sufficiency of the allegations in
the complaint. It was proscribed from inquiring into the truth of the allegations in the complaint or the
authenticity of any of the documents referred or attached to the complaint, as these were deemed
hypothetically admitted by the respondents. 26
Evangelista v. Santiago elucidates:
The affirmative defense that the Complaint stated no cause of action, similar to a motion to dismiss based on the
same ground, requires a hypothetical admission of the facts alleged in the Complaint. In the case of Garcon v.
Redemptorist Fathers, this Court laid down the rules as far as this ground for dismissal of an action or affirmative
defense is concerned:
It is already well-settled that in a motion to dismiss a complaint based on lack of cause of action, the question
submitted to the court for determination is the sufficiency of the allegations of fact made in the complaint to
constitute a cause of action, and not on whether these allegations of fact are true, for said motion must
hypothetically admit the truth of the facts alleged in the complaint; that the test of the sufficiency of the facts alleged
in the complaint is whether or not, admitting the facts alleged, the court could render a valid judgment upon the
same in accordance with the prayer of said complaint. Stated otherwise, the insufficiency of the cause of action
1âwphi1
must appear in the face of the complaint in order to sustain a dismissal on this ground, for in the determination of
whether or not a complaint states a cause of action, only the facts alleged therein and no other matter may be
considered, and the court may not inquire into the truth of the allegations, and find them to be false before a hearing
is had on the merits of the case; and it is improper to inject in the allegations of the complaint facts not alleged or
proved, and use these as basis for said motion. (Emphasis and underscoring supplied)
27
Exceptions and Section 6 of Rule 16 not applicable
The Court does not discount, however, that there are exceptions to the general rule that allegations are
hypothetically admitted as true and inquiry is confined to the face of the complaint. First, there is no hypothetical
admission of (a) the veracity of allegations if their falsity is subject to judicial notice; (b) allegations that are legally
impossible; (c) facts inadmissible in evidence; and (d) facts which appear, by record or document included in the
pleadings, to be unfounded. Second, inquiry is not confined to the complaint if culled (a) from annexes and other
28
pleadings submitted by the parties; (b) from documentary evidence admitted by stipulation which disclose facts
29
sufficient to defeat the claim; or (c) from evidence admitted in the course of hearings related to the case. 30
Pointing to the exception that inquiry was not confined to the complaint if evidence had been presented in the
course of hearings related to the case, the CA ruled that it was within the trial court’s discretion to receive and
consider other evidence aside from the allegations in the complaint in resolving a party’s affirmative defense. It held
that this discretion was recognized under Section 6 of Rule 16 of the Rules of Court, which allowed the court to
conduct a preliminary hearing, motu proprio, on the defendant’s affirmative defense if no corresponding motion to
dismiss was filed. This section reads in part:
Section 6. Pleading grounds as affirmative defenses. – If no motion to dismiss has been filed, any of the grounds for
dismissal provided for in this Rule may be pleaded as an affirmative defense in the answer and, in the discretion of
the court, a preliminary hearing may be had thereon as if a motion to dismiss had been filed.
In their answer, respondents raised the affirmative defenses of "lack of cause of action, prescription, and res
judicata," stated in the following manner:
31
xxxx
6. Plaintiffs have no valid, legal and sufficient cause of action against the defendants. The alleged "deed of sale"
(Annex "B" – Amended Complaint) is spurious and the same cannot prevail over the Land Registration Decree No.
122511 issued on June 28, 1919 in Land Registration Case No. 5, LRC Record No. 128, by the Court of First
Instance of Pampanga, in favor of defendants’ predecessor-in-interest. In fact, plaintiffs’ predecessors-in-interest
were among the oppositors in that land registration proceeding but after trial the lot in question was awarded,
decreed and titled in favor and in the names of defendants’ predecessors-in-interest, as per Original Certificate of
Title No. RO-1138 (11376) of the Registry of Deeds of Pampanga;

7. The instant action, which is actually an action of reconveyance, is already barred by prescription. Moreover,
plaintiffs are guilty of laches in asserting their alleged title or interest over the subject lot. Said Land Registration
Decree No. 122511 was issued on June 28, 1919 and OCT No. RO 1138 (11376) was issued on May 12, 1922.
Clearly, it is much too late for the plaintiffs, after more than eighty (80) long years to institute this action against the
defendants;
xxxx
9. The present action is also barred by res judicata and violates the prohibition against forum shopping. There was
already a prior similar case for quieting of title filed by plaintiffs’ predecessor-in-interest against defendant Jaime
Quiazon and his co-owners, before Branch 56 of this Honorable Court, docketed as Civil Case No. 5487, which was
dismissed; x x x x (Emphases supplied)
32
A review of the first ground under paragraph 6 of the answer reveals that respondents alleged that "[p]laintiffs have
no valid, legal and sufficient cause of action against the defendants." It is at this point that it must again be
emphasized that it is not "lack or absence of cause of action" that is a ground for dismissal of the complaint under
Rule 16, but rather, that "the complaint states no cause of action." The issue submitted to the court was, therefore,
33
the determination of the sufficiency of the allegations in the complaint to constitute a cause of action and not
whether those allegations of fact were true, as there was a hypothetical admission of facts alleged in the
complaint. An affirmative defense, raising the ground that there is no cause of action as against the defendants
34
poses a question of fact that should be resolved after the conduct of the trial on the merits. A reading of
35
respondents’ arguments in support of this ground readily reveals that the arguments relate not to the failure to state
a cause of action, but to the existence of the cause of action, which goes into the very crux of the controversy and is
a matter of evidence for resolution after a full-blown hearing.
The trial court may indeed elect to hold a preliminary hearing on affirmative defenses as raised in the answer under
Section 6 of Rules 16 of the Rules of Court. It has been held, however, that such a hearing is not necessary when
the affirmative defense is failure to state a cause of action, and that it is, in fact, error for the court to hold a
36
preliminary hearing to determine the existence of external facts outside the complaint. The reception and the
37
consideration of evidence on the ground that the complaint fails to state a cause of action, has been held to be
improper and impermissible. Thus, in a preliminary hearing on a motion to dismiss or on the affirmative defenses
38
raised in an answer, the parties are allowed to present evidence except when the motion is based on the ground of
insufficiency of the statement of the cause of action which must be determined on the basis only of the facts alleged
in the complaint and no other. Section 6, therefore, does not apply to the ground that the complaint fails to state a
39
cause of action. The trial court, thus, erred in receiving and considering evidence in connection with this ground.
The lower courts also relied on the exception that external evidence may be considered when received "in the
course of hearings related to the case," which is rooted in the case of Tan v. Director of Forestry (Tan). In said
40
case, a hearing was conducted on the prayer for preliminary injunction where evidence was submitted by the
parties. In the meantime, a motion to dismiss was filed by the defendant, citing as one of the grounds that the
petition did not state a cause of action. The trial court resolved the prayer for the issuance of a writ of preliminary
injunction simultaneously with the motion to dismiss. It dismissed the petition for failure to state a cause of action on
the basis of the evidence presented during the hearing for preliminary injuction. On appeal, this Court ruled that the
trial court was correct in considering the evidence already presented and in not confining itself to the allegations in
the petition.
Tan, however, is not on all fours with the present case. First, the trial court therein considered evidence presented
during a preliminary hearing on an injunction and not during a hearing on a motion to dismiss. As discussed, a
preliminary hearing on a motion to dismiss is proscribed when the ground is failure to state a cause of action. The
exception of "hearings related to the case," therefore, pertains to hearings other than the hearing on a motion to
dismiss on the ground of failure to state a cause of action. To reiterate, the ground that the complaint fails to state a
cause of action should be tested only on the allegations of facts contained in the complaint, and no other. If the
allegations show a cause of action, or furnish sufficient basis by which the complaint can be maintained, the
complaint should not be dismissed regardless of the defenses averred by the defendants. The trial court may not
41
inquire into the truth of the allegations, and find them to be false before a hearing is conducted on the merits of the
case. If the court finds the allegations to be sufficient but doubts their veracity, the veracity of the assertions could
42
be asserted during the trial on the merits. 43

Second, Tan noted that the plaintiff had readily availed of his opportunity to introduce evidence during the hearing
and, as a result, was estopped from arguing that the court is limited to the allegations in the complaint. This is in
44
contrast to the present case, where petitioners steadfastly argued from the beginning that the trial court was limited
to the allegations in the complaint. Petitioners maintained their stance during the preliminary hearing on the
affirmative defenses, opting not to file rebuttal evidence and opposing respondents’ formal offer of evidence on the
same ground. Having been consistent in their position from the start, petitioners cannot be estopped from arguing
that the trial court was precluded from considering external evidence in resolving the motion to dismiss.
Third, it was noted in Tan that the documentary evidence given credence by the trial court had effectively been
admitted by stipulation during the hearing, and another had been an annex to the complaint, both of which are
45 46
exceptions to the general rule that external facts cannot be considered. Neither of the said exceptions is availing in
the present case. The Court notes that only the OCT of respondents was attached as an annex to their answer. The
June 28, 1919 Decision in the Cadastral case, which was given considerable weight by the trial court, was not
attached and was only presented during the preliminary hearing.
Fourth, Tanruled that the rigid application of the rules could not be countenanced considering the overriding public
interest involved, namely, the welfare of the inhabitants of the province whose lives and properties would be directly
and immediately imperilled by forest denudation. There appears to be no overriding public interest in the present
47
case to justify a similar relaxation of the rules.
It is of note that although the trial court might not have erred in holding a preliminary hearing on the affirmative
defenses of prescription and res judicata, it is readily apparent from the decisions of the lower courts that no
disquisition whatsoever was made on these grounds. It cannot be denied that evidence in support of the ground of
"lack of cause of action" was received and given great weight by the trial court. In fact, all the evidence given
credence by the trial court were only in support of the ground of "lack of cause of action." This all the more highlights
that the trial court erred in receiving evidence to determine whether the complaint failed to state a cause of action.
Although neither the RTC or the CA ruled on the affirmative defenses of prescription and res judicata, it appears that
this case could not have been dismissed on these grounds. First, an action to quiet title is imprescriptible if the
plaintiffs are in possession of the property, which is the situation prevailing in the present case. Second, there
48
appears to be no res judicata nor a violation of the prohibition against forum shopping considering that Civil Case
No. 5487 had been dismissed, without prejudice, years before petitioners initiated their complaint for quieting of title.
In sum, the trial court erred in dismissing the complaint on the ground of failure to state a cause of action. Evidence
should have been received not during a preliminary hearing under Section 6 of Rule 16, but should have been
presented during the course of the trial. The case should, thus, be remanded to the RTC-Br. 59 for trial on the
merits.
WHEREFORE, the petition is GRANTED. The March 13, 2012 Decision of the Court of Appeals, in CA-G.R. CV No.
92887 is REVERSED and SET ASIDE. The case is ordered REMANDED to the Regional Trial Court for trial on the
merits of the case.

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1.) G.R. No.

152131 April 29, 2009

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The MTC framed the issues in the case as follows:

THE MTC’S DECISION22

The MTC thus ruled:

3. To pay the costs of suit.

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THE RTC’S DECISION30

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THE CA’S DECISION

The petitioner submits the following as the issue to be decided:

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THE COURT’S RULING

The petition is partly meritorious.

Remand Not Necessary

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1) the fact of lease by virtue of a contract, express or implied;

2) the expiration or termination of the possessor's right to hold possession;

The petitioner’s contention is misplaced.

The petitioner’s denial in her answer consists of the following:

2. Na hindi lumabag sa kasunduan ng upahan ang nasasakdal;

3. Na, ang pagpapagawa ng bahay na inuupahan ng nasasakdal ay sa kaalaman at kapahintulutan ng

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PHILIPPINE DEPOSIT INSURANCE CORPORATION, petitioner,

xxx xxx xxx

xxx xxx xxx

xxx xxx xxx

WHEREFORE, premises considered, judgment is hereby rendered:

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Petitioner's position does not persuade.

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

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LUI ENTERPRISES, INC., Petitioners,

Trial Court of Makati’s decision dated July 4, 2006.

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necessarily included an authority to file the interpleader case.

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dismiss and declared it in default. 35

fairly presenting [its] case."

filed interpleader case be dismissed.

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a timely answer was inexcusable negligence which bound his client.

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Lui Enterprises appealed to the Court of Appeals. 54

and affirmed in toto the Regional Trial Court of Makati’s decision.

Lui Enterprises filed a motion for reconsideration. 60

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IV. Whether Zuellig Pharma was entitled to attorney’s fees.

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Appeals to resolve the Philippine Coconut Authority’s appeal.

Court of Appeals to resolve Go’s appeal "in the interest of justice." 81

Court of Appeals did not err in dismissing Lui Enterprises’ appeal.

the record and, thus, "may be stricken or disregarded altogether." 90

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"[w]ithin the time for but before filing the answer." 96

or her complaint may warrant. 100

[oppose]motions filed against him [or her]." 106

allegations "despite the default of [the defendant]." 109

Negros Occidental, Branch

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