CAMARINES SUR IV ELECTRIC COOPERATIVE, INC., PETITIONER, VS. EXPEDITA L. AQUINO, RESPONDENT.This petition for review on certiorari under Rule 45 of the Rules of Court seeks to set aside the January 5, 2005 decision[1] and March 22, 2005 resolution[2] of the Court of Appeals (CA) in CA-G.R. CV No. 81666.Respondent Expedita L. Aquino bought several personal computers and leased a commercial building in Tigaon, Camarines Sur for purposes of establishing a computer gaming business. She had the electrical service in the building restored because the former tenant, a certain Mrs. Paglinawan,[3] had it disconnected when she gave up the occupancy thereof. Respondent paid the reconnection fee as well as the fee corresponding to the electric consumption covering the period of April 17, 2002 to May 16, 2002 to petitioner Camarines Sur IV Electric Cooperative, Inc. in Mrs. Paglinawan's name. However, respondent failed to pay the electric bills in the succeeding months.Because of adverse reports, petitioner conducted an inspection of the electrical wiring of the leased building, took pictures thereof and gave respondent's overseer a report of pilferage of electricity with the notation:"Disconnected w/light/illegal tapping."Petitioner alleged that respondent violated RA 7832[4] and required her to pay the differential billing and penalty within 48 hours; otherwise, the electric service would be disconnected. A conciliatory conference between the parties was held where petitioner presented respondent with two options: deposit the differential billing of P3,367.00 to avoid disconnection during the pendency of the criminal action to be filed by petitioner or pay the amount of the differential billing and the penalty of P15,000.00, in which case the matter would be considered closed and the filing of a criminal case dispensed with.Respondent refused to choose any of the options as she felt that to do so would be tantamount to an admission of guilt. Consequently, her electrical service was permanently disconnected on January 23, 2003.Respondent filed a complaint for damages against petitioner in the Regional Trial Court (RTC). She alleged that due to the disconnection of electrical services, her business operation was interrupted causing her damages in the form of unrealized income, rentals paid for the premises she was unable to use and renovation costs of the leased building.Petitioner filed an answer with affirmative defenses. It alleged, among others, that the complaint failed to state a cause of action. According to petitioner, no contract to supply electricity was entered into between them. Thus, respondent's complaint had no basis and should be dismissed.Respondent subsequently amended her complaint. Petitioner still insisted on moving for its dismissal, reiterating that the complaint stated no cause of action.The trial court initially denied the motion to dismiss in an order dated July 10, 2003. It held that, as respondent was in possession of the premises to which petitioner supplied electricity, there was, in a way, a contract between the parties.When petitioner moved for reconsideration, the court a quo, in its December 22, 2003 order, made a turnaround and ruled in petitioner's favor (second RTC order).[5] It stated that respondent's payment of the reconnection fee did not suffice to create a new contract between the parties as the same was made in Mrs. Paglinawan's name, whose contract with petitioner was terminated upon the disconnection of the electrical service.Respondent received a copy of the second RTC order on December 23, 2003 and moved for reconsideration thereof on January 5, 2004. Respondent mailed a copy of her motion for reconsideration (with notice of hearing) to petitioner's counsel only on the same date. The notice of hearing indicated that the hearing of the motion was set on January 9, 2004. Petitioner filed an opposition thereto, alleging, among others, that the motion should be denied as respondent did not comply with the 3-day rule (as provided in the Rules of Court).On February 3, 2004, the trial court denied respondent's motion for reconsideration for lack of merit.[6] However, it was silent on the motion's non-compliance with the 3-day rule.Respondent filed an appeal in the CA on February 5, 2004, insisting that the complaint sufficiently stated a cause of action for damages. For its part, petitioner reiterated its stand on the issue. It also called the CA's attention to the alleged flaw in respondent's motion for reconsideration in theRTC. It argued that the motion was a pro forma motion (since it violated the 3-day rule) which should have been dismissed outright by the trial court. Furthermore, it did not stop the running of the 15-day period for respondent to appeal which should have been reckoned from her receipt of the second RTC order on December 23, 2003. Consequently, her February 5, 2004 notice of appeal (which was filed 44 days after she received a copy of the second RTC order) was filed late.The appellate court held that the RTC erred in dismissing the complaint as indeed a cause of action existed. The CA ruled that the matter of whether or not a contract, express or implied, existed between the parties was a matter of defense that must be resolved in a trial on the merits. It stated that such issue was not relevant in a motion to dismiss based on failure to state a cause of action. However, it did not pass upon the issue relative to the timeliness of respondent's appeal.Petitioner filed a motion for reconsideration. It was denied. Hence, this petition.The issues before us are: (1) whether or not respondent's complaint for damages stated a cause of action against petitioner and (2) whether or not respondent's appeal in the CA was filed on time.There is a cause of action when the following elements are present: (1) the legal right of the plaintiff; (2) the correlative obligation of the defendant and (3) the act or omission of the defendant in violation of said legal right.[7] In determining the presence of these elements, only the facts alleged in the complaint must be considered. The test is whether the court can render a valid judgment on the complaint based on the facts alleged and the prayer asked for,[8] such that the facts alleged in the complaint, if true, would justify the relief sought. Only ultimate facts, not legal conclusions or

evidentiary facts, are considered for purposes of applying the test.[9]

Based on the allegations in the amended complaint, we hold that respondent stated a cause of action for damages. Respondent was in possession of the property supplied with electricity by petitioner when the electric service was disconnected. This resulted in the alleged injury complained of which can be threshed out in a trial on the merits. Whether one is a party or not in a contract is not determinative of the existence of a cause of action. Participation in a contract is not an element in considering whether or not a complaint states a cause of action[10] because even a third party outside the contract can have a cause of action against either or both contracting parties.Be that as it may, respondent's appeal in the CA should have been denied outright for having been filed out of time.In its petition in this Court, petitioner insisted that respondent mailed a copy of her motion for reconsideration (with notice of hearing) to its (petitioner's) counsel only on January 5, 2004, although the motion was already scheduled for hearing on January 9, 2004. Respondent should have foreseen that the registered mail, which originated from Naga City, would not be able to reach the law office of petitioner's counsel in Manila at least 3 days before said date. As expected, the mail did not reach petitioner's counsel on time. In fact, he received it only on the day of the hearing itself.[11] Thus, respondent's motion for reconsideration was fatally flawed for failure to comply with the 3-day rule under Section 4, Rule 15 of the Rules of Court. It did not toll the reglementary period for respondent to appeal the RTC's decision.We note that respondent's comment did not even touch on the issues of the perceived deficiency in her motion for reconsideration and the timeliness of her appeal in the CA. Although her memorandum briefly discussed these issues, the same was insufficient as it merely reiterated the statement of facts in her appellant's brief in the CA (specifically, as to when she filed said motion in the RTC). No discussion was proffered regarding the date of mailing of a copy of the assailed motion to petitioner's counsel. Furthermore, as if admitting her failure to comply with the mandatory rule on notice of hearing, respondent invoked the much abused exhortation of losing litigants on the primacy of substantial justice over mere technicalities.Respondent's arguments have no merit.Section 4, Rule 15 of the Rules of Court provides:Sec. 4. Hearing of Motion. - Except for motions which the court may act upon without prejudicing the rights of the adverse party, every motion shall be set for hearing by the applicant.Every written motion required to be heard and the notice of hearing thereof shall be served in such a manner as to ensure its receipt by the other party at least three (3) days before the date of hearing, unless the court for good cause sets the hearing on shorter notice. (Emphasis supplied)Time and again, we have held that non-compliance with Section 4 of Rule 15 of the Rules of Court is a fatal defect. A motion which fails to comply with said Rule is a mere scrap of paper. If filed, such motion is not entitled to judicial cognizance.[12]The fact that the RTC took cognizance of a defective motion, such as requiring the parties to set it for hearing and denying the same for lack of merit, did not cure the defect of said motion.[13] It did not suspend the running of the period to appeal.[14]

Based on the foregoing, respondent's defective motion for reconsideration did not stop the running of her period to appeal. Thus, the appeal in the CA should have been dismissed outright as the decision of the RTC had by then already become final and executory.WHEREFORE, the petition is hereby GRANTED. The January 5, 2005 decision and March 22, 2005 resolution of the Court of Appeals are REVERSED and SET ASIDEand CA-G.R. CV No. 81666 is ordered DISMISSED.GLICERIA SARMIENTO, Petitioner, vs.EMERITA ZARATAN, Respondent. This petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to nullify the Court of Appeals Decision1 in CA-G.R. SP No. 79001 entitled, "Emerita Zaratan v. Hon. Ramon A. Cruz, as Presiding Judge of RTC, Quezon City, Branch 223, and Gliceria Sarmiento," dated 17 August 2004, which reversed and set side the Orders dated 19 June 2003 and 31 July 2003 of the Regional Trial Court (RTC) of Quezon City in Civil Case No. Q-03-49437, dismissing respondent’s appeal for failure to file the memorandum within the period provided for by law.On 2 September 2002, petitioner Gliceria Sarmiento filed an ejectment case2 against respondent Emerita Zaratan, in the Metropolitan Trial Court (MeTC) of Quezon City, Branch 36, docketed as Civil Case No. 29109.On 31 March 2003, the MeTC rendered a decision in favor of petitioner, the dispositive portion of which reads:WHEREFORE, the Court finds that plaintiff has sufficiently established her causes against the defendant and hereby order the defendant and all persons claiming rights under her:1. to pay plaintiff the monthly rentals of P3,500.00 for the said premises from August 1, 2002 until defendant vacates the premises;2. to pay plaintiff the sum of P20,000.00 plus P1,500.00 per appearance of counsel in court, as and for attorney’s fees; andto pay the cost of suit.3

Respondent filed her notice of appeal.4 Thereafter, the case was raffled to the RTC of Quezon City, Branch 223, docketed as Civil Case No. Q-03-49437.In the Notice of Appealed Case,5 the RTC directed respondent to submit her memorandum in accordance with the provisions of Section 7(b) of Rule 40 of the Rules of Court and petitioner to file a reply memorandum within 15 days from receipt.

Respondent’s counsel having received the notice on 19 May 2003, he had until 3 June 2003 within which to file the requisite memorandum. But on 3 June 2003, he filed a Motion for Extension of Time of five days due to his failure to finish the draft of the said Memorandum. He cited as reasons for the delay of filing his illness for one week, lack of staff to do the work due to storm and flood compounded by the grounding of the computers because the wirings got wet.6 But the motion remained unacted.On 9 June 2003, respondent filed her Memorandum. On 19 June 2003, the RTC dismissed the appeal as follows:Record shows that defendant-appellant received the Notice of Appealed Case, through counsel, on May 19, 2003 (Registry Return Receipt dated May 12, 2003, Record, back of p. 298). Thus, under Section 7(b), Rule 40 of the 1997 Rules of Civil Procedure, she had fifteen (15) days or until June 3, 2003 within which to submit a memorandum on appeal. As further appears on record, however, the required Memorandum was filed by defendant-appellant only on June 9, 2003 (Record, p. 623), or six (6) days beyond the expiration of the aforesaid fifteen day period.It should be stressed that while the rules should be liberally construed, the provisions on reglemenatry periods are strictly applied as they are "deemed indispensable to the prevention of needless delays and necessary to the orderly and speedy discharge of judicial business" (Legaspi-Santos vs. Court of Appeals, G.R. No. 60577, October 11, 1983) and strict compliance therewith is mandatory and imperative (FJR Garments Industries vs. Court of Appeals, G.R. No. L-49329, June 29, 1984). The same is true with respect to the rules on the manner and periods for perfecting appeals (Gutierrez vs. Court of Appeals, L-25972, November 26, 1968).Premises considered, the instant appeal is hereby DISMISSED. This renders academic defendant-appellant’s application for a writ of preliminary injunction.7 1awphi1.netOn the basis of the above-quoted Order, petitioner filed a Motion for Immediate Execution,8 while respondent moved for the Reconsideration.9 Both motions were denied by the RTC on 31 July 2003. The Order in part reads:In the main, defendant-appellants Motion for Reconsideration is premised on the argument that she filed a timely "Motion for Extension of Time To File Memorandum," dated and filed on June 3, 2003, but that her motion was not acted upon by this Court. She adds that her appeal memorandum was filed well within the period sought by her in her "Motion for Extension of Time to File Memorandum" so that her appeal should not have been dismissed.The argument is without merit. This Court did not take cognizance of defendant-appellant’s "Motion for Extension of Time to File Memorandum," and rightly so, because it did not contain a notice of hearing as required by Sections 4 and 5, Rule 15 of the Rules of Court, an omission for which it could offer no explanation. As declared in the case of Gozon, et al. v. court of Appeals (G.R. No. 105781, June 17, 1993);It is well-entrenched in this jurisdiction that a motion does not meet the requirements of Sections 4 and 5 of Rule 15 of the Rules of Court is considered a worthless piece of paper which the clerk has no right to receive, and the court has no authority to act upon.Moreover, parties and counsel should not assume that courts are bound to grant the time they pray for. A motion that is not acted upon in due time is deemed denied (Orosa vs. Court of Appeals, 261 SCRA 376 [1996]). Thus, defendant-appellant’s appeal was properly dismissed on account of her failure to file an appeal memorandum within the fifteen (15) day period provided under Section 7(b), Rule 40 of the 1997 Rules of Civil Procedure.With regard to the "Motion for Immediate Execution," dated June 23, 2003, filed by plaintiff-appellee, the rule is explicit that the execution of a judgment in an ejectment case, must be sought with the inferior court which rendered the same. The appellate court which affirms a decision brought before it on appeal cannot decree its execution in the guise of an execution of the affirming decision. The only exception is when said appellate court grants an execution pending appeal, which is not the case herein (City of Manila vs. Court of Appeals, 204 SCRA 362; Sy vs. Romero, 214 SCRA 187).10

Petitioner moved for reconsideration of the said Order, while respondent sought clarification on whether the 31 July 2003 Order dismissing the appeal was anchored on Section (b), Rule 40 or Section 7(c) of the same Rule.On 27 August 2003, the RTC reconsidered its previous Order by granting petitioner’s motion for Immediate Execution, but denied respondent’s Motion for Clarification, in this wise:Section 21, Rule 70 of the Rules of Court provides that "the judgment of the Regional Trial Court against the defendant shall be immediately executory, without prejudice to a further appeal that may be taken therefrom. Pursuant to this Rule and taking into account the arguments of the plaintiff in her "Urgent Motion for Reconsideration," the Court is inclined to grant the same. As further correctly argued by the plaintiff, through counsel, during the hearing on her motion on August 15, 2003, the cases of City of Manila v. Court of Appeals (204 SCRA 362) and Sy vs. Romero (214 SCRA 187) cited in the July 31, 2003 Order refer to ejectment cases which has (sic) been decided with finality and hence, inapplicable to this case where a further appeal is still available to the defendant. It should likewise be noted that while the Supreme Court ruled in these cases that execution of a judgment in an ejectment case must be sought with the inferior court which rendered the same, it likewise provided that for an exception to this rule, that is, in cases where the appellate court grants an execution pending appeal, as the case herein.With regard to defendant’s Motion for Clarification, contained in her Opposition, the Court notes that the issues raised therein have already been squarely dealt with in the July 31, 2003 Order. The same must, therefore, be denied.11

Aggrieved, respondent filed a Petition for Certiorari in the Court of Appeals, which was granted in a decision dated 17 August 2004. The appellate court nullified and set aside the 19 June 2003 and 31 July 2003 Orders of the RTC and ordered the reinstatement of respondent’s appeal. Consequently, respondent’s appeal memorandum was admitted and the case remanded to the RTC for further proceedings.12

Petitioner filed a motion for reconsideration13 on 13 September 2004, followed by a Motion for Inhibition14 of the members of the Eighth Division of the Court of Appeals on 20 September 2004. Both motions were denied for lack of merit on 10 March 2005.15

Hence, this appeal by petitioner posing the following issues,16 thus:1. Whether respondent’s petition for certiorari should have been dismissed in the first place;2. Whether the trial court committed grave abuse of discretion in denying respondent’s motion for extension;3. Whether it is Section 19 of Rule 7 that applies, and not Section 21; and4. Whether the Court of Appeals Justices should have inhibited themselves from further proceeding with the subject case.Stated otherwise, the main issue for resolution is whether the Court of Appeals committed a reversible error of law in granting the Writ of Certiorari. In granting the petition, the Court of Appeals ruled that the RTC erred in dismissing respondent’s appeal for failure to file the required Memorandum within the period provided by law and in granting petitioner’s Motion for Immediate Execution of the MeTC decision.Before resolving the substantive issues raised by petitioner, the Court will first address the procedural infirmities ascribed by petitioner. Petitioner assails the correctness and propriety of the remedy resorted to by respondent by filing a Petition for Certiorari in the Court of Appeals. According to petitioner, certiorari is not appropriate and unavailing as the proper remedy is an appeal.It must be noted that respondent’s appeal in the RTC was dismissed for failure to file the required memorandum within the period allowed by law, as the Motion for Extension of Time to file Memorandum was not acted upon for failure to attach a notice of hearing. From the said dismissal, respondent filed a Petition for Certiorari in the Court of Appeals.Respondent correctly filed said petition pursuant to Section 41 of the Rules of Court, which provides:Section 1. Subject of appeal. An appeal may be taken from a judgment or final order that completely disposes of the case, or of a particular matter therein when declared by these Rules to be appealable.No appeal may be taken: (d) An order disallowing or dismissing an appeal;In all the above instances where the judgment or final order is not appealable, the aggrieved party may file an appropriate civil action under Rule 65. (Underscoring supplied.)Petitioner also contends that the Petition for Certiorari filed in the Court of Appeals should be dismissed as the certification of non-forum shopping was defective. The verification in part reads:I, EMERITA ZARATAN, of legal age, after having been duly sworn to, according to law, depose and say:That I, Emerita Zaratan is one of the respondent (sic) in the above entitled case, hereby declare, that I have caused the preparation and filing of the foregoing Comment on the Petition; that I have read all the allegations therein, which are true and correct to the best of my own knowledge.That as respondent, I further certify that I have not commenced any other action or proceeding involving the same issues in the foregoing Petition in the Court of Appeals, the Supreme Court, or different Divisions thereof, respectively, or any tribunal, or agency; and should it be known that a similar action or proceeding has been filed or is pending in any of the abovementioned Courts or different Divisions thereof, the petitioner shall notify the Honorable Court to which this certification is filed, within five (5) days from such notice. (Underscoring ours.)Petitioner avers that respondent by stating in the above-quoted certification that she was the respondent, while in truth she was the petitioner and by stating that respondent caused the preparation of the comment on the petition, instead of the petition itself, indicate that respondent did not understand what she was signing. The defect of the verification all renders the petition in the Court of Appeals without legal effect and constitutes ground for its dismissal.The contention is baseless.The purpose of requiring a verification is to secure an assurance that the allegations of the petition have been made in good faith, or are true and correct, not merely speculative. This requirement is simply a condition affecting the form of pleadings and non-compliance therewith does not necessarily render it fatally defective.17 Perusal of the verification in question shows there was sufficient compliance with the requirements of the Rules and the alleged defects are not so material as to justify the dismissal of the petition in the Court of Appeals. The defects are mere typographical errors. There appears to be no intention to circumvent the need for proper verification and certification, which are intended to assure the truthfulness and correctness of the allegations in the petition and to discourage forum shopping.18

Now, the substantial issues.Corollary to the dismissal of the appeal by the RTC is the question of whether the lack of notice of hearing in the Motion for Extension of Time to file Memorandum on Appeal is fatal, such that the filing of the motion is a worthless piece of paper.Petitioner avers that, because of the failure of respondent to include a Notice of Hearing in her Motion for Extension of Time to file Memorandum on Appeal in the RTC, the latter’s motion is a worthless piece of paper with no legal effect.It is not disputed that respondent perfected her appeal on 4 April 2003 with the filing of her Notice of Appeal and payment of the required docket fees. However, before the expiration of time to file the Memorandum, she filed a Motion for Extension of Time seeking an additional period of five days within which to file her Memorandum, which motion lacked the Notice of Hearing required by Section 4, Rule 15 of the 1997 Rules of Court which provides:SEC. 4. Hearing of Motion. - Except for motions which the court may act upon without prejudicing the rights of the adverse party, every written motion shall be set for hearing by the applicant.

Every written motion required to be heard and the notice of the hearing thereof shall be served in such a manner as to ensure its receipt by the other party at least three (3) days before the date of hearing, unless the court for good cause sets the hearing on shorter notice.As may be gleaned above and as held time and again, the notice requirement in a motion is mandatory. As a rule, a motion without a Notice of Hearing is considered pro forma and does not affect the reglementary period for the appeal or the filing of the requisite pleading.19

As a general rule, notice of motion is required where a party has a right to resist the relief sought by the motion and principles of natural justice demand that his right be not affected without an opportunity to be heard.20 The three-day notice required by law is intended not for the benefit of the movant but to avoid surprises upon the adverse party and to give the latter time to study and meet the arguments of the motion.21 Principles of natural justice demand that the right of a party should not be affected without giving it an opportunity to be heard.22

The test is the presence of the opportunity to be heard, as well as to have time to study the motion and meaningfully oppose or controvert the grounds upon which it is based.23 Considering the circumstances of the present case, we believe that procedural due process was substantially complied with.There are, indeed, reasons which would warrant the suspension of the Rules: (a) the existence of special or compelling circumstances, b) the merits of the case, (c) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of rules, (d) a lack of any showing that the review sought is merely frivolous and dilatory, and (e) the other party will not be unjustly prejudiced thereby.24 Elements or circumstances (c), (d) and (e) exist in the present case.The suspension of the Rules is warranted in this case. The motion in question does not affect the substantive rights of petitioner as it merely seeks to extend the period to file Memorandum. The required extension was due to respondent’s counsel’s illness, lack of staff to do the work due to storm and flood, compounded by the grounding of the computers. There is no claim likewise that said motion was interposed to delay the appeal.25 As it appears, respondent sought extension prior to the expiration of the time to do so and the memorandum was subsequently filed within the requested extended period. Under the circumstances, substantial justice requires that we go into the merits of the case to resolve the issue of who is entitled to the possession of the land in question.Further, it has been held that a "motion for extension of time x x x is not a litigated motion where notice to the adverse party is necessary to afford the latter an opportunity to resist the application, but an ex parte motion made to the court in behalf of one or the other of the parties to the action, in the absence and usually without the knowledge of the other party or parties." As a general rule, notice of motion is required where a party has a right to resist the relief sought by the motion and principles of natural justice demand that his rights be not affected without an opportunity to be heard. It has been said that "ex parte motions are frequently permissible in procedural matters, and also in situations and under circumstances of emergency; and an exception to a rule requiring notice is sometimes made where notice or the resulting delay might tend to defeat the objective of the motion."26

It is well to remember that this Court, in not a few cases, has consistently held that cases shall be determined on the merits, after full opportunity to all parties for ventilation of their causes and defense, rather than on technicality or some procedural imperfections. In so doing, the ends of justice would be better served.27 Furthermore, this Court emphasized its policy that technical rules should accede to the demands of substantial justice because there is no vested right in technicalities. Litigations, should, as much as possible, be decided on their merits and not on technicality. Dismissal of appeals purely on technical grounds is frowned upon, and the rules of procedure ought not to be applied in a very rigid, technical sense, for they are adopted to help secure, not override, substantial justice, and thereby defeat their very aims. As has been the constant rulings of this Court, every party-litigant should be afforded the amplest opportunity for the proper and just disposition of his cause, free from constraints of technicalities.28 Indeed, rules of procedure are mere tools designed to expedite the resolution of cases and other matters pending in court. A strict and rigid application of the rules that would result in technicalities that tend to frustrate rather than promote justice must be avoided.29

The visible emerging trend is to afford every party-litigant the amplest opportunity for the proper and just determination of his cause, free from constraints and technicalities.Parenthetically, it must be noted also that when the appeal was dismissed on 19 June 2003, the memorandum was already filed in court on 9 June 2003.On the issue of immediate execution of judgment.The applicable provision is Section 19, Rule 70 of the Rules of Court, which reads:SEC. 19. Immediate Execution of judgment; how to stay the same.- If judgment is rendered against the defendant, execution shall issue immediately upon motion, unless an appeal has been perfected and the defendant to stay execution files a sufficient supersedeas bond, approved by the Municipal Trial Court and executed in favor of the plaintiff to pay the rents, damages, and costs accruing down to the time of the judgment appealed from, and unless, during the pendency of the appeal, he deposits with the appellate court the amount of rent due from time to time under the contract, if any, as determined by the judgment of the Municipal Trial Court. x x x.To stay the immediate execution of judgment in ejectment proceedings, Section 19 requires that the defendant-appellant must (a) perfect his appeal, (b) file a supersedeas bond, and (c) periodically deposit the rentals falling due during the pendency of the appeal.

As correctly observed by the Court of Appeals, execution pending appeal was premature as respondent had already filed a supersedeas bond and the monthly rental for the current month of the premises in question.30

The invocation of petitioner of the provisions of Section 21, Rule 70 of the Rules of Court, which runs:Sec. 21. Immediate execution on appeal to Court of Appeals or Supreme Court.- The judgment of the Regional Trial Court against the defendant shall be immediately executory, without prejudice to a further appeal that may be taken therefrom.to justify the issuance of the writ of execution pending appeal in this case is misplaced.A closer examination of the above-quoted provision reveals that said provision applies to decision of the RTC rendered in its appellate jurisdiction, affirming the decision of the MeTC. In the case at bar, the RTC order was an order dismissing respondent’s appeal based on technicality. It did not resolve substantive matters delving on the merits of the parties’ claim in the ejectment case. Thus, the case brought to the Court of Appeals was the dismissal of the appeal for failure to file the required memorandum within the period provided by law, and not on the merits of the ejectment case.Lastly, petitioner posited the view that the Court of Appeals’ justices should have inhibited themselves because of bias and partiality for deciding the case within eight months and for being very selective in discussing the issues.We reject the proposition.Inhibition must be for just and valid causes. The mere imputation of bias and partiality is not enough ground for judges to inhibit, especially when the charge is without basis. This Court has to be shown acts or conduct clearly indicative of arbitrariness or prejudice before it can brand them with the stigma of bias and partiality.31 This Court has invariably held that for bias and prejudice to be considered valid reasons for the voluntary inhibition of judges, mere suspicion is not enough. Bare allegations of their partiality will not suffice "in the absence of clear and convincing evidence to overcome the presumption that the judge will undertake his noble role to dispense justice according to law and evidence and without fear and favor."32

There is no factual support to petitioner’s charge of bias and partiality. A perusal of the records of the case fails to reveal that any bias or prejudice motivated the Court of Appeals in granting respondent’s petition. Neither did this Court find any questionable or suspicious circumstances leading to the issuance of the questioned decision, as suggested by petitioner.The fact alone that the Court of Appeals decided the case within eight months does not in any way indicate bias and partiality against petitioner. It is within the constitutional mandate to decide the case within 12 months.33

As to petitioner’s allegation that the Court of Appeals was selective in choosing what issues to resolve, it bears to stress again that "a judge’s appreciation or misappreciation of the sufficiency of evidence x x x adduced by the parties, x x x, without proof of malice on the part of respondent judge, is not sufficient to show bias and partiality."34 We also emphasized that "repeated rulings against a litigant, no matter how erroneously, vigorously and consistently expressed, do not amount to bias and prejudice which can be bases for the disqualification of a judge."35

IN ALL, petitioner utterly failed to show that the appellate court erred in issuing the assailed decision. On the contrary, it acted prudently in accordance with law and jurisprudence.WHEREFORE, the instant petition is hereby DENIED for lack of merit. The Decision dated 17 August 2004 and the Resolution dated 10 March 2005 of the Court of Appeals in CA-G.R. SP No. 79001 are hereby AFFIRMED. No costs.SO ORDERED.ROMULO vs. PERALTAEN BANCSirs and Mesdames:Quoted hereunder, for your information, is a resolution of this Court dated JUN 21 2005.G.R. No. 165665 (Hon. Alberto Romulo, substituted by the Hon. Eduardo I. Ermita, et al. vs. Hon. Judge Eduardo B. Peralta, Jr., etc., et al.)Considering the allegations, issues and arguments adduced in the petition, as well as in the comment thereon, and in the reply, the Court Resolved to (1) GIVE DUE COURSE to the petition; (2) TREAT the comment as ANSWER; and (3) REQUIRE the parties to SUBMIT their respective MEMORANDA within thirty (30) days from notice hereof.The memorandum of each party shall contain the following:(a) A "Statement of the Case," which is a clear and concise statement of the nature of the action, a summary of the proceedings, the challenged decision, resolution or order of the court below, the nature of the judgment and other matters necessary to an understanding of the nature of the controversy;(b) A "Statement of the Facts," which is a clear and concise statement in a narrative form of the established facts;(c) A "Statement of the Issues," which is a clear and concise statement of the issues to be submitted to the Court for its resolution;(d) The "Argument," which is a clear and concise presentation of the argument in support of each issue; and(e) The "Relief," which is a specification of the order or judgment which the party seeks to obtain.No new issues may be raised by a party in his/its Memorandum, and the issues raised in his/its pleadings but not included in the Memorandum shall be deemed waived or abandoned. Being a summation of the parties' previous pleadings, the Court may consider the Memorandum alone in deciding or resolving this petition the pertinent records of this case be TRANSFERRED to the Court of Appeals.Very truly yours,LUZVIMINDA D. PUNOClerk of Court

(Sgd.) MA. LUISA D. VILLARAMAAsst. Clerk of CourtVETTE INDUSTRIAL SALES CO., INC., KENNETH TAN, ESTRELLA CHENG, LUISITO RAMOS, YVETTE TAN, KESSENTH CHENG, VEVETTE CHENG and FELESAVETTE CHENG, petitioners, vs.SUI SOAN S. CHENG a.k.a. CHENG SUI SOAN, respondent.x ---------------------------------------------------- xG.R. No. 170301 December 5, 2006SUI SOAN S. CHENG a.k.a. CHENG SUI SOAN, petitioner, vs.VETTE INDUSTRIAL SALES CO., INC., KENNETH TAN, ESTRELLA CHENG, LUISITO RAMOS, YVETTE TAN, KESSENTH CHENG, VEVETTE CHENG and FELESAVETTE CHENG, respondents.These consolidated Petitions for Review on Certiorari1 assail the Decision2 dated September 22, 2005 of the Court of Appeals in CA-G.R. SP No. 88863 entitled, "Vette Industrial Sales, Company, Inc., Kenneth Tan, Estrella Cheng, Luisito Ramos, Yvette Tan, Kessenth Cheng, Vevette Cheng, and Felesavette Cheng, Petitioners versus Hon. Regional Trial Court of Manila, Branch 173, and Sui Soan S. Cheng a.k.a. Cheng Sui Soan, Respondents." Also assailed is the Resolution3 dated October 27, 2005 denying petitioners’ motion for partial reconsideration and respondent Sui’s motion for reconsideration.In his Complaint4 for specific performance and damages filed against Vette Industrial Sales Company, Inc., Kenneth Tan, Estrella Cheng, Luisito Ramos, Yvette Tan, Kessenth Cheng, Vevette Cheng, and Felesavette Cheng (petitioners) and docketed as Civil Case No. 03-105691, Sui Soan S. Cheng a.k.a. Cheng Sui Soan (Sui) alleged that on October 24, 2001, he executed a Deed of Assignment,5 where he transferred his 40,000 shares in the company in favor of Kenneth Tan, Vevette Cheng, Felesavette Cheng, and Yvette Tan (Petitioners-Assignees). To implement the Deed of Assignment, the company acknowledged in a Memorandum of Agreement (MOA),6 that it owed him P6.8 million pesos, plus insurance proceeds amounting to P760,000.00 and a signing bonus of P300,000.00. Thereafter, he was issued 48 postdated checks but after the 11th check, the remaining checks were dishonored by the bank. Sui also claimed that petitioners did not remit to him the insurance proceeds, thus breaching their obligation under the MOA which entitled him to moral and exemplary damages, and attorney’s fees.In their Answer With Compulsory Counterclaim,7 petitioners alleged that Sui sold his shares for only P1.00 per share which they already paid; that the MOA was unenforceable because it was executed without authorization from the board of directors; that the MOA was void for want of consideration; and that petitioner Kenneth Tan executed the MOA after Sui issued threats and refused to sign the waiver and quitclaim.After the issues were joined, pre-trial was set on July 3, 2003.8 However, the case was first submitted for mediation but it was referred back to the court for continuation of the proceedings when no settlement was arrived at during mediation.Sui thereafter filed a Motion to Set Pre-trial9 on December 16, 2003. Petitioners received the motion but they did not attend because there was no notice from the Court setting the pre-trial date. On December 29, 2003, petitioners received two orders from the trial court. The first Order10 allowed Sui to present evidence ex-parte, while the second Order11 revoked the first order after the trial court noted that "what was set for consideration on December 16, 2003 was merely a motion to set pre-trial." Thus, the trial court reset the pre-trial on January 15, 2004 but it was postponed and moved to May 21, 2004. On said date, Sui and his counsel, Atty. Pedro M. Ferrer (Atty. Ferrer), failed to appear. Consequently, the trial court ordered the dismissal of the case without prejudice on the part of petitioners to present and prove their counterclaim and set the hearing for reception of evidence on June 22, 2004.12

Atty. Ferrer filed a Manifestation and Motion for Reconsideration13 of the order of dismissal, explaining that he arrived late for the hearing because he had to drop by his office to get the case folder because he had just arrived from South Cotabato where he served as Chief Counsel in the Provincial Board of Canvassers for Governor Datu Pax Mangudadatu and Congressman Suharto Mangudadatu.The trial court required petitioners to file their Comment on the Manifestation and Motion for Reconsideration. In their Opposition,14 petitioners asserted that the motion for reconsideration be denied outright because (1) Sui did not comply with the three-day notice rule which is mandatory under Section 4, Rule 15 of the Rules of Court considering that petitioners received the manifestation and motion for reconsideration only one day prior to the date of hearing of the motion for resolution, thus the same must be treated as a mere scrap of paper; (2) the trial court did not comply with Section 6 of Rule 15 of the Rules15 when it acted on the manifestation and motion of Sui despite the latter’s failure to submit proof of receipt by petitioners of the manifestation and motion; (3) the negligence of counsel binds the client, thus, when Atty. Ferrer arrived late for the hearing, the trial court correctly dismissed the complaint; and (4) the explanation of Atty. Ferrer is unacceptable because traffic gridlocks are daily events in the metropolis, thus, Atty. Ferrer should have left his place early.In his Reply,16 Sui averred that the motion complied with Section 5 of Rule 15 of the Rules17 and that the setting of the hearing of the motion on May 28, 2004 was within the three day period for it was filed on May 25, 2004. He added that the same was not heard because the trial court allowed petitioners to file a comment on the manifestation and motion for reconsideration, which was received by the latter prior to the said setting.In an Order dated December 16, 2004,18 the trial court granted Sui’s motion for reconsideration and set aside the dismissal of the complaint, the dispositive portion of which provides:

WHEREFORE, prescinding with such ruling and in the interest of substantial justice, plaintiff’s motion is GRANTED and the order dated May 21, 2004 is hereby lifted and set aside with the warning that any delay in this proceedings will not be countenanced by the Court.Set pre-trial anew on February 15, 2005.Notify the parties.SO ORDERED.19

The trial court cited Ace Navigation Co., Inc. v. Court of Appeals,20 which held that since rules of procedure are mere tools designed to facilitate the attainment of justice, their strict and rigid application which would result in technicalities that tend to frustrate rather than promote substantial justice must always be avoided – the dismissal of an appeal on purely technical ground is frowned upon especially if it will result to unfairness.The Motion for Reconsideration21 filed by petitioners was denied by the trial court22 hence they filed a Petition for Certiorari23 with the Court of Appeals which granted the petition, thus:UPON THE VIEW WE TAKE OF THIS CASE, THUS, the writ applied for is partly GRANTED. The assailed orders must be, as they hereby are, VACATED and SET ASIDE, and another hereby issued dismissing the instant complaint, but "without prejudice." This means that the complaint can be REINSTATED. On the other hand, petitioners are hereby given leave to present before the Trial Court evidence of their counterclaim. Without costs in this instance.SO ORDERED.24

The Court of Appeals noted that both Atty. Ferrer and Sui were not in attendance at the pre-trial conference; that Section 5 of Rule 18 mentions only the effect of the failure to appear on the part of "the plaintiff" but is silent on the effect of failure of the party’s counsel to appear at the pre-trial; that the Manifestation and Motion for Reconsideration25 mentioned only the reasons why Atty. Ferrer was absent without stating that he was fully authorized in writing to enter into an amicable settlement, or to submit to alternative modes of dispute resolution, or to enter into stipulations or admissions of facts and of documents; and that there was no explanation for Sui’s nonappearance. Thus, based on these circumstances, the Court of Appeals held that dismissal of the case is proper but without prejudice to the filing of a new action.26

Both parties moved for reconsideration but the same were jointly denied in a Resolution dated October 27, 2005.Hence, these consolidated Petitions.In G.R. No. 170232, petitioners raise the following errors:I.THE COURT OF APPEALS ERRED IN NOT DISMISSING THE COMPLAINT OF RESPONDENT CHENG IN CIVIL CASE NO. 03-105691 WITH PREJUDICE.II.THE COURT OF APPEALS ERRED IN CONCLUDING THAT RESPONDENT’S COUNSEL FAILED TO APPRECIATE THE BASIC RULES ON PRE-TRIAL.III.THE COURT OF APPEALS ERRED IN NOT CONSIDERING THE MISTAKE OR NEGLIGENCE OF RESPONDENT’S COUNSEL AS BINDING ON THE RESPONDENT HIMSELF.IV.THE COURT OF APPEALS ERRED IN APPLYING THE RULINGS OF THE HONORABLE COURT IN THE DE LOS REYES VS. CAPULE (102 PHIL. 464) AND SUAREZ VS. COURT OF APPEALS (220 SCRA 274)CASES.V.THE COURT OF APPEALS ERRED IN NOT CONSIDERING RESPONDENT’S MANIFESTATION AND MOTION FOR RECONSIDERATION DATED MAY 21, 2004 FILED BEFORE THE TRIAL COURT AS A MERE SCRAP, AND A USELESS PIECE, OF PAPER AND IN NOT CONSIDERING THE ORDER DATED MAY 21, 2004 OF THE TRIAL COURT AS ALREADY FINAL IN VIEW OF THE PROCEDURAL INVALIDITY/DEFECTIVENESS (I.E. IT FAILED TO COMPLY WITH SECTIONS 4 AND 6 OF THE RULES) OF RESPONDENT’S MANIFESTATION AND MOTION FOR RECONSIDERATION DATED MAY 21, 2004.In G.R. No. 170301, Sui raises the following issues, thus:I. THE COURT OF APPEALS ERRED IN NOT RULING THAT THE NON-APPEARANCE OF PETITIONER IN THE PRE-TRIAL MAY BE EXCUSED FOR A VALID CAUSE.II. THE COURT OF APPEALS ERRED IN NOT RULING THAT THE CASE OF ACE NAVIGATION CO. INC. VS. COURT OF APPEALS IS SQUARELY APPLICABLE TO THE INSTANT CASE.The core issue for resolution is whether the Court of Appeals erred in dismissing without prejudice Civil Case No. 03-105691 and in ruling that the trial court committed grave abuse of discretion when it granted Sui’s motion for reconsideration to set aside the order of dismissal of the complaint.The judge has the discretion whether or not to declare a party non-suited.27 It is, likewise, settled that the determination of whether or not an order of dismissal issued under such conditions should be maintained or reconsidered rests upon the sound discretion of the trial judge.28 The next question to be resolved is whether there was grave abuse of discretion of the trial judge. We hold that there was none.The case of Estate of Salud Jimenez v. Philippine Export Processing Zone29 discussed the propriety of filing a Petition for Certiorari under Section 1 of Rule 65 of the Rules of Court, thus:A petition for certiorari is the proper remedy when any tribunal, board, or officer exercising judicial or quasi-judicial functions has acted without or in excess of its jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction and there is no appeal, nor any plain, speedy, and adequate remedy at law. Grave abuse of discretion is defined as the capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. An error of judgment committed in the exercise of its legitimate jurisdiction is not the same as "grave abuse of discretion." An abuse of discretion is not sufficient by itself to justify the issuance of a writ of certiorari. The abuse must be grave and patent, and it must be shown that the discretion was exercised arbitrarily and despotically.As a general rule, a petition for certiorari will not lie if an appeal is the proper remedy thereto such as when an error of judgment as well as of procedure are involved. As long as a court acts within its jurisdiction and does not gravely abuse

its discretion in the exercise thereof, any supposed error committed by it will amount to nothing more than an error of judgment reviewable by a timely appeal and not assailable by a special civil action of certiorari. However, in certain exceptional cases, where the rigid application of such rule will result in a manifest failure or miscarriage of justice, the provisions of the Rules of Court which are technical rules may be relaxed. Certiorari has been deemed to be justified, for instance, in order to prevent irreparable damage and injury to a party where the trial judge has capriciously and whimsically exercised his judgment, or where there may be danger of clear failure of justice, or where an ordinary appeal would simply be inadequate to relieve a party from the injurious effects of the judgment complained of.30 (Emphasis supplied)Lack of jurisdiction and excess of jurisdiction are distinguished thus: the respondent acts without jurisdiction if he does not have the legal power to determine the case; where the respondent, being clothed with the power to determine the case, oversteps his authority as determined by law, he is performing a function in excess of his jurisdiction.31 Thus, we now discuss whether the trial court granted the motion for reconsideration of Sui and reinstated the complaint without basis in law. Citing the case of Ace Navigation Co., Inc. v. Court of Appeals,32 the trial court held that rules of procedures are mere tools designed to facilitate the attainment of justice and must be relaxed if its strict and rigid application would frustrate rather than promote substantial justice. Thus, it lifted and set aside its order of dismissal in the interest of substantial justice, which is the legal basis for the trial court to grant the motion for reconsideration of Sui.We have repeatedly warned against the injudicious and often impetuous issuance of default orders.33 While it is desirable that the Rules of Court be faithfully observed, courts should not be so strict about procedural lapses that do not really impair the proper administration of justice. If the rules are intended to ensure the proper and orderly conduct of litigation, it is because of the higher objective they seek which is the attainment of justice and the protection of substantive rights of the parties. Thus, the relaxation of procedural rules, or saving a particular case from the operation of technicalities when substantial justice requires it, as in the instant case, should no longer be subject to cavil.34

When the Court of Appeals held that the case is dismissible because Sui did not attend the pre-trial conference, it failed to consider the explanation of Atty. Ferrer that Sui executed a "Special Power of Attorney" in his behalf and that he was not absent on the scheduled pre-trial but was only late.Under Section 4 of Rule 18 of the Rules,35 the non-appearance of a party at the pre-trial may be excused when there is a valid cause shown or when a representative shall appear in his behalf, and is fully authorized in writing to enter into an amicable settlement, to submit to alternative modes of dispute resolution, and to enter into stipulations or admissions of facts and of documents. Although Sui was absent during the pre-trial, Atty. Ferrer alleged that he was fully authorized to represent Sui. Moreover, it is not entirely accurate to state that Atty. Ferrer was absent during the pre-trial because he was only late, the reasons for which he explained in his Manifestation and Motion for Reconsideration. The circumstances attendant in the instant case compel this Court to relax the rules of procedure in the interest of substantial justice.Petitioners claim that the motion for reconsideration of Sui was procedurally defective because it was not served three days before the date of the hearing and no proof of service was given to the court, in violation of Sections 4 and 6 of Rule 15. Petitioners also aver that they received the Manifestation and Motion for Reconsideration of Sui on May 27, 2004 but the hearing was scheduled on May 28, 2004. Thus, it is nothing but a scrap of paper because it violated the three-day notice rule.We are not persuaded.In the instant case, we find that the purpose of a notice of hearing had been served. In Vlason Enterprises Corporation v. Court of Appeals,36 we enumerated the exceptions to the rule on notice of hearing, to wit:The Court has consistently held that a motion which does not meet the requirements of Sections 4 and 5 of Rule 15 of the Rules of Court is considered a worthless piece of paper, which the clerk of court has no right to receive and the trial court has no authority to act upon. Service of a copy of a motion containing a notice of the time and the place of hearing of that motion is a mandatory requirement, and the failure of movants to comply with these requirements renders their motions fatally defective. However, there are exceptions to the strict application of this rule. These exceptions are as follows:"x x x Liberal construction of this rule has been allowed by this Court in cases (1) where a rigid application will result in a manifest failure or miscarriage of justice; especially if a party successfully shows that the alleged defect in the questioned final and executory judgment is not apparent on its face or from the recitals contained therein; (2) where the interest of substantial justice will be served; (3) where the resolution of the motion is addressed solely to the sound and judicious discretion of the court; and (4) where the injustice to the adverse party is not commensurate [to] the degree of his thoughtlessness in not complying with the procedure prescribed."The present case falls under the first exception. Petitioner was not informed of any cause of action or claim against it. All of a sudden, the vessels which petitioner used in its salvaging business were levied upon and sold in execution to satisfy a supposed judgment against it. To allow this to happen simply because of a lapse in fulfilling the notice requirement – which, as already said, was satisfactorily explained – would be a manifest failure or miscarriage of justice.A notice of hearing is conceptualized as an integral component of procedural due process intended to afford the adverse parties a chance to be heard before a motion is resolved by the court. Through such notice, the adverse party is permitted time to study and answer the arguments in the motion.Circumstances in the case at bar show that private respondent was not denied procedural due process, and that the very purpose of a notice of hearing had been served. On the day of the hearing, Atty. Desierto did not object to the said

Motion for lack of notice to him; in fact, he was furnished in open court with a copy of the motion and was granted by the trial court thirty days to file his opposition to it. These circumstances clearly justify a departure from the literal application of the notice of hearing rule. In other cases, after the trial court learns that a motion lacks such notice, the prompt resetting of the hearing with due notice to all the parties is held to have cured the defect.Verily, the notice requirement is not a ritual to be followed blindly. Procedural due process is not based solely on a mechanistic and literal application that renders any deviation inexorably fatal. Instead, procedural rules are liberally construed to promote their objective and to assist in obtaining a just, speedy and inexpensive determination of any action and proceeding. For the foregoing reasons, we believe that Respondent Court committed reversible error in holding that the Motion for Reconsideration was a mere scrap of paper.37 (Emphasis supplied)When the trial court received Sui’s Manifestation and Motion for Reconsideration, it did not immediately resolve the motion. Instead, it allowed petitioners to file their comment and also leave to file a rejoinder if Sui files a reply.38These circumstances justify a departure from the literal application of the rule because petitioners were given the opportunity to study and answer the arguments in the motion.Petitioners’ claim that Sui failed to attach proof of service in violation of Section 6, Rule 15 of the Rule, must fail. In Republic of the Philippines v. Court of Appeals,39 we held, thus:Nonetheless, considering the question raised in the appeal of the government and the amount involved in this case, we think the Court of Appeals should have considered the subsequent service of the motion for reconsideration to be a substantial compliance with the requirement in Rule 15, §6. In De Rapisura v. Nicolas, the movant also failed to attach to his motion for reconsideration proof of service of a copy thereof to the other party. Nonetheless, this Court held the failure not fatal as the adverse party had actually received a copy of the motion and was in fact present in court when the motion was heard. It was held that the demands of substantial justice were satisfied by the actual receipt of said motion under those conditions.40

Petitioners admitted that they received a copy of Sui’s Manifestation and Motion for Reconsideration. In fact, they had the opportunity to oppose the same. Under these circumstances, we find that the demands of substantial justice and due process were satisfied.It is the policy of the Court to afford party-litigants the amplest opportunity to enable them to have their cases justly determined, free from the constraints of technicalities.41 It should be remembered that rules of procedure are but tools designed to facilitate the attainment of justice, such that when rigid application of the rules tend to frustrate rather than promote substantial justice, this Court is empowered to suspend their operation.42

WHEREFORE, in view of the foregoing, the Decision dated September 22, 2005 and the Resolution dated October 27, 2005 of the Court of Appeals in CA-G.R. SP No. 88863 is REVERSED and SET ASIDE. The Order of the Regional Trial Court in Civil Case No. 03-105691, lifting its previous order of dismissal is REINSTATED and AFFIRMED.SO ORDERED.REPUBLIC OF THE PHILIPPINES, represented by the ANTI-MONEY LAUNDERING COUNCIL, petitioner, vs.GLASGOW CREDIT AND COLLECTION SERVICES, INC. and CITYSTATE SAVINGS BANK, INC., respondents.This is a petition for review1 of the order2 dated October 27, 2005 of the Regional Trial Court (RTC) of Manila, Branch 47, dismissing the complaint for forfeiture3 filed by the Republic of the Philippines, represented by the Anti-Money Laundering Council (AMLC) against respondents Glasgow Credit and Collection Services, Inc. (Glasgow) and Citystate Savings Bank, Inc. (CSBI).On July 18, 2003, the Republic filed a complaint in the RTC Manila for civil forfeiture of assets (with urgent plea for issuance of temporary restraining order [TRO] and/or writ of preliminary injunction) against the bank deposits in account number CA-005-10-000121-5 maintained by Glasgow in CSBI. The case, filed pursuant to RA 9160 (the Anti-Money Laundering Act of 2001), as amended, was docketed as Civil Case No. 03-107319.Acting on the Republic’s urgent plea for the issuance of a TRO, the executive judge4 of RTC Manila issued a 72-hour TRO dated July 21, 2003. The case was thereafter raffled to Branch 47 and the hearing on the application for issuance of a writ of preliminary injunction was set on August 4, 2003.After hearing, the trial court (through then Presiding Judge Marivic T. Balisi-Umali) issued an order granting the issuance of a writ of preliminary injunction. The injunctive writ was issued on August 8, 2003.Meanwhile, summons to Glasgow was returned "unserved" as it could no longer be found at its last known address.On October 8, 2003, the Republic filed a verified omnibus motion for (a) issuance of alias summons and (b) leave of court to serve summons by publication. In an order dated October 15, 2003, the trial court directed the issuance of alias summons. However, no mention was made of the motion for leave of court to serve summons by publication.In an order dated January 30, 2004, the trial court archived the case allegedly for failure of the Republic to serve the alias summons. The Republic filed an ex parte omnibus motion to (a) reinstate the case and (b) resolve its pending motion for leave of court to serve summons by publication.In an order dated May 31, 2004, the trial court ordered the reinstatement of the case and directed the Republic to serve the alias summons on Glasgow and CSBI within 15 days. However, it did not resolve the Republic’s motion for leave of court to serve summons by publication declaring:Until and unless a return is made on the alias summons, any action on [the Republic’s] motion for leave of court to serve summons by publication would be untenable if not premature.On July 12, 2004, the Republic (through the Office of the Solicitor General [OSG]) received a copy of the sheriff’s return dated June 30, 2004 stating that the alias summons was returned "unserved" as Glasgow was no longer holding office at the given address since July 2002 and left no forwarding address.

Meanwhile, the Republic’s motion for leave of court to serve summons by publication remained unresolved. Thus, on August 11, 2005, the Republic filed a manifestation and ex parte motion to resolve its motion for leave of court to serve summons by publication.On August 12, 2005, the OSG received a copy of Glasgow’s "Motion to Dismiss (By Way of Special Appearance)" dated August 11, 2005. It alleged that (1) the court had no jurisdiction over its person as summons had not yet been served on it; (2) the complaint was premature and stated no cause of action as there was still no conviction for estafa or other criminal violations implicating Glasgow and (3) there was failure to prosecute on the part of the Republic.The Republic opposed Glasgow’s motion to dismiss. It contended that its suit was an action quasi in rem where jurisdiction over the person of the defendant was not a prerequisite to confer jurisdiction on the court. It asserted that prior conviction for unlawful activity was not a precondition to the filing of a civil forfeiture case and that its complaint alleged ultimate facts sufficient to establish a cause of action. It denied that it failed to prosecute the case.On October 27, 2005, the trial court issued the assailed order. It dismissed the case on the following grounds: (1) improper venue as it should have been filed in the RTC of Pasig where CSBI, the depository bank of the account sought to be forfeited, was located; (2) insufficiency of the complaint in form and substance and (3) failure to prosecute. It lifted the writ of preliminary injunction and directed CSBI to release to Glasgow or its authorized representative the funds in CA-005-10-000121-5.Raising questions of law, the Republic filed this petition.On November 23, 2005, this Court issued a TRO restraining Glasgow and CSBI, their agents, representatives and/or persons acting upon their orders from implementing the assailed October 27, 2005 order. It restrained Glasgow from removing, dissipating or disposing of the funds in account no. CA-005-10-000121-5 and CSBI from allowing any transaction on the said account.The petition essentially presents the following issue: whether the complaint for civil forfeiture was correctly dismissed on grounds of improper venue, insufficiency in form and substance and failure to prosecute.The Court agrees with the Republic.The Complaint Was Filed In The Proper VenueIn its assailed order, the trial court cited the grounds raised by Glasgow in support of its motion to dismiss:1. That this [c]ourt has no jurisdiction over the person of Glasgow considering that no [s]ummons has been served upon it, and it has not entered its appearance voluntarily;2. That the [c]omplaint for forfeiture is premature because of the absence of a prior finding by any tribunal that Glasgow was engaged in unlawful activity: [i]n connection therewith[,] Glasgow argues that the [c]omplaint states no cause of action; and3. That there is failure to prosecute, in that, up to now, summons has yet to be served upon Glasgow.5

But inasmuch as Glasgow never questioned the venue of the Republic’s complaint for civil forfeiture against it, how could the trial court have dismissed the complaint for improper venue? In Dacoycoy v. Intermediate Appellate Court6 (reiterated in Rudolf Lietz Holdings, Inc. v. Registry of Deeds of Parañaque City),7 this Court ruled:The motu proprio dismissal of petitioner’s complaint by [the] trial court on the ground of improper venue is plain error…. (emphasis supplied)At any rate, the trial court was a proper venue.On November 15, 2005, this Court issued A.M. No. 05-11-04-SC, the Rule of Procedure in Cases of Civil Forfeiture, Asset Preservation, and Freezing of Monetary Instrument, Property, or Proceeds Representing, Involving, or Relating to an Unlawful Activity or Money Laundering Offense under RA 9160, as amended (Rule of Procedure in Cases of Civil Forfeiture). The order dismissing the Republic’s complaint for civil forfeiture of Glasgow’s account in CSBI has not yet attained finality on account of the pendency of this appeal. Thus, the Rule of Procedure in Cases of Civil Forfeiture applies to the Republic’s complaint.8 Moreover, Glasgow itself judicially admitted that the Rule of Procedure in Cases of Civil Forfeiture is "applicable to the instant case."9

Section 3, Title II (Civil Forfeiture in the Regional Trial Court) of the Rule of Procedure in Cases of Civil Forfeiture provides:Sec. 3. Venue of cases cognizable by the regional trial court. – A petition for civil forfeiture shall be filed in any regional trial court of the judicial region where the monetary instrument, property or proceeds representing, involving, or relating to an unlawful activity or to a money laundering offense are located; provided, however, that where all or any portion of the monetary instrument, property or proceeds is located outside the Philippines, the petition may be filed in the regional trial court in Manila or of the judicial region where any portion of the monetary instrument, property, or proceeds is located, at the option of the petitioner. (emphasis supplied)Under Section 3, Title II of the Rule of Procedure in Cases of Civil Forfeiture, therefore, the venue of civil forfeiture cases is any RTC of the judicial region where the monetary instrument, property or proceeds representing, involving, or relating to an unlawful activity or to a money laundering offense are located. Pasig City, where the account sought to be forfeited in this case is situated, is within the National Capital Judicial Region (NCJR). Clearly, the complaint for civil forfeiture of the account may be filed in any RTC of the NCJR. Since the RTC Manila is one of the RTCs of the NCJR,10 it was a proper venue of the Republic’s complaint for civil forfeiture of Glasgow’s account.The Complaint Was Sufficient In Form And Substance

In the assailed order, the trial court evaluated the Republic’s complaint to determine its sufficiency in form and substance:At the outset, this [c]ourt, before it proceeds, takes the opportunity to examine the [c]omplaint and determine whether it is sufficient in form and substance.Before this [c]ourt is a [c]omplaint for Civil Forfeiture of Assets filed by the [AMLC], represented by the Office of the Solicitor General[,] against Glasgow and [CSBI] as necessary party. The [c]omplaint principally alleges the following:(a) Glasgow is a corporation existing under the laws of the Philippines, with principal office address at Unit 703, 7th Floor, Citystate Center [Building], No. 709 Shaw Boulevard[,] Pasig City;(b) [CSBI] is a corporation existing under the laws of the Philippines, with principal office at Citystate Center Building, No. 709 Shaw Boulevard, Pasig City;(c) Glasgow has funds in the amount of P21,301,430.28 deposited with [CSBI], under CA 005-10-000121-5;(d) As events have proved, aforestated bank account is related to the unlawful activities of Estafa and violation of Securities Regulation Code;(e) The deposit has been subject of Suspicious Transaction Reports;(f) After appropriate investigation, the AMLC issued Resolutions No. 094 (dated July 10, 2002), 096 (dated July 12, 2002), 101 (dated July 23, 2002), and 108 (dated August 2, 2002), directing the issuance of freeze orders against the bank accounts of Glasgow;(g) Pursuant to said AMLC Resolutions, Freeze Orders Nos. 008-010, 011 and 013 were issued on different dates, addressed to the concerned banks;(h) The facts and circumstances plainly showing that defendant Glasgow’s bank account and deposit are related to the unlawful activities of Estafa and violation of Securities Regulation Code, as well as to a money laundering offense [which] [has] been summarized by the AMLC in its Resolution No. 094; and(i) Because defendant Glasgow’s bank account and deposits are related to the unlawful activities of Estafa and violation of Securities Regulation Code, as well as [to] money laundering offense as aforestated, and being the subject of covered transaction reports and eventual freeze orders, the same should properly be forfeited in favor of the government in accordance with Section 12, R.A. 9160, as amended.11

In a motion to dismiss for failure to state a cause of action, the focus is on the sufficiency, not the veracity, of the material allegations.12 The determination is confined to the four corners of the complaint and nowhere else.13

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 made in the complaint to constitute a cause of action and not whether those allegations of fact are true, for said motion must hypothetically admit the truth of the facts alleged in the complaint.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 the complaint.14 (emphasis ours)In this connection, Section 4, Title II of the Rule of Procedure in Cases of Civil Forfeiture provides:Sec. 4. Contents of the petition for civil forfeiture. - The petition for civil forfeiture shall be verified and contain the following allegations:(a) The name and address of the respondent;(b) A description with reasonable particularity of the monetary instrument, property, or proceeds, and their location; and(c) The acts or omissions prohibited by and the specific provisions of the Anti-Money Laundering Act, as amended, which are alleged to be the grounds relied upon for the forfeiture of the monetary instrument, property, or proceeds; and[(d)] The reliefs prayed for.Here, the verified complaint of the Republic contained the following allegations:(a) the name and address of the primary defendant therein, Glasgow;15

(b) a description of the proceeds of Glasgow’s unlawful activities with particularity, as well as the location thereof, account no. CA-005-10-000121-5 in the amount of P21,301,430.28 maintained with CSBI;(c) the acts prohibited by and the specific provisions of RA 9160, as amended, constituting the grounds for the forfeiture of the said proceeds. In particular, suspicious transaction reports showed that Glasgow engaged in unlawful activities of estafa and violation of the Securities Regulation Code (under Section 3(i)(9) and (13), RA 9160, as amended); the proceeds of the unlawful activities were transacted and deposited with CSBI in account no. CA-005-10-000121-5 thereby making them appear to have originated from legitimate sources; as such, Glasgow engaged in money laundering (under Section 4, RA 9160, as amended); and the AMLC subjected the account to freeze order and(d) the reliefs prayed for, namely, the issuance of a TRO or writ of preliminary injunction and the forfeiture of the account in favor of the government as well as other reliefs just and equitable under the premises.The form and substance of the Republic’s complaint substantially conformed with Section 4, Title II of the Rule of Procedure in Cases of Civil Forfeiture.Moreover, Section 12(a) of RA 9160, as amended, provides:SEC. 12. Forfeiture Provisions. –

(a) Civil Forfeiture. – When there is a covered transaction report made, and the court has, in a petition filed for the purpose ordered seizure of any monetary instrument or property, in whole or in part, directly or indirectly, related to said report, the Revised Rules of Court on civil forfeiture shall apply.In relation thereto, Rule 12.2 of the Revised Implementing Rules and Regulations of RA 9160, as amended, states:RULE 12 Forfeiture Provisionsxxx xxx xxxRule 12.2. When Civil Forfeiture May be Applied. – When there is a SUSPICIOUS TRANSACTION REPORT OR A COVERED TRANSACTION REPORT DEEMED SUSPICIOUS AFTER INVESTIGATION BY THE AMLC, and the court has, in a petition filed for the purpose, ordered the seizure of any monetary instrument or property, in whole or in part, directly or indirectly, related to said report, the Revised Rules of Court on civil forfeiture shall apply.RA 9160, as amended, and its implementing rules and regulations lay down two conditions when applying for civil forfeiture:(1) when there is a suspicious transaction report or a covered transaction report deemed suspicious after investigation by the AMLC and(2) the court has, in a petition filed for the purpose, ordered the seizure of any monetary instrument or property, in whole or in part, directly or indirectly, related to said report.It is the preliminary seizure of the property in question which brings it within the reach of the judicial process.16 It is actually within the court’s possession when it is submitted to the process of the court.17 The injunctive writ issued on August 8, 2003 removed account no. CA-005-10-000121-5 from the effective control of either Glasgow or CSBI or their representatives or agents and subjected it to the process of the court.Since account no. CA-005-10-000121-5 of Glasgow in CSBI was (1) covered by several suspicious transaction reports and (2) placed under the control of the trial court upon the issuance of the writ of preliminary injunction, the conditions provided in Section 12(a) of RA 9160, as amended, were satisfied. Hence, the Republic, represented by the AMLC, properly instituted the complaint for civil forfeiture.Whether or not there is truth in the allegation that account no. CA-005-10-000121-5 contains the proceeds of unlawful activities is an evidentiary matter that may be proven during trial. The complaint, however, did not even have to show or allege that Glasgow had been implicated in a conviction for, or the commission of, the unlawful activities of estafa and violation of the Securities Regulation Code.A criminal conviction for an unlawful activity is not a prerequisite for the institution of a civil forfeiture proceeding. Stated otherwise, a finding of guilt for an unlawful activity is not an essential element of civil forfeiture.Section 6 of RA 9160, as amended, provides:SEC. 6. Prosecution of Money Laundering. –(a) Any person may be charged with and convicted of both the offense of money laundering and the unlawful activity as herein defined.(b) Any proceeding relating to the unlawful activity shall be given precedence over the prosecution of any offense or violation under this Act without prejudice to the freezing and other remedies provided. (emphasis supplied)Rule 6.1 of the Revised Implementing Rules and Regulations of RA 9160, as amended, states:Rule 6.1. Prosecution of Money Laundering –(a) Any person may be charged with and convicted of both the offense of money laundering and the unlawful activity as defined under Rule 3(i) of the AMLA.(b) Any proceeding relating to the unlawful activity shall be given precedence over the prosecution of any offense or violation under the AMLA without prejudice to the application ex-parte by the AMLC to the Court of Appeals for a freeze order with respect to the monetary instrument or property involved therein andresort to other remedies provided under the AMLA, the Rules of Court and other pertinent laws and rules. (emphasis supplied)Finally, Section 27 of the Rule of Procedure in Cases of Civil Forfeiture provides:Sec. 27. No prior charge, pendency or conviction necessary. – No prior criminal charge, pendency of or conviction for an unlawful activity or money laundering offense is necessary for the commencementor the resolution of a petition for civil forfeiture. (emphasis supplied)Thus, regardless of the absence, pendency or outcome of a criminal prosecution for the unlawful activity or for money laundering, an action for civil forfeiture may be separately and independently prosecuted and resolved.There Was No FailureTo ProsecuteThe trial court faulted the Republic for its alleged failure to prosecute the case. Nothing could be more erroneous.Immediately after the complaint was filed, the trial court ordered its deputy sheriff/process server to serve summons and notice of the hearing on the application for issuance of TRO and/or writ of preliminary injunction. The subpoena to Glasgow was, however, returned unserved as Glasgow "could no longer be found at its given address" and had moved out of the building since August 1, 2002.Meanwhile, after due hearing, the trial court issued a writ of preliminary injunction enjoining Glasgow from removing, dissipating or disposing of the subject bank deposits and CSBI from allowing any transaction on, withdrawal, transfer, removal, dissipation or disposition thereof.

As the summons on Glasgow was returned "unserved," and considering that its whereabouts could not be ascertained despite diligent inquiry, the Republic filed a verified omnibus motion for (a) issuance of alias summons and (b) leave of court to serve summons by publication on October 8, 2003. While the trial court issued an aliassummons in its order dated October 15, 2003, it kept quiet on the prayer for leave of court to serve summons by publication.Subsequently, in an order dated January 30, 2004, the trial court archived the case for failure of the Republic to cause the service of alias summons. The Republic filed an ex parte omnibus motion to (a) reinstate the case and (b) resolve its pending motion for leave of court to serve summons by publication.In an order dated May 31, 2004, the trial court ordered the reinstatement of the case and directed the Republic to cause the service of the alias summons on Glasgow and CSBI within 15 days. However, it deferred its action on the Republic’s motion for leave of court to serve summons by publication until a return was made on the aliassummons.Meanwhile, the Republic continued to exert efforts to obtain information from other government agencies on the whereabouts or current status of respondent Glasgow if only to save on expenses of publication of summons. Its efforts, however, proved futile. The records on file with the Securities and Exchange Commission provided no information. Other inquiries yielded negative results.On July 12, 2004, the Republic received a copy of the sheriff’s return dated June 30, 2004 stating that the aliassummons had been returned "unserved" as Glasgow was no longer holding office at the given address since July 2002 and left no forwarding address. Still, no action was taken by the trial court on the Republic’s motion for leave of court to serve summons by publication. Thus, on August 11, 2005, the Republic filed a manifestation and ex parte motion to resolve its motion for leave of court to serve summons by publication.It was at that point that Glasgow filed a motion to dismiss by way of special appearance which the Republic vigorously opposed. Strangely, to say the least, the trial court issued the assailed order granting Glasgow’s motion.Given these circumstances, how could the Republic be faulted for failure to prosecute the complaint for civil forfeiture? While there was admittedly a delay in the proceeding, it could not be entirely or primarily ascribed to the Republic. That Glasgow’s whereabouts could not be ascertained was not only beyond the Republic’s control, it was also attributable to Glasgow which left its principal office address without informing the Securities and Exchange Commission or any official regulatory body (like the Bureau of Internal Revenue or the Department of Trade and Industry) of its new address. Moreover, as early as October 8, 2003, the Republic was already seeking leave of court to serve summons by publication.In Marahay v. Melicor,18 this Court ruled:While a court can dismiss a case on the ground of non prosequitur, the real test for the exercise of such power is whether, under the circumstances, plaintiff is chargeable with want of due diligence in failing to proceed with reasonable promptitude. In the absence of a pattern or scheme to delay the disposition of the case or a wanton failure to observe the mandatory requirement of the rules on the part of the plaintiff, as in the case at bar, courts should decide to dispense with rather than wield their authority to dismiss. (emphasis supplied)We see no pattern or scheme on the part of the Republic to delay the disposition of the case or a wanton failure to observe the mandatory requirement of the rules. The trial court should not have so eagerly wielded its power to dismiss the Republic’s complaint.Service Of Summons May Be By PublicationIn Republic v. Sandiganbayan,19 this Court declared that the rule is settled that forfeiture proceedings are actionsin rem. While that case involved forfeiture proceedings under RA 1379, the same principle applies in cases for civil forfeiture under RA 9160, as amended, since both cases do not terminate in the imposition of a penalty but merely in the forfeiture of the properties either acquired illegally or related to unlawful activities in favor of the State.As an action in rem, it is a proceeding against the thing itself instead of against the person.20 In actions in rem orquasi in rem, jurisdiction over the person of the defendant is not a prerequisite to conferring jurisdiction on the court, provided that the court acquires jurisdiction over the res.21 Nonetheless, summons must be served upon the defendant in order to satisfy the requirements of due process.22 For this purpose, service may be made by publication as such mode of service is allowed in actions in rem and quasi in rem.23

In this connection, Section 8, Title II of the Rule of Procedure in Cases of Civil Forfeiture provides:Sec. 8. Notice and manner of service. - (a) The respondent shall be given notice of the petition in the same manner as service of summons under Rule 14 of the Rules of Court and the following rules:1. The notice shall be served on respondent personally, or by any other means prescribed in Rule 14 of the Rules of Court;2. The notice shall contain: (i) the title of the case; (ii) the docket number; (iii) the cause of action; and (iv) the relief prayed for; and3. The notice shall likewise contain a proviso that, if no comment or opposition is filed within the reglementary period, the court shall hear the case ex parte and render such judgment as may be warranted by the facts alleged in the petition and its supporting evidence.(b) Where the respondent is designated as an unknown owner or whenever his whereabouts are unknown and cannot be ascertained by diligent inquiry, service may, by leave of court, be effected upon him by publication of the notice of the petition in a newspaper of general circulation in such places and for such time as the court may order. In the

event that the cost of publication exceeds the value or amount of the property to be forfeited by ten percent, publication shall not be required. (emphasis supplied)WHEREFORE, the petition is hereby GRANTED. The October 27, 2005 order of the Regional Trial Court of Manila, Branch 47, in Civil Case No. 03-107319 is SET ASIDE. The August 11, 2005 motion to dismiss of Glasgow Credit and Collection Services, Inc. is DENIED. And the complaint for forfeiture of the Republic of the Philippines, represented by the Anti-Money Laundering Council, is REINSTATED.The case is hereby REMANDED to the Regional Trial Court of Manila, Branch 47 which shall forthwith proceed with the case pursuant to the provisions of A.M. No. 05-11-04-SC. Pending final determination of the case, the November 23, 2005 temporary restraining order issued by this Court is hereby MAINTAINED.SO ORDERED.RAYTHEON INTERNATIONAL, INC., Petitioner, vs. STOCKTON W. ROUZIE, JR., Respondent.Before this Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure which seeks the reversal of the Decision[1] and Resolution[2] of the Court of Appeals in CA-G.R. SP No. 67001 and the dismissal of the civil case filed by respondent against petitioner with the trial court.As culled from the records of the case, the following antecedents appear:Sometime in 1990, Brand Marine Services, Inc. (BMSI), a corporation duly organized and existing under the laws of the State of Connecticut, United States of America, and respondent Stockton W. Rouzie, Jr., an American citizen, entered into a contract whereby BMSI hired respondent as its representative to negotiate the sale of services in several government projects in the Philippines for an agreed remuneration of 10% of the gross receipts. On 11 March 1992, respondent secured a service contract with the Republic of the Philippines on behalf of BMSI for the dredging of rivers affected by the Mt. Pinatubo eruption and mudflows.[3]

On 16 July 1994, respondent filed before the Arbitration Branch of the National Labor Relations Commission (NLRC) a suit against BMSI and Rust International, Inc. (RUST), Rodney C. Gilbert and Walter G. Browning for alleged nonpayment of commissions, illegal termination and breach of employment contract.[4] On 28 September 1995, Labor Arbiter Pablo C. Espiritu, Jr. rendered judgment ordering BMSI and RUST to pay respondent’s money claims.[5] Upon appeal by BMSI, the NLRC reversed the decision of the Labor Arbiter and dismissed respondent’s complaint on the ground of lack of jurisdiction.[6] Respondent elevated the case to this Court but was dismissed in a Resolution dated 26 November 1997. The Resolution became final and executory on 09 November 1998.On 8 January 1999, respondent, then a resident of La Union, instituted an action for damages before the Regional Trial Court (RTC) of Bauang, La Union. The Complaint,[7] docketed as Civil Case No. 1192-BG, named as defendants herein petitioner Raytheon International, Inc. as well as BMSI and RUST, the two corporations impleaded in the earlier labor case. The complaint essentially reiterated the allegations in the labor case that BMSI verbally employed respondent to negotiate the sale of services in government projects and that respondent was not paid the commissions due him from the Pinatubo dredging project which he secured on behalf of BMSI. The complaint also averred that BMSI and RUST as well as petitioner itself had combined and functioned as one company.In its Answer,[8] petitioner alleged that contrary to respondent’s claim, it was a foreign corporation duly licensed to do business in the Philippines and denied entering into any arrangement with respondent or paying the latter any sum of money. Petitioner also denied combining with BMSI and RUST for the purpose of assuming the alleged obligation of the said companies.[9] Petitioner also referred to the NLRC decision which disclosed that per the written agreement between respondent and BMSI and RUST, denominated as “Special Sales Representative Agreement,†� the rights and obligations of the parties shall be governed by the laws of the State of Connecticut.[10] Petitioner sought the dismissal of the complaint on grounds of failure to state a cause of action and forum non conveniens and prayed for damages by way of compulsory counterclaim.[11]

On 18 May 1999, petitioner filed an Omnibus Motion for Preliminary Hearing Based on Affirmative Defenses and for Summary Judgment[12] seeking the dismissal of the complaint on grounds of forum non conveniens and failure to state a cause of action. Respondent opposed the same. Pending the resolution of the omnibus motion, the deposition of Walter Browning was taken before the Philippine Consulate General in Chicago.[13]

In an Order[14] dated 13 September 2000, the RTC denied petitioner’s omnibus motion. The trial court held that the factual allegations in the complaint, assuming the same to be admitted, were sufficient for the trial court to render a valid judgment thereon. It also ruled that the principle of forum non conveniens was inapplicable because the trial court could enforce judgment on petitioner, it being a foreign corporation licensed to do business in the Philippines.[15]

Petitioner filed a Motion for Reconsideration[16] of the order, which motion was opposed by respondent.[17] In an Order dated 31 July 2001,[18] the trial court denied petitioner’s motion. Thus, it filed a Rule 65 Petition[19] with the Court of Appeals praying for the issuance of a writ of certiorari and a writ of injunction to set aside the twin orders of the trial court dated 13 September 2000 and 31 July 2001 and to enjoin the trial court from conducting further proceedings.[20]

On 28 August 2003, the Court of Appeals rendered the assailed Decision[21] denying the petition for certiorari for lack of merit. It also denied petitioner’s motion for reconsideration in the assailed Resolution issued on 10 March 2004.[22]

The appellate court held that although the trial court should not have confined itself to the allegations in the complaint and should have also considered evidence aliunde in resolving petitioner’s omnibus motion, it found the evidence presented by petitioner, that is, the deposition of Walter Browning, insufficient for purposes of determining whether the complaint failed to state a cause of action. The appellate court also stated that it could not rule one way or the other on the issue of whether the corporations, including petitioner, named as defendants in the case had indeed merged together based solely on the evidence presented by respondent. Thus, it held that the issue should be threshed

out during trial.[23] Moreover, the appellate court deferred to the discretion of the trial court when the latter decided not to desist from assuming jurisdiction on the ground of the inapplicability of the principle of forum non conveniens.Hence, this petition raising the following issues:WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO DISMISS THE COMPLAINT FOR FAILURE TO STATE A CAUSE OF ACTION AGAINST RAYTHEON INTERNATIONAL, INC.WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO DISMISS THE COMPLAINT ON THE GROUND OF FORUM NON CONVENIENS.[24]

Incidentally, respondent failed to file a comment despite repeated notices. The Ceferino Padua Law Office, counsel on record for respondent, manifested that the lawyer handling the case, Atty. Rogelio Karagdag, had severed relations with the law firm even before the filing of the instant petition and that it could no longer find the whereabouts of Atty. Karagdag or of respondent despite diligent efforts. In a Resolution[25] dated 20 November 2006, the Court resolved to dispense with the filing of a comment.The instant petition lacks merit.Petitioner mainly asserts that the written contract between respondent and BMSI included a valid choice of law clause, that is, that the contract shall be governed by the laws of the State of Connecticut. It also mentions the presence of foreign elements in the dispute – namely, the parties and witnesses involved are American corporations and citizens and the evidence to be presented is located outside the Philippines – that renders our local courts inconvenient forums. Petitioner theorizes that the foreign elements of the dispute necessitate the immediate application of the doctrine of forum non conveniens.Recently in Hasegawa v. Kitamura,[26] the Court outlined three consecutive phases involved in judicial resolution of conflicts-of-laws problems, namely: jurisdiction, choice of law, and recognition and enforcement of judgments. Thus, in the instances[27] where the Court held that the local judicial machinery was adequate to resolve controversies with a foreign element, the following requisites had to be proved: (1) that the Philippine Court is one to which the parties may conveniently resort; (2) that the Philippine Court is in a position to make an intelligent decision as to the law and the facts; and (3) that the Philippine Court has or is likely to have the power to enforce its decision.[28]

On the matter of jurisdiction over a conflicts-of-laws problem where the case is filed in a Philippine court and where the court has jurisdiction over the subject matter, the parties and the res, it may or can proceed to try the case even if the rules of conflict-of-laws or the convenience of the parties point to a foreign forum. This is an exercise of sovereign prerogative of the country where the case is filed.[29]

Jurisdiction over the nature and subject matter of an action is conferred by the Constitution and the law[30] and by the material allegations in the complaint, irrespective of whether or not the plaintiff is entitled to recover all or some of the claims or reliefs sought therein.[31] Civil Case No. 1192-BG is an action for damages arising from an alleged breach of contract. Undoubtedly, the nature of the action and the amount of damages prayed are within the jurisdiction of the RTC.As regards jurisdiction over the parties, the trial court acquired jurisdiction over herein respondent (as party plaintiff) upon the filing of the complaint. On the other hand, jurisdiction over the person of petitioner (as party defendant) was acquired by its voluntary appearance in court.[32]

That the subject contract included a stipulation that the same shall be governed by the laws of the State of Connecticut does not suggest that the Philippine courts, or any other foreign tribunal for that matter, are precluded from hearing the civil action. Jurisdiction and choice of law are two distinct concepts. Jurisdiction considers whether it is fair to cause a defendant to travel to this state; choice of law asks the further question whether the application of a substantive law which will determine the merits of the case is fair to both parties.[33] The choice of law stipulation will become relevant only when the substantive issues of the instant case develop, that is, after hearing on the merits proceeds before the trial court.Under the doctrine of forum non conveniens, a court, in conflicts-of-laws cases, may refuse impositions on its jurisdiction where it is not the most “convenient†� or available forum and the parties are not precluded from seeking remedies elsewhere.[34] Petitioner’s averments of the foreign elements in the instant case are not sufficient to oust the trial court of its jurisdiction over Civil Case No. No. 1192-BG and the parties involved.Moreover, the propriety of dismissing a case based on the principle of forum non conveniens requires a factual determination; hence, it is more properly considered as a matter of defense. While it is within the discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do so only after vital facts are established, to determine whether special circumstances require the court’s desistance.[35]

Finding no grave abuse of discretion on the trial court, the Court of Appeals respected its conclusion that it can assume jurisdiction over the dispute notwithstanding its foreign elements. In the same manner, the Court defers to the sound discretion of the lower courts because their findings are binding on this Court.Petitioner also contends that the complaint in Civil Case No. 1192-BG failed to state a cause of action against petitioner. Failure to state a cause of action refers to the insufficiency of allegation in the pleading.[36] As a general rule, the elementary test for failure to state a cause of action is whether the complaint alleges facts which if true would justify the relief demanded.[37]

The complaint alleged that petitioner had combined with BMSI and RUST to function as one company. Petitioner contends that the deposition of Walter Browning rebutted this allegation. On this score, the resolution of the Court of Appeals is instructive, thus:

x x x Our examination of the deposition of Mr. Walter Browning as well as other documents produced in the hearing shows that these evidencealiunde are not quite sufficient for us to mete a ruling that the complaint fails to state a cause of action.Annexes “A†� to “E†� by themselves are not substantial, convincing and conclusive proofs that Raytheon Engineers and Constructors, Inc. (REC) assumed the warranty obligations of defendant Rust International in the Makar Port Project in General Santos City, after Rust International ceased to exist after being absorbed by REC. Other documents already submitted in evidence are likewise meager to preponderantly conclude that Raytheon International, Inc., Rust International[,] Inc. and Brand Marine Service, Inc. have combined into one company, so much so that Raytheon International, Inc., the surviving company (if at all) may be held liable for the obligation of BMSI to respondent Rouzie for unpaid commissions. Neither these documents clearly speak otherwise.[38]

As correctly pointed out by the Court of Appeals, the question of whether petitioner, BMSI and RUST merged together requires the presentation of further evidence, which only a full-blown trial on the merits can afford.WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 67001 are herebyAFFIRMED. Costs against petitioner.RUDOLF LIETZ HOLDINGS, INC., petitioner, vs. THE REGISTRY OF DEEDS OF PARAÑAQUE CITY, respondent.The instant petition for review is filed on a pure question of law arising from the Decision rendered by the Regional Trial Court of Parañaque City, Metro Manila, Branch 257, in LRC Case No. 97-0170.Petitioner corporation was formerly known as Rudolf Lietz, Incorporated. On July 15, 1996, it amended its Articles of Incorporation to change its name to Rudolf Lietz Holdings, Inc. The Amended Articles of Incorporation was approved by the Securities and Exchange Commission on February 20, 1997.[1]

As a consequence of its change of name, petitioner sought the amendment of the transfer certificates of title over real properties owned by the said corporation, all of which were under the old name, Rudolf Lietz, Incorporated. For this purpose, petitioner instituted, on November 20, 1997, a petition for amendment of titles with the Regional Trial Court of Parañaque City, docketed as LRC Case No. 97-0170.[2]

The petition impleaded as respondent the Registry of Deeds of Pasay City, apparently because the titles sought to be amended, namely, Transfer Certificates of Title Nos. 99446, 99447, 99448, 102486, 102487, 102488 and 102489, [3] all state that they were issued by the Registry of Deeds of Pasay City. Petitioner likewise inadvertently alleged in the body of the petition that the lands covered by the subject titles are located in Pasay City.Subsequently, petitioner learned that the subject titles are in the custody of the Register of Deeds of Parañaque City.[4] Hence, on February 16, 1998, petitioner filed an Ex-Parte Motion to Admit Amended Petition.[5] In the attached Amended Petition,[6] petitioner impleaded instead as respondent the Registry of Deeds of Parañaque City, and alleged that its lands are located in Parañaque City.In the meantime, however, on January 30, 1998, the court a quo had dismissed the petition motu proprio on the ground of improper venue, it appearing therein that the respondent is the Registry of Deeds of Pasay City and the properties are located in Pasay City.[7]

Before counsel for petitioner could receive an official copy of the aforesaid order of dismissal, he filed with the lower court a Motion for Reconsideration.[8] On February 20, 1998, in view of the dismissal of the petition, the lower court denied the Ex-Parte Motion to Admit Amended Petition.[9] On March 30, 1998, the lower court denied the Motion for Reconsideration.[10]

Petitioner, thus, is before this Court arguing that –The court a quo acted contrary to the rules and jurisprudence on the matter for the following reasons:1. It has no power to immediately dismiss an initiatory pleading for improper venue;2. Assuming the Order of 30 January 1998 was proper, it was nevertheless still a matter of right on petitioner’s part to amend its petition in order to correct the wrong entries therein; and3. The unassailable reality is that the subject parcels of land are located in Parañaque City, so venue was properly laid despite that erroneous allegation in the original petition.[11]

The Solicitor General filed on November 4, 1998 his Comment.[12] He contends that the trial court did not acquire jurisdiction over the res because it appeared from the original petition that the lands are situated in Pasay City; hence, outside the jurisdiction of the Parañaque court. Since it had no jurisdiction over the case, it could not have acted on the motion to admit amended petition.On February 15, 1999, petitioner filed its Reply.[13] It discussed the distinction between jurisdiction and venue, and maintained that the trial court had jurisdiction over the petition, but that venue appeared to be improperly laid based on the erroneous allegation therein on the location of the properties.The issue involved herein is simple. May the trial court motu proprio dismiss a complaint on the ground of improper venue? This question has already been answered in Dacoycoy v. Intermediate Appellate Court,[14] where this Court held that it may not.While the ground invoked by the trial court in dismissing the petition below was clearly that of improper venue,[15] the Solicitor General confuses venue with jurisdiction. A distinction between the two must be drawn. Jurisdiction over the subject matter or nature of an action is conferred only by law.[16] It may not be conferred by consent or waiver upon a court which otherwise would have no jurisdiction over the subject matter of an action. On the other hand, the venue of an action as fixed by statute may be changed by the consent of the parties, and an objection on improper venue may be waived by the failure of the defendant to raise it at the proper time. In such an event, the court may still render a valid

judgment. Rules as to jurisdiction can never be left to the consent or agreement of the parties. Venue is procedural, not jurisdictional, and hence may be waived. It is meant to provide convenience to the parties, rather than restrict their access to the courts as it relates to the place of trial.[17]

In Dacoycoy v. IAC, this Court ruled:The motu proprio dismissal of petitioner’s complaint by respondent trial court on the ground of improper venue is plain error, obviously attributable to its inability to distinguish between jurisdiction and venue.Questions or issues relating to venue of actions are basically governed by Rule 4 of the Revised Rules of Court. It is said that the laying of venue is procedural rather than substantive. It relates to the jurisdiction of the court over the person rather than the subject matter. Provisions relating to venue establish a relation between the plaintiff and the defendant and not between the court and the subject matter. Venue relates to trial not to jurisdiction, touches more of the convenience of the parties rather than the substance of the case.xxx xxx xxx.Dismissing the complaint on the ground of improper venue is certainly not the appropriate course of action at this stage of the proceedings, particularly as venue, in inferior courts as well as in the courts of first instance (now RTC), may be waived expressly or impliedly. Where the defendant fails to challenge timely the venue in a motion to dismiss as provided by Section 4 of Rule 4 of the Rules of Court, and allows the trial to be held and a decision to be rendered, he cannot on appeal or in a special action be permitted to belatedly challenge the wrong venue, which is deemed waived.Thus, unless and until the defendant objects to the venue in a motion to dismiss, the venue cannot be truly said to have been improperly laid, as for all practical intents and purposes, the venue, though technically wrong, may be acceptable to the parties for whose convenience the rules on venue had been devised. The trial court cannot pre-empt the defendant’s prerogative to object to the improper laying of the venue by motu proprio dismissing the case.Indeed, it was grossly erroneous for the trial court to have taken a procedural short-cut by dismissing motu proprio the complaint on the ground of improper venue without first allowing the procedure outlined in the rules of court to take its proper course. Although we are for the speedy and expeditious resolution of cases, justice and fairness take primary importance. The ends of justice require that respondent trial court faithfully adhere to the rules of procedure to afford not only the defendant, but the plaintiff as well, the right to be heard on his cause.[18]

Rule 9, Section 1 of the 1997 Rules of Civil Procedure states that defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. The court may only dismiss an action motu proprio in case of lack of jurisdiction over the subject matter, litis pendentia, res judicata and prescription. Therefore, the trial court in this case erred when it dismissed the petition motu proprio. It should have waited for a motion to dismiss or a responsive pleading from respondent, raising the objection or affirmative defense of improper venue, before dismissing the petition. However, this was overtaken by petitioner’s motion for leave to amend its petition.Petitioner correctly invoked the jurisdiction of the Regional Trial Court in seeking the amendment of its certificates of title. The jurisdiction of the Regional Trial Court over matters involving the registration of lands and lands registered under the Torrens system is conferred by Section 2 of Presidential Decree No. 1529, The Property Registration Decree, viz:Nature of registration proceedings; jurisdiction of courts. --- Judicial proceedings for the registration of lands throughout the Philippines shall be in rem and shall be based on the generally accepted principles underlying the Torrens system.Courts of First Instance (now Regional Trial Courts) shall have exclusive jurisdiction over all applications for original registration of title to lands, including improvements and interest therein, and over all petitions filed after original registration of title, with power to hear and determine all questions arising upon such applications or petitions. The court through its clerk of court shall furnish the Land Registration Commission with two certified copies of all pleadings, exhibits, orders, and decisions filed or issued in applications or petitions for land registration, with the exception of stenographic notes, within five days from the filing or issuance thereof.More specifically, jurisdiction over petitions for amendments of certificates of title, such as the one brought below, is provided for by Section 108 of P.D. 1529, thus:Amendment and alteration of certificates. --- No erasure, alteration, or amendment shall be made upon the registration book after the entry of a certificate of title or of a memorandum thereon and the attestation of the same by the Register of Deeds, except upon order of the proper Court of First Instance (now Regional Trial Court). A registered owner or other person having an interest in registered property, or, in proper cases, the Register of Deeds with the approval of the Commissioner of Land Registration, may apply by petition to the court upon the ground that the registered interests of any description, whether vested, contingent, expectant inchoate appearing on the certificate, have terminated and ceased; or that new interest not appearing upon the certificate have arisen or been created; or that an omission or error was made in entering a certificate or any memorandum thereon, or on any duplicate certificate; or that the name of any person on the certificate has been changed; or that the registered owner has married, or, if registered as married, that the marriage has been terminated and no right or interest of heirs or creditors will thereby be affected, or that a corporation which owned registered land and has been dissolved has not conveyed the same within three years after its dissolution; or upon any other reasonable ground and the court may hear and determine the petition after notice to all parties in interest, and may order the entry or cancellation of a new certificate, or grant any other relief upon such terms and conditions, requiring security or bond if necessary, as it may consider proper: xxx. (Emphasis ours.)

In the case at bar, the lands are located in Parañaque City, as stated on the faces of the titles. Petitioner, thus, also correctly filed the petition in the place where the lands are situated, pursuant to the following rule:Venue of real actions. --- Actions affecting title to or possession of real property, or interest therein, shall be commenced and tried in the proper court which has jurisdiction over the area wherein the real property involved, or a portion thereof, is situated.[19]

Petitioner, however, named as respondent the Register of Deeds of Pasay City, under the mistaken impression that it was still the custodian of the titles to lands in Parañaque. Later, petitioner learned that a Register of Deeds for Parañaque City had taken over the record and custody of titles therein. Petitioner, thus, promptly moved for leave of court to amend its petition. This, to our mind, was justified. In preparing its amended petition, petitioner likewise corrected its allegation on the location of the lands involved.Before the amended petition was filed, the trial court had already dismissed the petition based on improper venue. It relied on the allegation in the petition that the lands are located in Pasay City. However, the titles of the land, copies of which were attached to the petition, plainly show that the lands involved are situated in Parañaque City. The trial court should have considered these annexes, as these form an integral part of the pleading.At the very least, the trial court should have allowed petitioner to amend its petition, for this was still a matter of right on its part.Amendments as a matter of right. --- A party may amend his pleading once as a matter of right at any time before a responsive pleading is served or, in the case of a reply, at any time within ten (10) days after it is served.[20]

Amendments to pleadings are liberally allowed in furtherance of justice, in order that every case may so far as possible be determined on its real facts, and in order to speed the trial of cases or prevent the circuitry of action and unnecessary expense.[21] The trial court, therefore, should have allowed the amendment proposed by petitioner for in so doing, it would have allowed the actual merits of the case to be speedily determined, without regard to technicalities, and in the most expeditious and inexpensive manner.[22]

The courts should be liberal in allowing amendments to pleadings to avoid multiplicity of suits and in order that the real controversies between the parties are presented, their rights determined and the case decided on the merits without unnecessary delay. This liberality is greatest in the early stages of a lawsuit, especially in this case where the amendment to the complaint was made before the trial of the case thereby giving petitioner all the time allowed by law to answer and to prepare for trial.[23]

WHEREFORE, the petition for review is GRANTED. The Orders dated January 30, 1998, February 20, 1998, and March 30, 1998 are REVERSED and SET ASIDE. LRC Case No. 97-0170 is ordered REINSTATED.SO ORDERED.PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES, petitioner, vs.JOSE SAMSON, BENJAMIN BARRERA and the COURT OF FIRST INSTANCE OF SURIGAO DEL SUR,respondents.Appeal from an order of dismissal, dated September 18, 1968, of the Court of First Instance of Surigao del Sur based on the ground that venue had been improperly laid.On July 16, 1965, petitioner Paper Industries Corporation of the Philippines, hereafter to be referred to as PICOP, filed with the respondent Court of First Instance of Surigao del Sur a verified complaint for injunction and damages against respondents Jose Samson and Benjamin Barrera, alleging therein, among others that PICOP is the licensee of a pulpwood and timber concession portions of which are located in the provinces of Surigao del Sur and Agusan; that respondents herein were discovered and verified to have unlawfully entered, trespassed and encroached deep into portions of plaintiff's pulpwood and timber concession in two areas at Pamintigan, Mabtay, Malix within the province of Surigao del Sur; and that without any title or notice whatsoever felled trees standing thereon and took them away in gross violation of plaintiff's rights; that defendants-respondents have unlawfully logged over a total area of 857 hectares and felled and took away logs with a total volume of 958.60 cubic meters from plaintiff's concession; that because of the continuous unlawful logging operations of defendants inside plaintiff's pulpwood and timber concession, plaintiff as of May 31, 1965, suffered damages amounting to P10,600.00, more or less; and that despite demands that they vacate plaintiff's pulpwood and timber concession and stop their operations, defendants have continued and are continuing their unlawful encroachment and trespass and their spurious logging operations on , the plaintiff's concession. Plaintiff, therefore, prayed inter alia that defendants be restrained from carrying on their illegal logging operations by the issuance of a writ of preliminary injunction and furthermore, that they pay for damages incurred by the plaintiff.Defendants filed a joint answer to the complaint and opposition to PICOP's application for writ of preliminary injunction. In their answer they disputed the material allegations of the complaint and, as their only defense, alleged that they are not the real party in interest as the logging operation in the questioned area is owned and operated by the concessionaire and licensee Lope A. Coñate of Butuan City, and that they (defendants) are mere employees of Coñate. Samson and Barrera filed a motion to dismiss on the ground that venue is improperly laid, defendants' contention being that the action was personal and, therefore, should have been filed either in the province of Agusan or Rizal, the places of residence of the parties therein.On August 13, 1965, January 1, 1966, and February 5, 1966, without first requiring a ruling on their motion to dismiss, the parties in the lower court proceeded to trial where each party adduced evidence on the issue of injunction.On August 29, 1965, PICOP filed its Opposition to Motion to Dismiss arguing that the action was principally for injunction which should be instituted conformably with the principle that the authority of a court to issue writ of injunction is coterminous with its territorial jurisdiction, or in the Court of First Instance of the province where the acts

intended to be restrained are being committed; that the action is one to recover possession and, hence, the proper venue is the place where the concession areas sought to be recovered are situated, and that defendants waived the objection to improper venue when they failed to ask a ruling on their motion to dismiss and went to trial on the question of the propriety of the issuance of the writ of preliminary injunction.On May 6, 1966, the Court of First Instance, then presided by Judge Ricardo D. Garcia (subsequently he retired), issued an Order granting PICOP's application for a writ of preliminary injunction.On September 18, 1968, the trial court, with a new presiding judge (Hon. Reynaldo Honrado), issued an Order granting defendants' Motion to Dismiss. The motion for reconsideration of the dismissal having been denied, this petition for certiorari was filed, petitioners claiming grave abuse of discretion in ordering the dismissal of the case.The main question posed by the petitioner is whether or not the Court of First Instance committed grave abuse of discretion in dismissing its complaint. In other words, was the trial court right in dismissing plaintiff's complaint on the ground of improper venue?The question whether or not venue has been properly laid depends to a great extent on the kind of action (real or personal) presented by the Complaint. It is defendants' contention, affirmed by the trial court, that the action at bar is personal.The contention has no merit. A personal action is one that is founded on privity of contract (Moran, Comments on the Rules of Court, Vol. 1, 1970 ed., p. 110). The facts of the case as borne out by the record reveal that no contract is here involved. From a reading of the Complaint petitioner PICOP is interested primarily in recovering its rights to the concession over the land, to have defendants Samson and Barrera vacate the same, to desist from further encroaching on their concession rights and to stop their illegal logging operations in the concession areas. Clearly, therefore, the action is real and in accordance with the Rules of Court, Section 2, Rule 4, the same must be brought in the locality where the land is situated.Section 2. Venue in Courts of First Instance. — (A) Real Actions. — Actions affecting title to, or for recovery of possession or for partition or condemnation of, or foreclosure of mortgage on, real property shall be commenced and tried in the province where the property or any part thereof lies.This ruling on venue was laid down in the early case of Cayetano de la Cruz vs. El Seminario de la Archdioceses de Manila et al., 1 where it was held:If the action is founded on privity of contract between the parties, then the action whether debt or covenant, is transitory. But if there is no privity of contract and the action is founded on privity of estate only, such a covenant that runs with the land in the hands of the remote grantees, then the action is local and must be brought in the country wherein the land lies.From an analysis of the complaint and other pleadings filed by petitioner, We find that the main complaint in this case is for recovery of possession. The claim for damages is of no material consequence as it is only an incident to the principal claim. As well slated by this Court: 2

In other words, the respondent Lim sought to establish an interest in the Hacienda de Leon that ran with the land and one that must be respected by the purchaser, even if the latter was not party to the original lease contract. That being the case, whether the standing crop is or is not immovable property is not relevant, for venue is determined by the nature of the principal claim. It is apparent that the plaintiff is primarily interested in establishing his right to recover possession of the crop. Hence, his action is real and must be brought in the locality where the land is situated.Petitioner was only cognizant of the lack of jurisdiction of Courts of First Instance to issue injunction writs to control acts outside of their provinces or districts; hence it acted right in filing its action in Surigao del Sur rather than in the province of Agusan or Rizal. The courts of Rizal or Agusan could not have issued the writ of injunction consistent with the rules, Sec. 2, Rule 58, 3 , and the Judiciary Act, Section 44 (h) 4, for such writs cannot effectively reach acts being perpetrated outside of their districts or, in particular, in Surigao del Sur. It is now settled that a Court of First Instance cannot restrain or enjoin acts being perpetrated or will be perpetrated outside of its territorial boundaries.In Hacbang, et al. vs. The Leyte Autobus Co., et al., 5 this Court held — .The jurisdiction of Courts of First Instance to control or restrain acts by means of a writ of injunction is limited to act being committed or about to be committed within the territorial boundaries of their respective provinces and districts.Cudiamat, et al vs. Torres (L-24225, February 22, 1968) reiterates this rule, viz: 6

The preliminary injunction that maybe granted by a CFI under said Section 2 is, in its application, co-extensive with the territorial boundaries of the province or district in which the said court sits. Consequently, a Court of First Instance may not issue a writ of preliminary injunction which will be enforced outside the territorial boundaries of its province and district.As petitioner did right in filing their Complaint in the Court of First Instance of Surigao del Sur, We see no further need for discussing at length the other issue of waiver of venue. Suffice it to say that respondents herein went to trial, cross-examined PICOP's witnesses and adduced evidence without first requiring a ruling on their motion to dismiss. This is waiver of venue, pure and simple.In Pangasinan Transportation Co., vs. Yatco, et al., G. R. No. L-23090 October 31, 1967, 21 SCRA 658, 660, We said:The petitioner is untenable because the objection to venue is deemed waived. The filing of Pantranco's counterclaim in the CFI of Rizal, and, later, of Pantranco's third party complaint against the La Mallorca-Pambusco, necessarily implied a submission to the jurisdiction of said court, and, accordingly, a waiver of such right as the Pantranco may have had to object to the venue, upon the ground that it had been improperly laid. The introduction of the part of the evidence for

the Pantranco after the denial of its motion to dismiss and before the institution of the prohibition suit tended, also, to have the same effect.WHEREFORE, the order appealed from is hereby set aside and the case remanded to the respondent court for further proceedings.Costs against respondents.IT IS SO ORDERED.FELIZARDO S. OBANDO and the ESTATES of JOSE FIGUERAS and DOÑA ALEGRIA STREBEL VDA. DE FIGUERAS, petitioners, vs. EDUARDO F. FIGUERAS and AMIGO REALTY CORPORATION as represented by ANTONIO A. KAW, respondents.In resolving this appeal, the Court invokes the following principles: (1) a lawyer’s standing in a case remains, until a substitute takes over pursuant to Section 26, Rule 138 of the Rules of Court; (2) a trial court may act upon a motion to dismiss at any time a ground therefor becomes available, even after a responsive pleading to the complaint has already been filed; (3) a civil case initiated by an estate administrator may be dismissed upon a showing that the said administrator’s appointment as such has been revoked by the probate court; and (4) the dismissal of an action may be made after the ground therefor becomes known, even if the trial court has refused to do so earlier when that ground was not yet available.Before us is a Petition for Review under Rule 45 of the Rules of Court, seeking to annul the July 30, 1998 Decision of the Court of Appeals[1] in CA-GR SP No. 47594, which affirmed the dismissal, without prejudice, of Petitioner Felizardo Obando’s action for annulment of contract and reconveyance earlier ordered by the Regional Trial Court (RTC) of Quezon City,[2] Branch 218. MisÓ sppedIn 1964, Alegria Strebel Figueras, together with her stepsons, Eduardo and Francisco, filed a Petition for settlement of the intestate estate of her deceased husband Jose Figueras.[3] While settlement of the estate was pending, she died and Eduardo assumed administration of the joint estates of Don Jose and Doña Alegria. Hardly had the proceedings in both intestacies begun when Eduardo was served a Petition for Probate of what purported to be Doña Alegria’s Last Will and Testament, filed by Felizardo S. Obando (herein petitioner), a nephew of Doña Alegria.[4]

The alleged Will bequeathed to Petitioner Obando and several other members of the Obando clan properties left by the Figueras couple, including two parcels of land in Gilmore Avenue, New Manila, Quezon City, covered by TCT Nos. 13741 and 17679.[5] When the probate case was consolidated with the intestate proceedings, Petitioner Obando was appointed as Eduardo’s co-administrator of the joint estates.[6]

As Eduardo insisted that the alleged Will was a forgery, the document was submitted to the National Bureau of Investigation (NBI) for examination and comparison of Doña Alegria’s alleged signature therein with samples which both parties accepted as authentic. The NBI found that the questioned and the standard signatures were not made by the same person.[7] This led to the indictment and the conviction of Petitioner Obando in Criminal Case 90-85819[8] for estafa through falsification of a public document.On February 20, 1990, the probate court denied Eduardo’s Motion for authority to sell the aforementioned two parcels of land in New Manila.[9] Despite such denial, Eduardo sold the lots to Amigo Realty Corporation on the strength of an Order issued by the probate court on May 15, 1991. New titles were issued for these lots in the name of Amigo Realty.[10]

On June 4, 1992, Petitioner Obando, in his capacity as co-administrator and universal heir of Doña Alegria, filed a Complaint against Eduardo and Amigo Realty (collectively referred to as the respondents) for the nullification of the sale. The proceedings were docketed as Civil Case No. Q-92-12384 and raffled to the Regional Trial Court of Quezon City, Branch 79.However, in Special Proceeding Nos. 61567 and 123948, the probate court, in its Order dated December 17, 1997, removed Petitioner Obando from his office as co-administrator of the joint estate of the Figueras spouses.[11]Consequently, in the civil case, respondents filed a Joint Motion to Dismiss dated January 27, 1998, after Obando had rested his case. The respondents built their evidence around the loss of his legal standing to pursue the case.[12] In its Order dated February 11, 1993, the trial court granted the Motion and dismissed the civil case without prejudice.[13] Joä sppedPetitioner Obando filed a Motion for Reconsideration to no avail. As earlier stated, the Court of Appeals likewise dismissed his Petition for Certiorari and Mandamus and affirmed the dismissal Order of the RTC.[14]

Ruling of the Court of AppealsThe Court of Appeals rejected the contention of Obando that he did not lose his legal personality to prosecute the civil case since there was no categorical statement that the purported will was a forgery and its probate was still pending.The CA affirmed the dismissal of the action for reconveyance because the probate court’s Order dated February 5, 1998 "alluded" to the fact that the alleged Will was a forgery. That the probate of the alleged Will had not yet been decided on the merits did not change the fact that the probate court had removed Petitioner Obando as co-administrator. The dismissal of the civil case was without prejudice, because the trial judge anticipated that Obando could regain co-administration of the estates on appeal.Hence, this Petition.[15]

Assignment of ErrorsIn their Memorandum, petitioners raise the following issues:[16]

"A........WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN SANCTIONING THE TRIAL COURT’S ALLOWANCE OF RESPONDENTS’ JOINT MOTION TO DISMISS, DESPITE THE FACT THAT ONE OF THE LAWYER-MOVANTS THEREIN WAS NO LONGER THE COUNSEL OF RECORD FOR RESPONDENT FIGUERAS AT THE TIME THE MOTION WAS FILED."B........WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN SANCTIONING THE TRIAL COURT’S RADICAL DEPARTURE FROM THE LAW WHEN IT GRANTED A MOTION TO DISMISS ON LACK OF CAPACITY TO SUE/LEGAL STANDING AT THE TIME WHEN THE [PETITIONERS] HAVE ALREADY RESTED THEIR CASE AND THE [RESPONDENTS] HAVE BEGUN PRESENTATION OF THEIR EVIDENCE."C........WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN IT SANCTIONED THE TRIAL COURT’S DISMISSAL OF THE CASE BASED ON ORDERS OF OTHER COURTS THAT HAVE NOT YET ATTAINED FINALITY. Sppedä jo"D........WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN IT UPHELD THE TRIAL COURT’S WHIMSICAL AND CAPRICIOUS DEPARTURE FROM ITS PREVIOUS RULINGS DENYING RESPONDENTS’ MOTION TO DISMISS AND MOTION TO SUSPEND PROCEEDINGS."E........WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN IT RENDERED ITS 30 JULY 1998 DECISION IN CA-G.R. 47594 UPHOLDING THE TRIAL COURT’S ORDERS DATED 11 FEBRUARY 1998 AND 12 MARCH 1998."Simply stated, the following issues are raised by the petitioners: (1) whether the trial court could act on a motion filed by a lawyer who was allegedly no longer Eduardo’s counsel of record; (2) whether a motion to dismiss filed after the responsive pleadings were already made can still be granted; (3) whether the conviction of Petitioner Obando for estafa through falsification and the revocation of his appointment as administrator, both of which are on appeal, constitute sufficient grounds to dismiss the civil case; and (4) whether there was a conflict between the Order dismissing the civil case and the previous actions of the trial court.The Court’s RulingThe Petition is devoid of merit.First Issue:Counsel of RecordPetitioners claim that when Atty. Joaquin Yuseco filed the Motion to Dismiss, he no longer represented the respondents, as shown by Eduardo’s Manifestation and Motion dated January 8, 1998, dispensing with said counsel’s services in the proceedings in view of a Compromise Agreement with Petitioner Obando.[17]

We disagree. Representation continues until the court dispenses with the services of counsel in accordance with Section 26, Rule 138 of the Rules of Court.[18] Counsel may be validly substituted only if the following requisites are complied with: (1) new counsel files a written application for substitution; (2) the client’s written consent is obtained; and (3) the written consent of the lawyer to be substituted is secured, if it can still be; if the written consent can no longer be obtained, then the application for substitution must carry proof that notice of the motion has been served on the attorney to be substituted in the manner required by the Rules.[19] MisoIn this case, we are convinced that Eduardo did not dismiss Attorney Yuseco. In fact, the former manifested that he had been tricked by Petitioner Obando into signing the aforesaid Manifestation and Motion and Compromise Agreement. Besides, the filing of the Motion to Dismiss was not prejudicial but beneficial to the said respondent; hence, he had no reason to complain. At the discretion of the court, an attorney who has already been dismissed by the client is allowed to intervene in a case in order to protect the client’s rights. In the present case, had there been any irregularity, it should have been raised by the respondents, not the petitioners.Second Issue:Timeliness of the Motion to DismissThe Rules provide that a motion to dismiss may be submitted only before the filing of a responsive pleading.[20] Thus, petitioners complain that it was already too late for Respondent Eduardo Figueras to file a Motion to Dismiss after Obando had finished presenting his evidence.This is not so. The period to file a motion to dismiss depends upon the circumstances of the case. Section 1 of Rule 16 of the Rules of Court requires that, in general, a motion to dismiss should be filed within the reglementary period for filing a responsive pleading. Thus, a motion to dismiss alleging improper venue cannot be entertained unless made within that period.[21] Nexâ oldHowever, even after an answer has been filed, the Court has allowed a defendant to file a motion to dismiss on the following grounds: (1) lack of jurisdiction,[22] (2) litis pendentia,[23] (3) lack of cause of action,[24] and (4) discovery during trial of evidence that would constitute a ground for dismissal.[25] Except for lack of cause of action or lack of jurisdiction, the grounds under Section 1 of Rule 16 may be waived. If a particular ground for dismissal is not raised or if no motion to dismiss is filed at all within the reglementary period, it is generally considered waived under Section 1, Rule 9 of the Rules.[26] Maniâ kxApplying this principle to the case at bar, the respondents did not waive their right to move for the dismissal of the civil case based on Petitioner Obando’s lack of legal capacity. It must be pointed out that it was only after he had been convicted of estafa through falsification that the probate court divested him of his representation of the Figueras estates. It was only then that this ground became available to the respondents. Hence, it could not be said that they waived it by raising it in a Motion to Dismiss filed after their Answer was submitted. Verily, if the plaintiff loses his capacity to sue during the pendency of the case, as in the present controversy, the defendant should be allowed to file a motion to dismiss, even after the lapse of the reglementary period for filing a responsive pleading.Third Issue:Removal from Administration

Petitioners aver that it was premature for the trial court to dismiss the civil case because Obando’s conviction for estafa through falsification was still on appeal.We disagree. This argument has no bearing at all on the dismissal of the civil case. Petitioner Obando derived his power to represent the estate of the deceased couple from his appointment as co-administrator.[27] When the probate court removed him from office, he lost that authority. Since he lacked the legal capacity to sue on behalf of the Figueras estates, he could not continue prosecuting the civil case.[28] Thus the trial court properly granted the Motion to Dismiss on this ground.[29] Whether a final conviction for a crime involving moral turpitude is necessary to remove him from his administration is not a proper issue in this Petition. He should raise the matter in his appeal of the Decision removing him from administration of the Figueras estates. ManiksâThe fact that the conviction of Obando and his removal from administration are on appeal only means that his legal standing could be restored; thus, the civil case was correctly dismissed without prejudice. If his conviction is reversed and his appointment restored by the probate court, the case may continue without being barred by res judicata. The lower court’s Decision showed that it was careful in its action. On the other hand, Obando has yet to show that he has regained administration of the Figueras estates. Noteworthy also is the fact that his removal from office was predicated not only on his conviction for a crime, but also on his failure to render an accounting of the rentals of a property leased to the Community of Learners.Fourth Issue:No Conflicting RulingsRespondent Eduardo Figueras’ earlier Motion to Dismiss was denied in the trial court’s March 4, 1993 Order which reads:"x x x [I]t is pertinent to note that the criminal case of Estafa through Falsification of Public Document filed against [petitioner] and the Petition to Remove him as co-administrator are still pending determination. Thus, suffice it to state that while herein [petitioner] remains as the co-administrator of the estates of the deceased Figueras the Court will continue to recognize his right to institute the instant case in his capacity as judicial administrator, unless he be removed as such by the probate Court pursuant to Rule 82 of the Revised Rules of Court."[30]

Thus, petitioners allege that the trial court whimsically and capriciously departed from its previous rulings when, in its Resolution dated February 11, 1993, it granted Eduardo’s later Motion to Dismiss.[31]

We cannot see any conflict between these trial court rulings. Obviously, they were based on different grounds. The first Motion to Dismiss was denied because, at the time, Petitioner Obando still had legal capacity to sue as co-administrator of the Figueras estates. On the other hand, the second Motion was granted because the probate court had already removed him from his office as co-administrator. The change in his legal capacity accounts for the difference in the adjudication of the trial court. We see no reversible error in the appellate court’s affirmance of the trial court.WHEREFORE, the Petition is hereby DENIED and the assailed Resolution AFFIRMED. Costs against petitioners.AETNA CASUALTY & SURETY COMPANY, plaintiff-appellant, vs.PACIFIC STAR LINE, THE BRADMAN CO. INC., MANILA PORT SERVICE and/or MANILA RAILROAD COMPANY, INC., defendants-appellees.This is an appeal from the decision of the Court of First Instance of Manila, Branch XVI, in Civil Case No. 53074 entitled Aetna Casualty & Surety Company vs. Pacific Star Line, The Bradman Co. Inc., Manila Port Service and/or Manila Railroad Company, Inc." dismissing the complaint on the ground that the plaintiff has no legal capacity to bring this suit and making no finding as to the liability of the defendants. 1

On February 11, 1963, Smith Bell & Co. (Philippines), Inc. and Aetna Surety Casualty & Surety Co. Inc., as subrogee, instituted Civil Case No. 53074 in the Court of First Instance of Manila against Pacific Star Line, The Bradman Co. Inc., Manila Port Service and/or Manila Railroad Company, Inc. to recover the amount of US $2,300.00 representing the value of the stolen and damaged cargo plus litigation expenses and exemplary damages in the amounts of P1,000.00 and P2,000.00, respectively, with legal interest thereon from the filing of the suit and costs.The complaint stated that during the time material to the action, the defendant Pacific Star Line, as a common carrier, was operating the vessel SS Ampal on a commercial run between United States and Philippine Ports including Manila; that the defendant, The Bradman Co. Inc., was the ship agent in the Philippines for the SS Ampal and/or Pacific Star Line; that the Manila Railroad Co. Inc. and Manila Port Service were the arrastre operators in the port of Manila and were authorized to delivery cargoes discharged into their custody on presentation of release papers from the Bureau of Customs and the steamship carrier and/or its agents; that on December 2, 1961, the SS Ampal took on board at New York, N.Y., U.S.A., a consignment or cargo including 33 packages of Linen & Cotton Piece Goods for shipment to Manila for which defendant Pacific Star Line issued Bill of Lading No. 18 in the name of I. Shalom & Co., Inc., as shipper, consigned to the order of Judy Philippines, Inc., Manila; that the SS Ampal arrived in Manila on February 10, 1962 and in due course, discharged her cargo into the custody of Manila Port Service; that due to the negligence of the defendants, the shipment sustained damages valued at US $2,300.00 representing pilferage and seawater damage; that I. Shalom & Co., Inc. immediately filed claim for the undelivered land damaged cargo with defendant Pacific Star Line in New York, N.Y., but said defendant refused and still refuses to pay the said claim; that the cargo was insured by I. Shalom & Co., Inc. with plaintiff Aetna Casualty & Surety Company for loss and/or damage; that upon demand, plaintiff Aetna Casualty & Surety Company indemnified I. Shalom & Co., Inc. the amount of US $2,300.00; that in addition to this, the plaintiffs had obligated themselves to pay attorney's fees and they further anticipated incurring litigation expenses which may be assessed at P1,000.00; that plaintiffs and/or their predecessor-in-interest sustained losses due to the negligence of

Pacific Star Line prior to delivery of the cargo to Manila or, in the alternative, due to the negligence of Manila Port Service after delivery of the cargo to it by the SS Ampal; that despite repeated demands, none of the defendants has been willing to accept liability for the claim of the plaintiffs and/or I. Shalom & Co., Inc.; and that by reason of defendants' evident bad faith, they should consequently be liable to pay exemplary damages in the amount of P2,000.00. 2

On motion of the defendants Pacific Star Line and The Bradman Co. Inc. and with the conformity of the plaintiff Aetna Casualty & Surety Company, the plaintiff Smith Bell & Co. (Philippines), Inc. was dropped and the complaint was dismiss as to said plaintiff. 3

In their answer filed on February 28, 1963, the defendants Manila Port Service and Manila Railroad Company, Inc. alleged that they have exercised due care and diligence in handling and delivering the cargoes consigned to Judy Philippines, Inc.; that, in fact, they had delivered the merchandise to the consignee thereof in the same quantity, order and condition as when the same was actually received from the carrying vessel; that a portion of the shipment in question was discharged from the carrying vessel in bad order and condition and consequently, any loss or shortage incurred thereto, is the sole responsibility of the said carrying vessel and not that of the arrastre operator; that they have delivered to the consignee thereof the same quantity of merchandise and in the same order or condition as when received from the carrying vessel; that since no claim of the value of the goods in question was filed by the plaintiff or any of its representative within 15 days from the discharge of the last package from the carrying vessel, the claim has become time-barred and/or prescribed pursuant to the management contract under which said defendants were appointed as arrastre operator at the Port of Manila; that consequently, they are completely relieved or released from any or all liability therefor and that they do not in any manner act as agent of the carrying vessel in the discharge of the goods at the piers. 4

The Pacific Star Line and The Bradman Co. Inc. alleged in their answer as special defenses that the plaintiff's cause of action, if any, against the answering defendants had prescribed under the provisions of the Carriage of Goods by Sea Act and/or the terms of the covering bill of lading that the entire shipment covered by the bill of lading issued by answering defendant Pacific Star Line was discharged complete and in good order condition into the custody of the other defendant, Manila Port Service, which was the operator of the arrastre service at the Port of Manila; that any damage which may have occurred to the cargo while it was in the custody of the other defendant, Manila Port Service was caused solely by the negligence of said arrastre operator and is, therefore, its sole responsibility, the defendant Manila Port Service is not the vessel agent in the receiving, handling, custody and/or delivery of the cargo purchased: that the vessel responsibility ceased upon removal of the cargo from the ship's tackle; that defendant Manila Port Service is not the vessel's or answering defendant's agent in the receiving, handling, custody and/or delivery of the cargo consignee; that the vessel's responsibility ceased upon removal of the cargo from the ship's tackles; that the vessel's liability, if any, for one case cannot exceed the sum of P 500.00 under the Carriage of Goods by Sea Act. 5

The defendants Manila Port Service and Manila Railroad Company, Inc. amended their answer to allege that the plaintiff, Aetna casualty & Surety Company, is a foreign corporation not duly licensed to do business in the Philippines and, therefore. without capacity to sue and be sued. 6 The parties submitted on November 23, 1965 the following partial stipulation of facts-.PARTIAL STIPULATION OF FACTSCOME NOW the parties, through their undersigned counsel, and to this Honorable Court respectfully submit the following Partial Stipulation of Facts:A. - On their part, defendants admit:1. - Paragraphs 2, 3, and 4 of the complaint;2. - That the S/S Ampal arrived in Manila, on February 10, 1962 and in due course discharged her cargoes into the custody of the defendant Manila Port Service, including the subject shipment complete and in good order, except two (2) cases Nos. 5804 and 16705 which were discharged under B.O. Tally Sheets Nos. 2721 and 2722 and turned over to the custody of the defendant Manila Port Service by the vessel S/S Ampal. The shipping Documents covering the cargo were indorsed and sent to Judy's Philippines, Inc. for processing and eventual return thereof to the owner, and which cleared the documents with the defendants and the Bureau of Customs;3 - That the I. Shalom & Co., Inc. filed claim for undelivered and damaged portion of subject cargo with defendant Pacific Star Line in New York, New York, but said defendant refused and still refuses to pay the said claim, for the reason stated in said defendant's letter to Smith, Bell & Co. (Philippines, Inc. dated June 1, 1962, copy of which letter is hereto attached and marked Annex A;4 - That Judy's Philippines, Inc. through its customs broker filed provisional claims with defendant The Bradman Co., Inc. and defendant Manila Port Service on February 13, 1962.B. - Defendants admit the genuineness and due execution of the following documents:1 - Bill of Lading No. 18 dated December 22, 1961, ex S/S Ampal, attached hereto and marked as Annex B;2 - Invoice dated December 26, 1961 of I. Shalom & Co., Inc. attached hereto and marked as Annex B;3 - Provisional Claim filed with The Bradman Co., Inc. on February 13, 1962, attached hereto and marked as Annex E;4 - Provisional Claim filed with the Manila Port Service on February 13, 1962, attached hereto and marked as Annex E;5 - Request for Bad Order Examination No. 1073 dated march 6, 1962 covering Cases Nos. 16705 and 5804, attached hereto and marked as Annex F;

6 - Request for Bad Order Examination No. 1177 dated March 5, 1962 covering Cases Nos. 14913 and 15043, attached 'hereto and marked as Annex G;7 - Formal Claim dated April 10,1962 addressed to defendant Pacific Star Line filed by I. Shalom & co. Inc. attached hereto and marked as Annex H;8 - Letter dated May 3, 1962 addressed to defendant Manila Port Service by Smith, Bell & co. (Philippines) Inc., attached hereto and marked as Annex I;9 - Letter dated August 8, 1962 addressed to the defendant Manila Port Service by Smith Bell & Co. (Philippines) Inc., attached hereto and marked as Annex J;10 - Certification of Insurance, authenticated by the Philippine Consul, New York, U.S.A. attached hereto and marked as Annex K;11. Subrogation Receipt dated June 1, 1962, attached hereto and marked as Annex L;C. - On their part, plaintiff and defendant Pacific Star Line and The Bradman Company, Inc. admit:1. - Having knowledge and being bound by the provisions of the Management Contract entered into by and between the Manila Port Service and the Bureau of customs on February 29, 1956, covering the operation of the arrastre service in the Port of Manila, a copy of which is attached hereto and marked as Annex M;2. - The genuineness and due execution of Gate Pass No. 34582 which, aiming others, covers Case NO. 14915, attached hereto and marked as Annex N;3. - The genuineness and due execution of Gate Pass No. 34837, which, among others, cover Cases No. 16706 and 16707, attached hereto and marked as Annex O;4. - The genuineness and due execution of a Certification issued by the Office of the Insurance Commissioner dated December 19, 1964, a photostat copy of which is attached hereto and marked as Annex P;5. - The genuineness and due execution of a Certification issued by the Securities and Exchange Commission dated November 10, 1964, a photostat copy of which is attached hereto and marked as Annex Q;6. - That the value of the shipment in question was not specified or manifested in the bill of lading and that the arrastre charges thereon were paid on the basis of weight and/or measurement and not on the value thereof.D. On other part, plaintiff and defendant Manila Port Service admit:1. - That the shipment in question was discharged complete and in good order condition into the custody of the Manila Port Service except Cases Nos. 5804 and 16705 covered by Tally Sheets Nos. 2721 and 2722;2. - That as per signed copies of Survey Report and Turnover Receipt both dated February 26, 1962, all goods contained in Case No. 5804 were received in good order condition by the consignee who waived all claims thereon and that the contents of Case No. 16705 were turned over to the defendant Manila Port Service in the condition shown in said Turnover Receipt;3. - The genuineness and due execution of the following documents:(a) Tally Sheet No. 2721 dated November 2, 1962 attached hereto and marked as Annex R;(b) Tally Sheet No. 2722, dated November 2, 1962, attached thereto and marked as Annex S;mark as Annex T;(d) Turnover Receipt dated February 26, 1962, attached hereto and marked as Annex U.WHEREFORE, it is respectfully prayed that the following Partial Stipulation of Facts be approved, and the parties be allowed to present evidence on the remaining controverted issues.Manila, Philippines, September, 1965.ROSS, SELPH, SALCEDO, DEL ROSARIO,BITO AND MISABy:(Sgd.) MARIANO LOZADA( T. ) MARIANO LOZADACounsel for the defendantsPACIFIC STAR LINE andTHE BRADMAN COMPANY, INC.405 FNCB Building ManilaOZAETA, GIBBS & OZAETABy:(Sgd.) JESUS S. J. SAYOC( T. ) JESUS S. J. SAYOCCounsel for the Plaintiffs7th Floor, Magsaysay Bldg.520 T. M. Kalaw StreetErmita, ManilaD. F. MACARANAS &A. M. ABRENICABy:(Sgd.) ALIPIO M. ABRENICA( T. ) ALIPIO M. ABRENICACounsel for the DefendantsMANILA PORT SERVICE andMANILA RAILROAD COMPANY, INC.

Terminal Bldg., Port Area Manila. 7

The case was submitted for decision on the basis of the partial stipulation of facts and three (3) documents submitted in evidence by the defendants consisting of (a) a certification issued by the Office of the Insurance Commission to the effect that there is no record in said office showing that Aetna Casualty & Surety Company has been licensed to transact insurance business in the Philippines; (b) a certification issued by the Securities and Exchange Commission that its records do not show the registration of the Aetna Casualty & Surety Company either as a corporation or a partnership nor that it has been used to transact business in the Philippines as a foreign corporation; (c) a certification of the Clerk of Court of the Court of First Instance of Manila issued on August 5, 1965 to the effect that thirteen (13) civil cases appear to have been filed by and/or against the Aetna Casualty & Surety Company in said court. 8

The trial court dismissed the complaint because:There has been a ruling that foreign corporation may file a suit in the Philippines in isolated cases. But the case of the plaintiff here is not that. The evidence shows that the plaintiff has been filing actions in the Philippines not just in isolated instances, but in numerous cases and therefore, has been doing business in this country, contrary to Philippine laws. 9

The plaintiff Aetna Casualty & Surety Company appealed to this Court assigning the following errors:ITHE LOWER COURT ERRED IN RULING THAT APPELLANT INSURANCE COMPANY IS SUBJECT TO THE REQUIREMENTS OF SECTIONS 68 AND 69 OF ACT 1459, AS AMENDED, AND FAILING TO COMPLY THEREWITH, HAS NO LEGAL CAPACITY TO BRING SUIT IN THIS JURISDICTION.IITHE LOWER COURT ERRED IN DISMISSING THE COMPLAINT. 10

The main issue involved in this appeal is whether or not the appellant, Aetna Casualty & Surety Company, has been doing business in the Philippines. It is a fact that said appellant has no license to transact business in the Philippines as a foreign corporation.Section 68 of the Corporation Law provides that "No foreign corporation or corporation formed, organized, or existing under any laws other than those of the Philippines shall be permitted to transact business in the Philippines until after it shall have obtained a license for that purpose from the Securities and Exchange Commissioners . . . ." And according to Section 69 of said Corporation Law "No foreign corporation or corporation formed, organized, or existing under any laws other than those of the Philippines shall be permitted to transact business in the Philippines or maintain by itself or assignee any suit for the recovery of any debt, claim, or demand whatever, unless it shall have the license prescribed in the section immediately preceding ..."It is settled that if a foreign corporation is not engaged in business in the Philippines, it may not be denied the right to file an action in Philippine courts for isolated transactions. 11

The object of Sections 68 and 69 of the Corporation Law was not to prevent the foreign corporation from performing single acts, but to prevent it from acquiring a domicile for the purpose of business without taking the steps necessary to render it amenable to suit in the local courts. It was never the purpose of the Legislature to exclude a foreign corporation which happens to obtain an isolated order for business from the Philippines, from securing redress in the Philippine courts. 12

In Mentholatum Co., Inc. et al. vs. Mangaliman, et al., this Court ruled that:No general rule or governing principle can be laid down as to what constitutes 'doing' or 'engaging in' or 'transacting' business. Indeed, each case must be judged in the light of its peculiar environmental circumstances. The true test, however, seems to be whether the foreign corporation is continuing the body or substance of the business or enterprise. for which it was organized or whether it has substantially retired from it and turned it over to another. (Traction Cos. Collectors of Int. Revenue [C. C. A. Ohio], 223 F. 984, 987.) The term implies a continuity of commercial dealings and arrangements, and contemplates, to that extent, the performance of acts or works or the exercise of some of the functions normally incident to, and in progressive prosecution of, the purpose and object of its organization. (Griffin v. Implement Dealers Mut. Fire Ins. Co., 241 N. W. 75, 77; Pauline Oil & Gas Co. vs. Mutual Tank Line Co., 246 P. 851, 852, 118 Okl. 111; Automotive Material Co. vs, American Standard Metal Products Corp., 158 N. E. 698, 703, 327 I11. 367.) 13

And in Eastboard Navigation, Ltd., et al. vs. Juan Ysmael & Co., Inc., this Court held that:(d) While plaintiff is a foreign corporation without license to transact business in the Philippines, it does not follow that it has no to bring the present action. Such license is not necessary because it is not engaged in business in the Philippines. In fact, the transaction herein involved is the first business undertaken by plaintiff the Philippines, although on a previous occasion plaintiff's vessel was chartered by the National Rice and Corn Corporation to carry cargo from abroad to the Philippines. These two isolated transactions do not constitute engaging in business in the Philippines within the Purview of Sections 68 and 69 of the Corporation Law so as to plaintiff from seeking redress in our courts. (Marshall-Wells Co. vs. Henry W. Elser & Co. 49 Phil., 70; Pacific Vegetable Oil Corporation vs. Angle O. Singson, G.R. No. L-7917, April 29,1955.) 14

Based on the rulings laid down in the foregoing cases, it cannot be said that the Aetna Casualty & Surety Company is transacting business of insurance in the P ' Philippines for which it must have a license. The contract of insurance was entered into in New York, U.S.A., and payment was made to the consignee in its New York branch. It appears from the list of cases issued by the Clerk of Court of the Court of First Instance of Manila that all the actions, except two (2) cases filed by Smith, Bell & Co., Inc. against the Aetna Casualty & Surety Company, are claims against the shipper and the arrastre operators just like the case at bar.

Consequently, since the appellant Aetna Casualty & Surety Company is not engaged in the business of insurance in the Philippines but is merely collecting a claim assigned to it by the consignee, it is not barred from filing the instant case although it has not secured a license to transact insurance business in the Philippines.WHEREFORE, the decision appealed from is hereby set aside and the case is remanded to the trial court for further proceedings to determine the liability of the defendants-appellees, without pronouncements as to costs.SO ORDERED. INTRAMUROS ADMINISTRATION, petitioner, SHERWILL DEVELOPMENT CORPORATION, petitioner, vs. SITIO STO. NIÑO RESIDENTS ASSOCIATION, INC. and/or NILDA DEVILLERES, and the LANDS MANAGEMENT BUREAU, respondents.This is a petition for review on certiorari assailing the Order[1] of the Regional Trial Court (RTC) of Muntinlupa City, Branch 205, dismissing Civil Action No. 02-237 on the ground of litis pendentia and forum shopping.Petitioner Sherwill Development Corporation is the registered owner of two parcels of land in Muntinlupa, Rizal. Lot 88 is covered by Transfer Certificate of Title (TCT) No. 131918[2] consisting of 8,774 square meters, while Lot 86, with an area of 16,766 square meters, is covered by TCT No. 131919.[3] Both lots form part of the Muntinlupa Estate, while the titles thereon were issued by the Registry of Deeds of Rizal on September 24, 1913.On October 16, 2002, the petitioner filed a Complaint[4] for quieting of title against respondents Sitio Sto. Niño Residents Association, Inc. (SSNRAI), Nilda Devilleres, and the Lands Management Bureau (LMB). The petitioner made the following allegations in its complaint:6. Since petitioner acquired subject two (2) lots in 1984, it has dutifully paid realty taxes thereon. A copy of its latest tax-payment receipt is attached as Annex “E.”7. In the late 1960s and the 1970s, and up to the 1980s, unauthorized persons, without the prior knowledge and consent of petitioner and/or Mr. Lipio, by force, stealth and strategy, unlawfully entered and occupied the lots covered by TCT Nos. 131918 and 131919. Among said unauthorized persons are members and officers of SSNRAI, Devilleres included;8. Said LMB Case No. 7-98 is the first step of respondents to disturb and/or cast clouds on TCT Nos. 131918 and 131919, as in fact they are disturbing and casting clouds over said titles. From all indications, LMB is set to recommend to the Philippine Government, [through] the Office of the Solicitor General (OSG), the “nullification” of TCT Nos. 131918 and 131919 and/or the reversion thereof to the Philippine Government, despite the fact that the latter, sometime in 1927 or thereabout, sold and/or disposed of subject lots, then covered by Original Certificate of Title (OCT) No. 684, pursuant to Act No. 1120 and other pertinent laws. Petitioner is the third or fourth transferee and buyer in good faith of the lots in question. Certainly, its titles (TCT Nos. 131918 and 131919) have long become indefeasible and conclusive, considering that indefeasibility and conclusiveness of titles accrue one year after the issuance thereof.[5]

As part of its prayer for relief, the petitioner prayed that a writ of preliminary injunction be issued, ordering the LMB to cease and desist from proceeding with the hearings in LMB Case No. 7-98, a case pending before it where petitioner’s titles to the subject lots were being questioned by the respondents SSNRAI and Nilda Devilleres. Thus:WHEREFORE, petitioner most respectfully prays for the following:(a) The immediate issuance of a writ of preliminary injunction against LMB, ordering it to cease and desist from hearing or continuing its hearing of LMB Case No. 7-98; thereafter, after due hearing, the issuance of another order making said injunction permanent; and(b) The quieting of title of TCT Nos. 131918 and 131919, and the complete removal of any and all clouds thereon, and the accompanying declaration that said titles are indefeasible and conclusive against the whole world, as in fact they are.Petitioner further prays for other reliefs which this Honorable Court may deem proper to grant.[6]

The trial court set the hearing of the prayer of the writ of preliminary injunction at 8:30 a.m. of November 22, 2002.[7] On November 6, 2002, the private respondents, through counsel, filed a Motion to Dismiss[8] the petition on the following grounds:(a) THE PETITION ITSELF IS FATALLY DEFECTIVE AS THE CERTIFICATE OF NON-FORUM SHOPPING DID NOT SPECIFY AND/OR DISCLOSE THE PENDENCY OF THE ADMINISTRATIVE CASE, LANDS MANAGEMENT BUREAU CASE NO. 7-98;(b) PETITIONER IS GUILTY OF FORUM-SHOPPING; and(c) THERE IS ANOTHER ACTION PENDING BETWEEN THE PARTIES INVOLVING THE SAME SUBJECT MATTER AND FOR THE SAME CAUSE.In its opposition to the motion to dismiss, the petitioner averred that contrary to the private respondents’ allegations, it did disclose the pendency of LMB Case No. 7-98 in paragraph 3 of its petition, to wit:3. Said LMB Case No. 7-98 was filed on May 5, 1995 and is, at present, being heard by [the] LMB thru Hearing Officer Rogelio C. Mandar, the same Special Investigator-Designate who, on Feb. 12, 1998, wrote the LMB Director thru the Chief, Legal Division, recommending “that an order be issued directing the Surveys Divisions of this Office or its duly-authorized representatives to conduct verification and relocation survey” of subject lots. In effect, Atty. Mandar as such Hearing Officer has already prejudged the case in favor of SSNRAI. A copy of the petition filed by SSNRAI (minus annexes) is attached as Annex “B,” and that of Atty. Mandar’s letter consisting of seven (7) pages (minus annexes), as Annex “C;”[9]

According to the petitioner, there was no identity of actions and reliefs sought in the two cases. The petitioner pointed out that in LMB Case No. 7-98, the private respondents (as the petitioners therein) sought the declaration of the nullity of the said titles issued in its favor, on their claim that their issuance was “highly irregular and erroneous,” and that the

subject properties were not disposed of in accordance with Act No. 1120, otherwise known as the Friar Lands Act. On the other hand, in SP Civil Action No. 02-237, the petitioner’s right of action was based on the private respondents’ act of disturbing and casting clouds over TCT Nos. 131918 and 131919, considering that such titles have long become indefeasible and conclusive.The motion to dismiss filed by the private respondents was submitted for resolution on November 15, 2002.[10]

In its Order[11] dated February 24, 2003, the trial court dismissed the petition on the grounds of litis pendencia and forum shopping. In so ruling, the trial court made the following ratiocination:As alleged in the petition filed with the LMB itself, quoted elsewhere in this order, and as shown in the copy of said petition attached to this petition, herein petitioner is respondent therein and herein private respondents are petitioners there. The element of identity of parties is therefore present. The cause of action and reliefs sought in the two sets of cases are, likewise, identical. The ultimate issue involved in both is who between the parties has a better right to the properties covered by TCT Nos. 131918 and 131919 which are alleged in the LMB case to originally constitute a portion of the Muntinlupa Friar Lands Estate titled in the name of the government. As to the third requirement that the result of the first action is determinative of the second, it is true here inasmuch as the Lands Management Bureau, public respondent herein before which the case earlier filed is pending, absorbed the functions and powers of the Bureau of Lands (abolished by Executive Order No. 131) and is mandated by law to implement the provisions of the Public Land Act (Com. Act No. 141) which governs the administration and disposition of lands commonly known as “friar lands,” so an earlier recourse to it would be an exercise of the doctrine of exhaustion of administrative remedies, regardless of which party is successful.It is clear from the petition that what the petitioner wants is for this court to enjoin public respondent from proceeding with the case before it and take over the same which it cannot and should not do.WHEREFORE, this case is hereby dismissed on the grounds of litis pendencia and forum shopping. No cost.SO ORDERED.[12]

The petitioner filed a motion for reconsideration, which the trial court denied in an Order[13] dated May 29, 2003.Hence, the present petition, on the following question of law: whether or not the grounds of litis pendentia and forum shopping insofar as SP Civil Action No. 02-237 is concerned are applicable. The petitioner puts forth the following arguments:1. THE GROUNDS OF “LITIS PENDENCIA AND FORUM SHOPPING” RELIED UPON BY THE COURT A QUO IN DISMISSING SP. CIVIL ACTION NO. 02-237 AND DENYING PETITIONER’S MOTION FOR RECONSIDERATION ARE SHAKY AT BEST. IN FACT, THEY ARE NON-EXISTENT.[14]

2. MOREOVER, AS ALREADY RAISED BY PETITIONER IN ITS REPLIES TO RESPONDENTS’ COMMENTS ON ITS AFORESAID MOTION FOR RECONSIDERATION, LMB HAS NO JURISDICTION TO TRY LMB CASE NO. 7-98 INASMUCH AS CASES LIKE THIS FALL UNDER THE EXCLUSIVE ORIGINAL JURISDICTION OF REGIONAL TRIAL COURTS.[15]

To bolster its pose that no forum shopping and litis pendentia exist, the petitioner invokes the ruling of the Court in Silahis International Hotel, Inc. v. NLRC, et al.,[16] averring that when a party does not pursue simultaneous remedies in fora, there is no forum shopping. The petitioner reiterates that the issue and the causes of action in LMB Case No. 7-98 and SP Civil Action No. 02-237 are different. It points out that it certainly is not “a party against whom an adverse judgment or order has been rendered in one forum”; neither has it instituted “two or more actions or proceedings grounded on the same cause.” The petitioner further insists that the LMB has no jurisdiction to try LMB Case No. 7-98; it is the regional trial courts that have original jurisdiction in such cases. The petitioner points out that the private respondents failed to file an action for nullification of TCT Nos. 131918 and 131919 within the one-year period from the date of issuance of the subject titles and are, therefore, barred from questioning the said titles. The petitioner further points out that the certificates of title under the Torrens system of registration cannot be collaterally attacked. The petitioner concludes that the trial court should not have dismissed SP Civil Action No. 02-237, but instead should have given it due course.The Office of the Solicitor General (OSG), for its part, points out that the parties in both cases are identical. It further points out that LMB Case No. 7-98 was filed as early as 1995, and that the petitioner subsequently initiated SP Civil Action No. 02-237 obviously to preempt the outcome of the case before the Lands Management Bureau. Hence, the trial court correctly dismissed SP Civil Action No. 02-237 on the ground of litis pendentia.The OSG further contends that the determination of whether there was a violation of the Friar Lands Act, the very issue raised in the two cases, is well within the authority of the LMB to investigate, it being the agency of the government charged with administrative control over Friar Land Estates under Commonwealth Act No. 2550. As such, according to the OSG, the LMB has primary jurisdiction over the subject matter. The OSG points out that the petitioner’s resort to the courts is premature, considering that the LMB has primary jurisdiction over the matter.The OSG, likewise, avers that the petitioner is guilty of violating Section 5, Rule 7 of the Rules of Court, on certification against forum shopping. It points out that the petitioner’s representative, Roland Leslie V. Lipio, certified under oath that the petitioner “had no knowledge of any action pending before any tribunal or agency.” It further points out that it cannot be said that the petitioner was unaware of LMB Case No. 7-98, since it even filed an Answer therein on July 31, 1995. To justify the dismissal of the case, the OSG cites the ruling of the Court in Republic v. Carmel Development, Inc.[17]

The Ruling of the Court..At the outset, the Court notes that the petitioner assails an order of dismissal issued by the RTC, with direct recourse to this Court. It must be stressed that in so doing, the petitioner violated an established policy, one that is 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 overcrowding of the Court’s docket.[18] There is, after all, a hierarchy of courts which is determinative of the venue of appeals.[19] This rule may be relaxed only for special and important reasons clearly and specifically set out in the petition.[20] The petitioner should thus have filed its petition first before the Court of Appeals, conformably with this principle of hierarchy of courts. The Court notes that the petitioner failed to satisfactorily explain its failure to comply with or its non-observance of judicial hierarchy.Even upon the merits of the case, the petition at bar is still destined to fail for the following additional reasons:First. Contrary to the petitioner’s contention, at this instance, it is the courts which should defer the exercise of jurisdiction on the matter. Jurisdiction having been correctly assumed by the Director of Lands over the parties’ conflicting claims, the case should, in accordance with law, remain there for final adjudication.[21] After all, the Director of Lands, who is the officer charged with carrying out the provisions of the Public Land Act, has control over the survey, classification, lease, sale or any other form of concession or disposition and management of the public lands, and his finding and decision as to questions of fact, when approved by the Secretary of Agriculture and Natural Resources (now Secretary of Environment and Natural Resources), is conclusive.[22]

The power and authority of the Director of Lands were discussed in the recent case of Republic of the Philippines v. De Guzman.[23] According to the Court, the Director of Lands does not lose authority over the land even upon the issuance of an original certificate of title over the same. Thus:… The authority of the Director of Lands to investigate conflicts over public lands is derived from Section 91 of the Public Land Act. In fact, it is not merely his right but his specific duty to conduct investigations of alleged fraud in securing patents and the corresponding titles thereto. While title issued on the basis of a patent is as indefeasible as one judicially secured, such indefeasibility is not a bar to an investigation by the Director of Lands as to how such title had been acquired, if the purpose of such investigation is to determine whether or not fraud had been committed in securing such title, in order that the appropriate action for reversion may be filed by the Government.[24]

As a rule then, courts have no jurisdiction to intrude upon matters properly falling within the powers of the LMB.[25]

On the petitioner’s claim that its titles to the subject lots have been rendered indefeasible, the pronouncement of the Court in Republic v. Court of Appeals[26] is instructive:It is true that under Section 122 of the Land Registration Act, a Torrens title issued on the basis of a free patent or a homestead patent is as indefeasible as one judicially secured. And in repeated previous decisions of this Court that indefeasibility has been emphasized by our holding that not even the Government can file an action for annulment, but at the same time, it has been made clear that an action for reversion may be instituted by the Solicitor General, in the name of the Republic of the Philippines. It is also to the public interest that one who succeeds in fraudulently acquiring title to a public land should not be allowed to benefit therefrom, and the State should, therefore, have an even existing authority, thru its duly-authorized officers, to inquire into the circumstances surrounding the issuance of any such title, to the end that the Republic, thru the Solicitor General or any other officer who may be authorized by law, may file the corresponding action for the reversion of the land involved to the public domain, subject thereafter to disposal to other qualified persons in accordance with law. In other words, the indefeasibility of a title over land previously public is not a bar to an investigation by the Director of Lands as to how such title has been acquired, if the purpose of such investigation is to determine whether or not fraud had been committed in securing such title in order that the appropriate action for reversion may be filed by the Government.[27]

Second. The OSG correctly invoked the doctrine of primary jurisdiction in this case. Indeed, the courts cannot and will not resolve a controversy involving a question which is within the jurisdiction of an administrative tribunal, especially where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience and services of the administrative tribunal to determine technical and intricate matters of fact.[28] The doctrine of primary jurisdiction applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such case, the judicial process is suspended pending referral of such issues to the administrative body for its view. And in such cases, the court cannot arrogate unto itself the authority to resolve a controversy, the jurisdiction over which is initially lodged with an administrative body of special competence,[29] in this case, the LMB.Third. The trial court correctly ruled that the petitioner’s action was barred by the pendency of the proceedings before the LMB. For litis pendencia to lie, the following requisites must be satisfied:1. Identity of parties or representation in both cases;2. Identity of rights asserted and relief prayed for;3. The relief must be founded on the same facts and the same basis; and4. Identity of the two preceding particulars should be such that any judgment, which may be rendered in the other action, will, regardless of which party is successful, amount to res judicata on the action under consideration.[30]

To the Court’s mind, these requisites are present in the instant case. For one, the parties in the LMB case and in SP Civil Action No. 02-237 are the same. There is, likewise, identity of rights asserted and reliefs prayed for. The petition filed by the private respondents SSNRAI and its President Devilleres before the LMB alleged that the lots in question had been the subject of “double titling”; on the other hand, the petition with prayer for preliminary injunction filed before the RTC sought the declaration from the court that TCT Nos. 131918 and 131919, in the name of the petitioner, are indefeasible and conclusive as against the whole world. The resolution of the foregoing issue would likewise require the

presentation of evidence from the parties. Verily, the conclusion in one proceeding would amount to the adjudication of the merits on the other – that is, a favorable ruling from the LMB would have virtually removed any and all existing “clouds” from the petitioner’s titles to the subject property; in the same vein, a declaration of the indefeasibility of TCT Nos. 131918 and 131919 would preempt any ruling of the LMB on the matter.Indeed, the underlying principle of litis pendentia is the theory that a party is not allowed to vex another more than once regarding the same subject matter and for the same cause of action. This theory is founded on the public policy that the same subject matter should not be the subject of controversy in court more than once in order that possible conflicting judgments may be avoided, for the sake of the stability of the rights and status of persons.[31] The RTC of Muntinlupa City, Branch 205, recognized this doctrine when it dismissed SP Civil Action No. 02-237 to avoid the possibility of two contradictory decisions on the question of the validity of the subject titles.In any case, should the petitioner disagree with the ruling of the LMB, it is not precluded from taking the matter up to with the courts of law.Fourth. To determine whether a party violated the rule against forum shopping, the test applied is whether the elements of litis pendentia are present or whether a final judgment in one case will amount to res judicata in another.[32] Considering our pronouncement that the requisites of litis pendentia barred the filing of SP Civil Action No. 02-237, the RTC correctly dismissed the same on the additional ground of forum shopping.WHEREFORE, considering the foregoing, the petition is DENIED for lack of merit. The Order of the Regional Trial Court of Muntinlupa City, Branch 205, dismissing SP Civil Action No. 02-237 on the ground of litis pendentia and forum shopping, is AFFIRMED.SO ORDERED.INTRAMUROS ADMINISTRATION, petitioner, vs.YVETTE CONTACTO AND GREGORIO LUIS C. CONTACTO III, respondents.DAVIDE, JR., C.J.:In its petition for review on certiorari in this case, petitioner Intramuros Administration seeks the review and reversal of the 28 February 2002 Decision of the Court of Appeals in CA-G.R. SP No. 63815, which set aside the orders of the Regional Trial Court of Manila, Branch 9, in Civil Case No. 98-90835 and granted respondent’s motion to dismiss on the ground of litis pendentia.On 21 January 1993, the petitioner and respondent Yvette Contacto entered into a contract1 for the lease of petitioner’s premises known as "Cantinas de Aduana" (Cantinas) to the latter to establish a fastfood and restaurant business. The lease was for a period of five years, from 1 February 1993 to 31 January 1998, at a monthly rental of P36,000. Yvette was to assume the payment of water and other utility expenses, and secure appropriate licenses and permits.Shortly after the lease contract went into effect, Yvette began complaining of the petitioner’s failure to make good its alleged representations made prior to and during the execution of the lease contract that it would evict the sidewalk vendors outside the leased premises.2 She also alleged to have suffered losses in income due to the presence of the sidewalk vendors.In the next two years of the contract, Yvette additionally complained of inadequate facilities of the Cantinas, which allegedly resulted in the suspension of her license and denial of her permit applications by the Manila Health Department. She further claimed that in August 1995, she was constrained to rehabilitate the Cantinas on her own, resulting in the significant increase in her food sales. During this time, however, Yvette did not pay the stipulated rent. Thus, between 1994 and 1995, the petitioner and Yvette entered into three agreements allowing the latter to restructure her outstanding obligations.3 Still, Yvette failed to pay the accrued rentals.On 16 January 1996, Yvette received a letter from the petitioner requiring her to pay her unsettled accounts and to vacate the premises under threat of closure, within five days from receipt of the letter. With the advise of then Secretary of the Department of Tourism Eduardo Pilapil, she attempted to hold a conference with the petitioner in order to prevent the closure, but this attempt failed.4 On 22 January 1996, the scheduled date of the closure, Yvette hurriedly filed with the Regional Trial Court (RTC) of Manila a complaint for preliminary injunction, with a prayer for specific performance and damages. She prayed that the petitioner be ordered to (1) desist from enforcing the closure order; (2) offset all the expenses that she incurred or might incur as a result of assuming petitioner’s obligation to make the leased premises fit for its intended use; (3) reduce the monthly rental fromP36,000 to P18,000, retroactive 1 February 1993 up to the expiration of the contract in 1998; and (4) pay her actual and exemplary damages, attorney’s fees, and cost of suit.The complaint was docketed as Civil Case No. 96-767-44 and assigned to Branch 26 of the court. In its order of 23 January 1996, the court granted the prayer for a temporary restraining order.5 On 15 February 1996, it issued a writ of preliminary mandatory injunction ordering the petitioner to reopen the leased premises, reconnect the water and electrical services in the leased premises,6 and allow Yvette to operate the Cantinas.On 17 September 1998, pending the resolution of Civil Case No. 96-767-44 but after the expiration of the lease contract, the petitioner filed with the RTC of Manila a complaint7 against respondent spouses Yvette and Gregorio Contacto. It alleged that the respondents occupied the leased premises for the entire five years stipulated in the contract; however, they defaulted in the payment not only of their monthly rentals from May 1995 until 31 January 1998 when they vacated the leased premises but also the water bills and electric bills. It then prayed that the respondents be ordered to pay (1) P3,069,225.13,8 representing unpaid rentals, penalty, surcharges and interest, and electric and water bills after deducting their deposit of P72,000; (2) P500,000 as exemplary damages; (3) attorneys fees equivalent to 20 percent of

the total award; and (4) interest on the monetary claims. The complaint was docketed as Civil Case No. 98-90835 and assigned to Branch 9 of said court.On 12 March 1999, the respondents filed in Civil Case No. 98-90835 a Motion to Dismiss on the ground of litis pendentia,9 i.e., the pendency of Civil Case No. 96-767-44 in Branch 26 of the RTC of Manila.In its order of 2 December 1999, Branch 9 of the RTC denied10 the motion to dismiss. It also denied the motion for reconsideration11 in its order of 8 September 2000. Hence, the respondents filed with the Court of Appeals a special civil action for certiorari, docketed as CA-G.R. SP No. 63815.After due proceedings, the Court of Appeals rendered a decision dated 28 February 2002 granting the petition; declaring as null and void the 2 December 1999 and 8 September 2000 orders of Branch 9 of the RTC of Manila; and dismissing Civil Case No. 98-90835 on the ground of litis pendentia.12

Unsatisfied with the decision, the petitioner filed the petition in this case. It alleges that (a) the Court of Appeals erred in holding that Civil Case No. 98-90835 is barred by litis pendentia; and (b) even assuming that the trial court erred in perfunctorily denying respondents’ motion to dismiss, the error would not change the fact that there is no litis pendentia in the cases below, and hence, in the interest of substantial justice, the complaint in Civil Case No. 98-90835 should be reinstated.On the other hand, the respondents allege that the petition does not raise a substantial issue or question. The Court of Appeals correctly ruled (1) that the orders denying the motion to dismiss and the motion for reconsideration were perfunctory in nature, since they did not clearly and distinctly state the reason for such denial; and (2) that the filing of Civil Case No. 98-90835 is barred by the pendency of Civil Case No. 96-767-44 because both cases flow from the same contract of lease and are based on the demand of both parties against each other to perform their obligations under the contract.We agree with the Court of Appeals and the respondents that the trial court’s order denying the motion to dismiss was perfunctory in nature. The order reads:For resolution of this Court is a Motion to Dismiss filed by defendant through counsel, on grounds that there is another action pending between the same parties for the same cause.Finding no merit therein, the Motion to Dismiss is hereby Denied.SO ORDERED.The aforequoted order did not state clearly and distinctly the reason for denying the motion to dismiss, thereby violating the mandate in Section 3, Rule 16 of the 1997 Rules of Civil Procedure, which provides:SEC 3. Resolution of motion.- After the hearing, the court may dismiss the action or claim, deny the motion, or order the amendment of the pleading.The court shall not defer the resolution of the motion for the reason that the ground relied upon is not indubitable.In every case, the resolution shall state clearly and distinctly the reasons therefor.The reason "no merit" stated in the order is not sufficient compliance with the abovequoted rule. It has been frowned upon by the Court, for it "often creates difficulty and misunderstanding on the part of the aggrieved party in taking recourse therefrom and likewise in the higher court called upon to resolve the issue."13

Nonetheless, respondents’ motion to dismiss on the ground of litis pendentia cannot prosper.In order to grant a motion to dismiss on the ground of litis pendentia, the following requisites must concur: (a) there must be an identity of parties, or at least such parties as representing the same interests in both actions; (b) there must be an identity of rights asserted and reliefs prayed for, the reliefs being founded on the same facts; and (c) the identity of the two preceding particulars is such that any judgment rendered in the other action will, regardless of which party is successful, amount to res judicata in the other.14

The identity of the parties being apparent and uncontroverted, we proceed to the second and third requisites.There are several tests of ascertaining whether two suits relate to a single or common cause of action, such as (1) whether the same evidence would support and sustain both the first and second causes of action;15 or (2) whether the defenses in one case maybe used to substantiate the complaint in the other.16

The determination of whether there is an identity of causes of action for purposes of litis pendentia is inextricably linked with that of res judicata, each constituting an element of the other. In either case, both relate to the desire to include, in a single litigation, the settlement of all issues relating to a cause of action that is before a court.17 This is the reason for their invocation in cases where one party splits a cause of action by, for example, filing separate cases to recover separate reliefs for a single cause of action, or in cases where a defendant files another case arising from what should have been pleaded in a compulsory counterclaim. In sum, it is a matter of policy, for efficient justice, "to prevent repeated litigation between the same parties in regard to the same subject of controversy; to protect defendant from unnecessary vexation; and to avoid the costs and expenses incident to numerous suits."18

In the first case, Civil Case No. 96-767-44, respondent Yvette Contacto, as a lessee, asserts her right under the lease contract to occupy the leased premises and to use the same for the purpose for which it was intended. On the other hand, in the second case, Civil Case No. 98-90835, the petitioner asserts its right as a former lessor to demand payment from the respondents, as former lessees, of the stipulated rentals, penalty, and surcharges, as well as water and electric bills.As regards the reliefs sought, Yvette prays in the first case for (1) the issuance of an injunction ordering the petitioner to desist from closing the leased premises; (2) the set-off of her accountabilities against the expenses she incurred or might incur in assuming petitioner’s obligations under the contract; (3) the reduction of the monthly rental

from P36,000 to P18,000; and (4) the payment of actual and exemplary damages, attorney’s fees, and cost of the suit. In the second case, the petitioner prays for the payment by the respondents of back rentals from May 1995 until 31 January 1998, water and electric bills, penalty and interests, exemplary damages, and attorney’s fees.The reliefs prayed for in the first case are anchored on the then impending closure of the leased premises, as well as the alleged failure or refusal of the petitioner to evict the sidewalk vendors in the area and improve the facilities in the leased premises. The second case is based on the refusal of the respondents to pay the monthly rentals from May 1995 up to 31 January 1998 when they vacated the leased premises, as well as the water and electric bills.From the foregoing, it is clear that there is as between the two actions no identity of rights asserted and reliefs prayed for, as well as of the facts from which the reliefs are founded. It is not therefore likely that petitioner’s defense in the first case, which was filed by the respondents, would be in pursuit of its theory as plaintiff in the second case.19

Applying our pronouncement in Cruz v. Court of Appeals,20 the Court of Appeals concluded that the causes of action in Civil Cases Nos. 96-767-44 and 98-90835 are identical because both parties claimed a breach of an obligation under the same lease contract:There is substantial identity in the cause of action in the two cases. Both cases are based on the demand of both parties against each other to perform their obligations under the same contract.The Complaint instituted by the respondent Intramuros Administration against the herein petitioners as lessees are [sic] based on the same contract of lease. The Intramuros Administration lodged said Complaint in the respondent Court to demand payment for rentals and utility bills [that] accrued during the existence of the contract of lease.On the other hand, in the earlier case filed by herein petitioners against Intramuros Administration as lessors [sic] which was given due course in RTC, Branch 26, Manila, was also for specific performance and damages with prayer for preliminary injunction under the same contract.The motion to dismiss has shown that these elements for litis pendentia to apply are present. The basic issue of the controversy in both cases is the determination of the compliance by the parties of the terms and conditions of their contract. The parties in both actions will be relying on the same contract which is the fountain of the controversy in Civil Case No. 98-9835 and Civil Case No. 96-767-44.21

The Court of Appeals, however, overlooked the fact that there is more to determining the identity of the causes of action than an identity of contract. More fundamental is whether the cause of action in the second case existed at the time of the filing of the complaint or answer with counterclaim, as the case may be.22

We have held that when a lease provides for the payment of the rent in installments, each failure to pay an installment is a separate cause of action. However, in an action upon such a lease for the recovery of rent, all installments due and demandable at the time the action is brought should be pleaded, and failure to do so will constitute a bar to a subsequent action for the payment of that rent.23 The lessor is not, therefore, barred from claiming installments that were not paid thereafter, for the simple reason that that the cause of action did not exist at the time. This is especially true in this case in light of the admissions by both parties to this case.Although Civil Case No. 96-767-44 was filed after the contract had been in force for two years, the respondents continued to occupy the leased premises until the expiration of the contracted term. Since the obligations of the parties under that contract and other supplementary agreements still existed, there also existed a relief for any further breach of the rights or obligations under the contract. This further breach of rights or obligations cannot be deemed to have been necessarily included in the issues raised in Civil Case No. 96-767-44.What could be barred by litis pendentia are the rentals which were due and demandable at the time of the filing of petitioner’s answer, since they could be pleaded as counterclaims. It has been held that lis pendens may also be interposed even if the claim is set forth by way of a counterclaim, since the latter partakes of the nature of a complaint by the defendant against the plaintiff. To interpose a cause of action in a counterclaim and again advance the same in a complaint against the same party would be violative of the rule against splitting a cause of action.24 However, petitioner’s claims of back rentals after its filing of an answer with counterclaim in the first case constituted distinct causes of action and cannot be barred by litis pendentia.Prudence and efficiency dictate that the petitioner should have, with the permission of the court, filed a supplemental pleading, like a supplemental answer with additional counterclaim, in the first case to cover those rentals and claims that matured after it filed its answer. This would be in accordance with Section 6 of Rule 10 and Section 9 of Rule 11 of the 1997 Rules of Civil Procedure, which provides:Sec. 6. supplemental pleadings.- Upon motion of a party the court may, upon reasonable notice and upon such terms as are just, permit him to serve a supplemental pleading setting forth transactions, occurrences or events which have happened since the date of the pleading sought to be supplemented. The adverse party may plead thereto within ten (10) days from notice of the order admitting the supplemental pleadings.The adverse party should file an answer to a supplemental complaint inasmuch as his original answer does not ordinarily cover the subsequent events.Sec. 9. Counterclaim or cross-claim arising after answer.- A counterclaim or a cross-claim which either matured or was acquired by a party after serving his pleading may, with the permission of the court, be presented as a counterclaim or a cross-claim by supplemental pleading before judgment.Such a counterclaim or cross-claim is not, however, compulsory.25 Thus, a party who fails to interpose a counterclaim although arising out of, or is necessarily connected with, the transaction or occurrence of the plaintiff’s suit but which

did not exist or mature at the time said party files his answer is not thereby barred from interposing such claim in a future litigation.26

As for the third requisite of litis pendentia, we likewise find it absent in this case. Again, we first refer to the findings of the Court of Appeals:The result of the case filed by herein petitioner against Intramuros Administration in Civil Case No. 96-767-44 at any event is determinative of the rights of Intramuros Administration to properly institute Civil Case No. 98-90835.If the Intramuros Administration [would] be found for breach of its obligations under the same contract and the reliefs sought by herein petitioners in the first civil case [would be]s upheld to offset the expenses she incurred with the payments of rentals and utility bills under the contract of lease, the petitioner could not be held liable for the payment of the accrued rentals as alleged by the Intramuros Administration.27

It should be noted that the Court of Appeals only considered the applicability of res judicata in the event the respondents prevailed. However, for the third requisite of litis pendentia to apply, there should be res judicataregardless of which party is successful.In this case, it cannot be said that a judgment in Civil Case No. 96-767-44 would have settled all matters concerning the rights and obligations of the parties under the contract. Regardless of which party prevails, the judgment therein would not necessarily resolve petitioner’s claim for subsequent back rentals, and would not therefore constitute res judicata as to the second case. As earlier stated, litis pendentia would operate to bar only those which were were due and demandable at the time of the filing of its answer. Conversely, litis pendentia would be inapplicable for obligations subsequently incurred.WHEREFORE, IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered REVERSING and SETTING ASIDE the decision of the Court of Appeals in C.A.-G.R. SP No. 63815 insofar as all causes of action or claims arising after the filing by the petitioner of an answer with counterclaim in Civil Case No. 96-767-44 are concerned. The Regional Trial Court of Manila, Branch 9, is directed to act on Civil Case No. 98-90835 with deliberate dispatch.Costs against respondents.SO ORDERED.PILAR T. DEL ROSARIO, MARIANO V. DEL ROSARIO, ANIANA DEUDOR, MACARIA FULGENCIO and CARLOS JAVIER, ET AL., plaintiffs-appellants, vs.SANCHO R. JACINTO, DOMINGO C. BASCARA and J.M. TUASON & CO., INC., defendants-appellees. Pilar, Mariano and Salvador, all surnamed del Rosario, filed in the Court of First Instance of Rizal, Branch I (Pasig), on October 2, 1958, an action against Sancho R. Jacinto, Domingo C. Bascara and J.M. Tuason & Co., Inc., for reconveyance and/or recovery of a 2,879 square-meter parcel of land, covered by Transfer Certificates of Title Nos. 26531 and 26532, situated at barrio Tatalon, Quezon City. Said action was docketed as Civil Case No. 5230. On March 15, 1962, Pilar, Mariano and Salvador del Rosario, as well as Aniana Deudor, Macaria Fulgencio and Carlos Javier, brought another action for reconveyance and/or recovery of the same parcel of land aforementioned, against the same Sancho R. Jacinto, Domingo C. Bascara and J.M. Tuason & Co., Inc. It was docketed as Civil Case No. 2254-P of the Court of First Instance of Rizal, Pasay City Branch. Plaintiffs in Case No. 2254-P (Pasay), on March 22, 1962, moved to transfer said case to the CFI of Rizal, Pasig Branch, where the other case (5230) was pending. Acting on said motion, however, the court, on March 27, 1962, ordered Case No. 2254-P (Pasay) transferred to the CFI of Rizal, Quezon City Branch, stating as reason that the land involved was situated in Quezon City. Accordingly, Case No. 2254-P (Pasay) was transferred to the CFI of Rizal, Quezon City Branch, where it was docketed as Civil Case No. Q-6324 (Quezon City). On April 4 and 6, 1962 defendants in Case No. Q-6324 (Quezon City) moved to dismiss the complaint on the ground that there was pending another action between the same parties, for the same cause, namely, Case No. 5230 at the Pasig Branch of the Rizal CFI. On June 2, 1962 the court granted the motion and dismissed, without costs, Case No. Q-6324 (Quezon City) on the ground of lis pendens. Plaintiffs moved to reconsider the order of dismissal, on July 12, 1962, and sought the admission of an amended complaint eliminating some of the parties so as to retain only Aniana Deudor, Macaria Fulgencio and Carlos Javier, as plaintiffs (the original owners from whom Pilar, Mariano and Salvador, all surnamed Del Rosario, allegedly bought the land in question); Sancho R. Jacinto and Domingo C. Bascara, as defendants. On August 7, 1962 the Court denied the motion for reconsideration and for admission of amended complaint. Plaintiffs appealed directly to this Court.1awphîl.nèt The sole issue to resolve is whether plaintiffs' suit in Case No. Q-6324 (Quezon City) is barred by lis pendens. The requisites for lis pendens as ground to dismiss a complaint are: (1) Identity of parties, or at least such as representing the same interests in both actions; (2) Identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (3) Identity in both cases is such that the judgment that may be rendered in the pending case would, regardless of which party is successful, amount to res judicata in the other.1

Are the foregoing elements, then, attendant herein? 1. Appellants themselves aver that Aniana Deudor, Macaria Fulgencio and Carlos Javier — as plaintiffs in Case No. Q-6324 (Quezon City) — are but the original owners of the land in question.2 Pilar, Mariano and Salvador, all, surnamed Del Rosario — as plaintiffs in Case No. 5230 are allegedly purchasers from said originalowners.3 It follows, therefore, that these parties represent the same interests in both actions.

As to parties defendants, elimination of J.M. Tuason & Co., Inc. does not alter the situation. The remaining defendants are defendants in both actions. Furthermore, said remaining defendants are sued as purchasers from J.M. Tuason & Co., Inc.,4 so that they similarly represent the same interests as the latter in the litigations. 2. It is not in dispute that in both Case No. Q-6324 (Quezon City) and Case No. 5230 (Pasig) the right asserted is the same, namely, ownership of the parcel of land covered by Transfer Certificates of Title Nos. 26531 and 26532. So, also, the relief prayed for is identical, that is, reconveyance and/or recovery of said land. And relief is sought to be premised on the same facts, viz., the execution on March 16, 1953 of a compromise agreement between the Deudors and J.M. Tuason & Co., Inc. 3. From the foregoing identities it results that whatever judgment may be rendered in Case No. 5732 (Pasig) will be res judicata to Case No. Q-6324 (Quezon City). For it is settled that parties who base their contention upon the same rights as the litigants in a previous suit are bound by the judgment in the latter case.5

Clearly, therefore, all requisites for lis pendens obtain herein. WHEREFORE, the order appealed from is affirmed, with costs. So ordered.